SVMC Ends Fiscal Year With Financial Improvements, Lower Deficit
For Immediate Release
11 January 2009
Media Contact: Kevin Robinson
BENNINGTON — With its 2009 fiscal year closed and audited, Southwestern Vermont Medical Center (SVMC) cut its operating deficit with a strong performance in the final months of the year that ended Sept. 30.
The financial statements, which were approved by the hospital’s board of trustees on January 7, showed an operating loss of $6.2 million. This represents a nearly $1 million improvement in the hospital’s operations since a March 31, 2009, mid-year audit.
“These results are a strong indication that the hospital’s vigorous fiscal recovery plan has stabilized SVMC’s finances,” said Thomas Dee, the hospital’s president and CEO, who joined SVMC on Dec. 1. “The board of trustees and the management team — including Dr. Mark Novotny, former interim CEO — made many difficult decisions that were necessary to return our hospital to a solid financial footing. In only a short time, this hard work has resulted in higher revenue and reduced expenses.”
The mid-year audit, commissioned by the board of trustees, revealed that SVMC had lost roughly $7 million on hospital operations as of March 31. The board and hospital management took immediate actions to stem the losses. The hospital reduced its workforce by 60 employees and cut its senior management team by 25 percent. SVMC also converted its employee pension plan to a defined-contribution plan similar to a 401(k). Additional measures included freezing capital projects, reducing management compensation, and renegotiating vendor contracts. Taken together, these changes removed more than $5 million of annual expense from hospital operations.
“Hospitals across the country struggled in 2009,” Dee said. “The American Hospital Association reported last spring that more than 50 percent of U.S. hospitals had taken steps to cut expenses by reducing staffing and benefits, trimming hours, cutting supply costs, and other means.”
In addition to expense reductions, hospital administrators made changes to improve SVMC’s management and financial systems. They enhanced financial reporting to ensure that management has up-to-date information. They also improved systems for tracking hospital productivity and accurately forecasting future revenue.
In September, SVMC’s senior management said it plans to end the current fiscal year (2010) with a $750,000 surplus. With the first quarter completed, Dee is optimistic that the recovery remains on track.
“At this point, SVMC is somewhat ahead of the targets we set for this fiscal year,” Dee said. However, he cautioned that, like many other hospitals and businesses nationwide, SVMC still faces a challenging financial climate. He said the hospital may be affected by several unknown economic factors, including the state of the national economy, the impact of health care reform pending in Congress, and the potential for unexpected capital expenses.
“Continuing to provide high-quality patient care remains our top priority. To sustain that principle, we are working hard to maintain our workforce and continue to find ways to ensure that our revenue, expenses, and productivity stay on target.”
Southwestern Vermont Medical Center is a 99-bed community hospital serving Bennington and Windham counties in Vermont, neighboring Rensselaer and Washington counties in New York, and northern Berkshire County in Massachusetts. SVMC is part of Southwestern Vermont Health Care, a not-for-profit health system that also includes the Centers for Living & Rehabilitation, VNA & Hospice of SVHC, and medical practices in Bennington, Manchester, and Wilmington, Vermont.