Health System Finishes Fiscal Year with $6.6 Million Gain
For Immediate Release
8 February 2011
Media Contact: Kevin Robinson
BENNINGTON — Southwestern Vermont Health Care’s (SVHC’s) 2010 annual audit results show the health system in a favorable financial position, posting a year-end operating gain of $6.6 million. At its January 27 meeting, the SVHC Board of Trustees approved the audit, which was compiled by the national accounting firm BKD, of Springfield, Mo.
“The board is pleased at the strides our entire health system has made in getting expenses under control,” said Michael Brady, chair of the SVHC Board of Trustees. “Our employees are doing more with less. Thanks to their efforts, 2010 was a good year financially. But, this is only the first step. We must continue to have positive financial performance to make our health system sustainable for the future.”
In fiscal year 2010, SVHC posted revenues of $142.5 million for services it provided to patients. In addition, the health system saw $5.5 million in non-patient service revenue, making the total revenue $148 million. The audit shows the health system’s expenses were $141.4 million. The operating margin of $6.6 million is equivalent to a 4.5 percent margin.
“This was a year for rebuilding,” explained Thomas A. Dee, the health system’s president and CEO. “Our focus was on getting our organization back on track and managing our finances. Now, we are looking ahead to prepare our health care system to meet community needs both now and in the future. I remain concerned, however, about the effect of higher provider taxes and cuts in Medicare and Medicaid payments on our future.”
SVHC’s fiscal year FY 2011 budget calls for a 1.7 percent margin, equal to about $2.3 million. Dee explained that higher provider taxes and cuts in Medicare and Medicaid make this margin hard to achieve. The state of Vermont taxes the revenue of hospitals and other health care providers. Although some of that money comes back in payments, SVHC loses money to the provider tax. In fiscal year 2010, the hospital lost about $500,000. This fiscal year, the hospital stands to lose $1.7 million. In fiscal year 2012, this loss jumps to $2.6 million.
Dee explained that stable operating margins are key to the hospital’s future. “Even though we’re a not-for-profit, we need an operating margin of between three and five percent,” he said. “That margin pays for everyday upkeep on our buildings and replacing equipment. It also affects our ability to borrow for larger projects.
“Most people understand that personal income determines whether someone gets a home loan. For hospitals, a stable operating margin determines whether we can get a loan for construction to build new facilities, replace major items, such as a boilers and chillers, and update diagnostic equipment, such as a CT scanner.”
Dee added that facility improvements are a priority moving forward. “There is no question that SVHC needs to invest in our infrastructure,” Dee explained. “We have the oldest physical plant in Vermont. To make the necessary investments, we must maintain an adequate operating margin. The economic climate, higher taxes, and lower government payments makes this goal more difficult. To reach our goal, we are focused on reducing expenses and improving efficiency throughout our organization.”
Southwestern Vermont Health Care is a not-for-profit health system that consists of Southwestern Vermont Medical Center, the Centers for Living and Rehabilitation, the VNA & Hospice of SVHC, as well as several medical practices. More information about SVHC can be found at www.svhealthcare.org.