Both El Camino locations posted operational losses in July, the first month of its current fiscal year which ends June 30, 2011. In July, hospital operations in Mountain View and Los Gatos lost $3.26 million and $39,000, respectively. El Camino officials had budgeted to lose more than that at the Mountain View campus, but had expected to see $275,000 in profits in Los Gatos.
In an effort to make up for falling revenues, the hospital announced last month that it would lay off 140 employees. El Camino spokeswoman Chris Ernst said that the layoffs could save the hospital as much as $14 million annually.
The El Camino Hospital Foundation, the surgery center and other entities did make money in operations in July, but the organization as a whole still posted a total operating loss of $3.1 million for the month.
At the end of July, the hospital had $281 million in cash on hand, according to Kyle Wichelmann, director of finance for the hospital.
The hospital's 2010-11 budget, approved earlier this month by the board of directors, anticipates the Mountain View campus will lose $2.35 million from its operations during its fiscal year. However, Ernst said the hospital is projecting that it will make $4.17 million from operations at its Los Gatos site. That would be enough to put the organization's bottom line in the black — with a total operational income of $1.8 million for the fiscal year.
Yet, after factoring in other operations costs associated with the El Camino Hospital Foundation, the hospital district and Silicon Valley Medical Development, the hospital expects to see $494,000 in operating revenues by next year. That is down from a profit of $4.48 million last year and $52.7 million the year before.
Because El Camino is not-for-profit, Ernst said, the budget does not use the term "profit" to describe hospital earnings, and any excess revenue goes back into the hospital. In the coming fiscal year, factoring in all operational and non-operational expenditures and revenues, the hospital is budgeting to be $14.3 million in the black. That is down from $36.6 million in profit last year and $71.37 million the year before.
"Operations" refers to all of the hospital's core business, such as patient care at the hospitals and the surgery center, according to Ernst. Non-operational costs and revenues come from investments and joint-venture activities, among other things.
For the coming fiscal year, the hospital has budgeted to spend $606 million, Ernst said.
The hospital anticipates the Los Gatos campus will generate a portion of $4.17 million in operational income through "strategic initiatives" that include expansion of the men's health program, orthopedics, the vascular program and the opening of the inpatient rehabilitation program, Ernst wrote.
El Camino's budget anticipates the new hospital building to lose money because of additional costs due to a full year of depreciation and interest on the new Mountain View campus, Ernst wrote. "But we are implementing cost control activities at both campuses and we are forecasting an increase in revenues from new services and a price increase in some service areas."
Ernst wrote that El Camino officials are "confident in the improvements we are making" through its financial planning program.