The 2011-12 budget, which was passed unanimously at the hospital's June 8 board meeting, anticipates that El Camino will generate a $52.4 million profit over the next 12 months.
Last year, the board of directors was three months late in adopting a budget, and anticipated a profit of only $14.3 million.
"This year we expect to do very well," El Camino spokeswoman Chris Ernst said.
The budget, presented by Ned Borgstrom, El Camino's chief financial officer, was touted by hospital CEO Ken Graham and drew compliments from members of the board.
"We are very confident that this is a great budget," El Camino CEO Ken Graham said before Borgstrom gave his presentation. "We have a strong exit from 2011."
"I think it's a very realistic, well put-together budget," said board member David Reeder. It's "one of the first times we've had a budget that didn't say we were going to meet our profit objective by growing volume."
For many years, Reeder observed, the hospital had assumed — apparently naively — that patient volumes would grow and had based profit projections on that assumption.
"In 2009-10, the budget anticipated volume increases as a result of opening the new hospital, which in hindsight turned out to be optimistic," Borgstrom wrote in an email to the Voice. Reeder "was pleased that we are being more conservative in our projections. The hospital will see a positive operating margin by maintaining good cost controls and managing the revenue cycle."
Both Graham and Borgstrom credited the hospital's Accelerating Continuous Excellence program — or ACE — saying it played a huge role in getting the hospital back on track financially.
"More than 160 projects were undertaken to improve revenue cycle, labor, productivity and supplies expenditures," Borgstrom wrote.
With the ACE program, the hospital systematically combed through all of its expenses, looking for ways to save money. El Camino fought for new contracts with major health insurance providers like Blue Cross, Blue Shield and Aetna, which resulted in higher reimbursement rates. The hospital stepped up its collections efforts and worked on improving contracts with supply companies.
Some initiatives drew criticism from the community, particularly when El Camino gave pink slips to 140 hospital employees. Most of the employees put on notice didn't end up losing their jobs, but moved to other positions within the hospital. Those cuts and reassignments saved money in the long run, Borgstrom said.
Borstrom explained that some departments of the hospital could stand to be reduced, while others are growing. As such, the budget calls for cuts to be made to about 40 as yet unidentified full-time positions, while it simultaneously calls for hiring as many as 25 full-time employees.
The hospital is budgeted to purchase about $30 million in medical equipment — $8 million more than was spent last year.