"Because of our revenue performance, we've been living out of our savings account to a small degree. That's a trend we don't want to continue," said hospital CFO Marla Marlow, who presented the year-to-date financials as of February during the hospital board's April 14 meeting.
While revenues are up compared with last year, they are still running below budgeted projections, Marlow said. "The investment income is down. We had to liquidate some investments to cover our costs for the month," she said.
There's no shortage of patients, but El Camino is seeing a different mix of patients that is bringing in less revenue, Marlow said. Fewer babies are being delivered, fewer elective surgeries are being scheduled, and more ailments are being treated medically rather than surgically.
El Camino is also seeing a higher percentage of uninsured or "self-payer" patients, Marlow said. Lower reimbursements for Medicare patients are also a factor.
"The sky is not falling, but it's imperative we get started on revenue enhancements and productivity improvements," said board member David Reeder.
The $11.3 million in net income loss includes January's $8 million write-down of uncollectible bills, said hospital spokeswoman Chris Ernst. Hospital officials made the decision in March to take a one-time write-down rather than to spread it out, she said.
"While the year-to-date losses are $11 million, what we are doing about it is important to consider. We have already been putting productivity and efficiency measures in place in early winter," Ernst said. "We've identified hundreds of initiatives that are already underway, with a benefit of $50 million to $70 million in the next nine months."
Those initiatives should continue to enhance revenue over the next three to five years, she said.
Ernst described the initiatives as "a comprehensive approach" that looks at everything from daily procedures to supply chains to how the hospital charges and collects for services. "Our goal is to avoid layoffs," she said.
Board member Reeder stressed that the initiatives — dubbed "ACE" for "Accelerating Continuous Excellence" — won't negatively affect the quality of care at the hospital.
"Our No. 1 goal and priority is the quality of care of our patients," Reeder said.
While El Camino Los Gatos, opened less than a year ago, is performing below budgeted projections, the budget gap is not attributable to it, officials said.
"They (Los Gatos) have been doing really well. It looks like they're off from the budget, but we didn't have any historical data," Ernst said. "Most of this is due to Mountain View challenges, the changes we are seeing in our business, and reimbursement rates."
New board member
Meanwhile, the hospital board held a special meeting Tuesday night to select a new board member.
Patricia Einarson was picked to replace Mark O'Connor, who announced in February that he would be stepping down. Board members cast secret ballots to appoint Einarson on a 3-1 vote, said Ernst.
Einarson, a medical doctor who is board certified in family medicine, has a private practice in Mountain View where she specializes in eating disorders. From 2003 to 2004, she served as the co-chief resident at the San Jose Medical Center. She will be sworn in May 12 and her term expires in November.
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