If the numbers hold — and early projections show they aren't likely to change — it would be the best year El Camino Hospital has had to date, beating an already high bar set by the prior year. With strong increases in patient visits and a windfall from investments, there's no question that the hospital is in great financial shape, said Iftikhar Hussain, the hospital's chief financial officer.
The hospital's profit, listed as net income, rose from $106.8 million in the 2015-16 year to $159.7 million in 2016-17.
A little under two-thirds of the $100 million windfall, $64 million, came from revenue fueled primarily by more patients coming to El Camino Hospital. The bad flu season meant more hospital visits to doctors and the emergency department, while substantial investments in oncology and heart and vascular services helped drive up patient visits seeking the specialized care, Hussain said.
"We built up the programs and expanded capacity, (and) added staffing that have attracted patients to our hospital, and that has really worked to our advantage," he said.
The remaining roughly $37 million of the $100 million came from financial investments in a strong market through the end of 2017, which is one of the hospital's more volatile sources of funding, Hussain said. In 2016, the hospital's investment earnings sank to a little over $1 million, falling well below expectations, while this year it's expected to add a total of $56.4 million to the hospital's bottom line.
The hospital's strong earnings are in contrast to comments by the hospital's administrators and board of directors, who have said that the hospital faces a difficult financial future, requiring it to grow to stay competitive or risk insolvency. El Camino's leadership used the concerns over an uncertain financial future as the rationale for buying its Los Gatos campus in 2009, along with more recent efforts to build clinics and buy land for future medical facilities in South San Jose.
Hussain told the Voice that the hospital's tireless effort to grow is part of the reason the hospital is in such strong financial shape, and that failing to manage costs and improve the number of patients coming to El Camino can put the hospital in a tough spot.
"Our financial health is really tied to whether or not we can grow ... whether you're a stand-alone hospital or part of a system," he said. "The concern is whether you can maintain that in the long term."
For the coming year, hospital officials are budgeting for more conservative earnings — about $112 million — due to major investments in primary care clinics outside of the hospital itself, including one on Winchester Boulevard in San Jose. Hussain said the hospital is also pumping $9 million into what he called "strategic investments," which means tightening up the costs of doing business, and a robust marketing campaign.
The hospital is also planning to increase the "list" price of services by 5 percent for the 2018-19 year, which amounts to about a 3 percent increase in costs paid by insurance companies based on the hospital's commercial contracts, Hussain said. He called it a moderate increase along the lines of inflation, and said that the hospital has a financial assistance program for low-income and uninsured patients who might otherwise bear the brunt of the increase.
The hospital's capital spending is shifting into high gear this fiscal year, with plans to wrap up $310 million in construction through June 2019. The vast majority of that spending, $250 million, will go toward finishing the Mountain View hospital campus upgrades, which include a large, seven-story medical office building in the center of the campus and a new behavioral health services building near the shell of the old main hospital.
This story contains 690 words.
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