Woodlawn Hospital Chief Executive Officer Alan Fisher was one of six hospital industry executives who layed out of the current state of Indiana hospital finances during a Wednesday press conference.
Fisher represented small rural hospitals as he talked about the need for state legislation meant to help them overcome tough financial times.
2022 was the worst year for hospital finances since before the pandemic and 2023 will be another challenging year, said Erik Swanson, of the data and analytics firm Kaufman Hall.
Woodlawn is no exception. Fisher told press conference attendees from across Indiana that Woodlawn, with its five clinics, suffered a $4.5 million operating losses in 2021. Estimated 2022 loss is $6.3 million. The goal for the community-owned critical access hospital this year is $1.5 million loss. But that would only be possible because $2.5 million of cost reductions have been enacted. Cash on hand at Woodlawn dropped in half last year.
“With state support we could reverse this trend to keep marginal programs at Woodlawn open, like our maternity oasis,” Fisher said. He refers Woodlawn’s labor and delivery unit as a maternity oasis because other rural hospitals in the area have closed their maternity units.
Woodlawn’s Maternity Department is open, but loses $2 million annually, mostly because 60 percent of births there are paid through Medicaid and that state program pays 53 percent less than the hospital’s incurred costs.
“What we worry about are closing sites of care,” Indiana Hospital Association President Brian Tabor said, referring to Fisher’s comments and Woodlawn’s obstetrics department.
During his comments Fisher also referred to a Center for Healthcare Quality and Payment Reform report from October 2022 that said 11 of 54 rural hospitals in Indiana are at risk of closing.
He said Woodlawn could easily be one of those without careful management and a close eye on finances.
When The Sentinel brought the study to his attention in October, Fisher was fresh out of the gate as Woodlawn’s president.
“Today more than ever, all rural hospitals are facing a multitude of challenges such as labor shortages, supply chain issues, unfavorable reimbursement by all payors that contribute to both their financial viability and sustainability of the rural hospital,” Fisher said of the study. “Woodlawn Hospital is no exception to these national issues with declining census, increased wages and especially for us reimbursement for our services.
“Presently, we receive approximately 26 cents for every dollar charged. What other industry has that kind of mark down? These rates negatively impact our hospital. Adding to this is we do not receive any subsidy from the state or local level. To punctuate our financial issues, Woodlawn gave away over one million dollars in free care.”
He added: “Decisions for healthcare and our services are made in Rochester, Indiana, by people who live in the community. The one way to help keep Woodlawn a viable option in Fulton and the surrounding counties for years to come is for community members to use our services. Healthcare is an extremely personal choice for those we have the honor to serve. It is not something we take lightly that is why we are asking our legislators for help and funding.”
The Indiana Hospital Association released these statistics, based upon a Kaufman Hall analysis and report, during its Wednesday press conference:
Indiana hospitals operated on a -2.0 percent median operating margin last year, declining 22 percent compared to pre-pandemic levels.
Expenses for labor, medical supplies, drugs, and other purchased services rose $3.2 billion during this time due to inflation and other external factors, outpacing revenue.
The median hospital operating margin for the state of Indiana was at or below the national median each year, the report found.
Indiana hospitals experienced negative operating income for the first time since the beginning of the pandemic in 2022, losing $72 million.
Total operating income for Indiana hospitals fell $1.2 billion below pre-pandemic levels.
In 2022 alone, Indiana hospitals experienced a nearly 20 percent median decline in their number of days cash on hand compared to 2021.
Hospital efforts to attract and retain critical staff resulted in a nearly $2 billion increase in labor costs compared to pre-pandemic levels. Salary increases for health care workers accounted for 96 percent of those costs.
A rise in average length of stay suggests that patients who visited hospitals in 2022 had more severe health needs than prior to the pandemic.
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