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Redwood Area Hospital
| FOR IMMEDIATE RELEASE
FROM: Shelly Pauling,
Education & Communications Manager
RE: Redwood Area Hospital Again in U.S. Top 35
DATE: January 30, 2009
For a second year in a row, Redwood Area Hospital (RAH) has
achieved the Gold Standard designation as one of the country’s
top 35 hospitals for financial performance among small, rural
facilities.
RAH was notified mid-January that recent analysis by the audit
firm LarsonAllen, LLP, qualified the hospital for the auditors’
Gold Standard category of critical access hospitals for 2007.
RAH first achieved Gold Standard designation for 2006. It takes
up to a year, or more, for the data to be reported and analyzed
for all eligible hospitals.
“Gold Standard” is a recognition given by LarsonAllen to the top
35 critical access hospitals in the nation, from an analysis of
over 1,100 hospital reports. Critical Access Hospital
designation is extended by Medicare to hospitals with 25, or
fewer, beds that are reimbursed on the basis of an annual cost
report.
Hospital officials were pleased at achieving Gold Standard
status again for 2007, because the hospital was deep into the
first full year of construction and remodeling projects. But
volume of patient activity did not drop as much as expected
during the disruptions of remodeling.
According to those hospital officials, the audit firm’s analysis
is based on numerous balance sheet and income statement ratios
that try to assess each hospital’s performance and current
financial viability. It is not solely based on a one-year
“bottom line” performance.
Hospital Chief Executive Officer Jim Schulte points out that the
positive financial performance at RAH is a result of
conservatism and a highly productive hospital staff. By its
general nature, hospital care is expensive because it requires
the constant availability of well-trained staff 24 hours a day,
seven days a week, 365 days per year. Hospital care is
very labor-intensive. About 60% of the hospital budget is
related to personnel costs. This does not include the
independent physicians who care for their patients at the
hospital. In contrast, even with the newly completed remodeling
and expansion, only about 10% of the operating budget goes to
providing the equipment and building that staff needs to do
their work.
“But, RAH works very hard at holding down cost the best it can,
while also working hard to provide high-quality patient care,”
says Schulte. “That is another reason the hospital has achieved
Gold Standard status.”
Like a family that sets up a savings plan, RAH sets aside funds
for current and future capital improvements, according to
Hospital Commission Chairman Pete Smith. Residents in some
communities pay property taxes to support their local hospital.
“Conversely, this city-owned hospital has been able to make
contributions to the community that help reduce tax burden,”
says Smith.
Like other hospitals built in the 1950s and 1960s, RAH recently
completed needed upgrades to its building complex. Past
financial performance and the funds set aside for improvements
help the hospital absorb the increased depreciation and interest
costs associated with the remodeling, without placing it in
financial jeopardy.
It perhaps would have been more convenient and faster to replace
the facility with a new building, but it would have cost
substantially more. With the current state of the economy, city
and hospital officials say they are glad they chose the more
conservative approach to remodel.
According to hospital Chief Financial Officer John Peyerl,
positive financial results in 2006 and 2007 also helped prepare
the hospital for the changes in the economy. Like other segments
of the economy, RAH saw its financial performance decline in
2008. The continued general decline in the economy and the
state’s struggles to eliminate a budget deficit will further
challenge hospital officials.
But, having several years of strong financial performance, as
the hospital started and worked through the remodeling, has
helped the hospital maintain a solid financial position. 2009
will undoubtedly bring its own set of challenges. “Having a
strong balance sheet is very important anytime. It is especially
helpful during times of economic uncertainty,” says Peyerl. |
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