Hospital budget includes cost savings

In the midst of inflation, rising prices and votes on bonds and levies to increase school and community taxes, there's some good news: The Snoqualmie Valley Hospital's budget expenses are decreasing.

This year, SVH will earn $12.8 million in total revenue, but will only pay $12.3 million in expenses, leaving a surplus of about $500,000. All surplus money will be put back into the hospital, clinics and patient care, said Don Galer, SVH chief financial officer. There is no specific use planned for the money because the surplus anticipated may not materialize if operations do not go as planned, Galer said. The revenue includes about $3.8 million collected from district taxes. In 2006, the hospital earned $12.6 million in total revenue and spent about $12.5 million. That's a decrease of about $171,800 in expenses from 2006 to 2007.

Over the past year, changes have taken place at the hospital that will result in even less budget expenses. For example, 2006 was the hospital's first full year as a critical access hospital, or a hospital that is certified to receive cost-based reimbursement from Medicare, Galer said. As a result, the amount of money the hospital expects to receive from billing its patients' insurance companies is 20 percent higher than the amount it actually receives from those companies due to the contractual discount the hospital gives insurance companies or Medicare.

"Insurance, or Medicare, is prompt pay and provides hospitals with a large number of patients," so insurance companies expect a discount, which the hospital provides, Galer said.

The largest change in this year's budget is the lack of a Behavioral Health Unit (BHU), which treated geriatric patients and those diagnosed with Alzheimer's and dementia, Galer said. This occurred because when the hospital became a critical access hospital, Medicare changed the way it reimbursed the hospital for the BHU, Galer said. Reimbursement on a cost basis was no longer allowed, so continuing to operate the BHU would have reduced the hospital's funding from Medicare significantly, he said. Getting rid of the BHU will create a $3 million gap in revenue, but the hospital will make up the difference by increasing the number of patients cared for in the acute care and swing bed units, Galer said.

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