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Hospital Board Approves 2013 Budget

June 26, 2012

McCook, Nebraska—Community Hospital Board of Directors approved the fiscal year 2013 operating and capital budgets during the regularly scheduled board meeting on June 20, according to Troy Bruntz, Vice President of Finance. The report highlighted an operating margin that is budgeted at 5.0% and $1.9 million. Gross revenue is projected to increase 4.8% to $49.2 million. Total expenses are expected to increase to $36.4 million.

Community Hospital anticipates growth in service revenue of 2.8% in 2013. This is due mainly to increased medical oncology services now that a dedicated area in Phase 2 is available for chemotherapy treatments. More days of oncology clinic are also anticipated at the Medical Specialists Center. Plans are to increase pain management services next year as well. Community Hospital recently employed an additional Certified Registered Nurse Anesthetist, Chad Miller, to provide more access for this service. He joins the anesthesia department of Brian Smith, Darrell Milhon and Lawrence Friestad, all Certified Registered Nurse Anesthetists.

“Community Hospital will be applying for Electronic Health Record (EHR) incentive payments available through the Stimulus Bill passed back in 2009,” Bruntz said. “These incentives are available to hospitals that have achieved the status of a ‘Meaningful User’ of electronic health records. We have been implementing systems for a few years in anticipation of this and as of September 30 intend to qualify for the incentives,” he added.  Bruntz said Community Hospital projects the incentives from the Medicaid and Medicare programs will amount to around $1 million of Other Income.

Depreciation and interest expense will increase significantly again in 2013 from Phase 2 of the major building project completed in May of 2012. Bruntz said the hospital will incur $840 thousand of depreciation expense and $300 thousand of interest expense in 2013 related to Phase 2.

“Savings of more than $1 million has been built into Community Hospital’s supply and labor budgets in 2013 due to more efficient processes and better contracting of pricing for high dollar surgical implants,” he said.

“Our operating margin of 5.0% is consistent with our strategic targets,” Bruntz said, explaining the hospital will be able to grow its cash reserves as planned and as necessary to ensure it is financially sound for the years ahead. “Uncertainty in healthcare is very high currently,” he added.  “We continue to dodge and weave through the massive changes in regulations we encounter almost daily. We also continue to prepare for the inevitable retirement of baby boomers. This will cause a switch in the community from commercial insurance to Medicare coverage at increasing rates. Positioning Community Hospital to be financially sound now is important but positioning ourselves to be financial sound in the future is essential.  We believe this budget has accomplished that despite the uncertainty,” Bruntz concluded.

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