Durham Regional Hospital may still be losing money, but its officers nevertheless had a reason for optimism Wednesday: Last year's losses were nearly $2 million less than they had expected.
But the hospital also released figures showing an operating loss nearly twice as high as projected for the first month of the current fiscal year.
Mark Miller, chief financial officer of Durham Regional, told the Durham County Hospital Corporation's Planning and Finance Committee Wednesday that the hospital had lost only $7.5 million during fiscal year 2001, according to its unaudited financial summary. That sum represents a $1.9 million improvement over the $9.4 million loss the hospital had been projecting.
"We're really pleased with the progress we've made," Miller said. "We're heading in the right direction."
Miller attributed the improvements over the budgeted numbers to an increase in patient volume, combined with the hospital's decision to cut unprofitable programs like the Oakleigh Substance Abuse Treatment Center and the Senior Health Center in Northgate Mall.
Miller stressed, however, that the hospital was still losing money and would continue trying to move closer toward profitability.
"Am I doing any high-fives because we lost seven and a half million dollars? No," he said. "Am I pleased that we're doing better than expected? Yes."
The hospital--which lost $12.9 million in 1999 and $16.9 million in 2000--has projected losses of $3.7 million for the fiscal year that began July 1.
But in the first month of the new fiscal year, the hospital's actual operating losses were $303,434, almost double the budget projection of $159,429.
Miller explained that the difference, once again, was attributable mainly to a change in the number of patients treated.
"Unfortunately, in [July] our volume was shy of our plan, but we're hoping that will start to turn around," he said, explaining that the hospital had fallen behind on surgeries performed but found three new surgeons who would be able to treat more patients.
But even if patient volume remains low, the hospital has a good chance to beat its projections for fiscal year 2002, due to an accounting move called a goodwill adjustment that the Duke University Health System made Wednesday. DUHS operates Durham Regional on a 20-year lease.
DUHS reduced the book value of Durham Regional's assets from $126 million--a figure which assumed future hospital earnings--to $88 million, the value of the hospital's tangible assets alone.
"This accounting adjustment is being made to more accurately reflect the Ofair market value' of DRH," Kenneth Morris, vice president and chief financial officer of DUHS, wrote in a letter to Charles Blackmon, chair of the DCHC board of directors. "These savings will go straight to Durham Regional Hospital's bottom line."
The adjustment is an accounting one only; no actual dollars will change hands as a result of it. But on paper, it means that the hospital can erase a $2 million expense from its annual budget--and thus is more likely to beat its projections.
"We happen to start out with a very nice plus," Miller said.
Miller also said Wednesday that of the 130 positions that Durham Regional announced it would cut in April, all but four of the employees involved had been reassigned to other jobs in the health system.
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