The St. John’s Medical Center Board of Trustees approved an operating budget Thursday that tops $131 million, a figure that doesn’t include the capital construction money for the medical center to begin building Sage Living, its updated nursing home.
The fiscal year 2020 budget takes into account an 8% average increase in prices the board approved in June and anticipates growth in demand for services.
“When we thought volume increases we spent a lot of time questioning ourselves and challenging ourselves to say those are realistic,” CEO Paul Beaupre told the board. “We’re confident we can defend the volume increases.”
Beaupre laid out those volume increases in his presentation to the board, telling them the hospital expects a 1% increase in inpatient services and a 3% bump in outpatient health care. Teton County’s growing, aging population can account for some of the growth in the need for services, but Beaupre pointed to new services as drivers as well.
Brachytherapy, in particular, he said, has grown faster than expected. The cancer treatment, in which radiation “seeds” are placed in or near a tumor, is intended to shorten healing times and reduce radiation. St. John’s introduced it in 2018.
“Brachytherapy is way out ahead of performance expectations,” Beaupre told the board. “We called for 20 patients in a year. Last week we did seven patients, and that was the second week we’ve done seven.”
In the projections Trustee Scott Gibson provided the board as chairman of its finance committee, both operating revenue and expenses for the fiscal year sit just about at $131 million, with revenue about $225,000 above expenses. However, operating revenue is not the only source of money coming into St. John’s, and the hospital anticipates its other sources will give it a cushion.
The bulk of the hospital’s nonoperating income comes from two sources: the St. John’s Hospital Foundation and property taxes. The foundation expects to contribute $4.3 million to the hospital, and taxes are estimated to generate $4.9 million. With interest income St. John’s expects roughly $9.3 million in nonoperating money.
“That helps offset the cost of providing care to patients unable to afford care,” St. John’s Communications Director Karen Connelly said in an email to the News&Guide.
The projections Beaupre presented to the board put charity care and bad debt at $10 million this fiscal year.
On top of its traditional sources of revenue, St. John’s has a new manner of money coming in, a specific purpose excise tax voters approved to pay for part of the construction of Sage Living. The hospital held a ceremonial ground-breaking Thursday just before the board meeting. That tax revenue is expected to bring in $7.75 million for the hospital this fiscal year, though the funds are earmarked for Sage Living.
That temporary source of revenue is part of $17 million voters approved to help fund the building of Sage Living. Construction started last week on the project. Trustees also approved a capital funds request as part of the budget, though Sage Living expenses are separate from it.
The $6.2 million capital funds request included money to cover recurring costs like building improvements and information systems, as well as $75,000 to hire an owners representative for the Sage Living building process and for modular buildings.
In approving the budget, Gibson cited some of the reasons the board gave in raising prices in June. Expenses have outpaced revenue each of the past two fiscal years, and the board hopes the recent price increase and the work put into the budget approved for this year will reverse that trend.
“When we looked at all the list prices and found our list prices were 15 to 25% lower than our competition,” Gibson said, “we realized extensive study was a real necessity and we had an opportunity to ameliorate the operating losses.”