The Crested Butte News Serving the Gunnison Valley since 1999
Accounts receivable still high
Gunnison Valley Hospital (GVH) is back in the black after falling on financial hard times a year ago.
“We are in the positive,” GVH chief executive officer Randy Phelps says. “The cash flow for the hospital is $700,000 to the positive through November and year over year it’s about a $1.7 million improvement, or swing, between 2008 and 2009.”
Over the past year, the hospital has implemented a practice of talking to patients about their financial responsibilities before they receive treatment and it seems to be paying off. Phelps says the hospital has already collected about $135,000 in payments in 2009 from patients paying their bills without insurance or before receiving care.
GVH chief financial officer Tim Cashman says that program has led to a “dramatic reduction in self-pay accounts receivable. That means folks are paying attention to what is happening and what their responsibilities are.”
The hospital is also laying plans for the future that could boost revenues, which are slowly starting to overtake the hospital’s expenses.
“We’re definitely showing very slight earnings this year with a little positive cash flow, which is better than we had in 2008,” Cashman says. “We had a negative year in ‘08, but that was the first negative year we’ve had in the 13 years since I’ve been here.”
Part of the reason for the positive movement is—like any business—an increase in the number of customers, or patients being treated at the hospital.
“Basically, we’re just trying to improve our financial performance,” Phelps says.
“We hope to do as well as we did in 2009 when our surgery volume was up 40 percent over the first 11 months. Now we’re not expecting to grow 40 percent again but we’re hoping to maintain those gains and it is my expectation that we’ll see a 2 to 3 percent volume growth rate in 2010.”
Phelps also says that although the reduced sales tax revenues seen by local municipalities suggest fewer visitors to the Gunnison Valley, this past summer was the busiest in the hospital’s history. He thinks the success of the tourist industry affects GVH “enormously.”
“Over the holidays, we were a little bit busy because of skier accidents, and that drives surgery,” he says. “Obviously we don’t like to see anyone get hurt, but we hope that over the course of the recreational seasons we can take care of those folks.”
But that doesn’t mean that everyone the hospital treats is paying the bills they accrue. The hospital currently has 7 percent of its revenues held up in unpaid bills—about twice the amount Cashman is comfortable with.
“It’s bad,” Cashman says. “We’ll probably come in with bad debts for the year that are over $2 million, and charity care is twice what it was last year.”
Charity care is the hospital’s program to help needy individuals or families cover the cost of their medical care. The amount GVH will cover slides based on the needs of the patient. Last year, the hospital covered $500,000 in charity care.
“Things are bad in bad economies. I don’t think people aren’t paying because they don’t want to. I think they can’t,” Cashman says. “We’re all impacted when folks don’t have jobs, and that’s just the way things are right now.”
But while Cashman says he doesn’t think the hospital has “any planned business ventures or planned new product lines” in the coming year, GVH would “like to find a way to control our costs and improve our existing business model to make it safe and affordable.”
Cashman says, “The hospital is on a pretty good track right now and I’m cautiously optimistic about next year.”
