Baptist Health registered a loss of $2.4 million in 2012, according to the Little Rockbased hospital chain’s filing with the Internal Revenue Service as a nonprofit organization.
The deficit was primarily because of a reduction in government reimbursement for care, said Bob Roberts, senior vice president for finance.
“We’re feeling some of the same pressures [that are being felt] industry-wide,” Roberts said.
Revenue fell $52.8 million to $739.4 million in 2012, compared with $792.2 million in the previous year, according to the filing released this month by the hospital. Expenses dropped $20.8 million to $741.9 million in 2012, down from $762.7 million, but that was not enough to offset the decrease in income.
The key reason for the decrease in expenses was that bad debt dropped to $54.8 million, down from $81.7 million in 2011, Roberts said. Baptist recorded a $27.2 million surplus in 2011.
It was not clear from comparing the IRS forms for 2011 and 2012 how top executives fared in compensation. Baptist spokesman Mark Lowman said that it is against the organization’s policy to comment on personnel matters.
The number of patient visits rose slightly: outpatient by 1 percent, inpatient by less than that, Roberts said.
Baptist, which has 1,308 beds on seven campuses and 7,300 employees in Arkansas, last month announced it will build a 100-bed hospital in Faulkner County.
This a good time for a hospital to expand, said Lisa Phillips, editor of M&A News. Despite the turmoil of the major shift in the way health care is delivered in the country, “scale is where the advantage is,” Phillips said in a recent interview. Nonprofits are especially feeling “very vulnerable right now.” Many are “trying to get into as many communities as possible.”
Starting Wednesday, Baptist Health will assume management of Hot Spring County Medical Center in Malvern, a 72-bed, public hospital.
But Roberts said that Baptist’s plans are driven by its response to requests for help. The Hot Spring County hospital approached Baptist, he said.
“We do not have a strategy of actively … targeting other facilities,” he said.
A group of Faulkner County physicians, likewise, approached Baptist about building a hospital there, he said.
Baptist will “evaluate other opportunities if they’re brought to us,” he said.
As for 2013, the report for which will be filed late next year, patient volume continues to be stable, Roberts said, adding that the system is hopeful that the steps taken by the state through the “private option” of converting Medicaid insurance into private health policies will relieve some of the downward pressure on Baptist and other hospitals in the state.
So-called sequestration cuts in the federal budget approved by Congress in 2011 took effect in April, reducing Medicare reimbursement by 2 percent, Roberts said.
The loss to Baptist in Medicare reimbursement because of the Budget Control Act of 2011 will amount to about $6 million a year, Roberts said.
President Barack Obama’s signing of compromise budget legislation last week did not help in that area, said Robert “Bo” Ryall, chief executive of the Arkansas Hospital Association.
Ryall said in an email that “the Bipartisan Budget Act … would extend the 2 [percent] sequestration cut to Medicare providers through 2023 - two years longer than the cuts set by the Budget Control Act of 2011 costing Arkansas’ hospitals another $100 million in Medicare cuts.”
Business, Pages 21 on 12/31/2013