Antelope Valley Hospital Posts $11.2 Million Loss Because of Low Reimbursements
Antelope Valley Hospital in Lancaster has finished fiscal year 2003-2004 with an operating loss of more than $11.2 million, double the loss of $5.7 million in FY 2002-2003, the Los Angeles Daily News reports.
A year-end audit by Tulsa, Okla.-based BKD attributed the 2003-2004 loss primarily to low reimbursements for Medi-Cal beneficiaries and uncompensated care for the uninsured. Charity care costs at the hospital increased from $38 million in FY 2002-2003 to $57 million in FY 2003-2004.
According to the audit, other factors behind the loss include a 10.7% increase in employee salaries and wages, an 18.2% increase in employee benefit costs and a 12.9% increase in supplies and other costs. Employee salary and benefit costs increased in part because of a three-year contract negotiated with the California Nurses Association -- which raised nurses' salaries 18% to 38% -- as well as retention and recruitment efforts.
The audit also said that the hospital's net patient service revenue grew by 6.2% to $197.2 million because of new hospital rates and an increase in patient days resulting from additional staffing of medical surgical beds.
According to the audit, the hospital's net worth decreased 19.7% from $122.5 million in FY 2002-2003 to $98.4 million in FY 2003-2004, in large part because of the conversion of the hospital's skilled nursing facility to a women and infants center. The new center is expected to open in about one year.
Hospital administrators project a $6 million loss for the current fiscal year ending in June, the third straight year of losses. Since July, Antelope Valley has recorded losses every month except August and September.
"We are ahead of budget as of December," Leon Choiniere, Antelope's vice president of finance, said, adding, "We're still in the red but ahead of budget. It is a challenge, and we are far from being out of the red zone."
He added that the conversion of the skilled nursing facility involves "a major writedown of the building," adding, "The assets are no longer in productive use for the creation of revenue" (Maeshiro, Los Angeles Daily News, 2/14).