Financial losses mount at Wake Forest Baptist Medical Center

Wake Forest Baptist Medical Center

WINSTON-SALEM, N.C. — A decision by Wake Forest Baptist Medical Center to write off $103.8 million in uncollectable payments contributed to a $154.7 million core operating loss through three quarters of fiscal 2013-14, according to the Winston-Salem Journal.

When factoring in $37.7 million in investment income, the overall loss was reduced to $116.7 million. Not for-profit hospitals depend significantly on investment income to bolster their bottom line and to help pay for capital investments.

By comparison, the overall current fiscal year loss was $4.06 million through Dec. 31, which included $18.5 million in investment income. For the same three-quarter period in fiscal 2012-13, the center had an overall loss of $3.2 million, which included $54.6 million in investment income.

The center’s fiscal year ends June 30. It is Forsyth County’s largest employer, with a combined 14,686 employees in the Triad when including Davie and Lexington medical centers.

Wake Forest Baptist said in a statement Thursday it took funds out of its reserves as part of an adjustment for patient accounts receivables. The move was made “based on management’s assessment of the collectability of aged receivables.”

In its quarterly financial disclosure to bondholders on the Municipal Securities Rulemaking Board’s website – www.emma.mrsb.org – the center said the adjustment “is predominantly related to the revised valuation of prior fiscal year receivables.”

Michael Rutherford, the center’s recently hired chief financial officer, said the center “is assuming the $103.8 million in prior revenue is no longer collectible. We’re actually now taking the expense against it. It is tied to care previously delivered.”

When asked how much of the uncollected payments were connected to Medicare and Medicaid, Rutherford said, “We provide robust narrative disclosures on a quarterly basis on EMMA, so we are not able to provide material comments beyond what is provided in those disclosures.”

Wake Forest Baptist showed some progress made with its finances during the quarter.

The center reported net patient revenue up 2.7 percent to $1.27 billion. Excluding the reserve amount, the provision for bad debt for the current fiscal year dropped from $67.8 million to $40.8 million.

When excluding the $103.8 million in reserve adjustment, the center’s loss from core operations was $50.9 million as of March 31.

However, that represents more than a doubling of the $23.5 million in losses it reported as of Dec. 31.

The center said it “continues to aggressively implement strategies toward a value-based academic health care model with emphasis on safety, service and quality.”

The center announced May 1 a continuation of cost restructuring efforts that began in November 2012. The first restructuring phase featured the elimination of 950 job positions, affecting 420 current employees.

The latest phase includes cutting 350 jobs across all of its locations, including nine jobs at Lexington Medical Center.

Wake Forest Baptist said May 1 the latest move is aimed at helping “close the increasing gap between growing expenses and declining reimbursement from federal and state health insurance and other revenue sources.”

Like most of its peers, whether academic medical centers or regional hospitals, Wake Forest Baptist reported a decrease in inpatient admission (down 7.5 percent to 29,285 patients) and an increase in outpatient procedures (up 6.9 percent to 19,995).

The center says it “continues to feel the negative financial pressures experienced throughout the health-care industry in response to federal health reform readiness requirements, coupled with localized decreased demand for inpatient hospitalization.”

The center also cited reduced revenue “related to the implementation of CMS “two-midnight rule.”

Before Medicare approved the policy, inpatient status was determined by a physician based on the severity of illness and level of treatment required.

With the policy, a patient whose hospital stay does not span over two midnights will be considered as receiving outpatient services, and the hospital will be reimbursed at the lower rate.

Typically, inpatient services are reimbursed at a higher rate level than outpatient. “The rule could decrease revenue on average by $3,000 to $4,000 per case,” Moody’s Investors Service analyst Daniel Steingart said.

David Meyer, a senior partner with Keystone Planning Group of Durham, said “health-care industry reform, government reimbursement declines and the decreased demand for inpatient hospitalization, plus the focus on reducing hospital readmissions, are all common issues” for North Carolina hospitals.

12 comments

  • j r nance (@rnance1950)

    The American People, especially Seniors are getting Screwed by the Government as usual, especially this Odumber Adm. with Odumbercare & as usual the Seniors get screwed first then it trickles on down to everybody else & in this particular time & place the Trickle down will be even faster so hold on to your pocketbooks because you’re gonna need all the money you can lay your hands on if you have a severe Medical Problem, all of you!!

  • FaithC

    What do you expect. You have illegals going in and saying they have no ID, giving a fake name and address and then never paying a dime of the bill.
    You also have a middle class that can not afford to pay the out of pocket expense associated with Obamacare.

    • Sarah

      Faith that has nothing at all to do with it. It’s attributed to health care reform you idiot

  • Ken

    just sell some of the brand new buildings that you just built….you have a new 4 story one in Advance and 2 more in Clemmons !!! Just keep building and building more and more… I love your new 9 story cancer building…just keep building more… maybe you need to sell some !!!! Cheers

  • stantheman

    What do you expect? Remember if you like your doctor you can keep your doctor. Obama and Hagan both made this statement. You are going to see many medical centers shut down before this is finished, And they keep talking about how great Obamacare is. Ignorant and uninformed will believe anything. Ask Harry Reidf.

    • JWS

      “A decision by Wake Forest Baptist Medical Center to write off $103.8 million in uncollectable payments” Did you not read why they had the loss? Write offs due to people having no insurance and unable to pay their bills. If everyone had health insurance they would not have had the loss they have. Even if an employer has illegals working for them and they employ over 50 people they must provide them with healthcare. You need to quit listening to Fox News propaganda and now the real facts then you will not be the ignorant one. I would bet you are one of those who have no health insurance and don’t want to have any or one of those who are on Medicare (Government Insurance) and complain about our government taking over healthcare.

      • stantheman

        For your info I worked 45 years, 6 and 7 days week. Anything I get from the govt Ipaid for and deserve ever penn. Can you say the same?

    • JWS

      Thank you, you totally made my point. You are on government insurance but are one of those who do not want others to have the opportunity to afford health insurance and yes I have worked the last 45 years and still working and pay for my own individual health insurance to the tune of thousands of dollars. Yours was probably employer based healthcare.

  • molia

    When is the CEO going to get fired? They are cutting salaries of faculty members whereas the senior administration keeps getting bonuses

  • RICKM

    As we the people will discover, there’s a tremendous difference between ‘health insurance’ and ‘health care.’ The insurance cos. themselves are trying every trick in the book to avoid paying the hospitals; Obama is forcing hundreds of new regulations on hospitals & providers which cost big money. Eventually we will have a single-payer system which will spell the end of private insurance and all treatments/surgeries/medicines will be dictated by the US government.

  • tommyrixx

    As expected, lots of of posts from those who try to blame everything on Obamacare. If WFB’s financial difficulties are a result of Obamacare, it seems odd that there is only one teaching hospital in the state that is in the news repeatedly about it’s poor financial performance. I live near the Triangle and have never seen articles related to Duke University Medical Center or UNC hospitals having such difficulties. Perhaps if our Republican Governor expanded Medicaid at the cost of zero dollars, WFB might be relieved of some of its financial troubles.

  • Chip R

    It does seem fishy that Baptist has been crying financial blues and laying off so many employees, all the while building very expensive, brand new facilities in both Clemmons and Advance, competing with Novant which also has a new facility in Clemmons. I never knew that Clemmons and Advance had such a tremendous need for medical care that one hospital would not have been enough, much less drive 15 more minutes down the road to Winston. Oh, that’s right, its all about wait times advertised on the highway!

    Personally, I think some very bad (egotistical) decisions have been made trying to compete against Novant (Forsyth), and the employees are unfortunately having to pay a steep price. Let us not forget that Forsyth had it’s ugly layoffs a while back too! You can’t blame all of this on bad debts and health care reform and have the whole picture!

Comments are closed.

Follow

Get every new post delivered to your Inbox.

Join 34,328 other followers