Sonoma Valley Hospital says it’s losing money

The Sonoma Valley Hospital issued a statement Tuesday saying that it’s losing money. The statement comes as the hospital gears up for March parcel tax election that would help fund ongoing operations.
Jim McSweeney, the hospital’s chief financial officer, said in the statement, “The bad news is we’re still losing money and are behind budget projections halfway through our fiscal year, most of it due to lower inpatient volumes than we had projected. The good news is we’ve significantly reduced costs and are well ahead of last year in outpatient procedures. Since those are elective and generally more lucrative than inpatient care, they help offset some of our losses on the inpatient side, which is much more prone to variance and dependence on illness patterns in the community.”
Although the hospital is 11 percent behind last year’s pace in inpatient revenues, it is 15 percent ahead in outpatient revenues. Overall, the budget shortfall amounts to 7 percent, or $1.2 million, below projected revenues.
Hospital officials have responded to the revenue decline both by reducing expenses and by taking steps to enhance revenues in other areas, the statement said.
Two vice president positions have been eliminated and a number of other positions have remained unfilled long enough to save roughly $600,000 on an annualized basis, McSweeney said. On the enhancement side, a recent agreement with Kaiser to care for the HMO’s local skilled nursing needs and home care patients will positively affect revenues in coming months, the statement said.
“A recent review of our operation by an outside consulting group showed we’re more efficient, on average, than hospitals in our peer group, so we’re running lean while still maintaining quality and high levels of patient satisfaction,” McSweeney said. “Make no mistake: we still face very significant financial challenges, and ultimately, the community will have to make some critical decisions on what it wants to finance in local health care. But in a very difficult environment where even an organization with the resources of Sutter Health can close a hospital as it has just decided to do in Santa Rosa, it is no small thing that we are still here, still providing great care, still employing some 450 people, and still planning for a future with a community that has clearly indicated it wants a hospital here.”