HCHC approves FY20 budget, loan for medical equipment

The Henry County Health Center's board of trustees reviewed the hospital's fiscal year 2020 budget, approved a 10-year loan to purchase medical equipment, reviewed construction and agreed to meet for a work session later this summer during a meeting on Tuesday, May 21.

Dave Muhs, chief financial officer at the Henry County Health Center (HCHC), said that cash flow will probably decrease by $250,000 again. Muhs said the biggest impact is the increase in patient receivables if they increase.

'I project they will again next year because of the slowdown in payments from insurance companies,” Muhs said.

Over price increase for FY20 is 2.41 percent, which is in line with HCHC's annual increase.

'It just doesn't make sense to do a whole lot more because you add to your detractuals because everything is fixed payments anymore,” Muhs said.

Muhs said he met with Blue Cross Blue Shield because of how behind they are in their payments to HCHC. Muhs said Blue Cross Blue Shield is one payer who has historically paid on time; however, that's no longer the case.

'They're three to six months behind, probably a quarter of a million dollars sitting out there,” Muhs said.

The FY20 budget does not include expenses for renovation projects, which will affect the FY21 budget, Muhs said. That will include the cooling towers and air handlers, a $2 million project.

'Once we get past this and the renovations, I think things are going to slow down a little but, but we've put some stuff off and now we have to play catch-up,” Muhs said.

Muhs said the parking lot paving project won't disrupt a lot financially because it is being done over the next few years.

Overall, Muhs said FY20 is a 'tough budget.”

'We tried to ‘eke' out a bottom line,” he said.

Robb Gardner, CEO of HCHC, said that it's a good sign that patient revenue is continuing to climb; however, the hospital needs to be mindful of their operating margins.

'Our operating margins continue to climb and get worse, even though our debt patient revenue is going down,” Gardner said. 'Even though we've reduced expenses in some critical areas and changed some services, we need to continue to look at how our organization evolves.

'We're going to continue to try to be more efficient and drive revenue higher to improve those numbers,” Gardner said.

The board of trustees approved borrowing $720,000 to purchase medical equipment. The money is being borrowed through Access Energy Cooperative and an energy cooperative out of Missouri.

Gardner said the loan will maintain the health center's current debt service coverage of 1.5. The loan is a 10-year, no interest loan, which is tentatively scheduled to close June 27. No further board action is needed.

'A big thanks to our local Access Energy Cooperative,” Gardner said. 'They've been a leader in helping rural health care.”

Construction in HCHC parking lots is continuing slowly as heavy rains disrupt construction.

Gardner said that they poured concrete in the associates parking lot on the north side of the health center, and hope to allow people to start parking on that section some time soon.

Crews will then move on to the south parking lot next week, weather dependent. They will be working in the parking lot closest to the Emergency Room entryway. Finally, they will move on to another small section in the associates parking lot.

'They could be done as early as the first part of July,” Gardner said. 'They're making good progress.”

The board of trustees will meet late June or early July for a full-day work session. Gardner said that the board did this two or three years ago and it's 'vital” for the board to review what's going on at HCHC and trends in Iowa.

A more concrete date will be set during the next regular board of trustees meeting, which is Tuesday, June 18.