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    Financials

    What a year it was for the healthcare industry.

    Healthcare reform passed, changing our industry in ways that will rival the historic legislation that established Medicare in 1966. Healthcare reform is certainly controversial and may have served as a catalyst, along with the sluggish economy, for the shake-up of Congress in November's election. But what does healthcare reform mean to our state and to Lawrence + Memorial Hospital?

    Remarkable Financial Performance

    L+M had a remarkable year. The operating margin was just under 4 percent, possibly a statewide best. This surpasses a budgeted operating margin of 3 percent - a goal set by the Board of Directors one year ago - the target that industry experts claim will be necessary for long-term survival. We exceeded our goal during some very difficult economic times.


    Let's look at some of the underlying reasons we ended the year so well:

    Inpatient revenue was significantly higher than projected

    We had a more severe flu season, and we experienced more visits to our Emergency Department. This resulted in higher-than-expected inpatient admission rates.

    In addition, orthopedic and spinal surgeries increased

    L+M has received national recognition for our orthopedic surgery program, and, as an emerging spine center, we saw demand for these surgeries increase significantly during the past year. Active, aging baby boomers are taking advantages of these services - a trend occurring across the country.

    Visits to the Emergency Department increased

    Patient visits to L+M's two Emergency Departments increased by 1,345. Most of the additional visits were to the main campus, where they've made great strides in treating patients quickly. At the Emergency Department at Pequot Health Center in Groton, facility improvements that will speed up care - the FastER care program and valet parking - were recently completed. The results were amazing - patient visits increased by almost 1,200.

    Coding and documentation practices improved

    The proper coding and documentation of medical records also is extremely important for a hospital's financial success.

    Our revenue cycle team - including Patient Accounting, Health Information Management (Medical Records), Patient Access (Registration), Insurance Contract Management, Case Management and Finance - deserves much credit for doing an incredible job in this specialty area. They ensure that our hospital gets credit for all the services that we provide to our patients. Their work encompasses coding, billing, collecting and contracting with insurance companies and state and federal programs.

    This team reduced outstanding accounts receivable over the past three years by more than $20 million. This helps provide the necessary resources to purchase equipment, pay the salaries of our employees and keep the lights on in our facilities.

    The average time it took for bills in accounts receivable to be paid dropped to 33 days because of the team's extraordinary efforts.

    We received favorable interest rates on our bonds

    Interest rates on our variable rate bonds remained extremely low during the past year - one of the few positive sides of the sluggish economy.

    Investment returns on our endowments increased significantly because of improvements in the stock market.


    What's in store for 2011?

    The Patient Protection and Affordable Care Act was signed into law by President Barack Obama on March 23, 2010. The 2,000-page document outlines new ways of financing and delivering healthcare.

    As might be expected, not all states will be affected in the same ways. However, we know that Connecticut currently has fewer uninsured people than other parts of the country. So, it is unlikely that the payments the hospital receives from these newly insured people will be enough to cover what the hospital loses from cuts to Medicare payments - cuts that are being made to help uninsured people get private insurance.

    Recent Connecticut Hospital Association estimates show a diminishing profit margin for our hospital over the next five years - the years when the majority of cuts will be implemented.

    Payment reforms have already begun. Other areas of the new legislation will be implemented during the next decade.


    Financial Summary

    For the fiscal year ending Sept. 30, 2010*

    Net Revenue

     
    Net revenue from services to patients $314,168
    Other operating revenue $9,926
    Total net revenue $324,094
       

    Expenses

     
    Salaries and benefits $184,324
    Supplies and other $93,016
    Bad debts $15,052
    Depreciation and interest $19,061
    Total expenses $311,453
       
    Net operating gain $12,641
    *Amounts in thousands (audited)  
       

    Some Key Statistics

    Patient visits

     
    Inpatient admissions 15,478
    Emergency Department visits 84,072
    Outpatient surgeries 7,166
    Ancillary services (lab, x-ray, rehab, etc.) 368,500
    Total patient visits 475,216