EDMONDS — Stevens Hospital is reporting the best financial year in its 46-year history — profits of at least $11.5 million.
This financial strength not only allowed the public hospital to have a good year-end report, it put the hospital into a stronger negotiating position with Seattle’s Swedish Health Services on a new business affiliation, hospital officials say.
The agreement between the two organizations is expected to be approved next month.
The hospital’s year-end financial report says Stevens made $11.5 million on its operating income, up from $1.3 million in 2008. Operating income is the money the hospital makes without income from sources such as investments and taxpayers’ bond and levy money.
Profit on total hospital income was $15.4 million, up from $5 million last year, according to Rick Canning, a hospital vice president and chief operating officer.
“This is the best year we’ve ever had in the history of the hospital,” Canning said. It probably puts the hospital in the top 25 percent nationally for hospitals of its size, he added.
Fred Langer, president of the five-member publicly elected hospital board, said the financial results show “this organization is a strong organization.”
The profits of the last two years are a stark contrast with its performance a decade ago.
Losses began in 1998 and hit its nadir in 2000 when operating losses totaled $5.8 million.
The hospital took a number of steps to help turn around its finances, Canning said. These include:
Properly documenting diagnosis and medical procedures so that insurance companies pay the hospital for the services it provides. As one example, when the hospital provided oxygen to patients, it wasn’t billing for those services. Some tests on patients weren’t being properly billed either, he said.
Renegotiating contracts on everything from copier services to reducing costs for insurance brokers. Operating expenses, which typically had increased about 5.9 percent a year, were reduced to 2 percent to 3 percent a year in 2008 and 2009, Canning said.
Although the public may think that it’s enough for the taxpayer-supported hospital to break even, making a profit allows it to invest in new medical technology and make building improvements, upgrades that aren’t paid from its general operating costs, Canning said.
Over the years, the hospital wasn’t earning enough money to do that. Like consumers who use credit cards to maintain their lifestyle, the hospital increased its borrowing, he said.
“At some point in time, it catches up with you,” Canning said. That helped pave the way for the hospital’s cycle of financial losses.
Being financially strong helped the hospital negotiate a pending agreement with Swedish that calls for the Seattle health care organization to pay Stevens $600,000 a month in lease payments. That amount will increase 3 percent a year for 15 years.
This money, as well as local tax money of about $4 million a year, will stay at Stevens. It will be used by the hospital district to improve health care programs, Canning said. Those projects will be determined later, but could include a community clinic and improved health care access and mental health programs.
Swedish has also pledged to spend up to $90 million in capital upgrades during the first 10 years of the agreement and spend an additional $60 million in facility improvements.
However, Stevens still has room to improve with patient satisfaction, according to the results of recent surveys.
About half of all patients gave the hospital in essence an “A” rating for their overall hospital stay last year. Hospital officials say they’d like to see the number giving an “A” move higher.
Hospital administrators said they also would like to see the total time patients spend in the emergency room reduced.
Time spent in the emergency room ballooned to 220 minutes — more than three hours — in December, in part due to winter viruses. The goal is to reduce the time of emergency room admission to discharge to 135 minutes — just over two hours, Canning said.
Sharon Salyer: 425-339-3486 or salyer@heraldnet.com
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