The Regional Medical Center’s finances continue to improve.
The entire hospital system, which includes its seven primary care practices, was $3.2 million in the black through the end of January. At the same time last year, the hospital system was posting a $3.7 million loss for the fiscal year, which begins Oct. 1.
"We had about $1 million more in operational revenue but our biggest impact was in our operating expenses of about $4.3 million less," RMC Chief Financial Officer Liza Porterfield told trustees Tuesday during the board's regularly scheduled meeting.
The hospital has saved about $3.4 million this year by reducing its use of contract labor. It’s also saved $900,000 by reducing the use of locums tenens, which are physicians that fill in for other physicians on a temporary basis.
Both contract and locum tenens employees are more costly for the hospital than regular employees.
For the month of January alone, the hospital had 23 contract employees compared to 81 in January 2018.
"The staff and everybody has done a great job in turning things around," trustee Kenneth Rickenbaker said. He specifically cited the reduction in contract employees.
"That really helps us a lot,” he said.
In related matters, Kevin Callaway a principal with Dixon Hughes and Goodman, reported the hospital owes the Centers for Medicare and Medicaid Services about $985,948 toward the Medicare program.
"The hospital administration has estimated what this liability will be," Callaway said. "This is part of the year-end close for financials. This is not a surprise to the hospital. If you go back and look at prior year settlements, you typically have an over-payment because of your sole community status somewhere in the $800,000 to $1 million range for Medicare."
Because RMC is a sole community hospital -- meaning there is not another hospital within several miles of RMC – it received an extra $4.2 million from the Centers for Medicare and Medicaid Services, Callaway said.
The hospital has been audited and settled with Medicare through the 2013 fiscal year and with Medicaid through 2012.
"This is pretty customary in most states," Callaway said. "That is not a priority."
Medicare owes RMC’s Edisto Regional Health Services about $20,799, primarily for Medicare bad debt and vaccine costs. Edisto Regional Health Services consists of the hospital's primary care practices.
Hospital financial consultant David Yon provided trustees with a quarterly overview of its investment portfolios.
Currently, the hospital has $189 million invested in three types of investment funds: a capital reserve fund, a defined benefit plan for employees for salary payment upon retirement and a defined contribution fund for employees supplemented by an RMC match.
Pension funds are regulated by state law and can only be placed in high-quality assets using more stable and lower risk investments.
The capital reserve fund does not have these restrictions, Yon said.
Yon noted the yields in the hospital's capital reserve fund are “significantly higher than the benchmark” of returns, netting about $7.2 million over five years.
With regards to the pension plans, Yon said the current market value of the pension plan is $49.4 million as compared to $46.1 million in Oct. 1, 2017.
In other matters:
• Trustees unanimously approved the RMC Strategic Alliance Inc. bylaws.
The RMC Strategic Alliance is a non-profit corporation created by the hospital to provide a vehicle for its entry into a possible future business venture.
RMC Strategic Alliances Inc. would be controlled by the existing RMC Board of Trustees.
The new entity would be in a similar relationship with the hospital as the current Edisto Regional Health Services.
• Former RMC trustee Johnny Mallard Jr. was recognized for his service to the hospital and to the community during his time on the board from January 2007 to January 2018. Former trustee Leroy West, who had a prior obligation, will be recognized at a later date.
• Trustees unanimously approved the board's calendar of meetings for 2019.