New hospital surpasses revenue projections and key milestones, headed for profitability

(from The Sonoma Independent full article here)

With flowers budding everywhere, balmy sunny days and the greenest, best- watered fields to be seen in years, it feels as though a vibrant early springtime has arrived in West Sonoma County.

Meanwhile, perched on the picturesque Laguna of Santa Rosa, our community’s new hospital is experiencing its own unexpectedly early fiscal spring. Based on the Sonoma Independent’s analysis of financial data from the new Sonoma West Medical Center (SWMC) for the month of January and first week of February, it seems clear that the new hospital has succeeded in its goal of keeping wages and supply costs down while surpassing its revenue target.

Nevertheless, SWMC faces a short term cash flow crunch during the next four to six weeks. This has not been caused by operational losses (the revenue that the hospital conservatively expects to receive through insurance reimbursements and patient payments minus all operating costs). As shown in the two pie charts above, if you exclude pending insurance payments and un-compensated care provided prior to insurance re-certification, SWMC's losses were under $400,000 for December and January.

What these graphs illustrate is that the need for bridge financing at SWMC did not arise from operational losses related to the functioning of the new hospital, but to the controversial decision by the former Palm Drive District Board to close the hospital and give up its Medicare number and licensing authorizations in late April, 2014. As the 'Where $13 Million of Funding Went" pie shows, more than 80% of the $13 million that has been laid out to reopen the hospital has been paid to operate a fully staffed hospital with no revenue for six months (May through October), plus three months (November through January) as an open hospital. During these first months of operations, the cost of more than $4.5 million in reimbursable care had to be fronted while waiting for Medicare and other insurance labyrinths to process their payments to a “new recipient.”

This $4.5 million of reimbursed cash will flow back to the hospital starting in March. Meanwhile, nearly $12 million in community philanthropy has run out, and bills still need to be paid.

Story continues here at the Sonoma Independent....