Regional Medical Center to break even with 2014 budget
by Patrick McCreless
Jun 17, 2013 | 3216 views |  0 comments | 176 176 recommendations | email to a friend | print
Regional Medical Center in downtown Anniston is shown in this file photo. (Photo by Trent Penny/The Anniston Star)
Regional Medical Center in downtown Anniston is shown in this file photo. (Photo by Trent Penny/The Anniston Star)
Regional Medical Center will reduce worker overtime and other general costs to remain in the black next year, offsetting a loss of $4 million in Medicare money due to federal health reform.

During its regular meeting Monday, the RMC board approved an approximately $139.8 million operating budget for its 2013-2014 fiscal year. Despite a projected $4 million cut to its Medicare revenue due to the Affordable Care Act, or Obamacare, RMC administrators project the Anniston hospital will break even and maintain its health services through a combination of general expenditure cuts and improved efficiency.

"We're playing it flat," said Greg Kernion, chairman of the RMC board, referring to the hospital's budget. "We're expecting a huge reduction in reimbursements, so we're tightening our belts."

The Affordable Care Act in 2014 will reduce Medicare spending and expand it for Medicaid. Medicare is a social insurance program mainly for residents 65 years old and older as well as the disabled. Medicaid is a joint federal and state program that covers health care costs for low-income residents and children. Alabama has so far chosen not to expand its Medicaid program.

Low-income residents ineligible for Medicaid or Medicare will be able to purchase affordable insurance through insurance marketplaces, which will be set up in every state starting next year.

David McCormack, CEO of RMC, said the insurance marketplaces and the estimated cost-savings they could provide were not factored into RMC's latest budget.

"Those won't really kick in until the year after next," McCormack said.

To offset its Medicare losses, RMC will maintain all its health care services but will reduce its general operating expenses by between 6.5 percent and 7 percent for its 2014 fiscal year. For instance, the budget projects the hospital will spend $67.42 million on salaries and benefits through 2014 — a slight decrease from the $67.9 million the hospital projected it would spend on workers in the previous budget.

"We're trying to manage overtime," McCormack said. "We're finding people are coming in early and clocking in and staying late."

McCormack was adamant that there will be no layoffs for this new fiscal year.

"We'll fight until the bloody end before that," McCormack said.

McCormack said the hospital is making up the loss in Medicare revenue by becoming more efficient and reining in unnecessary spending on indigent care. The budget projects RMC will spend approximately $53 million on charity care — care provided to residents without insurance or any ability to pay. RMC spent almost $60 million on charity care last year.

"We've done a better job of managing those patients," McCormack said. "We're getting them treated quicker and out of the hospital faster."

The budget did not include expenses from RMC Jacksonville. RMC purchased the Jacksonville hospital for $6 million in December. McCormack said RMC Jacksonville's budget will be ready next month. He added that the Jacksonville hospital's budget will be wrapped into RMC's next year.

Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.

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