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Pardee ends fiscal year with $15M loss

Pardee Hospital closed its 2015-16 fiscal year with a $15.2 million loss attributed to installation of a new systemwide computer system, hiring new physicians and operations and capital investments that are expected to pay off in the coming months and years, hospital officials told Pardee’s Board of Directors last week.

Pardee CEO Jay Kirby had first reported on the expected loss for the year during the board meeting in September.
A loss of productivity during the introduction of the EPIC health care records system dropped revenue for the year by roughly $13.5 million. Also dragging down the hospital financial performance for the year was patients’ inability to pay co-pays or cash requirements of high-deductible insurance plans such as those offered by the Affordable Care Act and some employer plans.
Despite the minus 8 percent margin for the year ending Sept. 30, the hospital had a strong year in revenue overall. Its revenue gain of $75 million overall came in at 16 percent over 2014-15 — the highest increase among the hospitals affiliated with UNC Health Care. Hospital officials also emphasized that the fiscal year results are so far unaudited numbers that could change.
“As you can see, these are numbers that we’re not accustomed to seeing,” Kirby told the board at its regular meeting on Oct. 26. “Clearly, this has been a challenging financial year.”
Pardee made investments over the past year that should position it for greater revenue in 2017 and beyond. It hired 24 new physicians or other health care providers. It spent $3.7 million on new equipment and upfits at orthopedic facilities in Henderson, Buncombe and Haywood counties. Among other one-time costs for the year were $3.4 million for the EPIC system, $3.8 million for the new Comprehensive Cancer Center, $1.7 million to buy property in Mills River for future development and $2.26 million at the Mission Pardee Health Campus.
EPIC training from April through July pulled physicians and nurses from patient bedsides and surgeons from operating rooms, plunging revenue well below budgeted projections. The 24 new providers in specialties including oncology, orthopedics, cardiology and vascular surgery “are expected to generate a greater level of return over time” while expansions in general surgery, pulmonology, radiation oncology and anesthesiologists “were critical to meet the needs of our increasing volumes,” the hospital said.
As higher copays and deductibles have brought a burden to patients, the hospital has committed to “increased dialogue with patients” to urge them to pay their bills. “Pardee will be more intentional in collecting these obligations moving forward from both the patients and their insurance carriers,” administrators reported to the board.
Previously on an Oct. 1-Sept. 30 fiscal year that matched the federal schedule, Pardee is switching to a July 1-June 30 fiscal year that matches the budget year of UNC Health Care and the state of North Carolina. Pardee has projected a break-even margin for the shortened nine-month fiscal year ending on June 30, said Johnna Reed, Pardee’s chief administrative officer.
Pardee remains strong and with the backing of UNC Health Care system, Kirby said, “we are stronger and able to bounce back from this setback.” The new cancer center, improvements to the hospital’s catheterization lab and other facility and equipment investment will help the hospital provide the best care for patients, he added.