Hospital's patient costs will increase next year, but remain low

Even with the 4.2 percent increase, inpatient and outpatient costs will still be lower than other area hospitals, both rural and metro, according to Daryl Friedenbach, director of financial services at FVH.

"When we look at a number of sources for comparing prices for facilities, our pricing seems to be significantly less than all the hospitals in the area," he said.

One of those sources is the Iowa Hospital Association. The public can access the website, www.ihaonline.org, to compare FVH's prices with other area hospitals, Friedenbach said.

The previous budget saw a 4.1 percent increase in patients' cost for services.

The FVH Board of Trustees last week approved a $29.7 million 2009-10 budget, which is up significantly from the current year, Friedenbach said.

Part of that reason is the expected acquisition of Medical Associates and the expenses and revenues associated with it on July 1, which is the beginning of the new fiscal year.

FVH's overall operating expenses -- salaries, benefits, supplies and purchased services -- will be up 4.5 percent before Medical Associates numbers are included, Friedenbach said.

That amount of expenses still exceeds the 4.2 percent increase in patient costs for the coming year, Friedenbach said.

The 2009-10 budget includes a 2 percent raise in salaries for all nonmanagement staff and a 1 percent increase for department managers.

Employee health insurance costs will increase by 10 percent as premium prices the hospital pays rise.

"I believe this is the first year in the past three years that we have had an increase in the cost of insurance for our employees," Friedenbach said.

The approved budget also indicates an ongoing trend in outpatient revenue exceeding inpatient. FVH's outpatient revenue accounts for 78 percent of the hospital's total revenue.

Breaking that down, $29.3 million of $37.7 million comes from outpatient services.

"It's been occurring for at least a dozen years or so that it's been going to the outpatient side," Friedenbach said. "It's getting even bigger for us this year than other years."

That's because revenues for outpatient services from Medical Associates are included, Friedenbach said.

About $100,000 for expenses associated with physician recruitment is also included in the budget.

And the hospital will make its first payment in March on a $300,000 zero percent interest loan from North West Rural Electric Cooperative to pay for the new Remsen Clinic.

Unlike previous years, FVH's revenues will equal its expenses in the 2009-10 budget, Friedenbach said.

"We budgeted operations to break even," he said. "We usually like to include some bottom line margin in our budget. We decided for one year to have a break even budget."