Even with a proposed rate increase for some Floyd Valley Hospital services, patient costs will still be under the national average.
The Floyd Valley Hospital (FVH) Board of Trustees approved the hospital's 2012-13 budget during its meeting earlier this week.
As part of the budgeting process, an average 3.4 percent increase in patient rates was identified to stay in line with operating costs, said Mike Donlin, FVH administrator.
That percentage is lower than the 4.8 percent inflation rate provided by the Bureau of Labor Statistics for health care costs in the coming year, said Daryl Friedenbach, FVH director of financial services.
"We have always sought to be below that, if we could, because we think it's a good thing," Donlin said.
Friedenbach explained the 3.4 percent increase is an average because some departments' fees won't change while others may go up or down.
Donlin noted Park Place Estates Assisted Living will see a 3 percent increase in resident costs in the upcoming fiscal year starting July 1.
He added that rate increases are part of the budgeting process every year to "operate our existing facility."
The rate increase does not have anything to do with the proposed $16 million north addition, a two-story surgical and clinic addition to the hospital, Donlin explained.
"We're borrowing $16 million to pay for the north addition," he said. "The cost of the borrow will eventually show up in our expenses, but it's not an expense to us now."
The hospital's 2012-13 operating budget includes an estimated $35.1 million in net revenue versus $34.5 million in expenses with a 1.7 percent margin or reserve.
"That's a guess of our revenue for the coming year and a guess of our expenses with a little bit of a cushion," Donlin said.
The hospital is self-supporting, meaning it does not receive any taxpayer revenue even though it is owned by the city of Le Mars, he said.
Within the proposed 2012-13 budget, Donlin said health insurance costs for staff are expected to increase by 3 percent, something that will be finalized in the coming weeks.
The budget also includes 3 percent pay raises for all staff who are doing their jobs satisfactorily, he said.
"Our trustees agree with that 100 percent," Donlin said. "I can say we are back to our normal routine for payroll adjustments."
Those were suspended in 2009 and 2010 because budgets were tighter but returned for the current year and the upcoming fiscal year, he explained.
"I think that's always good," Donlin said. "We want to keep the superb people we have here and we want them to feel appreciated as far as pay goes."
In addition to the 2012-13 operating budget, FVH trustees also approved a $1.5 million capital budget, which pays for replacement or purchase of new equipment.
The 10 items in that budget range from a $450,000 digital fluoroscopy X-ray machine to $35,000 for Lifeline Home Units.
"These are all on a case by case once the budget itself is approved," Donlin explained. "It doesn't mean we actually buy everything on the list. We rarely buy everything."
In light of the proposed north addition project, he said hospital staff and officials are avoiding any "radical expenses," instead concentrating on paying down existing debt.
"We want to run lean and mean as best we can in preparation of that (north addition)," Donlin said. "When you bring a big building online, it affects everything for better or for worse."