Page 61 article text (OCR)
Sunday Gazette-Mail, Sunday, June 2,1974 ' HARLESTON ^HEA IEDICAL C ENTER CAMC REPORT CHARLESTON. WEST VIRGINIA The Charleston Area Medical Center (CAMC) is a Health Care Corporation incorporated under Chapter 31, Article I of the West Virginia Code as a not-for-profit, non stock corporation. Nonprofit means that there are no shareholders and that no trustee is to personally benefit from the proceeds of the operation. In other words, there is no distribution of revenues over expense but just like any other organization, a not-for-profit hospital organization would deteriorate and die if funds were not available to put back into the operation to replace worn out equipment and buildings and to make it possible to provide new health benefiting services as they are developed. The Board of Trustees (who are listed elsewhere on this page) have dedicated all excess revenues over expense to medical center development. As shown on the accompanying audited, financial statement, this amounted to $757,021 in 1973 and is 2.79? of gross revenues. All other amounts accrued from past years will be used in the same way. The Trustees authorized the expenditure for this space in the belief that the community has an interest in and the right to know about the CAMC operations. The audited financial statements are being published for your review. We also are presenting some factual information about various aspects of the CAMC which formulates a progress report on the venture that was brought about by the merger of the Charleston General. McMillan and Memorial Hospitals. The goals of the CAM C a re: To increase the quality and quantity of health services and to provide them to more people. To increase the number of physicians and other health personnel. To delete unnecessary duplication of equipment, facilities and services. To create greater efficiency and control or contain costs to the maximum extent possible. Therein lies the reasons for the merger of the three hospitals. As a consequence of the merger, three more or less typical general hospitals became a major medical center, not just in size but in character as it assumed a major role in education and set the stage for increased quality and quantity of services that would not otherwise have occurred. The balance of this report deals with the accomplishments toward these goals and other information which we hope will be of interest to you. BALANCE SHEET CHARLESTON AREA MEDICAL CENTER, INC. DecemberSI, 1973 ASSETS CURRENT ASSETS Cash Certificates and time deposits. Marketable securities--at cost (approximate market value .15397.500) Patient receivables, less allowance for losses of Â§1,450.000 ' Other receivables Supplies inventory Prepaid expenses TOTAL CURRENT ASSETS $ 72,773 2,726,470 455.670 5.657,536 412,516 488.093 129.065 S9.942.123 INVESTMENTS AND OTHER ASSETS Cash $ 19,664 Certificates and time deposits 501.749 Marketable securities at cost (approximate market value $150.500) 164,255 Deposits and sundry accounts 237.155 PROPERTY, PLANT, AND EQUIPMENT Land 2,071.606 Buildings and improvements . . . 16,457.868 Equipment 7,608,182 Construction in progress 1,594.023 Allowances for depreciation (8.012.166) 922,823 19.719.513 S30.584.459 LIABILITIES AND ACCUMULATED EQUITY CURRENT LIABILITIES Note payable to bank S 500.000 Bank overdraft 344.424 Accounts payable and other liabilites 938.777 Employee compensation and payroll taxes 852.1353 Advances from third-party payers 351.375 Current maturities of long-term debt 18.604 TOTAL CURRENT LIABILITIES $3.005,533 DEFERRED INCOME, SPECIFIC PURPOSE FUNDS 604.741 LONG-TERM DEBT 3 ; ' - r general obligation boitds payable, due in annual installments of $5,000 to 1979 and increasing amounts thereafter to 2014 $ 563,000 Miscellaneous mortgages payable 71.056 634,056 Less current maturities. . : 18.604 615.452 ACCUMULATED EQUITY Undesignated 25.601,712 Designated for medical center development 757.021 26.358.733 COMMITMENTS AND CONTINGENCIES 830,584,459 STATEMENT OF REVENUES AND EXPENSES CHARLESTON AREA MEDICAL CENTER, INC. . Year ended December 31, 1973 Revenues from patient services'. $28,241,859 Less: Provision for reduction in charges for Medicare, Department of Welfare, and other contractual arrangments $1,236,151 Provision for uncollectible and charity accounts 1.282.130 2.518,281 NET REVENUES FROM PATIENT SERVICES . $25,723,578 Operating expenses net: Salaries and wages 15,327,153 Supplies and other expenses 9,628,185 Professional fees 610,075 Depreciation .Â· 950,030 Other operating revenues (1.043.689) 25.471.754 INCOME FROM OPERATIONS 251,824 Nonoperating revenues (principally income and gains from investments and properties) 505,191 EXCESS OF REVENUES OVER EXPENSES.. . 757,021 Less funds designated for medical center development EXCESS OF REVENUES OVER EXPENSES AND FUNDS DESIGNATED FOR MEDICAL CENTER DEVELOPMENT _ CHARLESTON AREA MEDICAL CENTER BOARD OF TRUSTEES Don L. Arnwine F. G. Bannerot, Jr. Mrs. Bert Bradford, Jr. W. Gaston Caperton Emerson Carson G. N. Casto, Jr., DMD George A. Cato John T. Chambers, M.D. Vincent V. Chaney George L. Coyle, Jr. Hugh A. Curry William M. Davis R.P. DeVan, Jr. Charles B. Gates, Jr. Sherman E. Hatfield, M.D. Paul Hinkle Homer A. Holt E. Forrest Jones Robert G. Kelly William J. Kenney Dewey E. S. Kuhns James W. Lane, M.D. William E. Lcwton, Jr., M.D. Stanley Loewenstein J. William Martin Mrs. William E. Moore, II Quin Morton J..E. McDavid James S. Phillips A. L. Poffenbarger, M.D. Miller C. Porterfield William A. Pugh William A. Rice Stanley H. Rose, Jr. William N. Shearer, Jr. Stanley Silverstein John D. Smallridge E. Dana Smith William W. Ten Eyck James K. Thomas John H. Thomas Deal H. Tompkins Joseph Turner Olaf Walker Henry B. Wehrle, Jr. Russell Wehrle Clayton Williams Mrs. Frank M. Winterholler ADMINISTRATIVE STAFF: Don L. Arnwine, President Â· James C. Crews, Executive Vice President Â· Herbert D. Johnson, Vice President for Finance Â· Robert L. Morris, Vice President for Personnel* Richard V. Livengood, Vice President and Administrator, General/McMillan Divisions Â· J. Darrel Richmond, Vice President and Administrator, Memorial Division. ACCOMPLISHMENTS PATIENT CARE Goal Statement: "To increase the quality and quantity of services and to provide them to more people." During 1973, approximately 200,000 visits were made to the three divisions of CAMC as inpatlent admissions, outpatient visits, or emergency cases. Since the creation of CAMC, new services have been added and many existing services have been upgraded. New labor and delivery rooms have been added, a new comprehensive newborn intensive care unit is now open, inpatient and outpatient psychiatric services were initiated, inpatient and outpatient renal dialysis (artificial kidney) services were greatly expanded. These are examples of ways CAMC has increased the quality of health care available in this a rea. MEDICAL STAFF Goal Statement: "To increase the numbers of physicians and other health personnel." The primary determinant to the quality of health care in any community is the physician. CAMC has a quality medical staff of 260 physicians representing 27 medical and surgical specialities. The number of physicians practicing in a community can be increased in only two ways: (1) educate them in the community, or (2) recruit them to the community. CAMC's contribution to medical education is described above. CAMC contributes to the recruitment effort by creating a medical center in which physicians want to practice medicine or surgery. The elimination of the unhealthy competition through merger and the coordination of its comprehensive services has made the CAMC an attractive health facility in which physicians may care for their patients. EDUCATION Goal Statement: "To increase the numbers of physicians and other health personnel." An affiliation agreement was developed with West Virginia University which resulted in the creation of the Charleston Division of the West Virginia University Medical Center. The Charleston Division is temporarily housed in the CAMC Administration Building but plans are being made to construct a University facility on the Memorial Division campus. Under this affiliation junior and senior medical students will receive a portion of their training in the CAMC facilitites. This year, forty-five (45) junior and fifty-four (54) senior .students will receive a portion of their training here. A training program in Behavorial Medicine and Psychiatry has been established atthe General Division and CAMC has collaborated with WVU and Thomas Memorial Hospital to create the Kanawha Valley Family Practice Residency Program. At the time of the merger there were thirty-six (36) interns and residents in training and only three (3) were WVU graduates. This year there will be fifty-eight (58) and thirty-six (36) of those will be WVU graduates. CAMC and WVU applied for and received a $3.6 million five-year contract with the Department of Health, Education and Welfare to assist in the development of education programs. The number of students in nursing and allied health programs has increased from 422 to 656, all receiving a portion of their training in CAMC. Since the merger, twenty-nine (29) new physicians have been added to the Medical Staff of CAMC. These and similar developments are designed to increase the numbers of health manpower available to the people of this area and to the State of West Virginia. 1973 Statistical Highlights Number of Patients Admitted 34,019 Number of Patient Days 272,493 Number of Surgical Procedures 19,009 Number of Babies Delivered 3,554 Number of X-Ray Examinations 127,703 Number of Laboratory Procedures. 502,834 Number of Emergency Cases 35,757 Number of Outpatient Visits 126,406 Obstetrics Ophthalmology Oral Surgery Orthopedics Otolaryngology Pathology Pediatrics Plastic Surgery Proctology Psychiatry Radiology Thoracic Surgery Urology Specialities Represented by the CAMC Medical Staff Allergy Cardiology Cardiovascular Surgery Dermatology Emergency Medicine Family Practice Gastroenterology General Surgery Gynecology Internal Medicine Nephrology Nuclear Medicine Neurology Neurosurgy ECONOMIC ACCOMPLISHMENTS Goal Statement: "To delete unnecessary duplication of equipment, facilities, and services, and to create greater efficiency and control or contain costs to the maximum extent possible." Since the creation of CAMC, annual savings in the cost of operations ' exceed $840,000. Contributing to this savings are the consolidation of obstetrics, consolidated purchasing, consolidated dietary service between General and McMillan Divisions, coordination of insurance programs, transfer of fulltime clinical directors to WVU, consolidating two employee newspapers into one, and other examples. These savings allowed CAMC to operate for the first two full years without a price increase, despite great increases in food, drugs, supplies, equipment, purchased services, and other operating expenses. The numerous consolidation efforts have caused a realignment in the administrative structure in order to carry out CAMC goals and objectives better and faster. There has been no increase in the number of administrative staff since merger. Prior to merger there were nineteen individuals comprising the administrative staffs at Memorial, General, and McMillan. CAMC presently has eighteen on its administrative staff for all three divisions, including the president, excutive vice president, administrators and assistant administrators, directors of nursing, and administrative people in the personnel department. HOSPITAL COSTS What Are The Factors Contributing To High Hospital Costs? There are many factors contributing to the costs of providing hospital services but there are three general expense areas that are principally responsible. They are personnel costs, costs of new technology and the impact of inflation upon goods and services consumed by the patients. , Hospitals are service organizations and as such a higher percentage ot total costs are invested in personnel. Sixty-one percent of the 1973 expenses were for salaries and wages. The impact of this circumstance is such that a relatively small increase of ten cents per hour for CAMC employees results in a cost of SI 4.67 per patient admission. In the past two decades there has been a virtual explosion of new health care technology. There have been tremendous enhancements in existing diagnostic services such as radiology and laboratory and many completely new services such as open-heart surgery, renal dialysis, nuclear medicine, speech and hearing, coronary care, intensive care, monitoring devices, cobalt therapy and many others. It is estimated that seventy-five per cent of the drugs in our pharmacies were not in existence just fifteen years ago. The net result of these developments is better health and a longer life span but they are very expensive. The impact of increasing costs of goods and services is enormous. Almost all of the usual everyday consumable supplies are required by our patients and there are many highly unusual and inflation prone items that are likewise required.Here are just a few items and what they cost CAMC in 1973: Utilities 5602,113 Meat $274,608 Milk 5162,630 Linens 555,621 Oxygen 540,171 Pharmaceuticals 5713,858 Obviously, all of these costs have to be passed on to the patient or his insurer. As high as these costs are the average total daily charge for services in CAMC in 1973 was $91.71 as compared fo the national average of $109.95 or 20% less. There are few goods and services available in Charleston at 20% less than the national average. How Patient Charges Are Constructed Hospitalsthroughoutthe country have traditionally followed the "ala-cqrte" method of charging for hospital services. This means that patients pay a room charge which includes a hospital room, meals, and nursing care, and pay separately for each other service they receive. This concept began many years- ago, before hospital insurance was available, and followed the general accepted premise that it was proper to pay only for what you receive. The charge for services offered by CAMC, whether it is for room and board, operating room, coronary care, delivery room, or the many other services offered is related to the cost of providing that particular service. The charge for use of the operating room, for example, includes the wage and salary cost of the nurses and technicians who staff the operating rooms, the expense of the people who clean the operating rooms, the cost of supplies, the expense of maintaining the operating room equipment, the depreciation expense of the major operating room equipment, and utilities expense for the operating suite. CAMC has over 1,160 distinct services for which a charge has been developed. CAMC's patient bill reflects each charge by code number and description so that a patient is aware of each item of service he received. How Are Hospital Bills Paid? In 1973, 3.6 percent of the patients treated at" CAMC paid their hospital bill "out-of-pocket" while 96.4 percent were covered by hospitalization insur-. ance, Medicare, Blue Cross, Welfare, UMW, or other forms of third party coverage. The table below shows- a breakdown by type of payment for both inpatient and outpatient services. Inpatient Out patient Services Services Medicare 27.0% 9.4% . Blue Cross 26.3% 23.9% Commercial Insurance 22.7% 16.3% , United Mine Workers 8.2% 4.4% State Programs (Welfare) 8.1% 8.8% Workmen's Compensation 4.1% 5.1% 1 Uninsured Patients 3.6% 32.1% 100.0% 100.0% Â· * FUTURE DEVELOPMENTS Patient Care A major study of CAMC services was recently completed recommending consolidation and coordination of certain clinical services within the two major divisions of CAMC. Major emphasis will be placed in outpatient services during the foreseeable future including outpatient surgery and ambulatory care. Economic Considerations Construction The present effort to effect e c o n o m i e s o f o p e r a t i o n through consolidation will be continued. Areas of activity such as laundry, business office, medical records, warehousing, pharmacy, laborato- r y , a n d o t h e r s a r e being considered for centralization. Additional savings in purchasing is expected through com- binpd contract buying. A great deal of construction activity will begin in 1974. A physicians' office building will begin early summar on the Memorial campus. A two-floor addition will begin on the Marmet building of the General Division providing sufficient beds to replace the McMillan Division and some of the old beds located in the 1923 section of the General Division. Plans for future construction are under study which include renovation of old and construction of needed neÂ» facilities. ft" Sources of Financing The construction mentioned above plus additional developments to tneet CAMC's long range planning goals will require between $22 and $30 million over the next ten years. The traditional sources of funding for health facility construction were Federal Hill-Burton funds and community fund raising efforts. Grants from the Hill-Burton program and community fund raising efforts can no longer be relied upon to raise this amount of money. Therefore, the financing of these planning efforts must come from a combination of borrowed funds and operating gains. The amount required, for this purpose, from operating gains K actually about' 5.5% per year whereas in 1973 only 2.7% was realixed; CAMC must earn a reasonable gain from its operation each year to assure the availability of its present and future services to the people of the Charleston Area.