BREWSTER — On paper, it doesn’t look so good. Three Rivers Hospital in Brewster has relied on loans from Okanogan County to meet operating costs for six years, and each year, the amount owed has grown.
The state Auditor’s Office released a new audit this week for 2011 and 2012, finding again that the hospital has insufficient funds to cover operating expenses, and is at risk of not meeting its monthly financial obligations while providing the current level of services.
The county charges interest on its loans to the hospital, known as registered warrants, adding to the hospital’s expenses, the audit report said.
But Bud Hufnagel, who took over as the hospital’s CEO in September 2011, said the public hospital is in much better shape than it was last year. It just takes time to dig your way out of a deep hole, he said.
The public hospital employs 140 people, and last year operated on a budget of about $12.6 million.
“When you look at the overall picture, we were as high as $3.2 million in our warrants at our highest point, and currently, our last report showed about $2.5 million, so we’ve made substantial improvements,” he said. That high point didn’t occur at the end of the year, which are figures the audit considers. Additionally, the hospital has made nearly $500,000 more this year compared with last year that also is not considered in the audit.
Hufnagel said the public hospital doesn’t have an expense problem, it has a revenue problem, caused largely by the community losing physicians who use the hospital.
He said in the last three years, nine doctors have left or retired. The hospital has been working to recruit new physicians, he said, which he said is critical to the hospital’s future success.
He also said the hospital has been working hard to reduce it’s expenses. “We have been really intent upon managing down our costs to what I would say is the minimum level we need in order to sustain our operations, and to treat patients well,” he said.
The audit also said the district passed a levy in 2011 that brings in $700,000 annually beginning last year, reduced budgeted expenses by about $80,000 a month, closed its Mansfield clinic, and sold its sleep clinic. It negotiated a lower cost group-purchasing agreement with a new company, renegotiated third-party contracts, renegotiated its nurse’s union contract and eliminated unnecessary positions.
And with Centers for Medicare and Medicaid Services, it met criteria to receive $400,000 last year and this year through an incentive program for using electronic health records, and increased its inpatient daily rate to $3,400, and outpatient rate by 50 or 60 percent.
“What you’re going to find is, when our financial audit results are published — and those should be coming back from our auditors by mid-July — is that we have made a substantial turnaround in a year’s time,” he said.
And once the community is able to recruit more doctors, the revenue side should bounce back, and the hospital’s financial picture should continue to improve, he said.