HOSPITAL FINANCES IN NEED OF CPR $5.9 MILLION LOSS IS SIX TIMES HIGHER THAN FACILITY PROJECTION.

Byline: KAREN MAESHIRO

Staff Writer

LANCASTER -- Antelope Valley Hospital is reporting a loss of $5.9 million at the end of January, a figure more than six times higher than the hospital had projected for the seven- month mark of the 2006-07 fiscal year.

The size of the loss is prompting hospital officials to consider cuts so the facility can break even by the end of the budget year, although they said it was too early to say where the cuts might be made.

"We budgeted to have a million-dollar loss, but we are significantly over that. We are now at a point where we have to look at the expense side of the equation," said Brad Mucek, hospital chief financial officer.

Mucek said the losses mounted during the winter months because people did not become as sick as they have in past years. Typically the hospital loses money during the first couple of months of the fiscal year because there are a lot of fixed costs and not a lot of sick patients -- but that changes during the winter.

"It's no different from other hospitals. You have higher acuity and more sick patients during the winter months. Revenue increases in the winter from more patients, and patients are sicker, and we get higher reimbursement during the winter," Mucek said.

"What happened this year, in November and December, we did not see the flu and acuity that we have seen in past years. We had a large amount of fixed costs in November and December and did not see an increase in acuity and patients, so that's why we had a bigger loss than anticipated," Mucek said.

If the hospital gets more and sicker patients during the next few months, the financial picture should improve, Mucek said.

"In the next couple of months if we get the patients we expect, we can eliminate most of the year-to-date loss," Mucek said.

By contrast, the fiscal year that ended in 2006 was financially healthy for the Antelope Valley Healthcare District, the public agency that owns the hospital and some other facilities, including the Regional Valley Surgery Center.

The health care district finished the 2005-06 fiscal year with an operating budget surplus of $2.4 million, an 18 percent increase over the prior year, an audit shows.

The past two fiscal years compare favorably to 2004, when the operating loss was more than $11.2 million.

"Overall we had a challenging year last year. This year is even more challenging," Mucek said. "It's just going to continue, but we are not alone. If you look at the financial statements of not only district hospitals but of for-profits and not-for-profits, hospitals are struggling in the state of California."

The uptick in the operating surplus for 2006 was attributed in part to increased revenues of nearly $20 million, Mucek said.

"We had increase in business and (contract) rates. All of our managed-care contracts do have inflational clauses in them," Mucek said.

Because the 420-bed hospital is owned by a public agency, the surplus must be invested back into equipment, facilities or services.

The cost of charity care -- providing care to the indigent and uninsured and not getting reimbursed by government welfare programs for the full cost of medical services rendered -- continued to rise, going from $57 million to $65 million, according to the audit.

Net patient revenue went up $19.2 million, or 9 percent, to $233 million in the 12 months ending June 30, the audit said.

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