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D-H’s Fiscal Year Now In the Black



Valley News Staff Writer
Friday, June 01, 2018

Lebanon — A new financial report indicates that Dartmouth-Hitchcock remains on firm financial footing, primarily due to successful efforts to boost revenue following an operating loss in 2016. A key component is a significant increase in patient appointments.

In the first nine months of the current fiscal year — through March 31 — the Lebanon-based health system showed an operating surplus of $33.7 million, which is up $58.1 million over the same period last year, according to a third-quarter report to bondholders posted on Tuesday.

“Our commitment to performance improvement, started in the fall of 2016, has enabled D-H to better navigate the rapidly changing health care landscape, and in turn, allows us to maintain the high quality of care and experience that the people of the region deserve, and expect, from Dartmouth-Hitchcock,” D-H spokesman Rick Adams said in an email on Friday.

The report represents the finances of the entire health system, including Dartmouth-Hitchcock Clinic, Mary Hitchcock Memorial Hospital, New JLondon Hospital, Mt. Ascutney Hospital and Health Center, Cheshire Medical Center, Alice Peck Day Memorial Hospital and Visiting Nurse and Hospice of New Hampshire and Vermont.

D-H implemented the performance improvement plan following a $12.2 million operating loss in the fiscal year ending June 30, 2016. The plan included an accelerated freeze of D-H’s pension plan and a layoff of 84 employees, among other revenue-boosting and cost-cutting measures.

In addition to the pension freeze and workforce reductions, the report credits several factors for
D-H’s improvement, including an increase in revenue from patient care, a reduction in bad debt and the end of ImagineCare health monitoring service, which had been a drain on resources.

On the revenue side, net patient service revenue — the amount the hospitals received from patient care before expenses were factored in — is up to $1.4 billion, which is an increase of $38.2 million, or about 3 percent over the same period last year, according to the report. This increase accounts for bad debt, which was down to $43.4 million, from $49.4 million for the same period last year.

This is driven by a nearly 4 percent increase in the case mix index, a measure of the complexity of cases a hospital sees, and a nearly 12 percent increase in appointments. A push to urge doctors to pick up the pace was among the steps taken to address the hospital system’s loss in 2016, according to a Valley News story at the time.

To cut costs, D-H’s defined benefit plan — a traditional pension plan in which employees’ pension payments were based on the length of their service and the salary they earned at the time of retirement — was frozen in 2017. Retirees and current employees who already had accrued benefits were not affected, but under the freeze there have been no increases in the amount of the pensions since January 2017, according to Valley News reports at the time.

D-H has shifted to so-called defined contribution plans such as 401(k) plans. In such packages, employees and retirees make investment decisions and take on the risks of losing money if investments do poorly.

The freeze of the pension plan contributed to a reduction in the cost of employee benefits of $21.2 million between the first three quarters of last year and the same period this year, according to the recent report.

D-H also saved $2.1 million in bond interest payments as the result of a December 2017 bond refinancing.

This year’s financial results also reflect the fact that D-H is no longer losing money through ImagineCare, which generated a loss of $5.3 million in the first three quarters of fiscal year 2017.

The program’s end resulted in about three dozen layoffs, and marked a shift away from an innovative service which used cloud-based Microsoft technology to help “nurses and health coaches track and respond to an individual’s health status in real time,” according to a Valley News story published in January 2017, when D-H ended the program.

D-H’s increased revenues are tempered somewhat by the system’s expenses, which continue to climb despite cost-cutting efforts. Compared with the first three quarters of last year, expenses are up $7.3 million, which is less than 1 percent of the $1.49 billion total. The increase is attributed to salaries, which continue to grow; as do the cost of medical supplies, medications and the Medicaid enhancement tax.

Valley News Staff Writer Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.