The Upper San Juan Health Service District Board of Directors heard a presentation of the district’s draft budget on Thursday, Oct. 10, with the budget anticipating the addition of cardiopulmonary services and expansion of other services.
The board oversees Pagosa Springs Medical Center (PSMC).
Chief Financial Officer Chelle Keplinger presented an overview of the draft budget to the board, explaining the district’s finance committee had gone over it in detail the night before.
Keplinger explained to the board that the district believes it will have some “unknown variables” to contend with, adding the district always does.
She also prefaced the budget presentation by noting PSMC is coming back into a pattern following the pandemic, but is not 100 percent there.
Further, she noted the medical center is still using contract labor in areas where it has not been able to hire.
Budget assumptions
The budget document presents a number of budget assumptions used with respect to both revenues and expenses.
With respect to revenues, the listed budget assumptions include:
• A transfer from the district’s foundation to PSMC in the amount of $450,000, “which represents funds raised for the remodel of the Sterile Processing Department, as well as, additional capital requests.”
• An average 4 percent increase in patient volume and an average 4 percent increase in prices.
• Anticipated revenue increases in the cancer center due to steady growth, in pain management due to the expansion of the service line, in radiology due to the increase in volume, in surgery due to the addition of an additional orthopedic surgeon, in cardiopulmonary due to the addition of pulmonary function testing equipment and a full-time pulmonologist, and in cardiology due to having an echo tech for the entire year.
During the Oct. 10 meeting, Keplinger noted the district is also looking at a surgical robot, noting the robot is on the capital list, but that PSMC may lease one first to ensure the volume is there.
The capital list shows the surgical robot with a cost of $900,000.
Board president Kate Alfred noted the robot is a “big deal for us.”
PSMC CEO Dr. Rhonda Webb added that younger athletes especially want that technology, and people are getting knee replacements younger now.
She added the robot company will also advertise PSMC as a site that uses its robot.
With respect to expenses, the budget document lists the following assumptions:
• PSMC’s largest expense continues to be labor. The budget includes a 3 percent increase in wages to employees without an employment agreement (providers and senior leaders). It also shows a net increase of 8.46 full-time equivalents.
• An increase in costs (inflation) of 4 percent in medications, 4 percent for supplies and 3 percent for the employee health insurance plan.
• “We will continue to see increased costs needed to enhance our security with regards to IT.”
• Other expense increases are specific to departments and based on projects expected to be completed in 2025.
Keplinger indicated during the meeting that expenses related to capital replacement will change, giving the example that PSMC was still working on getting prices on bronchioscopes.
Budget numbers
After presenting the budget methodology to the board, Keplinger showed the board draft numbers for 2025, noting the statement is “not very pretty.”
The document shows total patient revenues of $90,075,263 (a 15 percent increase from 2024 annualized figures) and total net patient revenues of $43,181,938 (compared to $37,503,530 in the 2024 annualized figures).
Including operating grants and other operating income, the budget shows total net revenues of $45,438,206, which is 2 percent less than the 2024 annualized amount.
Operating expenses are listed at $48,735,373 — 10 percent less than 2024’s annualized figure.
Keplinger noted an increase of almost $3 million in salaries, saying, “That’s a big jump for us.”
She also noted she expects more implanted devices with a second orthopedic surgeon on board, with the devices expensive for PSMC.
Operating revenue less expenses is listed as a deficit of $3,297,167. The 2024 annualized figure is $3,799,686.
Nonoperating income — which includes grants, interest income, tax revenue, donations and other sources — is estimated at $3,391,756, leaving a bottom line of $94,589.
The annualized 2024 figures show nonoperating revenue of $4,019,468, leaving a projected bottom line of $219,782.
The budget includes a potential $2,889,900 in capital outlay.
A cash-flow statement for budget year 2025 projects beginning cash of $14,755,819 and ending cash of $13,090,454.
Keplinger suggested there will be further revisions to the budget before it is adopted, which is anticipated to occur in November.
Pulmonary service line
In late May, the board voted unanimously to approve starting a pulmonary service line.
Prior to approving moving forward with the service line, the board heard a presentation from CEO Dr. Rhonda Webb and Chief Financial Officer Chelle Keplinger.
Webb began the presentation by explaining that pulmonary medicine is a branch that specializes in diagnosing and treating diseases of the lung and other parts of the respiratory system.
She further added that conditions treated would include asthma, bronchitis, chronic cough, chronic obstructive pulmonary disease or COPD, interstitial lung disease (which she noted is on the rise in the country), lung cancer/lung mass, pleural disease, pulmonary edema, pulmonary arterial hypertension, pulmonary nodules, shortness of breath and sleep apnea/sleep studies.
“We were tasked with finding ways to increase our revenue and sustainable service lines that could help this hospital and our community,” Webb told the board.
She added the closest pulmonary medicine doctors are in Durango and while tests or consultations are ordered, some people are unable to go to Durango or choose not to.
She added there are a lot of people locally with lung disease.
She explained that service line studies would include pulmonary function testing, bronchoscopy, lung biopsy and spirometry, with referrals to ancillary services including blood gas analysis, complete blood count, comprehensive metabolic panel, X-ray, CT scan and MRI.
She then showed the board an image of a pulmonary function testing machine and explained that the tests are noninvasive and show how well the lungs are working.
“The tests measure lung volume, capacity, rates of flow, and gas exchange,” the presentation states. “This information can help your healthcare provider diagnose and decide the treatment of certain lung disorders.”
randi@pagosasun.com
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