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Paynesville Press - Oct. 1, 2003

PAHCS expects profitable year in 2004 fiscal year

By Peter Jacobson and Michael Jacobson

While running in the red during their current fiscal year, the Paynesville Area Health Care System (PAHCS) is predicting a profit in its 2004 fiscal year, which starts on Wednesday, Oct. 1.

A budget for the 2004 fiscal year was approved last week by the Paynesville Area Hospital District Board of Directors. PAHCS's 2004 fiscal year runs from Oct. 1, 2003, to Sept. 30, 2004.

That profit is largely due to an expected switch to critical-access hospital designation, for which the the hospital district is currently applying. This designation will increase Medicare reimbursement to PAHCS. In the 2004 budget, a gain of $937,500 for PAHCS was assumed for the switch to critical-access designation.

The budget estimates that PAHCS will have operating revenues of $25,294,000 in the 2004 fiscal year, an increase of 13.27 percent. In the budget, PAHCS also projects a price increase of seven percent and a volume increase of two percent.

pahcs fiscal year chart On the expense side, PAHCS budgeted that expenses will increase by only 5.64 percent (compared with the 13.27 percent increase in operating revenues). Operating revenues are projected to increase by nearly $3 million while expenses are projected to increase by only $1.3 million.

The salary increases are budgeted at 2.5 percent while the cost of health insurance is budgeted to increase by 18 percent.

Also, the capital expenditure budget for the 2004 fiscal year is only $600,000, compared to $1.345 million in 2003.

The approved budget predicts a net profit of $605,000 for the 2004 fiscal year, while PAHCS now projects to lose over $900,000 in 2003. This means PAHCS did not fully cover the depreciation of its facilities in 2003, since depreciation was budgeted at more than $1,500,000 for 2003.

Once again, the hospital district will not levy a tax in the 2004 fiscal year. Since forming as a hospital district in 1991, PAHCS has had taxing authority but has never used it.

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