Phelps Health had one of the busiest months the health system has seen in recent years during April 2019 due to a record-breaking inpatient census, while two capital contingency requests were made for the finance committee to consider to meet growth in both the cardiovascular and obstetrician-gynecologist services Phelps Health offers.

“We had a very busy month through April, and I think everyone in the room can attest to that. We had the highest inpatient census on record. You would have to go back to March 2012 to find a census that was actually over 100,” Vice President and Chief Financial Officer for Phelps Health Jana Cook said at the Wednesday, May 22 finance committee meeting.

The average daily census at Phelps Health in April was 104 and was over budget by 16 days.

“It has been more than five years since the census has been that high,” Phelps Health’s Chief Executive Officer Ed Clayton said.

The increase in inpatient care and inpatient rehab led to a high adjusted average daily census for patient volumes at Phelps Health with 286 patients treated daily, which was over budget by 22 days, according to Cook.

There is an overall increase in patient admissions at Phelps Health since April 2018, while the trend of a lower length of stay for patients continues at Phelps Health.

There was an increase in surgeries in April, according to Cook, parallel to the historically high inpatient census the health system had in April.

“There were a lot of inpatient surgeries; if that wasn’t a record month I’d be surprised,” Cook said. “Inpatient saw an increase of about 35 procedures and there was a pick-up of over 50 outpatient procedures.”

There has been an 8 percent growth year-to-date in surgeries at Phelps Health and a substantial growth in cardiac procedures in April.

“I can talk a lot about total number of patients, but if you look at procedures, it’s about an increase of 40 percent,” Cook said. “We continue to see good growth in our Waynesville areas over a year ago in both our outpatient areas in our ancillary clinic and our immediate care that is all showing growth from April 2015,” Cook said.

Phelps Health’s operating income was $711,000 in April 2019, which was over budget by $325,000. Phelps Health has had an operating income of $2.5 million year-to-date; under budget by $542,000. Operating income as a percentage of net operating revenues was 2.8 percent in April compared to Phelps Health’s 3.5 percent budget, according to Cook.

Phelps Health’s net income in April was $2.7 million, which was under budget by $1.7 million, while Phelps Health has had a year-to-date net income of $12.1 million; over budget by $6.3 million. Net income as a percentage of total revenues in April was 12.2 percent compared to Phelps Health’s budget of 6.5 percent.

Phelps Health had a net operating revenue of $23.9 million in April, which was over budget by 9 percent. The variance in Phelps Health’s net patient service revenue over budget by $1.9 million was due to the high inpatient average daily census and adjusted average daily census the health system had in April, according to Cook.

April operating expenses for the health system were $23.2 million, and expenses in April were over budget by 7.7 percent.  Cook said the variance in operating expenses over budget by $1.7 million was related to supplies expense over budget by $560,000 as a result of pharmaceutical expense in the employee and Delbert Day Cancer Institute pharmacies, as well as the increase in volume and case mix in the cardiac catheterization lab and main operating floors at Phelps Health.  

Purchased service expense in April was over budget by $460,000 at Phelps Health due to the use of agency personnel, according to Cook, and salaries and wages expense was over budget in April by $332,000 related to staffing and the additional expense incurred from orientation hours for staff to meet the high patient volume Phelps Health had in April.

Phelps Health’s non-operating revenues were $1.9 million in April, which was over budget by $1.3 million and reflected favorable market conditions, Cook said. As of April 30, 2019 Phelps Health had $153.8 million in total cash and investments – an increase of $12.9 million from Dec. 31, 2018.

Phelps Health has acquired a total of $59.3 million in debt as of April 30, 2019 – down $1.6 million from Dec. 31, 2018. Phelps Health’s operating margin year-to-date is 2.8 percent.

Following the April 2019 financial statements, the finance committee accepted two capital contingency requests for approval by Phelps Health’s Board of Trustees.

The first capital contingency request was for a cardiac catheterization lab – not to exceed $3.5 million in the capital contingency request.

“When we passed the 2017 to 2019 capital budget we didn’t set aside funds for a second cardiac catheterization lab, but we did identify it as a need,” Cook said. “We did have it on the list, that if we had additional funds  we generated through general operations, that we would come back to the board and potentially ask for the addition of the second cardiac catheterization lab.”

Phelps Health’s Administrative Director of Ancillary Services Shawn Hodges said at the meeting the usage of the current cardiac catheterization lab continues to grow, and the one lab is nearing capacity.

Projections based on the continual growth in patient volumes – that are solely the number of patients and not patients who have multiple procedures – reflect the lab will not be able to handle its current patient load soon.

The catheterization lab is currently open Monday through Friday from 7 a.m. to 3:30 p.m. “From a patient care aspect we need to go to seven days a week. In order to have a catheterization lab that is open 24/7 we have to have the progression and that plan in place,” Hodges said. “If you look at how we maximized our current lab with the staff and the physicians, I can tell you right now that approximately 40- to- 45 - percent of the time they are working overtime.”

Recently, Arslan Shaukat, MD, FAAC, joined Phelps Health Medical Group as a full-time interventional cardiologist in July 2018 and a new general cardiologist is expected to begin at Phelps Health this summer with additional plans in place to recruit another interventional cardiologist.

The finance committee accepted the capital contingency request for an amount not to exceed $3.5 million to be used to acquire a second cardiac catheterization lab at Phelps Health.

Phelps Health will have to follow the Certificate of Need process to acquire a second cardiac catheterization lab, and providing more cardiovascular services locally was identified as a growth initiative in Phelps Health’s strategic plan – a second cardiac catheterization lab would help achieve that goal, Clayton said.

The second capital contingency request the finance committee heard was for a new ultrasound machine for approximately $171,000.

Last summer two obstetrician-gynecologists joined Phelps Health. There has been significant growth in the number of ultrasounds at Phelps Health due to the growth of obstetric physicians within the Phelps Health Medical Group, according to Cook.

“We’ve seen that additional growth, and we’ve been able to meet that demand by extending our hours in our current ultrasound location in the medical office building,” Cook said. “They’ve been working late into the evening using agency personnel to keep that location open, so we can continue to meet that demand.”

Cook recommended the finance committee approve the capital contingency request for $171,000, which will provide another ultrasound machine to help continue to meet the demand the organization has seen.

The finance committee approved the capital contingency request for the ultrasound machine.

“We had about $1.4 million set aside for 2019 in capital contingency funds. This will take us down to right around $1 million to $850,000,” Cook said.