Schneider CEO tells Senate hospital needs $9.9M more for FY 2015

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ST. THOMAS - Schneider Hospital executives told members of the Senate Finance Committee on Tuesday that they need $9.9 million more than the $22.4 million the governor recommended in the Fiscal Year 2015 budget proposal.

The additional $9.9 million would be to just break even on operating costs for FY 2015. The hospital also has $9 million in capital needs that currently are not funded, Schneider Chief Executive Officer Bernard Wheatley said.

Wheatley said funding for the hospital has steadily declined since 2008, when funding peaked at $31.5 million.

The $22.4 million General Fund budget proposal is about $200,000 less than last year's appropriation.

"Unfortunately, the recommended appropriation is insufficient to meet the mandate of operating a cancer center, an acute care hospital and an urgent care clinic on a 24-hour basis," Wheatley said. "The current heightened challenge that the proposed $22,472,518 level of funding imposes on the organization makes it difficult to render the full scope of services expected by the community and visitors."

The FY 2015 budget recommendation will fund only salaries and benefits for employees with NOPAs - notices of personnel action - that originally showed were to be paid from the General Fund, according to Wheatley.

The funding leaves the hospital with a $25 million shortfall to cover all personnel costs for FY 2015, he said.

The proposed budget funds 673 filled positions and 120 vacancies, Wheatley said.

The projected operating expenses for 2015 are $110.3 million. With only $22.4 million coming from the General Fund, the remainder of the hospital's budget must come from revenue.

Revenue has been weak for years because of a number of things, including low and outdated reimbursement rates; indigent patients; and the high rate of uninsured patients.

Sen. Nereida Rivera-O'Reilly mentioned that Luis Hospital on St. Croix has only one day's worth of cash in the bank and asked Wheatley what Schneider Hospital's cash position is.

He said they have enough cash on-hand to run the hospital for about five days.

Wheatley said the hospital has taken on several initiatives to reduce costs and boost revenue and are projecting a $7 million increase in net revenue in the coming year.

Schneider Regional Medical Center is comprised of three facilities: Schneider Hospital, the Kimelman Cancer Institute and Myrah Keating Smith Community Health Center on St. John.

Wheatley said the Myrah Keating Smith clinic had an operating loss of $2.7 million in FY 2013 and already is operating with a $1.6 million loss in 2014.

Despite an increasing number of patients coming through the doors, the clinic's appropriation levels have dropped by about 24 percent in the last five years, Wheatley said.

"Given its financial status, MKS cannot continue to provide services at its current levels without additional financial support and resources. If funding is not provided, MKS must take measure to curtail services in order to reduce its operating expenses," Wheatley said.

The Kimelman Cancer Institute is facing similar trouble. Wheatley said in 2013, the center had a $2.9 million operating loss, and as of June, the 2014 operating loss is at $1 million.

Capital needs are a huge issue that must be addressed soon, Wheatley said. The lack of funds to support critical capital projects have meant that each year, necessary projects get put off and rolled into the coming year, bumping the capital projects budget up to $9.4 million.

However, the capital budget is not funded.

Ignoring the importance of addressing capital needs - such as replacing aging infrastructure and equipment - means the hospital is forced to spend more money it does not have to make emergency repairs, Wheatley said.

"The cost of maintaining an aging physical infrastructure and repairing outmoded equipment is increasing and will continue to increase, while the capital base erodes until SRMC is able to access resources to fund its capital needs," he said.

- Contact Aldeth Lewin at 714-9111 or email

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