Humboldt General Hospital leadership and board members will soon have a new tool to project operating costs for expansion projects under consideration.
HGH CEO Jim Parrish gave a preliminary description of the computer program and interactive software package that can take into consideration 1,200 cost-component variables to analyze the effect a change in such variables will have on operations costs and hospital revenue.
As hospital board members have seen architects' plans and listened to presentations regarding the proposed third, fourth and fifth phases of hospital remodel and expansion, board member Kevin Chatfield has repeatedly asked for estimates on operational expenses that would be part of the proposed changes.
Parrish has worked with HGH controller Eddie Davis and CFO Sandi Lehman to develop three scenarios of operation cost projections. Lehman said there is a "best case" scenario, a "middle-of-the-road - what we really think will happen" scenario and a "worst case" scenario.
"Even under the worst-case scenario, the hospital does quite well," Lehman said.
Once the three cost projection scenarios were developed, Parrish said they sent them to Clifton Larson Allen, the accounting firm that works with the hospital and asked them to do a peer review "to make sure we had put in all the projections and hadn't missed or duplicated anything."
Lehman said CLA made some changes in a couple of areas, including depreciation and then said it was a complete analysis.
Parrish said the document they developed with best, average and worst-case scenarios can be combined with the computer software to analyze the effect of any number and combination of facilities changes or management decisions.
"As we combine the planning document with the budgets, it gives us so much information," said Parrish.
He added they can figure out how the hospital would be affected by the rate of inflation, changes to Medicaid or the payer mix between private insurance (under which the hospital gets reimbursed for about 95 percent of charges) and Medicaid (under which the hospital gets reimbursed for about 38 percent of charges).
"Almost anything you can think of can be put into the computer program," said Parrish. "If we consider a change in the number of employees, this computer program can project both the budget impacts and other impacts including standard of care.
"We could project what would happen if we lost all net proceeds of mines revenue; we can see what would happen if we lost our critical access hospital designation."
The most valuable part of the operations cost-projection software may be its capability to analyze the impacts of the Affordable Care Act.
Parrish said he wanted to give the board members time to look at the binder with the written information on the three cost-projection scenarios for the next three phases of remodeling and construction. Then, he said he'd like to get together with board members one or two at a time and go through the software package with them and explore its capabilities.[[In-content Ad]]
