The Cook-Orr Healthcare District Board agreed Tuesday to hold the line on its annual levy and collect $895,926 — the same amount it levied for in 2009.
“People have enough stress on their budgets,” said Cook Hospital Administrator Al Vogt in recommending the 2010 levy amount. “We don’t want to add to it.”
The levy includes $404,000 for capital improvements, mainly in electronic records equipment, software and training. That amount will be supplemented by $183,252 earmarked for capital improvements that the district expects to carry over to 2010.
In addition, the levy will provide $213,000 to be divided equally between the Cook and Orr Ambulance services and includes $278,696 for operating expenses, much of which will be used to offset losses incurred in the nursing home operations.
“The ambulance piece is critical,” said Vogt. “It’s really a positive benefit to have new emergency vehicles to transport people to health facilities and it’s sometimes overlooked when we act on the levy that a portion goes there.”
Change in levy
Prior to 2009, the Cook-Orr Healthcare District could only use its levy for capital improvements. That changed as a result of state legislation pushed by state Sen. Tom Bakk, DFL-Cook, and state Rep. David Dill, DFL-Crane Lake, which allows the district to use levy funds for operating costs.
The new uses for levy dollars resulted in a 55-percent increase in taxes from 2008, when the district levied $576,196, to 2009, when the district levied $895,926.
That, in turn, has helped fuel a turnaround in the hospital’s finances. As of July 2009, the hospital was showing a net income of $384,125, up from a net loss of just over $54,000 at the same point in 2008.
Although the hospital’s bottom line has also been improved by exceeding its budgeted in-patient stays during the first half of 2009, officials say the levy has been key in strengthening the hospital’s financial health.
Budget projections
Early budget projections for 2010 estimate operating expenses will total $10.237 million while revenues will be $10.001 million. That gap between expenses and revenues, however, could widen with some new financial challenges confronting the hospital in 2010.
Chief among those challenges will be Gov. Tim Pawlenty’s directive that slashes $381 million from General Assistance Medical Care (GMAC). The cut takes effect in July 2010 and strips eligibility from 30,000 people.
Hospitals, which represent 40 percent of the current GMAC expenditures, won’t refuse to care for those adults, but will lose millions in state funding. Administrator Vogt expects the cuts to cost the Cook Hospital $100,000 or more. Minnesota Hospital Association President Lawrence Massa said he hopes to work with legislators to minimize that cut before it takes effect.
At the same time, Vogt said nursing home reimbursement rates will be frozen at the current levels for the next four years.
In addition, the hospital is working to meet a mandate to convert medical files to electronic media by 2015. Cook expects to spend an estimated $1.3 million over the next three to four years to meet that goal.
