AVH budget debate: job growth
The message last week from the citizens who oversee operations and finances at Aspen Valley Hospital to the administrators who run it was clear: Get a handle on job growth.
AVH finance committee chairman Bart Levin sparked a half-hour debate on hospital service and job growth last Monday at a joint meeting between his committee and the hospital’s board of directors. He questioned the need for 18 new full-time employees, an increase of just over 10 percent, in light of the fact the hospital’s revenues are expected to increase only 7 percent and its year-end operating profit is expected to be only $313,400. The personnel increase is in line with what AVH has experienced in recent years.
“It’s not the direction I like to see things go,” Levin said. “Let’s see if we can come in under that number of new employees requested.”
Whether Levin’s concerns, shared by some but not all of the committee and board members, will translate into fewer new hires next year could be decided today, when the board is scheduled to adopt a budget and property-tax mil levy.
Aspen Valley Hospital is one of 21 public hospitals in Colorado which rely on public financing to cover a portion of operating and capital expenses. Property taxes assessed throughout the hospital’s taxing district – most of Pitkin County – provide about 7 percent of its operating budget. Voters authorized the tax for a five-year period in 1995 to bail out the then-financially troubled institution, and they will likely be asked next November to renew the tax.
This year, the hospital expects to collect just over $1.6 million; if the mil levy is not adjusted at tonight’s meeting, the hospital can expect to bring in about $2.2 million next year, reflecting a 25 percent increase in property values.
“Sometimes there is a perception in the community that the hospital is supported entirely by tax dollars, but the reality is quite different. It’s an important part of the budget picture, but not a significant one,” said hospital CEO Randy Middlebrook.
According to the hospital’s preliminary estimates, next year’s operating expenses are expected to be close to $30 million. Charges for patient services will recoup an estimated $28.5 million, and property taxes will make up the difference.
The draft budget discussed last week contemplates a 4 percent increase in the prices charged patients and their insurers, four new physicians, an expanded obstetrical department to deal with the growing number of births, purchase of the Midvalley Medical Clinic building in Basalt, and roughly $300,000 in housing subsidies for hospital employees (excluding physicians) – up from about $100,000 in 1998.
Middlebrook said recruiting employees has become more and more difficult in recent years, as the cost of housing becomes more and more expensive.
The number of AVH-owned units is not sufficient for the existing employees, much less 18 new ones, so the hospital is forced to lease apartments and rent them back at subsidized rates.
“Housing is becoming a huge, huge issue for us,” said AVH Finance Director Verna Bartlett in an interview last month. “The cost of a nurse coming in, for instance, can be as much as three times her actual wage level.”
The new employees are needed throughout the hospital operations, Middlebrook said, with about 40 percent going into patient care and 60 percent into administrative positions.
That ratio was cause for concern last week for board member Morris Cohen. “We’re not looking to cut employees, but maybe we should think about adding a few less,” he said.
Board member Chuck Torinus was also concerned with the hospital’s appetite for new employees, and wondered aloud about what it would take for the hospital to be “lean and mean.”
“Our position over the years has been that seven to ten percent increases in the staff each year is not `lean and mean,’ ” he said. “A one percent surplus in net operating revenue is not generating much of a cash reserve. If we want to raise the reserve, then we’re not doing a good job of it. If we believe breaking even and providing good service is the goal, then maybe we’re OK.”
By the end of the discussion, the board and the finance committee declined to direct staff to cut back its hiring plans, although that may still change tonight.
“There’s a fine line between running lean and mean and running whipped and wounded,” said Levin. “Now that we’ve brought these concerns up with staff, they’ll be cognizant of them.”
The board meets today at 5:30 p.m. in the hospital cafeteria.
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