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AVH finishes year in the black

John Colson

If Aspen Valley Hospital were a for-profit institution, officials there would be celebrating their first year of real profits in quite some time.

“We had a pretty good year,” Chief Executive Officer Dave Ressler said.

Ressler and Chief Financial Officer Terry Collins said increased revenues and trimmed costs in 2005 lead to a “profit” of roughly $4.2 million in a budget of about $52 million.

The year before, the nonprofit hospital lost approximately $1.2 million in a budget of about $49 million, according to Ressler and Collins.

The 2005 figures are preliminary until they have been scrutinized and approved by the facility’s auditing firm, Grant Thornton LLP. Those final numbers, Collins said, should be available in late March or early April.

Collins noted that hospital budgets in general contain a number of estimates in critical categories such as accounts receivable, retirement payments and expenditures made at the end of the fiscal year.

“You just don’t know who’s going to pay,” he said of the accounts receivable, which is the largest estimated segment of the hospital’s budget

The current administration is dealing with a host of problems left behind by several years of disastrous fiscal and other management practices by former hospital executives.

“This has been a correction year,” Ressler said. “Our receivables did build … while we got our [bookkeeping] processes in order.”

However, Collins and Ressler noted that expenses either held steady or fell in 2005.

Salary expenses, for example, fell from $19.7 million in 2004, to $17.6 million in 2005, Collins reported to the hospital board this week. The savings were mostly the result of laying off 34 employees, nearly 8 percent of the hospital’s work force, in April 2004, as well as outsourcing certain clerical and administrative functions. The outsourcing budget went from zero in 2004 to $2.6 million in 2005.

The hospital later hired back people to fill more than a dozen of the positions cut through layoffs.

Collins also noted that the hospital’s outlay for legal, consulting and audit services dropped from $3.1 million in 2004 to less than $900,000 in 2005. A large part of that cut, Collins said, was the 2004 closing of the old administration’s satellite billing department in Rifle, which cost considerable amounts in legal and other fees.

Another indication of the hospital’s improving financial health, Collins said, is the growth of the reserve funds account. He said a commonly accepted healthy reserve is an amount that could keep a hospital running for 120 to 200 days without any income.

In 2004, Collins said, AVH finished the year with about 55 days worth of reserve funds. For 2005, he said, the reserve account increased to 83 days.

Aside from providing the hospital with a financial cushion against hard times, Ressler noted, a healthy reserve balance is an indication of fiscal health that can translate into higher bond ratings and an improved outlook for borrowing money for expansions and improvements.

John Colson’s e-mail address is jcolson@aspentimes.com


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