Becker's Hospital Review

44 FINANCE Carolinas HealthCare Plans $3B in Capital Investments By Ayla Ellison C harlotte, N.C.-based Carolinas HealthCare System intends to spend $3 billion on capital projects as part of a six-year re- investment plan, according to a Charlotte Observer report. At the health system's quarterly board meeting, Greg Gom- bar, CFO of Carolinas HealthCare, said the plan is critical to meet evolving consumer demands when it comes to healthcare. Mr. Gombar said it is the health system's goal to spend 10 per- cent of net operating revenue annually on capital projects, includ- ing buildings and technology. Since 1984, Carolinas HealthCare has spent an average of 11 percent of net operating revenue annually on capital projects. However, the health system had pulled back on its capital investments in recent years, according to the report. Mr. Gombar didn't provide details on any future projects, but Carolinas HealthCare CEO Michael Tarwater said at least one proj- ect will be announced in early 2016. n OSU Wexner's Operating Margin Cut in Half on CFO's Recommendation By Ayla Ellison I n the healthcare industry, where median nonprofit hospital margins have been in the 2 percent to 3 percent range for the past few years, Columbus-based The Ohio State Universi- ty Wexner Medical Center stood out with double-digit margins. However, Mark Larmore, who took over as Wexner's CFO Oct. 1, recently cut the annual operating margin reported to trustees in half, according to a Columbus Business First report. Wexner reported a 13.7 percent operating margin for the fis- cal year that ended June 30, but that number didn't account for about $130 million used to support OSU's medical school and to pay faculty physicians for their time training students and newly li- censed physicians in residency programs, according to the report. In a recent summary to trustees, Mr. Larmore said that after the support to the medical school was accounted for, Wexner end- ed FY 2015 with a healthy 7 percent operating margin. Regard- ing why the hospital made the change, Mr. Larmore told Colum- bus Business First, "We thought the board should see it, including the cost the health system is incurring to support the mission." n Brigham Reports $53M Shortfall After Epic Transition By Brooke Murphy B oston-based Brigham and Women's Hospital reported its first budget shortfall in more than 15 years for the fiscal year that ended Sept. 30. The hospital came $53 mil- lion short of its budget, owing the shortfall in part to unexpected costs associated with its EHR transition in June, hospital spokeswoman Erin McDonough told STAT. The EHR transition — part of a broader Epic implementation across 10 Boston-based Partners Health- Care hospitals — cost Brigham $27 million more than its $47 million cost estimation. The hospital had planned for a $122 million surplus in the most re- cent fiscal year, which was to be rein- vested into capital projects. Financial problems prompted the hospital to lay off 20 workers and eliminate 80 vacant job positions earlier this year, according to Ms. McDonough. Improperly coded patient visits resulted in lower reimbursements from insurance companies, esti- mated at $13.5 million of the $27 million excess costs. The other half came from reduced patient volume this past summer in an attempt to avoid miscoding. Brigham and Women's Hospital President Betsy Nabel, MD, said the Epic-related losses and coding prob- lems are expected to be temporary, according to STAT. Epic spokeswoman Erika Koch told STAT that while there are initial financial investments in launching the company's software, "what we typical- ly see when a health system transi- tions to Epic is permanent, long-term improvement in financial health and increased bond ratings." n

• Cover