Fundraising is the key to BIHS financial stability
The Block Island Medical Center will almost certainly end the year with a budget deficit. Just how large that deficit will be is uncertain, given that there are still two months left in the year. As of Sept. 30, when the latest numbers were made available, the health center was $23,062 in the red, having an income of $540,610 and expenses totaling $563,672. The medical center has projected its annual operating expenses for 2013 to be about $611,000.
According to Bruce Eagleson, the staff accountant for the health center, and Renwick “Pete” Tweedy, who is chair of the Finance Committee, the fact that the medical center operates at a deficit has become an annual reality. Expenses and income remain stable, as does the fact that income has not been able to cover annual expenses.
Given that this is not expected to change this year, or in the next, or in five years, the stark reality for the medical center and the people that it serves is that the only remedy for financial stability is an increased donor base.
“The primary issue is income. We can’t raise our patient fees, although you can try to raise patient visits,” said Eagleson at a Finance Committee meeting on Oct. 18. “The expenses are pretty straight forward.”
BIHS Board President Bob Fallon agreed that fundraising is the key. “The only other option is more revenue from the town, and the town’s resources are limited,” said Fallon to The Block Island Times this week.
Sue Hagedorn, Co-chair of the Fundraising Committee, said her group is aware of the importance of its mission.
“We have a great plan — it’s more than a plan — we have developed a whole new Lights of Love campaign.” Lights of Love is the annual Thanksgiving fundraiser for the center that allows an individual to make a donation in honor of a loved one, family member or friend.
Hagedorn said the campaign will include a more sophisticated, targeted approach to potential donors. She also said that an outside donation has covered the cost of the campaign.
“Everything we get will go toward erasing the deficit,” she said. As to the success of the campaign, Hagedorn said. “We’re optimistic.”
Hagedorn also said that there will be a separate effort to approach donors that may be able to offer more significant contributions.
Executive Director Barbara Baldwin said that as far as fundraising is concerned, the center needs “to look at more foundation and grant opportunities, but most of these are mainland options and they don’t necessarily see giving to Block Island as a priority. We need to see what would interest them.”
One of the key factors in the center’s revenue squeeze is that patient fees remain flat year after year.
According to the Finance Committee report issued on Oct. 18, a total of $288,418.46 has been billed — not necessarily collected — for the first three quarters of this year. In the first quarter, $34,027.74 was billed; in the second quarter, $84,179.28 and in the third quarter the billed amount totalled $170,212.44.
The budget committee has projected $71,506.15 in patient fees for the fourth quarter, but that remains uncertain.
The total patient fee revenue for 2013 inclusive totals $359,924.
This is a higher amount than what was presented on the Profit and Loss sheet the center issued on Oct. 18, which showed the total patient fees billed for January through December for 2012 was $293,909.46 — or $66,615 less than what is expected to be collected in 2013.
With a current deficit of more than $23,000, along with unbudgeted expenditures that became known this week totalling more than $20,000, if the revenues projected for patient fees are not met in the fourth quarter, some members of the finance committee at the Oct. 18 meeting expressed concern about the extent of the budget deficit.
There have been some measures in the past few years to help ease the strain on finances. A personal loan from a former board member for $50,000 (according to tax returns made available on the website Guidestar.com) was provided in 2011 and has since been paid back. The Town of New Shoreham voted to provide the center $105,000 earlier this year.
In the fourth quarter of 2012, not long after Tweedy joined the finance board (Eagleson was hired this year), the board wrote off $92,000 in what was called “unsubstantiated accounts receivable” that had not been previously written off in a timely fashion.
This year, Tweedy and Eagleson said the center is writing down bad debt. The line item for bad debt for the first nine months of 2013 was $29,999, and the two expected that they will write off about $10,000 more to bring the total of bad debt to just under $40,000 for the year.
Tweedy said this bad debt had been accrued for years.
The Board this year also voted to approve a loan of up to $30,000 from the center’s endowment of $1.25 million to help defray the cost of the electronics medical records (EMR) system the center is mandated to implement.
The center has received a total of $8,000 in grants from the state ($5,000 from the Senate and $3,000 from the House) to help offset the cost of the system, which will lower the amount of the overall loan the center may have to borrow.
The Board might have to make another withdrawal from the endowment before the end of the fiscal year to help cover $20,000 in unbudgeted expenses that arose this past week. (See related story that begins on page 6.)
These loans from the endowment, Eagleson pointed out, conform to guidelines and formulas that allows the center to make a withdrawal from the endowment without affecting its growth.
The good news is that donations are up. Last year, donations totaled $48,695 and this year donations (which include membership fees) total $74,779.
“When you look at income and expenses, you can see how fundraising has helped this year,” said Baldwin.
But at the finance committee meeting on Oct. 18, member Judith Cyronak recognized the need for more community support.
“If the community wants medical care 24/7, they are going to have to support it.”
Bottom line, said Tweedy and Eagleson, the facility is doing its best to keep the budget in check as the facility looks into more ways to increase its fundraising and to bolster its endowment.
“We have a $1.25 million endowment. The balance sheet looks great. We have no liabilities and a whole lot of assets,” said Tweedy.
Hagedorn also said the Fundraising Committee is focused on shoring up the endowment.
“We want to build our endowment,” she said. “That’s our job, to build an endowment we can live off and provide resources that will allow us to be more independent.”