Boca Hospital records net loss of $110 million

By Dale M. King
CITY EDITOR

A second consecutive year of staggering financial losses at Boca Raton Community Hospital has forced the facility to defer indefinitely the development of a new medical center on the Florida Atlantic University campus and turn inward to solve “core” problems, hospital officials told the Boca Raton News.

“BRCH is projecting a large net loss for the fiscal year ending June 30, 2008” of $110 million, said President and CEO Rick Van Lith, who took over last year after former CEO Gary Strack was dismissed after reporting a $42 million loss.

In a letter distributed to employees, Van Lith said the hospital’s “balance sheet and liquidity remain solid, with an estimated $180 million in cash and investments in the hospital Foundation at the end of fiscal year 2008.”

Van Lith estimates it will take “at least two years to turn around the hospital’s financial performance.  We are fortunate to have the strength and support of the hospital Foundation as we address our challenges.”

The CEO offered a shrug, pointing toward some things beyond the hospital’s control – a decline in patient population, a sour economy and decreases in Medicare reimbursements, for example.

Layoffs Due

The losses will take a personal toll, he said.  The hospital workforce will be reduced by 30 people, and 50 vacant positions will not be filled.

Van Lith said the hospital will phase out its inpatient pediatrics and outpatient developmental pediatric rehabilitation centers – programs he said are little used. He said the closings will be phased in and any patients will be directed to other facilities.

While hospital leaders did not pull the proposed FAU medical center off the BRCH to-do list, it offered projections that look bleak.  Of the $110 million in losses, Van Lith said, $50 million are “costs associated with the planning, development and financing of the proposed academic medical center.”

He said the project is deferred “for the foreseeable future.”  And he said BRCH “will also enter into discussions with Florida Atlantic University and the University of Miami’s Miller School of Medicine to remove BRCH from the regional academic affiliation agreement it became a party to in January 2006.”

FAU was depending on the hospital to provide an onsite internship facility for would-be physicians being trained on the Boca campus.  FAU and UM are partners in a medical training program, but students do internships in Miami.

Part of the $50 million loss associated with the new hospital is a loss of $16 million in the value of a parcel of land BRCH purchased on Spanish River Boulevard in anticipation of the new hospital, said interim Chief Financial Officer Steve Ruzika.

Improve Collections

Of the $60 million loss, Van Lith said $20 million is “related to reductions in BRCH’s net revenue, accounts receivable and other miscellaneous charges.”  He said a consultant has been hired to improve billing and collections.

The hospital is also trying to “lower supply costs and increase patient and physician satisfaction.”

Some “great progress” made this year buoyed the CEO’s spirits, among them, “the success of the Lynn Heart Institute, the development of the new Lynn Cancer Institute-Harvey and Phyllis Sandler Pavilion, BRCH’s 40th anniversary and our association with the Moffitt Cancer Center clinical research program.”

“Clearly,” he added, “We have much to be proud of.”