Cambridge Health Alliance now expects to lose more than twice as much as it forecast in its budget for this fiscal year, mostly because fewer patients than anticipated are using its services.
The health care system will probably lose $13.1 million for the year ending June 30, Chief Financial Officer Jill Batty told its trustees on Tuesday. The budget had forecast a loss of $4.8 million, one of the smallest in recent years. The Alliance, the state’s second-largest provider of care to poor and uninsured patients, has been trying to reach financial stability for years.
Monthly financial reports have shown a consistent shortfall of patients in the system’s three hospitals: Cambridge Hospital, Somerville Hospital and Whidden Memorial Hospital in Everett. The numbers are not only lower than budgeted, but they are going down overall. In the seven months that ended Jan. 31 – the most recent report – 6,194 patients had been discharged from a hospital bed, compared with 6,945 during the same period a year ago.
Chief Executive Patrick Wardell told trustees that the Alliance is losing Cambridge and Somerville residents who don’t see a primary care doctor in the system. “They are down the most,” he said, adding that managers don’t know why. Batty said all hospital networks in the area “are experiencing unpredictable volume” and “varying degrees of loyalty” from patients, meaning the extent to which patients see specialists and use hospitals in their primary care doctor’s network.
The Alliance and other health care organizations are increasingly being paid a set amount per patient for providing all necessary care, ranging from a primary care visit to a stay in the intensive care unit, so it is more important for systems to keep patients in their own networks where they have more control of costs.
The Jan. 31 report also showed fewer visits to doctor’s offices than expected, but that total was higher than a year ago.
This year’s budget was adopted despite sharp questions from the chairman of the trustees’ finance committee, Cambridge city finance department head Louis DePasquale, about the likelihood of meeting much higher targets for the number of visits to doctors.
Then, DePasquale called the predictions “a large assumption” but he voted for the budget, saying staff members “convinced everybody we can do it.” He did not comment during the public part of Tuesday’s meeting; the trustees later met in a closed-door session to discuss “strategic planning and peer review matters,” according to chairwoman Carol VanDeusen Lukas.
This year’s loss forecast may change again. At a meeting of the finance committee last month, DePasquale suggested the prediction should be amended monthly. The figures are no longer reported at the committee’s public sessions, but they are apparently available on request.
The forecasts haven’t proven very accurate in recent years. The original budget for fiscal year 2014, ending June 30, 2014, predicted a loss of $19.1 million; that was changed to a loss of $28.1 million and later revised to an actual figure of $17.7 million. In 2015 the budget forecast a loss of $19.8 million, but the Alliance ended up with a surplus of $24.6 million as a result of unexpected revenue.
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