The Cambridge Hospital campus of Cambridge Health Alliance. (Photo: Marc Levy)

Once again, Cambridge Health Alliance is expecting that more patients will visit doctors’ offices in the next year and that the increased volume will help the health care system earn a modest surplus. The same prediction of more doctor visits didn’t happen in the previous two years, but the Alliance still did well financially, mostly because of one-time revenues and annual contributions from the city.

Budgets over individual years haven’t forecast bottom lines very accurately, but the health care system has stabilized its financial status in the past three years after worries about repeated deep losses. For the most recent fiscal year that ended June 30, the Alliance, a safety-net system that serves mostly low-income patients on Medicaid or without coverage, expects to report a $10.3 million surplus. That’s more than the budget for fiscal 2018 had anticipated: $7 million.

The budget for the next fiscal year, outlined last month, predicts net income of $2.4 million. It also predicts that office visits will rise 3.2 percent, to 719,280. Actual performance has followed the opposite trend; the number of outpatient visits has declined in the past three years, from 712,031 in fiscal year 2016 to 696,700 in fiscal 2018.

As he has in the past, City Manager Louis A. DePasquale, chairman of the Alliance trustees’ finance committee, questioned the volume predictions. 

“We sat here last year and predicted a 6.4 percent increase in volume, and we had less,” DePasquale said. (Actual volume for 2018 was 6.3 percent below projections). Looking at the 3.2 percent forecast of outpatient volume increase for the next year, he called it “a big number … I’m concerned that a positive will turn into a negative.”

The system’s chief operating officer, Renée Kessler, ticked off changes that Alliance managers believe will increase volume: a recently opened service to streamline access to outpatient psychiatric services; new doctors in Everett; new services in Revere; and an effort to “standardize appointments,” intended to help physicians increase productivity.

DePasquale asked what would be done to respond if patients’ visits fall below the forecast. “How do you monitor?” he said.

“This year we will be equally focused on volume by site and volume by provider,” said Jill Batty, the system’s chief financial officer.

The committee adopted the proposed budget.

Although the Alliance’s bottom line has been positive, the system still runs a loss when it comes to health care operations. Last year trustees were elated that the Alliance expected an operating loss of just $4.5 million this year; the actual loss will be much smaller – $1 million, according to the budget presentation to trustees last month.

The operating loss predicted for the coming fiscal year is $8.5 million, though. The health care system has overcome operating losses with income from the city’s annual contribution meant to reimburse the system for operating the public health department and other non-operating income, such as interest. The city gave $8.8 million this year; the actual cost of running the health department isn’t available. 

The Alliance operates hospitals in Cambridge, Somerville and Everett, and has clinics serving patients in Cambridge, Somerville, Malden, Revere, Everett, Chelsea and Winthrop.

CHA depends heavily on federal and state support. Besides getting funds available to any type of health care system that meets performance requirements, it is eligible for extra help because of its safety-net status. That designation also qualifies the Alliance to buy drugs at a big discount and benefit from billing insurers at a higher price when it fills prescriptions for its patients. The Alliance has expanded its outpatient pharmacy program to take advantage of the program.

The Alliance is in expansion mode, opening clinics in cities such as Malden and Revere. But so far the new offices haven’t produced the expected increase in volume, at least partly because hiring didn’t keep up. Officials have said it takes time to bring physicians on board, and for them to function as efficiently as experienced doctors.

Next year the Alliance intends to hire more health providers and support staff, bringing the total to the equivalent of  412 full-time providers and 3,269 support workers, the budget says. But the system has struggled to hire doctors. The 2018 budget provided for the equivalent of 399 doctors and other health care professionals, but the system ended the year June 30 with 364. That was only three more providers than were on staff in 2017.