January was a good month for the Cambridge Health Alliance on many fronts, financially speaking: increased number of patients admitted to a hospital bed or going to a doctor’s office; higher reimbursements because those patients were sicker; and ability to take care of the higher number of patients without adding more staff. It led to a joyful report Feb. 25 to trustees on the CHA finance committee.
“I hope everyone had a chance to review the [financial] statements in advance and can join us in celebrating that January was a very positive month from a financial performance perspective,” chief financial officer Jill Batty said at the beginning of the meeting.
The higher volume during months such as January isn’t unusual “because of a lot of community illness with flu and other viruses,“ Batty said. And “frequently we’re very busy and there’s not an ability to rapidly ramp up staff in response to that. And so the net impact of that is frequently a positive financial outcome.”
Besides those factors, “the financial improvement work that we’re doing also contributed to the positive performance and really set us up well for continuation through the end of the year. So we’re excited and happy to report on that information,” Batty said.
All these elements led to a $700,000 surplus without the help of one-time revenues such as state or federal aid, Batty said. Referring to a line in the January financial report that showed the results for recurring revenue and expenses, she said: “You can see that it’s actually a positive number. It’s been a while since we’ve seen a positive number for our recurring operations. So we’re excited for that and it’s well above budget by about $4 million, which means although we had been about a half-million dollars behind as of the first six months, we’re now ahead of budget year to date. So great news.”
There are some drawbacks, Batty acknowledged. “When there’s a lot of the flu it’s frequently a financial boon for health care organizations, and this year is probably no exception, but not necessarily a trend – nor do we want it to be a trend for the sake of our communities and patients,” she said. That’s not “a business we’d like to conduct.”
David Kale, finance committee chair and former Cambridge city treasurer, responded: “That is true, but we’ll take any win we can get.”
Federal money due
The alliance also won approval from the Federal Emergency Management Agency in January for a long-awaited reimbursement of $33 million in Covid expenses. That payment plus $722,000 from the city of Cambridge gave CHA a surplus of $31.5 million for the month, when the alliance had expected to lose $367,000, the financial report said.
The picture for the first seven months of the fiscal year was equally rosy. With the $33 million Fema reimbursement and $5 million from the city, CHA earned $15.9 million instead of losing $3.9 million as expected. In addition, the alliance budgeted a payment of $28 million from Fema, not the entire $33 million it had applied for, in case there were problems with the application.
Although the federal government has “obligated” the money, getting the cash could take some time, Batty said. “We will be working with Mema and Fema about processing the cash flow related to that over the next several months,” she said. Mema is the Massachusetts Emergency Management Agency.
Asked whether there was uncertainty about getting the cash, given that the Trump administration has paused or refused to pay some grants approved by Congress or federal agencies, Alliance spokesperson David Cecere said: “CHA continues to work closely with Mema and Fema to complete the reimbursement process for excess costs incurred to respond to the Covid pandemic. We do not have any indication that these grants will be affected by federal policy changes.”
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