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Cookeville Regional Medical Center will propose a 4% percent increase in operating expenses for the new fiscal year.
The total expenses are projected at roughly $321 million, according to CFO Tommye Wells’ presentation to the finance committee Tuesday. Wells said salaries, benefits and supplies make up about 76 percent of the expense budget.
“All three of these categories show substantial increases over the projected current fiscal year, due primarily to the addition of the surgery center on Whitney,” Wells said.
Cookeville Regional purchased the surgery center from several local physicians as a way to expand its market share and its space to complete certain types of surgeries.
Wells said the CRMC budget includes an average of 3 percent merit raises for employees. Wells said the hospital’s salary and benefits as a percentage of net revenue puts the medical center right in line with the industry standards.
The proposed budget includes a total revenue increase of approximately 4.5 percent. Wells said that increase originates in large part from the medical center’s expansion of services.
In addition to the operating expenses, CRMC’s budget includes $23 million in capital expenditures. Among the major investments, a new DaVinci XI robot, an update of CRMC’s phone system and nurse call stations, and new beds in several units. CEO Paul Korth said the demand for another robot, priced at some $1.9 million, is growing at CRMC expands its share of surgical business.
The capital expenditures include continued construction to update the medical center CATH labs, work that is already underway. Korth said the medical center will also begin renovations to 4 West and 5 West in the coming year.
“We’re probably going to have another half dozen meetings on that before we ever find out really what we want to do,” Korth said. “It’s probably going to be a year from now before we ever start on that.”
Board of Trustees Member Kevin Carter asked about the budget process and how the medical center executive team approaches the work. Korth said his team considers all the expenses carefully and makes sure the Board of Trustees remains involved.
“This is what I tell physicians that come in here, one of nice things about being the structure we are, owned by the city, and all the pluses that come with that, is our board meets monthly so we’re able to approve projects and we’re able to approve capital expenditures,” Korth said. “This is just a budget. You’re going to see a lot of these line items two or three times before we ever vote on them for that definite approval.”
Korth said the team has made changes to the budget process, such as the creation of an innovation section to the capital expenditures budget, to capture changes in the medical world.
“By the time we put it in place, it will be basically be six months old and we’re looking at a year and half, 18 months, before we ever finish the budget,” Korth said. ” In the medical field, 18 months is an extremely long time for innovations and new technology that may come out there.”
The Finance Committee approved the budget Tuesday. The Board of Trustees will consider the budget at its Thursday meeting. It then goes on to Cookeville City Council for inclusion in its budget.
