ELKO — Since becoming Northeastern Nevada Regional Hospital’s CEO in 2009, Gene Miller has seen considerable growth — in both services and profits.
Between 2009 and 2012, hospital profits increased by nearly 56 percent to more than $41 million, according to state reports.
“We’re proud of that,” Miller told the Elko Daily Free Press. “... Growth is the major driver; adding new services, and so on.”
Despite being in a rural area, NNRH continues to be the most profitable hospital in the state last year. On the other end of the spectrum was Saint Mary’s Regional Medical Center in Reno, which lost more than $64.7 million.
“It’s reflective of the region of the state we’re in,” Miller said. “If you look at the other hospitals in northeastern Nevada, you’d find there’s similar profitability. The fact is, our hospital is the largest hospital in the northeastern Nevada region.”
What accounts for the profitability in this area is the percentage of people who are employed and have commercial insurance, Miller said. In fact, 90 percent of patients admitted to NNRH have either commercial insurance, Medicare or Medicaid — the last two comprising of 25 percent and 8 percent of patients, respectively.
“We have a very young, well insured population here,” Miller said. “That’s the single most important factor.”
The two other Nevada hospitals nearest to Elko are Battle Mountain General Hospital and Humboldt General Hospital. These were the second and third most profitable of the 15 rural hospitals in Nevada last year.
The Battle Mountain hospital made $9 million net income in 2012, and the Winnemucca hospital made $13.1 million. These made less, however, than several other hospitals in the state.
Miller said expansion of services at NNRH has largely accounted for the $14 million profit increase over the last four years. Since 2009, NNRH has added a variety of new services, including a behavioral health program, a urologist, spinal surgery and the purchase of Elko Diagnostic Imaging.
Both revenue and expenses ultimately determine the net income of a hospital, Miller said.
Billed charges for NNRH in 2012 totaled more than $166.3 million. After deductions of about half that number, its net operating revenue was about $83.2 million.
The net income for NNRH was more than $2,000 per day and $6,241 per adjusted admission last year.
“Most of our admissions to the hospital are medical in nature versus surgical in nature,” Miller said.
More of the surgery is done on an outpatient basis versus an inpatient basis, he said. With about twice the number of procedures, outpatient billed charges surpassed inpatient charges last year, at nearly $100.1 million.
Determining what to charge for any given procedure is a complex process. Charges can be calculated as a multiple of cost or through negotiation with insurance companies. Medicare and Medicaid are on a fixed payment plans.
“We use multiple ways of arriving at charges, just like every other hospital in the nation,” Miller said.
About 60 percent of a hospital’s expenses is labor, Miller said.
Over four years, the hospital has hired 59 additional employees. Recently, the largest increase has been in nursing. Another part was the acquired Elko Diagnostic Imaging employees. In 2012, the hospital had a payroll of more than $22.5 million with 325 employees.
NNRH recruits physicians on an annual basis as a reflection of volume and community needs, Miller said.
Another 30 percent of expenses is supplies.
“We’re very fortunate that we’re part of LifePoint Hospitals,” Miller said.
LifePoint Hospitals is based in Brentwood, Tenn. Most Nevada hospitals have corporate affiliations.
Being a part of LifePoint gives the hospital more buying power, Miller said. This has a significant effect on the amount of money NNRH spends on equipment.
Another way NNRH has managed expenses is through efficiency.
“A major driver of expenses for hospitals is the amount of time the patients stay in the hospital,” Miller said. “The hospitals that are most efficient are the hospitals that tend to be the most profitable.
For 2012, NNRH had an average length of stay of 2.9 days, among the lowest in the state.
The hospital was established in 2001 and has 75 beds. Last year, it reported an average daily census of 19.8. This reflects the average number of inpatient occupied beds in a hospital on any given day, excluding newborns.
NNRH spent more than $2.7 million in capital improvements in 2012. Among these were technology replacements and updates, such as purchasing new anesthesia machines.
However, $2 million alone was spent on information technology, updating how the hospital keeps electronic medical and expense records. One million dollars has already been spent this year, and Miller expects to spend even more in 2014.
Under the government push for affordable health care, there are penalties for not having electronic records, Miller said.
According to its Community Benefits Report for 2012, NNRH spent nearly $5.5 million spent on charity and uncompensated care.
Although this was reported at more than $60.5 million in 2011, the difference is due to a change in the state reporting system. The new government-standardized methodology is based on a cost formula that doesn’t include revenues, Miller said.
“In the past, hospitals might report based on revenues, as opposed to based on costs,” he said.
Taking this into account, charity and uncompensated care did not change significantly from 2011 to 2012, he said.
Miller said he was attracted to Elko after seeing how it has thrived.
“This a community that is not being adversely affected by the economy,” Miller said. “I’ve always enjoyed being part of growth ... and I’m forever proud of the success we’ve had here. A lot of people have contributed to that.”
Miller attributes the mission of LifePoint Hospitals, “making communities healthier,” as the major contributor to NNRH’s growth and success.
“Our commitment and our passion for that has truly driven us to look for opportunities to increase the service that’s available.”
NNRH is located at 2001 Errecart Blvd.
Hospital profits are reported yearly by the state Division of Health Care Financing and Policy in its Report on Activities and Operations released Oct. 1. The Report on Activities and Operations can be found at https://dhcfp.nv.gov/hcfpdata.htm. Scroll down to the “Published Reports” subheading and select “Governor’s Hospital Reports” for the years 2009-2012.