HAD 4 board approves 2007 budget for Mayo, physician office network

DOVER-FOXCROFT – Hospital Administrative District 4 directors Wednesday approved a 2007 operating budget for Mayo Regional Hospital and its eight associated physician practices.

Mayo anticipates net operating revenue of $36.2 million. After $35 million in expenses are factored in, Mayo expects to generate operating income of $1,162,082 in the fiscal year that begins Oct. 1. Net income is reinvested in the nonprofit community hospital to fund depreciation, acquire new equipment and develop new programs, according to Tom Lizotte, the hospital’s director of marketing and development.

Chief Financial Officer Dennis Allen said total hospital gross revenues are anticipated to increase by 10.27 percent in the coming year. Approximately half of the increase is because of greater use of hospital services, and half is because of rate changes.

Allen said most of the rise in Mayo’s revenues will come in the outpatient area, from increased activity in such departments as laboratory, radiology and pharmacy. Outpatient services, which account for 61 percent of gross patient revenue, are expected to increase revenues 11.5 percent in 2007.

Solid growth also is projected in Mayo’s network of physician offices, located in Corinna, Dexter, Dover-Foxcroft, Guilford and Milo. Physician office revenue is predicted to increase 12.5 percent in 2007, largely because of the addition of a staff psychiatrist and new physicians at Mayo Orthopaedics and Milo Family Practice. Physician office visits are expected to exceed 52,000 during the year.

The hospital plans a 5 percent overall general rate increase at the start of the fiscal year, the hospital’s first rate increase since 2003. The hospital also expects to absorb bad debt and free care amounting to more than $2.3 million, according to Lizotte.

Mayo’s work force next year, including hospital and physician office staff, is budgeted at 345 full-time-equivalent positions, an increase of 20 positions over the previous year. Part of the employment increase is because of decreased reliance on temporary agency personnel.

Lizotte said Mayo’s employment level has grown from 291 to 345 since 2004, driven both by increased use of hospital-based services and expansions of the hospital’s physician office network and regional ambulance service. The state Department of Labor lists Mayo Regional Hospital as the largest employer in Piscataquis County.

Total salaries and benefits at Mayo will reach nearly $22 million in 2007.

HAD 4 directors Wednesday also authorized a hospital capital equipment budget of $1.7 million. Of that total, $620,000 is earmarked for the purchase of two new ambulances, construction of a new ambulance base to serve the Dexter-Corinna region, and acquisition of radio and monitoring equipment.

Other capital purchases include pharmacy dispensing, anesthesiology, information technology and surgical services equipment. A new roof is scheduled to be installed on the main hospital as well as other repairs and maintenance projects to buildings on the Dover-Foxcroft campus.