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  Cook County was created on January 15, 1831 and named after Daniel P. Cook, Member of Congress and the first Attorney from the State of Illinois.

County Hospitals Up Revenue Projections, Again

Wednesday, October 05, 2011

by Adrienne Lu

Despite a track record of overestimating revenues, the Cook County Health and Hospitals System has recently increased revenue projections for the next fiscal year by about $30 million in an attempt to reduce its subsidy from the county.

Cook County Board President Toni Preckwinkle and health system officials jointly agreed to the revisions, which project that the additional revenue will come from increases in Medicaid reimbursements.

The health system projects to fall about $90 million short of revenue expectations this year, roughly $40 million of which stems from expected Medicaid payments that did not materialize.

Preckwinkle acknowledged concerns over revenue projections at the board’s Finance Committee’s health budget hearing on Monday.

“Consistently, over time, there’s been an overestimation of revenues,” Preckwinkle said. “I want to assure you that reasonable minds on both sides believe that we’ve got a good and reasonable number for revenues.”

Commissioner Jeffrey Tobolski said during the hearing that some of his constituents have expressed concerns about the accuracy of the revenue figures.

“Some people feel that’s a deceiving number we plug into the budget every year [which] may lead to them being laid off,” Tobolski said.

On Tuesday, the board formally recommended the inclusion of the health system’s preliminary budget of $932.3 million in the president’s executive budget. Andrea Gibson, the county’s budget director, said the gap between Preckwinkle’s proposed budget and the health system’s is now down to about $44.2 million.

The health system is projecting that revenues will come in at about $548 million for the current fiscal year, about $90 million short of the $638 million budgeted. As of Aug. 31, patient fees, which make up the vast majority of revenues for the health system, are running $79 million, or 34.3 percent, behind budget, according to a revenue report by Comptroller Constance Kravitz. The fiscal year ends Nov. 30.

A significant portion of the revenue shortfall in the current fiscal year stems $40 million in expected Medicaid payments that never materialized. Gibson acknowledged “overoptimism on how quickly those revenues could be realized” and said the budget for next year anticipates only a portion of those revenues.

The health system also overestimated the revenues it would receive from other areas, including billing for patient services and physician services.

In responding to commissioners’ questions about revenue estimates, Dr. Terry Mason, who has been serving as the health system’s interim chief executive officer, said revenues had been overestimated in part because the health system had “tried to be aggressive in looking at what the opportunities for revenues were, but those required internal changes to take place that have not.”

The county and health system have overestimated patient fees since 2005, according to county budget documents, after fees peaked in 2004 and began a steep decline.

Last year, Service Employees International Union officials warned that the health system’s revenue estimates for 2011 appeared overly optimistic. According to an SEIU analysis, the health system introduced a budget on Oct. 13 projecting $529.1 million in patient fee revenues, but just over a week later, the projections had grown by over $70 million, based on higher Medicare, Medicaid and private payer revenues.

“This revision is troubling given that CCHHS’s estimate of 2010 patient fee revenues are currently projected to be $55.7 million short, with an over-estimation of 2010 Medicaid revenues of $59.5 million,” the analysis states. “In short, the 2011 budget may rest on thin margins built on potentially risky assumptions.”

Frank Borgers, an SEIU consultant, said the Preckwinkle administration reassured the union that the latest revenue projections are solid.

“We haven’t seen anything that would cause us to be concerned about an overprojection,” Borgers said. “I think everybody has learned a lesson from the last two years in terms of being much more cautious.”

Looking ahead to next year’s budget, Mason said health system officials have “tried to be as aggressively conservative as we can for this year.”

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