The Bartlett Regional Hospital budget for fiscal year 2012 increases the rates patients pay by 7.75 percent, increases personnel, plans for high-dollar capital projects and anticipates a decrease in the number of patients seen per day.

The hospital’s board of directors approved the budget Monday in a 7-1 vote, with member Dr. Alex Malter opposed. The budget will be reviewed by the Assembly Finance Committee on Wednesday.

Chief Financial Officer Garth Hamblin outlined the budget for the hospital board. He said the board traditionally budgets for a net profit margin between 6 and 9 percent.

Hamblin said state detox and treatment grants will remain the same, as will city liquor and tobacco tax allotments.

The hospital recognized Juneau’s population as steady, with a .7 percent decrease expected through 2014.

Hamblin said the average number of budgeted patients per day is down slightly, however patients are coming in more ill or in more distress. He said outpatient revenue is taking a higher percentage of total revenues — 62.6 percent — which is 2 percent higher than this year.

Hamblin noted growth with revenues in MRI, CT and operating room procedures, but a decrease in ultrasound due to competition from a physician’s practice.

The budget includes 437.29 full-time equivalent positions, up 17.79 from FY11’s budget. That increase in personnel is still less than the request of a roughly 15 FTE request from various hospital departments.

The increase in staff is for improving patient care and nursing based on a clinical review of productivity and development of staffing grids for nursing departments. Other areas where staffing is increasing are psychiatric inpatient billing, ancillary support (lab, diagnostic imaging, environmental services and facilities), and inpatient access services in the emergency room.

Outlined in capital expenditures are equipment replacement and expansions for $500,000; ultrasound and IV pump upgrade for $600,000; surgical services instruments and equipment for $650,000; $7.3 million for information systems upgrades; and $250,000 for facilities costs — vehicles, flooring, fire alarm upgrade.

The budget also includes $800,000 for physician integration initiatives and $5 million for an adolescent mental health unit.

If the board did not increase rates at all, it would decrease cash flow from the budget by $4.9 million — roughly the amount it’s setting aside for the treatment center.

The board favored the scenario with a 7.75 percent increase in rates, which puts the net profit margin at 9.1 percent — or an increase in operating cash of $1.2 million. This increase will add five days to Bartlett’s operating cash. The management presentation included a chart with scenarios of a 0 percent increase all the way up to 9.3 percent increase.

Hamblin said the goal is to have 180 days of operating cash-on-hand.

Malter was opposed to such a high increase in rates. He said for the past three to four years, the board has traditionally aimed at a net margin on the low side of 6 to 9 percent. Now, he said, it’s gone above and beyond.

“To begin, when I thought administration did a really nice job early on,” he said. “They had budgeted out a proposal that put in for a marginal net margin of 7.5 percent, which is halfway between the range of 6-9 percent this body had always wanted to shoot for. I had always tried to persuade the group to the left. We always want to buy things, but that translates into real rate increases. The margin went up to 8.7 percent two to three weeks later.”

Malter said he was concerned with budgeting for such high-ticket items in next year’s budget when the adolescent treatment center and IT upgrades aren’t even close to formalized. He said there aren’t specific plans for either one and was concerned with setting aside so much money if they may not need that much.

He said he isn’t opposed to setting some money aside for those projects and isn’t opposed to the projects themselves.

“My concern is, I already sometimes encourage patients to go to Seattle because rates are cheaper,” he said. “I am concerned I may have to do that a little bit more.”

Malter said he couldn’t support a rate increase of more than 7.5 percent, and noted a March 13 Finance Committee packet said the administration felt that 7.6 percent increase would be “plenty adequate in this environment.”

Board chairwoman Kristen Bomengen said she supported the increase and addressed Malter’s concerns. She said she supported designating funds for the adolescent center because it was time for them to get serious about the facility. Bomengen admitted they don’t know what kind of facility it will be, but however it ends up it will be a high ticket item and is needed in the community.

Bomengen said she isn’t sure that $7 million allocated for IT will be needed, but she said there isn’t enough information available to say that they can do it and meet the meaningful use requirements on the $4 million Malter suggested.

“I would rather that we pay close attention to that now while we can proceed and while we’re trying to move forward in this next fiscal year to establish adequate IT facilities for our hospital,” she said.

• Contact reporter Sarah Day at 523-2279 or at sarah.day@juneauempire.com.