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MMH Board approves purchase of new CT scanner with one dissent

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MASSENA — Saying he couldn’t support borrowing more money when Massena Memorial Hospital was already in the red, board of managers member Darrell P. Paquin cast the sole no vote on the lease and purchase of a new CT scanner package.

“That would count as part of our debt. You’re going to take on more debt. I’m opposed because of the leasing. I agree we need a CT scanner. I don’t agree with going out and borrowing money when we’re in debt,” he said.

Senior Director of Ancillary Services Mark P. Brouillette told board members Monday that the hospital will lease the Siemens 128-slice CT scanner package for five years before buying it at the end of the five-year term.

The cost would be $1,260,135. That includes $998,900 for the scanner, including the negotiated trade-in value of $115,000 for the scanner now in use; $208,630 for a work station; $34,605 for a power injector; and $18,000 for facility preparation and modification expenses. The annual service costs will be $147,313.

“We also negotiated an approximate $24,000-per-year reduction in the preventive maintenance cost,” Mr. Brouillette said.

With the leasing option, the hospital would pay an interest rate of 2.9 percent, equating to just over $91,000 in total interest, according to Michael J. Tortoriello, MMH’s director of accounting and finance. Mr. Tortoriello is serving as the acting chief financial officer.

“It seems as if we’re borrowing a lot of money. We’re not generating enough revenue to pay our debt and we have to borrow more money. I’m in complete favor of replacing the machine. I don’t understand why we’re paying $90,000 interest,” Mr. Paquin said.

Instead, he said, the hospital could use two anticipated reimbursement checks to pay cash for the machine.

“You’re going to take on more debt” because of the leasing, he said.

Hospital CEO Charles F. Fahd II said that as the hospital faces difficult financial times, it was important to have cash on hand to tide it over rather than use it to make large-scale purchases.

“I think right now what we’re trying to do is, we need to have all the cash in the bank,” he said.

Mr. Brouillette said the purchase had been presented to the Finance Committee, which agreed to move forward with the acquisition of the machine.

The current CT scanner had brought in its share of revenue for the hospital, he said. In 2012, for instance, he said the hospital conducted 6,984 exams that generated $9,252,445 in gross revenue. The average reimbursement for the year was $4,973,189. The average reimbursement percentage is an average between zero reimbursement, the Medicare rate estimate of 40 percent, the private insurance rate estimate of 75 percent and the full 100 percent reimbursement.

For the first portion of this year, it has had 2,694 exams and seen a gross revenue of $4,536,307 and an average reimbursement of $2,438,265.

Altogether, the machine has been used for 59,725 exams, resulting in a gross revenue of $63,045,926 and an average reimbursement of $33,887,185, he said.

The purchase comes at a time when the hospital continues to see declining financial figures.

The hospital budgeted 217 inpatient discharges for June and ended the month with 203, compared to 215 in June 2012, a drop of 5.58 percent. The year-to-date budget called for 1,364 inpatient discharges, and the actual figure is 1,276, with in time in 2012, a drop of 1.62 percent.

Net patient revenue was budgeted for $4.2 million in June, but fell short at $3.6 million, or 13.84 percent below budget. It was $3.4 million in June 2012.

Year to date, net patient revenue as of the end of June was $22.2 million, short of the budgeted $24.7 million. It was $22 million at this point in 2012.

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