Petersburg Medical Center board approves revised FY25 budget and adopts FY26 operating and capital budgets

The Petersburg Medical Center Board on a voice and roll-call vote approved a revised fiscal year 2025 operating budget and then adopted the fiscal year 2026 operating and capital budgets after hospital staff presented financial reports and grant updates.

Board members were told the hospital’s operating position has strengthened this year amid higher patient volumes and new program revenues. Jason (staff member) reported that cash on hand was about $2,000,000 and that month-to-month net income for May was about $346,003.53 above budget. The board heard that outpatient revenue and long-term care volumes had contributed to stronger-than-expected collections.

Hospital staff said several one-time and ongoing items shaped the revised FY25 figures. Officials said the hospital has begun operating a 340B pharmacy program (reported as “3 40 b” in meeting materials) that is producing revenue, and the organization has recorded a claim for an employee-retention tax-credit through a consulting firm; staff said the hospital qualifies for an amount “upwards of $3,000,000” and recorded both the receivable and a contingency fee expense in FY25 financial statements. Staff also reported higher bad-debt expense tied to a prior electronic health records conversion and cleanup of older accounts and said insurance coverage limits were increased to meet stroke-program requirements.

For FY26, leaders proposed an 8% increase to the charge master (the hospital’s master price list for services) effective in July and projected a nearly breakeven operating budget with positive cash flow. Staff described several budget drivers: increased depreciation from the new work building, utility costs tied to the new facility, additional staff for higher patient volumes, and anticipated full-year revenue from the 340B program. The budget packet also included a capital plan; managers said smaller capital items may be paid from reserves and larger items could be leased or financed.

The board approved three formal motions at the meeting: the FY25 revised operating budget (moved by Marlene), the FY26 operating budget (moved by Cindy), and the FY26 capital budget (moved and seconded during the meeting). Board members recorded their votes by roll call; one member (Board member Khan) was absent for the votes. The board then voted to enter executive session to discuss legal matters and medical appointments and reappointments.

The hospital’s grant and development staff reported a mixed grant environment: an award from HRSA of $100,000 to support a network among independent rural critical-access hospitals, ongoing opioid-settlement funding supporting telepsychiatry, and uncertainty on some state prevention grants. Staff said a recently recalled school-based grant is being discussed with the state to attempt recovery of costs and that the 340B program is expected to provide a substantial recurring revenue stream.

Board members asked for clarifications on specific budget lines during the presentation, including the increase in bad debt and how capital grants are presented. Jason (staff member) explained that capital grants were recognized as revenue while building costs will be capitalized and depreciated over future years, and that depreciation will be recorded even though the grants funded construction.

Actions recorded at the meeting and the roll-call confirmations are included below.