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Finance committee hears $4.2M May operating loss, approves TeamHealth amendment and orders contract review
Summary
At a finance committee meeting, leaders reported a May operating loss of about $4.2 million and a year-to-date unfavorable margin of roughly $4.8 million; the committee approved a TeamHealth hospital medicine contract amendment and asked staff to review vendor performance and Meharry PSA impacts.
The finance committee reviewed May financials and approved an amendment to the hospital medicine contract with TeamHealth during a meeting that focused on plunging inpatient volumes, a sharp drop in deliveries and plans to recover lost revenue.
Dr. Blackledge and finance staff told the committee that May produced an operating loss of about $4.2 million and left the year-to-date operating margin roughly $4.8 million unfavorable to budget. "May was a challenging month," Dr. Blackledge said, noting both lower-than-expected gross revenue and higher-than-average expenses.
Cole Griffith, who presented the income-statement detail, said monthly gross charges were about $1.9 million unfavorable to budget and expenses were about $2.1 million unfavorable, producing a monthly operating margin roughly $4 million below budget. He added that a year-to-date net-revenue variance was positively affected by an unbudgeted PHS/PP payment of about $8.8 million that was not in the plan.
The committee approved an amendment to the TeamHealth hospital medicine contract that will increase support for physician FTEs effective July 1. Dr. Veronica Eldridge described the amendment as an update to a long-standing contract and said the change is intended to reflect compensation increases not adjusted since 2019. "This is an amendment to an existing contract for our hospital inpatient medical services," Eldridge said.
Board members pressed leadership on causes and remedies. The committee heard that inpatient admissions were well below budget for May (about 2,234 expected admissions with 355 cases representing a 13.7% shortfall in a recent reference to budgeted cases), and that deliveries were a key driver: the hospital recorded 20 deliveries in May against a budgeted 32. Leaders said obstetrics physician shortages and patient choice to deliver at other hospitals contributed to the drop.
Committee members urged action on physician engagement and vendor performance. Several members recommended that the finance committee examine the TeamHealth contract, its renewal terms (the vendor relationship was described as about 10 years long and auto-renewing in April 2027), and any legal or financial implications of termination. "If in fact we are contracting with a vendor for this express purpose, we should look at other vendors," a committee member said during the discussion.
Leadership outlined a two-part response: a recovery plan to stabilize near-term operations and a growth plan to expand volume. Tactics include asking TeamHealth for an actionable plan to boost encounters and community outreach, deploying physician liaisons to referring practices and moving board-level performance statistics from monthly to weekly to speed decisions and accountability.
The committee also asked staff to provide follow-up data, including: a breakdown of the FTE variance (budgeted hospital FTEs at 681 vs. actual 760), the exact dollar value and escalation history of the TeamHealth contract, and Meharry-related PSA figures. Members requested counts of antepartum patients seen by Meharry or hospital clinics who later delivered at other facilities.
The meeting ended with the committee approving the May financial statements by voice vote and scheduling the next meeting for July 30 at 3 p.m. A photo session will follow and Ms. Lester will coordinate logistics.
