AHS quarterly update: patient revenue gains but Saint Rose still projects a $23.7 million loss; county IGT match eyed to close gap

Alameda County's Health Committee heard March 10 that Alameda Health System (AHS) has seen improved patient collections and several one-time supplemental receipts, but Saint Rose Hospital still faces a projected operating loss for fiscal 2025.

Sherry Johnson, who leads revenue cycle operations at Alameda Health System, told supervisors that higher outpatient and professional volumes produced an estimated net patient revenue increase of "approximately $37,100,000." She listed supplemental receipts outside the operating budget including a $19,100,000 skilled-nursing facility pass-through, $5,000,000 in enhanced payment program funds, $7,200,000 from QIP payments and about $5.8 million in FEMA COVID relief.

"We've had favorable revenue variance," Johnson said, adding that the system has reduced AR days and is using process changes in Epic and external appeal partners to overturn payer denials rather than write them off. "EPIC also allows us to put rules in their system so that things aren't just written off; they move and are escalated to the right appropriate person to pursue those," she said.

But Johnson and system leaders warned that expense pressures, especially labor, are significant: wage and benefit increases and higher FTE utilization contributed to an unfavorable expense picture. In January AHS reported AR days of about 64.8 on a 90-day view.

Mario Harding, chief administrative officer for Saint Rose Hospital, said the hospital's FY25 budget projects a loss of roughly $23,700,000. He described operational steps underway to grow volume and control costs, including physician integration, service-line rebuilding, a capital push to upgrade cath-lab equipment and a recently opened 29-bed subacute unit. Harding said the subacute unit opened Feb. 10 but has had slow commercial admissions; he reported the hospital received its first commercial admission the morning of the meeting.

When asked how much the loss would have been without the February 18 suspension of labor-and-delivery services, Harding estimated the additional impact at roughly $3 million.

Committee members pressed staff about financing options. AHS staff and finance leaders said they expect to use a combination of existing cash, a $15,000,000 line of credit and an intergovernmental transfer (IGT) strategy to close the gap. Finance staff said the county and AHS aim to maximize an IGT match that could total about $30,000,000 if AHS contributes an additional $14,000,000; those amounts include both county community support and a federal match.

Christy Roeberg, who addressed the committee on budget assumptions, said the budget currently includes prior-year IGT at about $14,000,000 and that AHS had agreed to donate an additional $14,000,000 to maximize the match and reach the roughly $30,000,000 total that would materially close the projected shortfall.

Supervisors asked about sustainability beyond the current year; Johnson and Harding said some items on the FY25 financials are one-time (severance related to the Alecto separation, prior extra IGT) and that volume is trending up since AHS took over operations. Harding said converting Saint Rose's Meditech record system to Epic would aid integration but that initial conversion costs were estimated near $8,000,000 and are not currently funded.

The committee did not take any formal vote. Staff were asked to return with further quarterly updates and more detailed projections as the IGT and financing plans evolve.