Wednesday, Feb. 03, 2010

Hospital could use some cash

In hindsight, perhaps Johnston Health should have held off on building an outpatient hospital in Clayton and a patient tower in Smithfield. But the buildings are there, and so is their $144 million debt.

That debt worries the accounting firm that audited the hospital's finances for fiscal 2008-09. So much so that the auditor has told the hospital to increase its cash reserves so it can guarantee repayment of its debt.

The good news in the audit is that Johnston Health has done a good job of controlling costs during the economic downturn. The bad news is that the hospital can't expect to find much more money in cost-cutting. After rounds of layoffs, Johnston Health is about as lean as it can get. We doubt, too, that the hospital can raise what it charges for patient care. A recession is never a good time to raise prices, and it's always hard for Johnston Health to do so because of the competition it faces from the many hospitals surrounding Johnston County.

No, the auditor is right. It's time for that Clayton hospital and that Smithfield bed tower to start making new money; i.e., they need to attract patients who, in the past, would have gone outside of the county for their health care. That means the hospital needs to market itself, and it needs to offer the health care patients need. Johnston Health still can't do every procedure imaginable, but through strategic alliances with the likes of Duke Health, it has greatly expanded the care that it offers. More such alliances are needed if Johnston Health is to meet more health-care needs of more Johnstonians.

County leaders say Johnston taxpayers aren't on the hook for the hospital's debt. Much of the money for the Clayton hospital and Smithfield bed tower came from U.S. Rural Development, which means the loans are guaranteed by the federal government.

Still, no one wants to see Johnston Health default. That would scare away the most loyal of patients, and the hospital would wither. Then where would Johnstonians go for their health care?

No, the better scenario is to start making money -- and soon.