FORT WORTH -- Falling property tax revenue and a reduction in a federal reimbursement for treating Medicaid patients could leave the JPS Health Network with a $10 million to $25 million operating loss next fiscal year.
However, network officials said they're confident that they can balance the budget without impeding improvements to patient care. They also noted that many other entities are facing worse budget scenarios because of the economic downturn.
"It's a balancing act," network CEO Robert Earley said. "You cannot just make cuts, and you cannot just start new programs. We know we have a major responsibility to the taxpayer and a major responsibility to the patient."
Chief Financial Officer David Salsberry provided the budget update during Thursday's meeting of the board of managers. He said property owners are still appealing valuations, so it will be a few weeks until officials know exactly how much the tax base will shrink.
Tarrant County officials estimate a 2 to 5 percent reduction, which would translate to a $5.6 million to $14 million drop in ad valorem taxes collected by the network, according to the presentation.
Salsberry noted that, while a reduced tax base isn't desirable, other communities are seeing much worse.
"These valuations would be desired by the rest of the country," he said. "We hope this is only temporary and the economy will continue to recover."
A permanent financial loss, however, is expected from an upcoming adjustment in what is known as FMAP, a formula the federal government uses to fund reimbursements for treatment of Medicaid patients. JPS is reimbursed $1 for every 29 cents it spends.
However, a 10-cent adjustment that was part of the federal stimulus package will expire Dec. 31, meaning that JPS will start paying 39 cents per $1, Salsberry said. Lobbying efforts aim to have the adjustment extended or phased out slowly, he said.
The loss of the adjustment could cost JPS about $6 million, records show.
Factoring in nonoperating revenue, the network could see a net loss of only $6 million to $12.7 million. Salsberry reminded board members that the losses are a relatively small share of the overall budget, which this year was $637 million.
"We have to keep that in perspective," he said. "While it's never easy to go backwards, it certainly is not insurmountable by any means."
The board's budget retreat will be Aug. 7.
"We are going to have to talk about some way we can make things more efficient and where can we identify cost [cuts] that would have very, very marginal impact," Salsberry said.
Board member Bruce Capeheart said he has faith that network officials will figure out how to balance the budget, noting that JPS is finishing this fiscal year with an expected $2.5 million positive operating margin.
"I fully expect us to meet whatever the problems are and keep improving the hospital and providing better care for patients," he said.
ALEX BRANCH, 817-390-7689