By GIB SNYDER
OBSERVER City Editor
The floodwaters that destroyed the Gowanda Tri-County Hospital in 2009 may have ended up allowing the TLC Health Network Lake Shore Health Care Center a few extra years to operate.
When Christopher Lanski, chairman of the board of directors for Lake Erie Regional Health System of New York, wrote an open letter to the area's residents stating that financial problems at the Lake Shore Health Care Center will lead to its closing in January, he cited continuing financial losses. Included in that was a projection of a $7 million loss for 2013.
LERHSNY has been facing some very serious financial challenges dating back to its original formation through the merger of Brooks Memorial Hospital and TLC Health Network in 2008.
Lanski stated the LERHSNY, which operates Lake Shore and Brooks Memorial hospitals, has had financial challenges since its formation with the merger of Brooks and the TLC Health Network.
TLC Health Network financials
The following are the financial report for TLC?Health Network in 2011. The 2012 reports are not available.
Total revenue: $51,126,855
Flood revenue: $5,827,532
Non-flood revenue: $45,299,323
Total Expenses: $46,938,613
Source: Internal Revenue Service 990 forms.
At that time, Brooks Memorial Hospital was consistently running a surplus in operations while Lake Shore was running up deficits. Brooks' merging with TLC was part of a Berger Commission recommendation in 2006.
If Brooks had not agreed to merge at that time, the commission would have forced closure of the facility in Irving.
A look at financial filings from recent years indicate the funds that came in following the devastating flood of August 2009 may have kept things afloat until now.
According to the 990 form that not for profits file with the Internal Revenue Service, Lake Shore has received more than $11 million in flood related revenue, which came in part from the Federal Emergency Management Assistance fund. That included $5,827,532 in 2011, as reported on the 990 signed by then President and CEO Jonathan I. Lawrence and dated Nov. 15, 2012. In 2010 that flood-related revenue was listed at $2,630,978 while in 2009 it was listed at $2,802,553.
According to the forms, overall revenue dropped more than $7 million in one year, going from $57,714,310 in 2008 to $50,504,945 in 2009. Revenues went up the next two years, hitting $50,853,150 in 2010 and $51,126,855 in 2011.
The total expense side dropped $7,748,689 from 2008 to 2011. In 2008, total expenses were listed at $54,687,302; $51,786,705 in 2009; $48,351,863 in 2010 and $46,938,613 in 2011.
The 2011 expense side was in two major categories, program service expenses and management and general expense. Program services cost $35,251,537, including over $15.5 million in salaries and wages while management and general expense was listed at $11,553,528, including over $4.2 million in salaries and wages. Pension plan contributions and other employee benefits added more than $2.1 million to the cost of services, as did the payment of over $1.5 million in payroll taxes. Those same three lines for management and general expense were more than $1.4 million.
Other major 2011 expenses under programs services included $4,948,702 in purchased services; $3,756,291 in office expenses; $1,892,989 in pharmacy costs; $1,301,407 listed as other; $1,284,572 as bad debt; $1,134,321 as depreciation, depletion and amortization.
Topping the list of management and general expenses after salaries and wages was $1,535,283 for purchased services and $1,285,602 listed as miscellaneous.
Looking at 2011's figures shows how important the flood-related revenue was. Without that $5,827,532, the bottom line goes from a surplus of over $4 million to a deficit of $1,639,290.
Patient services accounted for more than 81 percent of overall 2011 revenue at $41,414,131. Government grants and contributions were over $2 million while miscellaneous income was listed at just over $1.1 million.
In 2010 the flood related revenue made the difference between a surplus of over $2.5 million as opposed to a deficit of $129,691. In 2009 there was a deficit of $1,281,760 even with the infusion of $2,802,553 in flood related revenue.
The numbers for LERSHNY's Dunkirk hospital do not include any flood-related revenue.
Brooks Memorial Hospital's numbers for its 2011 990 filing show an operating deficit of $129,635. Total revenue was listed at $42,903,413 while total expenses were $43,033,813.
In addition for 2011 under changes in net assets or fund balances, Brooks reported a loss of $361,018 on investments and a pension liability adjustment that cost $3,780,238. Add those two and subtract a $1,898 adjustment to beneficial interest in trusts and the outcome for 2011 was a negative change to net assets or fund balances of $4,139,38 in 2011.