"Children's Hospital National Medical Center is required by law to give a reasonable amount of service at no cost or less than full cost to people who cannot pay. If you think that you are eligible for these services, please contact our business office."
A plaque posted in the main lobby of Children's Hospital carries that modern rendition of the colorful language under which the hospital was incorporated more than 110 years ago. Despite the changes in wording, the hospital today still operates primarily to provide free or low cost health care to needy area children. To maintain this function, it relies substantially on public support.
"A 'closing the doors' to free care cases threat is the very last thing we would do if faced by a critical lack of public support," explained Dr. Robert H. Parrot, director of Children's Hospital. "Everytime we've seen that as a potential dilemma, something has come through. We have a guardian angel that seems to watch over us.
"The big phrase right now is 'cost containment,'" continued Parrott.
"It's tough because everything has gone up in price. The hospital relies on the same things as a person to exist -- food, for instance."
During the holiday season, Children's Hospital mounts a major area-wide effort to raise charitable funds through direct mailings, celebrity fund-raisers, radio and television advertising, and this daily column, contributed by The Washington Post. This year, development officials at Children's have indicated that contributions are running about 10 percent above last year's level. Even with that increase, though, the amount collected will fall far below the costs of providing free pediatric care.
For the fiscal year ending June 30, 1980, Children's lost $6.62 million on free care and on debits from patients who didn't pay, compared to $4.84 million the year before. Of that $6.62 million, about $4.1 million was spent directly on free care for needy children, and the remaining $2.5 million represented bad debts. Those amounts were included in total operating expenses last year of $57.03 million on total operating revenues of $54.58 million, leaving an overall loss from operations of $2.45 million.
"We had a lot of problems last year collecting our receivables," said James Grubbe, the hospital's financial director."We've done some analysis. We do very well on inpatients.But outpatients, well, we billed a little over $14 million for 1980 and collected only $7.2 million, or 53 percent. Most cash receipts are lost through patient services."
For fiscal 1980, the hospital covered the outstanding deficit of $2.45 million through the "nonoperating revenues" of $3.22 million. Of that total, $1.66 million came from annual community support, or charitable contributions, $996,000 came from estates and bequests and an additional $567,000 was income from hospital investments. The facility recorded net revenues for fiscal 1980 of $770,013. The previous year the hospital showed a loss of more than $466,000.
"The key thing to look at is the 'loss from operations' figure," said Grubbe. "It's taking all the revenue we can bill and then all the expenses we incur. At that point we show a loss of about $2.5 million. That's where community support has to come in."
"So far we're running about 10 percent above last year," commented Alfred B. Lawson Jr., director of development at Children's Hospital. "We've had a couple of unusually large one-time gifts for special purposes, and realized about $200,000 from a terminated pension plan.
"More and more peole are becoming aware of the services provided by Children's Hospital, and with that awareness usually comes more money," said Lawson.
"Children need the kind of enriched program we have here at the hospital and we would hate to have to cut back on it," added Parrot. "Right now we're in a period of consolidation. We grew very rapidly in our patients' programs. It's time to look at what we're doing and examine our needs for the future."
For fiscal 1981, budgeting for free care losses and bad debts at the hospital has been set at approximately $7.4 million. Of that amount, around $4.6 million will be spent on free care.
"Kids are staying longer and the acuteness of illness is up in terms of patient care," explained Grubbe. "Free care costs certainly will not come down in the future. Help from the community is vitally important."