Bradford Regional Medical Center operated at a $5.3 million loss for 2006, but rebounded in 2007, officials said.

"In 2006, the bottom line is we lost $5.3 million," BRMC President and Chief Executive Officer George Leonhardt said Tuesday morning. "That is a significant loss for us ... it's the worse year since I've been here."

Leonhardt, who has been at BRMC for 15 years, added that the causes for the loss are "fairly straight forward."

BRMC had gone through a growth period and also had to deal with some unexpected expenses, an unforeseen contractual dispute and a computer conversion.

"We had to take over the OB practice when Dr. (Manhot) Lau died," he said. That required a significant investment to get the situation to stabilize, including hiring two OB/GYNs. Lau died unexpectedly in February 2005.

Another unexpected expense was a contract dispute with Blue Cross.

"We were not paid what we had anticipated" for a full year, Leonhardt said.

Senior Vice President and Chief Financial Officer James Tarasovitch said that when compiling the budget, they can expect a certain amount of revenue. When it's a third-party payer like Blue Cross, the funds don't come in for about 50 days, which added to the delay in the hospital not finding out they were not getting paid what they thought they were.

Leonhardt said the finance department also "ran into some issues ... that picture was not clear to us for a period of time."

All these factors contributed in it taking "longer than it should of to recognize what happened in 2006," the CEO said.

When it came to doing the audit report, officials had to "piece together" what happened until they felt comfortable it was correct.

Normally, the hospital releases its financial report in November for the fiscal year that ended in June.

"We had a contract with them and anticipated a payment based on that contract," Leonhardt said of Blue Cross. "Understand, that at the end of the day, they had not paid us what we anticipated."

Leonhardt said that just recently BRMC came to an agreement that "we are much happier with."

Neither Leonhardt nor Tarasovitch could speak further on the issue, citing the agreement reached.

Another financial issue the hospital has had to deal with are payments from Medicare, making up 65 percent of the revenue, and Medicaid, which is about 19-20 percent of the revenue.

"They have historically not paid enough to cover the cost of care delivered here," Leonhardt said. "We rely on second-party payers to make up the difference."

Medicare has also changed the amount covered and change eligibility.

This ultimately falls into uncompensated care.

Government health care providers, like Medicare, "squeeze payments to providers," Leonhardt said.

In Pennsylvania, Medicaid generally pays 20 percent less than the cost, Tarasovitch said. That 20 percent then falls on other payers and the community.

"That's 65 percent of our business depends on the government,' Tarasovitch said.

The two also addressed a report from the Pennsylvania Health Care Cost Containment Council for 2006.

BRMC's three-year total margin average was negative, including -4.41 percent in 2006.

While the news was not good, Tarasovitch it is important to note that an independent body said the facility was "still viable."

"We can't endure three more years," he said. "This is an aberration. It will not threaten the solvency of the organization."

"We don't ever want to see something like this happen again. We are making the necessary changes," Leonhardt said.

The good news is BRMC has started to recover.

"The projection for 2007, and we are confident about this, is the audit numbers will show a loss of $1.5 million," Leonhardt said. "It's still a loss that's pretty dramatic, but it's an improvement over one year."

"It's a significant turnaround and we are going in the right direction," he said.

The officials projected the facility will break even in the fiscal year '08, although it's only three weeks old.

"We are doing everything we can to turn it around," Leonhardt said.

"It's a realistic goal," Tarasovitch said.

And while the hospital has had to endure some problems regarding its operating expenses, both Leonhardt and Tarasovitch made it clear that it has nothing to do with the $15 million renovation project still under way.

"Financing the construction of the building was not an operating cost," Leonhardt said.

The renovation was funded through state funds, philanthropy and bond financing, Tarasovitch said.

"This project is really the key to the future of our organization," Leonhardt said, adding they took a careful look at the organization and determined what would make it financially strong into the future.

The funds were specifically earmarked for the construction project.

"What had to happen was for the organization to grow, increase the range of services provided and to do so efficiently," Leonhardt said. "Only through growth can we stabilize financially.

"The issues in '06 were not driven by the project," he said.

He added the construction project is on target with the budget and time.

"We will finish without using any other funds."

The project is set to be complete in the spring of 2008.

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