South Central Kansas Medical Center trustee Duane Oestmann called into question the generation of revenue at Winfield Medical Arts (WMA), following 10 consecutive months of financial losses, during a SCKMC Board of Trustees meeting July 26.

Winfield Medical Arts (WMA) logoHis question concerned the number of patients seen at both WMA and South Central Kansas Clinic (SCKC) in Arkansas City, versus the number of providers at each and the profit or loss reported by each clinic. For instance, in June, WMA saw only 683 patients, while SCKC saw 1,093.

For SCKC, this was a slow month, according to SCKMC Chief Financial Officer Holly Harper.

“How many people are in South Central Kansas Clinic?” Oestmann asked. “Four providers,” Harper said.

“Let’s go to Winfield Medical Arts. How many’s there?” Oestmann followed up.

“There are four providers on payroll and three that are contract(ual),” she said. “I see where you’re going with this.”

“Why is one (payroll) $50,000 and the other $108,000 (not including contracted providers)? Something’s way out of whack there,” he said.

Harper said one of the reasons is because there are two specialists at WMA.

One of them, former SCKMC chief of staff Dr. Perry Lin, has resigned his position and will leave in August.

Financial breakdown

In June, two documents related to SCKMC’s May finances were sent out by the hospital on a public email list.

Although the hospital later requested that the documents be disregarded, sending them out effectively made them a public record.

One of the documents shows the revenue generated by and number of patients seen by each provider at WMA, as well as their salaries.

Using this document, Ark City Daily Bytes was able to calculate the apparent profit margin of each provider.

Of the nine providers on the WMA payroll in May, only two generated more income for WMA than they subtracted in their payroll expenses.

Those two providers are Cherie Bahm and Jane Kaufman, both nurse practitioners. The remaining providers — four physicians, two specialists and a surgeon — all received compensation in May that exceeded the total amount of revenue that they generated that month.

Contractual amounts

When SCKMC purchased WMA in September 2017, two employees were guaranteed additional compensation, Kaufman and Dr. Kent Winblad.

Winblad has been receiving added compensation for acting as “medical director” of the facility. His original contract promised $26,000 a year for this service.

Kaufman’s contract guarantees an annual salary of $95,000, plus standard benefits.

That figure does not appear to match the June document, as her income as projected from May’s numbers appears to be significantly less.

At the July 10 meeting of the SCKMC Board of Trustees, SCKMC Chief Executive Officer Virgil Watson indicated the WMA contracts were being renegotiated in light of the clinic’s underwhelming performance to date.

Trustee Jay Warren indicated in a telephone interview July 31 that renegotiation of the WMA contracts still is ongoing.

WMA location costs

In addition to issues of salaries versus productivity, SCKMC also is still covering the costs of the facility used by WMA.

The cost of the WMA purchase, as outlined in the 2017 contract, is $37,500, set to be paid in 60 monthly installments of $625 each.

However, the hospital’s financial obligation does not end with that purchase price. SCKMC also is on the hook for leasing of the space in which WMA currently operates. The clinic facility itself is owned by GWBC LLC, a subsidiary of Wichita-based Galichia Medical Group.

The base rental fee starts at $4,000 per month, but it will be renegotiated at the beginning of each lease year.

“The annual Rent Increase will be calculated by taking fifty percent of the percentage increase in the Consumer Price Index for the preceding twelve months and multiplying such percent times the prior year’s annual Rent,” the contract states.

“This annual Rent Increase will then be added to the prior year’s annual Rent to determine the Rent for the coming Lease Year.”

The maximum increase per year is capped at 3 percent, but also is limited to no less than a 1.5-percent annual increase.

There also are additional expenses in the contract, including fees for utilities, fuel, maintenance, janitorial services, local and long-distance telephone services, internet access, building and grounds maintenance and repair, taxes, assessments, and property and casualty insurance.

The total for these incidental additions are “as estimated by (the) Landlord from time to time.”