September 24, 2010, By Rebecca Layne
WINCHESTER- Valley Health officials gathered Thursday to spread the word that the nonprofit organization is a good neighbor.
During an information session in the Valley Health Wellness & Fitness Center on the Winchester Medical Center campus, they discussed their 2009 Community Benefit Report. The presentation illustrates the challenges the six-hospital system has been facing in the economic slowdown and the efforts it has made for the community.
For the remainder of the article ... http://winchesterstar.com/articles/view/valley_health_officials_outline_contributions
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Nobody in this area is going to dispute the facts that Valley Health Systems provides a lot of great valuable services and gives back to the vast regional communities that VHS is operating in as a not-for-profit institution.
Is it not time for the local media to start stating "regional community" for Valley Health since they serve many counties outside of Winchester and Frederick County. VHS serves 18 counties to be exact.
The charity care and bad debt are isolated benefits to those individuals in need. The programmatic community benefit has an affect on every individual within these regional communities.
The programmatic community benefit (community health improvement & community benefit operations; health professions education; subsidized health services; research; cash and in-kind donations) amounts for years 2009 back to 2005 are 7.1, 7.6, 1.3, 1.7 and 2.9 million respectively.
Wonder why Mr. Whitworth Jr. did not share nor the community benefit chart display the excess of revenue over expenses figures for 2005-2009? To be more precise, profit/loss figures.
Valley Health System's five year profit total for years 2004-2008 was a little over $218.6 million.
But don’t be misled here, for-profit hospitals that pay taxes, has charity care too, bad debt and also gives back to local communities as this side-by-side comparison link below will show in detail.
Healthcaresoundoff.com’s comment on the comparison: “Valid comparison. Roll with it.”
A couple of notable highlights of the 2007 comparison, Lewis-Gale Medical Center paid $12.1 million in taxes as compared to Winchester Medical Center’s $162,362 (one hundred and sixty-two thousand and three-hundred and sixty-two dollars). Winchester Medical Center had a profit of $66.6 million as compared to Lewis-Gale’s $11.9 million.
Valley Health’s community benefit report information for years 2005-2007 was taken from the pamphlet mailer.
The 2008 numbers were taken from VHS’s mailer, no link provided and 2004’s numbers were taken from VHS’s former website.
To get a better understanding of the breakdown of VHS’s 2007 $56.1 million in community benefit. Again, got a perspective from Healthcaresoundoff.com:
Also, do not forget about how profitable that the “Winchester Medical Center” was for years 2001-2007 where their profits increased 460%.
2001 - $11.8 million (per Quad State Biz Journal)
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2005 - $54,346,679 (per IRS990)
2006 - $57,422,678 (per IRS990)
2007 - $66,617,961 (per IRS990)
The Wellness Fitness Center brought in $1.1 million in revenue in just their first 3 months of operation after opening their doors in September of 2008.
Just before the wellness and fitness center opened in September 2008, it had collected 3,200 applications for membership.
Kent said the goal was to reach 5,000 members in three years, but it has moved beyond that. “We hit that number in a year,” she said, noting that the center now has 5,800 members.
Wonder how much revenue did the Wellness Fitness Center generate for 2009?
More information on the Zoning Violation issue from August, 4th WincStar article:
The issue arose when Diem determined that the wellness center was violating the city zoning code by marketing its services to the public via a website, direct mailings, and advertisements in The Winchester Star.
Diem sent WMC a letter stating that its marketing efforts must cease because they violate terms set for buildings in the Medical Center zone. Private health clubs are allowed in the zone, but they cannot be marketed publicly.
The zone's definition - including the prohibition on public marketing - was written and submitted on WMC's behalf in 1989.
Butler and hospital officials and board members argued before the BZA that "personal services" best describes the use of the wellness center, a use that allows public marketing.
The BZA quickly rejected that argument, but did not vote to make the wellness center immediately cease its marketing campaigns. Instead, it gave WMC four months to seek an amendment to the zoning code that would enable the center to be marketed publicly.
Information from September 8th WincStar article:
The wellness center issue stems from a determination made in May by Vincent Diem, the city's zoning and inspections administrator, that the center was violating the zoning code by publicly marketing its services.
The city zoning ordinance states that recreational facilities and private health clubs or sports-medicine clinics are permitted in the Medical Center District. However, the ordinance includes a provision that the facilities cannot be "marketed to the public-at-large."
Ironically, the restriction was included in an amendment written on behalf of WMC in 1989, and passed by the City Council in 1990.
After reading quotes and statement from the Quad State Business Journal article back in May of 2006, it is safe to say that VHS’s projections were somewhat conservative:
In projections used for COPN (Certificate of Pubic Need) approval, Valley Health said it is looking at a membership of 4,000 persons, targeting the 35-to 80-age group, especially people who don't exercise, said Kent.
"I have met with owners of the local clubs, and some say we will take members away from them," said Kent. "But we are hoping to attract people who don't exercise. In most markets, commercial clubs did not go out of business; their memberships actually went up because of the increased awareness of fitness."
Valley Health is projecting the wellness center business will break even in its second year, and after the third year will throw off cash flow of almost $1.3 million. Funding the cost of the center from Valley Health internal resources means there is no requirement for debt service.
"If it [wellness center] is such a big money maker, others would have come into the market."
The perception is that this information session that took place in the Valley Health Wellness & Fitness Center on the Winchester Medical Center campus on Thursday is most likely a result of City officials calling out VHS in violating their own zoning ordinance that the WMC had drawn up on their behalf back in 1989 and was adopted by City Council in 1990.
