“LMH actually increased their operating margin this year, which is pretty commendable, especially given what has happened to the economy this past year,” said Angela Miratsky, senior manager of the Kansas City, Mo.-based accounting firm BKD, which did the audit. “I think the hospital is moving in the right direction. These numbers reflect a very good year.”

LMH ended 2009 with an operating income of $9.6 million.

The hospital had $162.9 million in operating revenue, a 7.5 percent increase, compared to $151.6 million in 2008. That was a result of a record amount of patient activity. There were: 225,000 outpatient visits, 6,280 inpatient discharges, 36,277 emergency room visits, and 1,150 births.

Miratsky pointed out that both operating revenues and expenses have increased during the past four years.

Total operating expenses of $153 million in 2009 were up by $9.9 million, or 6.9 percent, from 2008 — primarily because of the increased expense of taking care of more patients, particularly cardiac and surgical cases.

“The audit continues to show us that the hospital is on solid ground financially, and I think most importantly that we have positive comparisons to peer groups, whether it be nationally or regionally,” Heath said.

Miratsky showed that LMH’s operating margin — revenues over expenses — was 5.9 percent in 2009. She said other hospitals are seeing margins of 1 percent.

Miratsky and Heath said the hospital’s financial position will help it better withstand any changes that might be coming with health care reform.

Heath said there are pros and cons to the federal legislation for the hospital.

Each year, LMH loses money from bad debt and charity care. Last year, it deducted $9.3 million in charity care compared to $7.1 million in 2008. Bad debt accounted for $15.1 million in 2009, compared to $12.8 million.

If more people obtain health insurance, this number should decrease.

On the flip side, the hospital expects to get less reimbursement for Medicaid and Medicare patients. About 27 percent of net patient service revenues are from participation in these programs.

“Where that trade-off ends up, we don’t know. It’s too soon to tell,” Heath said.