VAIL — Vail Valley Medical Center's top executive Wednesday said the center is in strong financial condition, and will stay independent. But, she added, national health care reform is creating a host of new, and expensive, potential problems in the near future.

Medical center CEO Doris Kirchner made those remarks Wednesday in an annual “state of the medical center” address at the Sonnenalp in Vail. The address will be repeated Feb. 16 in Gypsum.

Kirchner gave an overview of the hospital's philosophy, facilities and financial picture during the presentation. The medical center's financial picture has improved over the last few years, Kirchner said, with net revenue increasing, salaries and benefits dropping, and the “margin” — not “profit” since the hospital is a nonprofit organization — more than doubling from 2009 in both 2010 and 2011.

The medical center is also a safer place than it's been in the past. Kirchner said the infection rate for new surgical patients is .38 percent, and .42 percent overall. The federal Centers for Disease Control puts any rate below 1 percent into a “less than expected” category. Kirchner said that improvement comes from a set of policies that range from the technical to the simple — there are hand-sanitizing stations throughout the hospital, and employees are encouraged to use them even if they never touch a patient.

Talking about the medical center's mission, Kirchner stressed the goal to remain independent, so decisions about patient care can remain in the hands of local residents.

While Kirchner said the medical center is well-positioned to remain independent, that's going to be more difficult in the next few years, especially as the requirements of 2010's federal health care reform bill kick in.

One of the biggest expenses for hospitals is the requirement to move to electronic health records. Kirchner said that's a worthy goal — it can reduce mistakes and speed care in urgent cases. But, she said, making the switch is also very expensive, to the tune of many millions of dollars per hospital. Just that part of health care legislation is forcing many small-town hospitals into mergers with bigger companies.

Federal health care legislation will also almost certainly reduce the amount of money hospitals and clinics receive for treating patients in Medicaid and Medicare programs.

Since Vail Valley Medical Center already collects less than 25 percent of the costs of treating Medicaid patients, that's going to take money from an already-shaky financial model.

The medical center puts millions every year into subsidizing underinsured and uninsured patients, from the Eagle Care Clinic for mostly low-income residents to financial arrangements made with people who have a hard time paying off either high insurance deductibles or other bills.

Ultimately, though, Kirchner said “I don't think there's an easy out for those with $5,000 deductibles.”

During a question and comment session after Kirchner's presentation, Vail resident Kathy Langenwalter said she's heard from other residents who are having tests and procedures done in other communities to save money.

Charlie Crevling, the medical center's chief financial officer, said the hospital uses prices from other regional hospitals, as well as Lutheran Medical Center in Denver, to help set its prices.

“We stack up very well in those cases,” Crevling said.

Still, just about any medical care is expensive, something that isn't changing any time soon. But in many cases, people from outside the valley are driving a good deal of the medical center's growth. That growth, from the Shaw Regional Cancer Center, the Steadman Clinic and the Steadman Philippon Research Institute, has led to negotiations and planning for a new medical office building on town of Vail property near the current town hall. If and when that building is finished, it will free up nearly 35,000 square feet of space in the current hospital building, Kirchner said.

Combining that available space with plans that include ways to get ambulance traffic off Meadow Drive will help the Vail hospital thrive into the future, Kirchner said.

“We're cognizant of all these changes,” Kirchner said. “We'll meet whatever comes our way.”

Business Editor Scott N. Miller can be reached at 970-748-2930 or smiller@vaildaily.com.