Annual Hospital Audit Shows Positive Cash Flow Even with Net Loss

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Texas County Memorial Hospital ended 2016 with a net position of -$1,203,806.00 in excess revenues over expenses hospital board members and administration heard at their monthly meeting on Tuesday.  The number represents an $800,000 improvement over the county hospital’s loss in 2015.

David Taylor, senior manager at BKD, LLP of Springfield, MO and Stephanie Weis, partner at BKD, presented the annual audit report at the monthly meeting.

“TCMH increased revenues and decreased expenses in 2016, which is a good sign of management making good decisions throughout the year,” Taylor said.

Taylor explained that the final, audited numbers show about a $100,000 increase to the bottom line reported to board members before the audit.

“The numbers you are seeing every month are accurate,” Taylor said.  “In our audit we tweak the estimates with information that’s available to us after the year has ended.”

In 2016, grants and donations to the TCMH Healthcare Foundation totaled $200,006.  In 2015, grants and donations totaled $619,196. Although the Healthcare Foundation funds are designated for specific purposes, the numbers are included the overall year end fiscal results.

“A key distinction that separates your hospital from other hospitals your size is your ability to raise additional funds for the hospital through outside donations and grants,” Taylor said.  He pointed out that in the past five years, the Healthcare Foundation has brought in over $3.7 million from outside sources.

In 2016, TCMH increased revenues 5.77 percent, up to $1,638,123.  Expenses in 2016 increased by 2.53 percent, up $770,560 for the year.

Since completing a major expansion of the hospital in 2013 depreciation expense has increased to about $2 million annually.

“This is nothing to be alarmed about, and it’s okay to have a loss with the other related financials showing increased revenues,” Taylor said.

Long-term debt at the hospital decreased in 2016 with TCMH paying down the current debt and not taking on any new long-term debt.

Taylor described the hospital’s current debt of $17.5 million as “not an alarming amount”. Positive cash flows in 2016 allowed TCMH to put an additional $281,928 in the bank, an increase of over 60 percent in comparison to 2015.

In 2016 TCMH brought in additional funds through the 340b pharmaceutical program.  TCMH added three new physicians in 2016, Dr. Juan Mella, pulmonologist; Dr. Cory Offutt and Dr. Jennifer Groner, family medicine and obstetrics physicians, and the inpatient and outpatient hospital revenues of those providers should add to 2017 revenues at TCMH.

Medicare and Medicaid funds made up $14,076,363 in 2016 revenues, dollars that would not have returned back to Texas County without the hospital and its clinics.

TCMH also provided $6,679,726 in uncompensated care for area healthcare services in 2016, up from $5,501,463 in 2015.

Taylor provided information about the current healthcare industry from an accounting point of view with hospital board members.  He noted that the overall numbers of uninsured in the nation have decreased since the Affordable Care Act was signed into law in 2010.  He also explained that TCMH and other Missouri hospitals have not fully benefited from the Affordable Care Act because Medicaid was not expanded in the state as federal legislators intended.

“We are paying for expanded Medicaid coverage, but we have not seen the benefit in Missouri,” Taylor said.

Taylor explained that proposed American Healthcare Act may change federal healthcare law but the general consensus in the healthcare industry was that the changes would not be beneficial to anyone.

“Changes are coming to the way hospitals and physicians are paid,” Taylor reported.

The Department of Health and Human Services has the goal of changing the way 50 percent of Medicare and Medicaid claims are paid by the end of 2018.

Taylor expects additional cost shifting pressure on hospitals as well as pressure to “bend the cost curve” with new payment models and program and increased initiatives related to
“health improvement”.

BKD sends an audit team to TCMH each March, spending about a week pouring over hospital financial information from the previous year.  The firm takes about a month to complete the audit information including expense statements, balance sheets, statement of cash flows and other information that comprises the financial report documents presented at the April board meeting.

BKD uses historical TCMH data and data from other healthcare facilities for comparison purposes during the audit.  BKD also has access to the latest information regarding hospital payers which helps the firm reach concrete numbers in the final audit report.

Taylor described the relationship between TCMH and BKD as “mutually beneficial”.

“In working with you, we always come away with ideas on how to help the other rural hospitals that we work with,” Taylor said.

Taylor commended TCMH for “years of good decisions” that have helped TCMH weather recent tumultuous years in healthcare.  “A lot of rural hospitals have not been nearly as well prepared for the current healthcare climate,” he said.

Weis also commended TCMH for planning ahead and knowing that the hospital’s bottom line would take a hit with interest and depreciation expense related to major capital improvements.

“The strength of your balance sheet has helped you weather these healthcare storms a lot easier that some of your rural hospital counterparts,” Weis said.

In his administrative report, Wes Murray, TCMH chief executive officer, reported that 61 hospital employees completed the Safe Training and Responsible Restraints (STARR), the workplace violence reduction training program at TCMH.

Centers for Medicare and Medicaid Services (CMS) has created regulations for healthcare facilities to achieve a higher level of safety for patients, visitors, physicians, and staff.  The STARR training will help TCMH comply with the new regulations.

The Missouri Hospital Association chose TCMH to participate in the STARR program along with other hospitals in the state.

“I have received nothing but positive feedback from our employees that participated in the training program,” Murray said.

Murray also reported that 315 drivers participated in the Drive 4 UR Community event hosted by Romines Motor Company in Houston.

Ford Motor Company will donate $20 for every qualified test drive. The number of participants should be enough for Ford to give the $6,000 maximum donation to TCMH.

“We received tremendous community support for the event,” Murray said.  “We can’t thank Don Romines and his staff enough for asking us to be the recipient of this program.”

Over 100 TCMH employees participated in Drive 4 UR Community, and many employees brought friends and family members from across the county to participate, too.

Board members unanimously agreed to sign a letter of intent to create a Charter of Antimicrobial Stewardship at TCMH.  The letter is an official document showing the hospital board’s support of the establishment of systems and processes at TCMH for managing antibiotic usage.

CMS has developed new guidelines for antibiotic stewardship programs, and TCMH is working toward developing the necessary program to meet CMS guidelines.  The board of trustees approved letter was one step in the process.

Linda Pamperien, chief financial officer at TCMH, presented the financial report for the month of March.

“Inpatient and outpatient revenues exceeded our budgeted expectations in March,” Pamperien said.  Contractual adjustments and overall expenses we also down for the month.

TCMH ended the month of March with a positive bottom line of $110,117.09 and a positive year-to-date bottom line of $207,967.68.

Present at the meeting were Taylor; Weis; Murray; Pamperien; Doretta Todd-Willis, chief nursing officer; Joleen Senter Durham, public relations director; Ron Prenger, CoxHealth representative; Anita Kuhn, controller; Dr. Jonathan Beers, TCMH chief of staff; and board members Jim Perry; Mark Hampton; Jay Loveland, and Janet Wiseman.

Board member, Omanez Fockler, was not present at the meeting.

The next meeting of the TCMH board of trustees is Tue., May 23 at 12 p.m. in the hospital board room.

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