Texas County Memorial Hospital had net position of -$527,077 in excess revenues over expenses following the 2013 financial audit the TCMH board of trustees and administration heard at the monthly board meeting on Tuesday.
Stephanie Weis, partner at BKD, LLP of Springfield, MO and David Taylor, senior manager at BKD, presented the annual audit report, explaining that TCMH had a “strong balance sheet” at the end of a “challenging year”.
Taylor pointed out that the negative bottom line included $863,099 in cash and pledges belonging to the TCMH Healthcare Foundation and $1,060,000 received by TCMH from the federal government for the adoption and implementation of electronic medical records within the hospital.
The growth of the Healthcare Foundation’s assets over the past seven years requires it to be included in TCMH financial statement. In 2012 the Foundation embarked upon a $3.2 million capital campaign to raise funds to build a tornado safe room and new surgery department which added to the funds held by the Foundation in 2013.
“The $3.1 million raised by the Healthcare Foundation is tremendous,” Weis said, adding, “These funds represent great community support.”
As the auditors reported after the 2012 audit, the “challenging healthcare environment” has not gone away and it again contributed to lower operating results for TCMH.
Taylor explained that the hospital’s assets have increased by almost $6 million from $20,753,264 in 2012 to $26,241,752 in 2013 with the opening of new patient care areas and the addition of new equipment for those areas.
With half year of depreciation included in the audit, the average age of TCMH equipment and facility is 11 years in 2013. The rural Missouri hospital average is about 10 years of age.
Taylor highlighted the fact that TCMH has 106 days of cash on hand. “If the hospital stopped receiving payments, you would be able to keep the doors open for quite awhile,” he said, explaining that one day of cash on hand is equivalent to $64,000. The average rural Missouri hospital has 43 days of cash on hand.
TCMH has 47 day of revenue in accounts receivable, which Taylor called “really strong”. One day is equivalent to $74,000.
In 2013, TCMH increased its liabilities by taking on a loan from the United States Department of Agriculture and Rural Development to expand the hospital.
“This was a big burden to take on, but you are in a very good position with a 30-year loan with a 3.75 percent interest rate,” Taylor explained.
Taylor and Weis commended TCMH for their work to pay off bonds that will mature in June 2014.
“It is remarkable for us to see bonds paid off,” Weis said. “Most places refinance or try to extend bonds rather than pay them off.”
“The addition of a retail pharmacy in 2012 added additional revenue to the bottom line in 2013,” Taylor said, noting that provider changes at the hospital affected inpatient volumes.
“We have seen volume declines with the majority of our clients,” Weis said. “It’s imperative that hospitals act quickly with volumes begin to decline or you can quickly bleed the balance sheet dry.”
Weis and Taylor commended TCMH for “mitigating losses” at the hospital.
“Without strong management of expenses and personnel your losses could have been much greater,” Taylor said.
The auditors commented on federal healthcare changes brought on by the Affordable Healthcare Act and the American Taxpayers Act of 2012.
“Historically, the federal government has recognized that over one-third of Medicare recipients live in rural areas, making it difficult for rural hospitals to support capital and technological projects,” Taylor said.
Taylor explained that although some incentives have been provided to rural hospitals to make up for the number of Medicare recipients cared for by rural hospitals, many of the monetary incentives that directly impact the hospitals bottom line have been cut in recent years.
On April 2, 2013, TCMH and other hospitals received an additional two percent reduction in Medicare reimbursement due to sequestration. Those cuts in payment have not been restored, nor does BKD believe the cuts will be restored.
Taylor explained that these cuts make the healthcare environment “tough to manage”.
“Healthcare facilities and providers are being audited to death, which has providers utilizing more outpatient services,” Taylor said. He believes that hospital inpatient volumes will remain flat or continue to decline in future years.
“We are also seeing a shift in where we get our revenue,” Taylor said. “Commercial volumes are changing and Medicaid numbers are growing.”
Taylor stressed the importance of continuing to monitor payer sources at TCMH.
The auditors commented on Missouri Medicaid expansion explaining that “something will happen” and that the unknown adds to the challenges faced by hospitals in the state.
Taylor offered a list of things that other hospitals are doing to weather the current challenges in healthcare: practice expense discipline; improve processes in the system; analyze service lines; expand and utilize 340B prescription drug program; seek relationships with other facilities; and search for other funding sources.
“You are doing all of these,” Taylor said, “And you deserve an ‘A+’ for the grants, donations and other funds you have received to make your facility stronger.”
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 income 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.
Prior to the annual audit report portion of the meeting, Omanez Fockler, chair of the TCMH board of trustees, administered the oath office to Mark Hampton of Summersville. Hampton was re-elected in April to serve a five-year term on the TCMH board of trustees.
Omanez Fockler, chairperson of the Texas County Memorial Hospital board of trustees, administered the oath of office to Mark Hampton of Summersville at the monthly meeting on Tuesday. Hampton was re-elected for a 5-year term on the board after the April 8th election.
Hospital board members agreed that board officers for the 2013-2014 year would remain the same. Fockler will serve as chairperson; Janet Wiseman will serve as vice-chairperson and secretary.
The new medical staff officers were also introduced to those present at the meeting. Dr. Schaun Flaim retains his role as the chief of the TCMH medical staff. Dr. Jon Beers is the new vice chief of the TCMH medical staff. Dr. Steve Hawkins is the secretary and treasurer of the TCMH medical staff.
Joleen Senter Durham, director of physician recruiting, reported that physician recruiting efforts have been strong at the hospital.
“Since our last meeting, we have had two physicians visit, and I have a physician and a mid-level provider scheduled to visit in the next two weeks,” Durham said.
TCMH hopes to fill the need for physicians in Houston and Mountain Grove and for a general surgeon.
“I spend a lot of time studying information about potential candidates that are presented to me and screening those candidates to see if they would be a good fit for our hospital and our community,” Durham said.
When Durham has a candidate that meets the hospital’s criteria, she works with the candidate to schedule a site visit. The site visits include hospital and clinic tours, time with the staff, a medical staff dinner and a community tour.
“Sometimes these visits involve finding childcare or meeting other special requests of the provider,” Durham said. “Everyone that I’ve asked to help has done a great job in making these providers and their families feel welcome.”
Durham is hopeful that TCMH will reach an agreement with one or more of the providers that have visited the facility in recent weeks.
Wes Murray, chief executive officer at TCMH, reported that Dr. LeRoy Wombold, a general surgeon, has been seeing patients and performing surgery at TCMH. Wombold plans to continue to see patients at TCMH even after a full-time surgeon is recruited.
“Dr. Wombold brings some additional surgical capabilities to TCMH, and he’s doing the surgeries here which help the hospital and our patients,” Murray said.
Murray also explained to board members that in conjunction with Tuesday’s board meeting, a special team of medical professionals from the state of Missouri were on site doing a survey and interview process for TCMH to receive “level 3 stroke designation”.
“Dr. Kerr and the emergency department have been working on the steps needed for this designation for many months,” Murray said. “This team will review our plan and processes for stroke patients, and they will decide if our application for level 3 designation should be recommended for approval to the state.”
With a stroke designation, the TCMH emergency department is recognized statewide as a place for potential stroke victims to receive emergency care. The treatment plan for stroke patients that come to our emergency department will be even faster and more streamlined so patients can get the treatment they need as quickly as possible.
The designations will be awarded statewide at the end of 2014.
Linda Pamperien, chief financial officer at TCMH, presented the financial report for March 2014 which showed a big dip in inpatient volumes at the hospital. Although expenses for the month were also down, the decrease in revenues led to a negative bottom line of $308,007.27 for the month of March, and a negative year-to-date bottom line of $299,546.72.
Present at the meeting were Murray; Pamperien; Weis; Taylor; Flaim; Beers; Durham; Anita Kuhn, controller, and board members, Fockler; Hampton; Dr. Jim Perry, OD and Janet Wiseman.
Board member, Russell Gaither, was not present at the meeting.
The next meeting of the TCMH board of trustees is Tuesday, May 27 at 12 p.m. in the hospital board room.