Texas County Memorial Hospital had $1,626,799 in excess revenues over expenses in 2012 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 was “in a strong position financially”.
Taylor pointed out that the positive bottom line included $858,865 in cash and pledges belonging to the TCMH Healthcare Foundation and $1,462,272 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 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 2012.
“Your Foundation is very active, having received $1.1 million in support from the community over the past two years,” Weis said, adding, “This is an exciting time for your hospital as you prepare to move into the new construction.”
The auditors prefaced the audit with comments about the current “challenging healthcare environment”, explaining that the challenges were not likely to go away in the near future.
Taylor explained that the electronic medical records funding continues to positively impact the TCMH bottom line, and he noted that the incentive funding goes down in 2013 and continues to dwindle annually.
“With the new depreciation and debt and interest payments you are taking on, it’s going to be very tough in the upcoming years to continue to have a positive bottom line,” Taylor said.
Taylor highlighted the fact that TCMH has 150 days of cash on hand. “If the hospital stopped receiving payments, you would be able to keep the doors open for almost half a year,” he said, calling it “a tremendous accomplishment” that took many years of efforts to achieve.
In 2012, TCMH saw a slight dip in their noncurrent cash and investments due to the purchase of Hutcheson Pharmacy, but the hospital’s property and equipment asset numbers jumped up 96 percent due to the purchase of the pharmacy and equipment for the hospital expansion.
TCMH liabilities are set to go up with the addition of debt from the new construction.
“This is a big burden to take on in future years, but you are in a very good position with a 30-year loan at 3.75 percent interest rate,” Taylor explained.
The addition of new debt increased the hospital debt to capitalization percentage from just below 13 percent in 2011 to 26 percent in 2012. However, TCMH still remains below the rural Missouri hospital average of 31 percent for debt to capitalization percentage.
“You are set to weather future healthcare changes much better than many of your peers,” Weis said, explaining that the new construction provides a “different starting point” for TCMH in comparison to other rural hospitals in Missouri.
TCMH is adding the expansion and renovation debt, but the average age of the TCMH facility will also drop dramatically with new equipment and space.
Currently, the average age of TCMH equipment and facility is 14 years of age, and the rural Missouri hospital average is 9 years of age. The older age of the TCMH equipment and facility was an indicator considered by TCMH in planning to upgrade patient care areas with new construction. BKD projects that TCMH will fall into the rural Missouri average by 2013 with the new construction and new equipment purchases.
“It’s important to remember that TCMH is not funded by any tax revenues,” Weis said, adding that many rural hospitals rely on tax revenues to fund one to three percent of operations.
“You are fully self-sufficient,” Weis said, “And that’s something to be proud of.”
Revenues continue to increase at the county hospital. TCMH had $27,652,412 in revenues from services in 2012, a 5 percent increase from 2013. Operating expenses and losses exceeded the revenues in 2012, but labor expenses remained flat.
“This is good sign that your management has a handle on labor and the volumes needed to handle the costs associated with the patient load,” Taylor said.
According to the auditors, changes in reimbursement from the federal government provide a challenge at TCMH, and they accompany a large amount of uncompensated care the county hospital also provides.
Medicare and Medicaid–the largest payor groups at TCMH–generated $15.5 million in revenue for the county hospital, which are federal and state funds coming back to the county.
Uncompensated care provided by the hospital totaled, $6,453,380, up from $5,652,305 in 2011. This number is a reflection at the local level of the numbers of patients who are uninsured and unable to pay for their healthcare.
In comparing TCMH to other rural Missouri hospitals it was noted that TCMH continues to provide a wage and benefit package to employees that is competitive with the rural Missouri average.
In 2012, the average salary expense at TCMH per full-time equivalent personnel was $46,263.
The auditors explained that there are many “fixed costs” to healthcare, and due to “excellent management”, the cost per patient discharge rose slightly from $4,812 in 2011 to $4,994 in 2012. The average cost per patient discharge in rural Missouri hospitals was $7,036.
Following the annual audit, gross revenue for the hospital in 2012 was $65,511,368 with a positive excess of revenues over expenses of $1,626,799.
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.
As of April 2nd, TCMH and other hospital received an additional two percent reduction in Medicare reimbursement due to sequestration. Taylor explained that these cuts create “an extremely challenging healthcare environment”.
Taylor stressed that the financial picture has been challenging in the past, and that there is a positive side for TCMH.
“You are in a strong position financially,” Taylor added. “You have a great team in place to navigate these changes.”
Board chairperson and former longtime employee at TCMH, Omanez Fockler agreed that current times were not the first healthcare challenges faced by TCMH. “With wisdom and tenacity, we will survive,” she said.
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 payors which helps the firm reach concrete numbers in the final audit report.
Just before the 12 p.m. start of the monthly meeting of the TCMH board of trustees, a moment of silence was held at the hospital to remember Mark Forbes, longtime board member at TCMH that served until his term expired with the April 2013 election. Forbes recently passed away following a long illness.
Prior to the annual audit report portion of the meeting, Omanez Fockler, chair of the TCMH board of trustees, administered the oath office to Russell Gaither, of Houston. Gaither was elected in April to serve a five-year term on the TCMH board of trustees.
After administering the oath of office, Fockler took a moment to welcome Gaither Fockler explaining that she worked at the hospital as a registered nurse when Gaither’s grandfather, Wilbert Smith, served as a member of the hospital board of trustees.
“As the TCMH board of trustees, we recognize the trust the citizens of Texas County have placed in us to provide the best possible healthcare we can provide to them,” Fockler said to Gaither about his role as trustee. “It’s imperative that we work together for the common good.”
Hospital board members agreed that board officers for the 2012-2013 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 is the current chief of the TCMH medical staff. Dr. Matt Brown is the current vice chief of the TCMH medical staff. Dr. Charles Mueller retains his role as the secretary and treasurer of the TCMH medical staff.
Wes Murray, chief executive officer at TCMH, reported that the grand opening celebration for the new construction is slated for May 16th at 1 p.m.
The first floor will be complete on May 16th, and construction work will be ongoing in the first floor.
“Holding the grand opening at this time will allow members of the community to see a complete inpatient room as well as the new emergency and radiology departments before they are in use,” Murray said.
Renovation in the current hospital will begin in the very near future, according to Murray.
“We have made a few changes to our renovation plans that will save some money and make better use of our space,” Murray said.
Members of the board of trustees unanimously approved a resolution to seek tax credits from the Missouri Department of Revenue for the construction of the tornado safe room and surgery department.
“Our capital campaign continues to bring in funds, and we are just $300,000 shy of our $3.2 million goal for the campaign,” Murray said.
TCMH attempted to pursue tax credits toward the construction project in past, but the request was denied. A new possibility of pursuing tax credits was presented to TCMH through the South Central Ozark Council of Government, and a resolution was required by the TCMH board of trustees before TCMH could apply for the program.
“We are not sure if it will be approved, but it’s certainly worth pursuing if it will help us reach our goal,” Murray said.
Linda Pamperien, chief financial officer at TCMH, presented the financial report for March 2012 which showed a decrease in inpatient volumes and outpatient revenues at the hospital. Expenses for the month were also down.
TCMH had a positive bottom line of $15,215.79 for the month of March, bringing the negative year-to-date bottom line to $152,822.98.
Present at the meeting were Murray; Pamperien; Weis; Taylor; Flaim; Brown; Mueller; Doretta Todd-Willis, chief nursing officer; Joleen Senter Durham, director of public relations; Anita Kuhn, controller; Dr. John Duff, and board members, Fockler; Gaither; Jim Perry, OD and Mark Hampton.
Board member, Janet Wiseman, was not present at the meeting.
The next meeting of the TCMH board of trustees is Tuesday, May 28 at 12 p.m. in the downstairs meeting room of the hospital.