County Hospital Had a Good Year in 2011

Texas County Memorial Hospital had $1,052,484 in excess revenues over expenses 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, manager at BKD, presented the annual audit report, commending hospital management for “strong” balance sheet and debt to capitalization ratio.

Taylor pointed out that the positive bottom line included $247,073 in cash and pledges belonging to the TCMH Healthcare Foundation and $1,472,000 received by TCMH for reaching “Stage 1 Meaningful Use” for the adoption and implementation of electronic medical records within the hospital.

The growth of the Foundation’s assets over the past six years requires it to be included in TCMH financial statement.

“The Foundation is currently seeking additional funds through a capital campaign and those pledges as well as other Foundation assets will continue be included the hospital’s revenues in future years,” Taylor said.

Weis noted that the federal funds received by TCMH for Stage 1Meaningful Use were not received by all hospitals.

“The meaningful use funds positively impacted your bottom line in 2011 which is a good accomplishment for a hospital of your size,” Weis said. “This shows a lot of long-term planning on your part to be able to achieve what was needed for the program.”

Taylor highlighted the fact that TCMH has 166 days of cash on hand. “Basically, if the hospital stopped receiving payments, you would be able to keep the doors open for over half a year,” he said, adding, “That’s really unheard of for a hospital of your size.”

TCMH also has a very low debt to capitalization percentage—just below 13 percent—which is below the rural Missouri hospital average of 32 percent and well below hospitals of similar size located throughout the nation.

You are going into your building project in a position that many of your peers are not in,” Weis explained, noting that many hospitals are seeking outside help to keep their doors open while TCMH is “in a great position to deal with future uncertainties.”

“The 30-year interest rate you have locked in for the hospital’s expansion project is historically low,” Taylor said, commending TCMH for locking in the rate “at the right time”.

Weis cautioned the hospital board that the debt to capitalization percentages would change radically in the 2012 audit with the addition of the expansion and renovation debt, but that the average age of the TCMH facility would also drop dramatically with new equipment and space.

Currently, the average age of TCMH equipment and facility is 12 years of age, and the rural Missouri hospital average is 8 years of age.

The TCMH debt to capitalization ratio will change to about 55 percent when TCMH takes on the debt related to the hospital expansion and renovation project.

“That is not a huge amount of debt to capitalization considering that you will have a large portion of brand new patient care areas,” Taylor said.

TCMH is funding the expansion and renovation through a low-interest loan from the USDA.

“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.”

Weis and Taylor explained that TCMH had a negative operating income of $476,556 in 2011, and even though volumes at the hospital were up, changes in payments from third-party payors means that TCMH was “providing the same service but getting paid less”.

Administrative expenses at TCMH remained flat for 2011.

“This shows that you are doing all that you can to retain any additional revenue made by the hospital,” Taylor said.

TCMH still has “a strong cash position” with 166 days cash on hand versus the rural Missouri hospital average of 40 days cash on hand, according to auditors.

The auditors pointed out that Medicare and Medicaid, the largest payor groups at TCMH, generated $15.1 million in revenue for the county hospital, which are federal and state funds coming back to the county.

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 2011, the average salary expense at TCMH per full-time equivalent personnel was $44,847.

The auditors explained that there are many “fixed costs” to healthcare, and due to “excellent management”, the cost per patient discharge rose slightly from $4,553 in 2010 to $4,812 in 2011. The average cost per patient discharge in rural Missouri hospitals was $7,415.

Uncompensated care at TCMH dropped in 2011 to $5,652,305 from $6,013,269 in 2010. This number is a reflection at the local level of the numbers of patients who are uninsured and unable to pay for their healthcare.

Following the annual audit, gross revenue for the hospital in 2011 was $59,300,078 with a positive excess of revenues over expenses of $1,052,484.

The auditors commented on federal and state healthcare topics, giving a short synopsis of how they believe hospitals like TCMH will be affected by the Affordable Healthcare Act.

“You are entering a new phase in healthcare in a very good position that many of your peers are not in,” Weis said.

Taylor reminded board members that TCMH is still in line to receive additional funds from the federal government for the implementation and use of electronic medical records at the hospital. BKD has been working with TCMH to make sure they meet all the requirements for the payment. The release of additional funds is still unknown.

“The economy is also still not the best, and the healthcare environment is very tough,” Taylor explained. He noted that Medicare and Medicaid remain top targets for federal and state funding cuts.

“You will continue to be asked to provide the same amount of work but be paid less for that work,” Taylor said.

“However, you deserve a tip of the hat for what you’ve accomplished in the past few years, especially in these challenging times.”

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.

Prior to the annual audit report Omanez Fockler, chair of the TCMH board of trustees, administered the oath office to Dr. Jim Perry, OD, of Cabool. Perry was elected in April to serve a five-year term on the TCMH board of trustees.

Hospital board members agreed that board officers for the 2012-2013 year would remain the same. Fockler will serve as chairperson; Wiseman will serve as vice-chairperson and secretary.

Murray reported that Hutcheson Pharmacy in Houston had a wholesale account set up to fill prescriptions through the 340B contract pharmacy network.

The 340B contract pharmacy program provides a drug discount for TCMH outpatients. Local pharmacies can contract through the program to provide pharmaceuticals to patients of TCMH clinics or patients at the TCMH emergency department, excluding patients with Medicaid.

TCMH is currently working with other local pharmacies to help them become part of the network as well.

Murray explained the construction contractors were currently building a mock room and a mock exterior wall that will show what portions of the hospital’s expansion will be like when it’s completed.

“We want to make sure that we have everything in place to put our patient rooms together the right way,” Murray said.

Nursing staff and other hospital personnel will be invited to look at and to critique the mock room.

Murray provided some statistics about the new rooms versus the rooms in the hospital’s current South wing. The South wing will no longer be used for patient care when the new medical surgical tower is built.

“A current room on the South wing is 109 square feet of semi-private space, not including the shared bathroom between the semi-private rooms,” Murray said. “A new private patient room will have 292 square feet of space that includes a complete bathroom with a shower.”

The new rooms will have 143 square feet of space dedicated to one patient bed and the area around it.

“There is never enough space with the size of medical beds and the equipment we use, but these new rooms in comparison to what we are currently working with are very spacious,” Murray explained.

“It sounds fabulous,” Fockler, a former nurse at TCMH, said.

Bricklayers are currently working on a large wall that will obscure most of the current hospital from view. The old hospital building and new construction will be connected between the wall, and staff hallways will run between the old and new construction.

Linda Pamperien, chief financial officer at TCMH, presented the financial report for March 2011 which showed an increase in inpatient volumes and outpatient revenues at the hospital.

“We haven’t seen a month this strong in both the inpatient and outpatient side in a long time,” Pamperien said.

Hospital inpatient admissions were up by 7 admissions for the year-to-date over 2011.

TCMH had a positive bottom line of $156,204.64 for the month of March bringing the year-to-date bottom line to $252,711.11.

Present at the meeting were Murray; Pamperien; Weis; Taylor; Dr. Charlie Rasmussen, chief of staff; Dr. Schaun Flaim, vice chief of staff; Doretta Todd-Willis, chief nursing officer, Joleen Senter Durham, director of public relations; Anita Kuhn, controller; Jennifer Hugenot, human resources director, and board members, Fockler; Perry; Mark Hampton and Janet Wiseman.

Board member, Mark Forbes, was not present at the meeting.

The next meeting of the TCMH board of trustees is Tuesday, May 22 at 12 p.m. in the downstairs meeting room of the hospital.