Texas County Memorial Hospital ended 2014 with a net position of -$698,123 in excess revenues over expenses hospital board members and administration heard at Tuesday’s monthly meeting.
Stephanie Weis, partner at BKD, LLP of Springfield, and David Taylor, senior manager at BKD, presented the annual audit report.
“The audit shows that there are positive underlying operations at TCMH,” Taylor said. “In fact, 2014 was a better year operationally than 2013.”
Taylor pointed out that in 2014 TCMH had depreciation and interest payments of $2,882,675 related to the new hospital construction, up over half a million from the previous year. In 2014, TCMH also received only $435,000 in government electronic medical records incentive funds, down from over $1 million in incentive funds in 2013.
“The bottom line for 2014 is lower, but the long term depreciation and interest numbers present a truer picture of hospital operations,” Taylor said.
Net patient revenue was up 3.63 percent for 2014 over the previous year, and operating expenses were up only 2.56 percent for 2014 over 2013.
“Last year you found ways to get extra revenue out of your expenses,” Taylor said.
Grants and donations to the TCMH Healthcare Foundation totaling $1,180,978 were utilized for capital projects at TCMH in 2014.
Taylor said over the past two years, TCMH has utilized more than $2 million in capital grants and donations. In 2014, the net property and equipment assets at TCMH rose by 3.15 percent or $826,361.
“Generally, hospitals are not investing funds in capital projects right now,” Taylor said. “But TCMH is on the offense, investing in the future of your hospital.”
Taylor noted that TCMH is not different than many other big and small hospitals across the nation with a negative operating margin in 2014. However, the hospital has $9.3 million in total current assets, which includes cash, accounts receivable and third-party settlements.
According to Taylor, TCMH continues to operate with “clean revenue cycles.” At the end of 2014, 92 percent of accounts receivable from 2013 had been collected, and currently the hospital’s accounts receivable is at 52 days, which is less than the average of hospitals in rural Missouri.
“You have a strong financial position with 94 days of cash on hand,” Taylor said.
Cash on hand indicates how many days the hospital could operate without bringing in any funds. Taylor noted that the average rural Missouri hospital has 41 days of cash on hand.
Construction projects at TCMH have the average age of the hospital facility down to about 10 years, which is at or below Missouri hospital averages.
The debt to capitalization ratio at TCMH is a 46.9 percent, which Taylor called “not too high.” TCMH is in line with other hospitals in the state.
Taylor cautioned TCMH about cost shifting that hospitals are dealing with related to healthcare reform.
“Regardless of the patients you serve, the costs remain the same,” Taylor said. “However, the only patient population currently showing a positive margin for hospitals is those with private insurance.”
In 2014 at TCMH, 46 percent of patients were Medicare patients, 21 percent were Medicaid patients, 24 percent were commercial insurance patients and nine percent were self-pay patients.
Taylor noted that many employers are changing their private employee insurance plans by scaling back the coverage offered. Expansion of Medicaid in Missouri has not occurred, creating additional holes for healthcare coverage of patients.
“We can no longer believe in the traditional foundation of hospital economics,” Taylor said.
He explained that employer-sponsored healthcare coverage, steady public-payer pricing growth, and predictable volume channels have all changed and continue to change creating numerous uncertainties for hospitals.
“At TCMH you continue to find ways to increase revenues without increasing expenses, and the right buttons are being pushed to help improve your facility,” Taylor said.
Taylor commended TCMH for efforts made in difficult times.
“You have to continue to look at services to see what you can offer,” he 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 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.
“The annual audit is a huge amount of work for a very small staff,” Weis said. “Everyone did a great job and quickly responded when we had a need.”
ADMINISTRATIVE REPORT
Wes Murray, chief executive officer, said physician staffing for the TCMH emergency department is progressing well. Murray said Dr. Randal Qualls has taken the emergency department medical staff director position. Qualls is employed by the hospital and continues to work for TCMH as an employed physician in the emergency department.
Murray reported that at the end of 2014 309 past and present hospital employees were participating in the hospital’s 403b retirement plan.
“The overall plan is at $8.5 million, up from about $3 million over 13 years ago,” Murray said.
Murray said all employees receive information about the plan during orientation at TCMH.
“We are really trying to stress the importance of retirement savings to our younger employees,” Murray said.
REVENUE UPDATE
Linda Pamperien, chief financial officer at TCMH, presented the financial report for the month of March. She said revenues and expenses were down, and inpatient and some outpatient volumes were up.
Admissions are up by 32 patients for the first quarter of the year, with TCMH showing 426 inpatient admissions through the end of March. TCMH ended March with positive bottom line of $11,396.02, decreasing the negative year-to-date bottom line to $584,645.62.
Present at the meeting were Weis; Taylor; Murray; Pamperien; Doretta Todd-Willis, chief nursing officer; Joleen Senter Durham, director of public relations; Anita Kuhn, controller; Dr. Jonathan Beers, TCMH chief of staff; Dr. John Duff; and board members Jim Perry, Mark Hampton, Omanez Fockler and Janet Wiseman.
The next meeting of the TCMH board of trustees is noon Tuesday, May 26, in the hospital board room.