Audit report

Texas County Memorial Hospital experienced a negative bottom line of $652,789 in 2009, the TCMH board of trustees and administration heard at the monthly board meeting last week.

Stephanie Weis, partner at BKD, LLP of Springfield, and David Taylor, manager at BKD, presented the annual audit report, commending hospital management for controlling expenses in a year when hospital revenues were down by $1.7 million.

“The costs for general, administrative and fiscal services dropped slightly from 2008, but those are fixed costs that cannot be adjusted according to the census,” Weis explained. “The decreased operating expenses related to nursing services were adjusted with the decreased hospital census which shows that you were making real time management decisions.”

Taylor noted that salaries and benefits usually make up 50 to 60 percent of a hospital’s expenses, and TCMH is no different.

“TCMH was able to trim hours and manage staff at the hospital as needed throughout the year last year without having to lay off employees,” Taylor said. He said many hospitals were not so fortunate with staffing.

TCMH still has “a strong cash position” with 133 days cash on hand versus the rural Missouri hospital average of 67 days, according to auditors.

Looking at the hospital’s assets and liabilities, Taylor noted that TCMH was still extremely strong with $9.4 million in cash and only $2.3 million in debt.

“Your current assets are a testament to the job that has been done over the past 10 years in managing the hospital,” Taylor said.

Taylor said that while future building plans would affect the asset to liability ratio at the hospital, TCMH was in a strong position compared to many rural Missouri hospitals.

“It’s important to remember that TCMH is not funded by any tax revenues,” Weis said. “You are fully self-sufficient, and that’s something to be proud of.”

Taylor also commended TCMH for continuing to invest in the community with the addition of the TCMH Mountain Grove Clinic and ambulance base.

“Even with lower operations last year, you were still able to invest in your community,” he said.

The auditors pointed out that Medicare and Medicaid, the largest payer groups at TCMH, generated more than $14 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 2008, the average salary expense at TCMH per full-time equivalent personnel was $41,819. The rural Missouri average is $45,895.

The auditors explained that there are many fixed costs to healthcare and due to excellent management, the cost per patient discharge actually went down for the third year in a row from $4,662 in 2008 to $4,634 in 2009.

The average length of patient stays in 2009 also went down to 3.05 from 3.85 from in 2008.

Uncompensated care at TCMH dropped slightly to $4,134,819 in 2009 from $4,842,948 in 2008. 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 2009 was $49,354,534 with a negative excess of revenues over expenses of $652,789.

The auditors commented on recent federal healthcare reform efforts, giving a short synopsis of how they believe hospitals like TCMH will be affected.

“The goal of the Healthcare Reform Act is to try in increase healthcare coverage by $1 trillion,” Taylor said, explaining that about half of the money to fund that will come from cuts in payments to hospitals and the other half will come from raising taxes.

“Bad debt and uncompensated care will be reduced at hospitals, but Medicare and Medicaid payments will also be cut,” Taylor said. “Operating margins will be realigned as the payer mix changes.”

There is still no clear picture on the long-term effect of the healthcare reform law TCMH. Over the next two years, TCMH may receive an additional payment of about $600,000 from the federal government due to the high number of Medicare patients at the hospital.

TCMH is also in line to receive from the federal government’s Economic Recovery Act funds an “incentive payment” for the implementation and use of electronic medical records at the hospital. BKD is working with TCMH to make sure they meet all the requirements for the payment. According to BKD estimates, the hospital is in line to receive about $3 million over the next four years. It is unknown when the funds will begin to be distributed to healthcare facilities.

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.

“It’s not often that an audit team will say ‘good job’ after a $600,000 loss,” Weis said. “But for the year you were presented with, your management team did a very good job.”

Wes Murray, chief executive officer at TCMH, noted: “Everyone here is anxious to put 2009 behind us and move forward in what we hope will be a better year.”

Already in 2010, TCMH has taken possession of a new clinic and ambulance base in Mountain Grove. The hospital officially opened the building Tuesday.

“Mountain Grove continues to lead all of our ambulance bases in primary runs,” Murray said.

A resolution was signed by TCMH board of trustees’ chairperson Omanez Fockler to pursue funding with the Federal Emergency Management Association for a storm shelter structure on the hospital’s campus. The structure could be multifunctional – utilized as meeting or multipurpose space unless the need for shelter from a storm arises.

“FEMA would cover three-quarters of the cost of the building which could be as much as $750,000,” Murray said. “This space can be utilized now as well as functioning in conjunction with future hospital expansion plans.”

TCMH should know by September whether or not it will receive funding for the storm shelter.

Also at the meeting, Fockler administered the oath of office to Janet Wiseman, a current board member elected in April to serve a five-year term on the TCMH board of trustees.

Hospital board members agreed that board officers for the 2009-’10 year will remain the same. Fockler will serve as chairperson; Wiseman will serve as vice-chairperson; and Jane Kirkwood will serve as secretary.

Doretta Todd-Willis, chief nursing officer, reported that a comprehensive physician orientation has been put in place for all new physicians that begin work at TCMH. Schaun Flaim, D.O., the new internal medicine physician at TCMH Medical Complex in Houston, was the first physician to go through the orientation process, which includes meeting with managers in most departments at the hospital.

“I believe this orientation is going to very good,” Murray said. “It can have a huge impact for how comfortable our providers feel on their first day.”

Fockler expressed excitement about the orientation for physicians, too.

“This is something that has been needed for a long time,” she said, commending Todd-Willis for her efforts.

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

“This is the first time we have seen an increase in outpatient services in a long time,” she said.

Hospital inpatient admissions were up by 21 admissions for the year-to-date over 2009, and hospital swing-bed utilization continues to remain high.

TCMH had a positive bottom line of $46,875 for March, lowering the year-to-date bottom line to a negative balance of $75,502.

Murray noted that inpatient numbers were high throughout much of April, including one recent day when the hospital had 51 inpatients.

“We hope to continue to improve our finances from here,” he said.

Present at the meeting were Murray; Pamperien; Todd-Willis; Weis; Taylor; Joleen Senter Durham, director of public relations; Charles Mueller, M.D., chief of staff; Charlie Rasmussen, D.O., vice chief of staff; Anita Kuhn, controller; and board members Fockler, Wiseman, Kirkwood and Mark Hampton. Board member Mark Forbes was not present.

The next meeting of the TCMH board of trustees is noon Tuesday, May 25, in the downstairs meeting room of the hospital.



The 2009 TCMH annual report.

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