Texas County Memorial Hospital had $576,086 in excess revenues over expenses in 2010, the board of trustees and administration heard last week at the monthly board meeting.
Stephanie Weis, partner at BKD, LLP of Springfield, and David Taylor, manager at BKD, presented the annual audit report, commending hospital management for a “better than expected” financial performance in a year that included starting a new clinic in Mountain Grove and adding three new, full-time primary care physicians.
“2010 was a very strong, healthy year,” Weis explained following the detailed audit, a more in-depth review required by the federal government for entities receiving more than $500,000 in federal funds which TCMH received in the form of a $740,000 no interest loan through U.S. Department of Agriculture for the Mountain Grove clinic and ambulance base.
“To provide the capital investment of a new clinic and ambulance base in Mountain Grove without any interest incurred on the loan is very positive for your organization,” Taylor said.
Weis and Taylor explained that TCMH had $309,048 in operating income in 2010 and $267,038 in non-operating revenues — most of which was brought in by the TCMH Healthcare Foundation, combined to equal $576,086 in excess revenues over expenses for 2010.
Taylor noted that due to the growth of the foundation’s assets over the past five years since the organization was reorganized, it was now required to be included in TCMH financial statement.
“In all likelihood, the foundation’s assets will continue to grow and will continue to be included in future years,” Taylor said.
TCMH still has “a strong cash position” with 125 days cash on hand versus the rural Missouri hospital average of 50, according to auditors.
Looking at the hospital’s assets and liabilities, Taylor noted that TCMH has a “balance sheet fortress” with $9.6 million in cash and only $3.1 million in debt.
“Your current assets are a testament to the job that has been done in managing the hospital,” Taylor said, “because this type of balance sheet doesn’t happen overnight.”
The TCMH current debt to capitalization ratio is at almost 13 percent, and that 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 1 to 3 percent of operations.
“You are fully self-sufficient,” Weis said, “and that’s something to be proud of.”
The auditors pointed out that Medicare and Medicaid, the largest payer groups at TCMH, generated almost $15 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 it continues to provide a wage and benefit package to employees that is competitive with the rural Missouri average.
In 2010, the average salary expense at TCMH per full-time equivalent personnel was $42,787.
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 fourth year in a row from $4,634 in 2009 to $4,553 in 2010.
Uncompensated care at TCMH jumped to $6,013,269 in 2010 from $4,134,819 in 2009. 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 2010 was $57,093,449 with a positive excess of revenues over expenses of $576,086. In 2010, TCMH exceeded the financial projections made by BKD when the accounting firm did the financial feasibility study related to the hospital expansion project.
The auditors commented on federal and state healthcare topics, giving a short synopsis of how they believe hospitals like TCMH will be affected.
“You are entering in to the implementation phase for healthcare reform, and big issues like value based purchasing and accountable care organizations can greatly affect TCMH three to five years down the road,” Taylor said.
Taylor reminded board members that TCMH is in line to receive more than $3 million over four years 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 it met all the requirements for the payment. It is unknown when the funds will begin to be distributed to healthcare facilities.
“The economy is also still not the best,” Taylor explained. He noted that Medicare and Medicaid remain top targets for federal and state funding cuts.
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 information 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.
“Our expansion is going to change the look of things to come,” said Wes Murray, chief executive officer at TCMH.
Omanez Fockler, chairperson of the TCMH board of trustees, described the expansion and renovation project as “a walk of faith” since its inception in 2007.
“We were right to put off the project in 2008,” explained Jane Kirkwood, board member. “But we need to do the project now because if we don’t we will lose physicians and patients.”
Murray agreed with board members, noting that while waiting for the right funding source for the expansion project many county citizens “have come to realize and support the need for improved healthcare facilities for our patients.”
Dr. Charlie Rasmussen, chief of the TCMH medical staff, spoke on behalf of the medical staff. “We couldn’t be more excited about this project,” he said. “It’s going to be great.”
Bid notices for the project will be published in area newspapers in May, and bid openings for the expansion and renovation projects will be opened June 1.
Following a complete survey of the hospital by the Missouri Department of Health and Senior Services, TCMH was asked to revamp the hospital patient grievance policy. TCMH already had one in place, but the state requested specific differentiation between the two processes. A specific grievance policy was also written up by the hospital and put into place.
Hospital board members were asked to approve the new patient grievance policy. It received a unanimous vote of approval.
Board members also unanimously approved amending the TCMH board of trustee by-laws to include a “Patient Grievance Committee” comprised of the hospital’s quality assurance/risk manager, the chief nursing officer, the chief executive officer and the quality assurance members of the TCMH medical staff. The committee will meet regularly to address any patient grievances.
Also at the meeting, Janet Wiseman, vice chairperson of the TCMH board of trustees, administered the oath of office to Fockler, a current board member who 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 2011-2012 year will remain the same. Fockler will serve as chairperson; Wiseman will serve as vice chairperson; and Kirkwood will serve as secretary.
Linda Pamperien, chief financial officer at TCMH, presented the financial report for March 2011, which showed an increase in inpatient volumes and a decrease in outpatient revenues at the hospital.
Hospital inpatient admissions were up by 60 admissions for the year-to-date from 2010, and hospital swing-bed utilization was also up.
TCMH had a positive bottom line of $8,886 in March, lowering the year-to-date bottom line to a negative balance of $37,501.
Present at the meeting were Murray; Pamperien; Rasmussen; Weis; Taylor; Joleen Senter Durham, director of public relations; Amanda Turpin, quality assurance nurse manager; Anita Kuhn, controller; Jennifer Hugenot, human resources director; and board members Fockler, Kirkwood and Wiseman. Board members Mark Hampton and Mark Forbes were absent.
The next meeting of the TCMH board of trustees is noon Tuesday, May 23, in the downstairs meeting room of the hospital.
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