Amid a challenging environment for healthcare institutions, Texas County Memorial Hospital lost $527,077 in 2013, according to a report issued last week by its accounting firm.
The news came at a meeting of the hospital’s board of trustees last week.
Stephanie Weis, partner at BKD, LLP of Springfield, and David Taylor, senior manager at BKD, said TCMH had a strong balance sheet at the end of a challenging year.
A bright spot included about $863,099 in cash and pledges on the books for the TCMH Healthcare Foundation and another $1.06 million received from the federal government for 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 million 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 2013.
“The $3.1 million raised by the healthcare foundation is tremendous,” Weis said. “These funds represent great community support.”
As the auditors reported after the 2012 audit, the challenging healthcare environment has not gone away, and it again contributed to lower operating results for TCMH. Taylor said that the hospital’s assets have increased by almost $6 million from $20,753,264 in 2012 to $26,241,752 in 2013 with the opening of new patient care areas and the addition of new equipment for those areas.
With half year of depreciation included in the audit, the average age of TCMH equipment and facility is 11 years in 2013. The rural Missouri hospital average is about 10 years of age.
Taylor highlighted the fact that TCMH has 106 days of cash on hand. One day of cash on hand is equivalent to $64,000. The average rural Missouri hospital has 43 days of cash on hand.
TCMH has 47 days of revenue in accounts receivable, which Taylor called “really strong.” One day is equivalent to $74,000.
In 2013, TCMH increased its liabilities by taking on a loan from the U.S. Department of Agriculture’s Rural Development to expand the hospital.
“This was a big burden to take on, but you are in a very good position with a 30-year loan with a 3.75 percent interest rate,” Taylor said.
Taylor and Weis commended TCMH for their work to pay off bonds that will mature in June 2014.
“It is remarkable for us to see bonds paid off,” Weis said. “Most places refinance or try to extend bonds rather than pay them off.”
“We have seen volume declines with the majority of our clients. It’s imperative that hospitals act quickly with volumes begin to decline or you can quickly bleed the balance sheet dry.”
Weis and Taylor commended TCMH for “mitigating losses” at the hospital.
“Without strong management of expenses and personnel your losses could have been much greater,” Taylor said.
The auditors commented on federal healthcare changes brought on by the Affordable Care 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.
On April 2, 2013, TCMH and other hospitals received an additional 2 percent reduction in Medicare reimbursement due to sequestration. Those cuts in payment have not been restored, nor does BKD believe the cuts will be restored.
Taylor said the cuts make the healthcare environment tough to manage.
“Healthcare facilities and providers are being audited to death, which has providers utilizing more outpatient services,” Taylor said. He believes that hospital inpatient volumes will remain flat or continue to decline in future years.
“We are also seeing a shift in where we get our revenue,” Taylor said. “Commercial volumes are changing and Medicaid numbers are growing.”
Taylor stressed the importance of continuing to monitor payer sources at TCMH.
The auditors commented on Missouri Medicaid expansion, explaining that “something will happen” and that the unknown adds to the challenges faced by hospitals in the state.
Taylor offered a list of things that other hospitals are doing to weather the current challenges in healthcare: practice expense discipline; improve processes in the system; analyze service lines; expand and utilize 340B prescription drug program; seek relationships with other facilities; and search for other funding sources.
“You are doing all of these,” Taylor said, “And you deserve an ‘A+’ for the grants, donations and other funds you have received to make your facility stronger.”
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 that helps the firm reach concrete numbers in the final audit report.
THIS WEEK: A detailed 2013 report to the public from TCMH appears in this week’s Houston Herald.