Texas County Memorial Hospital lost almost $2.1 million last year, reflecting a tough healthcare environment in the state that was accelerated by depreciation costs.
The report, received on Tuesday at the board’s monthly meeting, was compiled by BKD, LLP, a Springfield accounting firm and reported by representatives Stephanie Weis and David Taylor.
Weis said “2015 was an atypical year for operating results” as she cited the loss of two doctors in the first quarter, leading to lower operating revenues of $1,848,391. Audit results also showed that expenses at the hospital dropped by $475,145, which Taylor described as not common.
“A substantial portion of expenses are fixed in a hospital of your size,” Taylor said. “It’s very hard to be responsive to volume changes, but you were able to control expenses that were controllable.”
Grants and donations to the TCMH Healthcare Foundation totaled $619,196 –– compared to $1,180,978 in 2014. Although the foundation funds are designated for specific purposes, the numbers are included in overall year-end fiscal results.
“The funds you have received for grants and donations are very strong,” Taylor said. “Numbers like these are not typically seen in a hospital of your size.”
Although revenues at the hospital were down in 2015, TCMH continued to invest in the hospital with capital purchases totaling $500,940. TCMH made principal payments of $747,356 on the major construction project completed in 2014 and depreciation expenses made up a good portion the hospital’s losses in 2015.
“A lot of this year’s loss is related to depreciation,” Taylor said. “If you take out the depreciation, 2015 showed a ‘true decrease’ of about $450,000.”
The report showed a decrease in accounts receivable of more than 12 percent for 2015, most of which is third-party insurance collections for clinic-based billing. Auditor called the decline favorable.
“Our report shows that you are doing what you can to watch any funds that are going out the door,” Taylor said.
TCMH had 83 days of cash on hand — the days the hospital could operate without bringing in any funds. The average among rural Missouri hospitals is about 50 days.
Construction projects at TCMH have the average age of the hospital facility down to about 10 years –– at or below Missouri hospital averages. The debt to capitalization ratio at TCMH is at 50 percent, which Taylor called “not too high.” TCMH is in line with other hospitals in the nation.
“Your balance sheet is good, and your financial position is strong,” Taylor told board members.
Taylor pointed out that revenue from the 340b pharmaceutical program helped offset losses in 2015. He said TCMH plans to grow those revenues in 2016. Additionally, TCMH has hired Dr. Cory Offutt, a family medicine and obstetrics physician, who will begin working full-time in the hospital and clinic in July.
TCMH brought $14,127,908 in Medicare and Medicaid funds into the hospital. Due to the patient population in the area, TCMH relies heavily on federal funds.
Taylor spoke to board members about the shift that hospitals are experiencing as Medicare makes payments for healthcare related to value rather than volume.
“TCMH experienced some value-based payments in 2015, and there are more of those to come in the future,” Taylor said.
Taylor explained that understanding the financial path for risk-based reimbursement versus the traditional fee for service payment method is not entirely known.
Beginning this April, a pilot program for hip and knee replacement was put into place in major-metro areas of the state. Hospitals are given a bundled bulk payment for the joint replacement, and with the joint replacement, the hospital assumes a 90-day responsibility for the patient post-discharge.
“The bottom line for each joint replacement is dependent upon improving the outcome of the patient,” Taylor said. “This is forcing conversations on the coordination of care for patients.”
Taylor and staff at BKD anticipate that more healthcare procedures and services will be placed into “bundled” payments, placing the hospitals at risk financially.
As a result of the anticipated changes to the payment delivery methods for the hospitals they serve, BKD has hired non-CPA staff to help the accounting firm better understand the clinical side of the business.
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.
“As our numbers show, there was not a significant change from the numbers you reported internally to those we are reporting,” Weis said. “You did a good job making decisions throughout 2015 based on your internal results.”
ADMINISTRATIVE REPORT
Wes Murray, chief executive officer, said he and Joleen Senter Durham, physician recruiting director, visited the Cox Family Medicine Residency Program in Springfield to speak to residents about TCMH.
“We had a very productive meeting and provided lunch for about 15 people,” Murray said. “We spoke with them about moonlighting in the ER, rural residency rotations in the clinic or surgery department, weekend hospitalist work and full-time opportunities after residency.”
Durham said several of the current residents have roots in the Ozarks.
“Most residents will take a job within 100 miles of where they complete residency,” Durham said. “We are very fortunate that Cox allows us the opportunity to meet with their residents regularly.”
Ron Prenger, CoxHealth representative, said the Cox residency program was recently allowed to add an additional resident. The program hopes to add more slots for residents in the future.
FINANCIAL REPORT
Linda Pamperien, chief financial officer at TCMH, reported inpatient volumes were below budgeted expectations, but outpatient volumes were above budgeted expectations for an overall revenue of $23,261.
Due to Medicaid payment remittance for three weeks instead of two in March, contractual adjustments were higher, coming in at almost 68 percent.
With the higher contractual adjustment, TCMH ended March with a negative bottom line of $132,018, creating a negative year-to-date bottom line of $35,997.
Attending the meeting were Weis; Taylor; Murray; Pamperien; Durham; Prenger; Anita Kuhn, controller; Dr. Jonathan Beers, TCMH chief of staff; and board members Jim Perry, Mark Hampton, Omanez Fockler and Janet Wiseman. Absent was Russell Gaither.