SMH board receives financial audit report

Members of the Stephens Memorial Hospital District board received a report on the 2015 fiscal year financial statements from the auditors during their meeting Thursday night.

During her presentation, Deborah Whitley, a CPA whose firm represents other rural hospitals similar to SMH, gave board members a quick overview of what’s going on in the Heath Care industry, a look at how they compared to similar-sized rural hospitals and walked them through a snapshot of SMH’s 2015 audited financial statements.

“You have one problem in this hospital; there’s only one. It’s one very, very simple problem. Your volume is declining. And because your volume is declining you’ve got a cost problem,” she said. “If you didn’t have declining volume, you wouldn’t have a cost problem. But, because volume is declining, we have issues with costs. And then that’s generating all the other things.”

Whitley said the overall gross patient service revenue was down almost $500,000 in 2015. She said some of the volume decrease was in inpatient services, some of it was outpatient services and some of it was in the clinics.

SMH Administrator Mathew Kempton said the main reason why volume was down in 2015 was because during the prior year one of the physicians left the hospital and another started cutting back his practice during 2015, getting ready for retirement and then retired partway through the year.

Kempton said the hospital didn’t get a replacement hired and in full service until near the end of the year, which effectively left them short two physicians for the year.

As for this year, inpatient volume continued to be down and had been down all year, according to Samuel Grant, SMH chief financial officer.  He said there were only 491 patients this year through March compared to 803 the same time last year.

He also said ancillary services, such as pharmacy doses, laboratory procedures and radiology, were down this year mainly because of the low inpatient volume.

However, in other areas, he said patient volume was up over last year. For example, Emergency Room visits and hospital admissions from the Emergency Room were up over last year.

Grant said MRIs, radiology, CT scans and ultrasound were also up over last year. Cardiac rehab visits were much higher than last year with 546 compared to 323 this time last year, he said.

He said outpatient visits were almost up to normal.

“This is the highest we’ve had since October in outpatient visits,” Grant said. “And they’re slowly climbing. The clinic volume is slowing climbing. It takes a while for a practice to get built up.”In addition to decreased volume, Whitley also said, during 2015 operational expenses for the hospital were up. She said while salary and employee benefits came down, the costs of contracted services went up. For example, she said the hospital spent almost $100,000 outsourcing medical coding to get better and faster results. She said expenses for recruiting were up, too.

“We spent a lot of money on recruiting,” she said. “So the good is, it was effective, but we spent a lot of money to get that. Your professional fees and purchasing contracted services, coding, EMS, recruiting, cost a lot of money for you in fiscal year 2015. Those were the three biggies.”

In going forward, Whitley said the some important things SMH needs to focus on from a financial point of view is staying on top of collections and billings, managing costs, managing volume and utilization and planning for reduced tax revenues because of economic decline. She said they also need to start planning for reductions in reimbursements by finding ways to supplement and grow in other ways.

During her presentation, Whitley said it was also important for board members, when asked by a taxpayer about property taxes, to stress the importance tax revenue plays in the operation of the hospital.

“We depend upon property tax revenues for survival. It’s paying us to operate and stay alive. Those tax revenues are what keeps this place open. It’s absolutely critical.” she said. “I’m getting more and more calls and questions on why do we have to stay a district. It’s without a doubt the only reason hospitals in the rural areas survive these days.”

In other business, Kempton told board members that SMH had signed a contract with a new pediatrician. He said Dr.  Flor Guerengomba is scheduled to start in September and will be working out of Breckenridge Medical Center.

“We’re excited about that,” he said. “I think it’s something the community has asked for, for some time.”