Hospital Board hears updates about audit, construction

Representatives from Dingus, Zarecor and Associates, PLLC, presented on the audit they recently completed for East Adams Rural Healthcare during the monthly meeting of the Adams County Public Hospital District No. 2 Board of Commissioners on June 23.

Craig Leone of Leone and Keeble also presented to the commissioners with updates on construction projects during the meeting.

The DZA representatives went over the completed financial audit for 2015, and Joe Lodge presented the results to the board. Lodge explained the commissioners could see a large increase in the net position from 2014 to 2015, and that is largely due to the inclusion of the nursing home in the district.

The district saw the largest changes between the results of the two years with non-operating revenues and capital contributions.

Lodge explained the district saw positive trends with revenue, expense and net income. The hospital experienced an increase in revenue with the high traffic departments, such as radiology and laboratory, as well as the addition of the nursing home.

While the nursing home donation is recorded as positive income, as is the bond principle, Lodge explained even without those additions, the district would still be recording positive revenue.

Lodge reported the operating income for the hospital at the end of 2015 was $180,000, and for the entire district it recorded at $1.2 million.

The district did see a net decrease in cash with the purchase of capital assets, and Lodge explained this is due to the renovations currently ongoing at the hospital.

Overall, Lodge reported the hospital is having a positive trend with revenue and patients. Even with the loss of money on the nursing home side, Lodge reported positive income for the district.

During the audit, Lodge explained there were two findings for the district. These included material weaknesses in account reconciliations and manual journal entries.

Lodge said in regards to the account reconciliations, his recommendation is that they are seen through to completion.

He explained currently multiple employees are handling it without one administrator overseeing the entire process of each account from the beginning to end.

With the manual journal entries, Lodge said it poses a potential risk to the district.

The results are not posted directly and are inputted from accounting, and he recommended these are also reviewed.

Both findings are of a lesser deficiency, Lodge explained, and are not large findings on the part of the district.

After Lodge’s report, Shaun Johnson presented on the financial indicators for the district.

Johnson explained the total net income saw a large increase in 2015, recording 7.8 percent higher even without the nursing home. While higher is better, Johnson said the number is above the recommended range.

In operating expenses, Johnson said the district recorded similar amounts to the past years. The goal is to breakeven, but because of the current bond, the hospital is recording debt. Johnson said the district is in a good position though with the bond and the EMS levy.

In the “days cash on hand” category, Johnson explained this includes money set aside for the future, including bond money collection. The hospital recorded 280 days cash on hand, and Johnson said the district is performing very well, especially when compared to hospitals of similar size.

With days in net patient accounts receivable, Johnson said currently it is taking the district an average of 113 day to collect. The recommended amount of days is 60, and he encouraged the district to work towards that goal.

While the hospital recorded an increase in bad debt, Johnson said it is close to where it should be and the commissioners should not be concerned.

Johnson provided the commissioners with an extensive list of advisory comments on areas where the hospital district could improve.

After the DZA presentation, Leone presented to the board regarding the status of the ongoing construction project. Leone explained they are hoping to have Phase B completed by July 1, and to begin working on Phase C on July 7.

During Phase C, Leone said they are already preparing for structural issues they have experienced in the previous phases.

In this final phase, they are also planning on lifting the roof in the lobby area, Leone said.

There will be some abatement completed in the final phase, Leone said, and they are expecting to have complications with the bearing walls in the hallways, since those area issues they have been experiencing during the project.

With ongoing drainage issues with the roof, Leone addressed the concerns of the commissioners. The roof is under warranty for 20 years and Leone assured the commissioners the roof would be working properly by the time the entire project is completed.

Unfortunately, the roofing had to be completed first and not at the completion of the project because of the need to install the new air handlers, Leone said.

While this caused difficulties during construction, Leone said the roof will be operating as it should in the upcoming months, as the warrantor will not sign off on the roof unless it is built to the correct specifications.

The issues with the roof ranged from various leaks to drainage problems on the outside of the building. Leone explained an architect reviewed the plans and the roof, and changes will be implemented with the drainage.

These changes include draining the water farther from the side of the building and into habitats that can help absorb the water.

Currently, the water is draining next to the foundation of the building, which could have caused issues in the future if they had not been addressed.

CEO/CFO Gary Bostrom added in his report Phase A is mainly finished, with the stairwell and elevator complete.

The helicopter landing is also complete minus the addition of striping.

Bostrom added when Phase C begins, patients and visitors will have to use the entrance on the 10th Avenue side of the hospital, as the lobby area will be under construction.

Also during the meeting, the commissioners approved the finance committee’s recommendation to purchase a CT velocity upgrade. While the machine is only five years old and the photo quality is good, the machine has difficulty processing an abundance of images.

The request for the upgrade was made so the machine could be reliable and efficient during emergent situations. The total cost of the upgrade was $85,000, and the benefits of the upgrade include patients are exposed to fewer x-rays while receiving the same quality scan and the machine can process the images quickly.

During the financial report, Bostrom reported a net loss of $71,919 for the district for the current month.

For the year, the district is reporting a loss of $131,327. Bostrom said this is the lowest recorded loss for the district in over a year.

For East Adams Care Center, the facility recorded a net loss of roughly $26,000 for the month. This moves the net loss for the year to $415,000.

While it proved to be one of the lowest recorded months for the hospital, the loss at EACC is one of the least amounts seen in the past months. The administrators at the facility are working hard to catch up on accounts receivable, Interim Administrator Michele Johnston reported.

Johnston said her focus in the past month has been hiring local individuals in order to cut back on agency usage costs. The facility has already benefitted from the change, but Johnston said there will still need to be a few additional hires before the agency usage can be significantly reduced.

She also explained the facility is looking to host NAC classes in the upcoming months.

Johnston added her main focus now is on the financials and learning about revenue collections to increase the amount of payments the facility is receiving. EACC currently has 17 residents in the facility.