Hospital unveils strategic financial initiatives
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An overview of the 2023 audit and troubling finances were the focus at the Ringgold County Hospital (RCH) board of trustees meeting on Monday, February 26.
Marty Dubas, CPA and audit partner with EideBailly, presented preliminary findings from the 2023 audit.
Dubas shared a new governmental accounting standard, GASB 96, changes the way subscription based information technology arrangements (SBITA) are documented on financial statements for contracts over 1 year.
EideBailly recorded 15 contracts that were subscription based IT arrangements for FY 2023.
Dubas noted that the hospital adopted the provisions of GASB Statement No. 96 for the year that ended June 30, 2023.
Dubas also provided an overview of financial indicators, including profitability, revenue and cost indicators.
Overall, total operating revenue increased 8.6%, while expenses increased 5.7%, and the hospital saw an increase of $994,000 in net position during 2023.
While total profit margin was 12.6% in 2021, it was only 2.5% in 22 and 3.6% in 2023. Comparatively, the central IA Mercy network had a profitablility margin of 8.5% in 2023, and the IA median was 7.9%.
Although lower than peers at 1.8, RCH did meet their debt service requirements in 2023. Dubas noted that they need to have at least 1.25.
As in previous years, outpatient services remains the largest revenue generator for the hospital, accounting for 91% of revenue in 2023. RCH is moving slightly above the Iowa median of 88% in 2023.
Significant growth in ancillary services, primarily in surgery, increased operating revenue 8.6% in 2023.
Dubas noted that RCH sees a higher percentage of Medicare patients, consistent with an aging population, and 57% of outpatient services are paid by Medicare.
Only 43% of the payor mix is coming from another source besides Medicare, which hinders revenue.
Salaries are showing a positive trend, down to 45% in 2023 from 52% of net patient revenue in 2020.
Most troubling, is the downward trend in days cash on hand. While the preferred trend is upward, RCH dropped to 107 days in 2023, and has been steadily decreasing since 2020.
As a way of measuring a hospital’s cash reserves in relation to daily operating expenses, days cash on hand indicates how many days they could meet their operating expenses if revenue suddenly stopped.
The chief of staff, Katie Willcox, DO reported they have started the interview process for a new advanced practitioner, as Leah Kipfer, ARNP has resigned.
They have had 2 interviews so far, and a couple more coming up.
Amy Mobley, the Director of Nursing reported they had their first round of telehealth visits with Iowa Health, and received favorable feedback.
She also reported being down to 2 travel nurses. At one time, they had a larger group of traveling nurses, and they have worked really hard to improve the culture.
They also still have a clinic nurse that is helping cover a shift to help keep from using so many travel nurses.
“Are we providing any incentives for that,” asked MercyOne representative Sandra Christensen, “For those who stepped up to help cover shifts, are we providing an incentive?”
“Yes,” stated Mobley, “it’s financial.”
A grant is also helping to supplement the cost of schooling for nurses, and they are visiting with a couple people about that.
“It’s an internship grant to bring in younger high school age students, to help get them acclimated to the field,” said Mobley.
She explained there is an application, and an obligation for them to stay after they graduate.
“We are continuing to look at how we can be creative with pay, but not go over and above our finances,” noted Mobley.
Turning to finances, Missy Walter, CFO reported that January was not a particularly strong month, as both surgeons were out during January.
Walter also noted they had some administrative adjustments, as roughly $88,000 in wound care claims ended up being written off after trying to get them paid.
“We had gone over and above the units we were allowed,” said Walter, “We billed what we used, so we had to write off the difference.”
She explained there was an approval process for the product, and they got approval for the supply, but not the number of units needed. The private insurance claims were for a couple different patients.
They worked with the sales representative who provided the product, and have done a lot of education with the provider since they realized there was an issue.
“These were old claims that we needed to get off the books,” Walter stated, “We’ve done a lot of education, and we are not seeing the same issues we were before.”
“How old were these,” Christensen asked
“These were at least 18 months old,” Walter stated, “the appeal claim process took 6-8 months.”
Walter credited Debbie Klommhaus for getting it all straightened out.
On a positive note, Walter reported they are still seeing a nice increase in the 340B drug program. Year to date, they are net $346,000, and last year it was about $70,000.
Walter also shared supplies and drugs were $589,000 below budget due to really watching how they are utilizing purchasing contracts.
She thanked Rhett Murphy and Kristi Moffitt for working with department managers.
Ultimately, the month ended with a net loss of $258,397, as total operating revenue was down and benefits were up.
“Are you concerned about cash on hand,” asked Trustee Karleen Stephens.
“Yeah,” said Walter, “We need to be very concerned about cash on hand. There’s a plan formulating, but we are not ready to share anything yet.”
“Is it more in the ER or is it more in the clinic that bills run up,” Stephens asked.
“It’s more in surgery,” answered Walter.
Walter requested forming a budget committee of 2-3 board members.
“I’m proposing a finance committee meeting on April 3, publishing the notice in the paper on the 10th, and a tentative board meeting on the following week.”
Board trustees Karleen Stephens and Contessa Barnes agreed to meet with Walter on April 1, at noon to help draft the budget for next fiscal year.
Nicky Gilbertson, CEO, shared the security grant was successfully completed and submitted, and noted all records have been submitted to the Freedom of Information Council.
She also shared that Brenda Willis is no longer at the hospital, and they’ve had quite a few applicants for the open position.
An ophthalmologist, will be visiting, and they are hoping to share him with 2 other locations. He would be in Mount Ayr once a month. They will still have an optometrist, this would be an additional specialist.
Gilbertson also shared a new strategic scorecard with the board.
“This is what we are sharing with staff,” noted Gilbertson.
Their primary goal is to obtain a positive operating margin by improving their margin 2% year over year (-10.7% or better).
“We are trying really hard to reduce costs, but not sacrifice quality patient care,” stated Mobley.
Although they ended the first quarter (July-Sept) with an operating margin of -14%, quarter two (Oct-Dec) they achieved a -2.70% operating margin, which is trending in a positive direction. The scorecard tracks operating margin year-to-date, which is currently -8.2%.
Maintaining or improving patient safety and quality is their secondary goal, and creating and maintaining successful relationships with employees and patients to provide a better consumer experience rounds out their top four goals.
They have set an employee retention rate goal of 86%.
“As a board member, I appreciate this very much,” stated Stephens, “and the efforts to make staff aware.”
Lastly, Gilbertson talked about the direct payment program, and her desire to have improved payment for patient services.
“I’m hopeful we can get a finance committee together to see what we need to focus on next,” said Gilbertson, “to develop a 3yr, 5yr, and 10yr plan.
Sandra Christensen, MercyOne representative, reported they are continuing to work on financial improvements, including a financial turnaround plan, and the recruitment of talented, qualified people.
Other miscellaneous business rounding out discussion included:
• Approval of a $11,539.00 quote from Martin’s Flag Company to replace and reinstall the flag pole that was removed so it would not blow over in the wind.
• The reappointment of anesthesiologist Melissa Friedrich, CRNA.
Gilbertson closed the meeting by noting that the board of trustees should now be using the Board Effect app and hospital email addresses for communication.
“To be clear, we are sending invites just to Ringgold County emails,” stated Gilbertson.
