Rick Patrick: Greene Publishing, Inc.
Despite challenges facing many rural hospitals, Madison County Memorial Hospital (MCMH)'s financial health is strong. MCMH has released their monthly financial report for the time period that ended on Wednesday, May 31. Current numbers show MCMH had an available cash balance of $1,364,266.85, as of Tuesday, June 13. The hospital has a line of credit of $250,000 available and $88,486.88 in outstanding checks. The hospital surtax balance as of Apr. 30 was $1,636,199.56. Occasionally, a negative interest will be listed on the hospital surtax spreadsheet. According to the Madison Clerk's Office, monthly revenues - as well as quarterly revenues - go into the hospital surtax account. These funds are invested into two different groups: The Florida Local Government Investment Pool – this group is more volatile and normally earns more interest; and The State Board of Administration – this group is less volatile and earns less interest. The hospital bond debt service reserve balance, as of May 31, was $350,364.28. (Per USDA requirement, the County must fund one tenth of the annual debt payment for 10 years until the account meets the maximum requirement of one full annual payment.) The accounts payable for the hospital, as of June 13, was $149,146.67.
One significant challenge faced by the hospital in recent years has been a change in the way Medicare reimburses hospitals, especially in the way hospitals are reimbursed for the unpaid debts incurred when low income beneficiaries cannot pay the coinsurance portion of the cost of their medical care. Historically, the Medicare program has paid hospitals 100 percent of the debt incurred by Medicare beneficiaries. Since 2013, that percentage has dropped to its current 65 percent rate. The MCMH Medicare reimbursement rates have been adjusted by the following, effective Apr. 20: inpatient remained at $1,291 per day, swing remained at $1,069 per day, and outpatient dropped from 33 percent of allowable charges to 29 percent of allowable charges. Current Medicaid reimbursement rates are: $205.89 per day for swing bed; diagnostic related group reimbursement, for inpatient; and $53.67 per line item.
The Hospital Cash Reserves account balance is $501,404. The hospital has other liabilities totaling $270,971.19. This amount is from a loan from the Florida Department of Economic Opportunity (DEO). The original loan amount was $450,000 made in Dec. 2006. In Mar. 2016, the DEO sent a letter to Shirley Joseph, Board Chair, and reported interest and principal payments have been received from MCMH between Mar. 2007 and Apr. 2010. The DEO reported an outstanding loan balance due of $364,530.51 and requested the hospital's plan to meet this financial obligation. The Chief Financial Officer (CFO) and Chief Executive Officer (CEO) of MCMH requested total loan forgiveness for the loan through the assistance of Sen. Montford, but total forgiveness was not granted by the DEO. The DEO revised the outstanding loan balance to $306,971.19. The CFO/CEO communicated a plan to meet this obligation on behalf of MCMH in the amount of $4,000 per month for 76 months beginning Oct. 2016 if all interest/penalties were removed. The payoff plan was approved by the hospital board and accepted by the DEO on Aug. 25, 2016.
A collections analysis of cash receipts from total operations for the month of May 2017 showed that MCMH received a total of $917,563, compared to $702,751 in May 2016.
The hospital has an estimated $1,463,542 available cash on hand with $481,404 in cash reserves. The hospital also has a line of credit of $250,000. With daily operating expenses of $22,000, this gives the hospital 67 days of operation with the available cash on hand without the line of credit. With the line of credit, the hospital could operate for 78 days. The average days cash on hand for Florida Critical Access Hospitals is 22 days. Nationally, the cash on hand for Critical Access Hospitals is 69 days. MCMH is well ahead of the average Florida hospital and about even nationally in terms of available cash on hand.
Since Feb. 2016, the hospital's total days in Accounts Receivable (AR) has dropped from 141 days to 87 days. The average days in AR for Florida Critical Access Hospitals is 60 days. The average days in AR for US Critical Access Hospitals is 55.
The salaries to net patient revenue has dropped from 64 percent in 2011 to 41 percent in 2016. This is below the state average of 52 percent and the national average of 46 percent.
Collection rates for the hospital have improved over the past year. In June 2016, a contract with the TruBridge company to provide the hospital's early out collection services. Early out collections are for accounts less than 120 days past due. This service is not hard-core collections. These early out debt collection accounts are handled in a manner which preserves the hospital's relationship with the patients while ensuring that outstanding bills are collected before formal collection activity is pursued. In Sept. 2016, the cash collected amount was $6,792 or 0.44 percent of the balance sent to TruBridge for early out collection. In Apr. 2017, the cash collected was $31,478 or 12.4 percent of the balance sent to TruBridge.
Co-pays collected by the hospital Admissions Department at the point of service in the Outpatient Department and the Emergency Room grew to $5,160 in May 2017, compared to $3,265 in May 2016.
A breakdown of the revenue for the hospital showed that in the month of May 2017, 50 percent of the hospital's revenue came from Medicare, 13 percent came from Medicaid, 24 percent came from insurance, six percent was from private pay, and seven percent was from County/charity (Indigent care).
As part of the hospital's cost-cutting efforts, the CFO is negotiating better pricing terms directly with all vendors for various contracts before an existing contract is auto-renewed or before a new contract is finalized. This has resulted in a total savings of $122,567 for the hospital.
The mere numbers show the financial health of MCMH is going in a positive direction, despite challenges which will likely continue. The hospital's contribution made to the Madison community's way of life is immeasurable.