Crawford County Memorial Hospital (CCMH) CFO Rachel Melby presented an end of the month and end of the fiscal year report to CCMH trustees at this Monday’s board meeting.
The hospital ended the last fiscal year on June 30 with better numbers than might have been expected during the ongoing pandemic.
Melby noted that some numbers were preliminary – and would be finalized after the hospital’s audit by Denman & Company, of West Des Moines, is complete. The company was at the hospital this week doing audit fieldwork, she said.
Melby said CCMH had many challenges in the just-completed fiscal year, but the hospital adapted well.
“We made operational adjustments that helped us weather the challenges associated with that first wave of COVID-19,” she said.
One of the most important outcomes of the year was that CCMH was able to increase cash reserves for the third year in a row.
“We ended the fiscal year with cash balances increasing by more than $8 million, with a total balance of $19,299,000,” Melby said.
Most of that increase came from stimulus payments from the federal government, but CCMH would have had a positive cash flow for the year without them.
“Even without the stimulus payments we still would have had positive cash flow of roughly $262,000,” Melby said.
The hospital was able to decrease expenses and made responsible decisions to insure sustainability in the face of significant decreases in inpatient volumes and revenue due to the pandemic, she said.
The preliminary report for the month of June reflected a net loss of more than $1 million for the month, but Melby noted that loss was primarily due to an Iowa Public Employees’ Retirement System (IPERS) accrual entry required by the state of Iowa.
“Throughout the year we have been accruing approximately $275,000 in additional IPERS expense based on the previous year’s entry,” Melby said. “However, the state of Iowa’s final actuarial calculation required us to accrue an additional $969,000 in June. Had we not had to book that additional IPERS accrual entry we would have had just a $100,000 loss, which is what we had budgeted and anticipated.”
She noted that the IPERS accrual entry is strictly a balance sheet and income statement adjustment, not a cash outflow.
Melby reminded the board that CCMH has no obligation at present to pay the IPERS entry; the state took it off the state’s balance sheet and put it on those of public entities in Iowa.
For the fiscal year, CCMH had a preliminary gain of $774,000, which could be adjusted after the audit, she said.
Melby still anticipates net income for the year.
Total patient revenue was under budget by more than $9 million, but compared to last year the gross patient revenue decreased by just over $4 million, she said.
“The most significant impact that COVID-19 had on our volumes occurred in outpatient services,” Melby said. “Our inpatient services stayed relatively flat. From an outpatient perspective we ended up with surgeries down about 18 percent, radiology was down about 9 (percent), therapy down about 15 (percent).
The biggest hit was to specialty clinic visits, which were down 28 percent for the year.
Overall medical clinic visits started to pick back up in May and June but were down 8 percent for the year.
Deductions from revenue, which are reductions from gross revenue resulting from commercial, Medicare and Medicaid contract discounts and reductions, increased by a half percent compared to last year.
Melby said that was lower than in the previous year when it was 1.2 percent.
“Our biggest contractual struggles continue to be the Iowa MCOs (Medicaid Managed Care Organizations) as well as Blue Cross,” she said. “We have weekly meetings with our MCO representative but from a reimbursement perspective we don’t have a lot of leverage because most of that was dictated by the State of Iowa.”
CCMH operating expenses were under budget by just over $2 million for the year.
“As a large part this was a result of reducing our supply expenses and managing our FTEs (full-time equivalent staff) and salary expenses,” Melby said.
The CARES (Coronavirus Aid, Relief, and Economic Security) Act stimulus payments provided to the hospital fall under “other operating revenue,” which was just under $7 million for the year.
The $3 million provided by the Paycheck Protection Program is currently on the hospital’s balance sheet as a loan, Melby said.
That is a loan that can be forgiven if certain conditions are met.
The hospital’s auditing company recommended that Melby wait to work on forgiveness of the loan because they were not sure how it would impact the cost report.
“We do anticipate having that forgiven in the next fiscal year which will increase our bottom line by $3 million,” she said.
The hospital ended the year with 202 days of cash on hand.
Melby said CCMH is moving in the right direction on accounts receivable and on the operating margin/debt service ratio.
Trustees Chairman Jay Mendlik noted the $774,000 profit was a number in the black the hospital had not seen in many years.
“I’m very proud of this team for accomplishing that through this pandemic and everything else,” he said. “We took advantage of the things we could take advantage of. Beyond that we did a heck of a job keeping everybody employed.”
He said he believes CCMH is heading in the right direction for profitability.
Trustees Tom Gustafson and Tom Eller recommended commending Melby and President and CEO Erin Muck for their work on job retention and expense control.
“It’s very easy to cut jobs or forget about expense control but they threaded that needle and I was so impressed,” Eller said.
The board voted 6-0 to commend the CCMH executive team for a job well done in 2020.
Trustee LaVerne Ambrose was not in attendance.