Auditors: Weems’ books stable, with needed subsidy
The auditors who filed a diagnostic report on the finances of Weems Memorial Hospital say the books are in good shape, and the financial condition remains stable, still highly dependent on county subsidies to stay fit.
In a sharing of his firm’s financial audit for the last two completed fiscal years, from Oct. 1, 2017 to Sept. 30, 2019, Brian Hall, Jr. with Carr, Riggs and Ingram, outlined for county commissioners May 19 the findings that went into the firm issuing an “unqualified opinion, the highest level of assurance we provide.”
He moved forward through it at a brisk pace, making sure to address each of the audit’s essential calculations.
Hall began with the topmost line item on the statements of net position, that the cash on hand had declined over those two years by almost a half-million dollars, down from about $750,000.
The sheet goes on to indicate that when a $1.5 million construction project, paid out of Hurricane Michael disaster relief insurance monies, is taken into consideration, Weems total current assets have grown from $5 million to $6.2 million
Hall said the auditors paid attention to making sure all the accounts receivable were accurately stated, and found that they were comparable to the year before.
He said the county’s waiting repayment of a roughly $700,000 loan from years past had improved the hospital’s position, and labeled as “pretty strong” the hospital’s nearly $5 million in net equity.
“That’s good strong equity for a hospital this size,” Hall said.
He said a drop in revenues at the hospital had been due to Hurricane Michael, and that absent that storm, he believed they would have risen.
Overall, Hall said, the hospital had withstood a $2.6 million operating loss, compared to $1.6 million the year before.
He said that the county subsidy was crucial to the hospital’s survival, totaling about $3 million annually once the $700,000 loan forgiveness was figured in.
“There is always going to be a need for some subsidy from the county. The question is what amount is appropriate,” Hall said, estimating that this needs to be at least $2.6 million to break even.
“We got to get back to where that makes sense,” he said. “Right now they need the money. The hospital is doing well, given the county subsidies.” He added that the picture would be different “if those were to go away.”
Hall said Weems provides about $424,000 is annual estimated charity care. “That was the actual estimated cost that the hospital had for giving away services,” he said. “For a hospital this size and the shape it is in, to be able to contribute $424,000 is a really good story to tell.
“The hospital is definitely contributing to its community,” he said. “That tells the story in black and white to me.”
Hall said auditors found no evidence of fraud, and that he found the hospital administration helpful.
“They bent over backwards to help us. They truly love the hospital and you can tell,” he said.
Chairman Noah Lockley sounded pleased at the audit, blasting those in the community who have railed against hospital finances. “We have people coming in telling us this and that and the other and they can’t count to two,” he said.
Hall said he expects fiscal year 2021 to be stronger, especially given that the hospital has shored up its contracts with commercial payors.
“What you bill is irrelevant,” he said. “The hospital used rates that were not accurate or not current. We recommend that management increase staff there.
“When we came in there was a large book of denials and claims. Insurance companies used denials as a way to manage the relationship,” Hall said.
He said the hospital makes only so much on Medicare payments and those from the private sector.
“The hospital was guaranteed to lose money every year based on those contracts,” Hall said. “They proactively hired someone who went over the contracts, and they’re going to pay dividends.
“These are the sins of the past,” he said. “No insurance company can go up to reasonable rates in one year. We’ve seen some eye-popping increases. The insurance companies knew they were underpaying for a long time.”