Weiser Memorial Hospital receives a clean audit

Weiser Memorial Hospital received a clean audit of the financial statements for the fiscal year 2019 that ended in June.
 A summary of the audit was recently presented to hospital board members by CPA Kevin Smith, who went over the financial statements and shared data that showed how Weiser Memorial Hospital was doing in comparison to other Idaho critical access hospitals.
 “The goal is always to issue a clean opinion and we’re happy to do that,” he said.
 Smith noted a slight decrease in net patient revenue in FY 2019 compared to FY 2018. The 2019 net patient revenue came in at $16.8 million compared to $16.9 million in 2018, a difference of $100,000.
 The audit noted that bad debt as a percentage of net patient revenue went down in FY 2019, which is a positive sign for the bottom line. The hospital estimated $1.5 million in bad debt in 2019, which totaled 8 percent of net patient revenue. In 2018, bad debt totaled $1.8 million of bad debt and represented 9 percent of net patient revenue.
 Smith said the bad debt allowance is an educated estimate. Hospital administrators come up with an estimate and the auditor also does an analysis that is independent of hospital management. The bad debt numbers estimated by hospital administrators have always been conservative, he said.
 The CPA said additional revenue is expected for the hospital as third-party payor settlements with Medicare and Medicaid regarding reimbursement from prior years are adjusted. The result is additional “found” money that the hospital can bill for that was not received in the initial payment.
 The hospital continues to improve how quickly it gets paid for services by reducing the amount of time bills spend in accounts receivable. The number of days in accounts receivable dropped from 55.3 days in 2017 to 49 days in 2018 and to an average of 48.2 days in 2019. The average number of days in accounts receivable for critical access hospitals in Idaho was 62 days.
 “You’re getting your bills out very timely and you’re getting that money back quicker than anyone in the state,” Smith said.
 The hospital’s cash flow position was about the same year over year. WMH averaged about 15.8 days of enough operating cash in 2019, a decline from 16.4 days with operating cash on hand in 2018. The hospital lags other hospitals cited in the audit, which had from 74 days to 174 days worth of cash on hand. The cash flow trend at WMH is going in the right direction. In 2017, the hospital averaged 11 days of operating cash on hand.
 The CPA said additional revenue is expected for the hospital as third-party payor settlements with Medicare and Medicaid regarding reimbursement from prior years are reopened and reviewed. The result is additional “found” money that the hospital can bill for that was not received in the initial payment.
 Salaries at WMH as a percentage of total operating expense crept up slightly from 49.1 percent in 2018 to 50.5 percent in 2019. Comparative figures from other hospitals cited in the audit ranged from 46 percent to 52 percent.
 The operating margin at WMH was on the plus side but basically flat at 0.4 percent for 2019, a decrease from the 2.1 percent in 2018, but higher than the minus 8.9 percent recorded in 2017. Operating margin is usually computed only with revenues and costs related to patient care.
 Comparative data in the audit indicated that some other hospitals in Idaho had operating margins that ranged from minus 5.9 percent to 6.8 percent. An increase in salaries impacted the operating margin at WMH and made it tighter, Smith said.
 The total margin at WHS was 2.8 percent in 2019, a decrease from 5.0 percent in 2018 but still an improvement over the minus 3.7 percent posted in 2017.
 The hospital district trustees reviewed and approved the audit for FY 2019.