The presenter, Chris Clark of BKD, LLP, said that while MCHD’s policies and practices were consistent with industry standards, the audit revealed that the entity had an operating loss of just over $3 million, when it is usually between $2 to $3 million.
“That’s not uncommon for hospital districts because you serve indigent patients and have property tax revenue to offset those costs, so [after adding] back property taxes you have a total loss of just over $1 million,” said Clark. “We did see a drop in patient revenue in 2016 as compared to 2015 largely driven by shift in payer mix, and there was a slight uptick in salaries and benefits which is a primary a product of cost of living adjustments that were made.”
Clark also mentioned that the average time for an accounts receivable account to be adjudicated was about 60 days compared to the average 50 days for other entities.
The monthly financial report presented later in the meeting by MCHD CFO Nestor Bonilla revealed that there was already a loss of $164,115.
Vice Chairman Jesus Casas was very concerned at the loss, despite Bonilla stating that MCHD was still in the positive at $713,552.
“This trend has been there for years where we make the budget, we believe everything is perfect but then at the end of the day we hit reserves again, and that’s what’s happening. As you can see this month you see a negative $164,000,” said Casas. “I’m certain if we don’t make some changes we’re still going to come out with a negative number at the end of the year. The trend for the last fifteen years is that we’ve been in a loss so how are we going to pretend to get a good result if we are doing the same thing? There’s no way we’re going to get positive numbers at the end of the year if we’ve actually been doing the same thing we’ve been doing the last 15 years.”
Casas said despite some changes being made, he would like to focus less on property tax and rental revenue and more on program revenues, as well as hire a management company to help organize a plan.
“I don’t think we can increase property taxes anymore, and I don’t think if we ever vote in favor of a tax increase, it will do us any good because at the end of the day we’re not going to be able to collect the $1 million we are lacking every year,” said Casas. “To me it is very clear that everything we need to concentrate on is on the program revenues created through our specialty group and the different projects we have in the future. In order for us to understand better how things at a business level should be working, we’re asking to get this management group to come up and help us so we can improve and increase our revenues. We’re losing $1 million and that’s coming from the reserves, and the reserves aren’t going to be there forever.”
MCHD CEO Terri Patlan-Contreras agreed that having a management company come in would be beneficial.
Patlan-Contreras will be working on a plan to present to the board that, once approved, will allow MCHD to go out for bids for a management company. She estimates the cost of hiring a management company to be anywhere from $100,000 to $200,000.
“I don’t exactly know how much it’s going to be, but we need to make things different than we have done in the past in order to create more program revenues, even though we’re not here for a profit, we’re here for a community,” added Casas. ”$200,000 is a one time deal preventing us from losing $1 million every year.”
Board members anticipate the addition of an orthopedic surgeon will bring revenue up dramatically.