Hospital CFO delivers grim financial report

WINNSBORO – Fairfield Memorial Hospital’s Chief Financial Officer Timothy Mitchell delivered a brief but dire financial report to the full Board last week during their regular monthly meeting. Operating expenses continue to outweigh revenues.

The more detailed financial picture presented by Mitchell during the Finance and Audit committee meeting preceding the full Board meeting showed an even darker outlook, causing Board member William Turner to exclaim the obvious, “Listen, we are absolutely broke.”

Even some positive things in July did not really budge the negative numbers on the FMH income statement or balance sheet.

For example, gross revenue was up $100,000 from June and there were smaller net losses in July – $128,596 – versus $289,648 the previous month. This ticked up average daily gross revenue from $37,234 in June to $39,286 in July.  But that is still about $5,000 a day less than July a year ago.

Also, in July the hospital received an extra $64,329 in disproportionate share money (DSH) as a result of a recalculation of unreimbursed cost.  DSH funds come from federal and state tax dollars and are paid out by the S.C. Department of Health and Human Services to help hospitals that treat a disproportionate share of indigent or uninsured patients.

“It is important to note, however,” Mitchell said, “that the DSH payments year to year are dropping.  It may be hard to see that, because we are getting payments related to audits from previous years.  DHS is actually dropping by $358,000 (this year) because patient volumes are down.”

Mitchell also noted that another source of federal money – $1.2 million in meaningful use funds the hospital received last August – would also be drying up.  Meaningful use funds are from a federal program to help hospitals and other health care providers implement and use electronic health records.

‘It’s no secret that the hospital has had substantial operating losses over the past four months, and this is affecting key financial indicators such as days cash on hand [money needed to operate on a daily basis],” Mitchell said. He projected that the hospital would have, on average, only eight days of cash in hand during the month of August and only five days cash on hand in September.

Other indicators were the focus of concern as well. For example, in July the hospital owed vendors more than $2.7 million, and 59.16% of accounts payable were older than 60 days.

“The hospital has experienced $928,930 in losses during the past four months,” Mitchell said.  “At that level, you are burning $65,000 in cash every month that you don’t have. That’s on top of the county appropriation. That’s the bottom line… so we have to sit down and have some serious discussions about how to deal with that.”

Board member Randy Bright pointed to the service line report which he said was indicative of where the hospital was losing money. For example, he said, for the current year through July, almost all of the hospital departments, including the emergency room, imaging services, respiratory and rehab therapy and laboratory were pulling in far less patient revenues than initially budgeted at the beginning of the year.

In total, the hospital’s actual revenues generated from its services were almost $7 million less than its initial operating budget.  Only home health revenues significantly exceeded budget expectations.

Mitchell pointed out that the hospital has already done some things, such as eliminating some loss leaders, i.e., ending its MRI and nuclear medicine services.  “I think we need to continue our consideration of other areas that we may need to think about closing or eliminating,” he said.  “We are at a place where we either charge or retreat.”

“We can either look at this completely insulated from the outside in how we deal with the problem,” Mitchell said, “or do we look outside our organization for any options.”

“No revenue just destroys you,” Board member William Turner said. Committee members agreed, noting that the hospital can only cut expenses so much.

Bright added that in the meantime there are still hospital departments that have opportunities.

“We have deadlines/time table for department decisions. But we can’t make any decisions on those departments until we know what we want to look like afterward,” he said, meaning after Providence Hospital builds the new, stand-alone ER and the FMH inpatient and ER departments close.

This prompted an outburst from Turner.

“If they [the hospital’s other departments] aren’t making money now, how are they going to make money then? We can sit here and talk all day about what they (Providence) are going to get and what we want to keep, but if we aren’t making money now, how are we going to make money later?”

“But maybe someone else could”, Bright noted.

“Well are we looking at someone else at this point?” Turner asked.  “What about Eau Claire [Cooperative Health Center]**, for example?  Why aren’t we looking at somebody right now no matter what departments we keep or which ones we get rid of?”

“I don’t know if we want to send that message out right now,” Board member Ronald Smith said.

“We don’t have time to send a message. Listen, we are absolutely broke,” Turner responded.

In the end, committee members agreed that until the Board had more information from Providence and the decisions it is going to make, it would be difficult to plot the future for the remaining departments of the hospital and how they could be sustained.

“We can’t get into any entanglements until we know what we want to be,” Bright said.


**At the Fairfield County Council meeting August 14, Eau Claire Cooperative Health made a presentation focused on expanding its presence in Fairfield County.  With locations in four counties, including Fairfield, Eau Claire has 50 providers and offers primary care, pediatrics, dental, women’s care, and behavioral health. In 2016 about 3,000 Fairfield residents received care from Eau Claire. During the full board meeting, copies of the presentation by Eau Claire were distributed by Board Chairwoman Catherine Fantry as information for the Board to consider.

 Council Grills Hospital CEO

After reporting to County Council Monday evening what services the hospital continues to provide as well as a financial update, which was bleak, hospital CEO Susie Doscher summed up her presentation by saying it would be difficult for the hospital to be sustained in the future without help from the County. Following her presentation, Doscher was grilled by several members of Council.

Councilman Douglas Pauley asked Doscher if she thought the hospital’s executive structure was top heavy with four executives: CEO, CFO, CNO (nursing) and a COO. Doscher said she didn’t know of any hospital that didn’t have a CEO, CFO and CNO, but that sometimes the CEO will take care of departments that are overseen in some hospitals by the Chief Operating Officer, thus eliminating that position.

Pauley also asked why Blue Granite Clinic has not been closed since it has never generated a profit.

“Blue Granite Clinic is a primary care provider. These can not stand alone. The Martin Center gets assistance from USC. Fairfield Medical Associates brings in other types of revenue such as ordering lab tests, by ordering any tests,” Doscher said.

“How much money has the hospital written off or adjusted last year due to errors on the hospital’s part?” Pauley asked.

“I’ll see if I can find out for you,” Doscher answered.

The questions got closer to the bone.

“FMH board and staff members are going to a conference in Hilton Head next month,” Pauley said, and asked if FMH would be paying for the trips.

“Yes,” Dosher responded.

“If the hospital pays for their trip to Hilton Head and you all come back to Council asking for more money, I will vote no,” Pauley said. “The hospital being in the financial condition it is in, if they go to Hilton Head, they need to pay for their own trips.”

Councilman Neal Robinson questioned Doscher about rumored recent cuts in employee pay and asked if executives also received pay cuts.

Doscher initially said there were no pay cuts, but explained that hours were cut back for some employees because staffing didn’t match patient volume. She said no salaried employees received cuts.

Robinson also asked what generates the most revenue at the hospital.

“Imaging services,” Doscher replied.

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