MHSC receives clean audit with financial growth being the key in the 2013-2014 fiscal year

MHSC receives clean audit with financial growth being the key in the 2013-2014 fiscal year

ROCK SPRINGS – It is that time of year again as government agencies are hearing audit reports for the past fiscal year. The law firm of CliftonLarsonAllen LLP, reported to the Memorial Hospital of Sweetwater County Board of Trustees Wednesday night they had a “very good audit.”

One of the Principals at CliftonLarsonAllen, Darryn McGarvey, along with audit manager James Mann presented the 2014 audit. The audit team of CliftonLarsonAllen, which is based in Minnesota, started talking to MHSC in May and June and from those discussions devised an audit plan. At the end of July, the team then came back to MHSC and began the audit process.

“It went very, very well,” McGarvey said as he gave the board a clean and unmodified opinion on the audit.

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Mann began the presentation with a look at some of the financial reporting, policies and internal controls. Mann said there was one new accounting policy last year but overall in the finances, there were no significant or unusual transactions which occurred. He said there were nine “very small” audit adjustments which they found. Recommendations to fix them were made with most already fixed or being completed. To indicate how small the problems were, Mann said the total amount of money involved with the small issues was $392.

After the meeting, MHSC Chief Executive Officer Jerry Klein told Sweetwater NOW for a company which deals with a  yearly budget that rivals some of the major industries and other governmental budgets in the county to only have $392 out of place speaks for itself.

Mann said again, they had no disagreements or difficulties from MHSC staff when requesting documents, receipts or financial information.

From there, Mann switched over to internal controls at MHSC. Again it was very positive. Mann said they found no material weaknesses or deficiencies in the internal controls at the hospital.

Liaison to the board, Sweetwater County Commissioner Reid West said not only were there no material weaknesses but also no deficiencies which is very impressive for an organization the size of MHSC. He said a lot of thanks and praise needed to go to Chief Financial Officer Irene Richardson and her team.

McGarvey then returned to the podium to discuss some of the financial highlights and data.

“We look at financial ratios and take the data and basically compare yourself to yourself,” he explained. “We also look at benchmarks we have from data gathered from hospitals throughout the region which are similar to yours.”

McGarvey summed up the 2013-2014 financial picture at Memorial Hospital of Sweetwater County as one of growth. He said the hospital has seen growth in both revenue and expenses. He focused on the new Medical Office Building to begin with.

Over the past year, the hospital has hired several new physicians and brought several new services online such as the new regional cancer center. McGarvey said several time during his presentation it is very obvious the hospital has invested heavily in MHSC. After the meeting, Klein also gave a lot of credit to the community for also seeing the importance of investing in MHSC by approving the past tax  initiatives.

With the Medical Office Building, McGarvey said anytime a new building is open, it is normal to see a drop off financially due to costs associated with staffing and furnishing the new building. He said while there was a drop, revenue was still up 10 percent over last year while expenses were up 17 percent due to the opening of the new building.

“We don’t see 10 percent increases in revenue in hospitals with today’s markets,” McGarvey stressed. “We were recently at a hospital in Michigan who is very similar to yours and they were happy with an increase of 4 percent in revenues.”

McGarvey also told the board 2015 projections also show a lot of growth due to changes the hospital has made in operating procedures over the past several years.

The net margin position was off about 1.1 percent but McGarvey said it is really not that far off of the benchmarks. He said the drop was because the hospital took money and paid off the B Bonds early.

McGarvey also spoke about the EBITDA which is an approximate measure of a company’s operating cash flow based on data from the company’s income statement. It is calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization.

He said MHSC is well above all the benchmarks because of the investments made into the organization which has kept the age on buildings and equipment very low.

Bad debt and charity was also discussed as well as cash on hand. McGarvey said with bad debt and charity pay, MHSC is higher than the benchmarks would like to see but said it is very consistent with hospitals throughout Wyoming, Montana and Colorado because of the population, medicaid and self pay issues in the region.

As for cash on hand, he reported it dropped this past fiscal year and again explained it was because the hospital has been paying “above and beyond” on the bonds. Again though, he said they are still well within the benchmarks.

Overall, McGarvey said MHSC had a very clean audit and gave an A grade to the organization. Board member Robert “Doc” Waldendorf joked a bit with McGarvey saying he was disappointed it wasn’t an A+. McGarvey responded joking back with Wallendorf telling him to take care of that $392 dollars next year and it will go up.

Overall, Klein said he was proud of the audit and how investing back into the organization as heavy as they are is paying off. He said he was pleased with the growth over the past year and was excited about the projections for the next year.

“I am very proud of this organization and the folks who come to work everyday with a desire to make this organization the best it can be,” Klein said.