MCDH financial audit report released

2/21/06

Mendocino Coast District Hospital’s Audit Committee, Finance Committee and Board of Directors received the annual financial audit report for the previous fiscal year at meetings held on Thursday, December 21.  The audit firm TCA Partners, LLP, prepared and presented the report, which covered the fiscal year July 1, 2005 – June 30, 2006.  The bottom line was a $5.0 million loss for the fiscal year.

While the magnitude of the loss is unprecedented, it is due primarily to two significant items, both of which have already been corrected according to MCDH’s current management team.  First is a large write-off of accounts receivable (A/R) funds that were not collectable last year, as discovered and reported early in the fall during the tenure of Interim CEO Jon Baker.  Baker had implemented an aggressive A/R collection initiative, only to find that a large portion of the A/R amount on the books had already been collected and not removed from this line item.  “That amount has been adjusted from the books, and is included in the audit report,” said Hospital Chief Financial Officer Wayne Allen.

The second major item was the removal from the books of a major gift from the Hospital Foundation ($1.2 million to replace the CT scanner) that was recorded during the year under audit.  Since the project is not yet complete, Allen and the auditor agreed that the Hospital should not include the gift amount in our financial statements until the CT scanner is actually installed.  The gift will be re-recorded upon completion of the project and receipt of the gift, anticipated for the fiscal year beginning July 1, 2007.

Raymond Hino, the Hospital’s CEO since mid-November, said that while the audit report paints a dark picture of the previous fiscal year, “I believe that the worst is behind us.  MCDH has made dramatic strides during the past 6 months.”  He pointed to the past month (November’s) positive net income of $40,893 and the 5-month net loss of $62,966, which is $1,680,000 better than the same time period during the last fiscal year.

“Give credit to current hospital management for finding and fixing these problems.  I only made one adjustment to the very thorough financial statements provided to me by Mr. Allen,” said Jerrel Tucker, CPA, of the audit firm TCA Partners.

“There has been a turnover in much of the management team, and we have lots of fresh ideas and experience from other places to lead us into a successful future.  We are prepared to take on the challenge of improving, to preserve the Hospital as a vital resource for the coast,” Hino continued.

Allen, who has led the effort to reconcile MCDH’s books since his arrival in August, echoed Hino’s confidence.  “With our Critical Access Hospital (CAH) designation, we should see an improvement to the tune of about $200,000 per month in additional revenues from Medicare,” said Allen.  “These CAH revenues, in combination with our expenses and revenues being in alignment with our actual current volumes, will bring us into about a break-even situation.”

Beginning in January, MCDH is launching a major strategic planning effort to determine the best ways to add to its patient services, increase physician availability and grow the business.  High quality patient care is the most important goal, and achieving a positive bottom line will allow for reinvestment in capital equipment and building improvements to further improve patient care.   The strategic planning process is a community-wide project to develop strategic initiatives to ensure the long-term health of the Hospital.

“We have a lot of strengths to build on,” says Hino. “Being new here, people have made it a point to tell me what they think of MCDH.  I hear compliments about our friendly staff and our quality of care.  It’s something we can all be proud of, and we are grateful for the community’s support.  I invite anyone with questions or concerns to call me directly at 961-4610 or e-mail me at rhino@mcdh.net,” concluded Hino.

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