Finance ~ MINUTES

Tuesday, April 24, 2011

0700 Hours – Board Room

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MT.GRAHAMREGIONALMEDICALCENTER

Safford, Arizona

Finance ~ MINUTES

Tuesday, April 24, 2011

0700 Hours - Board Room

Presiding: / Janet Oesterling, Chairman
Present: / Board Members / Administration
Bruce Stanfield / Patrick Peters, President & CEO
Dr. Bart Carter / Lori Burress, VP & Chief Nursing Officer
Jean Reynolds / Keith Bryce, VP & CFO
John Martin / Wick Lewis, Director H/R
Tom Johnson
Excused: / Caro Gaethje / Dr. Susan Jones
Public: / Cecil Evans
Guests: / Rick Alexander, Eide Bailly
Ky Sanders

Recording Secretary: Tanya Miller, Administrative Secretary

  1. Call to Order and Welcome – The meeting was called to order at 7:00a.m.,by Janet Oesterling.
  2. Approval of Minutes for March 29, 2011 –

ACTION: It was moved by Bruce Stanfield, and seconded by Jean Reynolds, to approve the Finance and Personnel Committeeminutes as presented. Motion carried.

  1. Review and Accept 2010 Financial Audit – Rick Alexander, Senior Manager with Eide Bailly LLP presented the 2010 audit findings for MGRMC. Reviewed Management’s Discussion and Analysis and Financial statements for 2010 and 2009. Discussed financial highlights which included an increase in net assets in the past two years; 11% in 2010. Operating income increased over 2008-2009 but decreased 20% in 2010. Total assets increased $4,400,542 in 2010 compared to 2009. Balance sheet for 2010 reflects $15,472,818 current ratio, an increase of $2,027,436 from 2009. Cash on hand reflects positive results; MGRMC could sustain over 200 days without additional income. Patient receivables show significant improvement. Discussion was held regarding TOPS payments and reserves to include RAC payments. It was noted that Medicare will normally close a cost report after 18 months; however, they can re-open a report after 3 years if decided. Due to this, cost reports for 2008 and 2009 are still open. Reviewed long term debt ratios; currently 13.4, proving MGRMC has been consistently paying off debt. Debt service ratios stand at 2.36 for 2010, down from 2009. Financial statement reflects total operating revenues of $55,364,323 for 2010, a slight increase from 2009 due to salary and wages and addition of medical specialists. A breakdown of these numbers will be provided by Keith Bryce to the committee. Total net assets ending 2010 were $54,004,571. Total cash and cash equivalents are $9,835,128, up from 2009. Home Health Prospective System (HHRG) reimbursement for 2010 was $1,089,934; significant improvement. Reviewed adjusted journal entries; bottom line reflects an adjusted increase in net assets of $5,155,12, primarily due to bad debt allowance. Overall, strength of financial department for MGRMC is good.
  1. Review and Approve Proposal for HIS Vendor and Project - Ky Sanders, MGRMC IS Clinical Analyst, reviewed proposal to replace CPSI data system with Meditech. The CPSI system was installed at MGRMC in 1999 and evaluated in 2005. Recently, CPSI has been found to be lacking some functionality such as Emergency Department software, flowcharts, reporting, and weaknesses in documentation through various departments. For these reasons Administration conducted another evaluation of its health information system. A cross-functional team from MGRMC departments was created and reviewed six main areas: base clinicals, advanced clinicals, general financials, patient accounting, resource management and productivity tools. Various vendors, including CPSI, were measured against these areas and results were reviewed. Staff and committee members ranked vendors based on vendor demonstrations, scenarios, support tools, and site visits. Results showed Meditech ranked consistently higher than other vendors. Meditech would assist with meeting Meaningful Use (MU) requirements, required by the government to ensure Medicare reimbursement, and move MGRMC into the future with a more efficient system and improve patient quality of care. Up front cost for Meditech system is $5 million, with an expected government reimbursement of $2,329,200 over a period of 4 years as the MU requirements are met. The net cost after the MU incentive monies is $2,750,175. MGRMC can meet MU with someenhancements to the current CPSI system. This option would result in $361,644 back to MGRMC after government reimbursements; however, it will not enhance clinical care. Additional vendors will be necessary to address current functional problems and weaknesses. Proposed solution is to replace CPSI with Meditech. Committee discussion was held.

ACTION: It was moved by Jean Reynolds, and seconded by Bruce Stanfield, to approve the HIS Vendor proposal. Motion carried.

It was agreed by the committee to break at 8:54 a.m. Meeting reconvened at 9:03 a.m.

  1. Review Discount Policy – Keith Bryce reviewed proposed changes to the policy. Uninsured patients represent 2.3% of the business at MGRMC. Application assistance is available within the hospital for those patients who qualify for AHCCCS benefits. Patients with high deductibles can apply for the discount if patients or guarantors have an adjusted gross income of $75,000 and pay their account in full within 30 days of billing.

ACTION: It was moved by Jean Reynolds, and seconded by Bruce Stanfield to approve the Discount Policy as presented. Bruce Stanfield noted $50,000 would be a good adjusted gross income for the Discount Policy. Motion carried.

  1. Review Financial Reports for February 2011 – Keith Bryce reported during the month of March, discharges were below budget. Inpatient revenue was below budget but slightly higher on outpatient revenue. Net operating revenue reflects $330,459 less than budgeted for the month. At budget for salaries; above budget for cost of goods. Surplus from operations is $382,176 as the market took back money. Total revenue was up $667,315 for year to date versus prior year. Operating expenses and bad debt expenses are up. Non-operating income shows the market took back $105,974 reflecting overall revenue below budget. Balance sheet remains strong. Construction projects include MRI building and expanded nurse station. Nurse station to be complete by the end of May. Bidding process of the MRI building to be reviewed next meeting. A proposed $580,000 will be added to the future expansion fund. Receivables remain consistent. Overtime report is up by $11,000, however the ER department was down. Net operating margin is down slightly. Days of cash consistent. Net days in accounts receivable are doing well.
  1. Executive Session regarding personnel matters and pending or contemplated litigation – none
  1. Review of Personnel Reports –none
  1. CEO Reports – Patrick Peters reported quality scores were positive for the month; above the national average.
  1. Adjournment – There being no further business, the meeting adjourned at 9:16 a.m.

Respectfully Submitted,

Janet Oesterling, Chairman

Pursuant to A.R.S. §38-431.03, the board may go into executive session to consult on any item that deals with personnel matters, pending or contemplated litigation, negotiations regarding acquisition/lease of real property, confidential records, contract negotiations, settlement and salary discussions, or other matters as allowed by law.