Audit cautions  hospital on finances

Ray Scherer


An audit of the Hermann Area District Hospital finances shows room for improvement, noting recent gains that have helped advance the institution from prior pitfalls.


Auditor Cori Schoenke, of Milwaukee-based accountant/consultant Wipfli, updated the hospital's board of trustees Monday, April 27, on the financial performance covering the past two years. Schoenke said the hospital continues to experience negative losses for the past four to five years. Yet she said officials have taken positive steps, but that those measures must continue to keep the losses from building during the next year. 


"Our concern is starting to life a little bit," Schoenke told the board at its regular monthly meeting. "We're not there yet….It's getting better."


The report shows HADH experienced a $353,000 loss for 2019, which turned out to be a $660,00 improvement over the prior year. The improvement resulted from a $1.3 million reduction in salary and employee benefits. Total assets decreased to $13.1 million as of Dec. 31, 2019, compared with $13.5 million as of Dec. 31, 2018.


The hospital recorded $15.5 million of net patient service revenue for the past year, as opposed to the $15.3 million for 2018 -- representing a 1.3 percent increase. The two latter figures constitute a 4.8 percent decrease from 2017. Meanwhile, expenses declined to $16.9 million for 2019, compared with $17.6 million a year earlier, or a 4.1 percent drop.


She said it's fortunate the hospital is not dabbling in too many investments.


"You guys do not have a lot sitting in the (stock) market," she said.


Removing asbestos from the building for remodeling purposes would result in liability, according to the audit. But Hospital Administrator Dan McKinney said only the radiology room had a small amount of asbestos removed, costing an estimated $50,000.


With the federal government providing hospitals with an assortment of financial aid because of the coronavirus pandemic, Schoenke advised the board to carefully track related expenses. She also said the board might want to consider the option of having the hospital reclassified into the community access category rather than critical access, with an emphasis placed on outpatient services.


"You're actually losing money on Medicare," she said, noting the hospital is only receiving 43 cents on the dollar from the program.


McKinney asked Schoenke how it could improve its financial standing.


"What's the golden egg we're not hitting? We cut $1 million in payroll," he said, with expenses reduced to a bare minimum.


Schoenke said she had no immediate answers for the hospital's plight, other than suggesting that the hospital focus on obtaining private pay patients to help its bottom line.


"But how do you do that? I don't know. I wish I did," she added.