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Spencer Hospital Audit Released

Spencer, IA–Spencer Hospital’s recent audit report reveals the hospital maintained solid financial performance compared to industry norms; however, experienced a  decline in profitability during its last fiscal year as compared to recent years.

The changing trend in profitability was primarily related to reductions in third party reimbursement and softer service volumes associated with the initial impact of healthcare reform measures. The audit was conducted by Winther, Stave & Co., LLC for the fiscal year which ended June 30, 2013.  “We live in changing times.” said hospital president Bill Bumgarner.  “A focus to reduce the growth in healthcare spending in the United States is impacting hospitals across the country.  Spencer Hospital is not immune to that reality.  Accordingly, we must change how we perform our work based on what our customers are willing to pay for our services.”

Bumgarner shared that the hospital has been engaged in active cost management activities for several years in anticipation of the impending changes in the healthcare system.  He said that work has intensified in the past year as the actual impact on hospital operations has become more apparent.

Winther Stave’s audit report shows the hospital’s revenues totaled $65,540,466 for the year ended June 30, 2013, which is a 3 percent decrease from the prior year. The revenues included $62,067,492 in net patient revenue, $2,161,333 of other operating revenue, and $1,311,641 of clinic revenue. “It’s important to keep in mind the hospital does not receive any tax revenues from the city,” stated certified public accountant John Toale, of Winther Stave & Co.

The audit report also shows that the hospital’s charity and uncompensated care for the year totaled $3.36 million, a 3.3% increase over the prior year amount which was $3.25 million.

Expenses for the year totaled $62,108,572, a 2 percent increase from the prior year, and included $29,776,104 salaries and benefits, $22,352,535 for supplies, services and other costs, $4,711,584 for prescription drugs, and $5,268,349 for depreciation expense on the hospital’s plant and equipment.

“Our entire healthcare team is focusing diligently to find ways to reassess how we perform our work,” Bumgarner said.  “We’re adjusting staffing models where we can to adapt to changes in service volume. Our management team is continually seeking more favorable terms related to purchasing contracts, service agreements and the like. I’m very proud of how our co-workers are responding to the challenges presented by unprecedented change in the healthcare industry.”

Bumgarner explained that the impact of softer services volumes and reduced reimbursement reaches far beyond the Spencer Hospital service area.

“Most hospitals in the area, state and region are taking similar steps to change organization practices in response to industry-wide circumstances,” he said.  “We’re not alone.  Yet, it’s our objective to be more proactive, focused and caring in our efforts to adapt our hospital needed as compared to the industry as a whole.  I’m pleased with the progress we’ve achieved thus far.  Our community can depend on us.  We’ll see this through.”

Below is a condensed statement of revenues and expenditures for Spencer Hospital for the year ended June 30, 2013 (in thousands):

Operating revenues …………………………………………..          $65,541

Operating expenses …………………………………………..            62,109

Operating income                                                      3,432

Non-operating income, net…………………………………..             1,482

Excess of revenues over expenses before

contributions                                                             4,914

Contributions …………………………………………………..                677

Change in net position                                                5,591

Total net position – beginning of year …………………….            83,465

 

TOTAL NET POSITION – END OF YEAR                       $89,056

 

A copy of the audit report is available for review in the Office of Auditor of State and the hospital administrator’s office.