The buck stops here!
by Rod Burrus
CEO, Cimarron Memorial Hospital
Since my arrival in late May there has been quite a bit of talk about the finances of Cimarron Memorial Hospital & Nursing Home. I have heard from employees that we have gone from boom to bust all in a matter of a couple of years. From what I can discern it all revolves around the people making the decisions on an Administrative level. When I went to the County Clerks Office I was told that our facility had in excess of five million dollars in the bank at one time, which is a far cry from where we are at now. This amount all depended on the services that were being provided, how involved the Administrator was in the billing process and how well the Physicians participated with the hospital.
I wanted to provide a little information about the finances of the facility in order to help communicate exactly where we were and where we needed to be and what my ideas are for the future of our facility. In order to determine the financial viability of any entity you first have to look at the facilities and equipment. Basically, if you have to invest large sums of cash in a hurry it would be for a capital investment of this sort. I am pleased to say that in my assessment that our facilities and equipment, while dated, is in very good working order. Our facility is in need of technology, which I will tell you about in a minute.
First what are our assets? Since this is a county owned facility that is being operated by a Board of Trustees, we have very little actual owned assets. The property, buildings and equipment are all leased from the county for the sum of $1 a year. What did transition over to the Cimarron County Health Services Authority were the accounts receivables. These are the funds for services that Cimarron Memorial Hospital & Nursing Home have provided in the past that are still owed to us. This amount is in excess of $1,268,705.35 as of May the 1 st . This is the total amount that is owed to this facility from private payers, the federal government and insurance companies. While that may sound like a high number it is important to note that the current receivables, monies that are owed to us that are less than 120 days old, comes to $419,119.80. The second liquid asset that the Cimarron County Health Services Authority received as a result of the agreement from Cimarron County was the 2% sales tax. While we do not actually have a dollar figure in hand it roughly averages around $22,000.00 per month. That means that over the 36 month period our facility will receive an average of $792,000.00. Sounds like a lot of money but we need to also look at our liabilities.
What are our liabilities? Who do we owe? There are three large, lump sum amounts that the Cimarron County Health Services Authority took with them when they signed the lease. The first liability and certainly most exasperating to me as an Administrator are the payroll taxes. Currently, and I have to admit that we have not cut payroll for June yet, but our expected past due and current payroll taxes are estimated to be around $184,894.70. The federal payroll tax is what is concerning me. We owe an estimated $112,602.75 for this second quarter. There has been absolutely no money paid to the federal government since April of this year. The rest of the money that comprises the payroll tax comes from the State payroll tax, which is $16,202.56 with penalties and interest, workers compensation at $23,928.35 and finally our dependent insurance payment that has not been paid in the last two months for $32,161.04. We have until mid July to come up with the past due payroll taxes or we can expect a visit from Uncle Sam. This practice is both unethical and illegal and I will not continue operations here without adequate funding.
Our second large liability is our accounts payable. These are the accrued amounts that we owe vendors, suppliers, attorneys, management firms and other individuals. The total amount comes to $222,054.88. Unfortunately most of that is owed to suppliers who have already cut us off from needed medicines and supplies, which puts the hospital in the compromising position of paying cash for anything we need to operate. Daily I receive phone calls from creditors asking for payment. Daily I receive requests from employees asking for some money to pay a vendor so they may receive the items needed to perform their healthcare tasks.
Our third and final large liability is our salaries payable. Currently we pay about $95,000.00 a month in salaries and another $45,000.00 in payroll taxes, workers compensation & insurance. As I mentioned in a previous article, this is such a large sum hitting the books every month that our employees have had to go without a pay check until governmental funds arrive. It makes for an uncomfortable position to be sure.
So the question is, can our hospital survive? The answer is, it depends. I have taken the liberty of completing a financial package that has been taken to one of our local banks. It shows the same financials that I have provided for you today. We owe, with payroll, approximately $466,949.58 right now. As of May 1 st when these financials were ran, we have approximately $1,211,119.80 in assets. We can make it over this hump if we have access to some financial resources. I need today, approximately $244,000.00 to keep this hospital open. That is not paying all of our accounts payable off, it is just paying our past taxes, allowing for a shortage in payroll this month and that's about it. As you see from our liquid assets, this hospital can repay a loan it's just finding someone to step forward and place trust in our hospital.
I have also been asked if this is a bandaid or if this is a permanent fix. I will not place a bandaid on a gushing wound. This is going to be a permanent fix. We have to provide the services that our community needs here locally and help prevent them from taking their healthcare dollars out of Cimarron County. I plan on accomplishing this by the following means:
· Borrow money from bank to pay past due taxes for second quarter. Use sales tax money and current accounts receivable for collateral.
· Focus on billing & collections contract with alternate collection agency / explore taking people to small claims court / selling extremely old A/R balances / shorten billing collection times from two weeks. / 1.2 million in A/R. Need to collect or write-off.
· Move payroll to twice a month decrease one time hit a month.
· Insist on correct financials so proper decision making can be made. (i.e. current bank statements, balance sheet, statement of cash flows & income statement)
· Give people the tools to do their job to increase receivables.
1. High speed internet reduce filing time due to knock-offs.
2. New computers in billing office to replace 486 era.
3. New software in billing office to replace DOS version of system.
· Hire temp workers to increase receivables & decrease past due amounts.
· Bring in new physicians on a rotational basis to increase hospital referrals.
We can make this work but you have to have faith. I told the Board of Trustees Chairman, Alan Shields, this kind of decision requires a leap of faith. Don't judge me on my predecessors, talk with me, question me and judge me based on my plans for the future. They are simple, provide the best in quality care, provide the services that Cimarron County needs and do both while maintaining a healthy bottom line. If you want to discuss issues that affect Cimarron Memorial Hospital & Nursing Home please feel free to call me at 544-2501 extension 210. My door is always open.
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