Early projections were too optimistic when predicting Allen County Regional Hospital’s financial growth, according to Chief Financial Officer Larry Peterson.
Administrator Tony Thompson attributed the gap in what the Kansas City, Mo., accounting firm, BKD, projected six years ago revenue would be compared to the numbers the hospital has actually produced, to several factors, including:
— Changes in government regulations, particularly 2 percent sequestration cuts implemented during the Obama administration.
— The Affordable Care Act inspired people across the nation to seek treatment from private doctors, decreasing the number of patients seen in emergency rooms, Thompson said. ACRH was no exception to the hospitals that saw a decrease in emergency room visits.
BKD has been asked to provide the Board of Trustees with a quote for a new projection.
A RECENT audit report conducted by the accounting firm paints a picture of a young but determined entity carrying a backpack of debt up a steep incline.
“The trend line is in the right direction (although) it is slow,” Thompson said of the hospital’s finances.
The financial picture has improved each of the past three years.
In 2014 the hospital saw a negative $876,000 in operating income. In 2015 the operating income loss was decreased to $625,000. In 2016, revenue exceeded expenses by $230,000.
“Our operating income was much better than last year,” Peterson said of the 2016 numbers.
That does not mean the hospital is “out of the red,” but it does show that it’s headed in that direction.
The 2016 report showed a positive cash flow of slightly more than $1 million. However a combination of the hospital’s revenue and sales tax was transferred to the Allen County Public Building Commission to help fund construction bonds. The recent payment was $1.2 million, up from the $900,000 paid in 2016.
“We are making progress, but we are not where we need to be,” Peterson said. “I’d say we are barely breaking even.”
THE HOSPITAL is dependent on the $60,000 to $65,000 it receives monthly in sales tax revenue to help pay interest on bond principal.
