How explainable is a $1 million loss over the three quarters of a fiscal year? Very, if you ask Booneville Community Hospital chief executive officer C. David Hill.
Hill presented the monthly financial report prepared by chief financial officer Stuart Lisko. The report indicates the hospital experienced a net loss of $221,833 in March and has a loss of $1,040,768 with three months remaining in the fiscal year.
"Money coming in, money going out, we’re running just about even," said Hill.
Hill said he has no problem with anyone stating the hospital has lost $1 million, because it is true. However, the CEO said, the loss cannot be equated as a cash issue.
"You’ve got a figure for depreciation of $561,000," Hill said while directing the council around the financial report. "In the world of accounting we show depreciation as an expense, but it’s not something that we pay.
"We take depreciation on the building. Had we spent $15 million and laid out cash for that building five years ago, that would definitely be an expense because it cost us money."
The building is, of course, being paid for through a bond issue, which Hill said is also reflected in the report.
"We pay $110,000 a month for that building so we do pay. That is actual cost of the building in principal and interest," said Hill. "And that is money that goes out the door."
The report also contains an abnormally high amount of bad debt expense, Hill said, because "we have over-accrued for income in previous years."
Hill was repeating a statement Lisko has made multiple times about a difference of opinion of previous administrators stance on what can truly be expected to be collected for services rendered.
"We had too much money on the book as collectible income when it’s not," Hill agreed.
As a result, about $250,000 has been written off which increases contractual expense but, Hill said, "again, it’s not money out the door."
Removing the combined $800,000 from the bottom line would leave the hospital in the hole about $240,000.
Hill said that can also be remedied by the annual cost report for which the hospital is reimbursed annually from Medicare and Medicaid.
Pro-rating the reimbursement would mean the hospital will actually receive an average of $30,000 to $35,000 each month — Hill said hospital officials are estimating between $350,000 to $400,000 will come from the governmental agencies for this fiscal year.
"You don’t show that (on the report), but at about $30,000 to $35,000 a month for nine months, with a half million in depreciation and the amount (of bad debt) that was written down, we’re running at about break even on cash," said Hill.
In other matters, the council approved an insurance bid to Andrews/Arkansas Valley Insurance to cover city vehicles, property and equipment.
The $28,635 bid was $160 less than a bid by First Western Insurance.
The council also accepted bids to sell 2001 and 2003 police cars.