MASSENA — A decline in patient revenue and the addition of new clinics were among the factors in Massena Memorial Hospital finishing in the red, according to an audit approved by the hospital’s Board of Managers on Monday, prior to the completion of Massena Memorial’s sale to St. Lawrence Health System.
The audit, which was first reviewed by the hospital’s Audit and Compliance Committee and then moved on to the full board for approval, covers the hospital’s financial condition in 2017 and 2018.
“Based on the committee discussions and presentation of the 2018 audit, and the recommendation of our chief financial officer, the committee has approved sending it on to the full board for approval,” said board member Michael Cook, chair of the Audit and Compliance Committee.
The audit’s “Condensed Statements of Revenues, Expenses and Changes in Net Position” notes that the change in the hospital’s net position reflects a loss of about $7.12 million in 2018 compared to $7.09 million in 2017.
The net position, according to the report, is “the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources.”
“Contributing factors to the 2018 losses was a reduction in net patient service revenue due to a 21 percent reduction in hospital admissions, a 7 percent reduction in emergency room visits and a 4 percent reduction in other outpatient services. Other contributing factors to the 2018 losses are additional expenses related to the Hospitalist program, anesthesia contracted services and locum staffing and administrative costs for professional services,” hospital officials said in their analysis.
Hospitalists are doctors who specialize in the care of patients in the hospital, giving the individual’s primary care physician the ability to remain in their office to see patients. Locum staffing are individuals who stand in temporarily for someone else of the same profession, such as doctors.
Hospital officials said another factor in the 2017 and 2018 losses were employee benefit costs, along with salaries and wages. They said the main cost — about $2.7 million and $3.8 million — related to the New York State and Local Employees’ Retirement System for 2018 and 2017, respectively.
They said some of their 2017 losses were also related to the purchase of a primary care office and establishment of two new provider clinics, as well as additional expenses related to the Hospitalist program and cardiology.
“For 2017, there are additional expenses related to the three new clinics, four additional medical physicians and two additional physician assistants,” they said.
They said there was an increase in clinic revenues in 2017, “however, revenues for new clinics and services take additional time to grow beyond the initial cost increases.”
The hospital’s salaries and wages also increased because of adjustments to the collecting bargaining agreements.
Discussing the hospital’s balance sheet in 2018, hospital officials said total assets decreased by about $2.8 million primarily because of a decrease in patient accounts receivable and capital assets.
“The decrease of approximately $832,000 in patient accounts receivable was primarily the result of a 23 percent decrease in hospital admissions during 2018. The decrease in capital assets is the result of annual depreciation expense of approximately $1,900,000, offset by purchases of capital equipment,” they said.
Accounts receivable is the number of days that a customer invoice is outstanding before it is collected.
At the same time, liabilities increased by about $4.4 million “primarily due to an increase in vendor accounts payable of $1,206,000 due to cash management, and an increase in other accrued liabilities of $2,925,000 related to the 2018 contribution payable of approximately $2,763,000 to the ERS (Employee Retirement System) retirement plan,” officials said.
Although 2018’s total operating revenues increased by about $45,000 compared to 2017, net patient service revenue decreased by about $3.7 million in 2018 compared to 2017.
“The decrease was primarily the result of a decrease in total inpatient discharges of approximately 21 percent in 2018, from 2,263 discharges in 2017 to 1,780 discharges in 2018, offset by an increase in total outpatient visits of 9,442, or approximately 7.3 percent in 2018, related to the purchase of a primary care office during 2017,” officials said.
Total operating expenses in 2018 decreased by about $100,000. The largest expense was salaries and benefits, representing about 61 percent and 60 percent of total operating expenses for 2018 and 2017, respectively. In 2018, salaries and benefits increased by about $795,000 primarily because of increases in the bargaining agreements — an increase of about 2 percent for members of the New York State Nurses Association in January 2018 and about 3 percent for civil service employees in 2018.
That was offset by a decrease in the total number of full-time equivalent employees, from 379 in 2017 to 369 in 2018.
“Employee benefits expenses decreased by approximately $544,000 primarily related to a decrease in the ERS retirement plan expense of approximately $1,080,000 and a decrease in employee health insurance expense, offset by an increase in workers’ compensation expense of approximately $1,020,000,” officials said.