Beaufort Regional Health System Chief Financial Officer Dick Reif submitted to the hospital board an Interim Financial Statements for the fiscal-year ending Sept. 30, 2010, at a special-called meeting on Thursday.
According the statement, BRHS ended the fiscal year with a net loss of $5,600,599. This stated loss is an accumulation of the non-cash cost to the hospital of losing $1,086,000 in assets from the sale of its real estate to Beaufort County; the non-cash depreciation of the hospital's fixed assets, in the amount of $2,943,178; and the $1.6 million loss in cash from operations.
BRHS CFO Dick Reif (left) presents the Interim Financial Statements for the fiscal-year ending Sept. 30, 2010, as BRHS board member Clifton Gray listens.
Both Reif and BRHS Finance Committee Chairman Hood Richardson suggested that the important number to look at is the $1.6 million operations loss.
"Often, a way to look at it is to look at your operating prior to depreciation so you get a sense of what your cash gain or loss is," said Reif.
If focused squarely on this cash loss, BRHS went into the red an average of $133,000 each month in running the hospital. Richardson proposed that the hospital board locate at least this amount of monthly savings.
"Here in the critical times we're thinking about survival," he said. "If you start thinking about survival, you start thinking about dollar bills, not non-cash items that are on your books."
Ideally, however, Reif insisted that the hospital should be equally concerned with its depreciation expenses. In 2010, he said, BRHS did not have the cash or financing for all the necessary repairs and upgrades. According to the 2010 financial statement, the hospital's assets depreciated by roughly $2.94 million, yet BRHS only made $976,653 in capital purchases.
"You've got to be able to replace your capital equipment...Otherwise, you're essentially cannibalizing your operation," said Reif.
The BRHS Finance Committee is currently pursuing financing that will enable the hospital to repay its vendors the $6,669,730 owed, as well as maintain the condition of the hospital's current fixed assets. An undisclosed firm has tentatively offered to loan BRHS money against its $15,131,463 in stated receivables, at a 1.1-percent interest rate. The Finance Committee will proceed with the examination of the loan contract, as well as the lending firm, Richardson said.
"If things go well, they would be willing to provide us a substantial check that we could use to handle the approximately $6 or $7 million that we have out there that we owe right now," said Richardson. "It would certainly improve the image of the hospital, and it would change the way that we're doing business. There's no question about that."
BRHS auditors, LarsonAllen LLP of Charlotte, will review the thousands of accounts receivable for fiscal year 2009-2010. According to Reif, this will be the major area of review and alteration, due to widely reported difficulties in billing.
"Several areas within the accounts receivable present some continuing concern," said Reif.
Richardson said that representatives from LarsonAllen LLP will be onsite Nov. 22 and 23 to meet privately with whichever hospital board members requested an audience. The LarsonAllen LLP auditing team will be onsite Dec. 13 to begin the audit in full force, said Reif. He said that they should have the audit finished by January.