Board Meeting surely to be difficult

Tonight is the first scheduled Board meeting since the announcement of the financial pitfall that has occurred at Floyd. It is still sketchy as to exactly how extensive the problem is and we probably won’t know until the external audit is completed in ~90 days.

Even the newspapers are getting “difficult to decipher” information. The tribune The News and Tribune - Floyd Memorial's bad debt rising reported the following:

Many patient bills from 2006 haven’t been collected yet, Miles said. The hospital always maintains a reserve fund to cover bad debt, but with Medicaid and insurance contributions dropping in some cases and with more patients who can’t pay anything, the hospital needs to add another $11.5 million to that fund.

About $8 million of the shortfall comes from bills now deemed “uncollectible” and $3.5 million from accounts for lower Medicaid and insurance contributions, Miles said. He would not comment on whether the funding gap would endanger jobs or services.
The board will review the 2007 budget at a meeting within the next 30 days and decide how to reconcile the $11.5 million shortfall, which Miles said represents 3.9 percent of previously expected revenue for 2006.

The Courier Floyd Memorial might trim '07 budget reported:

In it, he said "anticipated revenue" from Medicare and Medicaid might fall short of amounts listed in the 2007 budget, which was adopted at the end of last year.

"Therefore, the 2007 budgeted expenses will have to be reduced," he wrote.

The reasons for the adjustments, Miles said, include plans by Indiana lawmakers to "flat line" Medicaid reimbursements and Bush administration intentions to reduce Medicare and Medicaid payments to health-care providers.

In addition, Miles said, Floyd Memorial probably will have to make adjustments in the amounts set aside to cover bills not paid by uninsured patients and other bad debts and shortfalls in expected payments from health-insurance companies.

Because board members "had signals" that the financial statements for last year included inadequate reserves, Miles said, they called an accounting company to examine them.
"Preliminary results show a need to adjust the 2006 financial statements acknowledging a shortfall" of $11.5 million in bad-debt reserves, almost 4 percent of the hospital's gross revenue last year, he said.

"We had not reserved enough to cover these shortfalls," he said.

And in the Chairman’s Corner The Chairman's Corner, Floyd Memorial Hospital, New Albany, Indiana, Mr. Miles stated the following:

Blue & Company, an independent CPA firm that specializes in healthcare, recently conducted an analysis of Floyd Memorial Hospital and Health Services' 2006 financial statements. Preliminary results show a need to adjust the 2006 financial statements acknowledging a shortfall in contractual adjustments, bad debt reserve and third party settlements. A complete audit is being scheduled and will take approximately 90 days for results to be finalized. The preliminary result is a non-cash entry to the balance sheet showing an adjustment of approximately $11.5 million, which is 3.9% of the hospital's gross revenues for 2006.

I am continually asked why the reports being given and questions from reporters are coming from the Chairman of the Board. This is a radical change from the previous 13 plus years.

I believe Mr. Miles is diligently working and gathering information from all available sources to sort through this mess and implement a workable solution.

As the courier stated above, this current Board needs to examine closely “the signals” that were present and I believe they will reach the correct informed decision.