Dateline: April 15, 2004

MCNH finances center of debate

By Roger Estlack, Clarendon Enterprise

The financial condition of the Medical Center Nursing Home has become a central issue as voters prepare to cast ballots in next month’s hospital board election.

Board member Alan Fletcher is raising concerns over the home’s financial losses, the cancellation of the Donley County Hospital District’s professional liability insurance, and the amount of debt the district has.

Fletcher points to the district audit report for fiscal year July 1, 2002, to June 30, 2003, which shows Medical Center Nursing Home had a net loss of $199,739, and says the home has lost more than $600,000 in the last four years. He says part of the problem is that the budget has been prepared based on 96 percent occupancy and that average occupancy is closer to 91 percent.

But district administrator Alan Graham says the district’s books really look pretty good, and he says he’s willing to discuss the matter anytime. He doesn’t dispute Fletcher’s numbers, just the interpretation of them, and he says the nursing home is on track to make a profit this fiscal year.

The $199,739 loss shown in the audit report, Graham notes, includes expenses for more than $110,000 in depreciation and interest payments on bonds totaling $88,696, – the latter of which should be considered a hospital district expense rather than strictly a nursing home expense.

The hospital district is comprised of three components – the nursing home, the Associated Ambulance Authority, and the district itself, which has some administrative duties and is responsible for indigent health care payments.

Graham said the annual audit report only has two categories – one for the ambulance service and one entitled “Medical Center,” which includes the nursing home and the district expenses – and that can be confusing.

Graham also said the audit report does show a net loss for MCNH in the last fiscal year. He said past reports have shown losses every year going back to 1990 and beyond, including fiscal year 2002 when the home had a pre-depreciation profit.

The administrator admits that the current budget was based on 96 percent occupancy, but says that the occupancy in the previous fiscal year was 94 percent and that he therefore felt comfortable projecting 96 percent. Although, occupancy for the first seven months of fiscal year 2004 has been below 96 percent, things are turning around.

“We are currently at 52 beds, which is 98 percent,” Graham said last Friday. “Hopefully by the middle of next week, we will be completely full.”

Occupancy is not something fully within the control of the district, and it is affected by everything from the economy to acts of God, Graham said. Whatever the cause, empty beds have a profound impact on the financial operations of the home when five beds can generate approximately $185,000 per year.

“We, as a community and as taxpayers, need to support the nursing home and help keep the beds full by talking it up,” Graham said. “It’s in all our best interests.”

With regards to the professional liability insurance, Fletcher says he feels taxpayers are exposed to a huge risk not having that protection, but Graham says the risk is limited and that the premium for the insurance simply went out of control this year.

“Our premium last year was $18,769 for medical professional liability coverage,” he said. “For this year we were notified that – with zero claims against us – the coverage was going up to $136,824. We simply couldn’t afford it.”

Graham said Texas tort law caps the amount for which the hospital district can be liable and also said the district does carry general liability coverage.

The district’s debt includes a bond in excess of $1.5 million (for remodeling the Medical Center Nursing Home and adding ten beds to produce more revenue) and approximately $160,000 in local notes, which were taken out to build the Community Services Building and Ambulance Building and to purchase equipment and software for the ambulance service and MCNH.

Fletcher says the district can’t keep borrowing money for those kinds of expenses. Graham says that the Community Services Building generates lease revenue for the district, that building the ambulance facility “just made sense,” and that the other equipment was needed.

Fletcher, who is in his first year of a two-year term, says talk around town that he wants to close the nursing home or fire employees are just rumors started by other board members.

“I swore when I took office out there to operate it as I would my own business,” he said. “My feeling is just that no one wants to change anything.”

For his part, Graham said the people of Donley County have to decide what services they want to do without when it comes to budget cuts. He also says he’s willing to talk to Fletcher any time to discuss his concerns but that Fletcher has never done that.

“If Mr. Fletcher has questions, he has the opportunity to come to my office any time,” Graham said, “but he has never been to my office to discuss any issues pro or con, good or bad.”

The Donley County Hospital Board will meet in regular session next Tuesday, April 20, at 6 p.m.