PAHCS board hears annual audit report

This article submitted by Peter Jacobson on 12/23/97.

The audit report for fiscal 1997 for the Paynesville Area Health Care System [PAHCS], presented at the regular board meeting Wednesday, Dec. 17, revealed a net loss of 0.7 percent [$72,000] for operations. That compares to a 1.4 percent gain in fiscal 1996, a 3.8 percent loss in 1995, and a 1 percent gain in 1994. The budgeted operating margin for fiscal 1997 was $180,000 [2 percent]. The budgeted gain for fiscal 1998 is $130,000 or about 1.2 percent.

Revenues for 1997 totaled $10,695,000 compared to $10,062,000 for 1996, a 6 percent increase. Expenses, however, totaled $10,767,000 for 1997, compared to $9,916,000 for 1996. That represents an 8.6 percent increase.

Two major unbudgeted expenses during fiscal 1997 that contributed to the loss were the purchase of Dr. Roger Dreyling's clinic and the hiring of a new doctor at the clinic. Another factor in the loss is the reimbursement from medicare for the new clinic depreciation, which has not been received. This is expected to total approximately $200,000 for the last two fiscal years, and is expected sometime early in 1998.

The auditing firm of Deloitte and Touche also stated that medicare reimbursement is expected to decrease approximately 1 percent in fiscal 1998, with anticipated increases in future years less than that of market rates. This will make the goal of positive operating results even more difficult to attain. They recommended PAHCS continue its efforts in controlling costs both at the hospital and the clinics.

Richmond Clinic
Willie LaCroix stated he has been invited to the Richmond City Council meeting on Dec. 30 to discuss the Richmond Clinic situation again. LaCroix stated there is nothing more to say about the clinic at this time.

The Richmond Clinic was purchased by PAHCS in 1994. The clinic has become extremely busy over the years, and discussions over the past two years have centered around remodeling the present building or replacing it with a new clinic.

The PAHCS Board has invited Richmond to become involved in the clinic issue either by becoming part of the hospital district or by becoming somewhat financially involved.

The Richmond City Council and its advisory committee have been visited by personnel from PAHCS a total of nine times during the past two years. Recently, the Richmond City Council's advisory committee conducted a house- to-house survey to gather opinions from residents concerning their interest in the clinic and in joining the hospital district.

Board member Doug Ruhland stated that Richmond needs to decide whether or not they want to join the district. A motion was passed to wait for an answer from Richmond.

Administrator LaCroix stated he has heard from Cold Spring individuals concerning interest in PAHCS building a clinic there. LaCroix felt that PAHCS needed to keep its options open at the present time.

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