SVDH's liquidy strong point

Sierra View District Hospital’s finances are healthy, reported interim Chief Financial Officer Michael McGinnis on Tuesday morning before the Sierra View Local Health Care District Board of Directors and senior management.

On July 1, however, the hospital’s MediCal funding was reduced by 50 percent — resulting in a difference of $180,000 for the month of July.

And though it has not filtered through the accounting system, the difference will eventually be seen and felt, McGinnis reported.

When it comes to the hospital’s strategic financial ratios, compared to the benchmark of the 2011 Fitch Median of A-rated hospitals, Sierra View fares well.

“I wanted to show you how we look compared to benchmarks,” McGinnis said. “This gives us a snapshot at how the outside world looks at us from a financial perspective.”

Liquidity, McGinnis said, is the hospital’s strong suit.

“We have a large amount of cash in the bank — close to 500 days [of operation] compared to close to 200 [reported on Fitch]” he said. “The good news is, it allows us to offset risk. On the other side, having too much cash is a symptom of not being aggressive enough, in terms of growth.”

McGinnis reported that there are risks to doing too little and risks to doing too much.

“It would appear to me that we’ve probably been really conservative and probably could have invested more,” he said.

The actual Days Cash on Hand reported is 490 days of operation, a number well above the 194 reported at other A-rated hospitals.

“Our cash ratio is better than average,” McGinnis said. “We have enough in the bank to meet our demands 16 times over.”

The hospital, however, has a reasonable amount of debt for the size of the organization — fortunately, $12 million of it is short term.

As far as profitability, the hospital reported an operating margin of 5%, and an EBITDA (earnings before interest, taxes, depreciation and amortization) margin of 16.8% — both financially more stable than the amounts reported by the Fitch Median — 2.6 and 11%, respectively.

On revenue and expense, McGinnis reported a total operating revenue of $10,678,000, with most expenses coming in under budget, an approximate half of the amount paying for salaries and benefits. Supplies was the only listing above budget — most of it from pharmacy, he said, as specific drugs used for the cancer treatment center went up in volume.

McGinnis also reported a $530,000 gain in July from operations, and $593,000 from non-operating income.

When it comes to statistics, the number of patient days, discharges and deliveries were less than what the hospital budgeted for July, but surgery cases and emergency department visits were up — reported McGinnis.

McGinnis compared budgeted patient days, hospital discharges, newborn deliveries, surgery cases and emergency department visits to the hospital’s actual numbers — most of which ended with a negative-number variance against those of a month ago.

The hospital budgeted 2,420 acute patient days for July but ended with only 2,031, resulting in a negative 16.1% variance.

The percentage of Medicare, MediCal and contract discharges were also down, as were the number of deliveries — projected at 153 but resulting in only 139.

However, two “bright spots” exist, McGinnis said. In July, the numbers of emergency department visits and surgical cases were up by 1% and 10.9%, respectively.

“In the old days, E.D. visits were a good thing to have, not so sure [of that] today,” McGinnis said.

McGinnis also noted that he will be changing the format and will begin comparing the same month over two years in lieu of comparing the current month to the previous month, as currently done, at the next meeting, which is scheduled for Sept. 25 at the SVDH Board Room.