Hospital board hears that the audit it has been waiting for is still not ready | Eastern North Carolina Now

     Publisher's Note: We do very much appreciate this fine article on the BRHS debacle from our friends at the Beaufort Observer. It is the opinion of this publisher that their continued, complete reporting and analysis of this controversial issue is unparalleled in scope.

    The Beaufort Regional Health System (Hospital) met Tuesday and heard a report from the external auditor...that essentially he had nothing to report. He blamed the delay on turnover in personnel in the Finance Department. The current Chief Financial Officer, Richard Reif is out on medical leave at the present time. You can watch the video of the "non-report" below but before you watch it there is some background that will help you interpret what is going on.

    First, the timing is curious. There had been a major push to get this audit done in time for the boards to have the information before they finalized a deal with University Health Systems (UHS). You can hear a brief discussion in the video that the results of the audit, according to Vice Chair Brenda Peacock, could change the details of the closing financial arrangements. So some Hospital board members and county commissioners are eager to see the auditor's report, not only to ascertain the current financial status of the operation but also to get a better handle on how things got where they are financially.

    Most of the obfuscation about getting an accurate "bottom line" has to do with "receivables." That is the amount the Hospital can expect to collect from what it is owed. But it is standard in the hospital business that receivables are not simply what they have billed for their services. Hospitals (and doctors' offices) can "charge" anything they wish but Medicaid, Medicare and insurance companies will pay only so much for specific procedures regardless of what is billed. Then "private-party payers" (you and me) are billed a certain amount, and only a certain percentage of that billing is actually collected. So after the numbers are crunched they make "adjustments" to reflect these receivables, and those adjustments can have a major impact on the bottom line profit or loss number.
    BRHS Commissioners Hood Richardson and Howard Cadmus discuss the Beaufort County Hospital's financial problems. These two commissioners have been stalwarts in regards to the Hospital's fiscal responsibility. Sadly, a majority of the hospital board has not. Image by Stan Deatherage

    The bottom line can also be "adjusted" for "book values" that are accounting techniques for valuing certain assets and liabilities, such as depreciation and amortization. All of those "adjustments" drive the bottom line and just within the last year those amounts have been over a million dollars at times.

    So if the adjustments are not done correctly and are not fully understood, a person reading the financial statements may or may not have a clear picture of how much money the Hospital is making or losing and over what time period. You will hear the auditor refer to this as "shifting" the adjustments across various fiscal years.

    In a brief interview with Finance Committee Chairman Hood Richardson he said: "We had hoped to have preliminary numbers yesterday (3-1-11). We had emphasized that time is of the essence in this process and had been told three weeks ago that the numbers could be ready within two weeks. Now three weeks later they are still not available and we are faced with the CFO being out on medical leave for an unknown duration so I believe we are going to have to proceed with the best available numbers."

    A call has been made to Auditor Stang to ask for more information but he had not returned the call at the time of this posting. Check back later and we'll update this story with his information.

    Here's the video: