At its June meeting, the board of directors of the Upper San Juan Health Service District, which oversees Pagosa Springs Medical Center (PSMC), voted unanimously to accept the district’s 2024 audit.
The district received a clean, unqualified audit opinion, with auditor Kami Matzek explaining that “is the best” opinion, with no adjustments or findings.
During the meeting, PSMC Chief Financial Officer Chelle Keplinger explained to the board that the district’s contract with its auditor — Dingus, Zarecor and Associates PLLC — will expire in a year.
Matzek then explained the firm has been working with the district for a few years and the audit went really well, adding they went over the entire audit with the district’s finance committee and that she and fellow auditor Jeremy Valdez would present financial indicators to the board during the meeting.
Valdez noted PSMC staff are always great to work with before explaining the financial indicators are a visual representation.
The presentation also included comparative benchmark data for many of the indicators with three other data points: all Colorado hospitals in 2023, critical access hospitals (CAH) in the far west in 2023 and all rural hospitals with less than $90 million in revenue in 2023.
Matzek noted during the presentation the benchmarks are always at least a year behind and her favorite comparison is the CAH far west.
Valdez began by presenting the district’s total margin, which is the change in net position divided by total revenues.
The presentation notes, “This ratio reflects profits from both operations and nonoperations. Higher is better.”
Valdez added they like to see between 3 and 6 percent.
PSMC was at 4.3 percent for 2024, compared to 0.8 percent in 2023 and -3.1 percent in 2022, with Valdez noting that Colorado Department of Local Affairs grants were one of the biggest reasons for the increase.
The figure for all Colorado hospitals in 2023 was 2.6 percent, 2.4 percent for CAH far west and 2.2 percent for rural hospitals with less than $90 million in revenue.
Next was data on PSMC’s operating margin, which is its operating income or loss divided by total operating revenues, with the presentation noting higher is better.
PSMC’s operating margin in 2024 was -7.4 percent, which compares with -2.1 percent in 2023 and -9.4 percent in 2022. The figure for all Colorado hospitals in 2023 was 1.1 percent, for CAH far west was 1.2 percent and for the rural hospitals was 0.8 percent.
Valdez noted that typically they like to see a facility break even, but noted increases in salaries, benefits and cost of living.
Matzek noted they don’t see many actually break even and indicated that’s why the district receives tax revenue.
PSMC had 126 days cash on hand from all sources in 2024, down from 133 in 2023 and even with 2022’s 126.
The presentation explains the indicator “measures the number of days of average cash expenses that the District maintains in cash and marketable securities. It is a measure of total liquidity, both short-term and long-term. High values for Days Cash on Hand — All Sources usually imply a greater ability to meet both short-term obligations and long-term capital replacement needs. Higher is better.”
The figure for all Colorado hospitals in 2023 was 75, was 117 for CAH far west and 107 for the rural hospital category. Additionally, the presentation compares PSMC to all hospitals with fewer than 50 beds (123 days) and all hospitals with less than $80 million in revenues (93 days).
Valdez then presented information on PSMC’s current ration, which he explained is another measurement of liquidity.
According to the presentation, “The Current Ratio is perhaps the most widely used measure of liquidity. High values can sometimes be misleading if the current assets are not liquid, such as inventory or noncollectible accounts receivable. Higher is better.”
PSMC’s current ratio for 2024, or its total current assets divided by its current liabilities, was 2.7 in 2024, down from 3.7 in 2023 and 3.5 in 2022. The comparative categories range from 3.0 for all Colorado hospitals to 5.5 for all hospitals with less than $80 million in revenue. The CAH far west comparison for 2023 was 3.8.
Valdez noted PSMC has pretty good liquidity and a good trend over the last three years.
Board member Wayne Hooper asked what the goal to shoot for in terms of days cash on hand is before the district should shift money.
Matzek noted she tells people after they hit 180 days to look at cash management.
The next indicator presented was equipment additions to depreciation expense, which the presentation notes “is the current year capital acquisitions as a percentage of current year depreciation expense. Values of 100 percent or more are an indicator that capital assets are being updated and replaced.”
PSMC’s figure for 2024 was 139 percent, compared to 21 percent in 2023, 348 percent in 2022, 55 percent in 2021 and 110 percent in 2020.
In presenting the district’s long-term debt to net position, Valdez noted the district has a newer building.
The presentation explains, “Long-term Debt to Net Position is the proportion or long-term debt divided by long-term debt plus net position. Higher values for this ratio imply a greater reliance on debt financing and may imply a reduced ability to carry additional debt. Lower is better.”
PSMC’s figure for 2024 was 50 percent, down from 53 percent in 2023 and 51 percent in 2022. The 2023 figure for all Colorado hospitals was 23 percent, for CAH far west was 31 percent and for all rural hospitals with less than $90 million in revenue was 27 percent.
The next indicator presented was days in net patient accounts receivable, with PSMC’s figure of 43 days in 2024 comparing to 35 in 2023 and 45 in 2022.
PSMC’s figure is below the benchmark figures, which range from 68 to 110 days.
The presentation explains the figure is “the average time that receivables are outstanding, or the average collection period. Higher collection periods lead to greater short-term financing requirements and will often force hospitals to reduce short-term cash or increase short-term debt. Lower is better.”
PSMC’s gross days in accounts receivable, or the average time receivables are outstanding, for 2024 was 63 days, up from 57 in 2023, 61 in 2024, 60 in 2021 and 48 in 2020.
Matzek noted PSMC’s collections are “very healthy.”
PSMC’s contractual adjustment percentage, or “the percentage of gross patient revenue that is discounted to third-party payors,” according to the presentation, was 52 percent in 2024, which compares to 50 percent in 2023, 51 percent in 2022, 49 percent in 2021 and 45 percent in 2020.
The presentation further explains, “Increasing values for this indicator puts tremendous pressure on hospital prices in those limited areas in which fuller recovery of rates is possible.”
The presentation then focused on PSMC’s bad debt percentage, which Valdez noted saw a slight uptick.
He indicated there was an issue with the collections company and a change at the state which means certain people can’t be collected on.
PSMC’s bad debt percentage, or percentage of net patient revenue that has been earned but is determined to be uncollectable, was 9.4 percent, up from 8.1 percent in 2023 and 2022. The benchmark comparisons range from 3.6 percent to 6.1 percent.
The presentation then looked at bad debt and charity care, with charity care being revenue that has been earned but not billed or collected as part of a hospital’s charity care program.
“This is an indicator of the benefit a hospital provides to in-need members of the community from a service perspective,” the presentation states about the charity care percentage.
PSMC’s bad debt compared to gross patient revenues was 4.1 percent in 2024, with its charity care being 0.4 percent.
Matzek noted there is a positive feeling about charity care and a negative feeling about bad debt, but that they are the same thing, with one category filling out paperwork and the other not.
Valdez then noted that salaries and benefits are PSMC’s biggest expense, showing that PSMC had 223 full-time equivalent employees (FTEs) in 2024, compared to 225 in 2023, 215 in 2022, 219 in 2021 and 232 in 2020.
The salaries and benefits per FTE for 2024 was $117,090. That compares to $108,328 in 2023, $107,634 in 2022, $109,842 in 2021 and $96,729 in 2020.
The net patient service revenue per FTE in 2024 was $156,480, with Valdez pointing out PSMC’s revenue per FTE is greater than its cost per FTE.
The revenue per FTE in 2023 was $159,895, in 2022 was $151,828, in 2021 was $148,363 and in 2020 was $127,684.
Following the presentation, board chair Kate Alfred stated she is very proud of the hospital and its clean audit, which she called good news.
She added staff works hard and is good at what they do.
randi@pagosasun.com
>