At its June 23 meeting, the Upper San Juan Health Service District (USJHSD) Board of Directors — which oversees Pagosa Springs Medical Center (PSMC) — heard about the district’s recent unmodified, or clean, audit opinion.
The audit and financial indicators were presented primarily by Jeremy Valdez of Dingus, Zarecor and Associates (DZA).
“In our opinion, the financial statements ... present fairly, in all material respects, the financial position of the District as of December 31, 2025 and 2024, and the changes in its financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America,” the audit report states.
Financial indicators
As part of the audit presentation, Valdez presented financial indicators, comparing PSMC’s figures from recent years and to different hospital groups, such as all Colorado hospitals in 2024, far west critical access hospitals (CAH) in 2024, all hospitals with fewer than 50 beds, all rural hospitals with less than $90 million in revenue in 2024 and all hospitals with less than $110 million in revenue in 2024.
For total margin, which is the ration of change in net position to total revenues, PSMC landed at 10.0 percent in 2025 and 4.3 percent in 2024, up from 0.8 percent in 2023.
The presentation notes the ratio reflects profits from both operations and nonoperations, with higher being better. All Colorado hospitals landed at 1.7 percent, with the far west CAH figure landing at 4.0 percent. The other comparisons ranged from 1.8 percent to 2.3 percent.
PSMC’s operating margin, which reflects profits from operations only, was 0.0 percent in 2025, -6.6 percent in 2024 and -2.1 percent in 2023. The presentation notes higher is better, with the comparison groups ranging from 0.2 percent to 1.4 percent.
PSMC’s days cash on hand from all sources — which measures the number of days of average cash expenses that the district maintains in cash and marketable securities and is a measure of liquidity — came in at 142 for 2025, 126 for 2024 and 133 for 2023.
The presentation notes the measure “usually implies a greater ability to meet both short-term and long-term capital replacement needs. Higher is better.”
The comparison groups range from 70 to 148 days cash on hand.
The next financial indicator prested by Valdez is the current ratio, which the presentation describes as “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 landed at 3.0 in 2024, 3.2 in 2024 and 4.0 in 2023.
Valdez notes PSMC is well within range of its peers, with the comparison groups ranging from 1.8 to 4.2.
PSMC’s equipment additions to depreciation expense landed at 94 percent in 2025, 139 percent in 2024, 21 percent in 2023, 348 percent in 2022 and 55 percent in 2021.
The presentation notes that the figure “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.”
The next financial indicator presended is the long-term debt to net position, which the presentation notes “is the proportion of 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 2025 was 42, percent, for 2024 was 50 percent and for 2023 was 53 percent.
The comparison groups range from 24 percent to 41 percent.
Valdez noted that PSMC is quite a bit younger than other hospitals in the benchmark.
Valdez then commended the district, saying it is doing a good job with accounts receivable.
PSMC’s days in net patient accounts receivable for 2025 was 22, 43 for 2024 and 35 in 2024. The comparison groups range from 91 to 114 days.
PSMC’s gross days in accounts receivable came in at 57 days, down from 63 in 2024 and even with 2023.
PSMC’s salaries and benefits per full-time equivalent (FTE) employee was $117,141 in 2025 — slightly above 2024’s $117,090 and up from 2023’s $108,328.
Net patient service revenue per FTE landed at $175,684 in 2025, $156,480 in 2024 and $159,895 in 2023.
PSMC had 234 FTEs in 2025, compared to 223 in 2024 and 225 in 2023.
Other indicators looked at include bad debt and charity care, and contractual adjustment percentages.
Financial highlights
The audit document also include financial highlights provided by USJHSD management, which include:
• The district’s “net position increased $5,491,275 or 24.1 percent, and $2,031,318 or 9.8 percent, in 2025 and 2024, respectively.”
• The district “reported an operating loss of $12,765 and $2,769,792 in 2025 and 2024, respectively. Income in 2025 increased $2,757,027, or 99.5 percent, over the income reported in 2024. Operating income in 2024 decreased by $1,894,086, or 216.3 percent, under the income reported in 2023.”
• “Nonoperating revenues (expenses) increased by $1,580,341, or 704 percent, in 2025 compared to 2024. Nonoperating revenues (expenses) increased by $1,142,475, 03 103.7 percent, in 2024 compared to 2023.”
Later in the document, it states, “The first component of the overall change in the District’s net position is operating income — the difference between the revenue and the expenses incurred to perform those services. Operating income increased by $2,757,027 from 2024 to 2025.”
It further notes the net patient service revenue increased $5,746,055 or 14.6 percent due to an increase in patient services provided.
“Overall,” it notes, “operating expenses increased between 2024 and 2025 by $3,487,277, or 7.8 percent, and increased between 2023 and 2024 by $2,566,859, or 6.1 percent.”
The document also notes that current assets increased $4,339,763 from 2024 to 2025 due to a combination of an increase in patient accounts receivable and receiving the Employee Retention Credit.
randi@pagosasun.com
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