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CRHC audit shows growth despite COVID

CRHC audit shows growth despite COVID

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HJ - Standard CRHC

“It’s a year to be celebrated in the midst of a pandemic and the crazy year 2020 has been,” Brian Green of Seim Johnson said Oct. 27 during a meeting of the Clarinda Regional Health Center Board of Trustees.

Green attended the meeting by teleconference and reviewed a draft of the annual audit report for the hospital. Besides reviewing the overall financial position of the hospital, Green also discussed how funding associated with the COVID-19 pandemic impacted the hospital.

“We’re going to get into a couple of different slides here that talk about where the CARES Act relief funds stand and all the compliance related to those items. There’s such a big push to get money out to hospitals and health systems and now they’re trying to put parameters around those things to tell folks how they can be compliant and utilize those funds,” Green said.

CRHC is one of 82 critical access hospitals in Iowa and was ranked 23rd in 2019 in terms of net patient service revenue. In 2020, due to the growth the hospital has enjoyed, Green estimated that ranking would increase eight or nine spots.

There are also 39 critical access hospitals that have tax levy authority. Green said those county hospitals levy anywhere from $500,000 to $4.6 million. However, CRHC receives no tax support from Clarinda or Page County.

“A key takeaway is you are not a tax burden on the community or the county. There are a lot of other county facilities, on average, getting about $1.5 million of support on an annual basis through county tax levies,” Green said.

Green said CRHC received $5 million in funding through the CARES Act to help the facility combat the COVID-19 pandemic and related expenses it created. Various grants and loans were to the hospital through the Provider Relief Fund, the Paycheck Protection Program and by advances in the Medicare Accelerated Payment Program.

Of that $5 million, Green said approximately $2.3 million was shown as earned income for the hospital during 2020. The $2.6 million that remains is yet to be spent.

The most significant form of aid for healthcare industry was provided through the Provider Relief Fund. Green said $175 billion was distributed to the healthcare industry.

Since the money was first issued, Green said terms and conditions on how those funds could be used have been released. The original reporting system that was to start Oct. 1 was delayed to early 2021.

“There are concerns around the new guidance that came out Sept. 19 and Oct. 22. It really significantly changed a hospital’s ability to claim lost revenue as an appropriate use of the Provider Relief Funds,” Green said.

Currently, Green said the use of the funds is being based on a comparison of 2020 information with information from the same period in 2019. He said that was especially problematic for critical access hospitals.

“For organizations like yourself that have continued to grow, it basically takes away the opportunity to claim Provider Relief Funds based on lost revenues,” Green said. “The one good thing that came out of that guidance was it maintained that broad definition related to the use of, potentially, these monies for capital.”

The comparison period runs through Dec. 31. Green said the common theme in defining how the money can be spent comes back to expenses paid to ensure the money is spent by the end of the year. Any unspent funds can also be utilized through June 30, 2021.

CRHC also received $3.2 million through the Paycheck Protection Program. Currently classified as debt for the hospital, Green said payments through the program will ultimately be designated as forgivable loans.

Green said the $3.2 million CRHC received from the program was calculated based on 10 weeks of expenses. At first, that loan was to be forgiven over a period of eight weeks.

“So there was a question at the beginning if folks would be able to justify enough expenses to ultimately get the entire amount relieved. Subsequent to the initial issuances, that was extended to a 24 week option. So, in essence, everybody that would maintain their staff completely has a really good chance of having 100% of their loans forgiven,” Green said.

There was also a concern relating to Medicare cost reporting issues. Green said CMS issued a statement that hospitals would have offset the forgiven grants on their cost reports. As a result, Green said CRHC would lose Medicare reimbursement for the $3.2 million it received.

However, after a legislative push, Green said HHS and CMS revised that statement in favor of the providers.

“We anticipate that entire $3.2 million will be forgiven during Fiscal 21 and moved from a liability to a grant. So, very good news,” Green said.

The Medicare Accelerated Payment Program has paid CRHC $8,230,290. Green said those funds are a liability that will have to be repaid by the hospital next spring.

“Initially, you were going to get to keep that interest free loan for 120 and then it would be recouped starting in August. When August kind of started and nobody started taking the money, a lot of facilities started questioning what’s going on,” Green said.

Research into the situation showed there was a delay in the recoupment process. Green said there were also advocates calling for the money to be classified as grants.

“It’s still being bantered around out there. We’re keeping our fingers crossed. Hopefully, there will be some future legislative efforts and potentially you’ll be able to keep that $8.2 million. But as now it’s a loan that will be repaid next spring,” Green said.

Overall, Green said total assets for the hospital increased from $45.3 million to $58.4 million. That $13 million increase was primarily due to the cash investment position of CRHC.

The hospital has $34.8 million in cash this year compared to $21.8 million last year. “Again, a lot of that is related to the stimulus dollars that have come into the organization,” Green said.

In other business, the Board of Trustees held a public hearing on the plans, specifications, form of contract and estimated cost for the expansion project at the hospital. No comments were received during the hearing.

Therefore, the board passed a resolution approving those details for the project. The board also approved the parameter for issuing the Hospital Revenue Bonds that will be used to help finance the project.

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