Southwest Memorial Hospital is back up on the financial horse after being bucked off three years ago.
A series of corrective actions after a financial crisis in 2018, which included 40 layoffs, has Southwest Health System galloping into profitability, growth and stability, said CFO Rich Shrader in an interview Wednesday.
“We’re really doing well. It’s been a total team effort, we are blessed with providers and staff who understood we had the common goal to recover and continue providing quality care for the community,” he said.
During a SHS Facebook presentation Aug. 11, interim CEO Jeanette Filpi said the hospital is back to “operating in the black.”
“Financially it is a brand-new day, and it is not the same hospital worried about closure,” three years ago, she said. “We are being careful and efficient on how we build programs. When recruiting (staff) we look for the right person to join the community who wants to be here and stay.”
In May 2020, the hospital met all the requirements of an investor’s forbearance agreement, more than a year ahead of set deadlines. It has never missed a bond payment for the $32 million expansion completed in 2019, Filpi said.
Shrader credited former CEO Tony Sudduth’s for leading the financial turnaround effort. Top managers of SHS, including the CFO and CEO, were contracted by SHS from Community Hospital Corp. to lead the turnaround and implement a corrective action plan.
Receiving $5 million from the Payroll Protection Plan and $5.8 million in Federal CARES Act funding in 2020 helped SHS weather pandemic shutdowns. There were no staff furloughs because of COVID, which allowed SHS to keep the PPP funding. Current hospital staff is 405.
The forbearance agreement period, which ended June 30, outlined operational steps and cash-on-hand deadlines to recover.
A major hurdle was improving operational days cash on hand, a key measure of a hospital’s fiscal health.
Cash on hand is at the required 81 days, up from 15 days three years ago when hospital leaders realized the critical care community hospital was in danger of running out of money and closing. It is expected to hit 86 days later this year, Shrader said.
It costs $167,000 per day to operate the hospital. Cash reserves increased from $2.5 million in 2018, to $13.5 million currently.
SHS is operating in the black.
In 2020, net income was $786,000, which was supported in part by COVID relief funding.
In 2019, net income was $278,000, and 2021 is on pace to reach or exceed the 2019 net income, Shrader said.
Patient clinic visits have increased. Through June 2021, patient visits were 24,800, up from June 2020 patient visits of 20,700. The time it takes to drop a bill and collect for services has also improved from 58 days to 34 days.
Ambulance transports to Southwest are also up, Shrader said. There were 2,041 transports through June this year, compared with 1,700 transports through June of 2020.
Safeguards and action plans are in place to prevent another financial crises, Shrader said, such as external and internal audits, more open communication between both hospital boards, improved checks and balances, and the formation of an oversight finance committee.
An audit for 2020 conducted by Blue and Co., LLC concluded SHS financial statements are in compliance with auditing standards.
jmimiaga@the-journal.com
