Hospital Audit Report Shows Impact of COVID-19

posted on Friday, December 18, 2020 in General

Spencer Hospital ended the fiscal year with a 1.8 percent negative operating margin, according to the annual audit report presented by Winther, Stave & Co., officials at Thursday’s hospital board meeting, due to the impact of the COVID-19 public health emergency.

John Toale of Winther, Stave and Co. LLP, advised the Spencer Hospital Board of Trustees that the hospital’s financial position is solid, especially since the organization does not have any long-term debt. The operating loss experienced in the 2019-2020 fiscal year was the result of lost revenue due to decreased patient volumes when elective procedures were suspended in the spring of this year due to COVID-19, along with the hospital’s commitment during the spring not to layoff or furlough employees.

“The short-term financial performance of hospitals throughout the country were impacted by preparations for and the impact of COVID-19,” said Spencer Hospital president Bill Bumgarner.  “Yet, the long-term strength of the hospital’s financial position offered the opportunity to withstand a measure of revenue loss and to protect the job security of our valued co-workers.”

Bumgarner said that while the healthcare community has been primarily focused on addressing medical needs of the community related to COVID-19, the hospital has continued to advance other services for the benefit of the region. Abben Cancer Center started using its new linear accelerator for radiation therapy in August, which is the most advanced system in northern Iowa. In October, the Wound Healing & Hyperbaric Medicine Center opened, offering patients in the region advanced care for the treatment of chronic wounds.

“I’m proud of the hospital’s healthcare team and medical staff for its continued focus to follow through on important service improvement and expansion projects while managing the realities of the pandemic,” said Bumgarner.  “This year has certainly required perseverance and multi-tasking at a whole new level.”    

Spencer Hospital’s audited financials shows the hospital’s revenues totaled $93,645,396 for the year ended June 30, 2020. The revenues included $77,723,066 in net patient revenue, $3,370,434 of other operating revenue, and $12,551,896 of clinic revenue. The hospital does not receive any tax revenues from the city.

Expenses for the year totaled $95,329,160, including $35,866,327 in salaries and benefits, $41,363,979 for supplies, services and other costs, $12,572,472 for prescription drugs, and $5,526,382 for depreciation expense on the hospital’s plant and equipment.

“The audit report also reminds us each year that Spencer Hospital consistently reinvests its net revenues back into healthcare services,” said Bumgarner. “That investment, in addition to the fine work of the hospital’s talented medical staff and skilled healthcare team, results in the Spencer medical community being recognized as one of the finest in the State of Iowa.”

Below is a condensed statement of revenues and expenditures for Spencer Hospital for the year ended June 30, 2020 (in thousands):

Operating revenues ..........................................$93,645
Operating expenses ..........................................(95,329)
          Operating income ....................................(1,684)
Non-operating income (expenses).......................5,101
          Income before contributions......................3,417
Capital Contributions ..........................................1,143
          Change in net position ..............................4,560
Net position - beginning of year .....................104,808

NET POSITION - END OF YEAR.........................$109,368

A copy of the audit report is available for review in the Office of Auditor of State and the hospital administrator’s office.