Hospital Audit Report Reveals Financial Effects of Staffing Challenges, Pandemic Impact
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on Thursday, November 10, 2022
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Spencer Hospital’s annual audit report reflected a similar story to healthcare entities across the country, with operating margins negatively impacted by the COVID-19 pandemic, increased expenses related to staffing and a decreased return on investments. The hospital ended the fiscal year with a 0.4 percent negative operating margin as outlined in the annual audit report presented at October’s hospital board meeting.
Sam Johnson, of Winther, Stave and Co. LLP, assured hospital trustees that despite the negative operating margin, the hospital remains in a strong financial position due to years of fiscal responsibility. Johnson also observed that during the fiscal year, the hospital made a significant investment in personnel, with a $6.6 million increase in salaries over the previous year. Also, the hospital continued to invest in technology upgrades with the purchase of a new CT scanner and upgrades to the surgical suites in the surgery center.
Spencer Hospital president Bill Bumgarner commented, “We’re starting to see patient service volumes return to pre-pandemic levels; however, the impact of the pandemic has resulted in a labor shortage throughout the country, resulting in significantly higher costs. We have an exceptional healthcare team and have been able to maintain the continuity of all hospital services despite the labor challenges.
Bumgarner said that though meeting the healthcare needs of the community and supporting the hospital’s care team has been a primary focus over the past year, the hospital has continued to invest in technology and services for the benefit of the region.
“The MAKO orthopedic robotic system along with new video technology in our surgical suites was one of our major capital investments this past year,” Bumgarner said. “We’ve also completed an expansion and upgrade in our cardiopulmonary rehabilitation wellness area. Both of these projects also received funding from the Spencer Regional Healthcare Foundation We greatly appreciate the support of the foundation’s many donors who continue to enhance local healthcare services.”
Spencer Hospital’s audited financials shows the hospital’s revenues totaled $112,031,703 for the year ended June 30, 2022. The revenues included $108,376,986 in net patient revenue and $3,654,717 of other operating revenue. The hospital does not receive any tax revenues from the city.
Expenses for the year totaled $112,522,973, including $49,276,926 in salaries and benefits, $56,130,146 for supplies, services and other costs, and $7,115,901 for depreciation expense on the hospital’s plant and equipment.
“The audit report 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 and one of the top 20 mid-sized rural hospitals in the country.”
Below is a condensed statement of revenues and expenditures for Spencer Hospital for the year ended June 30, 2022 (in thousands):
Operating revenues ........................................... 112,032
Operating expenses ........................................... (112,523)
Operating income (loss)........................ (491)
Non-operating income (expenses)...................... (265)
Income before contributions....................... (756)
Capital Contributions ....................................... 776
Change in net position .............................. 20
Net position - beginning of year ....................... 115,499
NET POSITION - END OF YEAR..........................$115,519
A copy of the audit report is available for review in the Office of Auditor of State and the hospital administrator’s office.