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Memorial Regional Health board of trustees hear results of audit

Ellen Fike
For Craig Press

Memorial Regional Health saw a major cash influx last year due to a number of coronavirus-related programs, a 2020 audit showed.

The hospital’s board of trustees heard the results of the audit, completed by Eide Bailly LLP, during its April 22 meeting. The accounting firm provided an unqualified or “clean” opinion, the best type of report a business can get.

However, the hospital is “well below” the benchmark for days of cash on hand, although it has made progress. Its target is to go 100 days with cash on hand.



“You can see a nice decrease in accounts payable, which is always good to see from a cash flow standpoint,” accountant Dave Studebaker told the board on Thursday.

The hospital saw $10.6 million in cash from various federal and state COVID relief programs last year.



Memorial Regional Health's rehabilitation center in Craig. (Courtesy Photo / Memorial Regional Health)

In total, the hospital had $31.5 million in current assets, which came from the relief programs, $9 million in receivables, $1.3 million in property tax, $1.6 million in supplies and $1.6 million in prepaid expenses and other assets.

The board is expecting 100% forgiveness of the payroll protection plan loan it received, which will help raise the days of cash on hand at the hospital.

According to auditors from Eide Bailly LLP, MRH meets 100% of the eligibility to forgive the $3.3 million.

The hold-up for forgiveness, according to MRH Chief Executive Officer Andy Daniels, is that the Small Business Administration is supposed to release “compliance” items (in terms of documentation) for any amounts over $2 million, but have not done so. However, MRH still anticipates it will be fully forgiven before the end of 2021.

Another metric pointed out was the hospital’s current ratio, which indicates its ability to meet its current obligations with current assets. The U.S. Department of Agriculture requires the hospital to have a ratio of 1, which indicates its assets are just sufficient enough to meet its current obligations.

At the end of 2020, the hospital’s ratio was 1.5, but its industry goal is to get to 2 to 2.5.

By the end of the year, the hospital was at 54 days in accounts receivable, which is how long it takes for it to essentially be paid for the work it does. This number was below the Colorado average and meant MRH was tied with other comparable hospitals in the state.

Additionally, this was an even better end to the year, because in 2019, the hospital ended at 65 days in accounts receivable. As of April, the hospital is down to 50 days.

The hospital ended the year with $19.6 million in liabilities, however. This included $3.9 million came from salaries, wages and employee benefits, $1.8 million in maturities of long-term debt (which was at $62.5 million by the end of 2020) and $2.7 million in estimated third-party settlements.

The hospital saw $67.8 million in operating expenses last year, about $3 million less than 2019. The majority of this was in salaries, wages and employee benefits, which totaled $34.3 million, $18.8 million in supplies and $9.4 million in professional fees and purchased services.

Any revenue shortfall the hospital saw last year was attributed to the pandemic, which affected industries all over the world, Studebaker explained.


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