An unmodified opinion

“We are issuing an unmodified opinion – that’s essentially stating it’s a clean opinion for the two years presented,” said Jay Horn, CPA Partner with Denman and Company of West Des Moines.

Horn attended the September 25 Crawford County Memorial Hospital (CCMH) Board of Trustees meeting to present the fiscal year 2023 CCMH audit.

An unmodified opinion is what the hospital strives to receive when undergoing an audit, he said.

Fiscal years 2022 and 2023 were presented in the audit statement with additional comparisons to 2021.

Horn led the trustees through a look at the primary financial numbers in the 53-page report, which was pared down to a PowerPoint presentation for the meeting.

“We felt the balance sheet is in good position, needless to say (and we’re) pleased with the cash positions,” Horn said.

The audited assets had a combined value of $45.7 million; of that, cash and investments totaled about $21 million.

Horn said CCMH was in a “solid position” with cash, which he said would be useful for the hospital’s proposed expansion project.

He noted that a concern 15 years ago, when construction of the new hospital was being considered, was whether the cash position at CCMH would hold throughout the life of the project.

“And fortunately, it has,” he said.

Gross revenues for 2023 were $66,485,000, which was an increase of 9% over 2022; 2022 had a 9% increase over 2021.

The most significant increases in revenue in 2023 came from the CCMH observation room, the pharmacy and the clinics.

Net patient service revenue in 2023 was $36,374,000, an increase of 5% over 2022, which was 7% above 2021.

Horn said CCMH is “actually in pretty good shape” with respect to bad debts, with the hospital owed about $1.62 million in 2023, which was a 20% increase from 2022. 2022 had a decrease of 9% from 2021.

As part of the bad debt discussion, CCMH President and CEO Erin Muck noted that Crawford County currently has an uninsured population of about 11%, which is up 2% from a year ago; Crawford County’s uninsured rate is significantly higher than the rates of Carroll and Shelby counties.

Horn said the audit showed that the hospital’s total expenses were $39.8 million for 2023, which was an increase of 11%; salary expenses, with a total of $19.8 million, were up 8% over 2022.

He said other hospitals are reporting similar increases and said inflation was one of the drivers.

“Other expenses,” at $16.5 million, were up 19% from a year ago; the largest increases were in the emergency department and the clinics.

The hospital’s depreciation expense for 2023 was $2,603,000.

Horn noted that the depreciation expense has remained fairly stable from year to year – and could increase with a new expansion project.

Interest expenses were $772,000 in 2023, a decline from $865,000 in 2022.

Horn said hospitals had seen volatility in net income following the pandemic due to provider funds provided by the government; CCMH’s net income in 2021 was $2,609,000; $3,832,000 in 2022; and $1,797,000 in 2023.

Horn said the hospital’s 2023 debt service coverage ratio of 2.83 was above the target of 1.25.

Board of Trustees Chairman Jay Mendlik explained that the debt service coverage ratio is essentially a requirement that the hospital have $1.25 of net income for every dollar borrowed.

“In this instance, we’re showing $2.83 for every dollar we have borrowed,” he said.

For the 2023 audit, CCMH had 210 days of cash on hand, down from 233 in 2022 but up from 201 in 2021.

Horn said the final step of the CCMH audit process would be to file the audit with the Auditor of the State of Iowa and with the Crawford County Courthouse.

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