With patient volumes still not recovering to their pre-pandemic levels and federal coronavirus relief funding mostly exhausted, Greenwood Leflore Hospital has seen its cash reserves drop significantly.
On Tuesday, the board that oversees the publicly owned hospital showed increasing concern about the situation, as two of the five members voted against shifting some of those reserves in what hospital officials described as an accounting move.
“What happens when we run out of cash on hand? Who’s going to be responsible? Is it the owners?” asked board member Tracy Shelton, who later clarified herself to say “if we run out of cash.”
Shelton and Emma Bell voted against the request of Chief Financial Officer Dawne Holmes to move the entire $13.4 million in a restricted reserve fund to an unrestricted one.
The split vote was a rarity on a board that has shown little open disagreement in the two years since its membership was largely reconstituted.
Afterward, Holmes acknowledged that the financial concerns for the hospital, which has lost $11.3 million through the first 10 months of the current budget year, are legitimate.
“Our volumes are down, and we have a certain expense structure. Our volumes are not meeting that expense structure,” she said. “We are continually having to work on that. We are really having to keep a close eye on the cash management and continue to try to get those costs down.”
Since the fiscal year began on Oct. 1 of last year, the hospital has seen its cash reserves, not including coronavirus-related grants and loans, drop by more than 40%. At the end of July, it was showing total reserves of $29.5 million, of which nearly $15 million was in advanced Medicare payments the hospital received in 2020 and is now paying back in installments.
In July alone, $2.8 million in reserves were depleted.
COVID-19 has severely hampered the hospital’s turnaround efforts. Although it received almost $25 million in relief funding from Congress last year to help offset the costs of treating the highly infectious disease and the related declines in other streams of patient revenue, it has used up those funds.
Hospital officials are worried that the fourth wave of COVID-19 will further squeeze revenues.
In order to free up capacity for COVID patients, the Mississippi State Department of Health directed the state’s hospitals this month to do no elective surgeries that require an overnight stay. The order, which originally was supposed to expire Aug. 15, has been extended at least until the end of August.
In July, the hospital experienced a revenue drop of almost $800,000, or 8.4%, from the same month a year before, while expenses rose $250,000, or 2.6%. The net result was an operating loss of nearly $1.2 million, compared to a loss of about $150,000 the year before.
The drop last month, though, was considerably less than in June, when the hospital showed an operating loss of $4.3 million.
To help matters, the hospital board gave the administration the authority to try to negotiate a contract with Trilogy Revenue Cycle Solutions for consulting services to help the hospital improve its revenues and cash flow.
Trilogy, according to Holmes, says on average it has been able to produce a 3-to-1 return on investment to its clients.
The hospital is looking at a three-year contract that would pay Trilogy a percentage of the hospital’s net revenue, ranging from 0.5% in the first year to 0.3% in the third year. The estimated first-year cost would be $35,000 per month.
At least one of the board members was impressed by the Flowood-based firm’s reported track record.
“I would have loved to have something like this in my business,” said Hank Hargrove, a former beer distributor.
After the terms of the contract are worked out, it will still have to be voted on by the board.
- Contact Tim Kalich at 581-7243 or tkalich@gwcommonwealth.com.
