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By Dan Rudy 

Hospital finances in critical condition, but stabilizing

 


Executive staff with Wrangell Medical Center met with the Borough Assembly members for a work session at City Hall late Tuesday afternoon.

WMC CEO Marla Sanger, acting financial officer Olinda White and human resources head Mary Jo Pullman came to answer questions Assembly members might have relating to the hospital's finances. White had first informed them of WMC's low cash reserves and high receivables in mid-December, then delivered a presentation to the hospital's board of trustees shortly afterward.

In an independent audit conducted last fall by BDO USA in Anchorage, the hospital’s assets were totaled at $6.1 million, down from $10.4 million the previous year.

Coupled with $1.8 million lost on operations, auditors recommended White go through and write off all items relating to the previous attempt to construct a new facility. She explained everything that wasn't equipment, lands or permits – about $3.5 million in costs – were considered lost.

“That was the basic, big change in the financials.”

Auditors also found a number of adjustments that had to be made to the hospital's books due to erroneous accounting.

“Your debits have to equal your credits, or you've done something wrong,” said White. “It was just all over the place.”

Blame was rested on previous CFO Dana Strong. In addition to fudging figures, Sanger and White also claimed he had postponed the hospital's audit by a couple of months until October, leaving his position the week before it was to start.

After contacting Strong for an explanation, Sanger said he replied the necessary information would be found on his office computer.

“I haven't been able to find anything,” White complained. She predicted that comparing year-to-date totals will be difficult in the coming fiscal year.

“Those weren't actual numbers,” she said.

Sanger said Strong came with known references. “It's just baffling,” she commented. At WMC's audit briefing in December, BDO partner Eric Campbell told the hospital board they had followed the correct vetting procedures, but that Strong's references had let them down.

Sanger explained it will be difficult to find a replacement.

WMC will be keeping White as a consultant for the time being, and she will help with oversight and training once a new hire is found. As of yet one prospective applicant visited the hospital last month, but to date Sanger said they have not been advertising the vacancy yet.

“Would it not be prudent to advertise today?” asked Assembly member Stephen Prysunka. He felt it would be better to start the hiring process earlier rather than later, while White is still on board and the hospital has options.

The state of WMC's finances remain fragile, but are reportedly on the mend.

The medical center's cash reserves took a shock late last year when it had less than a month's funds on hand after an unexpected clawback. Due to the way Medicaid figured its midyear calculations, instead of receiving a $200,000 payment the hospital owed it $290,000– an unexpected, half-million dollar turnaround.

“We don't have anything that's labeled 'reserve,'” White said. “It's all considered money.”

Since then, the hospital has recouped less than half a million dollars from Medicaid, and though its receivables hover around $4 million, White has said they will be looking at lowering this figure by half through careful management over the next couple of years.

“Things slip through the cracks if someone isn't checking them all the time,” she said.

 

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