MAMMOTH HOSPITAL Management Discussion Document for the Year Ending - - PowerPoint PPT Presentation

MAMMOTH HOSPITAL

Management Discussion Document for the Year Ending June 30, 2019 Finance Committee & Board Meeting

CONTENTS

• Required Auditor’s Communication
• Performance

1

REQUIRED AUDITOR’S COMMUNICATION (1 OF 3)

Communication with The Board

• 1. Auditor's responsibility under generally accepted auditing standards
• Responsibility for basic financial statements – management
• Audit consists of tests, not complete verification – we obtain reasonable, not absolute, assurance about whether the

financial statements are free of material misstatements

• Engaged to perform audit in accordance with auditing standards generally accepted in the United States of America,

Government Auditing Standards, and California legal compliance

• Discretely presented component unit - Auxiliary
• 2. Significant accounting policies
• No material changes in fiscal 2019
• 3. Management judgments and accounting estimates and qualitative aspects of accounting practices
• Collectability of patients receivables and historical retrospective review results
• Third-party payor settlements and settlement related to prior year

2

REQUIRED AUDITOR’S COMMUNICATION (2 OF 3)

• 4. Financial statement disclosures
• Net patient service revenue
• Long-term term debt
• Contingencies
• 5. Corrected Misstatements and Uncorrected Misstatements (typically referred to as audit adjustments identified)
• No corrected misstatements
• Uncorrected misstatements:
• Understatement of accounts receivable and revenue due to late charges – $144,000
• Overstatement of beginning net position and understatement of revenue related to outpatient revenue

reconciliation – $115,000

• Understatement of cash and revenue related to the county cash reconciliation to final confirm received – $66,000
• In addition, there is a reclassification of additions related to South Gateway Apartments from capital assets to
• ther long-term assets and net position classification from net investment in capital assets to unrestricted –

$245,000

• 6. Difficulties Encountered in Performing the Audit
• None

3

REQUIRED AUDITOR’S COMMUNICATION (3 OF 3)

• 7. Disagreements with Management
• None
• 8. Management Consultations with Other Independent Accountants
• None noted
• 9. Other Matters Discussed Prior to Retention
• None
• 10. Other Matters
• Management’s Discussion and Analysis
• Internal Control over Financial Reporting letter
• Summary Financial Statements
• Other Non Audit services
• GASB 87, Leases – effective for the District fiscal year end June 30, 2021

4

PERFORMANCE OVERVIEW

• Liquidity Ratios
• Days Cash on Hand
• Days in Receivable
• Current Ratio
• Profitability
• Operating Margin
• Capital Structure
• Debt to Equity Ratio

5

The following represent the ratios used to analyze current performance levels:

DAYS CASH ON HAND

6

Days cash on hand from all sources is a measure of the average number of days the Hospital could

• perate without additional receipts.

Management has been able to continue to increase cash balances due to

• perating results over the last several years.

267.8 285.8 306.6 293.1 365.2 81.3 90.4 94.7 115.0 187.4 197.3 201.3 183.5

• 50.0

100.0 150.0 200.0 250.0 300.0 350.0 400.0 2015 2016 2017 2018 2019

Mammoth Hospital CA CAH Moody's Healthcare Median for Free-standing Hospitals for A3

NET DAYS IN AR

7

Net days revenue in receivables is used to estimate how long a charge is held in receivables before being collected.

Net days in AR has decreased during the current year, and is impacted by increased collection efforts.

40.5 52.3 51.6 64.3 52.4 65.7 66.7 62.0 63.4 48.0 46.2 47.6 47.0

• 10.0

20.0 30.0 40.0 50.0 60.0 70.0 80.0 2015 2016 2017 2018 2019

Mammoth Hospital CA CAH

Moody's Healthcare Median for Free-standing Hospitals for A3

CURRENT RATIO

8

The current ratio indicates the District’s ability to meet its current obligations with current assets. A ratio of 1.0 would indicate that current assets are just sufficient to meet current obligations. Mammoth has maintained a current ratio of at least 4.0 over the last five years and above benchmarks.

4.8 6.4 7.3 6.8 9.0 2.6 2.8 3.1 3.6 1.9 1.9 1.9 1.8

• 1.0

2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 2015 2016 2017 2018 2019

Mammoth Hospital CA CAH Moody's Healthcare Median for Free-standing Hospitals for A3

OPERATING MARGIN

9

6.8% 10.0% 6.2% 5.3% 11.5% 4.0% 4.3% 4.0% 5.3% 3.1% 1.9% 1.5% 1.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 2015 2016 2017 2018 2019

Mammoth Hospital CA CAH Moody's Healthcare Median for Free-standing Hospitals for A3

DEBT TO EQUITY

10

42.3 35.9 32.2 29.1 24.6 61.8 65.6 56.3 53.7 65.0 62.2 69.1 49.7

• 10.0

20.0 30.0 40.0 50.0 60.0 70.0 80.0 2015 2016 2017 2018 2019

Mammoth Hospital CA CAH Moody's Healthcare Median for Free-standing Hospitals for A3

NEXT STEPS AND CONCLUDING THOUGHTS

11

Thank you for allowing us to share our

• bservations and suggestions.

We look forward to continuing to serve you.