Seneca District Hospital passes annual audit with flying colors

M. Kate West
Chester Editor

“You can pat yourself on the back for an excellent year and then go back to work,” said certified public accountant Jerrel Tucker, TCA Partners, LLP, to the Seneca Healthcare District board of directors Sept. 29.

Tucker’s comment immediately followed his positive report on the audit for fiscal year 2010-11.

Beginning with the bare bones of the financial audit results, Tucker advised the board the district had received an unqualified audit opinion, which is good news for the district and community alike. The new rating means his firm does not have any concerns about the district’s sustainability.

He also said the results showed there were no material weaknesses or significant deficiencies identified related to the organization’s internal controls.

“There were no audit adjustments or difficulties encountered with management in performing our audit and we had no disputes or disagreements with management during the course of our audit,” he said.

Tucker complimented Cheryl Darnell and staff for their preparation and cooperation in the audit process.

Delving in deeper, Tucker walked through the district’s statement of operations and balance sheet for the past three fiscal years.


Financial picture

The district’s fiscal year ends every June 30. The net patient revenue increased from $12,609,894 in 2010 to $13,412,029 in 2011.

At the same time, the district’s operating expenses decreased from $14,016,386 in 2010 to $13,529,785 in 2011.

More patient revenue and tightening the belt on operating expenses resulted in a vast reduction in the district’s operating loss for the past year.

The end-of-year operating loss for 2010 was $1,172,861. This year the loss was $117,756, a position difference of $1,055,105. Simultaneously the district also posted a $478,838 net increase in net assets for the year.

In recap, Tucker called it “a very good year” and congratulated the district for overcoming a number of challenges, including a loss in property tax revenue due to the declining market values of Plumas County homes.

“Declining tax revenue is an issue we are seeing with all district hospitals,” he said.

Since 2009, the district has lost a $77,240 share of collected property taxes.

He complimented the in-house and outsourced billing process for making a difference and said, “It is the best working system Seneca has had in five – six years.

“Higher revenue and less write-off do impact the bottom line.”



Tucker also praised the management of Chief Executive Officer Doug Self when making comparisons between Seneca’s current position and that of peer hospitals.

The accounting firm set a variety of benchmark indicators to draw comparisons.

In completing the chart, the firm included the district’s numbers from both 2010 and 2011.

In the category of days cash on hand, Seneca increased its position from 10 days to 24 days this year but still has a way to go. Peer hospitals average 31 days on hand and the benchmark is 90 days.

Days before patient bills go out the door has reduced from 53 to 42 for 2011. Peer hospitals are at an average of 55 days. Seneca is three days under the benchmark of 45.

In 2010 the district began the year with a minus 3 percent net income margin and increased to a positive 3 percent by the end of fiscal year 2011. This is a gap the district is closing. Peer hospitals are averaging 4 percent and the benchmark is set at 5 percent.

The district also showed a marked increase in the areas of deductions from revenue percentages and bad debt as a percentage of gross revenue.

In closing, Tucker returned to the topic of the district’s net operating loss.

“Your financial reduction to $117,756 is getting closer and closer to the magic mark of balance,” he said.


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