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April 19, 2004
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BROOKINGS HOSPITAL AND BROOKVIEW MANOR
BOARD OF TRUSTEES MEETING
April 19, 2004
The Board of Trustees of the Brookings Hospital and Brookview Manor met on
April 19, 2004, at 7:00 p.m. in Hospital Conference Rooms A-B-C.
Present were: Michelle Robbins; Dianna Evers; Rob Jones; Eric Rasmussen; Dave
Kasperson; Chuck Blazey; Roberta Olson; Tim Reed, ex-officio; Dave Johnson,
Administrator; and Pam Emmett, Executive Secretary. Julie Whaley arrived at
7:15 p.m. John Ramsay arrived at 7:30 p.m.
The meeting was called to order at 7:05 p.m. by President Rob Jones.
Audit Report: Dave Timpe from Eide Bailly presented the year end audit report
for 2003. He noted that the Management’s Discussion and Financial Analysis is
a new item this year. Another change this year on the part of the auditors
was a mandate for a more proactive look for fraud. There was a typographical
error on page 5 end of paragraph 4 that should have been December 31, 2003 not
2004. It was questioned if there was an audit testing for supplies and
telephone usage. Dave Timpe stated that would take looking at each phone call
which would be beyond the scope of their audit. He noted that it took an
average of 60 days to collect accounts receivable where the normal range is
usually 65-68 days. Our revenue was up 8% and expenses down 2%. There was a
question as to how bad debt ratio was figured. Bad debt ratio is based on
three things: aging of accounts receivable offset by collection of accounts
previously written off, and accounts that are actually written off. It was
noted that contributions were up because of kidney dialysis. Dave explained
that charity care is for care that is furnished to patients or residents who
don’t have the ability to pay and bad debts are bills where the patient has
the ability to pay but for some reason does not pay the bill. One tenth of
one percent is charity care. Inventory differences in the two years arises
from the large expense adjustment in Central Service Supply for 2002.
Contractual adjustments are the difference between the charge made and the
amount an insurance company or Medicare has contracted to pay. Dianna Evers
stated that the financial report each month is presented as a balance sheet
but the totals in the financials do not add up. She asked Dave Timpe what the
policy is for what is reported on the financials and what is not shown. She
questioned what the Board’s responsibility was for approving a balance sheet
when totals don’t equal the amounts shown. Dave Timpe noted that the Board
should be looking for trends each month to see if there are drastic changes in
figures. He stated that the Board’s responsibility is to make sure the
hospital is running smooth - it is not to manage the hospital - the Board’s
role is an oversight and the Administrator is hired to run the hospital. He
stated that the Board is approving the big picture, not every dollar and cent.
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A Corporate Compliance program can be tested somewhat the same as the
financial report is audited. The report will be official when it comes back
from the Legislative Audit in 3-4 weeks. This is a draft and is not for
public consumption at this time.
Consent Agenda: The following items from the consent agenda were approved:
Minutes; minutes from March 25, 2004; Charge-Off/Write Off Accounts;
Accounts Payable; Award of Bid for Video Endoscopy System: authorizes
award of bid to Olympus America for $78,679.31; Observation Bed Service
Policy and Procedure; Medical Staff Bylaws; Credentialing: approves the
appointment of Mitch Poppens, PA-C for 1-year provisional allied health
staff; Statistical Report; Statistical Graphs. M/S/P.
Financial Report: Brookings Hospital, Brookview Manor, and Home Health/Hospice Agency
financial reports for March 2004 were reviewed and approved. This included $919,167.00 in
payroll and benefit expense for the month. It was noted that income was down and salaries were up.
M/S/P.
Award of Bid for Paint, Vinyl Wall Covering with Adhesives, and Concrete Sealer
for Brookhaven Estates: Board members reviewed a recommendation for award of
bid for paint, vinyl wall covering with adhesives, and concrete sealer for
Brookhaven Estates. There was a question if there was a conflict of
interest in awarding bid to a business where the owner is on our Board. It
was noted that award of bid was based on low bid received. There is nothing
in our conflict of interest statement that would prohibit a business owned
by a Board member to submit a bid. Board members awarded bid to Barrett’s
for vinyl wall covering with adhesives at $27,419.70; concrete sealer to
Homestead for $2,013.35; and paint to Menards from Watertown at $7,972.73.
M/S/P with Rob Jones abstaining.
Increase in Dakotacare Premium: Board members reviewed a recommendation for
increase in employee health insurance premiums. It was noted that the
average increase for employee portion of the premiums would be 15%. The
employee/spouse premium was much higher this year while the employee/child
premium did not raise much at all. It was noted that last year a mistake
was noted after the premiums already had Board approval so in correcting
this problem this year there was a bigger difference in these two areas.
Board members approved the increase in health insurance premium as proposed
by Dakotacare with an average increase of 15%. M/S/P.
Committee Reports:
Joint Conference (Medical Affairs): Has not met.
Strategic Planning: Michelle Robbins noted the minutes were included in the
packet. She pointed out that the percentage of Brookings county discharges
being made from Sioux Falls hospitals continues to increase. She expects
April 19, 2004
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some very serious decisions needing to be made in the near future. Rob
asked Dr. Ramsay if he had any comments on patients not coming here as many
would be referred from the clinic. Dr. Ramsay noted that they are busy at
the clinic but some people choose to be referred to Sioux Falls. It was
felt that we are located too close to Sioux Falls so people find it easy to
go to there. The clinic has two doctors retiring this year, Dr. Wake and
Dr. Saxena, and the clinic has hired four new doctors. Eric Rasmussen
questioned if we should be making changes now. It was noted that McKennan
would be making a financial evaluation of the clinic and then the clinic
will be doing their own, as well. With business being down, the Board feels
they need to make some decisions relatively soon about costs exceeding
income. It was asked how long can we afford to not do anything? There was
a question of the hospital becoming a critical access facility since our
numbers are dropping. Should we do a community survey to see where the
problems are? The Strategic Planning Committee felt that we should hold up
on building a second unit for Brookhaven Estates until the first unit is
nearly full. A decision regarding remodeling of Brookview Manor will need
to be made relatively soon. The committee asked that Dave Johnson bring
back additional information related to the actual problems and need to
expand the dining areas of Brookview Manor. Also requested was information
relating to the types of corridors that could be constructed to connect
Brookhaven Estates/Home Health Agency to Brookview Manor. Discussion was
held to make four or five patient rooms into private rooms. Board members
felt Dave Johnson should pursue gathering more information and report back
to the Board. At this time Board members would not advocate a third floor
addition to the hospital but would support modifying a small number of
double rooms to private rooms. The committee will continue to discuss this
and come back to the full Board in May or June with proposals. Eric asked
what Dave’s thoughts are on the decrease in patients and what we need to do
to reduce labor expenses.
Finance/Personnel: Dianna Evers reported for the committee that cutting
into core staff was a big issue and it was felt we need to maintain staff to
maintain services. Inpatient numbers are down and this is a trend. She
felt we needed to maintain staff to maintain services because it costs more
to hire and train new employees if our current employees resign. It was
questioned if the money for Brookhaven Estates should be coming out of our
monthly cash flow or if we should be taking this from our funded
depreciation savings. It was felt that we may need to take cash out of our
savings to pay for Brookhaven to have our cash flow for operational expenses
in the future. Rob Jones asked Dave Johnson if he could come up with cost
reducing staffing options to present to the Board at next month’s meeting.
There was a question of whether we should change the Hospital’s status to
critical access due to decreasing admissions. About 35 hospitals in SD have
changed their status to critical access. One significant issue the Board
needs to keep in mind is that critical access status may help in getting
higher reimbursements, but it also allows only 25 licensed beds. The
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message may be sent to the community that we are just going to be a small
hospital. You may get better reimbursements, but your public image may also
suffer. Critical access status can be forfeited at a later time if patient
numbers were to increase. Dave was asked to look at cutting expenses where
we can cut, and also what we have to do to become a critical access hospital
and bring this back to the Board. As a critical access hospital operations
would remain basically the same. A Board member noted that Dave could do
some preliminary work to reduce staff, merging some departments with
retirements, and take another look at pulling back at what we are spending.
It was noted that salary and benefit expenses were approaching 65% of net
operating income, once again. To reduce that number to 60%, we would need
to cut roughly 25 FTEs. One member felt a community survey needed to be
done to help inform us of what the issues are. It was noted that people in
the community have been making good comments regarding Dr. Park.
Executive Committee: Has not met.
Unfinished Business: None.
New Business:
Reading and Information: Board members received for information and reading:
Minutes from Executive Committee; Legal Correspondence; Thank you from Ervin
Leite Family and Janet Lambertus Family; Medicare Geographic Classification
Review Board Correspondence; and an Article entitled “Why is it Difficult
for Hospital Trustees to see the Physician’s Point of View?”
Comments: None.
There being no further business, the meeting was adjourned at 9:40 p.m.
____________________________
Michelle Robbins, Secretary