County trying to learn why UMC so far in debt

Adrienne Packer

Tuesday, Oct. 29, 2002 | 9:22 a.m.

Clark County administrators are delving further into University Medical Center's finances to try to uncover a definitive reason why the public hospital is suddenly struggling financially.

Deloitte and Touche was directed to look beyond hospital officials' justification that the $9 million deficit reported at the end of the fiscal year was due to uninsured, non-paying patients dominating hospital beds.

The accounting firm's report scheduled to be presented to commissioners Nov. 5 is expected to put UMC's debt at between $20 million and $24 million.

George Stevens, the county's finance director appointed to oversee the hospital's money after UMC chief financial officer Dennis Morris resigned in September, said UMC's "accounts receivable" projections might be skewed.

In determining its revenues from accounts receivable, hospital administrators examine trends and project the percentage of bills patients pay. Patients are broken down into the following categories: those who pay themselves; those with Medicaid or Medicare; and customers with insurance.

Percentages might be outdated, Stevens said. For example, the hospital is treating more self-pay patients -- who according to trends are less likely to pay their bill in full -- therefore UMC might be collecting less than it had projected.

"You have to take into account when you have $400 million in revenue, if a number shifts by 2 percent, that's $8 million," Stevens said. "It doesn't take a real dramatic change in percentages to make a significant change in the amount of revenues.

"We want to make sure we are adequately reserved in those receivables."

County leaders have had a difficult time getting a grasp on UMC's debt or what has led to the hospital's financial woes that are so dire the county might have to subsidize the facility.

The deficit presented to county commissioners last summer was $9 million. But when Stevens took over the hospital's books, he discovered UMC was losing close to $1.8 million a month.

Deloitte and Touche is performing the hospital's annual audit. In addition to the study, Clark County Manager Thom Reilly is requesting an assessment plan be implemented.

Aside from the audit, the accounting firm Price Waterhouse Coopers, the county's internal auditors and a health care company will descend on the hospital's paperwork.

At that point, Reilly said, a community-based task force might be assembled to determine the role UMC will play in the county.

"We'll know about the past, have an idea about the future and know the deliverables," Reilly said. "Now we decide what does this mean to UMC. It's critical to the community."