Valley General Hospital’s financial woes troubling to state Auditor
MONROE - The state Auditor’s Office warned Valley General Hospital that it needs to shape up financially or the hospital won’t endure.
Financial reports show the hospital blew through $6 million in reserves in five years and continues to overspend its revenues despite cutting back expenditures.
The hospital went through major changes last year to try to turn things around. Its levy increase voters approved in 2013 may generate an additional $2.4 million for the hospital this year.
The auditor’s office cast its warning in its recently released audit of the hospital’s 2012 finances. The hospital’s situation was dire enough to warrant an official finding from the auditor’s office that the hospital is “at risk of not meeting its financial obligations or providing services at current levels.”
Valley General is now affiliated with EvergreenHealth of Kirkland and voters approved a hospital tax levy boost that takes effect later this year.
The audit found Valley General was spending way past its revenues and the annual gap widened between 2009 and 2012.
The hospital began losing substantial amounts of money in 2009 when the economy tanked. The hospital lost $2.4 million in 2009, lost $3 million in 2010, and lost $4.2 million in 2011. In 2012, the auditor reported Valley General lost $4,428,758. The auditor noted a similar $4.3 million loss for 2013 in figures calculated September 2013.
At the same time, the hospital began cutting expenditures starting in 2010. The hospital shrunk its spending from $51.5 million in 2010 to $44 million in 2012.
The hospital may have been eating its reserves to make up for the losses.
The hospital’s cash reserves plummeted from $7 million in 2009 to $1.2 million as of September 2013, the auditor reported.
Last October, the hospital had to draw a line of credit to ensure it had enough cash to meet its operating obligations, the audit states.
The audit report noted the steps the hospital took throughout 2013 with a comprehensive turnaround plan. The plan was developed by the hospital to monitor cost savings achieved by the district and the impact of initiatives taken by the hospital.
The hospital’s tax rate was the lowest in the state before the 2013 vote. The increase upped residents’ property taxes from 14 cents to 37 cents per $1,000 assessed home value.
The hospital also subleased district clinical space to EvergreenHealth in April 2013. Evergreen prepaid the rent for five years to the tune of $5 million.
Fairfax, a mental health group, is set to lease space at Valley General for an inpatient mental health site, pending approval later this year from the state Department of Health.
Currently, the hospital is still looking into ways it can increase revenues while increasing services, if possible. The hospital stated in the report that it “continues to engage in process improvement activities to improve efficiencies, provide quality care and increase patient satisfaction.”
Hospital CEO Eric Jensen downplayed the audit finding.
“We’ve been well aware of our situation for a long time. ... None of that levy money has come through yet to help stabilize the hospital, but there are a lot of aggressive actions being taken now ... There’s a lot of things we’re working on, this was not a ‘dire’ report.”
It will take some years to correct the financial situation, Jensen said late last week.
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