In debt, Hospital audit shows one ‘material weakness’: debt balance

Weston County Hospital District/dba Weston County Health Services has received its draft audit for 2023 and will present it at the Nov. 21 board meeting, CEO Cathy Harshbarger said on Oct. 23.

The hospital will receive one “material weakness” in the draft audit, which Spokane-based accounting and advisory firm DZA conducted, according to Harshbarger. The weakness relates to debt balance. Even though having an audit finding that there is a “material weakness” is “not anything you’d ever want to get,” she said she is surprised that the hospital didn’t receive more than one because of the amount of work the hospital had to do to prepare for the audit.

At the Nov. 21 meeting, she will discuss what the hospital will do to try to address its ratio of debt to cash. The draft audit will contain trial balances. (According to Investopedia, a trial balance tests whether a company’s total debits entries and total credits entries don’t contain math calculation errors. Total debits should equal total credits. There could still be other bookkeeping errors.)

As of Oct. 11, the hospital’s cash and investments are at $4.9 million, which is down from $5.1 million on Sept. 30 and $6.1 million in August, according to an Oct. 17 board meeting presentation slide. (The hospital made a “significant ‘catch-up’ payment” of delinquent invoices in early September and bank balances are higher than the actual available cash balances because the bank balances include issued but uncashed checks, the slide said.)

That amount is still considerably higher than it was before the COVID-19 pandemic, when fiscal year end cash balances had decreased from $1.6 million for 2018 to $1.4 million for 2019. After an infusion of COVID-19 funds, however, the fiscal year-end figure jumped up to $11.1 million for 2020, before climbing to $14.1 million for 2021 and dropping back down to $10.6 million for 2022.

Since June 30, bank cash balances have dropped $2.1 million, or about $600,000 per month. If that rate continued, the hospital’s cash flow would run out within eight months, but that kind of “burn rate” actually marks an improvement, according to Harshbarger. She told the News Letter Journal that the hospital had previously possessed a burn rate of $775,000 a week. She believes that the hospital was able to slow that rate partly by catching up on some bills.

“We’re really watching some of our spending,” she said.

The hospital will also use DZA for the 2024 audit, the board decided at its Oct. 17 meeting.

The hospital is still reconciling and the earliest that preliminary trial balances would be available for that audit is probably the end of December, Harshbarger said at the meeting.

“That is a bear because none of it was done previously,” she said.

Harshbarger told the NLJ that the hospital will start working on the 2024 audit a little earlier “so that we get things done.”

“Hopefully, it’ll be a little easier,” she said.