SRHS audit shows turnaround from multimillion-dollar losses to slight profit

PASCAGOULA -- Singing River Health System's 2015 audit shows the county hospital system going from two years of huge losses -- more than $30 million a year -- to making a slight profit.

CEO Kevin Holland said in a press release the hospital system has "stopped the financial bleeding" and curtailed losses that amounted to $3 million a month.

The profit confirmed by the audit, done by Birmingham, Ala., CPA firm Dixon Hughes Goodman, is roughly $690,000.

The audit gives some indication of how the health system cut roughly $35 million in one year.

It indicates SRHS has reduced salaries and benefits by $30 million since 2014 and laid off 124 people. It saved money by closing clinics and improving purchasing procedures, the audit shows.

SRHS also saw a big savings because the pension plan, which it is being sued over, has been frozen. The health system was not on the hook for the costs associated with supporting it for several thousand employees and retirees.

Various measures cited

In a statement Friday, SRHS said the turnaround came through better revenue collections; job and benefit cuts; revenue-cycle improvements; clinic closings; and "contract renegotiations and other aggressive expense reduction initiatives that resulted in a 9 percent reduction in the total operating expenses," the statement said.

"Combined, these revenue and expense measures led to an improvement of $35.4 million in the bottom line margin from 2014 to 2015."

In a separate press release, Holland said the "days cash on hand," the number of days' worth of operating expenses SRHS has in reserve, increased last year from 28 to 51. This number is crucial to meeting and complying with bond covenants -- requirements by the companies that hold the hospital's debt of roughly $100 million.

CEO touts new team

Holland attributes the hospital system's new financial success to a team he put together a year ago. It includes Holland, who had been SRHS' chief operations officer; CFO Lee Bond, who joined the hospital system in 2013; COO Dr. Larry Shoemaker, previously chief medical officer; CMO Dr. Randy Roth, previously head of inpatient physician services and still over that; Chief of Staff Dr. Steven Demetropoulos; Craig Summerlin, who was assistant human resources director before moving up to HR director in 2012; hospital attorney Celeste Oglesby, Chief Nursing Officer Heath Thompson, who has held various administrative positions in the hospital for years, and Laurin St. Pé, who moved from director of cardiovascular services to administrator of Singing River Hospital last year.

Coverage reductions

SRHS, Holland points out, had been self-supporting without using tax dollars for 26 years. Jackson County, however, has pledged $13.6 million in tax dollars over the next eight years to support indigent care for SRHS if a recent settlement of the pension lawsuit is finalized. The health system still faces problems other community hospitals face: Reductions in payments from Medicare, Medicaid and private insurance companies and lack of expansion of Medicaid in Mississippi.

Holland said the hospital system, which includes Singing River and Ocean Springs hospitals and is the county's second-largest employer, eliminated the $3 million-a-month losses "while maintaining high quality and award winning care for our patients.

"By exceeding our budgeted forecasts for fiscal year 2015, and budgeting another profitable year of operations for 2016, we are positioning our organization to continue providing the outstanding quality and service our community expects."

This story was originally published January 8, 2016 at 8:19 PM with the headline "SRHS audit shows turnaround from multimillion-dollar losses to slight profit ."