GOLD BEACH – An independent audit of Curry Health District found that it has lost approximately $1.5 million during the past two fiscal years, which could endanger the district’s ability to stay in business.

The audit results were presented to the district board of directors Wednesday.

“The District has incurred substantial operating losses during the years ended June 30, 2011 and 2010, which have been only partially offset by the receipt of property taxes, and used substantial amounts of working capital in its operations and experienced a decrease in net assets during the year ended June 30, 2011,” said the report presented by Steven A. Evans, a partner in the Delap LLP firm.

“Further, at June 30, 2011, cash and cash equivalents and assets limited as to use have decreased significantly, while debt service requirements have significantly increased,” the audit says.

“These factors raise substantial doubt about the District’s ability to continue as a going concern,” Evans wrote.

He noted the District’s management is establishing productivity standards and is continuing to analyze less profitable operations, the District’s rate structure, potential new profitable services, and other strategies to improve the District’s operating results.

“The ability of the District to continue as a going concern is dependent upon the success of these plans,” Evans wrote.

The audit shows that the hospital district reported an operating loss of $1,132,000 in the last fiscal year, although Chief Financial Officer Mark Sayler notes that with the property tax collected by the district, that is reduced to $936,000. The loss in Fiscal Year 2010 was $552,000. The district, which operates Curry General Hospital in Gold Beach, Curry Medical Center in Brookings and Curry Family Medical in Port Orford, had operating income of $466,000 in fiscal year 2009.

The district notes that much of the problem is the economy, and decreased payments from government health plans.

It noted that while gross patient service revenue increased by $2.6 million, or 7.2 percent, in fiscal year 2011, the District’s deductions from revenue increased by approximately $1.7 million.

“Of the $1.7 million increase in deductions from revenue, approximately $1.1 million related to an increase in Medicare, OHP (Oregon Health Plan) and Medicaid contractual allowances, as such government payers continue to decrease reimbursement as a percentage of the District’s actual charges,” the district’s management reported.

The Curry Health District recently hired Quorum Health Resources (QHR) of Brentwood, Tenn., as consultants to help it pull its way out of the losses.

Harry Jarvis, one of two consultants assigned to Curry Health, was at Wednesday’s board meeting as the audit was presented.

“The first thing they’re doing is looking at our staffing, setting up a plan so that when we don’t have as many patients, we can staff differently. They are helping us to understand where we can cut and where we can’t, how we can be flexible in busy times and efficient in slow times,” Sayler said of QHR.

“They are also looking at what our charges are, how we’re billing, making sure we bill everything we can,” Sayler said.

“Health care is horribly complex. The emergency room, surgery, lots of times they do lots of procedures. It’s easy to forget to write something down, so it doesn’t get billed to the patient. It’s also very important in health care that everything is well documented. If we do a procedure, it needs to be ordered by a physician. If we do and it’s not included in the medical record, we can’t bill for that either.”

Sayler said that QHR is helping make sure the health district can bill everything they are entitled to bill.

“Once they get those going, they’re going to look at other things as well,” Sayler said.

He said QHR has contracts with suppliers that can help Curry Health get better discounts on equipment.

“It’s going to take a while. Most of our flexibility comes with salaries. We can’t do much with supplies, utilities and things. Changes in salaries, you can’t do rapidly. Most changes we want to make is through attrition. When a vacancy comes up, we will take a close look and decide do we need to replace that person, maybe move things around. Try the best we can to avoid too many changes with our employees.”

One thing the district is working on is Shore Pines Assisted Living Community.

“We’ve seen some pretty good increases there,” he said. “We had an awful lot of vacancies this summer. We’re slowly filling those up. We only have three or four vacancies now. If we can fill that up, we will just about break even. It never has been a money maker. To break even, I would be very happy with that. Last year, we lost over $200,000. Given with the lack of patients in the hospital, we can’t afford to subsidize another organization.”

He noted that the Brookings clinic is adding two new nurse practitioners.

“That’s great,” he said.

And there’s a new doctor coming to Brookings in February.

Although most of the district is seeing fewer patients because of the economy, Sayler said the Emergency Room at Curry General is busier.

“In the ER, we have to accept all patients. If a person has no insurance, often they will wait until they’re pretty ill. They can’t get into the doctor’s office, so they wait until it’s pretty bad, then go to the ER. ER business is up, but often times those people don’t have the best insurance or any insurance. It’s good for volume,” Sayler said.

“The positive thing is, we’re seeing our staff working together more,” he said. “We’re working together as a team to get out of this. It feels very positive from the staff. We will get through this. We will remain viable one way or the other and we will continue.”