Did the spirit of Bernie Ebbers guide the Singing River Health System? The 2014 audit charges that accounts receivable were overstated by $88 million while the pension plan fell into worse shape. The audit was presented to the Jackson County Board of Supervisors. The hospital system lost $34.7 million in 2014 and $32.3 million in 2013. The audit reviewed both years and was conducted by Horne CPA group. Previous audits were conducted by KPMG. KPMG was selected by then CEO Chris Anderson. Mr. Anderson is currently the CEO OF MBMC but served as Singing River's CEO until the spring of 2014. The audit also includes a restatement of the 2013 audit.
The accounts receivables were "overstated by approximately $61 million as of September 30, 2012.... For the 2013 fiscal year audit, management's evaluation resulted in an adjustment to the expected amount of collections of 2013 for $27 million". Assets declined by $42 million as cash and cash equivalents fell by $22.7 million. The system had cash for to only cover 28 days of operations in 2014 but had enough to cover 60 days in 2013.
Then there is the pension liability. See note 10 on page 45. It shot up to $35 million in 2013 and $53.4 million in 2014. Singing River stopped contributing to the plan in 2011. Previous audits show a negative trend in this area:
The audit states that management thinks it will be unable to "fund the plan in its current sstate into the foreseeable future". However, the audit also states that Horne can not reasonably predict the future of the plan due to several lawsuits. Singing River made no contributions in 2013 and 2014. It was supposed to contribute $18.4 million in 2014 and $11.4 million in 2013.
The funded ratio (p.47) dropped again in 2013:
It should be noted that management changed the assumed rate of return from 8% to 6.5%, thus decreasing the funding level.
Kingfish note: The Sun-Herald covered the Horne presentation of the audit to the Jackson County Board of Supervisors Monday. The newspaper reported:
An independent auditor told the Jackson County Board of Supervisors on Monday that Singing River Health System's prior management team counted as income $88 million in patient debt SRHS was unable to collect.
The system's previous accounting firm, KPMG, did not report the error in its audits of SRHS. Auditor Kade Moody of Horne LLP accounting firm told supervisors that Horne found the shortfall when it tested SRHS management's financial statements the first time Horne audited the books in 2014......
Once Horne found the shortfall, SRHS had to adjust its books, throwing the health system into financial turmoil. CEO Chris Anderson left for a job with Baptist Health Systems in Jackson soon after Horne discovered the shortfall.
In this year's audit, Horne found that SRHS lost almost $34.7 million in fiscal year 2014..... Rest of article.
Yet MBMC has taken no action regarding its CEO. This previous JJ cartoon says it all: