2016 audit presentation to board of directorsp cliftonlarsonallen.com northfield hospital &...
TRANSCRIPT
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cliftonlarsonallen.com
Northfield Hospital & Clinics2016 Audit Presentation to Board of Directors
(An excerpt from the full Board Reporting Packet)
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LLPNorthfield Hospital & Clinics
Presentation Overview
• Audit Overview & Outcomes
• Financial Ratio Analysis
• GASB 68 Update
• Industry Trends
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cliftonlarsonallen.com
Audit Overview & Outcomes
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Audit Overview
CLA Responsibility
• Express Opinion on financial statements
• Reasonable, not absolute assurance no material misstatements
Risk Based Approach
• Evaluation of internal controls
• Focus on areas of greatest risk of error
• Data Analytics
Adjustments
• No audit adjustments
• No passed adjustments
• Worked with Mgt. to update GASB 68
Difficulties Encountered
• Audit went as planned
• No difficulties
• No disagreements
• No issues
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Financial Ratios
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Northfield Hospital & Clinics (NHC) PPS Hospital ($102M Net Revenues)
Standard & Poors BBB+ to BBB-
13 PPS Facilities with $50 million to $100 Million of Net Patient Revenue
Industry Benchmark Data
2013-2016
2013-2015
2013-2015
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Days Cash on Hand (All Sources))
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Net Days in Accounts Receivable
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Debt to Capitalization
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Percentage Growth in Net Patient Revenues
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Operating Margin
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Pre-GASB 684.6%
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EBIDA
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Pre-GASB 6811.5%
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GASB 68 Update
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GASB 68 Accounting & Reporting for Pensions
MN PERA Information• MN PERA Net Pension
Liability:– 6/30/15: $5,182,519,000
– 6/30/16: $8,119,504,000
• Total MN PERA employer contributions:– FYE Ended 6/30/15:
$435,115,000
– FYE Ended 6/30/16: $465,978,000
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NH&C PERA Information
• NH&C Employer Contributions:– FYE 6/30/15: $2.6M or .5948%
– FYE 6/30/16: $3.0M or .6470%
– Increased proportion of .0522%
• Based on Formula NH&C’s NPL Equals:– 12/31/15: $30.8M
– 12/31/16: $52.5M
– Increase of $21.7M
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GASB 68 Accounting & Reporting for Pensions
• Resulting Financial Statement Impact
– Net Pension Liability increase of $21.7M to $52.5M
– Increase in Deferred Outflows of $17.4M to $21.2M
– Increase in Deferred Inflows of $4.3M to $4.3M
– Increase in PERA Pension Expense of $4.3M to $7.6M
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cliftonlarsonallen.com
Industry Update
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LLPTwo Options for Changes to ACA Provisions
Door A = Full Repeal
• Not “filibuster proof” in Senate
• Resistance from State Governors
• Industry & general public resentment
• Republicans not unified
Door B = Piecemeal Change
• Use of “Budget Reconciliation”
• Legislation that impacts spending, revenues or federal debt limit, only
• No filibuster in Senate allowed
• Simple majority necessary to pass in Senate
Budget Reconciliation is a numbers game, with limited options in a constrained process that does not always result in the best outcomes
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Republicans• Limited Government
• Promote Individual Rights and Justice
• Fiscal and social conservatism
• Carry views favorable to business
• Promoters of free trade and limited Government intervention
• Generally pro-life
• Favors free market competition & deregulation
• Favor private health care
Democrats• Robust Government
• Promote community and social responsibility
• Modern and progressive liberalism
• More center-left on economic policy, with greater emphasis on social agenda
• Believe in greater Government intervention
• Generally pro-choice
• Favor progressive taxation
• Support federally funded health care programs
Inherent Philosophical Difference Exist
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LLPAn Unsustainable Trend Line
• CBO’s projects outlays as a percent of GDP through 2027 to grow to 23.4% vs. historical average of 20.3%.
• Major Health Care Programs are projected to continue to escalate, and grow to 6.9% of GDP; the fastest and largest of any spending category.
• The corresponding impact of this deficit would be to escalate federal debt held by the public from $15 trillion to $25 trillion, or growing from 77% to 89% of GDP.
• This level of debt would be the highest since WWII in 1947 and more than double the average over the past 5 decades.
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LLPFour Principles to Monitor
Reductions in federal health care spending
Greater state management & control with less federal intervention
Increased market competition and incentives to drive consumerism
Continue to drive policies that promote increasing the value of health care
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Questions/Comments
Rob Schile, CPA, Managing Principal of Industry
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Eric Guth, CPA Senior Incharge
THANK YOU!