Audited financial statements issued
Community Medical Centers has issued final financial statements for fiscal year 2006, though the final disposition of funds received from an inter-governmental transfer (IGT) remains uncertain. The audited statements show a bottom-line loss of about $9 million with the $17.5 million in IGT funds conservatively excluded from the equation.
The IGT is a process by which Fresno County transferred funds to the state and the state in turn used those funds to obtain a federal matching amount to benefit Community as a leading Medi-Cal provider.
Debbie Vega, Community's vice president of finance, said federal questions surfaced about the IGT, however, just as Community was finalizing 2006 financial reports in late January.
“Questions about the language in our agreement with the county came up just as we were preparing our final numbers,” Vega said. “We hoped the questions could be resolved quickly enough to include the IGT funds in our final statements, but they weren’t.”
Bond covenants require Community to issue final financial statements now rather than wait for the IGT issue to be resolved.
“From an accounting perspective, the decision was simple,” Vega said. “The documents that existed at the time we needed to issue the financial statements did not support including the IGT funding.”
Community officials remain optimistic that central California’s largest health care system ultimately will be able to keep the IGT funds. Yet they also emphasize that even if the IGT funds were disallowed, Community’s financial stability would not be derailed.
A stronger-than-expected performance in the last half of fiscal 2006 and recently boosted bond outlooks are reasons Steve Walter, Community's chief financial officer, is optimistic about the future.
“Our recovery plan has included several strategies, among them new service lines, a new trauma-charge structure, benchmarked cost controls and better reimbursement contracts,” Walter said. “And I’m happy to say that these strategies have produced several consecutive months of very encouraging operating performance – the real key to a financially stable future for Community.”
This story was reported by Michael Bailey. He can be reached at mbailey@communitymedical.org.