State audit criticizes McKay finances

Officials say finances improving

SOAP LAKE — Problems with McKay Health Care and Rehab center's finances were highlighted in a recent report released by the Washington State Auditors Office, but nursing home officials say financial difficulties aren't as bad as in recent years.

The SAO released a report earlier this month, finding faults with McKay and its finances. Financially, the SAO said that lack of internal controls in 2002 and 2003 left the hospital unable to cover its expenses. Auditors were also critical of the hospital's use of registered warrants and its payment to a former administrator.

McKay Administrator and Superintendent Mary Prentice said that the facility's financial position has improved in the last year, thanks to an effort by all staff to cut expenses.

"We're doing much better than we were one year ago," Prentice said.

The SAO found that hospital district expenditures exceeded revenues in both 2002 and 2003. Those expenditures outnumbered revenue by almost $600,000 in 2002 and approximately $465,000 in 2003.

In their report, the SAO stated that part of the reason for the lack of funding was that McKay did not receive any rural hospital assistance money in 2002 or 2003.

McKay received $600,000 in rural hospital assistance money in 2001, but the SAO noted that spending was not curbed to compensate for the reduction in revenue when that money was not received again in 2002 or 2003.

"This is happening with a lot of smaller hospitals throughout the state," SAO spokesperson Mindy Chambers said of the hospital's finances.

The SAO was also critical of McKay's use of registered warrants. Those warrants, Prentice responded, have been decreased since the audit was performed last year. Registered warrants are short-term funds used to cover day-to-day operational expenses and long-term debt obligations.

The SAO report lists McKay's outstanding registered warrant balance as of November as approximately $660,000. But that figure has been significantly reduced according to Prentice. She said that as of the end of February, the outstanding balance to Grant County was approximately $484,000.

In its report, the SAO said that they recommend the hospital district take action to improve its financial condition. McKay officials responded, saying that the facility has engaged in efforts to control costs. McKay officials said in their response that cost controlling measures have resulted in a substantially improved financial position.

Prentice said that for the month of February, preliminary figures indicate that the hospital has made a profit of approximately $2,000. She added that the hospital district is also looking at developing other sources of revenue for the health care center.

The SAO was critical of the hospital district's payment without proper documentation to its former administrator for hours worked and moving costs.

According to a separate SAO report, the McKay Board authorized and paid their former superintendent administrator $10,000 in August 2003 for work not covered by a contract. On payroll forms, the SAO said the administrator indicated that the money was for 10,000 on-call hours as a night registered nurse over a period of approximately four years. The payment was also made as a bonus to cover the costs of the administrator's move from Moses Lake to Soap Lake, the SAO said.

Washington state law says that employers may not pay a public employee extra compensation after a contract has been entered into with that employee. Chambers said that if some sort of excess compensation is made, there needs to be a written agreement before money changes hands.

McKay said in its response that the hospital district board was not aware the payment was made to the former superintendent and administrator without proper documentation.

McKay officials said in their response that the district currently requires appropriate supporting documentation to comply with all provisions relating to compensation and reimbursements.

These were the first findings for McKay in several years. Chambers said the SAO's last finding for the hospital was in the 1990s, and those issues have been resolved.

McKay does its best financially, Prentice said, when they have 40 or more residents in the 42-bed nursing home facility. Prentice acknowledged that it was not really the hospital's job to make a profit, but she said when the facility does make a profit they are thrilled.

"What we're really trying to do is ensure that we don't lose money," Prentice said.

She also said that the hospital's primary issue is good care, and the hospital wants to provide that good care to all their patients.