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Phoebe board OKs audit, bond issues

Lin Harris of Draffin & Tucker presented an audit for Phoebe Putney Memorial Hospital for Fiscal Year 2012 at its finance committee meeting on Wednesday. The audit shows that the hospital had invested $130 million in community benefits over the year. (Nov. 7, 2012)

Lin Harris of Draffin & Tucker presented an audit for Phoebe Putney Memorial Hospital for Fiscal Year 2012 at its finance committee meeting on Wednesday. The audit shows that the hospital had invested $130 million in community benefits over the year. (Nov. 7, 2012)

ALBANY -- Both the finance committee and full board for Phoebe Putney Memorial Hospital considered Wednesday an audit for Fiscal Year 2012 and approval of a resolution associated with bond issues.

The audit, compiled by Draffin & Tucker, showed that the hospital's total assets were $676 million for the fiscal year that ended on July 31 compared to $638 million the previous year. In the meantime, total liabilities were at $508 million, up from $420 million for Fiscal Year 2011.

The debt service coverage ratio, which provides a measure of total debt service -- interest plus capital -- from the hospital's cash flow, was 3.7 for FY 2012, down slightly from 4 in FY 2011. Net worth was found to be at $168 million in 2012, a decrease from $217 million the year before.

The total margin, which reflects profits from both operations and non-operations, was 1.8 percent for 2012, compared to 2.3 percent in FY 2011.

The audit further showed that Phoebe invested $38.6 million in property, plant and equipment -- including the Phoebe Digestive Health Center that opened last month. The hospital invested $130 million in community benefits, including $117 million for charity care and unreimbursed Medicaid and Medicare.

The provider tax -- or bed -- funds were at $5.6 million for FY 2012, while $6.6 million was reimbursed in increased Medicaid funding. The net income for Phoebe was $9 million, while the operating income was $15.4 million, the audit shows.

Regarding bond issuance, Phoebe's board requested Wednesday for the Hospital Authority of Albany-Dougherty County to approve transactions for the repayment of bonded indebtedness and issue new, publicly available tax-exempt bonds officials say will continue to strengthen the hospital's financial position.

The board has asked the Hospital Authority to issue $115 million in fixed rate tax-exempt bonds to refinance last year's short-term loan for the purchase of Palmyra Medical Center and to reimburse Phoebe for previously incurred capital expenditures. A second transaction changed variable rates Series 2008A and Series 2008B bonds to a bank mode with Bank of America Merrill Lynch, lowering the cost of capital to the organization, officials say.

Per a resolution approved by the board, Phoebe is expected to assume responsibility to repay the bonds over a 30-year-period.

The hospital bonds will be available for purchase by various organizations as well as the general public, officials say. The selected underwriters include Bank of America Merrill Lynch, Morgan Stanley and Raymond James/Morgan Keegan.

The audit and bond issues were both approved by the board Wednesday afternoon after they had been reviewed by the hospital's finance committee earlier in the day. The Authority is expected to vote on the bond issues at its 7:30 a.m. meeting today at Phoebe Putney Memorial Hospital.

Comments

BettyBowTie 1 year, 8 months ago

I find everything about Phoebe to be hilarious and also unbelievable. Audit away, you only find what you were instructed to look for.

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whattheheck 1 year, 8 months ago

What many don't seem to realize is all audits are not the same. Phoebe, like the city and DCSS, needs an "operational audit", not a financial audit, where auditors look at more than recording of the transaction. As an example, if the DCSS bought a tank to transport students down the halls of learning safely, in an operational audit matters such as why it was bought and how it was bought would be considered. not just was it put in the proper accounts as an asset and an expenditure. In an operational audit, what management does is a consideration while what management wants to show takes a backseat--if real independence is allowed. .

Pitfalls of financial audits and problems with those who make them are best shown in the example of Enron below. While this is the most extreme example available, it was likely not the only example at that time or perhaps even now:

"The scandal also brought into question the accounting practices and activities of many corporations throughout the United States and was a factor in the creation of the Sarbanes–Oxley Act of 2002. The scandal also affected the wider business world by causing the dissolution of the Arthur Andersen accounting firm."

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dingleberry 1 year, 8 months ago

There are a gazillion dollars in bonds floating around sponsored by authorities of the city and county. While some are revenue bonds not supported by a credit on taxpayers, like the $42 million in ADICA bonds for improvements at ASU, others are the responsibility of the taxpayers, at least in part like those issued to support the Hilton. It would be interesting to see how many bonds are floating around in support of things we have invested in in the past and how many of those bonds have a potential taxpayer liability. I know the numbers are big in terms of $$ but the potential liability is a big unknown.

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