Home  Documents Letters to the Editor Letter to Editor (to Advocate-News) 4/14/06
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Letter to Editor (to Advocate-News) 4/14/06 |
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Sunday, 16 April 2006 |
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Letter to the Editor, Submitted 4/14/06 to the Fort Bragg Advocate-News (not yet published)
One aspect of your March 30 report on the Mendocino Coast District Hospital may leave readers thinking the hospital situation is far better than it actually is. Ms. Korbel states that the hospital's accounts receivable are $22.5 million, while accounts payable are $4 million. This makes it sound like everything will be fine and dandy when the money starts rolling in from the long-delayed billings.
However, the hospital will receive only a fraction of the $22.5 million
in accounts receivable, because third-party payers don't pay amounts
billed but previously negotiated contractual charges. According to the
February financial report, the hospital hopes to receive, after
contractual discounts, about $8 million.
"Normal" (absent billing problems) accounts receivable run around $4
million; thus getting back to "normal" will bring in only about $4
million in extra cash, not the $22.5 million that an unwary reader
might think. This $4 million would just about cover the outstanding
accounts payable -- if there are not more losses in the interim.
Your readers should also be aware that $4 million in accounts payable
represent many months of hospital purchases. According to the CFO Jacob
Lewis, "many accounts are over 90 days," though he was unable at a
recent finance committee meeting to say what number or percentage.
Based on anecdotal information from local suppliers ("who are paid
first," according to Mr. Lewis), almost all bills have gone unpaid for
more than 90 days. According to hospital staff, most suppliers will not
ship to the hospital without prior payment.
The accounts-payable situation is characteristic of businesses at the
edge of insolvency. No one would ever know, though, from reading the
Beacon/Advocate news stories.
Vince Taylor
Mendocino, California
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