VIVIAN. LOUISIANA AUDITED FINANCIAL STATEMENTS JUNEapp1.lla.la.gov/PublicReports.nsf/C26B67EC7C85B903862576BE00762… · about the Medical Center and about its activities in a way

IS^^J

NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDO MEDICAL CENTER

VIVIAN. LOUISIANA

AUDITED FINANCIAL STATEMENTS

JUNE 3D. 2009

Under provisions of state law, this report is a public document. A copy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court.

Release Date Îdpo

NORTH CADDO HOSPITAL SERVICE DTSTRICT. d^/a NORTH CADDO MEDICAL CENTER

C O N T E N T S

Management's Discussion and Analîs

Independent Auditors' Report

Basic Financial Statements:

Balance Sheets at June 30,2009 and June 30,2008

Statements of Revenues, Expenses, and Changes in Net Assets for the Years Ended June 30,2009 and June 30,2008

Statements of Cash Flows for the Years Ended June 30,2009 and June 30,2008

Notes to Financial Statements

Supplemental Information:

Independent Editors' Report on Supplemental Information

Revenue, Deductions from Revenue and Direct Departmental Expense for the Years Ended June 30,2009 and June 30,2008

General and Administrative Expenses for the Years Ended June 30,2009 and June 30,2008

Con^nsation Paid to Men^rs of the Board of Commissioners for the Year Ended June 30,2009

Coital Assets and Accumulated Depreciation for the Year Ended June 30,2009

Summary of Operating Results

Exhibit A

Exhibit B

Exhibit C

Exhibit D

Page Numbers

1-7

8-9

10-11

12

13

14-29

30

Schedule 1

Schedule 2

Schedule 3

Schedule 4

Schedule 5

31

32

33

34

35


C O N T E N T S

Page Numbers

Other Reports:

Independent Auditors' Report on Compliance and on Intemal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 36-37

Independent Auditors' Summary Schedule of Findings and Questioned Costs for the Year Ended June 30,2009 38-39

Management's Schedule of Prior Year Findings for the Year Ended June 30,2009 40


MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30.2009

Our discussion and analysis of North Caddo Sernce District, d/b/a North Caddo Medical Center's (the Medical Center) financial performance provides an overview of the Medical Center's financial activities for the year ended June 30,2009. Please read this in conjunction with the Medical Center's financial statements that follow.

Financial Highlights

The Medical Center's net assets increased by $283,784 as a result of this year's operations. This mcrease was attributable to a net operating loss, $(186,419), and nonoperating revenues, $470,203.

During the year, the Medical Center's operating revenues mcreased $3,924,797, or 31.07 percent, to $16^56,118 from the prior year while operating expenses increased $4,178,991, or 33.26 percent, to $16,742^37. The Medical Center experienced an operating loss of $(186,419) for the current year, which was (1.13) percent of operating revenues, versus operating income of $67,775 for the prior year, which was .54 percent of operating revenues.

Using this Annual Report

This aimual report consists of three basic financial statements that are based on Governmental Accounting Standards Board (GASB) accounting principles. The Balance Sheet, Uie Statement of Revenues, Expenses, and Changes in Net Assets, and tiie Statement of Cash Flows (Exhibits A, B, and C) provide infonnation about the activities of the Medical Center and present short-term and long-term views of the Medical Center's finances and activities.

Our analysis of the Medical Center focuses on Exhibits A, B. and C. One of the most important questions asked about the Medical Center's finances is, "Has the Medical Center's financial position been inq)Toved or worsened as a result of tiie year's operations?" The Balance Sheet (Exhibit A); the Statement of Revenues, Expenses, and Changes in Net Assets (Exhibit B); and the Statement of Cash Flows (Exhibit C) report information about the Medical Center and about its activities in a way that helps answer this question. The Balance Sheet and Statement of Revenues, Expenses, and Changes in Net Assets include all assets and liabilities using the accmal basis of accounting which means Uiat all of the current year's revenues and expenses are taken into account regardless of when cash is received or paid.

The Balance Sheet and Stotement of Revenues, Expenses, and Changes in Net Assets report tiie Medical Center's net assets balance and changes in it. You can titink of the Medical Center's net assets, the difference between assets and liabilities, as a way to measure the Medical Center's financial healtii, or financial position. Over time, increases or decreases in the Medical Center's net assets is an indicator of whetiier its financial health is improving or deteriorating. You wUl need to consider other nonfinancial factors, however, such as changes in die community, changes in Medicare and Medicaid regulations, and changes in managed care contracting.

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The Statement of Cash Flows reports the Medical Center's cash balance and changes in it. The Statement of Cash Flows provides information about the Medical Center's cash provided from or used by operating, investing, and financing activities. The Statement of Cash Flows provides information to tell you about where the Medical Center's cash came fiom and what the cash was used for.

In the Balance Sheet; tiie Statement of Revenues, Expenses, and Changes in Net Assets; and the Statement of Cash Flows, all of the Medical Center's functions and programs are reported as business-type activities. Patient revenues (including those fiom third party payors), Medicaid disproportionate share payments received, and property taxes finance these activities. The Medical Center does not have any component units which are legally separate organizations for which the Medical Center would be financially accountable.

Financial Analysis ofthe Medical Center

The Medical Center operates one proprietary enterprise fiind with only business-type activities for services provided to the general public, primarily to patients residing in the Vivian, Louisiana area.

Net Assets

A summary of tiie Medical Center's Balance Sheets is presented in Table 1 below:

Current and Other Assets Capital Assets-Net of

Depreciation

Total Assets

Total LiabiUties Net Assets

Total Liabilities and Net Assets

Table 1 Condensed Balance Sheets

At June 30 2009

$4,828,288

1.742.369

6-570-657

2,299,665 4.270.992

Increase (Decrease)

$3,779,346 $1,048,942

1.843.994 ( lOl.eZS'

5.623.340 947317

1,636,132 3.987.208

663^33 283.784

Percent Increase

(Decrease)

27.75

( 5.51)

16.84

40.55 7.12

16.84

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Revenues, Eiqienses, and Ctianges in Net Assets

Table 1 shows us that the Medical Center's Net Assets increased $283,784 to $4,270,992 during the year. This increase is detailed in Table 2 below which sununarizes the Medical Center's operations:

Table 2 Condensed Statements of Revenues, Expenses and Ctianges in Net Assets

Operating Revenues Operating Expenses

Operating Income (Loss) Nonoperating Revenues

Excess Revenues (Expenses)

Capital Grants and Contributions

Net Assets at Beginning of Year

Net Assets at End of Year

For the Years Ended June 30

2009

$ 16,556,118 16.742.537

( 186,419) 470.203

283,784

3.987.208

% 4.270.992

2008

$ 12,631,321 12.563.546

67,775 397.928

465,703

142,000

3.379.505

$ 3.987.208

Increase (Decrease)

$ 3,924,797 4.178.991

( 254,194) 72.275

( 181,919)

( 142,000)

607.703

$ 283.784

percent Increase

("Decrease)

31.07 33.26

(375.06) 18.16

( 39.06)

(100.00)

17.98

7.12

Sources of Revenue

Net patient revenues were 99 percent of die Medical Center's total revenues for each of the fiscal years ended June 30,2009 and June 30,2008. hicluded in net patient revenues are payments from the Medicare and Medicaid programs as well as payments from patients and other tiiird party payors. Medicare, Medicaid, and most private insurance payments are based on contracted rates that are less tiian the Medical Center's established rates. Differences between the established rates charged and tiie contracted rates collected are recorded as contractual discounts. The Medical Center's net patient revenues reported on Exhibit B, Statement of Revenues, Expenses and Chaiiges in Net Assets, are net of contractual discounts. Otiier revenues include mcome derived from mvestments, rent income, property taxes, grants and other miscellaneous service.

The Louisiana Medicaid disproportionate share hospital program allows for the reimbursement of uncompensated care costs to small rural hospitals serving a disproportionate number of low-income patients. The reimbursements are calculated based on cost reports filed by the small rural hospitals and are paid by the state fiom federal funding. Although federal appropriations have enabled the state to pay ahnost 100 percent of uncompensated costs to rural hospitals over the past several years, there is no assurance federal funding will continue and, tiierefore, no assurance that the Medical Center will receive any future payments. During tiie year ended June 30,2009, the Medical C:enter received $619,824 in disproportionate share payments compared to $684,554 received the prior year.

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FOR THE YEARENDED JUNE 30.2009

The Medical Center received grants and contnbutions totaling $189,315 during the year ended June 30,2009 of which $93,325 was fix>m a single donor. There were no donor restrictions on uses of these grants.

Table 3 below presents a summarized description of the mix of gross patient revenues and their related contractual adjustments or discounts along with their respective percentages of net patient revenues.

Tabk3 Payor Mix or Gross PaOent RevcDiies and Related Contnctnal Aînstmnits

For tbe Years Ended June 30

Gross Patient Revenues-Medicaie Contractual AdjustDient»-Medicare

Net Patient Revenues-Medicare

Gross Patient Revenues-Medicaid Contractual Adjustments-Medicaid Medicaid Dispn^xittionate Share

Payments Re<xived Net Pîent Revenues-Medicaid

Gross Piuient RevenucfrOtber Third Party Payors

OUiei CoattKtuBl Adjustments Net Patient Revenues-Otber

Total Gross Patient Revenues Total Contractual Adjustments Medicaid DispioporttoDate Share

Payments Re(xived Net Patient Reventtes

BadDd)ts Patient Revenues-Net of Had Debts

2002

9,176,725 ( 5.131.40n

4,045324

4,802360 ( 2348,050)

619.824

2374334

11336,422

9338,071

25315,707 ( 9.977302)

619324 16,457,729

( 3.191 J87>

Percentage of Nti Patient

55.77

UU9)

24J8

29.19 ( 15.49)

17.46

71.93 { USB

57.96

156.89 (60.65)

100.00

(..19.40) -80jO

2008

7,866,762 t 3.986.909>

3379353

3391,819 ( 2,669,251)

684J54

1,407,122

9,181308

7309,243

20,439389 ( 8328,?25)

684J54 12396,218

10.050.139

Percentage of Net Patient Revenues

62.45

f3l«)

30.80

26.93 ( 21.19)

5.43

11.17

72.89

(\^m 58.03

162.27 ( 67.70)

5,43 100.00

( 20,21) 79.79

Increase (QesQy!&)

1309,963 < 1.144.492^

165,471

1,410.741 121,201

f 64.730-t

1,467312

2,655,114 < A362X/6\

2,228328

53753I8 ( 1,449377)

( R730) 3361311

( 645.508^ 3-21fi-Wn

Percent Increase

fE)ecrcasel

16.65 28.71

4.26

4139 ( 434)

C 9.46)

104.27

28.92 (22.77)

30.49

26 JO 17.00

( 9.46) 30.66

(25.35) 3Z00

Operating and Financial Perfonnance

The following summarizes the Medical Center's Statements of Revenues, Expenses, and CSianges in Net Assets between tiie years ended June 30,2009 and June 30,2008:

As detailed in Table 2, operating revenues increased ftom last year by 31.07 percent. The increase in operating revenues can be explained by the foUowing:

• There was a full year of operations from the Vivian Medical and Surgery CHnic purchased in February 2008

• The Plain Dealing Clinic was added to operations in January 2009 • There was an increase in hospital patient days (a combination of increased patient admissions and

longer stays).

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NORTH CADDO HOSPITAL SERVICE DISTRICT, d^/a NORTH CADDO MEDICAL CENTER



The 33.26 percent increase in operating expenses shown in Table 2 was due primarily to increased employee salaries and an increase in bad debt expense. As a group, employee salaries is the Medical Center's single most significant operating expense. 43.46 and 38.82 percent of total operating expenses were employee salaries in 2009 and 2008, respectively. Total salaries increased 37.20 percent from $5,303,264 m 2008 to $7,276,270 in 2009. The largest component of the mcrease in wages and salaries occurred in operatmg the Medical Onter's clinics. As mentioned earlier, clinic operations grew for the year. Table 4, following, details each department's payroU expense for 2009 and 2008.

Table 4 Departmeotal Wages and Salaries

For the Years Ended June 30

Adnuoistrattve Ambulance Anesthesiology Cardiolo^ Clinics CTScao Dietary

Emergency Room Htoess Center Housekeeping Inhalation Intensive Outpatient ^ychiatry lOd-MedandHeatlqriex Laborat(Hy Medical and Surgual Medical Records O.B. Unit C^xrating Room Inpatient Routine Care Pharmacy Plant Maintenance Tteatment Room Ultrasound X-Ray

Total Wages and Salaries Paid

2009 $ 807,459

502,016 219,237

7336 2.110314

92371 202,968 190,473 58309

229,225 191350 20,973 78,936

430,681 77,050

196354 52,444 16,186

1,247,093 140338 128,136

6,109 48,660

_52U52 i 7.276.270

Percentage of Total Payroll

11.10 6.90 3.01 0.10

29.00 1.27 2.79 2.62 0.80 3.15 2.63 0.29 1.08 5.92 1.06 2.71 0.72 0.22

17.14 1.93 1.76 0.08 0.67

2Q{^ $ 611394

408350 216.267

2398 780,613 87359

170,710 198,130 69,215

199315 197,611 21.957 69,056

384,172 77396

194305 42376 18348

1.089323 143356 102.628

4,420 23,689

188J76 i 5.303.264

Percentage of Total PavToU

1133 7.70 4.08 0.05

14.72 1.66 3.22 3.74 131 3.76 3.73 a4i 130 7.24 1.46 3.66 0.81 034

2034 2.71 1.94 0.08 0.45 3.56

Increase fPecrease^

J 195365 93,666 2,970 4.638

1329,701 4312

32358 ( 7.657) ( 10.706)

29,710 ( 6.061) ( 984)

9380 46309

( 346) 2349 9368

( 2,062) 157370

( 3318) 25308

1389 24,971 32.776

i i.973,nnff

Percent Cbaogs

32.03 22.94

137 160.04 170.34

5.14 18.90

( 336) ( 15.47)

14.89 ( 3.07) ( 4.48)

14J1 12.11

( 0.45) I J l

2232 ( IIJO)

14.46 ( Z45)

24.85 38.21

105.41 17.40 37.20

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NORTH CADDO HOSPFTAL SERVICE DISTRICT, d^/a NORTH CADDO MEDICAL CENTER



Capital Assets

Capital Assets are recorded in the Balance Sheet and depreciated over their estimated useful Uves. (Capital asset additions for the year ended June 30,2009 are summarized ui Table 5 following:

Tables Capital Asset Additions

Praeses Operatmg System $227,665 hiterfacing Software 10,996 Plain Dealing Clinic Assets 24,541 Van 17,000 Telemetry Monitor 51,995 Two Hospital Beds 6,450 Refrigerator 1,580 Security System Clameras 800 Wireless System 6,778 Three Computer Servers 5,550 Computer Software 2,541 Two Printers 1,226 Two Computer Monitors 1,176 Nineteen Conûters 16.131

$374.429

Depreciation expense for the year ended June 30,2009 is $467,205.

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FOR THE YEAR ENDED JUNE 30,2009

Changes in the Medical Center's Capital Assets are summarized in Table 6 below.

Land

Land Improvements Buildings and Building

Improvements

Equipment

Equipment Held Under Capital Lease

Less-Accumulated

Depredation Net Capital Assets

Table 6

Summary o) [ Capital Assets

At June 30 2009

$ 111,243 173,837

2,040,590 2317,760

929.295 5,572,725

3.830356 $ 1.742 J69

2QQ8

$ 111,243 173,837

2,040,590

2328,722

691.615 5,546.007

3.702.013 $ 1,84: .994

Increase (Decrease)

$ - 0 -- 0 -

- 0 -( 210,962)

237.680 26,718

128343

$(_m.^)

Percent

Increase (Decrease)

( 8.34)

34.37 0.48

3.47

( 5.51)

Contacting the Medical Center's Financial Management

This financial report is designed to provide taxpayers, customers, and creditors with a general overview of the Medical Outer's finances and to show the Medical Center's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the administration of North Caddo Medical Center at 1000 South Spruce Street, Vivian, Lomsiana.

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WILLIAM JEFFERSON COLC, C.P.A. CAROL T. BARNES, C.P.A. C. WILLIAM GERARDY, J R . , C.P.A. BARRY S. SH1PP. C.P.A. STEVEN W. HEDGEPETH, C.P.A. STEVEN R. BAYER, C.P.A. GWENDOLYN M. H A R J U , C.P.A. TIMOTHY H. DURR. C.P.A. BAILEY B. BAYNMAM, C.P.A. ROBERT A. BUSBY, C.P.A. ANNE-MARtC COLE, C.P.A. TIMOTHY W. BORST, C.P.A. CRIC O. SMITH, C.P.A. MARY WELLS CARMODY, C.P.A. KYLE S. DOBBINS. C.P.A. MATTHEW R. H A H N , C.P.A.

JOHN A. CASKEY, C.P.A. NINA O. OLORIOSO, C.P.A. J . AMY MEMMINGS, C.P.A. LINDA K. BIBLE, C.P.A. TAYE D. CAMPBELL, C.P.A. BRENDA B. ORtMM, C.P.A. LAURA A. HUFF, C.P.A. DILLON WRIGHT, C.P.A. K A T H R Y N A , T H A X T O N , C.P.A.

C O L E , EVANS & PETERSON CERTIFIED PUBLIC ACCOUNTANTS

FIFTH FLOOR TRAVIS PLACE

6 S ^ TRAVIS STREET

SHREVEPORT, LOUISIANA 7 I I O I - 3 0 I 2

WWW. cepcpa.com

December 22,2009

M. ALTON EVANS, JR . PARTNER EMERITUS

AUSTIN O. ROBERTSON, JR . , C.P.A. OF COUNSEL

TELEPHONE (310) 2 2 2 - 8 3 6 7 TELECOPIER (318) 4 2 B - 4 I O I

MAILING A D D R E S S :

P.O. DRAWER 1788 SHREVEPORT, LOUISIANA 71166-1768

INDEPENDENT AUDITORS* REPORT

Board of Commissioners North Caddo Hospital Service District Vivian, Iûisiana

We have audited the accompanying balance sheets of North Caddo Hospital Service District, d/b/a Nortii Caddo Medical Center, component unit of the C addo Parish Commission, at June 30,2009 and June 30,2008 and the related statements of revenues, expenses, and changes in net assets, and cash flows for the years tiien ended. These financial statements are tiie responsibility of the Medical Center's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America and (government Auditing Standards issued by the Conq)troUer General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examming, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also mcludes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, m all material respects, ttie financial position of North Caddo Hospital Service District, d/b/a North Caddo Medical Center at June 30,2009 and June 30, 2008 and the results of its operations, changes in net assets, and its cash flows for the years tiien ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued a report dated December 22,2009 on our consideration of North Caddo Hospital Service District, d/b/a North C^do Medical Center's intemal control over financial reporting and on our tests of its compliance with certain provisions of laws and regulations, contracts, grants and other matters. The purpose of that report is to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

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http://cepcpa.com

Board of Commissioners December 22,2009 North C:addo Hospital Service District Page 2

Management's discussion and analysis on pages 1 through 7 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the methods of measurement and presentation ofthe supplementary information. However, we did not audit the information and express no opinion on it.

(iole, LJO/MD ( W^hDOn Cole, Evans & Peterson

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Exhibit A

NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDO MEDICAL C:ENTER

BALANCE SHEETS

AT JUNE 30.2009 AND JUNE 30.2008

June 30 A S S E T S

Current Assets: Cash and Cash Equivalents (Note 4) Accounts Receivable ftom Patient Services-Net of Estunated

Allowances and Uncollectible Accounts (Note 3) Other Accounts Receivable Inventories-Drugs and Supplies Prepaid Expenses

Total Current Assets

Capital Assets: (Note 5) Land Land Iixq)rovements Buildings and Building Improvements Equipment Equipment Held Under Capital Leases (Note 6)

I^S5-Accumulated Depreciation Net Capital Assets

Other Assets: Assets not in Service Unamortized C>)st of Tax Election Computer System Escrow (Note 21) Unamortized Financing Fees

Total Otiier Assets

Total Assets

2009

896,384 767,084

3,368,671 10,934

238,442 39.586

4,554,017

111,243 173,837

2,040,590 2317,760

929.295 5,572,725 3,830356 1,742,369

12,356 257,500

4.415 274.271

2,667,559 13,313

222,987 39.287

3,710,230

111,243 173,837

2,040,590 2,528,722

691.615 5,546,007 3.702.013 1,843,994

55,165 13,951

69.116

The Accompanying Notes Are An hitegral Part Of These Financial Statements

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Exhibit A Page 2


BALANCE SHEETS

AT JUNE 30.2009 AND JUNE 30.2008

June 30 L I A B I L I T I E S

AND NET A S S E T S

CWent Liabilities: Accounts Payable (Note 16) Estimated Third-Party Payor Settiements (Note 3) Accrued Salaries, Witiiholdings and Retirement Accrued £nq)loyee Vacation Benefits Accraed bterest Payable Capital Lease Obligations-Current Portion (Note 6) Notes Payable-Current Portion (Note 20)

Total Current Liabilities

Xjong-Term liabilities: Capital Lease Obligations (Note 6) Notes Payable (Note 20)

Less-Current Portions Total Long-Term Liabilities

Commitments and Cbntineent Liabilities (Note 7) Total LiabiUties

Net Assets: Invested in Capital Assets. Net of Related Debt Restricted for Capital Acquisitions (Note 21) Unrestricted

Total Net Assets

Total Liabilities and Net Assets

2009 2008

447,080 150,078 370,195 259,537

4,392 212,586 200.031

1,643,899

798,839 269.544

1,068,383 412.617 655,766

- 0 -2,299,665

593,567 257,500

3.419.925 4.270.992

222,955 44,542

293,706 236,184

6410 132,461 222.938

1,159,296

527,867 304J68 832,235 355399 476,836

- 0 -1,636,132

1,223,664

2,7^3^44 3.987.208

5.623J4Q


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Exhibit B

NORTH CADDO HOSPITAL SERVICE DISTRICJT. d/b/a NORTH CADDO MEDICAL CENTER

STATEMENTS OF RFVENUKS. EXPENSES.

AND CHANGES IN NET AS_SErS

FOR THE YEARS ENDED H INK 30,2009 AND JUNE 30.2008

Year Ended June 30 2009 2008

Operating Revenues: Net Patient Revenues (Note 3) Other Operating Revenue

Total Operating Revenues

(grating Expenses: Direct Departmental Expenses Housekeeping Maintenance and Utilities Medical Records General and Administrative (Notes 8,9,11,15 and 16) Bad Debts Depreciation (Note 5) Loss on Impairment of Fixed Asset (Note 22) Amortization Interest Expense

Total Operating Expenses

Operating Income (T jss)

Nonoperating Revenues: Loss on Disposition of Fixed Asset Interest Income Property Tax Revenues (Note 10) Rent Income (Note 13) Noncapital Grants and Contributions (Note 19)

Total Nonoperating Revenues

Excess Revenues Over Expenses

Capital Grants and Contributions (Note 19)

Increase in Net Assets

Net Assets at Beginning of Year

Net Assets at End of Year

16,457,729 98.389

16,556,118

8,480,928 344.256 345,741 235,517

3,609,356 3,191,587 467,205

8,600 2,490

56.857 16.742.537

( 186,419)

( 249) 25,816

255,321

189.315 470.203

283,784

283,784

3.987.208

12,596,218 35.103

12,631,321

6,402398 293,718 247382 216,499

2,490,914 2,546,079 321,536

1,993 43.027

12^63.546

67,775

35,839 204,970 4,800

152J19 397.928

465,703

142.000

607,703

3.379.505

The Acconq}anying Notes Are An Integral Part Of These Financial Statements

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Exhibit C


STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30.2009 AND JUNE 30.2008

Cash Flows from Operating Activities: Cash Received From Patients and Third-Party Payors Other Operating Receipts Clash Paid to Suppliers and Employees

Net C^h Provided (Used) by Operating Activities

Cash Flows from Noncapital Financing Activities: Property Tax Revenues Received Ckjst of Tax Election Noncapital (Grants and Contributions Loan Proceeds from Bank Principal Payments on Bank lx)an Principal Payments on Other Notes

Net Cash Provided by Noncapital Financing Activities

Cash Flows from Capital and Related Financing Activities: (Note 18) Acquisition of Capital Assets (Ilapital Grants and Contributions Principal Payments on Capital Leases Principal Payments on Notes Interest Payments on Capital Leases

Net Cash (Used) by Capital and Related Financing Activities

Cash Flows from Investing Activities: Interest Income on Investments

Increase (Decrease) in Cash and Cash Equivalents

Clash and Cash Equivalents at Beginning of Year

Cash and Cash Equivalents at End of Year

Reconciliation of Income From Operations to Net Cash Provided bv Operating Activities:

Excess Revenues Over (Expenses) (Exhibit B) Interest Income on Investing Activities Property Tax Revenues Interest Expense on Financing Activities Grants and Contributions Adjustments to Reconcile Excess Revenues to Net Cash Provided by Operating Activities: Depreciation and Amortization Provision for Bad Debts

Changes in Operating Assets and Liabilities: (Increase) in Accounts Receivable Increase in Accounts Payable Decrease (Increase) in Prepaid Expenses (Increase) in Inventory

Net Cash Provided (Used) by Operating Activities

2009

12,670,566 100,768

(12.707.585) 63,749

255,321

189,315 190,000 150,105) 75.297)

409,234

( 146,764)

( 163,759)

( 58.976)

( 369,499)

25.816

129,300

896.384

283,784 ( 25,816) ( 255,321)

56.857 ( 189,315)

8,849

469,695 3,191,587

( 3,890320) 429,503

( 299) ( 15.455)

2008

8,910,461 34,921

( 9353.531) ( 408,149)

204,970 10,913)

152319 223,608 110,000) 150.594) 309390

309,492) 142,000 88345) 3,493)

36.685) ( 296,015)

35.839

( 358,935)

1.126.019

767.084

607,703 ( 35,839) ( 204,970)

43,027 ( 294319)

323329 2346,079

( 2,873,751) ( 517,354)

41,654 ( 43.908) ( 4nH149)


- 1 3 -

Exhibit D


NOTES TO FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

The acconqranying financial statements are prepared in conformity witii generaUy accepted accounting principles. Application of those principles requires management to make estunates and assumptions tiiat affect the reported amounts of assets and Uabitities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Actual results could differ from those estimates. See Note 12 concerning siîificant estimates.

A summary of significant accounting poUcies follows:

Method of Accounting

The financial statements of North Caddo Hospital Service District, d/b/a Nortii Caddo Medical Center (Medical Outer) are prepared using the accrual method of accounting. The Medical Center's accounting and reporting practices also conform to the requirements of Louisiana Revised Statute 24:514, the Louisiana Governmental Audit Guide, tiie American Institute of Certified Public Accountants Audit and Accountmg Guide Healtii <^re Organizations, and standards set by tiie Govemmental Accounting Standards Board (GASB), which is the accepted standard settmg body for estabUshing govemmental accounting and financial reporting principles in the United States of America.

Accounting Standards

Pursuant to Govemmental Accounting Standards Board (GASB) Statement No. 20, Accounting and Financial Ret)orting for Proprietary Funds and Other Govemmental Entities That Use Proprietarv Fund Accounting, the Medical Center has elected to apply the provisions of aU relevant pronouncements of the Financial Accounting Standards Board (FASB), including those issued after November 30,1989, that do not conflict with or contradict GASB pronouncements and which were developed for business enterprises.

Statement of Operations Classifications

Revenues and expenses deemed by management to be ongoing, major, or central to the provision of health care services are reported as components of operating income. Transactions that are peripheral or incidental to providing health care services are reported as nonoperating.

Patient Revenue and Accounts Receivable

Patient revenues are reported net of free services and contractual adjustments, including estimated retroactive adjustments under payment agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period in which the related services are rendered and adjusted in future periods as settiements are determined. See Note 3.

-14-

Exhibit D Page 2



Note 1 - Summarv of Significant Accounting Policies (Continued)

Patient Revenue and Accounts Receivable (Continued)

Charges to accounts receivable are recorded contemporaneously with the services provided based on the estabUshed rates for those services. Reductions to accounts receivable results fix)m cash collections, discounts under contractual agreements, bad debts, and charity care (free services) adjustments. The Medical Center does not make its patient accounts receivable available for sale. Interest on unpaid balances is generally not charged. Allowances for bad debts are based on estimated percentages appUed to the various age groups of account balances that are not receivable from Medicare, Medicaid, or certain other large third-party payers. Allowances for discounts on accounts receivable from Medicare, Medicaid and certain other large third-party payers are based primarily on the latest discount percentages experienced with each payer.

For most charges to insured patients, the Medical Center files claims with those patients' insurance compaiues and abstains from biUing those patients until aU insurance benefits have been coUected or established. Once billed, the patient's charges are due within 30 days of the bilUng and are considered delinquent after 90 days. Patient account balances are charged against the aUowance for bad debts when all intemal coUection efforts have foiled and the account is referred to a collection agency or when the debtor is found to be bankrupt.

Performance Indicator

The Medical Outer's performance indicator, "excess revenues over expenses," includes operating and nonoperating revenues and expenses and excludes, consistent with industry practice, unrealized gains and losses on investment securities, and capital grants and contributions.

Capital Assets and Depreciation

Capital assets other than those held under capital leases are included at cost, or if donated, at fair value on the date of receipt. Depreciation is confuted using the straight-line method over the assets' estimated useful lives. See Note 5.

Gains and losses on the disposal of fixed assets are considered incidental to the provision of health care services and, as such, are reported as nonoperating.

Capital Leases and Amortization

Assets and liabilities under capital leases are recorded at the present value of the minimum lease payments. The assets are amortized over their related lease terms which approximate their estimated productive Uves. Amortization of assets under capital leases is included in depreciation.

Inventories

Inventories are reported principally at cost using a first-in, first-out cost flow assumption.

-15 -

Exhibit D Page 3



Notel - Summarv of Significant Accounting PoUcies (Continued)

Compensated Absences

The Medical Outer's poUcy regarding employees' vacation pay provides that employees' earned and unused vacation benefits accumulate and vest. Therefore a liability is recorded for those unpaid benefits. The Medical Center does not provide any other conqiensated absences that accumulate and vest.

Advertising

Costs of advertising are expensed as incurred. See Note 11.

Charity Care

The Medical Center provides care to patients who meet certain criteria under its charity care poUcy without charge or at amounts less than its established rates. Patient revenues are reported net of charity care adjustments.

Income Taxes

As a component unit of the Caddo Parish Commission and the State of Louisiana (Note 2), the Hospital is exempt frpm federal and state income taxes.

Amortization of Intangibles

The costs of an election to levy taxes for the Medical Center's benefit have been capitaUzcd and are bemg amortized over tiie life of tiie levy (10 years) beginning with the year ended June 30,2008, the year during which tax revenues were first received.

Cash Equivalents

Cash and cash equivalents includes all unrestricted highly Uquid deposits and debt mstruments acquired with maturities of three months or less.

Net Assets

Net assets of the Medical Center consists of net assets invested m capital assets net of related debt and unrestricted net assets. Net assets invested in capital assets net of related debt consist of capital assets net of accumulated depreciation and reduced by tiie current balances of any outstanding borrowings used to finance the purchase or construction of those assets. Net assets that are restricted for capital acquisitions are noncapital net assets that must be used for a particular purpose specified by the creditor. See Note 21. Unrestricted net assets are remaining net assets that do not meet tiie definitions of: 1) invested in capital assets net of related debt, or 2) restricted net assets.

-16-

Exhibit D Page 4



Notel - SiimmflTy of Significant Accounting PoUcies (Continued)

Risk Management

The Medical Center is exposed to various risks of loss from torts; thefr of, damage to, and destmction of assets; business interruption; errors and omissions; employee injuries and illnesses; natural disasters; and medical malpractice. Commercial insurance coverage is purchased for claims arising from such matters. Settied claims have not exceeded this commercial coverage in any of the three preceding years. See Note 14.

Note 2 - Organization and Operations

The Medical Center is located in Vivian, Louisiana and provides in-patient and out-patient acute and nonacute medical care, including emergency services, primarily to patients residing in the Vivian area. See Note 17 concerning concentrations of economic dependence.

The Medical Center is organized and operated as a hospital service district under Louisiana Revised Statutes, Chapter 10, Title 46 and is a component unit of the Caddo Parish Commission (the Commission). The Medical Center operates and Is financially independent ofthe Commission and has no component units in its operations. As a hospital and governmental unit, changes in federal or state laws and regulations or interpretations thereof may have a significant financial impact on the Medical Center.

Since the Medical Center is a component urut of the Commission it is considered part of the Commission and is included as such for financial reporting purposes. The governing authority of the Medical Center is a board of commissioners (the Board) consisting of nine voting members. The members are appointed by the Commission for four-year terms. Hie goveming authority of the Medical Center board was established by an ordinance of the Commission.

The Medical Center was determined to be a component unit of tiie Commission due to its financial accountabiUty to the Commission as follows:

The Commission has the ability to appoint or remove members of the Board at will.

The Commission requires the Board to advise them on problems concerning the operation of the Medical Outer and other faciUties.

The accompanying financial statements present information only on the sole fund maintained by the Medical Outer and do not present information on the Ommission.

Note3 • Patient Revenues and Accounts Receivable

The Medical Outer has agreements with third-party payors that provide for payments to tiie Medical Outer at amounts different from its established rates. Contractual adjustments under third-party payment programs represent the difference between the Medical Onter's established rates for services and amounts paid by third-party payors.

-17-

Exhibit D Page 5



Note 3 - Patient Revenues and Accounts Receivable (Continued)

Medicare-The Medical Outer operates under the Medicare Critical Assess Hospital (CAH) program. Under the CAH program, the Medical Onter is reimbursed under a cost reimbursement method by which the Medical Onter is reimbursed at tentative rates with final settiement determined after submission of annual cost reports by the Medical Onter and audits by the Medicare fiscal intermediary.

For tbe years ended June 30,2009 and June 30,2008, the Medical Onter received approximately 36 percent and 38 percent, respectively, of its ffoss patient revenue (25 and 30 percent, respectively, of its net patient revenues) from the Medicare program. These revenues are subject to health insurance program fiscal intermediary review and retroactive adjustment. Cost reports for the years ended June 30,2009,2008, and 2007 are subject to examination. Provisions have been made for estimated settiements and adjustments.

Medicaid-Under the Louisiana Medicaid program, inpatient services are paid at a per diem rate, and outpatient services are reimbursed under a cost reimbursement method. Under the cost reimbursement method, the Medical Outer is reimbursed at a tentative rate with final settlement determined after submission of annual cost reports by the Medical Onter and audits by the Medicaid fiscal mtermediary. Under the per diem method, one established rate is used for all patient stays regardless of the magnitude or complexity of the services provided. The Medical Onter's Medicaid cost reports for the years ended June 30,2009,2008, and 2007 are subject to examination by the Medicaid fiscal intermediary. Provisions have been made for estimated settiements and adjustments.

Other Payors. The Medical Onter has also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations, prefened provider organizations, and employers, which result in contractual adjustments from established rates. Payments to the Medical Center under these agreements are based primarily on agreed-upon discounts from established charges and rates prescribed for each service.

-18-

Exhibit D Page 6




A summary of patient revenues for the years ended June 30,2009 and June 30,2008 follows:

Patient Revenues at EstabUshed Rates

Less-Provisions for Ontractual Adjustments: Current Provisions Changes in Prior Estimates Medicaid Disproportionate Share

Payments Received


$ 25,815,707

9,977,802 - 0 -

( 619.824)

$20,439,889

8328,225 - 0 -

( 684.554^

Net Patient Revenues

9.357.978

S 16.457.729

7.843,671

Sources: Medicare Medicaid (Including Disproportionate

Share Payments) Other Third-Parties

Percentage 25%

17 58

100%

31%

11 _58 100%

The Medical Onter qualifies for Medicaid '^disproportionate share payments" under the Louisiana 1997 Rural Hospital Preservation Act. Such payments are contingent on aimual federal funding and recognized as decreases to contractual adjustments in the year received.

The Medical Onter grants credit without collateral to its patients, most of whom are from the Vivian, Louisiana vicinity. The mix of gross receivables from patients and third-party payors at June 30,2009 and June 30,2008 is as foUows:

At June 30 2009 2QQ8

Medicare Medicaid Other Third-Party Payors and Patients

17% 15 68

16% 19

1QQ%

-19-

Exhibit D Page 7

NORTH CADDO HOSPITAL SERVICZE DISTRICT, d/b/a NORTH CADDO MEDICAL CENTER



Net accounts receivable from patient services is comprised as follows:

At June 30 2009 . 2008

Gross Patient Accounts Receivable $ 9,415,413 $ 7,398,062

Estimated Allowances for Bad Debts and Contractual Adjustments Under Third-

Party Payment Programs (Note 12) (6.046.742) (4.730J;Q3)

Net Accounts Receivable from Patient Services $ 3368.671 $ 2.667. fiQ

Note 4 - Cash and Certificates of Deposit

Louisiana law requires banks and savings and loan associations to secure a government's deposits (cash in banks) by pledging qualifying securities as collateral. For this purpose "cash in banks'* is comprised of the account bdances according to the bank's records which at June 30,2009 are as follows:

Citizens Capital One Bank & Trust Bank

Osh in Banks

Insured by FDIC

OUateralization-Fair Market Value

UncoUateralized

OUateral is held by tiie pledging financial institutions' tmst department m the name of Nortii Oddo Medical Onter.

Note 5 - Depreciation

Depreciation expense and the estimated useful lives of the major categories of capital assets are as follows:


Buildings and Building Improvements (5-40 years) $ 47,106 $ 47,920

Equipment (1-20 years) 415,007 268,469 Land hnprovements (8-20 years) 5.092 5.147

$ 467.2Q5 S,.Jil426

-20-

Exhibit D Pages

NORTH CADDO HOSPTTAL SERVICE DISTRICT, d/b/a NORTH CADDO MEDICAL CENTER


Note 6 - Capital Leases

During the year ended June 30,2009, the Medical Onter entered into a capital lease for a computer system. See Note 21 for more details.

Following is a summary of property held under capital leases:

Oagulation Machine Chemistry Analyzer X-Ray Machine Radiography Two Heart Monitors X-Ray Machine Ultrasound System SteriUzer Ambulance Computer System (Note 21)

Less-Accumulated Depreciation Net CZarrying Amount

The Medical Onter's capital leases range from four to five years. Minunum future lease payments are as follows:

2009

S 157311 98,122 65,729 30,422 39,919 97,623 39,320

143.084 257.765 929,295 432.751 •496.544

At June 30 2008

$ 20,085 157311 98,122 65,729 30,422 39,919 97,623 39,320

143,084

691,615 226.266

$465,349

Yev Ending June 30

2010

2011

2012

2013

2014

i^^-Amount Representing Interest

Net Present Value of Minimum Lease Payments

Imputed Rate of Interest

JUUx

$ 24J75

18^81

4 2 ^ 6

-^L28S

S = ^ ^

8.8«%

R«di(MTaiiliv

S 17,401

12,047

29.448

2.W

i n.7.w

8.18%

Two Heart

i 7J54

5.665

13,219

im^

$ 12,2(11

8.86%

Cbemistry Analvzer

S 39,576

39,576

6^96

85,748

9.4^2

S 77,286

9.42%

K'M

% 10,772

9,944

9,944

1,657

32JI7

4.3S7

i 27,q^n

9.nn%

UHnsound Svstcm

$ 24,180

24,180

24.180

10,075

82,615

OLQZZ

$ ,71,588

X4I«.

SlsiiUsfii

$ 11,557

11J57

3,853

26,967

2.491

i 24,476

Afflbulance

S 33,U3

33.113

33,114

33,114

132,454

-1L3SS

SI 17,06/

Conqxiter Svstenf

$ 94.087

102,640

102.640

102,640

68.427

470.434

M.774

smm

Total

$262,615

257,003

180,327

147.486

915,858

112.012

S7<38,839

- 2 1 -

Exhibit D Page 9



Note 7 - Ommitments and Contingent Liabilities

The healthcare industry is subject to numerous laws and regulations which include, among other things, matters such as government healthcare participation requirements, various Ucensure and accreditations, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Crovemment action has increased with respect to investigations and/or aUegations concerning possible violations of fraud and abuse and false claims statutes and/or regulations by healthcare providers. Providers that are found to have violated these laws and regulations might be excluded from participating in government healthcare programs, subjected to fines or penalties or required to repay amounts received from the government for previously billed patient services. While management of the Medical Onter beUeves its policies, procedures and practices comply with govemmental regulations, no assurance can be given that the Medical Onter will not be subjected to govemmental inquiries or actions.

See Note 3 regardmg contingencies concerning the Medical Onter's Medicare and Medicaid cost reports and its Medicaid mral hospital disproportionate share payments.

See Note 8 concerning operating lease conunitments.

See Note 14 regarding insurance contingencies.

See Note 15 regarding self-funded unemployment claims.

Note 8 - Operating Leases

The Medical Onter has entered into several operating leases for telephones, other equipment, and real estate. These operating leases range from one month to five years with expiration dates through January 2013. Rent expense under these leases for the years ended June 30,2009 and June 30,2008 is as follows:


Telephones $ 812 $ 1,479 Otiier Equipment 47,986 51,162 Real Estate (Note 16) 32.099 38!519

Total Rent Bcpense $_SQJ22 $ 91.160

Minimum future rental payments under noncancelable operating leases are as foUows:

Year Ending June 30 2010 $136,754 2011 120,326 2012 95,992 2013 44.939

$MM1

-22 -

Exhibit D Page 10

NORTH CADDO HOSPITAL SERVICE DISTRICT, d^/a NORTH CADDO MEDICAL CENTER


Note 9 - Pension Plan

Plan Description

The Medical Onter contributes to the Parochial Employees' Retirement System of Louisiana, a Public Employee Retirement System (the Flan), that is a cost sharing multiple-employer plan estabUshed by the Louisiana legislature as of January 1,1953, by Act 205 of 1952. The system was revised by Act No. 765 of 1979, effective January 1,1980, to replace the "regular plan" witii'the Plan B Fund of which the Medical Onter is a participant. Plan B provides retirement and disabiUty benefits and death benefits to plan members and beneficiaries. The Retirement System is govemed by the Louisiana Revised Statues, Titie 11, Sections 1901 through 2015, specificaUy, and other general laws of the State of Louisiana.

The Parochial Employees' Retirement System of Louisiana issues a publicly available financial statement report that includes financial statements and required supplementary information for the Plan. That report may be obtained by writmg the Parochial Employees' Retirement System of Louisiana, 7905 Wrcnwood Boulevard, Baton Rouge, Louisiana, 70809.

Plan Funding

En^loyer and employee contributions to the Plan are estabUshed by state statute. Employee contributions are 3 percent of covered wages for each of the years ended June 30,2009 and June 30,2008. For the years ended June 30,2(X)9 and June 30,2(X)8, employer contributions are 6 percent of covered wages. In addition to the aforementioned contributions the tax collectors of various parishes contribute one fourth of one percent of aU tax collections.

The Medical Onter's contributions to the Plan, and its retirement expense, for the most recent three years are as follows:

Percentage of Year Ended June 30. Amount Required Amount

2009 $351315 100% 2008 $241,236 100% 2007 $268,899 100%

Note 10- Propertv Tax Revenues

The Medical Onter received $255,321 and $204,970 in property tax revenues for the years ended June 30, 2009 and June 30,2008, respectively. This revenue is used primarily for estabUshing, maintammg and operating an ambuhmce service for the residents of the North Oddo Hospital Service District. Any revenues in excess of the ambulance service costs may be used for maintaining, operating, and unproving the Medical Onter.

-23-

Exhibit D Page 11



Note 10- Property Tax Revenues (CTontinued)

The property tax is assessed on January 1, levied not later than June 1, due by December 31, and Uened on January 1 (one year after the assessment date). The C^do Parish Sheriff Department collects the taxes. The property tax revenues are sununarized as foUows:


Property Tax Assessment $ 280371 $ 222,790 Allowance for UncoUectible Assessments f 19.440) ( 16.304) Property Tax OUected 261,131 206,486 Adjustments, Interest and

Prior Period OUections ( 5.810) ( 1.516) Property Taxes Reported $ 255.321 $ 204.970

The original ambulance service property tax levy expired in May 2007. A renewal vote to extend the tax levy for an additional ten years was held in March 2007 and was approved. The renewed tax levy will expire in May 2017.

Note 11- Advertising

Advertising costs for the years ended June 30,2009 and June 30,2008 are $27,241 and $9,083, respectively.

Note 12- Significant Estimates

As described at Note 3, estimated allowances from accounts receivable for bad debts and contractual discounts and settiements have been provided. Due to uncertainties inherent in the estimation of such allowances, it is at least reasonably possible that actual bad debts and contractual discounts and settiements that materialize in the near term could differ materially from the estimates.

As described at Note 14, the Medical Onter participates in the Louisiana Hospital Association Malpractice Insurance Trust Fund and Workman's Ompensation Group Self-Insurance Fund. Due to uncertainties inherent m tiie estimation of potential clauns, it is at least reasonably possible tiiat actual chums that materialize in the near term could differ materiaUy from the estimates.

Note 13- Rental Income

The Medical Onter leased office space in its Extended Services building to Willis-Knighton Medical Outer (Note 16) under a montii-to-month lease (the original three-year operatmg lease expired June 30, 2000). This lease was terminated in December 2007. Rental income is presented in the statement of operations as nonoperating revenue. Rental income for the year ended June 30,2008 is $4,800.

-24-

Exhibit D Page 12

NORTH CADDO HOSPITAL SERVIC:E DISTRICT. dAi/a NORTH CADDO MEDICAL CENTER


Note 14- Insurance

Under current Louisiana law, the Medical Onter's Uability for medical malpractice is statutorily Umited to $500,000 per claim. To cover this exposure, tiie Medical Onter has obtained insurance coverage of $100,000 per claim with the Louisiana Hospital Association Malpractice and General Liability Trust and an additional $400,000 per claim witii tiie State of Louisiana Patient's Ompensation Fund.

The Medical Onter is a participant ofthe Louisiana Hospital Association Malpractice Insurance Trust Fund and Workmen's Compensation C5roup Self-Insurance Fund. These trust fimds retrospectively set premiums for members based on the loss history of each entire group. The Medical Onter expenses premiums paid to these multi-provider captive insurance companies over the poUcy periods covered.

According to the trust document for the Malpractice Insurance Trust (the Trust), participants are jointiy and severally Uable for tiie obUgations of the Trust with the right of indemnity among tiie participants for each participant's pro rata share ofthe obUgation as formulated in the trust document. Each participant has this contingent assessment UabiUty for the payment of actual losses and expenses incurred while a participant in the Trust. This contingent UabiUty is not to exceed the amount necessary to make up trust fund deficiencies in the tmst fund year in which the obligations were incurred, and such Uability is not to exceed an amount equal to the charges otherwise due by such participant during such plan year.

According to the trust document for the Workmen's Ompensation Group Self-Insurance Fund (the Fund), partidpants are liable jointiy and m solido for claims not paid pursuant to Subpart J of Part I of Chapter 10 of Titie 23 of the Louisiana Revised Statutes of 1950, with the right of indemnity among the participants for each participant's pro rata share of the obUgation as formulated in the trust document. Each participant has this contingent assessment UabiUty for the payment of actual losses and expenses incurred while a participant in the Fund, but only to the extent that such losses and expenses are not paid by the excess coverage secured by the Fund.

Management does not believe that any significant contingent UabiUties exist under these insurance arrangements.

Note 15- Self-Funded Unemployment Claims

The Medical Onter became self-funded with respect to unemployment claims effective October 1,1998. As a self-funded employer, the Medical Onter must reimburse the Louisiana Department of Labor on a doUar-for-doUar basis for unemployment benefits paid to former employees. The Medical Onter reimbursed the Louisiana Department of Labor $3,032 and $5,159 for claims paid on behalf of the Medical Onter during the fiscal years ended June 30,2009 and June 30,2008, respectively.

The Medical Onter signed a three-year contract witii Temple Resource Management, hic. (TRM) for claims management services at an annual cost of $2,000. TRM evaluates aU clauns. recommends appropriate action for all notices tiie Medical Onter receives from the Louisiana Department of Labor, and audits the experience rates and unemployment benefits charged to the Medical Center.

Management does not believe that any significant contingent UabiUties exist under tiiis arrangement at June 30,2009.

-25-

Exhibit D Page 13



Note 16- Related Party Transactions

The Medical Center has entered into a management contract with Willis-Knighton Medical Onter (WKMC), a large metropolitan health care provider operating in Shreveport and Bossier City, Louisiana approximately 30 miles from North Oddo. Under this contract, WKMC has agreed to manage the operations of the Medical Onter and to provide the Medical Onter with a qualified administrator. The administrator is an employee of WKMC and acts on behalf of WKMC in the Medical Onter's best uiterest. The contract is on a monthly basis and requires that the Medical Onter reimburse WKMC for the salary and benefits ofthe Medical Onter's administrator.

In January 2009, the Medical Onter acquired the Plain DeaUng, Louisiana Medical and Surgical Qinic from WKMC. The transaction involved the Medical Onter purchasing the equipment and furnishing of the cUnic for $24,541.

On February 21,2008, the Medical Onter acquired the Vivian, Louisiana Medical and Surgical Clinic from WKMC. The transaction involved the Medical Onter issuing two promissory notes to WKMC, one for the purchase price of the clinic's receivables, $248,891, and the otiier for tiie purchase price of the clinic's equipment and furnishings, $95,956. The receivables note bears interest at 8 percent per annum and at June 30,2009 its balance, $23,000, was past due. The equipment and furnishings note is secured by tiie equipment and furnishings purchased, bears interest at 8 percent per annum is payable monthly over a seven-year period ending February 25,2015. See Note 20,

The Medical Onter entered into an operating lease with WKMC for the Plain DeaUng Medical and Surgical CUnic building. The lease terms provide for monthly rentals of $750 for three years tiirough March 14, 2012 witii an automatic one year renewal. Rental expense on this lease during the year ended June 30,2009 is $4,500.

The Medical Onter entered into an operating lease witii WKMC for the Vivian Medical and Surgical Clmic building. The lease terms provide for monthly rentals of $6,419.82 for five years through January 31,2013 with an automatic one year renewal. Rental expense on this lease during tiie years ended June 30,2009 and June 30,2008 is $77,038 and $38,519, respectively.

The Medical Onter received rental income from WKMC in the amount of $4,800 for the year ended June 30,2008 for leased office space in its Extended Services building. Sec Note 13.

During the years ended June 30,2009 and June 30,2008, the Medical C:enter incurred, $309,967 and $282,035, respectively, for the administrator's salary and benefits, office suppUes, laundry services and various patient services with WKMC.

At June 30,2009 and June 30,2008, the Medical Onter owes WKMC $186,280 and $25,336, respectively, for various services and suppUes, which is included in accounts payable.

-26-

Exhibit D Page 14



Note 17- Oncentrations

The Medical Onter has an economic dependence on a small number of local physicians who admit substantially aU of the Medical Onter's patients.

See Note 3 concerning revenues derived from patients who are beneficiaries under the Medicare and Medicaid programs.

See Note 3 concerning significant financial resources provided from Medicaid Disproportionate Share Payments,

Note 18- Noncash Opital and Relating Financing Transactions

See Note 21, concenung a capital lease entered into during the year ended June 30,2009 in the amount of $434,730.

As mentioned at Note 16, the Medical Onter entered into two notes payable for the receivables and equipment and furnishing of the Vivian Medical and Surgical Clinic during the year ended June 30,2008,

As mentioned at Note 6, the Medical Onter entered into four capital leases during the year ended June 30, 2008, The amount of the assets capitalized under tiiese leases is $319,946.

Note 19- Cjrants and Ontributions

The Medical Onter entered into a voluntary nonexchange agreement with the Biomedical Research Foundation (a not-for-profit organization affiliated with the Louisiana State Uiuversity Health Science Onter m Shreveport, Louisiana) effective for tiie period October 1,2007 through August 31,2Q0S. The purpose of the agreement was to assist the Medical Onter with development of an electronic medical record system adaptable and written with open source code that will merge with aU health care organizations in the area, hiring of an RN and a social worker for assisting children at the K5 through S"* grade school levels in Vivian, providing a faith-based alliance with local congregations, adding a behavioral health unit, and various other community assistance. Draws on this grant and contributions received from other parties during the years ended June 30,2009 and June 30,2008 are summarized as follows:

Biomedical Research

Foundation Others Total

$ 93325 $ 95,990 $189315 Year Ended June 30.2009: Non-Opital Cjrants and Ontributions

Year Ended June 30.2008: Non-Opital Cjrants and Ontributions Opital Grants and Ontributions

Total Grants and Ontributions

$ 65,900 $ 86,419 $152,319 142.000 - 0 - 142.000

S207.90Q 86.419 $•

-27-

Exhibit D Page 15



Note 20- Notes Payable

In addition to the capital lease obligations mentioned at Note 6 and note payables mentioned at Note 16, the Medical Center has a $500,000 Une of credit with Citizens Bank & Trust. The fine of credit loan bears interest at 5.75 percent per annum and is secured by the Medical Onter's $619,871 certificate of deposit at Citizens Bank & Trast. The line of credit loan matures on November 5,2009. The unused line of credit at June 30,2009 is $345,918.

Notes payable at June 30,2009, mature as foUows;

Durmg die Year Ending

June 30 2010 2011 2012 2013 2014 Thereafter

Note 21- Omputer System

Receivables Note Payable

(Note 16) $ 23,000

$ 23.000

Equipment and Furnishings

Note Payable (Note 16)

$ 22,950 12,869 13,899 15,011 16,212 11.522

line of •Credit Total

$154,081 $200,031 12,869 13,899 15,011 16,212 11.522

$154.081 $269.544

During tiie year ended June 30,2009 the Medical Outer contracted with a computer systems firm for a conq)rehensive web-based hospital management computer system (the Omputer System) at a cost of $525,000. The Omputer System was to be constmcted in two phases: Phase 1, Fmancial; Phase II, CUnical. On or about February 1,2009 Phase I had been completed and placed in service at a cost of $257,765 (Note 6).

Subsequent to June 30,2009. management concluded that Phase I of the Computer System was not functioning satisfactorily and that a cure would not be cost effective. As a result, management decided to discontinue use of the Phase I system and cancel Phase IL Replacement of the Phase I system is expected to be completed in the first quarter of 2010. The cost of the Phase I system is being depreciated over its expected useful Ufe of thirteen months (February 1,2009 through February 28,2010).

Partial finandng for tiie Omputer System was provided by Cjovemment Opital Orporation through a lease-purchase agreement. See Note 6. Under tius agreement, $434,730 in financing proceeds was placed in escrow on March 10,2009 of which $177,230 was disbursed in eariy Febmary 2009 upon tiie completion of Phase I of the system. The unexpended financing proceeds, $257300, remain in escrow at June 30,2009 and may only be disbureed for Phase II of the Omputer System or upon termination of the lease-purchase agreement. No mterest eamings on tiie escrow accme to tiie benefit of the Medical Onter. As Phase II of the Omputer System has been cancelled, management intends to terminate the leaseûrchase agreement at its first opportunity which will occur March 10,2011 at which time the Medical Onter may pay $279,244 as a purchase price to terminate the lease. The majority of this termmation payment wiU be provided by the unexpended escrow fiinds, $257,500, that will be released to the Medical Onter upon termination of the lease.

-28 -

Exhibit D Page 16

NORTH CADDO HOSPITAL SERVICE DISTRICH'. d/b/a NORTH CADDO MEDICAL CENTER


Note 22- Loss on Impairment of Fixed Asset

In connection with the decision to replace the Omputer System described at Note 21, management also decided to discontinue use of hs payroll system acquired finsm the same vendor in August of 2007 at a cost of $38,700. The payroU system's shortened useful life from three years to two years four months resulted in an impairment loss of $8,600 on the payroll system for the year ended June 30,2009,

Note 23- Subsequent Events

Events through December 22,2009 (the date the financial statements were available to be issued) have been evaluated for their effects on the June 30,2009 financial statements.

See Note 21 concerning a decision to replace an unsatisfactory cximputer system.

-29-

WILLIAM JEFFERSON COLE, C.P.A. CAROL T. BARNES, C.P.A. C. WILLIAM GERARDY, J R . , C.P.A. BARRY S. SHIPP, C.P.A. STEVEN W. HEDOEPETH, C.P.A. STEVEN R. BAYER, C.P.A. GWENDOLYN H. H A R J U , C.P.A. TIMOTHY R. DURR, C.P.A. BAILEY B. BAYNHAM, C.P-A. ROBERT A. BUSBY, C.P.A. ANNE-MARIE COLC, C.P.A. TIMOTHY W. BORST, C.P.A. ERIC D. SMITH. C.P.A. MARY WELLS CARMOOY, C.P.A. KYLE S. DOBBINS. C.P.A. MATTHEW R. HAHN, C.P.A.

JOHN A. CASKEY, C.P.A. NINA a . GLORIOSO, C.P.A. J . AMY HEMMINOS, C.P.A. LINDA K. BIBLE, C.P.A. FAYE D. CAMPBELL, C.P.A. BRENDA B. GRIMM, C.P.A. LAURA A. MUFF, C.P.A. DILLON WRIGHT. C.P.A. KATHRYN A. THAXTON, C.P.A.

C O L E , EVANS & PETERSON CCR-'IFIED PUBLIC ACCOUNTANTS


6 2 4 TRAVIS STREET

SHREVEPORT, LOU^StAMA 7 U O I - 3 0 I Z

w w w . c 6 p c p a . c o m

December 22,2009

M. ALTON eVANS, JR . PARTNER EMERITUS

AUSTIN G. ROBERTSON, JR . , C.P.A. o r COUNSEL

TELEPHONE O l S ) 2 2 2 - S 3 6 7

TELECOPIER (318) 4 2 B - 4 I 0 I


R O. DRAWER 1768 SHREVEPORT, LOUISIANA 71106-1768

INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION

Board of Ommissioners North Oddo Hospital Service District Vivian, Louisiana

Our audits of the June 30,2009 and June 30,2008 financial statements of Nortii Oddo Hospital Service District, d/b/a North Oddo Medical Onter were performed for the purpose of forming an opinion on the basic financUl statements taken as a whole. Schedules 1 through 5 which follow are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opiruon, is fairly stated in aU material respects in relation to the basic financial statements taken as a whole.

to^ ÔMD ctCetascen Ole, Evans & Peterson

-30-

http://www.c6pcpa.com

Schedule 1

Z l >c N r- r- o - r - p M TT o\ m "rt F

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r ^ M m t * i o o c s ( N f < ' ^ ' O Q v o ^ o ) ( n ' 0 » * o o o o p f 4 v i

^ i - oq^wôoo ^ s j . ' ^ o i i ' H . ' ^ ^ * ' ** t ^ n . ^ ^ " ' ° 4 * ^

r f r f o f r f of

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-31-

Schedule 2


GENERAL AND ADMINISTRATIVE EXPENSES

FOR THE YEARS ENDED JUNE 30.2009 AND JUNE 30.2008

General and Administrative Salaries Accounting and Auditing Fees Legal Fees Os t Report Preparation and Onsulting Telephone Insurance Employee Benefits and PayroU Taxes SuppUes and Other

Total General and Administrative Expenses

Year Ended June 30 2009

825319 104,051

3,538 19,875 79,155

479,959 1,454,938

642.521 3.609.35(1

2008

619,289 60,790 2,620

36,172 53,888

257,740 997,655 462.760

2.490.914

-32-

Schedule 3

NORTH CADDO HOSPITAL SERVICE DISTRICH". d/b/a NORTH CADDO MEDICAL CENTER

COMPENSATION PAID TO MEMBERS OF THE BOARD OF COMMISSIONERS


Ompensation (including per diem) Paid to Board Members:

Earl G. WilUamson, Jr. Kennetii D. Chiy Robert Guth Helen Adger Robert Green Marylrvin Brenda Smith Pat White

Paid Board Meetings Attended

12 12 12 12 12 10 12 12

Ompensation

1,200 1,200 1,200 1,200 1,200 1,000 1,200

-1.2Q0

Mileage Reimbursement

- 0 -- 0 -- 0 -- 0 -550 - 0 -- 0 -- 0 -

Total Ompensation

1,200 1,200 1,200 1,200 1,750 1,000 1,200 1.200

9-400

-33-

Schedule 4

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« ^5 55 2

^ •0 >o 2i • t

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8 ^

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o

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OO m m

o 00

tn 00

I —

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^ t f l ( * •

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-34 -

Schedule 5


SUMMARY OF OPERATING RESULTS

Total Gross Revenue

Discounts and Bad Debts

Os t and Expenses

Increase in Net Assets

Total Hospital Patient Days

Admissions

Inpatient Revenue per Patient Day

Inpatient Revenue as a Percent of Total Patient Revenue

Increase (Decrease) in Net Assets per Patient Day

Increase (Decrease) in Net Assets as a Percent of Gross Patient Revenues

Number of Days Net Patient Revenues in Net Patient Receivables

Number of Days Net Patient Revenues (Without Medicaid Disproportionate Share Payment and Change in Estimate) in Net Patient Receivables

Average Length of Patient Stay in Days

Year ended June 30 2009

26,384,299

12449,565

13.550.950

283.784

4,166

1,279

2,128

2008

21,014,920

10389,750

10.017.467

607.703

3,450

1,112

2,471

2007

17,075,963

9,021.155

7349.335

505.473

3353

1,049

2,560

2006

12,874,064

6.289,675

6.509.747

^ 6 4 2

3,176

1,035

2,015

2005

10,889,180

4,948,728

6332.256

( 391.804)

2,699

910

2,117

34.34%

68.12

74.92

77.63

3.26

41.71%

176.15

77.51

81.74

3.10

49.59% 50.70% 53.85%

155.39

L10% 2.97% 3.01%

81.15

88.15

3.10

23.50 (145.17)

.59% ( 3.69)%

79.08

85.85

3.07

64.82

71.07

2.97

-35-

WILLIAM JEFFERSON COLE, C.P.A. CAROL T. BARNES, C.P.A. C. WILLIAM OEttARDY, J R . , C.P.A. BARRY S. SH IPp , C.P.A. STEVEN W. HEDGEPETH. C.P.A. STEVEN R. BAYER, C.P.A. GWENDOLYN H. H A R J U , C.P.A. TIMOTHY R. DURR, C.P.A. BAILEY B. BAYNHAM, C.P.A. ROBERT A. BUSBY, C.P.A. ANNE-MARIE COLE, C.P.A. TIMOTHY W. BORST, C.P.A. ERIC D. SMtTH, C.P.A. MARY WELLS CARMODY, C.P.A. KYLE S. DOBBINS, C.P.A. MATTHEW R. HAHN, C.P.A.

JOHN A. CASKEY, C.P.A. NINA G. GLORIOSO, C.P.A. J . AMY HEMMINOS, C.P.A. LINDA K. BIBLE, C.P.A, FAYE O. CAMPBELL, C.P.A. BRENDA B. GRIMM, C.P.A. LAURA A. HUFF, C.P.A. DILLON WRIGHT, C.P.A. KATHRYN A. THAXTON, C.P.A.

COLE. EVANS & PETERSON CERTIFIED PUBLIC ACCOUNTANTS


6 2 4 TRAVIS STREET

SHREVEPORT. LOUISIANA 7 I I 0 I - 3 0 I 2

www.cepcpa.com

December 22,2009

M. ALTON EVANS. JR . PARTNER EMERITUS

AUSTIN O. ROBERTSON, J R . , C.P.A. OF COUNSEL

TELEPHONE (318) 2 2 2 - 8 3 6 7 TELECOPIER <3IB) 4 2 5 - 4 I O I



INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Ommissioners Nortii Oddo Hospital Service District Vivian, Louisiana

We have audited the financial statements of North Oddo Hospital Service District, d/b/a North Oddo Medical Onter at and for the year ended June 30,2009 and have issued our report thereon dated December 22,2009. We conducted our audit in accordance with auditing standards generaUy accepted in the Uruted States of America and the standards applicable to financial audits contained in Cjovemment Auditing Standards, issued by the OmptroUer General of the United States.

Intemal Ontrol Over Financial Retx>rting

In planning and performing our audit, we considered North Oddo Hospital Service District, d/b/a North Oddo Medical Onter's intemal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opiruons on the financial statements, but not for the purpose of expressing an opinion on the effectiveness ofthe Medical Onter's intemal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Medical Onter's mtemal control over financial reporting.

A control deficiency exists when the design or operation of a control does not aUow management or en^loyees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the organization's abiUty to initiate, authorize, record, process, or report financial data reliably in accordance with generaUy accepted accounting principles, such that there is more than a remote UkeUhood tiiat a misstatement of the organization's financial statements that is more than inconsequential wiU not be prevented or detected by the organization's intemal control. We consider tiie deficiencies described in the accompanymg schedule of findings and questioned costs at Fmdings 09-01,09-02,09-03, and 09-04 to be significant deficiencies in mtemal control over financial reporting. Findings 09-01 and 09-02 are repeat findmgs from the prior year.

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Board of Ommissioner December 22,2009 North Oddo Hospital Service District Page 2

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements wiU not be prevented or detected by the organization's intemal control.

Our consideration of the intemal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarUy identify aU deficiencies in the intemal control that might be significant deficiencies and, accordingly, would not necessarily disclose aU significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider them all to be material weaknesses.

North Oddo Medical Onter's responses to the findings identified m our audit are described in the accompanying schedule of findings and questioned costs. We did not audit North Oddo Medical Onter's responses and, accordingly, we express no opinion on them.

OmpUance and Other Matters

As part of obtaining reasonable assurance about whether North Oddo Hospital Service District, d/b/a North Oddo Medical Onter's financial statements are free of material misstatement, we performed tests of its comphance with certain provîons of laws, regulations, contracts and grants, noncompUance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on con:q}liance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompUance that are required to be reported herem under Govemment Auditing Standards.

We noted a certain matter we reported to the management of North Oddo Medical Onter in a separate letter dated December 22,2009.

This report is intended solely for the information and use ofthe Oddo Parish Ommission, Board of Ommissioners, management, and others within the organization and the Office of the Legislative Auditor for the State of Louisiana and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of pubUc record and its distribution is not Umited. Under Louisiana Revised Statue 24:513, this report is distributed by the Legislative Auditor as a pubUc document.

Lob, isiQAD (^[mJtcm Ole, Evans & Peterson

-37 -

WILLIAM JEFFERSON COLE, C.P.A CAROL T. BARNES, C.P.A. C. WILLIAM GERARDY, J R . , C.P.A. BARRY a . SHIPP, C.P.A. STEVEN W, H tDOCPETH, C-P-A. STEVEN R. BAYER, C.P.A. GWENDOLYN H. H A R J U , C.P.A. TIMOTHY R. DURR. C.P.A. BAILCY 8 . BAYNHAM. C.P.A. ROBERT A. BUSBY, C.P.A. ANNE-MARIE COLE, C.P.A. TIMOTHY W. BORST, C.P.A. ERIC D. SMITH, C.P.A. MARY WELLS CARMODY, C.P.A. KYLE S. DOBBINS, C.P.A. MATTHEW R. H A H N , C.P.A.

JOHN A. CASKEY, C.P.A. NINA G. OLORIOSO, C.P.A. J . AMY HEMMINGS, C.P.A. LINDA K. B IBLE , C.P.A. FAYE D. CAMPBELL, C.P.A. BRENDA B. ORIMM, C.P.A, LAURA A. HUFF, C.P.A. DILLON WRIGHT, C.P.A. KATHRYN A. THAXTON, C.P.A.

C O L E . EVANS & PETERSON CERTIFIED PUBLIC ACCOUNTANTS


6 2 4 TRAVIS STREET

SHREVEPORT, LOUISIANA 7 I I 0 I - 3 0 I 2

www.c6pcps.com

December 22,2009

M. ALTON EVANS. JR . PARTNER EMERITUS

AUSTIN a . ROBERTSON, J R . , C.P.A. OP COUNSEL

TCLCPHONC (318) 2 2 2 - 8 3 6 7 TELECOPIER <3IBt 4 2 8 - 4 I O I

MAILING ADDRESS:

P. O. DRAWER 1768 SHREVEPORT, LOUISIANA 71166-1788

INDEPENDENT AUDITORS' SUMMARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS For tiie Year Ended June 30,2009

We have audited the financial statements of North Oddo Hospital Service District, d/b/a North Oddo Medical Onter at and for the year ended June 30,2009. and have issued our report thereon dated December 18, 2007. We conducted our audit in accordance with auditing standards generally accepted in the Uruted States of America and the standards appUcable to financial audits contained in Govemment Auditing Standards, issued by the OmptroUer General of the United States. Our audit of the financial statements as of June 30,2009 resulted in an unqualified opinion.

Section 1 - Siunmary of Auditors' Report

a. Report on Intemal Ontrol and OmpUance Material to the Fmancial Statements

Intemal Ontrol Material Weaknesses - Yes Significant Deficiencies - Yes

On^liance

Non-compUance Material to the Financial Statements • No

b. Management Letter

Management letter issued - Yes

Section 2 • Financial Statement Findings

FINDING 09-01 - Estimates for annual Medicare cost report settiements are not being posted on a timely basis.

Requirement - As a Medicare Critical Access Hospital, the Medical Onter is reunbursed by Medicare under a cost reimbursement method. The final settiement with Medicare is determined with the submission of an annual cost report. The adjustment for this final settlement can be material to the Medical Onter. The Medical Onter should inake a quarterly adjustment for this final settiement by preparing quarteriy interim cost reports.

-38-

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Recommendatioo - Management should ensure that someone is preparing interim cost reports, at least on a quarterly basis, so adjustments can be posted on a timely basis.

Management's Response - Management intends to immediately implement tiie preceding recommendation.

FINDING 09-02 - Changes in estimates for contractual adjustments are not recorded on a timely basis.

Requirement - The actual discounts on accounts receivable from Medicare, Medicaid, and certain other large third-party payers should be reviewed on at least a quarterly basis so proper aUowances are booked timely.

Remmmendation - Management should ensure that someone is calculating the actual discounts on the large third-party payers on at least a quarterly basis and those discounts factored in the estimation of allowances for contractual adjustments from patient accounts receivable.

Management's Response - Management intends to immediately implement the preceding recommendation.

FINDING 09-03 - Not all accounts payable and related expenses are being recorded or reconciled with vendors.

Requirement - Invoices should be posted to the books on a monthly basis m order to ensure timely payment and to reflect the activities of the Medical Center. Furthermore, disputed amounts should be addressed with vendors on a monthly basis.

Recommendation - Management should ensure that invoices are being posted to the general ledger in a timely manner and pursue disputed items with the vendor until these items are resolved.


FINDING 09*04 - There is an inadequate segregation of duties in that accounts payable and cash disbursements duties are being handled by the same person (the business office manager).

Requirement - Segregation of duties should be in place to mitigate the risk of fiaud by a single employee.

Recommendation - Management should segregate the responsibiUties of accounts payable and cash disbursements.


Section 3 - Federal Award Findings and Questioned Costs

N/A

-39-


MANAGEMENT'S SCZHEDULE OF PRIOR YEAR FINDINGS (Findings Prior to the Year Ended June 30,2009)

Section 1 • Internal Ontrol and Compliance Material to the Financial Statements

FINDING 08-1 - Estimates for annual Medicare cost report settiements are not being posted on a timely basis.

STATUS - This condition has not been resolved. See Finding 09-01.

FINDING 08-2 - Changes in estimates for contractual adjustments are not recorded on a timely basis.

STATUS - This condition has not been resolved. See Fmdmg 09-02.

Section 2 - Internal Control and Compliance Material to Federal Awards

N/A

Section 3 - Management Letter

N/A

-40-

WILLIAM JEFFERSON COLE, C.P.A. CAROL T. BARNES, C.P.A. C. WILLIAM GERARDY, J R . , C.P.A. BARRY S. SHIPP, C.P.A. STEVEN W. HEDGEPETH, C.P.A. STEVEN R. BAYER, C.P.A. GWENDOLYN H. H A R J U , C.P.A. TIMOTHY R. DURR, C.P.A. BAILCY 8 . BAYNHAM, C.P.A. ROBERT A. BUSBY, C.P.A. ANNE-MARIE COLE, C.P.A. TIMOTHY W. BORST, C.P.A. ERIC D. SMITH, C.P.A. MARY WELLS CARMODY, C.P.A. KYLE 5. DOBBINS, C.P.A. MATTHEW R. HAHN, C.P.A.

JOHN A. CASKEY, C.P.A. NINA G. GLORIOSO, C.P.A. J . AMY HEMMINOS, C.P.A. LINDA K. BIBLE, C.P.A. FAYE D. CAMPBELL, C.P.A. BRENDA B. ORIMM, C.P.A. LAURA A. HUFF, C.P.A. DILLON WRIGHT, C.P.A. KATHRYN A. THAXTON, C.P.A.

COLE, EVANS & PETERSON CERTIFIED PUBLIC ACCOUNTANTS


6 2 4 TRAVIS STREET

SHREVEPORT, LOUISIANA 7 I 1 O I - 3 0 I 2

www.cepcpa.com

December 22,2009

M. ALTON EVANS, JR . PARTNER EMERITUS

AUSTIN G. ROBERTSON, J R . , C.P.A. OF COUNSEL

TELEPHONE (316) £ 2 2 - 8 3 6 7

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INDEPENDENT AUDITORS' LETTER TO MANAGEMENT

Board of Ommissioners North Caddo Hospital Service District Vivian, Louisiana

The standards under which we performed our June 30,2009 audit of Nortii Oddo Hospital Service District d/b/a North Oddo Medical Outers' financial statements require that we uiclude aU significant intemal control deficiencies and material instances of nonconq>liance with qipUcable rules and regulations in certain reports accompanying the audited financial statements. The standards also require that less than significant intemal control deficiencies and immaterial instances of noncompUance discovered during our audits be reported to the Medical Onter's management in a separate communication. The purpose of this letter is to provide such separate communication.

An immaterial instance of noncompUance discovered during our audit foUows:

Employees were given $15 gift certificates in violation of Article Vn, Section 14 of tiie Louisiana Onstitution.

U2ii,&imyâi£AM/ix) Ole, Evans & Peterson

http://www.cepcpa.com

North Caddo Medical Center The Heart of Community Healthcare Since 196S

January 25, 2010

Legislative Auditor's Office Attn: Ms. Jo Ann Johnson Post Office Box 94397 Baton Rouge, Louisiana 70804-9397

Re: Response to Independent Auditor's Letter T-i ^ to Management

.';\jDearS^s. Johnson;

; ' This letter is in response to the attached December 22,2009 independent auditor's letter --'-to nrariagement as a result ofthe audit ofthe June 30, 2009 financial statements of North Caddo

,-Hos|uiaI Service District d/b/a North Caddo Medical Center. We had inadvertently violated :. Artkjle VII, Section 14 of the Louisiana Constitution by providing our employees with $ 15 gift certificates for Christmas. We will no longer provide our employees with gift certificates.

If you have any questions, please let us know.

Very truly yours,

North Caddo Medical Center

By -V>9^ Q _ David Jones, Admtmstrator

1000 South Spruce Street • P.O.Box792 • Vivian, LA 71082 • 318-375-3235 • Fax 318-375-5938

Documents

VIVIAN. LOUISIANA AUDITED FINANCIAL STATEMENTS JUNEapp1.lla.la.gov/PublicReports.nsf/C26B67EC7C85B903862576BE00762… · about the Medical Center and about its activities in a way