VIVIAN. LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE 30app1.lla.la.gov/PublicReports.nsf/CFB1F1989585E4EB... · 2021. 1. 11. · VIVIAN. LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE

NORTH CADDO HOSPITAL SERVICE DISTRICT,d/b/a NORTH CADPO MEDICAT, CENTER

VIVIAN. LOUISIANA

AUDITED FINANCIAL STATEMENTS

JUNE 30.2005

Under provisions of state law, this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date £— 2, 2- -

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

C O N T E N T S

Management's Discussion and Analysis

Independent Auditors' Report

Basic Financial Statements:

Balance Sheets at June 30,2005 and June 30,2004

Statements of Revenues, Expenses, and Changes in Net Assetsfor the Years Ended June 30,2005 and June 30,2004

Statements of Cash Flows for the Years Ended June 30,2005and June 30,2004

Notes to Financial Statements

Supplemental Information:

Independent Auditors' Report on Supplemental Information

Revenue, Deductions from Revenue and Direct DepartmentalExpense for the Years Ended June 30,2005 and June 30,2004

General and Administrative Expenses for the Years EndedJune 30,2005 and June 30,2004

Compensation Paid to Members of the Board of Commissionersfor the Year Ended June 30,2005

Summary of Operating Results

Capital Assets and Accumulated Depreciation for the YearEnded June 30,2005

Exhibit A

Exhibit B

Exhibit C

Exhibit D

Schedule 1

Schedule 2

Schedule 3

Schedule 4

Schedule 5

PageNumbers

1-7

8-9

10-11

12

13

14-25

26

27

28

29

30

31

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

C O N T E N T S

PageNumbers

Other Reports:

Independent Auditors* Report on Compliance and on InternalControl Over Financial Reporting Based on an Audit ofFinancial Statements Performed in Accordance withGovernment Auditing Standards 32-33

Independent Auditors* Summary Schedule of Findingsand Questioned Costs for the Year Ended June 30,2005 34-36

Management^ Schedule of Prior Year Findings for the YearEnded June 30,2005 37


MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30,2005

Our discussion and analysis of North Caddo Service District, d/b/a North Caddo Medical Center's (theMedical Center) financial performance provides an overview of the Medical Center's financial activities for the yearended June 30,2005. Please read this in conjunction with the Medical Center's financial statements in this report.

Financial Highlights

The Medical Center's net assets decreased by $391,804, or 12.28 percent, as a result of this year's operations.

During the year, the Medical Center's operating revenues decreased $176,210, or 2.45 percent, to $7,013,972from the prior year while operating expenses increased $620,824, or 8.87 percent, to $7,623,842. The MedicalCenter experienced an operating (loss) of $609,870 for the current year, which was (8.70) percent of operatingrevenues, versus operating income of $187,164 for the prior year, which was 2.60 percent of operating revenues.

The Medical Center experienced a change in management in April 2005. The acting administrator, throughOctober 1,2005, is Jerry Lee of Willis-Knighton Health System. Mr. Lee was preceded by administrator ToddBlanchard. The Board of Commissioners have appointed David Jones as the hospital's new administrator effectiveOctober 1,2005.

Using this Annual Report

This annual report consists of three basic financial statements using Governmental Accounting StandardsBoard (GASB) accounting principles. The Balance Sheet, the Statement of Revenues, Expenses, and Changes in NetAssets, and the Statement of Cash Flows (Exhibits A, B, and C) provide information about the activities of theMedical Center and present short-term and long-term views of the Medical Center's finances and activities.

Required Financial Statements

Our analysis of the Medical Center focuses on Exhibits A, B, and C. One of the most important questionsasked about the Medical Center's finances is, "Has the Medical Center's financial position been improved orworsened as a result of the 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 informationabout the Medical Center and about its activities in a way that helps answer this question. The Balance Sheet andStatement of Revenues, Expenses, and Changes in Net Assets include all assets and liabilities using the accrual basisof accounting. All of the current year's revenues and expenses are taken into account regardless of when cash isreceived or paid.

The Balance Sheet and Statement of Revenues, Expenses, and Changes in Net Assets report the Medical Center's netassets balance and changes in it. You can think of the Medical Center's net assets, the difference between assets andliabilities, as a way to measure the Medical Center's financial health, or financial position. Over time, increases ordecreases in the Medical Center's net assets is an indicator of whether its financial health is improving ordeteriorating. You will need to consider other nonfinancial factors, however, such as changes in the community,changes in Medicare and Medicaid regulations, and changes in managed care contracting.

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FOR THE YEAR ENDED JUNE 30. 2005

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

In the Balance Sheet; the Statement of Revenues, Expenses, and Changes in Net Assets; and the Statement ofCash Flows, all of the Medical Center's functions and programs are reported as business-type activities. Patientrevenues (including those from third party payers), Medicaid disproportionate share payments received, and propertytaxes finance these activities. The Medical Center does not have any component units.

Financial Analysis of the Medical Center

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

Net Assets

A summary of the Medical Center's Balance Sheets are presented in Table 1 below:

Table 1Condensed Balance Sheets

At June 302005 2004

Increase(Decrease)

Current and Other Assets $2,788,373 $2,571,121 $ 217,252Capital Assets-Net of

Total Liabilities andNet Assets

PercentIncrease

(Decreased

8.45

Depreciation

Total Assets

Total LiabilitiesNet Assets

1.183.090

3.971,463

1,172,0732,799.390

1.305.960

3.877.081

685,8873.191.194

( 122.870)

94.382

486,186( 391.804)

( 9.41)

2.43

70.88( 12.28)

$ 3.971.463 S 3.877.081 £ 94382 2.43

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FOR THE YEAR ENDED JUNE 30.2005

Revenues, Expenses, and Changes in Net Assets

Table 1 shows us that the Medical Center's Net Assets decreased $391,804 to $2,799,390 during the year.This increase is detailed in Table 2 below which summarizes the Medical Center's operations:

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

For the Years Bided

Operating RevenuesOperating Expenses

Operating Income (Loss)Nonoperating Revenues

Excess Revenues (Expenses)

Net Assets at Beginning of Year

Net Assets at End of Year

June 302005 2004

Increase(Decreased

$7,013,972 $7,190,182 $( 176,210)7.623.842 7.003.018 620.824

( 609,870)218.066

187,164181.007

( 797,034)37.059

PercentIncrease

(Decreased

( 2.45)8.87

(425.85)20.47

( 391,804)

3.191.194

$ 2.799390

368,171

2.823.023

$ 3.191.194

( 759,975)

368.171

Sr 391.804.

(206.42)

13.04

( 12.28)

Sources of Revenue

Net patient revenues were 96 percent of the Medical Center's total revenues for the fiscal year ended June 30,2005 versus 97 percent for the fiscal year ended June 30,2004. Included in net patient revenues are payments fromthe Medicare and Medicaid programs as well as payments from patients and other third party payers. Medicare,Medicaid, and most private insurance payments are based on contracted rates that are less than the Medical Center'sestablished rates. Differences between the established rates charged and the contracted rates collected are recordedas contractual discounts. The Medical Center's net patient revenues reported on Exhibit B, Statement of Revenues,Expenses and Changes in Net Assets, are net of contractual discounts. Other revenues include income derived frominvestments, rent income, property taxes, and other miscellaneous service.

The Louisiana Medicaid disproportionate share hospital program allows for the reimbursement ofuncompensated care costs to small rural hospitals serving a disproportionate number of low-income patients. Thereimbursements are calculated based on cost reports filed by the small rural hospitals and are paid by the state fromfederal funding. Although federal appropriations have enabled the state to pay almost 100 percent of uncompensatedcosts to rural hospitals over the past several years, there is no assurance federal funding will continue and, therefore,no assurance that the Medical Center will receive any future payments. During the year ended June 30,2005, theMedical Center received $612,177 in disproportionate share payments compared to $700,770 received the prior year.




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

TiHe3Ptyor Mix of Gross Patient Revenues tad Related Contractual Adjustments

For the Years Ended June 30

Gross Patient Revenues-MedicareContractual Adjustments-Medicare

Net Patient Revenues-Medicare

Gross Patient Revenues-MedicaidContractual Adjustments-MedicaidMedicaid Disproportionate Share

Payments ReceivedNet Patient Revenues-Medicaid

Gross Patient Revenues-Other3ri Party Payers

Other Contractual AdjustmentsNet Patient Revenues-Other

Total Gross Patient RevenuesTotal Contractual AdjustmentsMedicaid Disproportionate Share

Payments ReceivedNet Patient Revenues

Bad DebtsPatient Revenues-Net of Bad Debts

2QQ5.

$ 5,027,822( 2J58.904)

2,468,918

1,683,981( 1,084,616)

vi2.m1,211,542

3,899,431

3,273,632

10,611 34( 4,269319)

6,954,092

Percentage ofNet PatientRevenues

72.30( 36.80>

35 JO

24.22( 15.59)

8.80

17.43

56.07( 9.00>

47.07

15239( 61.39)

8.80100.00

2004

$ 5,490,711f..2.4803501

3,010361

1,427,915( 927,663)

- 70Q.770

1,201,022

3^55,470< 612359>

2,943,111

10,474,096( 4,020372)

7.154,494

Percentage ofNet PatientRevenues

76.74( 34.67)

42.07

19.96( 12.97)

9.79

16.78

49.70( 8.56

41.14

146.40( 56.19)

9.79100.00

PercentIncrease

( 541.443)

256,066156,953

( 88.5931

330,521

137,138248,947

( 88.593*( 200,402)

U&S7) ( 13.18)8 5.662JQ6

( 8.43)3.17

( 17.99)

( 17.93)16.92

( 12.65)

.88

9.672.19

11.23

1316.19

(12.64)2.80

37.01( 8.84)

Operating and Financial Performance

The following summarizes the Medical Center's Statements of Revenues, Expenses, and Changes in NetAssets between the years ended June 30,2005 and June 30,2004:

As detailed in Table 2, operating revenues decreased from last year, by 2.45 percent. The decrease inoperating revenues can be explained by a larger increase in total contractual adjustments over total patientrevenues and a decrease in disproportionate share payments received during the year ended June 30,2005.Total contractual adjustments increased by 6.19 percent while patient revenues increased by only 1.31percent. Disproportionate share payments decreased by 12.64 percent to $612,177. These factorscontributed to the decrease in operating revenue.

As detailed in Table 3, net "other" patient revenues increased 11.23 percent in 2005. Included in otherpatient revenues are self-pay patients and patients with private insurance such as Blue Cross. Bad debtexpense increased 37.01 percent in 2005 as a result of the new charity care program put into effect in January2005 and other contractual adjustments increased by 2.19 percent.

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



The 8.87 percent increase in operating expenses shown in Table 2 was due primarily to increased employeesalaries and an increase in bad debt expense. As a group, employee salaries is the Medical Center's singlemost significant operating expense. 42.24 and 43.55 percent of total operating expenses were employeesalaries in 2005 and 2004, respectively. Total salaries increased 5.58 percent from $3,049,916 in 2004 to$3,220,007 in 2005. Table 4 following details each department's payroll expense for 2005 and 2004.

Table 4Departmental Wages a»d Salaries

For the Years Ended June 30

NursingAides & OrderliesClericalInhalation TherapyGeneral SurgeryMaterials ManagementCentral SupplyTreatment RoomEducationLaboratoryRadiology & CT ScanPharmacyEmergency Room-ClericalKid-Med & HealthplexMedical RecordsDietaryPlant MaintenanceHousekeepingManagement & AdminstrativeAmbulanceFitness CenterTotal Wages and Salaries Paid

2QQ5$ 883,701

149,40340,508

132,9745,416

27,86045,86013,77676^92

301,911204,184148,04453,625

12430567,767

134,94044,669

147,445315,541249,75551.231

S 3.220.007

Percentage ofTotal Payroll '

27.444.641.264.130.170.861.420.432389376344.601.673.882.104.191394.589.807.76UP

j 00-00

2004$ 868,066

14938637,072

131,9863,258

22,631373674,294

73,925288,00717634313731?53,880

110,77276,845

133,77244319

141,500270,273234,92352.980

S 3,049,916

Percentage ofTotal Payroll

28.464.911.224.330.110.741.230.142.429.445.784.521.773.632.524.391.454.648.867.701.74

100.00

Increase

$ 15,635( 483)

3,436988

2,1585,2298,4939,4822,667

13,9042734110,227

( 255)

( 9.078)1,168

3505,945

45,26814332

(_ 1-749!t 170.091

Proprietary Fund Budgetary Highlights

Percent

1.80( -32)

9.27.75

66.2423.1122.73

220323.614.83

15.797.42

C -47)12.69

( 11.81).87.79

4.2016.756313305.58

Under Louisiana law, hospital service districts are not required to operate under a formal budget.Accordingly, budgetary accounting and information is not presented in our financial statements.

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Capital Assets

Capital Assets are recorded in the Balance Sheet and depreciated over their estimated useful lives. Capitalasset additions for the year ended June 30,2005 are summarized in Table 5 following:

TablesCapital Asset Additions

Hepa Filtration SystemPortable Digital Radio and SoftwareAS400 System Update and Software4 Computers, 1 LaptopGas Burner and GriddleSecurity SystemAntivirus SoftwareRespitory Equipment and TrailerDisaster Clothing and EquipmentAirway Management Trainer

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

Table 6Summary of Capital Assets

LandLand ImprovementsBuildings and Building

ImprovementsEquipmentEquipment Held Under

Capital Lease

Less-AccumulatedDepreciation

Net Capital Assets

At June 30 Increase2005 2004 (Decrease)

$ 111,243 $ 111,243 $173,837 173,837

PercentIncrease

(Decreased

2,040,5902,697,821

33.2455,056,736

3.873.646$ 1.183.090

2,040,5902,635,728

33.2454,994,643

3.688.683

62,093

62,093

184.963

$(_122£ZQ)

2.36

1.24

5.01( 9.41)

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Contacting the Medical Center's Financial Management

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

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WILLIAM JEFFERSON COLE, C.P.A.A. WILLIAM PETERSON, C.P.A.CAROL T. BARNES, C.P.A.C. WILLIAM OERARDY, JR., C.P.A.BARRY S. SHIPP, C.P.A.STEVEN W. HEDGEPETH, C.P.A.STEVEN R. BAYER, C.P.A.GWENDOLYN H. HARJU, 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. SMITH, C.P.A.MARY WELLS CARMODY, C.P.A.

JOHN A. CASKEY, C.P.A.JUDY E. MONCRIEF, C.P.A.NINA G. QLORIOSO, C.P.A.J. AMY HEMMINGS. C.P.A.LINDA K. BIBLE, C.P.A.LAURA A. HUFF, C.P.A.JAMES D. COLLINS, C.P.A.KYLE B. DOBBINS, C.P.A.WILLIAM D. JARRCTT,HT, C.P.A.TROY D. RABURN, C.P.A.MATTHEW R. HAHN, C.P.A.FAYE D. CAMPBELL, C.P.A.

COLE, EVANS & PETERSONCERTIFIED PUBLIC ACCOUNTANTS

FIFTH FLOOR TRAVIS PLACE

COO BLOCK TRAVIS STREET

SHREVEPORT, LOUISIANA 7MOI-3O13

www.cepcpa.com

September 7,2005

M. ALTON EVANS. JR., C.P.A.

PARTNER EMERITUS

TELEPHONE (316) 322-8367

TELECOPIER (318) 425-4IOI

MA'LING ADDRESS:

P.O. DRAWER 1768

SHREVEPORT, LOUISIANA 71)66-1768

INDEPENDENT AUDITORS' REPORT

Board of CommissionersNorth Caddo Hospital Service DistrictVivian, Louisiana

We have audited the accompanying balance sheets of North Caddo Hospital Service District, d/b/a NorthCaddo Medical Center, component unit of the Caddo Parish Commission, at June 30,2005 and June 30,2004 and therelated statements of revenues, expenses, and changes in net assets, and cash flows for the years then ended. Thesefinancial statements are the responsibility of the Medical Center^ management. Our responsibility is to express anopinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica and Government Auditing Standards issued by the Comptroller General of the United States. Thosestandards require that we plan and perform the audits to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles usedand 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, in all material respects, the financialposition of North Caddo Hospital Service District, d/b/a North Caddo Medical Center at June 30,2005 and June 30,2004 and the results of its operations, changes in net assets, and its cash flows for the years then ended in conformitywith accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued a report dated September 7,2005on our consideration of North Caddo Hospital Service District, d/b/a North Caddo Medical Center^ internal controland its compliance with certain provisions of laws and regulations. That report is an integral part of an auditperformed in accordance with Government Auditing Standards and should be read in conjunction with this report inconsidering the results of our audit.

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Board of Commissioners September 7, 2005North Caddo Hospital Service District Page 2

Our audits were made for the purpose of forming an opinion on the Medical Center's basic financialstatements. The supplementary information listed in the table of contents is presented for purposes of additionalanalysis and is not a required part of the basic financial statements. Such information has been subjected to theauditing procedures applied by us in the audit of the basic financial statements and, in our opinion, is fairly stated inall material respects in relation to the basic financial statements taken as a whole.

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

Cole, Evans & Peterson

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Exhibit A

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

BALANCE SHEETS

AT JUNE 30.2005 AND JUNE 30.2004

June 30ASSETS

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

Allowances and Uncollectible Accounts (Note 3)Inventories-Drugs and SuppliesPrepaid Expenses

Total Current Assets

Capital Assets: (Note 5)LandLand ImprovementsBuildings and Building ImprovementsEquipmentEquipment Held Under Capital Leases (Note 6)

Less-Accumulated DepreciationNet Capital Assets

Other Assets:Unamortized Cost of Tax Election

Total Assets

2005

1365,059

1,234,859143,47043.893

2,787,281

111,243173,837

2,040,5902,697,821

33.2455,056,7363.873.6461,183,090

1.092

3.971.463

2004

1,126,129

1,272,535137,33332.939

2,568,936

111,243173,837

2,040,5902,635,728

33.2454,994,6433.688.6831305,960

2.185

The Accompanying Notes Are An Integral Part Of These Financial Statements

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Exhibit APage 2


BALANCE SHEETS

AT JUNE 30.2005 AND JUNE 30.2004

June 30LIABILITIES

AND NET ASSETS

Current Liabilities:Accounts Payable (Note 16)Estimated Third-Party Payer Settlements (Note 3)Accrued Salaries, Withholding and RetirementAccrued Employee Vacation BenefitsAccrued Interest PayableCapital Lease Obligations-Current Portion (Note 6)

Total Current Liabilities

Lone-Term Liabilities:Capital Lease Obligations (Note 6)Less-Current Portions

Total Long-Term Liabilities

and Contingent Liabilities (Note 7)

Total Liabilities

Net Assets:Invested in Capital Assets, Net of Related DebtUnrestricted

Total Net Assets

Total Liabilities and Net Assets

2QQ5

166,435724,834194,26568,127

7.2191,160,880

18,4127.219

11,193

-0-1,172,073

1,164,6791.634.7112.799.390

3.971.463

2004

87,551308,462196,24464,786

22510.208

667,476

28,61910.20818,411

-0-685,887

1,2773411.913.8533.191.194


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Exhibit B


STATEMENTS OF REVENUES. EXPENSES.

AND CHANGES IN NET ASSETS

FOR THE YEARS ENDED JUNE 30,2005 AND JUNE 30.2004

Year Ended June 302005 2004

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

Total Operating Revenues

Operating Expenses:Direct Departmental ExpensesHousekeepingMaintenance and UtilitiesMedical RecordsGeneral and Administrative (Notes 8,9,11,15 and 16)Bad DebtsDepreciation (Note 5)AmortizationInterest Expense

Total Operating Expenses

Operating Income f Loss^

Nonoperating Revenues:Interest IncomeProperty Tax Revenues (Note 10)Rent Income (Notes 13 and 16)

Total Nonoperating Revenues

Excess Revenues (Expenses^

Net Assets at Beginning of Year

Net Assets at End of Year

6,954,09259.880

7,013,972

4,291351211,062160,63889,988

1391,2421,291,586

184,9641,0931,918

7.623.842

( 609,870)

23,145185321

9.600218.066

( 391,804)

3.191.194

2.799.390

7,154,49435.688

7,190,182

4,061,498213,282158,08286,530

1,338,074942,663200,646

1,0931.150

7.003.018

187,164

4,499166,908

9.600181.007

368,171

2.823,023

3.191.194


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Exhibit C


STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30.2005 AND JUNE 30.2004

Cash Flows from Operating Activities:Cash Received From Patients and Third-Party PayersOther Operating ReceiptsCash Paid to Suppliers and Employees

Net Cash Provided by Operating Activities

Cash Flows from Noncapital Financing Activities:Property Tax Revenues Received

Cash Flows from Capital and Related Financing Activities: (Note 18)Acquisition of Capital AssetsPrincipal Payments on Capital LeasesInterest Payments on Capital Leases

Net Cash (Used) by Capital and Related Financing Activities

Cash Flows from Investing Activities:Interest Income on Investments

Increase in Cash and Cash Equivalents

Cash and Cash Equivalents at Beginning of Year

Cash and Cash Equivalents at End of Year

Reconciliation of Income From Operations to Net CashProvided bv Operating Activities:

Excess Revenues (Expenses) (Exhibit B)Interest Income on Investing ActivitiesProperty Tax RevenuesInterest Expense on Financing ActivitiesAdjustments to Reconcile Excess Revenues to Net CashProvided by Operating Activities:Depreciation and AmortizationProvision for Bad Debts

Changes in Operating Assets and Liabilities:(Increase) in Accounts ReceivableIncrease (Decrease) in Accounts PayableDecrease (Increase) in Prepaid Expenses(Increase) in Inventory

Net Cash Provided by Operating Activities

2005

6,116,55469,480

(6.081.127)104,907

185321

( 62,093)( 10,207)( 2.143)( 74,443)

23.145

238,930

1.126.129

L365J)59

( 391,804)( 23,145)( 185,321)

1,918

186,0571,291,586

(1,253,910)496,618

( 10,955)( 6.1371

2004

5,793,23145,288

(5.834.375")4,144

166,908

( 36,464)( 6,550)( 9341( 43,948)

4.499

131,603

994.526

368,171( 4,499)( 166,908)

1,150

201,739942,663

(1,002,616)( 360,108)

37,900( 13.3481

4.144


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Exhibit D

NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDO MKDTCAT, CF.NTRR

NOTES TO FINANCIAL STATEMENTS

Nnte 1 - Summary nf Significant Accounting Policies

The accompanying financial statements are prepared in conformity with generally accepted accountingprinciples. Application of those principles requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and thereported revenues and expenses. Actual results could differ from those estimates. See Note 12 concerningsignificant estimates.

A summary of significant accounting policies follows:

Method of Accounting

The financial statements of North Caddo Hospital Service District, d/b/a North Caddo Medical Center(Medical Center) are prepared using the accrual method of accounting. The Medical Center's accountingand reporting practices also conform to the requirements of Louisiana Revised Statute 24:514, the LouisianaGovernmental Audit Guide, the American Institute of Certified Public Accountants Audit and AccountingGuide Health Care Organizations, and standards set by the Governmental Accounting Standards Board(GASB), which is the accepted standard setting body for establishing governmental accounting and financialreporting principles in the United States of America.

Accounting Standards

Pursuant to Governmental Accounting Standards Board (GASB) Statement No. 20, Accounting andFinancial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary FundAccounting and Statement No. 29, The Use of Not-for-Profit Accounting and Financial Reporting Principlesbv Governmental Entities, the Medical Center has elected to apply the provisions of all relevantpronouncements of the Financial Accounting Standards Board (FASB), including those issued afterNovember 30,1989, that do not conflict with or contradict GASB pronouncements and which weredeveloped for business enterprises.

Budgets and Budgetary Accounting

Under Louisiana law, hospital service districts are not required to operate under a formal budget.Accordingly, budgetary accounting is not presented in the financial statements.

Statement of Operations Classifications

Revenues and expenses deemed by management to be ongoing, major, or central to the provision of healthcare services are reported as components of operating income. Transactions that are peripheral or incidentalto 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 estimatedretroactive adjustments under reimbursement agreements with third-party payers. Retroactive adjustmentsare accrued on an estimated basis in the period in which the related services are rendered and adjusted infuture periods as final settlements are determined. See Note 3.

-14-

Exhibit DPage 2



Notel - Summary of Significant Accounting Policies (Continued)

Charges to patient accounts receivable are recorded contemporaneously with the services provided based onthe established rates for those services. Reductions to patient accounts receivable results from cashcollections, discounts under contractual agreements and bad debts. The Medical Center does not make itspatient accounts receivable available for sale. Interest on unpaid balances is generally not charged.Allowances for bad debts are based on estimated percentages applied to the various age groups of accountbalances that are not payable by Medicare, Medicaid, or certain other large third-party payers. Allowancesfor discounts on accounts payable by Medicare, Medicaid and certain other large third-party payers arebased primarily on the latest discount percentages experienced with each payer.

For most charges to insured patients, the Medical Center files claims with those patients' insurancecompanies and abstains from billing those patients until all insurance benefits have been collected orestablished. Once billed, the patient's charges are due within 30 days of the billing and are considereddelinquent after 90 days. Patient account balances are charged against the allowance for bad debts when allinternal collection efforts have failed and the account is referred to a collection agency or when the debtor isfound to be bankrupt.

Performance Indicator

The Medical Center's performance indicator, "excess revenue (expenses)," includes operating andnonoperating revenues and expenses and excludes, consistent with industry practice, unrealized gains andlosses on investment securities and contributions of long-lived assets.

Capital Assets and Depreciation

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

Gains and losses on the disposal of fixed assets are considered incidental to the provision of health careservices 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 lives.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.

Compensated Absences

The Medical Center's policy regarding employees' vacation pay provides that employees' earned and unusedvacation benefits accumulate and vest. Therefore a liability is recorded for those unpaid benefits. TheMedical Center does not provide any other compensated absences that accumulate and vest.

-15-

Exhibit DPageS



Notel - Summary of Significant Accounting Policies (Continued)

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 policy withoutcharge or at amounts less than its established rates.

Income Taxes

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

Amortization of Intangibles

The costs of an election to levy taxes for the Medical Center^ benefit have been capitalized and are beingamortized over the life of the levy (10 years) beginning with the year ended June 30,1997, the year duringwhich the tax levy was approved.

Cash Equivalents

Cash and cash equivalents includes all unrestricted highly liquid deposits and debt instruments acquiredwith maturities of three months or less.

Risk Management

The Medical Center is exposed to various risks of loss from torts; theft of, damage to, and destruction ofassets; business interruption; errors and omissions; employee injuries and illnesses; and natural disasters.Commercial insurance coverage is purchased for claims arising from such matters. Settled claims have notexceeded 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 andnonacute medical care, including emergency services, primarily to patients residing in the Vivian area. Asignificant portion of the Medical Center^ revenues are from patients who are beneficiaries under theMedicare program. See Note 3.

The Medical Center is organized and operated as a hospital service district under Louisiana RevisedStatutes, Chapter 10, Title 46 and is a component unit of the Caddo Parish Commission (the Commission).The Medical Center operates and is financially independent of the Commission and has no component unitsin its operations.

-16-

Exhibit DPage 4



Note 2 - Organization and Operations (Continued)

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

The Medical Center was determined to be a component unit of the Commission due to its financialaccountability 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 theMedical Center and other facilities.

The accompanying financial statements present information only on the sole fund maintained by theMedical Center and do not present information on the Commission.

Note 3 - Patient Revenues and Accounts Receivable

The Medical Center has agreements with third-party payors that provide for payments to the Medical Centerat amounts different from its established rates. Contractual adjustments under third-party payment programsrepresent the difference between the Medical Center^ established rates for services and amounts paid bythird-party payors.

Medicare-The Medical Center operates under the Medicare Critical Assess Hospital (CAM) program. Underthe CAH program, the Medical Center is reimbursed under a cost reimbursement method. Under the costreimbursement method, the Medical Center is reimbursed at tentative rates with final settlement determinedafter submission of annual cost reports by the Medical Center and audits by the Medicare fiscalintermediary. Inpatient acute care services rendered to Medicare program beneficiaries are tentatively paidat a per diem rate. Under the per diem method, one established rate is used for all patient stays regardless ofthe magnitude or complexity of the services provided. Outpatient services are tentatively paid based on 46percent of established charges.

For the years ended June 30,2005 and June 30,2004, the Medical Center received approximately 47 percentand 52 percent, respectively, of its gross patient revenue (36 and 42 percent, respectively, of its net patientrevenues) from the Medicare program. These revenues are subject to health insurance program fiscalintermediary review and retroactive adjustment. Cost reports for the years ended June 30, 2005,2004, and2003 are subject to examination. Provisions have been made for estimated settlements and adjustments.

Medicaid-Under the Louisiana Medicaid program, inpatient services are paid at a per diem rate, andoutpatient services are reimbursed under a cost reimbursement method. Under the cost reimbursementmethod, the Medical Center is reimbursed at a tentative rate with final settlement determined aftersubmission of annual cost reports by the Medical Center and audits by the Medicaid fiscal intermediary.Under the per diem method, one established rate is used for all patient stays regardless of the magnitude orcomplexity of the services provided. The Medical Center^ Medicaid cost reports for the years endedJune 30,2005, 2004, and 2003 are subject to examination by the Medicaid fiscal intermediary. Provisionshave been made for estimated settlements and adjustments.

-17-

Exhibit DPage 5



fote3 - Patient Revenues and Accounts Receivable (Continued)

The Medical Center has also entered into payment agreements with certain commercial insurance carriers,health maintenance organizations, and preferred provider organizations which result in contractualadjustments from established rates.

A summary of patient revenues for the years ended June 30,2005 and June 30,2004 follows:


Patient Revenues at Established Rates $ 10,611,234 $ 10,474,096

Less-Provisions for Contractual Adjustments:Current Provisions 4,202,678 4,097,352Changes in Prior Estimates 66,641 ( 76,980)Medicaid Disproportionate Share

Payments Received ( 612.177} ( 700.770^3.657,142 3.319.602

Net Patient Revenues $ 6.954.092 $ 7.154.494

The Medical Center qualifies for Medicaid "disproportionate share payments" under the 1997 RuralHospital Preservation Act. Such payments are contingent on annual federal funding and recognized asdecreases to contractual adjustments in the year received.

The Medical Center grants credit without collateral to its patients, most of whom are from the Vivian,Louisiana vicinity. The mix of receivables from patients and third-party payors at June 30,2005 andJune 30,2004 is as follows:

At June 302QQ5 2004

Medicare 35.39% 20.96%Medicaid 7.74 8.17Other Third-Party Payors and Patients 56.87 70.87

100.00%

-18-

Exhibit DPage 6



Note 3 - Patient Revenues and Accounts Receivable (Continued)

Net accounts receivable from patient services is comprised as follows:

At June 30

Gross Patient Accounts Receivable

Estimated Allowances for Bad Debts andContractual Adjustments Under Third-

Party Payment Programs (Note 12)

Net Accounts Receivable from PatientServices

2005

$ 2,493343

(1.258.484)

2004

$ 3,328,505

(2.055.970)

Note 4 - Cash and Certificates of Deposit

Louisiana law requires banks and savings and loan associations to secure a government^ deposits (cash inbanks) by pledging qualifying securities as collateral. For this purpose "cash in banks" is comprised of theaccount balances according to the banks'records which at June 30,2005 are as follows:

Cash in Banks

Insured by FDIC

Collateralization-Fair Market Value

Uncollateralized

CitizensBank & Trust

S 1.368.741

S 100.000

$ 1.281.718

S -0-

FirstGuaranty

Bank

$ 38.073

fi 10Q.QQQ

$ =

$„

-0-

-0-

Collateral is held by the pledging financial institutions' trust department in the name of North CaddoMedical Center.

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)

Equipment (3-20 years)Land Improvements (8-20 years)


$ 75,443119,684

5.519$-200646

-19-

Exhibit DPage?



Note 6 - Capital Leases

During the year ended June 30,2004, the Medical Center entered into two new capital lease contracts. Onecapital lease was for a blood coagulation machine, valued at $20,085, for the laboratory. The other capitallease was for a direct print connection between the ultrasound machine and the laser printer, valued at$13,160, for the radiology department.

The laboratory lease is with Dade Behring Financial Services. The lease has a term of five years andexpires in January 2009. It has an interest rate of 6.55 percent per annum which requires monthly interestand principal payments of $393 each.

The radiology lease is with Eastman Kodak Company. The lease has a term of two years and expires inDecember 2005. It has an interest rate of 5.73 percent per annum which requires quarterly interest andprincipal payments of $1,758 each.

Following is a summary of property held under capital leases:

At June 30

Coagulation MachinePrint Connection

Less-Accumulated DepreciationNet Carrying Amount

$ 20,08513.16033,24510.193

S 23.052

Minimum future lease payments under these leases are as follows:

Year Ending June 30

2006200720082009

Less-AmountRepresenting Interest

Net Present Value ofMinimum LeasePayments

Imputed Rate of Interest

2004

$ 20,08513.16033,2453.544

£ 29.701

CoagulationMachine

$ 4,7224,7224,7222.753

16,919

PrintConnection

$ 3,440-0--0--Q-

3,440

Total

$ 8,1624,7224,7222,753

20,359

1,947

6,55% 5.73%

-20-

Exhibit DPageS



Note 7 - Commitments 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 licensure and accreditations,reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Government action hasincreased with respect to investigations and/or allegations concerning possible violations of fraud and abuseand false claims statutes and/or regulations by healthcare providers. Providers that are found to haveviolated these laws and regulations might be excluded from participating in government healthcareprograms, subjected to tines or penalties or required to repay amounts received from the government forpreviously billed patient services. While management of the Medical Center believes its policies,procedures and practices comply with governmental regulations, no assurance can be given that the MedicalCenter will not be subjected to governmental inquiries or actions.

See Note 3 regarding contingencies concerning the Medical Center^ Medicare and Medicaid cost reports.

See Note 6 concerning capital lease commitments.

See Note 8 concerning operating lease commitments.

See Note 14 regarding insurance contingencies.

See Note 15 regarding self-funded unemployment claims.

Note 8 - Operating Leases

The Medical Center has entered into several operating leases for telephones, other equipment, and realestate. These operating leases range from one month to five years with expiration dates through June 2007.Rent expense under these leases for the years ended June 30,2005 and June 30,2004 is as follows:


Telephones $ 1,556 $ 1,374Other Equipment 37,862 38,365Real Estate 2.125 5.100

$ 41.543 $ 44.839

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

Year Ending June 3020062007

-21-

Exhibit DPage 9



Note ? - Pension Plan

Plan Description

The Medical Center contributes to the Parochial Employees'Retirement System of Louisiana, a PublicEmployee Retirement System (the Plan), that is a cost sharing multiple-employer plan established by theLouisiana legislature as of January 1,1953, by Act 205 of 1952. The system was revised by Act No. 765 of1979, effective January 1,1980, to replace the "regular plan" with the Plan B Fund of which the MedicalCenter is a participant. Plan B provides retirement and disability benefits and death benefits to planmembers and beneficiaries. The Retirement System is governed by the Louisiana Revised Statues, Title 11,Sections 1901 through 2015, specifically, and other general laws of the State of Louisiana.

The Parochial Employees'Retirement System of Louisiana, Inc. issues a publicly available financialstatement report that includes financial statements and required supplementary information for the Plan.That report may be obtained by writing the Parochial Employees' Retirement System of Louisiana, Inc., PostOffice Box 14619, Baton Rouge, Louisiana, 70898-4619.

Plan Funding

Employer and employee contributions to the Plan are established by state statute. Employee contributionsare 3 percent of covered wages in excess of $100 per month for each of the years ended December 31,2004and December 31,2003. For the years ended December 31,2004 and December 31,2003, employercontributions are 5.25 and 3.75 percent, respectively, of covered wages in excess of $100. In addition to theaforementioned contributions the tax collectors of various parishes contribute one fourth of one percent ofall tax collections.

The Medical Center^ contributions to the Plan, and its retirement expense, for the most recent three yearsare as follows:

Percentage ofYear Ended June 30. Amount Required Amount

2005 $ 135,854 100%2004 105,847 100%2003 88,872 100%

Note 10- Property Tax Revenues

The Medical Center received $185,321 and $166,908 in property tax revenues for the years ended June 30,2005 and June 30,2004, respectively. This revenue is used primarily for establishing, maintaining andoperating an ambulance service for the residents of the North Caddo Hospital Service District. Anyrevenues in excess of the ambulance service costs may be used for maintaining, operating, and improvingthe Medical Center.

-22-

Exhibit DPage 10



Note 10- Property Tax Revenues (Continued)

The property tax is assessed on January 1, levied not later than June 1, due by December 31, and liened onJanuary 1 (one year after the assessment date). The Caddo Parish Sheriff Department collects the taxes.The property tax revenues are summarized as follows:


Property Tax Assessment $ 198,015 $ 185,595Allowance for Uncollectible Assessments ( 19.469) ( 23.371)Property Tax Collected 178,546 162,224Adjustments, Interest and

Prior Period CollectionsProperty Taxes Reported

The original ambulance service property tax levy expired in May 1997. A renewal vote to extend the taxlevy for an additional ten years was held in March 1997 and was approved. The renewed tax levy willexpire in May 2007.

Note 11- Advertising

Advertising costs for the years ended June 30,2005 and June 30,2004 are $20,403 and $15,714,respectively.

Note 12- Significant Estimates

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

As described at Note 14, the Medical Center participates in the Louisiana Hospital Association MalpracticeInsurance Trust Fund and Workman^ Compensation Group Self-Insurance Fund. Due to uncertaintiesinherent in the estimation of potential claims, it is at least reasonably possible that actual claims thatmaterialize in the near term could differ materially from the estimates.

Note 13- Rental Income

The Medical Center leases office space in its Extended Services building to Willis-Knighton Medical Centerunder a month-to-month lease (the original three-year operating lease expired June 30,2000). Rentalincome is presented in the statement of operations as nonoperating revenue. Rental income for each of theyears ended June 30, 2005 and June 30,2004 is $9,600. See Note 16.

-23-

Exhibit DPage 11



Npte_14- Insurance

The Medical Center is a participant of the Louisiana Hospital Association Malpractice Insurance Trust Fundand Workmen^ Compensation Group Self-Insurance Fund. These trust funds retrospectively set premiumsfor members based on the loss history of each entire group. The Medical Center expenses premiums paid tothese multi-provider captive insurance companies over the policy periods covered.

According to the trust document for the Malpractice Insurance Trust (the Trust), participants are jointly andseverally liable for the obligations of the Trust with the right of indemnity among the participants for eachparticipant^ pro rata share of the obligation as formulated in the trust document. Each participant has thiscontingent assessment liability for the payment of actual losses and expenses incurred while a participant inthe Trust. This contingent liability is not to exceed the amount necessary to make up trust fund deficienciesin the trust fund year in which the obligations were incurred, and such liability is not to exceed an amountequal to the charges otherwise due by such participant during such plan year.

According to the trust document for the Workmen^ Compensation Group Self-Insurance Fund (the Fund),participants are liable jointly and in solido for claims not paid pursuant to Subpart J of Part I of Chapter 10of Tide 23 of the Louisiana Revised Statutes of 1950, with the right of indemnity among the participants foreach participant's pro rata share of the obligation as formulated in the trust document. Each participant hasthis contingent assessment liability for the payment of actual losses and expenses incurred while aparticipant in the Fund, but only to the extent that such losses and expenses are not paid by the excesscoverage secured by the Fund.

Under current Louisiana law, the Medical Center's liability for medical malpractice is statutorily limited to$500,000 per claim. To cover this exposure, the Medical Center has obtained insurance coverage of$100,000 per claim with the Louisiana Hospital Association Malpractice and General Liability Trust and anadditional $400,000 per claim with the State of Louisiana Patient's Compensation Fund.

Management does not believe that any significant contingent liabilities exist under these insurancearrangements.

Note 15- Self-Funded Unemployment (Claims

The Medical Center became self-funded with respect to unemployment claims effective October 1,1998.As a self-funded employer, the Medical Center must reimburse the Louisiana Department of Labor on adollar-for-dollar basis for unemployment benefits paid to former employees. The Medical Centerreimbursed the Louisiana Department of Labor $3,211 and $7,278 for claims paid on behalf of the MedicalCenter during the fiscal years ended June 30,2005 and June 30,2004, respectively.

The Medical Center signed a three-year contract with Temple Resource Management, Inc. (TRM) for claimsmanagement services at an annual cost of $2,000. TRM evaluates all claims, recommends appropriateaction for all notices the Medical Center receives from the Louisiana Department of Labor, and audits theexperience rates and unemployment benefits charged to the Medical Center.

Management does not believe that any significant contingent liabilities exist under this arrangement atJune 30,2005.

-24-

Exhibit DPage 12

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


Note 16- Related Party Transactions

On April 24,2000 the Medical Center entered into a management contract with Willis-Knighton MedicalCenter (WKMQ. Under this contract, WKMC has agreed to manage the operations of the Medical Centerand to provide the Medical Center with a qualified administrator. The administrator is an employee ofWKMC and acts on behalf of WKMC in the Medical Center^ best interest. The contract is for three yearsand requires that the Medical Center reimburse WKMC for the salary and benefits of the Medical Centerâdministrator.

The Medical Center received rental income from WKMC in the amount of $9,600 for each of the yearsended June 30,2005 and June 30,2004 for leased office space in its Extended Services building. SeeNote 13.

During the years ended June 30,2005 and June 30,2004, the Medical Center paid WKMC, $244,745 and$199,585, respectively, for the administrator^ salary and benefits, office supplies, laundry services andvarious patient services.

At June 30,2005 and June 30,2004, the Medical Center owes WKMC $37,261 and $27,708, respectively,for various services and supplies, which is included in accounts payable.

Note 17" Concentrations

See Note 3 concerning revenues derived from patients who are beneficiaries under the Medicare program.

See Note 3 concerning significant financial resources provided from Medicaid Disproportionate SharePayments.

Note 18- Noncash Capital and Relating Financing Transactions

During the year ended June 30,2004, the Medical Center entered into two new capital lease contracts forthe acquisition of a blood coagulation machine and a direct print connection. The amount of the assetscapitalized under these leases is $33,245.

-25-

WILLIAM JEFFERSON COLE, C.P.A.A. WILLIAM PETERSON, C.P.A.CAROL T. BARNES, C.P.A.C. WILLIAM OERARDY, JR., C.P.A.BARRY 3. SHIPP, C-P.A.STEVEN W. HEOGEPETH, C.P.A.STEVEN R. BAYER, C.P.A.GWENDOLYN H. HARJU, C.P.A.TIMOTHY R. DURR, C.P.A.BAILCY B. BAYNHAM, C.P.A.ROBERTA. BUSBY, C.P.A.ANNE-MARIE COLE, C.P.A.TIMOTHY W. BORST, C.P.A.ERIC O. SMITH, C.P.A.MARY WELLS CARMODY, C.P.A.

JOHN A. CASKEY, C.P.A.JUDY E. MONCRIEF, C.P.A.NINA O. GLORIOSO, C.P.A.J. AMY HEMMINGS, C.P.A.LINDA K. BIBLE, C.P.A.LAURA A. HUFF, C.P.A.JAMES D. COLLINS, C.P.A.KYLE S. DOBBINS, C.P.A.WILLIAM D. JAHRETT, HT, C.P.A.TROY D. HABURN, C.P.A.MATTHEW R. HAHN, C.P.A.FAYE D. CAMPBELL, C.P.A.



BOO BLOCK TRAVIS STREET

SMREVEPORT, LOUISIANA 7HOI-3OI3

www.cepcpa.com

September 7,2005

M. ALTON EVANS, JR., C.P.A.PARTNER EMERITUS

TELEPHONE (318) Z22-83G7

TELECOPIER (318) 425-4-IOI

MAILING ADDRESS:P. O. DRAWER 1768

SHREVEPORT, LOUISIANA 71166-1768

INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION


Our audits of the June 30,2005 and June 30,2004 financial statements of North Caddo Hospital ServiceDistrict, d/b/a North Caddo Medical Center were performed for the purpose of forming an opinion on the basicfinancial statements taken as a whole. Schedules 1 through 5 which follow are presented for purposes ofadditional analysis and are not a required part of the basic financial statements. Such information has beensubjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, isfairly stated in all material respects in relation to the basic financial statements taken as a whole.


-26-

Schedule 1

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-27-

Schedule 2


GENERAL AND ADMINISTRATIVE EXPENSES

FQRTBE YEARS ENDED JUNE 30.200S AND JUNE 30.2004


General and Administrative SalariesAccounting and Auditing FeesLegal FeesCost Report Preparation and ConsultingTelephoneInsuranceEmployee Benefits and Payroll TaxesSupplies and Other

Total General and Administrative Expenses

315,54128,8752^80

29,72535,839

157,329659,072162.481

L39L242

270,27325,0004,065

40,07132,711

129,122632,740204.092

-28-

Schedule 3


COMPENSATION PAID TO MEMBERS OF THE BOARD OF COMMISSIONERS


Compensation (including per diem')Paid to Board Members:

Earl G. Williamson, Jr.Kenneth D. ClayRobert GuthHelen AdgerMary Jane DominickScott WelchRobert GreenMary IrvinBrenda Smith

Paid BoardMeetings Attended

111313131011121313

Compensation

-29-

Schedule 4


SUMMARY OF OPERATING RESULTS

Year ended June 30

Total Gross Revenue

Discounts and Bad Debts

Cost and Expenses

Net Income (Loss)

Total Hospital Patient Days

Admissions

Inpatient Revenue per Patient Day

Inpatient Revenue as a Percentof Total Patient Revenue

Net Income (Loss) per Patient Day

Net Income (Loss) as a Percentof Gross Patient Revenues

Number of Days Net Patient Revenuesin Net Patient Receivables

Number of Days Net Patient Revenues(Without Medicaid DisproportionateShare Payment and Change inEstimate) in Net Patient Receivables

Average Length of Patient Stayin Days

2005 2004 2003 2002

10,889,180 10,690,791 10,335,184 9,769,285

4,948,728 4,262,265 4,119,130 4,286,191

6.332.256 6.060.355 5.862.749 5.771242

2,699 2,942 3,126 2,746

910

2,117

64.82

71.07

2.97

907

2,023

926

1,843

865

2,048

2001

8,807,754

4,201,292

4.869.129

( 262.6671

2,966

836

1,788

53.85 % 56.84 % 56.89 % 58.58 % 61.84 %

(145.17) 125.14 113.02 (104.93) ( 88.49)

( 3.69)% 3.52%

65.10

72.17

3.24

3.49% ( 3.00)% ( 3.06)%

62.29

69.89

3.38

66.91

71.18

3.17

79,38

83.41

3.55

-30-

Schedule 5

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-31-

WILLIAM JEFFERSON COLE, C.P.A.A. WILLIAM PETERSON, C.P.A.CAROL T. BARNES, C.P.A.C. WILLIAM GERARDY, JR., C.P.A.BARRY S. SHIPP, C-P.A.STEVEN w. HEDOEPETH, C.P.A.STEVEN R. BAYER, C.P.A.GWENDOLYN H. HARJU, C.P.A.TIMOTHY R. DURR, C.P.A.BAILEY B. BAVNHAM, 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 CARMOOY, C.P.A.

JOHN A. CASKEY, C.P.A.JUDY E. MONCR1EF, C.P.A.NINA G. GLORIOSO, C.P.A.J. AMY HEMM1NGS, C.P.A.LINDA K. BIBLE, C.P.A.LAURA A. HUFF, C.P.A.JAMES D. COLLINS, C.P.A.KYLE S. DOBBINS, C.P.A.WILLIAM D. JARRETT, 3T£, C.P.A.TROY D. RABURN, C.P.A.MATTHEW R. HAHN, C.P.A.PAYE D. CAMPBELL, C.P.A.



SCO BLOCK TRAVIS STREET

SHREVEPORT, LOUISIANA 7HOI-3OI3

www. cepcpa.com

M. ALTON EVANS, JR., C.P.A.

PARTNER EMERITUS

TELEPHONE (318) EZ2-B367

TELECOPIER (318) 4Z5-4IOI

MAILING ADDRESS:

P. O. DRAWER I7S8


September 7,2005

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

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


We have audited the financial statements of North Caddo Hospital Service District, d/b/a North CaddoMedical Center at and for the year ended June 30,2005 and have issued our report thereon dated September 7,2005.We conducted our audit in accordance with auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States.

Compliance

As part of obtaining reasonable assurance about whether North Caddo Hospital Service District, d/b/a NorthCaddo Medical Center^ financial statements are free of material misstatement, we performed tests of its compliancewith certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct andmaterial effect on the determination of financial statement amounts. However, providing an opinion on compliancewith those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance that are required to be reported herein under GovernmentAuditing Standards.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered North Caddo Hospital Service District, d/b/a NorthCaddo Medical Center^ internal control over financial reporting in order to determine our auditing procedures for thepurpose of expressing our opinion on the financial statements and not to provide assurance on the internal controlover financial reporting. Our consideration of the internal control over financial reporting would not necessarilydisclose all matters in the internal control over financial reporting that might be material weaknesses.

-32-

Board of Commissioner September 7, 2005North Caddo Hospital Service District Page 2

However, we noted certain matters involving internal control over financial reporting and its operation thatwe consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating tosignificant deficiencies in the design or operation of the internal control over financial reporting that, in ourjudgment, could adversely affect the Medical Center's ability to record, process, summarize and report financial dataconsistent with the assertions of management in the financial statements. These reportable conditions are describedin the accompanying schedule of findings and questioned costs as Findings 05-1 through 05-2.

A material weakness is a condition in which the design or operation of one or more of the internal controlcomponents does not reduce to a relatively low level the risk that misstatements in amounts that would be material inrelation to the financial statements being audited may occur and not be detected within a timely period by employeesin the normal course of performing their assigned functions. Our consideration of the internal control over financialreporting would not necessarily disclose all matters in the internal control that might be reportable conditions and,accordingly, would not necessarily disclose all reportable conditions that are also considered to be materialweaknesses. However, of the reportable conditions described above, we consider Findings 05-1 and 05-2 to bematerial weaknesses.

This report is intended solely for the information and use of the Caddo Parish Commission, Board ofCommissioners, management, and others within the organization and the Office of the Legislative Auditor for theState of Louisiana. However, this report is a matter of public record and its distribution is not limited. UnderLouisiana Revised Statue 24:513, this report is distributed by the Legislative Auditor as a public document.


-33-

WILLIAM JEFFERSON COLE, C.P.A.A. WILLIAM PETERSON, C.P.A.CAROL T. BARNES, C.P.A.C. WILLIAM GERARDY, JR., C.P.A.BARRY S. SHIPP, C.P.A.STEVEN W. HEDGEPETH, C.P.A.STEVEN R. BAYER, C.P.A.GWENDOLYN H. HARJU, 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 O. SMITH, C.P.A.MARY WELLS CARMODY, C.P.A.

JOHN A. CASKEY, C.P.A.JUDY E, MONCRlEF, C.P.A.NINA O. GLORIOSO, C.P.A.J. AMY HEMMINGS, C.P.A.LINDA K. BIBLE, C.P.A.LAURA A. HUFF, C.P.A.JAMES D. COLLINS, C.P.A.KYLE S. DOBBINS, C.P.A.WILLIAM D. JARRCTT, HE, C.P.A.TROY D. RABURN, C.P.A.MATTHEW R. HAHN, C.P.A.FAYE D. CAMPBELL, C.P.A.



6OO BLOCK TRAVIS STREET

SHREVCPORT, LOUISIANA 7MOI-3OI3

www. cape pa. com

September 7,2005

M. ALTON EVANS, JR., C.P.A.

PARTNER EMERITUS

TELEPHONE (318) 222-8367

TELECOPIER (3lS) 425-41OI

MAILING ADDRESS:P. O. DRAWER I 768


INDEPENDENT AUDITORS' SUMMARY SCHEDULE OF FINDINGS AND QUESTIONED COSTSFor the Year Ended June 30,2005

We have audited the financial statements of North Caddo Hospital Service District, d/b/a North CaddoMedical Center at and for the year ended June 30,2005, and have issued our report thereon dated September 7,2005.We conducted our audit in accordance with auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States. Our audit of the financial statements as of June 30,2005 resulted in anunqualified opinion.

Section 1 - Summary of Auditors' Report

a. Report of Internal Control and Compliance Material to the Financial Statements

Internal ControlMaterial Weaknesses - Yes Reportable Conditions - Yes

ComplianceCompliance Material to the Financial Statements - No

b. Management Letter

Management letter issued - No

Section 2 - Financial Statement Findings

FINDING 05-1 - There is no oversight over employees who have the ability to access and editaccounts receivable. There are no controls in place to prevent or detect errors ot fraud whenaccounts are written off, discounted, or contractually adjusted.

Requirement - All nonroutine entries posted to the accounts receivable subsidiary ledgershould be approved and reviewed by a responsible official.

-34-

Condition - Patient accounts were written off, discounted, and contractually adjusted withno review for accuracy or validity.

Cause - The Medical Center relies on the honesty and accuracy of the employees who makethe adjustments to the accounts receivable subsidiary ledger.

Recommendation - Management should ensure that a responsible official not associatedwith detail receivable and cash functions approve and review all nonroutine entries to theaccounts receivable subsidiary ledger.

Management's Response - Management intends to immediately implement the precedingrecommendation.

FINDING 05-2 - There is inadequate separation of duties with regards to the preparation of bankreconciliations, and bank reconciliations are not reviewed.

Requirement - The persons assigned to perform the monthly bank reconciliations and whoalso have involvement with the cash disbursements process should not receive the monthlybank statements (with cancelled checks) unopened from the bank. The bank statementsshould be opened by someone with no involvement in the cash disbursements process andcompleted bank reconciliations should be reviewed by a responsible official independent ofthe reconciliation process.

Condition - The bank statements are not opened and examined by someone other than theperson assigned to prepare the monthly bank reconciliations. The bank reconciliations arenot reviewed by a responsible official.

Cause - The Medical Center relies on the honesty and accuracy of the persons preparing thebank reconciliations.

Recommendation - Management should ensure that someone is assigned the responsibilityof opening and reviewing the bank statements and cancelled checks before they are given tothe persons assigned to perform the monthly bank reconciliations. Management should alsoensure that a responsible official is assigned the responsibility of reviewing the monthly bankreconciliations for accuracy and reasonableness.

Management's Response - Management intends to immediately implement the precedingrecommendation.

Section 3 - Federal Award Findings and Questioned Costs

N/A

-35-


MANAGEMENT'S SCHEDULE OF PRIOR YEAR FINDINGS(Findings Prior to the Year Ended June 30,2005)

Section 1 - Internal Control and Compliance Material to the Financial Statements

FINDING 04-1 - There is no oversight over employees who have the ability to access and editaccounts receivable. There are no controls in place to prevent or detect errors or fraud whenaccounts are written off, discounted, or contractually adjusted.

STATUS - This condition has not been resolved. See Section 2, Finding 05-1 of the Schedule ofFindings and Questioned Costs.

FINDING 04-2 - There is inadequate separation of duties with regards to the preparation of bankreconciliations, and bank reconciliations are not reviewed.

STATUS - This condition has not been resolved. See Section 2, Finding 05-2 of the Schedule ofFindings and Questioned Costs.

FINDINGS 04-3 - Monthly reviews of the general ledger were not performed.

STATUS - This condition has been resolved, the administrator reviews the monthly generalledger and financial statements.

FINDING 04-4 - Reconciliation of the accounts payable subsidiary ledger to the general ledgeraccounts are not completed on a monthly basis.

STATUS - This condition has been resolved, a reconciliation is now completed on a monthlybasis.

FINDING 04-5 - The Medical Center's payroll department cannot accurately accrue and keeptrack of accrued compensated absences.

STATUS -This condition has been resolved, accrued compensated absences are now accurately accountedfor manually.

Section 2 - Internal Control and Compliance Material to Federal Awards

N/A

Section 3 - Management Letter

Payroll Confidentiality - While payroll checks are waiting to be printed, anyone with a username and password can access the computer system and view the data of each paycheck.

STATUS - This issue has been resolved with the current payroll system vendor. Access is now restricted toconfidential payroll information.

-36-

Documents

VIVIAN. LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE 30app1.lla.la.gov/PublicReports.nsf/CFB1F1989585E4EB... · 2021. 1. 11. · VIVIAN. LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE