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KH suffered $894,000 loss as hospital transferred to Capella

Posted: December 7, 2015 6:18 p.m.
Updated: December 8, 2015 1:00 a.m.

According to a financial report presented to the Health Services District of Kershaw County Board of Trustees at its Nov. 30 meeting, KershawHealth suffered an $894,000 loss just as a majority of hospital operations were being transferred to Capella Healthcare and MUSC Health.

The financial report covered the month of October, the last month trustees governed the entirety of KershawHealth’s operations.

In conjunction with the operating loss, KershawHealth also marked a $3.9 million decrease in net assets. However, due to the Capella transaction, cash and investments totaled approximately $40.4 million at the end of October, increasing the number of days of cash on hand from 88 to 120.9.

At one of the board’s last meetings prior to the sale, Oct. 26, KershawHealth CFO Mike Bunch reported, as of Sept. 30 -- which marked the end of the hospital’s fiscal year -- KershawHealth had suffered a $1.5 million loss and a $1.4 million decrease in net assets. Bunch also reported at the time KershawHealth had $29.5 million in cash and investments.

During a phone conversation with the C-I, Marc A. Quigley, the board’s certified public accountant and secretary, said the board retained the cash and investments it had prior to the Capella transaction. In an email, he also pointed to a portion of the asset purchase agreement with Capella, stipulating not only would the board retain any cash, short-term investments and cash equivalents, but all checks “received by the seller” prior to the transaction.

On a balance sheet included with Quigley’s report to the board, cash and cash equivalents were listed at $15.7 million as of Oct. 31. KershawHealth’s total assets as of Oct. 31 were listed at nearly $104.52 million.

Quigley reported surgical cases were below October 2014’s by 81. Inpatient admissions were also lower compared to October 2014, by 22. In addition, emergency department visits dropped slightly by 2.3 percent. On the plus side, 10 more babies were born this October at KershawHealth than in October 2014.

Quigley reported October’s financials reflected the recording of the cash transaction with Capella, which took place on Oct. 30, ahead of the actual effective date of the closing, Nov. 1 He said the asset sale and lease income were recorded as deferred revenue until Nov. 1. The income statement for October also reflected a $3.06 million payment to refund the bond escrow agent.

In other business during the Nov. 30 meeting, the board also:

• received a Karesh Long-Term Care Unit administrator report from Jeanne Hanley, including discussion on a project for orientation and infection control;

• held a discussion of restricted fund, a LiveWell Kershaw County grant and an request for proposals process for investments;

• received an update on branding and a website;

• heard an update on the pension and retirement plans; and

 • discussed a letter the board received in August from former KershawHealth CEO Dennis A. Lofe, who is now president and CEO of Wilson Senior Care in Darlington.

According to a copy of the letter, Lofe indicated he had been approached about considering an affiliation with the Karesh center. After discussing the possibility with Wilson’s senior management team, the company decided “the timing of this opportunity would be difficult.” However, Lofe also indicated the board should re-contact him if a possible affiliation remained open in the future.

The board also entered executive session to discuss ongoing litigation matters and executive contracts, and to receive further updates and legal advice regarding the Capella/MUSC transaction

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