December 19, 2017

VIA ELECTRONIC MAIL: auditor@osa.ms.gov

Stacy Pickering, Auditor

State of Mississippi
Office of the State Auditor
Post Office 956
Jackson, Mississippi 39205

VIA ELECTRONIC MAIL: jessica.kelly@osa.ms.gov

VIA ELECTRONIC MAIL: Karei.McDonald@osa.ms.gov

Karei McDonald
Director, Performance Audit
State of Mississippi
Office of the State Auditor
Post Office Box 956
Jackson, Mississippi 39205

Re: Franklin County Memorial Hospital

Dear Mr. Pickering and Mr. McDonald:

I write seeking a formal correction from you in relation to the incorrect information found
in your recent Performance Audit dated December 13, 2017 entitled Assessing the Financial
Health of Mississippi’s Independent County-Owned Rural Hospitals.

Your performance audit in relation to the Franklin County Memorial Hospital is wrong. In
the event you had shown us the courtesy of communication before running to Anna Wolfe
of the Clarion Ledger and publishing the document on your website, the errors might have
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been corrected. The two glaring errors are as follows:

ERROR NUMBER 1:

Page 9 of your Performance Audit reports that the average daily census of the Franklin
County Memorial Hospital is 1.16. This number is correct for acute care days. However,
your Performance Audit completely fails to mention that the average daily census in our
swing bed program is 18.00. I need not tell an astute auditor that there is a monumental
difference between 1.16 and approximately 19.16. Your error leads to the horrible -2.94%
score on your Profitability index. You compound the error when you “recommend” that we
review the number of full-time employees at our hospital. Surely there was a “red flag” for
you or your staff when you saw that there were 232 total employees with 178 of them full
time but yet the Franklin County Memorial Hospital averaged just over one patient a day.

When the correct numbers are used the “Hospital Highlights” section changes significantly
for the better:

ERROR CORRECT

Average Length of Stay: 2.81 34.5

Average Daily Census 1.16 19.16
Occupancy Rate 4.62% 76.6%
Payor Types Medicare 51% 77%
Medicaid 2% 2.9%
Other 47% 20.1%

ERROR NUMBER 2:

You calculated that the Franklin County Memorial owed the State Retirement Fund the sum
of $15,458,028.00 for FY16 for its percentage share of the unfunded liability carried by
Mississippi’s Public Employees’ Retirement System. You properly point out that this change
was due to changes in Governmental Accounting Standards Board Statement Number 68.
You know this fact since the Mississippi State Auditor requires an entity to follow the
principles of the Governmental Accounting Standards Board. This accounting action turned
a 5 million dollar gain for FY 2016 into an 11 million dollar paper loss.

You are aware that the Attorney General of the State of Mississippi opined on March 23,
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2016 in a letter to the Franklin County Memorial Hospital attorney (Opinion Number 17-
00014) that a public hospital facility, as a participating employer in the Public Employees’
State Retirement System of Mississippi (PERS), is responsible for paying the employer
contributions as established by the Board of Trustees under Miss. Code Ann. § 25-11-123
and causing the employee contributions to be deducted and remitted to PERS on behalf of
the employee. However, the facility has no obligation above and beyond the proper
payment of these contributions. Therefore, the Franklin County Memorial Hospital does
not owe the sum of $15,458,028.00 for FY16. Yet using these numbers, you ruin the
Franklin County Memorial Hospital index score on “Financial Leverage”. With the
“Financial Leverage” and “Profitability” index scores in the tank the Financial Strength
Index Score of the Franklin County Memorial Hospital must be horrible.

So that you can see a more accurate financial situation of the Franklin County Memorial
Hospital, I attach hereto and incorporate by reference a chart showing a composite look at
the Financial Condition of the hospital before Governmental Accounting Standards Board
Statement Number 68 adjustment and after Governmental Accounting Standards Board
Statement Number 68 adjustment.

With these two conspicuous errors you announced to the world (and without a word to us)
that the Franklin County Memorial Hospital had the worst finances in the State of Mississippi
when nothing could be farther from the truth.

The story you should be telling is that the Franklin County Memorial Hospital is a twenty
five (25) bed Critical Access Hospital. The Franklin County Memorial Hospital received
Critical Access Hospital (“CAH”) Status in May, 2009. The Franklin County Memorial
Hospital provides a service unique to our region by doing on-going weaning from ventilators
for patients with tracheotomies, with our primary goal to liberate the patient from both the
ventilator and tracheotomy. Since gaining CAH status in May, 2009, our hospital has
admitted over one thousand one hundred forty five (1145) swing bed patients, over four
hundred (400) of whom were ventilator-tracheotomy patients. These patients have come
from all over Mississippi as well as from Alabama and Louisiana. The Franklin County
Memorial Hospital took our first ventilator-tracheotomy patients in January, 2010, and our
program has had outstanding growth and success. The Franklin County Memorial Hospital
had an average daily census of 15.76 as of December 2016, ten times the overall United
States median of 1.51. This census is the direct result of our ventilator-tracheotomy program
which is not duplicated by any CAH within hundreds of miles of Meadville, Mississippi.
Our Hospital is the “last best chance” for these patients to return home instead of going to
a long-term care facility; The Franklin County Memorial hospital truly epitomizes the
philosophy of swing bed programs. The Franklin County Memorial Hospital average length
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of stay for these patients is about sixty two (62) days, which is much shorter than a long term
care stay and much more economically beneficial to the Medicare program. To compare the
Franklin County Memorial Hospital to any other CAH in Mississippi is a disservice. The
Franklin County Memorial Hospital is a singular institution providing a unique service to
patients throughout our region. The Franklin County Memorial Hospital employs two
hundred thirty two (232) people (178 full time) and has an annual payroll of over eleven (11)
million dollars.

What we wish that our State Auditor would do, instead of tearing down a public facility that
provides health care to needy Mississippians is join arms with us and encourage our
Congressional representatives in Washington to sponsor and help pass legislation to
designate the Franklin County Memorial Hospital as a “necessary provider” pursuant to
Section 405(h)(2)(B) of the Medicare Prescription Drug, Improvement, and Modernization
Act (“MMA”) of 2003, which amended section 1820 of the Social Security Act.

Alternatively, as State Auditor you could work with our United States Senators and
Congressmen to pass the Save the Rural Hospitals Act (H.R. 2957), which is co-sponsored
by Representative Gregg Harper in the United States Congress during the 115th Congress.

For the reasons stated herein, I request, on behalf of the Franklin County Memorial Hospital
a formal correction to your “Performance Audit”. Further, I believe you owe a public
apology to the citizens of Franklin County, Mississippi for placing blatantly erroneous
information into the public discourse.

Sincerely,

Mike R. Boleware
Administrator

enclosure