Phelps Health has seen steady growth over August of fiscal 2018. Year-to-date net income is over budget by $5.3 million.

Phelps Health’s net operating revenue was over budget by 2.2 percent reaching $23.3 million in August of this fiscal year, Chief Financial Officer for Phelps Health Jana Cook said at Phelps Health's September Board of Trustees meeting.

Cook identified both the health system’s adjusted average daily census of 264 patient days coming in on budget in August and an increase in surgical services cases over budget by 1.7 percent as attributing to the $498,000 variance in net patient service revenue for the month.  

Operating expenses came in over budget by 3.7 percent in August reaching $23 million. Supply expense and purchased services Cook said contributed to the $832,000 variance in operating expenses for the month.

Supplies expense ran over budget by $592,000, due to chemotherapy drugs in August, while purchased services came in over budget for the month by $328,000 due to the use of agency personnel. Cook said this was offset by salaries and wages expense coming in under budget by $149,000 for the month.

The health system’s income from operations came in under budget for the month, Cook said. Income from operations ran $332,000 below budget totaling $273,000 for the month, while income from operations through August of fiscal 2019 was under budget by $1.75 million totaling $4 million.

Phelps Health’s income from operations as a percentage of net operating revenues was 2.2 percent through August compared to the health system’s budget of 3.2 percent, while net income was over budget by $5.3 million reaching $16.4 million through the first eight months of this fiscal year. Phelps Health’s net income as a percentage of total revenues was 8.5 percent compared to the budget of 6.1 percent through August.

Phelps Health had net loss of $142,000 in August, which was under budget by $1.4 million.

August non-operating income was under budget by $1 million, and Cook said the $415,000 loss in August was due to unfavorable market conditions.

Total cash and investments have grown by $13.7 million from Dec. 31, 2018, and as of Aug. 31 Phelps Health’s cash and investments totaled $154.7 million.

Phelps Health’s debt increased by $781,000 from Dec. 31, 2018, and as of Aug. 31 the health system’s debt totaled $61.7 million.

Following the finance committee’s approval of the health system’s August financials, Cook made one capital contingency request for a $43,789 transesophageal echocardiogram — to replace the current echocardiogram Phelps Health has on loan — and a second request for a $29,128 portable ultrasound.

Phelps Health is now in the third year of its capital budget. The capital budget had $1.4 million earmarked for 2019 capital contingency requests, Cook said, with the finance committee and the board of trustees approving the purchase of both pieces of equipment.

The health system now has roughly $450,000 of the $1.4 million going into the fourth quarter of the health system’s 2019 budget.

Cook then requested the approval to transfer $20 million of Phelps Health’s investment portfolio from UMB Investment Manager to Wells Fargo Advisors and approval to move forward with having Plante Moran conduct Phelps Health’s 2019 financial audit.

Cook said Phelps Health's investment portfolio was reviewed at the 2019 Investment Managers meeting. The health system is currently using a conservative growth and income asset allocation model based on the current investment policy statement.

Phelps Health’s current investment portfolio is overweight in fixed income based on the allocation model, according to Cook. To achieve the strategic allocation model, Cook requested to transfer $20 million from Phelps Health’s UMB Investment Manager to Wells Fargo Advisors, which was approved by the finance committee and board of trustees.

Approximately $6 million of the $20 million will be reallocated within the equities asset class with the remaining reallocated to investment types within the fixed income asset class. The assets will be transferred in kind and will be reallocated at appropriate times based on the strategic allocation model, Cook said.

The final item, the finance committee and board of trustees approved, was for Plante Moran to conduct Phelps Health’s 2019 financial audit, which marks the third year of the three year engagement between Phelps Health and Plante Moran.