The Petersburg Medical Center Board voted on Thursday to repay a $1.2 million credit line to Wells Fargo bank; a loan that was initiated in 2006 to pay for equipment and meet payroll needs.
PMC has recently come under scrutiny after Petersburg voted to become a borough and it came to light that for public entities, such as PMC, borrowing money without a public vote is not allowed under the state constitution.
PMC Board President Tom Abbott said paying back the loan is “in keeping with state law.”
The loan will be paid back by using reserve funds. The reserve fund account was at $4.1 million earlier this year. About $400,000 has been used to cover an operating loss and repaying the line of credit will drop the balance of the reserve account to about $2.5 million.
“Going through the process of the Borough and changing a lot of language, to change from a municipality to a borough government, it became clear that this had happened against state law. It happened without our knowledge that this was not allowed ... it all happened through a series of CFOs and CEOs,” Abbott said.
With the amount of the loan and need for repayment identified, the board discussed what that means for the future of the medical center.
“That account as far as I’m concerned should be for capital construction; basically we’re borrowing the money from ourselves, and I understand that,” said board member Phil Beardslee. “I think we should be looking at starting it toward the beginning of next year ... Once we get CPSI in place and everything and I think maybe we can get the accounts receivable set better then I think we’ll be in better shape and we’re gonna have to build this account back up I feel.”
“I don’t think we’re gonna be able to do it, when you look at the financials,” Board Member Rocio Tejera said.
Currently, the medical center is working to collect $3.25 million in overdue patient bills.
"I think, moving forward, we have been, as we have been for several years, trying to set a budget where we balance on operations. And hopefully our reserve investment account grows somewhat, where we’re off by .3 percent of the budget, or something like that...” Abbott said.
“So, when we do need capital improvements we will need to have partnership with the Borough, and get Borough support,” he added.
The board will meet with the Borough Assembly on August 22 to discuss future financial needs.
In other news, the Board learned that accounts that were overdue for 365 days, or longer, are harder to collect. Focus for June and July, for the billing office, has been to collect on overdue accounts from Medicare, Medicaid and private pay.
Also, an internal audit, dating back to 2010, revealed that of 776 billed accounts, two were incorrect. One of the payments was a Medicare payment and it was already corrected and the other is being cleared up.
The PMC board has recently come under fire from a former business office manager, Ramona Thompson, who was fired on May 23. Thompson had also reported to the board that the business office has been understaffed since 2011. A problem, Thompson pointed out, that put the medical center at risk for potential fines for missing Medicare paperwork and possible problems in customer billing.