KPMG reports process gains; hospital officials report improved payables and one-time Metro funding in FY25 update

KPMG told the Hospital Authority Board that process improvements implemented during a recent engagement have reduced accounting backlog and strengthened financial reporting controls, and hospital finance leaders reported improved cash performance and receipt of unbudgeted Metro funding in their FY25 audit update.

Hillary Simic, a partner with KPMG, and Chris Dixon, director at KPMG, presented findings from a multi-month engagement that assessed accounting processes and recommended new policies, procedures and reconciliation tools. Simic said the work focused on "improving the financial reporting process and creating sustainable practices within the accounting and finance department." Dixon said the team identified symptomatic problems and implemented tools and reconciliations across roughly 90 areas.

Dixon told the board payables dropped from about $27,000,000 in February to approximately $13,000,000 by the time KPMG completed the engagement, and he described establishment of standardized tools for calculating bad debt and payer contractual adjustments. "If you go back to February, the payables and invoices were sitting at around $27,000,000 ... and now they're down to $13,000,000," Dixon said.

Hospital finance leadership described operational steps to stabilize month-to-month reporting and cited some one-time and timing effects. Ray Bridal, controller, and Dr. Blackledge (finance lead) said net income for the month showed $7,891,000 on a budgeted $217,000 figure; hospital leaders attributed the variance primarily to $11,000,002 received from Metro that was not budgeted. The presenters indicated the Metro funds will be applied to payables and that a related $1,000,000 KPMG project subsidy offsets contract-service expense.

Finance staff also reported service-line activity: admissions were slightly above budget, emergency visits were near budget, outpatient cases were higher than budget while inpatient cases were below budget, and outpatient cardiac cases were down from the prior year. The women's health/OB service line showed growth in deliveries tied to a renewed partnership and the addition of midwives and a pending Meharry Medical College OB chair hire.

Revenue-cycle leaders reported July cash receipts were affected by delayed electronic payments from a service provider; $841,000 in expected cash was received on Aug. 1 after the reporting month. The revenue-cycle update also covered accounts receivable, unbilled services and denials management. Finance staff described July denials related to the Medicare "two-midnight" rule and said those denials can be overturned but cause delays in cash collection. "This is a denial, which is a delay because we are able to overturn those and receive payment, but it delays us getting those dollars," the revenue-cycle presenter said.

Board members praised the transparency and progress and recognized KPMG and hospital staff for collaborative work on the improvements. No formal board action was recorded for the audit update; the presentation was informational.

Ending: Finance staff said they expect continued stabilization of new processes during the fiscal year and will provide subsequent updates as audit and reporting activities progress.