Auditor gives Petersburg Medical Center a clean opinion; FY2024 shows positive operating results and large construction grants

Sean Johnson of DZA, the hospital—s auditor, told the Petersburg Medical Center Board of Trustees that DZA issued an unmodified (clean) opinion on the medical center—s financial statements for the fiscal year ended June 30, 2024. The board heard that operating results improved and that capital grant funding for a new facility materially increased net position.

Johnson told trustees the audited statements are "fairly stated in all material respects," and that DZA found no material weaknesses or significant deficiencies in internal control. He identified two areas for improvement: the hospital needs written policies and procedures for key financial-reporting processes and formalized policies for tracking and administering federal awards.

The auditor and hospital finance staff summarized fiscal highlights. Net patient service revenue rose about 9% compared with the prior year, increasing to roughly $22 million. Operating income for the year was about $2.2 million. Including capital grants and nonoperating items, the change in net position for FY2024 was reported at about $11 million. Capital assets reported on the statement of net position rose substantially (auditor cited growth from roughly $8 million to about $15.7 million), reflecting construction in progress for the new facility.

Johnson also presented the schedule of federal awards and related compliance work. The hospital spent roughly $8.7 million in federal funds during the fiscal year, including a Treasury-sourced grant tied to construction; the audit reported compliance with federal grant terms in all material respects. The auditor highlighted that the financial-statement totals were not materially adjusted in the audit, which he said supports the reliability of monthly financial reporting.

Trustees and staff discussed operational indicators from the auditor—s financial-indicators package: a total margin of 33% (largely driven by capital grants), an operating margin of 10.1%, days cash on hand of 104, and a current ratio of about 1.4. Full-time-equivalent employees fell from 71 to 63 year over year, a point Johnson noted when discussing payroll and benefit expense. The board was told capital grants recognized during the fiscal year included approximately $8.4 million applied to the construction project during the audited year; hospital leadership also described the broader construction funding package as roughly $27 million in grants supporting a $30 million project.

Hospital finance leaders emphasized next steps the organization already has begun, including drafting a set of accounting and finance policies and procedures to address the auditor—s recommendations. Directors said they had drafted and delivered multiple policies for internal review and expected to finalize them in the coming months.

The board took no action beyond receiving the audit and discussing the financial reports; trustees thanked staff and contractors and asked for follow-up on policy implementation and accounts-receivable improvements.

Ending: Hospital leaders said they will continue to brief the board on policy adoption and on metrics intended to reduce accounts-receivable days and maintain cash reserves as the construction project progresses.