C^OP^ LOUISIANA STATE UNIVERSITY SCHOOL OF MEDICINE IN NEW ORLEANS FACULTY GROUP d/b/a LSU HEALTHCARE NETWORK AND SUBSIDIARIES Management's Discussion and Analysis, Consolidated Financial Statements as of and for the Years Ended June 30. 2010 and 2009, and Independent Auditor's Report Underprovisions of state law, this report is a public document.Acopyofthe report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court. Release Date -y/^y///
Transcript
C^OP^
LOUISIANA STATE UNIVERSITY SCHOOL OF MEDICINE IN NEW ORLEANS
FACULTY GROUP d/b/a LSU HEALTHCARE NETWORK
AND SUBSIDIARIES
Management's Discussion and Analysis, Consolidated Financial Statements as of and for the Years Ended June 30. 2010 and 2009,
and Independent Auditor's Report
Underprovisions of state law, this report is a public document.Acopyofthe report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court.
Release Date -y/^y///
Contents
Independent Auditor's Report 1-2
Management's Discussion and Analysis 4 -14
Consolidated Financial Statements
Balance Sheets 16
Statements of Revenue s. Expenses and Changes i n Net Assets 17
Statements of Cash Flows 18
Notes to Consolidated Financial Statements 19-34
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Govemment Auditing Standards 36 - 37
Independent Auditor's Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 38 - 39
Schedule of Expenditures of Federal Awards 40
Notes to Schedule of Expenditures of Federal Awards 41
Schedule of Findings and Questioned Costs 42 - 43
Summary Schedule of Prior Audit Findings and Questioned Costs 44
LAPORTE SEHRT ROMIGHAND
Independent Auditor's Report
To the Board of Directors of Louisiana State University School of Medicine in New Orieans Faculty Group Practice
We have audited the accompanying consolidated balance sheets of the Louisiana State University School of Medicine in New Orieans Faculty Group Practice d/b/a LSU Healthcare Network and Subsidiaries (a Louisiana non-profit corporation) (LSUHN) as of June 30, 2010 and 2009, and the related consolidated statements of revenues, expenses and changes in net assets and of cash flows for the years then ended. These financial statements are the responsibility of the LSUHN's management. Our responsibility Is to express an opinion on these financial statements based on our audits. We did not audit the fi nancia! statements of University Medical Group, LLC (a consolidated subsidiary) (UMG), which statements reflect total assets constituting 44% and 35% of consolidated total assets as of June 30, 2010 and 2009, respectively, and total revenues constituting 36% and 42% of consolidated total revenues for the years ended June 30, 2010 and 2009, respectively. Those statements were audited by other independent auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for UMG, is based solely on the report of the other independent auditors.
We conducted our audits in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained In Government Auditing Standards, issued by the Comptroller General of the United States. Those standanjs require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting pnnciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements refen-ed to above present fairly, in all material respects, the financial position of LSUHN as of June 30, 2010 and 2009, and the consolidated changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
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RSM McGiadrey iNetwork
In accordance with Government Auditing Standards, we have also issued our report dated September 21, 2010 on our consideration of LSUHN's intemal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis on pages 4 through 14 is not a required part of the basic consolidated financial statements, but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and we do not express an opinion on it.
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements that collectively comprise LSUHN's basic consolidated financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133,/luc//fs of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic consolidated financial statements of LSUHN. The schedule of expenditures of federal awards has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, is fairly stated in ail material respects in relation to the basic consol idated financial statements taken as a whol e.
A Professional Accounting Corporation
September 21, 2010
MANAGEMENT'S DISCUSSION AND ANALYSIS
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30, 2010 an d 2009
Management's Discussion and Analysis
This section of the Louisiana State University School of Medicine in New Orleans Faculty Group Practice d/b/a LSU Healthcare Network's (LSUHN) annual financial report presents management's discussion and analysis of financial performance during the fiscal year ended June 30, 2010. It should be read in conjunction with the consolidated financial statements in this report.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of four components - Management's Discussion and Analysis of Financial Condition and Operating Results (this section), the Independent Auditors' Report, the Consolidated Financial Statements, and the Auditors' Report on Compliance and on Internal Control over Financial Reporting.
The Consolidated Financial Statements of LSU Healthcare Network and Subsidiaries report the consolidated financial position of LSUHN and the consolidated results of its operations and its cash flows. The consolidated financial statements are prepared on the accrual basis of accounting. These statements offer short-term and long-term financial information about LSUHN's activities.
The Consolidated Balance Sheets include all of LSUHN's and its Subsidiaries' assets and liabilities and provides infonmation about the nature and amounts of investments in resources (assets) and the obligations to LSUHN's creditors (liabilities) for both the current year and the prior year. They also provide the basis for evaluating the capital structure of LSUHN and assessing the liquidity and financial flexibility of LSUHN.
All of the current and prior year's revenues and expenses are accounted for in the Consolidated Statements of Revenues, Expenses and Changes in Net Assets. These statements measure the performance of LSUHN's operations over the past two years and can be used to determine whether LSUHN has been able to recover all of its costs through its patient sen/ice revenue and other revenue sources.
The primary purpose of the Consolidated Statements of Cash Flows Is to provide information about LSUHN's cash from operations, investing, and financing activities. The cash flow statement outlines where the cash comes from, what the cash Is used for, and the change in the cash balance during the reporting period.
The annual report also includes Notes to the Consolidated Financial Statements that are essential to gain a full understanding of the data provided in the consolidated financial statements. The notes to the consolidated financial statements can be found immediately following the basic financial statements in this report.
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30,2010 and 2009
Management's Discussion and Analysis
FINANCIAL ANALYSIS OF THE HEALTHCARE NETWORK
Operating results for fiscal year 2010, before faculty and enhancement payments to the School of Medicine, improved overall when compared to fiscal year 2009. Total assets at June 30, 2010 decreased $ .41 million from June 30, 2009 because of increased cash transfers to the School of Medicine. Unrestricted cash increased $2.2 million and restricted cash decreased $1.2 million, for a net increase in cash of $1.0 million. Accounts receivable decreased $1.1 million and other assets decreased $.35 million. Current assets exceed cun-ent liabilities by neariy $7 million, which is a current ratio of 1.59.
Condensed Consolidated Balance Sheets (In Thousands)
Fiscal Year Fiscal Year Dollar Total % 2010 2009 Change Change
Current and other assets Capital assets
Total assets
Debt Outstanding Other liabilities
Total liabilities
Invested in capital assets - net of related debt Unrestricted
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30,2010 and 2009
Management's Discussion and Analysis
Summary of Revenues, Expenses and Changes in Net Assets
The following table presents a summary of the practice's historical revenues and expenses for each of the fiscal years ended June 30, 2010 and 2009:
Condensed Statements of Revenues, Expenses and Changes In Net Assets For the Years Ended June 30, 2010 and 2009
(In Thousands)
Fiscal Year Fiscal Year
2010 2009
Revenues
Net patient service revenue Capitation revenue Grant revenue
Total Revenues
Operating Expenses Operating and administrative Medical claims expense Depreciation and amortization
Total Operating Expenses
Income from Operations 4,077 5,477
Non-operating Revenues (Expenses) Medical school enhancement fund
Interest income and other income and expenses
Change in Net Assets
Net Assets, Beginning of Year
Net Assets, End of Year
During fiscal year 2010, the practice generated 64% of its total revenues from patient care with the other 36% being derived from capitation revenue from University Medical Group, L.L.C. This represents an increase in patient care revenue from 57% of total revenue in fiscal year 2009.
$ 41,506 :
23,599
690
65.795
43,237
17,502
979
61,718
S 39.405
29.170
963
69,538
40,245
22,933
883
64,061
(4,043)
(363)
(329)
11,808
$ 11,479 a
(3,926)
(59)
1,492
10.316
) 11,808
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30,2010 and 2009
Management's Discussion and Analysis
LSUHN provides care to patients in the Louisiana public hospital system in New Orieans. Baton Rouge and Lafayette, without regard to their ability to pay for those services. During the year ended June 30. 2010, charity charges entered into the billing system and adjusted off totaled over $39.1 million compared to $35.6 million during the year ended June 30.2009.
Patient service revenue net of contractual adjustments and allowances and bad debt was $2.1 million higher in fiscal year 2010 than fiscal year 2009. Fiscal year 2010 patient sen/ice revenue included over $1.4 million In Medicaid Upper Payment Limit (UPL) funds, which fiscal year 2009 did not. Net capitation revenue in excess of claims paid decreased $.14 million compared to the previous fiscal year. Grant revenue decreased $.27 million, as specified in the terms ofthe grant.
Personnel and leased non faculty expense increased $.13 million for the year. Physician compensation and enhancement fund expenses increased over $4.09 million. General and administrative expenses decreased $1.08 million. Medical supplies expense decreased $.03 million.
The following table represents the relative percentage of gross charges billed for patient services by payor for the years ended June 30, 2010 and 2009:
Fiscal Year 2010
22% 28 20
7 23
100 %
Fiscal Year 2009
18% 30 23 10 19
100 %
Medicare Medicaid Managed Care Self-pay Free care/indigent
Total gross charges
OPERATING AND FINANCIAL PERFORMANCE
Operating and financial performance in fiscal year 2010 reflect the steady improvement and stabilization since the effects of Hurricane Katrine. LSUHN continues to operate clinic sites in medical office buildings adjacent to Ochsner Baptist, Ochsner Kenner, East Jefferson Hospital, West Jefferson Hospital and in the Behavioral Sciences Center near Touro Infimiary as well as a private clinic in Baton Rouge. LSUHN's physicians also provide services in hospital-based clinics at Ochsner Kenner, East Jefferson, and the LSU Interim Hospital in New Orieans, Eari K. Long Hospital in Baton Rouge, and University Medical Center in Lafayette.
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30, 2010 and 2009
Management's Discussion and Analysis
LSUHN management proposed a different business model for fiscal year 2009, moving to a management fee model based on a percentage of collections rather than the previous cost reimbursement model. LSUHN is now at risk for meeting revenue and expense goals. The fee structure set for the initial year varies by site of service and reflects the costs incurred by LSUHN to generate and collect the revenue.
LSUHN committed to reducing fees and overhead rates being covered by the School of Medicine over a three year period. Because the School of Medicine faced severe budget cuts from the State of Louisiana, LSUHN reduced management fees and overhead rates in fiscal year 2010 in most cases to the levels expected in year three of the new business model implementation. These reduced fees allowed LSUHN to push cash reserves to the School of Medicine to help cover reductions in State general funds.
The Pediatrics Department of the School of Medicine withdrew from LSUHN as of July 31, 2009, which reduced revenue to LSUHN by approximately $5 million. Increased revenue from continued grovrth and new services totally offset the loss of pediatrics. General and administrative expenses were reduced in fiscal 2010 through reductions in administrative staff. Clinic expenses increased because of additional staffing, a full year of increased rental expense and the cost of new services such as an in-house vascular diagnostic laboratory.
The following summarizes between 2010 and 2009. the practice's Statements of Revenue, Expenses and Changes in Net Assets:
• Revenue from patient services net of contractual allowances, adjustments and bad debt increased 5% from 2009 to 2010.
• Capitation revenue decreased because of fewer covered lives and service area expansion expenses are no longer the IPA's responsibility, therefore capitation payments were reduced proportionately.
• Non-physician personnel expense increased $.13 million, or 1.7%. • General and administrative expenses decreased by $1.1 million in 2010 primarily due to
lower capitation management fees, which are related to capitation revenue. • Medical supplies and drugs expense decreased slightly by $.03 million, or 3.3%. • Medical claims paid decreased by 24% during FY 2010 because of the transfer of service
area expansion risk to PHN. • Payments for leased employees-faculty increased 21%, or $3.97 million, because of
increased patient care revenue and the reduction of the fees charged to the School of Medicine.
• Enhancement Fund payments increased $.12 million, or 3.0%, because of increased collections on patient care services.
After considering other net revenues and expenses, the practice realized a decrease in net assets of $.33 million in 2010 compared to a $1.5 million increase in 2009.
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30,2010 and 2009
Management's Discussion and Analysis
The following charts show the trend in billable charges and payments for patient services for the fiscal years 2010. 2009. and 2008:
LSU Healthcare Network Billable Charges
FV 2010, FV 2009 and FY 2008 (Cash Basis)
16,000,000
14,000,000
12,000.000
^ 10,000,000
I ^ 8,000,000 u
J 6,000,000
4,000,000
2,000,000
Jul
^2010: 13,415*85
I20D9: 11,739441
2008; 12,722,404
Aug
13,339^43
11,326,366
ll,123P79
Sept Oct Dec Jan
11,933*45 I 13,175387 10,797*59 12.786,050 : 10,881,258
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30,2010 and 2009
Management's Discussion and Analysis
Ambulatory patient volume in LSUHN private clinics increased over 13% in fiscal year 2010. Charges exceeded prior year in most months of fiscal year 2010 even after taking into effect the departure of Pediatrics. Cash collections increased because of the increased patient activity. Collections in June 2008 were unusually low because of the change from one revenue cycle vendor to another in May 2008.
PERFORMANCE AGAINST BUDGET
In comparing actual versus budgeted fiscal year 2010 results, the following is noted (in thousands):
FY 2010 Actual
FY 2010 Budget
Variance Favorable
(Unfavorable)
Revenues Net patient service revenue Capitation revenue Grant revenue
Total Revenues
Operating Expenses Leased employees - faculty Leased employees - non-faculty Personnel - salaries and benefits General and administrative Medical supplies Medical claims expense Depreciation and amortization
Total Operating Expenses
Operatmg Income
41,506 23,599
690
36,705 24,200
900
4.801 (601) 12101
65,795
23,198
646 7.302
11,114
977 17,502
979
61.718
61.805
17,921
1.025
6.731
12,019
967 19.200 962
58,825
3,990
(5,277)
379 (571)
905 (10)
1,698 (17)
(2,893)
4,077 2.980 1,097
Total Other Revenues (Expenses), Net
Change in Net Assets
(4,406) (3,812) (594)
$ (329) $ (832) $ 503
10
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30,2010 and 2009
Management's Discussion and Analysis
Overall patient service revenue net of contractual adjustments, allowances and bad debt expense exceeded budget by $4.8 m illion, or 13%, in 2010.
o Net patient service revenue before Medicaid upper payment limit exceeded budget by $3.0 million, or 8%.
o The Medicine department exceeded budget by $1.29 million, or 23%, due to increased volume in Geriatrics, Nephrology, Physical Rehabilitation, Pulmonary and Rheumatology,
o The Neurosurgery department exceeded budget by $0.50 million, or 70%, due to an additional neurosurgeon and expanded volum e.
o The departments of Pathology and Audiology were under budget in total by $0.20 million, or 50%, because volume growth assumed In the budget estimates did not materialize.
o The departments of Obstetrics and Gynecology, Pediatrics, Surgery and Urology each exceeded budget by over $100,000.
o Baton Rouge and Lafayette exceeded budget by $1.19 million, or 11% because of continued improvement in processes which captured charges that were previously left unbilled. These processes were put in place by the new revenue cycle vendor for Baton Rouge and Lafayette in 2009.
Capitation revenue was under budget by $ .6 million, or 2%, due to lower than budgeted number of covered lives under the capitation contract and the transfer of service area expansion risk to PHN.
Operating expenses reflected an unfavorable variance of 5% when compared to budget primarily due to:
o Medical claims expense was $1.7 million, or 8.8%, below budget due to the lower than budgeted number of covered lives under the capitation contract.
o General and administrative expenses were under budget due to lower management fees, mariteting, and limited expense related to the development of the Electronic Health Records.
o Legal fees were under budget due to the reimbursement of legal fees associated with the defense of a physician leased by LSUHN.
The favorable variances as noted above were reduced by the following: o Leased faculty expense exceeded budget by $5.3 million, or 29.4%, because of
Increased collections and changes in the rate schedule and payor mix. o Higher expenses for billing and collection services exceeded budget as the direct
result of actual collections exceeding budget. o Malpractice insurance for the leased faculty was not budgeted. o Personnel expenses were higher due to additional staffing at the clinics.
Other operating expenses were above budget because Medical School expenses were higher than expected. Enhancement fund expense exceeded budget because collections exceeded budget. The Change in Net Assets exceeded budget by 60.5%.
11
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30, 2010 and 2009
Management's Discussion and Analysis
Capital Asset Summary (In Thousands)
Office furniture and telephones Computers and related equipment Medical equipment Leasehold improvements
Totals at historical cost
Less accumulated depreciation
Capital assets - Net
Fiscal Year
$
$
2010
644 517 780 427
2,368
(1.623)
745
Fiscal Year
$
$
2009
762 521 684 364
2,331
(1.432) .
899
Dollar Change
S (118) (4) 96 63
37
(191)
$ (154)
Total % Change
(15) %
(1) % 14 % 17 %
2 %
13 %
(17)%
Capital asset purchases in fiscal 2010 consisted of computer equipment, leasehold improvements to existing and new clinic locations, and medical equipment for the hand surgeon and the vascular lab for a total of $293,000. Office furniture and obsolete computer and telephone equipment costing over $255,000 were disposed of in the fiscal year.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The fiscal year 2011 budget assumes increased patient service revenue due to increased volume in the private sector. Capitation revenue is expected to decrease because the capitation rate PHN receives from Medicare decreased 20% in calendar 2010 and is not expected to increase in calendar 2011. Total operating expense for patient services is expected to increase 7% due to new practice sites and new services, and increased expenses for advertising and mari<eting, legal fees and implementation expense for the electronic health record.
LSUHN entered into a five year master lease with Touro Infirmary for approximately 75,000 square feet located on St. Charles Avenue effective upon effective upon substantial completion of the renovations. This lease has one (1) five year renewal. LSUHN will use this space to consolidate and integrate some of its clinical services now being provided in multiple sites throughout the New Orieans area and to establish a LSU medical office complex in the central part of New Orieans. The project occupancy date is September 2011.
The capital budget for fiscal year 2011 is $2.4 million; including $1.8 million for furnishing and equipment for the new St. Charies Avenue medical office building. The remaining $600,000 is to furnish and equip a new West Bank office and to expand the electronic health record. The capital needs are expected to be funded by cash distributions from UMG and through conventional bank financing.
12
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30, 2010 and 2009
Management's Discussion and Analysis
CONTACTING THE PRACTICE'S FINANCIAL MANAGER
This financial report is designed to provide our customers and creditors with a general overview of LSUHN's finances. If you have questions about this report or need additional financial information, please contact the Chief Financial Officer, LSU Healthcare Network, 1340 Poydras SL, Suite 1640, New Orieans, LA 70112.
REPORT OF MANAGEMENT'S RESPONSIBILITY
The management of LSUHN is responsible for the preparation and integrity of the financial information presented In this report. The basic financial statements have been prepared In accordance with accounting principles generally accepted in the United States of America as promulgated by the Governmental Accounting Standards Board and the Financial Accounting Standards Board and include amounts based on judgments and estimates made by management. Management also prepares the other information included in the report and is responsible for its accuracy and consistency with the consolidated financial statements.
The consolidated financial statements have been audited by the independent accounting firm of LaPorte Sehrt Romig Hand who was given unrestricted access to all financial records and related data, including the minutes of all meetings of the Board of Directors. The Board of Directors, through its Finance Committee (the "Committee"), provides oversight to the financial reporting process. Integral to this process is the Committee's review and discussion with management of the monthly financial statements and the extemal auditors for the annual consolidated financial statements.
LSUHN maintains a system of intemal control over financial reporting, which is designed to provide reasonable assurance that transactions are executed as authorized and accurately recorded and that assets are properiy safeguarded, and also provide reasonable assurance to our management and the Board of Directors regarding the reliability of our consolidated financial statements. The intemal control system includes:
• A documented organizational structure and division of responsibility • Established policies and procedures that are regulariy communicated and that demand
highly ethical conduct from all employees
13
LSU HEALTHCARE NETWORK AND SUBSIDIARIES For the Years Ended June 30,2010 and 2009
Management's Discussion and Analysis
LSUHN's Executive Committee and Finance Committee monitor the operations and internal control system and report findings and recommendations to management and the Board of Directors as appropriate. Con-ective actions are taken to address control deficiencies and other opportunities for Improvement as they are identified.
Louisiana State University School of Medicine in New Orieans Faculty Group Practice (d/b/a LSU Healthcare Network)
Joel Sellers, Chief Financial Officer
14
CONSOLIDATED FINANCIAL STATEIVIENTS
15
LSU HEALTHCARE NETWORK AND SUBSIDIARIES Consolidated Balance Sheets June 30,2010 and 2009
2010 2009
Assets
Current tesets
Cash and Cash Equivalents
Restricted Cash
Patient Accounts Receivable (Net of Contractual
Allowances and Doubtful Accounts of $21,751,787 in 2010 and $23,521,598 in 2009)
Due from Federal Government
Prepaid Expenses
Total Current Assets
Capital Assets, Net
Other Assets
License Fees, Net of Amortization
Deposits and Investments
Total Other Assets
Total Assets
$ 7,808,697 $
175,837
10.490.182
93,049
219,683
18,787,448
745,492
991,944
2,773,394
3,765,338
$ 23,298,278 $
5.636,570
1,327,616
11,586,525
-
139,740
18,690,451
899,239
1,524,421
2,591.401
4.115,822
23,705,512
Liabilities and Net Assets
Current Liabilities
Accounts Payable and Accrued Liabilities
Medical Claims Payable
Unearned Income
Leases Payable, Current Portion Due to LSU Health Sciences Center
1,241,464 $ 2,018,102
18
32,286
8.527,563
1,978,127
2,380,611
384,391
61,859 7.060.575
Total Current Liabilities
Leases Payable, Less Current Portion
Total Liabilities
Net Assets
Invested in Capital Assets, Net of Related Debt
Unrestricted
Total Net Assets
Total Liabilities and Net Assets
11,819,433
-
11.819,433
713.206
10,765,639
11.478.845
$ 23,298.278 $
11.865,563
32.286
11,897,849
805,094
11.002,569
11,807,663
23,705,512
The accompanying notes are an integral part of these consolidated financial statements.
16
LSU HEALTHCARE NETWORK AND SUBSIDIARIES Consolidated Statements of Revenues, Expenses and Changes in Net Assets For the Years Ended June 30, 2010 and 2009
2010 2009
Revenues Patient Service Revenue, Net of Contractual
Adjustments and Allowances Capitation Revenue Grant Revenue
Total Revenues
Operating Expenses Leased Employees - Faculty Leased Employees - Non-Faculty Personnel - Salaries and Benefits General and Administrative Medical Supplies Medical Claims Expense Depreciation and Amortization
Total Operating Expenses
Income from Operations
Other Revenues (Expenses)
Medical School Enhancement Fund Interest Income and Other Income and Expenses Interest (Expense) Income
Total Other Revenues (Expenses), Net
Change in Net Assets
Net Assets, Beginning of Year
Net Assets, End of Year
$ 41,505,920 $ 39,404,947 23,598,591 29,170,183
690,014 962.725
65,794,525
23,197,695 646,445
7,301,573 11,114,144
976,571 17.502,187
979,327
61,717,942
4.076.583
(4.043,211) (358,413)
(3,777)
(4,405.401)
(328,818)
11,807,663
$ 11,478,845 $
69.537.855
19,226.910 1,360,394 6,455,181
12,192,208 1,010,149
22,933.106 882.940
64.060,888
5,476,967
(3,926,187) (59,726)
239
(3,985,674)
1,491,293
10,316,370
11,807,663
The accompanying notes are an integral part of these consolidated financial statements.
17
LSU HEALTHCARE NETWORK AND SUBSIDIARIES Consolidated Statements of Cash Flows For the Years Ended June 30,2010 and 2009
2010 2009
$ 41,741.171 $ 38.715,575
817,547
24,383,745
(8,035,039)
(22,106,929)
(11,696,294)
(18,441,212)
Cash Flows from Operating Activities Cash Received from Clinic Operations Cash Received from Grant Operations
Cash Received from Capitation Revenue
Cash Payments for Personnel
Cash Payments for Leased Faculty Cash Payments for Supplies and General and Administrative
Cash Payments for Medical Claims
Net Cash Provicted by Operating Activities
Cash Flows from Non-Capital Financing Activities
Cash Payments for Enhancement Fund Cash Payments for Medical School Expenses Cash Payments for Unearned Grant Income Cash (Payment) Refund for Deposits Decrease (inc^rease) in Resfa'icted Cash
Net Cash Used In Non-Capltal Financing Activities
Cash Flows from Capital and Related Financing Activities
Payments on Leases Payable Purchase of Capital Assets Investments by UMG Interest Payments
Net Cash Used in Capital and Relating Financing Activities
Cash Flows from Investing Activities
Interest and Other Income Received
Net Cash Provided by Investing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Reconciliation of Operating Income to Net Cash Provided by Operating Activities
Income from Operations Adjustments to Reconcile Income from Operations to
Net Cash Provided by Operating Activities Depreciafon and Amortization Change in Assets and Liabilities
Decrease (Increase) in Patient Accounts Receivable, Net Decrease in Prepaid Expenses (Decrease) in Accounts Payable and Other Liabilities Increase in Due to LSU Health Sciences Center
Net Cash Provided by Operating Activities
The accompanying notes are an integral part of these consolidated financial statements.
1,146.585 29.681.700
(7,861,255)
(17.341,721)
(12,527.257)
(24,586.265)
6,462,989
(4,085,315)
(377,073)
(451,448)
(181,993)
1,151,779
(3,944.050)
(61,859)
(293,103)
(4.677)
(359.639)
12,827
12,827
2.172,127
5,636,570
$ 7,808.697 $
7.227,362
(3.653,124)
(109,686)
(198,262)
3.770
(1,327.616)
(5,284,918)
(65.787)
(241,938)
(2.200.000)
(1.861)
(2,509,586)
45,092
45.092
(522.050)
6.158,620
5,636,570
$ 4,076,583 $ 5,476.967
979.327 882,940
1,003,293
(79,943)
(1.027,313)
1,511,042
$ 6,462,989 $
(497.764)
(70,084)
(322.097)
1.757.400
7,227,362
18
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Reporting Entity Louisiana State University School of Medicine in New Orteans Faculty Group Practice, d/b/a LSU Healthcare Network and Subsidiaries (LSUHN), a Louisiana non-profit corporation, assists the LSU Health Sciences Center (LSUHSC) in carrying out its medical, educafional, and research functions. The Board of Directors consists of seven (7) members who are representatives of the Board of Supervisors of Louisiana State University and Agricultural and Mechanical College (LSU), the LSUHSC and the LSU School of Medicine in New Orieans as well as eight (8) Public or Community members who are not employees of LSU and are nominated by either the Nominating Committee or any member of the Board of Directors. Upon dissolution of LSUHN, any remaining assets would be distributed to the Board of Supervisors of LSU or its successor for distribufion to LSUHSC or to the Louisiana State University Medical Center Foundation. LSUHN provides health care to the general public including, but not limited to, the delivery of physician medical services and other health care services to individuals. LSUHN receives compensation for these services from the Medicare and Medicaid programs, certain commercial insurance carriers, health maintenance organizations, preferred provider organizations and directly from patients.
LSUHN's activifies include services provided in both the public hospitals and the private clinics serviced by LSUHSC. LSUHN and LSUHSC (through the Board of Supervisors of LSU) have entered into Cooperative Endeavor and Operating Agreements that permit the two entities to work together on a mutually beneficial basis. The agreements delineate the obligations and responsibilities of both LSUHN and LSUHSC. Both parties have the right to terminate the Cooperative Endeavor Agreement with or without cause upon 60 days written notice. The agreements expired October 31, 2005, and have been renewed on a month-to-month basis through October 31, 2010.
Basis of Accounting The financial statements of LSUHN have been prepared using the proprietary fund method of accounting whereby revenues and expenses are recognized on the accrual basis of accounting and, accordingly, refiect all significant receivables, payables and other liabilities.
In accordance with GASB Statement No. 20, Accounting and Financial Reporting/or Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the LSUHN has elected to apply the provisions of all relevant pronouncements of the Finaricial Accounting Standards Board (FASB) except those that conflict with a GASB pronouncement, including those issued after November 30,1989.
Consolidation The consolidated financial statements include the accounts of LSUHN and its wholly owned subsidiaries; University Medical Group, LLC, LSUHN Surgery Center, LLC, University Technology Group, LLC, LSUHN Vascular Lab, LLC and LSUHN Billing, LLC. The significant intercompany transactions and balances have been eliminated. The activity of the following subsidiaries of LSUHN is as follows:
19
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Consolidation (Contmued) University Medical Group, LLC - LSUHN is the sole member of University Medical Group, LLC (UMG). UMG indirectly contracts with health maintenance organizations and other third-party payors under capitated arrangements to provide physician health care services to members who select UMG primary care physicians. UMG operates primarily in the New Orleans, Louisiana metropolitan area.
The purpose of UMG is to pursue risk contracts in which providers accept capitated payments for health care services. UMG has two primary goals: (1)to gain and protect market share for its providers, and (2) to generate and distribute surpluses in the event that capitafion payments received exceed the cost of health care services provided.
LSUHN Surgery Center. LLC - LSUHN is the sole member of LSUHN Surgery Center LLC (LSUHN SC). LSUHN SC was formed to manage the day-to-day operations, including the billing and collection efforts, of the surgery center located at 2020 Gravier Street in New Orieans, Louisiana. LSUHN SC has not resumed activity since August 29, 2005, when Hurricane Katrina struck. There are no plans for LSUHN SC to resume activity.
University Technology Group, LLC - LSUHN is the only member of University Technology Group, LLC (UTG). UTG was formed to participate in technology ventures that will assist LSUHN in the delivery of health care sen/ices or any other activities that will enhance LSUHSC's ability to carry out its medical, educafional or research missions. UTG has been inactive for several years and there are no plans to resume activity.
LSUHN Billing, LLC - LSUHN is the sole member of LSUHN Billing, LLC (LSUHN Billing). LSUHN Billing was fonned In December 2007 for use by the billing company that handles Baton Rouge and Lafayette billing.
LSUHN Vascular Lab, LLC - LSUHN is the sole member of LSUHN Vascular Lab, LLC (LSUHN Vascular). LSUHN Vascular was formed in October 2009 for the purpose of owning and operating an independent vascular laboratory to provide vascular ultrasound testing to patients from the community. There was no activity in fiscal year 2010.
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also afl'ect the reported amounts of revenues and expenses during the reporting period. Estimates which are significant for LSUHN include contractual and bad debt allowances and the liability for medical claims payable. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents LSUHN considers all highly liquid investments in money market funds and investments available for current use with an initial maturity of three months or less to be cash equivalents. Amounts are recorded at fair value.
20
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Restricted Cash This amount represents UMG's allocable portion ofthe distributable cash in the catastrophic reserve pool.
Capital Assets Capital assets are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets, which range from 3-5 years. Assets held under capital lease obligations are recorded at the present value of the minimum lease payments and are included in equipment. Amortization of leased assets is included in depreciation and amortization expense.
Medical Claims Payable The unpaid medical claims liability represents management's best estimate of the ultimate net cost of all reported and unreported claims incurred, but not paid, during the reporting period. The estimate is based on actuarial projections of the historical development of claims incurred but not reported and case-basis estimates of claims reported prior to the end ofthe reporting period.
The estimate of the unpaid medical claims liability was based on the best data available to LSUHN; however, because of tiie limited number of members covered by LSUHN, the estimates are subject to a significant degree of inherent variability. The estimates are continually reviewed and adjusted as necessary as experience develops or new infonmation becomes known; such adjustments are included in current operations.
Although management believes the estimate of the unpaid medical claims liability is reasonable under the circumstances, it is possible that LSUHN's actual incurred claims expense will not conform to the assumptions inherent in the determination of the liability; accordingly, the ultimate settlement of the claims may vary significantly from the estimate Included in the accompanying consolidated financial statements.
During fiscal year 2010, LSUHN recognized favorable development of $268,000 and during fiscal year 2009, LSUHN recognized adverse development of $331,000 due to changes in estimates of the unpaid medical claims liability at June 30, 2009 and 2008, respectively. These changes in estimates resulted from the actual frequency and severity of claims differing from original estimates.
Operating versus Non-Operating Revenue and Expenses LSUHN distinguishes operating revenue and expenses from non-operating items. Operating revenue and expenses generally result from providing services in connection with LSUHN's principal ongoing operations. The principal operating revenue of LSUHN is for patient services. Operating expenses include patient services expense, general and administrative expenses, supply and other expenses, and depreciation and amortization expenses. All revenue and expenses not meeting this definition are reported as non-operating revenue and expenses.
21
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Patient Service Revenue Net of Contractual Adjustments and Allowances LSUHN has agreements with third parties that provide for payments at amounts different from its established rates. Net patient service revenue is reported in the financial statements at the estimated net amounts realizable from patients, third-party payors, and others for services rendered. Major third-party payor an^angements include the Medicaid and Medicare programs.
LSUHN has also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. The basis for payments to LSUHN under these agreements includes prospectively determined rates per office visit and discounts from established charges.
To ensure accurate payments to providers, the Tax Relief and Healthcare Act of 2006 mandated the Centers for Medicare & Medicaid Services (CMS) to implement a Recovery Audit Contractor (RAC) program on a permanent and nationwide basis no later than 2010. The program uses RACs to search for potentially improper Medicare payments that may have been made to health care providers that were not detected through existing CMS program integrity efforts, on payments that have occurred at least one year ago but not longer than three years ago. Once a RAC identifies a claim it believes to be improper, it makes a deduction from the provider's Medicare reimbursement in an amount estimated to equal the overpayment.
LSUHN will deduct from revenue amounts assessed under the RAC audits at the time a notice is received until such time that estimates of net amounts due can be reasonably estimated. RAC assessments are anticipated; however, the outcome of such assessments is unknown and cannot be reasonably estimated.
Charity Care LSUHN provides care to patients in the Louisiana public hospital system without regand to their ability to pay for those services. LSUHN does not pursue collection of charges generated from providing services to patients that are determined to qualify for charity care and, as a result, these charges are not reported as revenue. However, In certain areas, the billing process requires that some free care charges be entered into the system before they are adjusted out of revenues.
During the years ended June 30, 2010 and 2009, charity charges entered into the billing system and adjusted off were approximately $39,132,000 and $35,593,00 0, respectively.
As noted above, for those charity care charges entered into the billing system and adjusted off, accounts classified as charity care are written off immediately.
22
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Capitation Revenue UMG, the wholly owned subsidiary of LSUHN, receives capitation payments as compensation for a commitment to provide health care services to covered members. Capitation payments are recognized as revenue during the period in which UMG is obligated to provide health care services to these members.
UMG has entered into an agreement with New Orieans Regional Physician Hospital Organization, Inc. (NORPHO) whereby UMG has authorized NORPHO to contract with purchasers of healthcare services for the delivery of health care services to covered members. UMG pays a management fee to NORPHO for management services provided under a management services contract.
Grant Revenue LSUHN has received a grant from Louisiana Public Health Institute (LPHI) to provide discounted or free psychiatric services. As of June 30, 2010 and 2009, $690,014 and $962,725, respectively, is included as revenue on the Consolidated Statements of Revenues and Expenses and Changes in Net Assets. The grant funds received, but not expended, including interest was $18 and $379,853, as of June 30, 2010 and 2009, respectively and is reflected on the Consolidated Balance Sheets as unearned income.
Medical Claims Expense LSUHN contracts with various physicians, physician groups, and other ancillary providers under the terms of primary/specialty care physician agreements or other ancillary agreements for the purpose of providing health care services on behalf of LSUHN. Based on the nature of the agreements, medical expense is recognized either during the period in which LSUHN is obligated to provide medical services for members or during the period in which medical services are Incurred by members.
LSUHN participates in a catastrophic reserve pool with the other independent physician associations (IPAs) in the Network to provide shared-risk insurance coverage on physician charges in excess of certain limits. LSUHN has stop-loss insurance coverage with an unrelated Insurer for charges that exceed the limits covered by the catastrophic resen/e pool. Amounts recoverable from the catastrophic reserve pool and the unaffiliated insurer are classified as accounts receivable on the Consolidated Balance Sheets. In addition, LSUHN classifies pharmacy rebate receivables as accounts receivable on the Consolidated Balance Sheets.
Income Taxes LSUHN is a non-profit corporation organized under the laws of the State of Louisiana. It is exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986, and qualifies as a support organization, as defined in Section 501(a) ofthe Code,
23
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Net Assets LSUHN prepares its consolidated financial statements in accordance with Governmental Accounting Standards Board Statement (GASBS) No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. It requires the classification of net assets into three components - invested In capital assets, net of related debt; restricted; and unrestricted. These classifications are defined as follows:
Invested in Capital Assets - Net of Related Debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.
Restricted - This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted - This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt."
Reclassifications Certain reclassifications have been made in the June 30, 2009, consolidated financial statements to conform to the June 30, 2010, presentation. The reclassifications primarily related to reclassifying balance sheet accounts receivables and payables.
Note 2. Related - Party Transactions
LSUHSC provides certain clinical and administrative services to LSUHN. Amounts paid for services provided under this arrangement were $22,106,929 and $17,341,721, during the years ended June 30, 2010 and 2009, respectively. As of June 30, 2010 and 2009, $6,664,443 and $5,575,626, respectively, was owed to LSUHSC for physician and non-physician services. Including amounts accrued relating to accounts receivable.
In accordance with the Cooperative Endeavor and Operating Agreements with LSUHSC, LSUHN will provide management services, nursing services, technical support services, clerical services, billing and collection services and other support personnel as necessary.
Also under this agreement, LSUHSC requires LSUHN to pay at least ten percent (10%) of its annual gross cash receipts to LSUHSC, through the Medical School Enhancement Fund (MSEF) to support the clinical, academic and research missions of LSUHSC. Cash payments totaling $4,085,315 and $3,653,124, were made to the MSEF during the fiscal years ended June 30,2010 and 2009, respectively. As of June 30, 2010 and 2009, $1,250,402 and $1,292,506 respectively, was due to LSUHSC for MSEF payments. Including amounts accrued relating to accounts receivable.
24
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 2. Related - Party Transactions (Continued)
In addition, as of June 30, 2010 and 2009, leased faculty expense and other expenses due to LSUHSC were $612,718 and $192,443, respectively.
Tenet Healthcare Corporation and its subsidiaries (Tenet) formerty owned several acute care and specialty hospitals located in the New Orieans metropolitan area. Several IPAs, including UMG. and NORPHO operate as the Network. Effective May 1, 2009, the Network operates under a master operating agreement with People's Health, Inc. (PHI), a health maintenance organization (HMO), wholly owned by NORPHO. Prior to May 1, 2009, the Network operated under a master operating agreement with Tenet Choices, Inc. (TCI), a HMO, wholly owned by Tenet, with Tenet, through its hospital risk pools, operating as a component of the Network. The Network provides covered medical services under certain Medicare Advantage HMO, POS, PPG and prescription drug plans to covered members located in southeast Louisiana.
NORPHO is a physician hospital organization that contracts with PHI under a capitation arrangement to provide physician and hospital health care services to plan members. NORPHO provides all administrative services necessary for the operation of the Network, including, but not limited to, financial services, medical management, claims processing, member services, and provider relations.
On February 19, 2009. TCI entered into a definitive agreement with PHI, a wholly owned subsidiary of NORPHO, pursuant to which PHI assumed 100% of TCI's book of business (including the Medicare and non-Medicare business). Following receipt of all required regulatory approvals, this transaction closed on April 30, 2009, and became effective on May 1, 2009. As a related part of the overall transaction, NORPHO redeemed all stock held in NORPHO by an affiliate of Tenet Healthcare Corporation. In addition, NORPHO issued 4,800 additional shares of Class A Common Stock, of which UMG purchased 733.32 shares for $2,200,000 on April 30, 2009, effective May 1, 2009.
As a result of the overall transaction, the IPAs operating in the Network, collectively, own 100% of the issued and outstanding shares of Class A common stock of NORPHO. No other class of stock Is Issued and outstanding as of June 30, 2010. UMG holds a less than 20% Investment interest in NORPHO and continues to account for the investment under the cost method. However, because UMG holds more than a 10% investment Interest in NORPHO, it is subject to those provisions of the Louisiana Insurance Code relating to insurer holding companies, which include disclosure of certain transactions, prior approval of certain transactions, and filing and reporting obligations. UMG does not believe that compliance with these laws will have a material adverse affect on the operations of UMG.
25
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 2. Related - Party Transactions (Continued)
Over the past few years, the Network has expanded to provide services to certain areas in south Louisiana. Tenet, through its hospital risk pools, and the related IPAs had assumed an equal share of risk for the expansion area services. The risk related primarily to medical expenses exceeding revenue during the start-up phase of the expansion areas and was allocated to the hospital risk pools and IPAs based on ownership in NORPHO. As a result of the transaction described above and effective retroactively to January 1, 2009, the assets, liabilities, revenues, and expenses of the areas served outside of the greater New Orieans area, and for all hospital medical services, are included in the financial position and operating results of NORPHO, and will no longer be allocated to the IPAs for inclusion in their respective financial statements.
At June 30, 2009, a liability of $552,149 for service area expansion losses incurred through December 31, 2008 was recorded by UMG and included in accounts payable and accrued liabilities on the Consolidated Balance Sheets. The liability was paid during the fiscal year 2010. For the year ended June 30, 2009, the following expansion area revenues and expenses were allocated to UMG and included in the consolidated financial statement amounts:
Revenue $ 4.237,257 Expenses 4,245,165
Net Loss $ (7,908)
UMG, the wholly owned subsidiary of LSUHN, operates under a management services agreements with NORPHO. The agreement expires on December 31, 2010. Management fees were $2,916,648 and $3,515,434, in 2010 and 2009, respectively.
UMG has an out-of-network claims reimbursement agreement with NORPHO that requires NORPHO to reimburse UMG monthly for out-of-network claim payments that exceeded 5% of the period's capitation revenue. Under the terms of this agreement, UMG recovered $64,117and $211,664, in2010and 2009, respectively.
Note 3. Major Payor
Currentiy, all contracts with third-party payors are executed through NORPHO. UMG, the wholly owned subsidiary of LSUHN, earned 100% of capitation revenue from TCI through April 30, 2009. From May 1. 2009 through June 30, 2010, UMG earned 100% of capitation revenue from PHI. PH! and NORPHO contract with Centers for Medicare and Medicaid Services (CMS) under a Medicare Advantage contract.
26
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 3. Major Payor (Continued)
Under the terms of the Medicare Advantage contract, PHI has agreed to provide medical services to Medicare enrollees in return for capitated payments under the products Choices 65, HealthCare Select, Choices Plus, and Secure Health. The contract expires December 31, 2010, but automatically renews for successive periods of one year unless written notice of intention not to renew is given. Approximately 100% of PHI's revenue is earned under contracts for these products. A significant modification to, or termination of, this arrangement could have a material effect on UMG's results of operations and financial condition.
UMG through the Network, began offering Medicare Part D prescription drug insurance coverage under a contract with CMS. The CMS Premium, the Member Premium, and the Low-Income Premium Subsidy represent payments for UMG's insurance risk coverage under the Medicare Part D program and therefore are recorded as gross capitation revenue in operations. Gross capitation revenues are recognized ratably over the period in which eligible individuals are entitied to receive prescription drug benefits. Pharmacy benefit costs and administrative costs under the contract are expensed as Incurred and included in medical claims expense.
Note 4. Gross Capitation Revenue
The plans provide prescription drug benefits to members under the Medicare Part D contract. The capitation revenue is subject to risk corridor adjustment, which permits the plans and CMS to share the risk associated with the ultimate costs of the Part D benefit. The adjustment may be positive or negative based on the application of risk corridors that compare a plan's actual prescription dmg costs to its targeted costs, as reflected in the Medicare Part D bid. The plans also receive subsidies from CMS for all or a portion of the deductible, co-insurance, and co-payment amounts for low-income beneficiaries. A settlement with CMS of the prospective subsidies based on actual prescription dmg costs paid by the plans is made after the plans' year-end.
UMG, the wholly owned subsidiary of LSUHN, estimates and recognizes an adjustment to gross capitation revenue related to the risk corridor adjustment and an adjustment to drug costs for the low-income cost subsidy based upon prescription drug claims experience to date. UMG recorded a liability of $78,066 at June 30, 2010, for the 2009 plan year for its share of the Network plan settlements with CMS. tn November 2009, the Network received notification from CMS related to the reconciliation and final settlement of the calendar year 2008 Networi Part D Plan. UMG's share of the final settlement liability resulted in an increase to premium revenueof $79,532 during the twelve months ended June 30, 2010.
The difference between the recorded estimate and the final determination of the amount to be received or paid will be recorded when such detemiinations are made and the final settlement amount could vary significantly from the amount recorded at June 30, 2010.
UMG, the wholly owned subsidiary of LSUHN, periodically receives retroactive revenue adjustments from CMS resulting from changes in risk adjustment scores for prior periods. At June 30, 2010, UMG believes an accrual for these adjustments is not material.
27
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 4. Gross Capitation Revenue (Continued)
At June 30, 2010, UMG accrued $278,717 for estimated risk score adjustments to 2009 revenue. The amount was received by UMG in August 2010.
Note 5. Capital Assets
Capital asset activity for the fiscal years ended June 30, 2010 and 2009 were as follows:
Office Furniture and Fixtures Computers and Related Equipment Medical Equipment Leasehold Improvements
Total at Historical Cost
Less: Accumulated Depreciation
Capital /Assets. Net
Office Furniture and Fixtures Computers and Related Equipment Medical Equipment Leasehold Improvements
Balance 2009
$ 762,046 520,619 684,080 363,982
2.330,727
(1.431,488)
$ 899.239
Balance 2008
$ 869,886 561,875 621,523 363.982
Additions
$ 15.438 118,690 95,809 63,166
293.103
(446,850)
$ (153,747)
Additions
$ 179,381 62,557
Deletions
$ (132.936) (122.318)
(255,254)
255.254
$
Deletions
$ (107.840) (220.637)
Balance 2010
$ 644,548 516.991 779,889 427,148
2,368,576
(1,623,084)
$ 745,492
Balance 2009
$ 762,046 520,619 684,080 363,982
Total at Historical Cost
Less: Accumulated Depreciation
Capital Assets. Net
2,417,266 241,938 (328,477) 2,330,727
(1.393,222) (366,743) 328.477 (1.431.488)
$ 1,024.044 $ (124,805) $ $ 899.239
Depreciation expense amounted to $446,850 and $366,743, for the fiscal years ended June 30, 2010 and 2009, respectively.
28
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 6. Other Assets
Investinents On April 30, 2009, effective May 1, 2009, UMG (see Note 1) purchased an additional 733.32 shares of NORPHO Class A Common Stock for $2,200,000. At June 30, 2010 and 2009, UMG's investment in NORPHO was $2,531,213. At June 30, 2010, UMG holds less than a 20% investment interest in NORPHO and accounts for the investment under the cost method.
License Fees License fees and installation expenses for the electronic health records system have been capitalized and are being amortized using the straight line method over a 5 year period. LSUHN's intangible assets consisted of the following at June 30, 2010 and 2009:
The amortization expense for the years ended June 30, 2010 and 2009, was $532,477 and $516,197, respectively. Future amortization expense for the intangible assets at June 30. 2010, is as follows:
Years Ending June 30, Amount
2011 $ 533,097 2012 458,847
Total $ 991,944
Note 7. Lease Commitments
Operating Leases LSUHN leases office space and equipment under operating leases that expire at various dates through 2014. Certain of the lease agreements provide for escalations based on cost of operations.
29
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 7. Lease Commitments (Continued)
Minimum annual lease payments as of June 30, 2010, are as follows:
In addition, LSUHN has a lease for the rental of clinic space and personnel services. Effective June 1, 2008, this lease is on a month to month basis for a monthly amount of $26,000. Notification has been sent to terminate this lease on Septem ber 30, 2010.
Total rent expense for all of the above leases for the years ended June 30, 2010 and 2009, was $1,485,643 and $1,287,771, respectively.
Capital Leases LSUHN leases certain medical equipment under a five year capital tease agreement that includes an interest rate of 5.82% and a bargain purchase options. Future minimum lease payments under the capital lease, together with the present value of net minimum lease payments as of June 30, 2010, are as follows:
Years Ending June 30, Amount
2011
Total Minimum Lease Payments
Less: Amount Representing Interest
Present Value of Net Minimum Lease Payments
Less: Current Maturities
Leases Payable - Less Current Portion
$ 33,225
33,225
(939)
32,286
32,286
$ -
30
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Notes. 401(k)Plan
In December 1997, LSUHN established a 401(k) plan for the benefit of its employees. The plan permits employees to contribute up to 15% of their compensation to the plan, subject to certain limitations. At its discretion, LSUHN may make contributions to the 401 (k) plan for the benefit of participating em ployees. For the years ended June 30, 2010 and 2009, 401 (k) plan expenses were $281,101 and $226,819, respectively.
Note 9. Concentrations of Credit Risk
LSUHN provides services in New Orieans, Baton Rouge, and Lafayette. LSUHN grants credit to Its patients, some of whom are insured under third-party payor agreements. LSUHN routinely obtains assignment of, or is otherwise entitied to receive patients' benefits from Medicare, Medicaid and other third-party payors. The mix of receivables from its patients and third-party payors at June 30, 2010 and 2009, was as follows:
2010 2009
Medicare Medicaid Commercial Self-Pay
Total
LSUHN routinely invests available operating funds in highly liquid U.S. Government and agency obligations and money market mutual funds that generally invest in highly liquid U.S. government and agency obligations. Investments in money market funds are not insured or guaranteed by the U.S. Government; however, management believes the credit risk related to these investments Is minimal.
Note 10. Change in Third Party Billing Companies
LSUHN terminated its billing contract with GE Healthcare (GE), as of April 30, 2008, and has contracted with PST Services, Inc. (PST), a McKesson Company, and Acadiana Computer Services, Inc. (ACS) to provide for these billing and follow up activities. There was a termination fee paid to GE during the year ended June 30, 2008, in the amount of $1,356,400. There is a final payment due to GE included in accounts payable and accmed liabilities on the consolidated balance sheets as of June 30, 2009, in the amount of $53,535. This final payment was made during the year ended June 30, 2010. Transition services were provided by GE for 180 days after the termination date.
19.4 % 33.1 26.9 20.6
100.0 %
17.4 % 35.3 25.4 21.9
100.0 %
31
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 11. Insurance Coverage
Malpractice Insurance The physicians leased to LSUHN by LSUHSC are provided professional liability coverage by LSUHSC in accordance with the provisions of LA. R.S. 40:1299.39 et seq. for the services provided under the Cooperative Endeavor and Operating Agreements. These provisions provide the physician with coverage on malpractice claims up to $500,000 per occurrence, which is the limit on medical malpractice claims under current state law.
Note 12. Government Regulations
The healthcare industry is subject to numerous laws and regulations of Federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, and government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Recently, government oversight has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers. Violations of these laws and regulations could result in expulsion from government healthcare programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. The office ofthe Inspector General ofthe Department of Health and Human Services has undertaken a project to audit Medicare billings of certain academic medical institutions. The government has stated that it believes that a significant amount of Medicare claims filed by teaching physicians are not properly documented as required by current interpretations of Medicare standards. If a prcivider is found to be in violation of these documentation standands, the government may require repayment of any overcharges and may impose a penalty of treble damages plus up to $10,000 per false claim. Management believes that LSUHN is in compliance with the fraud and abuse regulations as well as other applicable government laws and regulations, and with the Medicare documentation standards. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.
Legislation and regulation at all levels of government have affected and are likely to continue to affect the operations of LSUHN. Federal healthcare reform legislation proposals debated in Congress in recent years have included proposals for the imposition of price controls and/or healthcare spending budgets or targets, significant reductions in Medicare and Medicaid program reimbursement to healthcare providers and the promotion of a restructured delivery and payment system focusing on competition among providers based on price and quality, managed care, and steep discounting or capitated payment arrangements with many, if not all, of LSUHN's principal payors. It is not possible at this time to determine the impact on LSUHN of government plans to reduce Medicare and Medicaid spending, government implementation of national and state healthcare reform or market-initiated delivery system and/or payment methodology changes. However, such changes could have an adverse impact on operating results and cash flows of LSUHN in future years.
32
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 13. Commitments and Contingencies
In October 2006, LSUHN was named as a defendant in two lawsuits claiming wrongful death and damages resulting from the action of a physician leased by LSUHN from LSUHSC. The incidents occurred in a New Orieans hospital during the aftermath of Hurricane Katrina. LSUHN intends to vigorously defend Itself and its representatives against these actions. At this time management is unable to detennine with any certainty the settlement prospects or probability of success in either of these suits.
LSUHN has certain other pending and threatened litigation and claims incurred in the ordinary course of business; however, management believes that the probable resolution of such contingencies will not exceed LSUHN's insurance coverage, and will not materially affect the financial position of LSUHN or the results of its operations.
LSUHN has contracted with PST and ACS as the third party billing companies effective April 30, 2008. The contracts with PST and ACS are for a 3 year period expiring in 2011. The contract rate for net cash collections for PST and ACS are 7.5% and 13%, respectively.
LSUHN entered into a five (5) year master lease with Touro Infirmary to lease approximately 75,000 square feet located on St. Charles Avenue. This lease is effective upon substantial completion of the renovations, which is expected to be September 2011. This lease has a one (1) five-year renewal. LSUHN will use this space to consolidate and integrate some of its clinical services now being provided in multiple sites throughout the New Orieans area, including leased space from Ochsner Medical Center and to establish a LSU medical office complex in the central part of New Orieans. This lease required an "initial rent" amount of $150,000 that is included on the consolidated balance sheet as of June 30, 2010 in deposits and investments.
Note 14. Uncertain Tax Positions
On July 1. 2009, LSU HN adopted the provisions of the Accounting for Uncertainty in Income Taxes Topic of the FASB ASC, which clarifies the accounting and recognition for income tax positions taken, or expected to be taken, in LSUHN's income tax returns. As a result of this adoption, the LSUHN believes there was no impact to the consolidated financial statements and did not record any adjustment to the beginning balance of net assets on the Consolidated Balance Sheets.
All tax returns have been appropriately filed by LSUHN. LSUHN recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. LSUHN files income tax returns with federal and state jurisdictions. LSUHN's open audit periods are 2006 - 2009. Management evaluated the LSUHN's tax positions and concluded that LSUHN had taken no uncertain tax positions that require adjustments to the consolidated financial statements to comply with the provisions of this guidance.
33
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 15. Subsequent Events
Management has evaluated subsequent events through the date that the financial statements were available to be issued, September 21, 2010, and determined that the following events occurred that require disclosure.
It is LSUHN's intention to issue a notice of non renewal on the current billing vendor contracts and to issue a formal Request for Proposal for these services.
Beginning in July 2010, UMG, the wholly owned subsidiary of LSUHN, plans to distribute monthly dividends of $100,000 to LSUHN. The distributions are contingent on UMG meeting a cash availability calculation as stipulated by the board of directors. The calculation considers cash available for dividends after consideration of current operating obligations and certain possible future obligations related to NORPHO.
No subsequent events occurring after the date above have been evaluated for inclusion in these financial statements.
34
OMB CIRCULAR A-133 SECTION
35
LAPORTE SEHRT ROMIGHAND
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNiyiENT AUDITING STANDARDS
To the Board of Directors of Louisiana State University School of Medicine in New Orieans Faculty Group Practice
We have audited the consolidated financial statements ofthe Louisiana State University School of Medicine in New Orleans Faculty Group Practice, d/b/a LSU Healthcare Network and Subsidiaries (a Louisiana non-profit corporation) (LSUHN) as of and for the year ended June 30, 2010, and have issued our report thereon dated September 21, 2010. We conducted our audit in accordance with auditing standanjs generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered LSUHN's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the LSUHN's intemal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe LSUHN's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies. In internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in the intemal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses.
36 U i Vt.il^HANS .M(:M"Ki-\i, H*H;j,hvv\t*n. SfUt : ftO", MiiiAiHif-, LA 7tRMf5 - 5fM..'<3,S.S>:;2 • FAX 5i)4.X35,55?.'>
Sinii V'ifi.Ar.1; W A I A , Siisu: 3'iu. fnv iNiv in^ . LA 7m}^-4i}\2 • <>85,h'C5H5() • T A X ^W5.a'l2,5^)56
T O W N !L%!.I, WJ;.ST, lt(0!H( i'lmKiNS R O W L , S i h , im}. HATCIN Rosii;); . LA THMU) i 7 ' n . :;2.s.2"6.5LSi) • F A X JZ.'^.^'M.ii!?!
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RSMMcGladrey Network
We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified a deficiency in internal control over financial reporting, described in the accompanying schedule of findings and questioned costs that we consider to be a significant deficiency in Internal control over financial reporting. See Finding 2010-1. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether LSUHN's consolidated financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
LSUHN's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit LSUHN's response and, accordingly, we express no opinion on iL
This report is intended solely for the information and use of management, the Board of Directors, the Louisiana Legislative Auditor, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statue 24:513, this report is distributed by the Legislative Auditor as a public document.
•^'aUd^.y ptAJ^^fs ^ - ^ ^
September 21, 2010 A Professional Accounting Corporation
37
LAPORTE SEHRT ROMIG HAND
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
ON EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
To the Board of Directors of Louisiana State University School of Medicine in New Orieans Faculty Group Practice
Compliance
We have audited the compliance of Louisiana State University School of Medicine in New Orieans Faculty Group Practice, d/b/a LSU Healthcare Network and Subsidiaries (a Louisiana non-profit corporation) (LSUHN) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A~133 Compliance Supplement that could have a direct and material effect on its major federal program for the year ended June 30, 2010. LSUHN's major federal program is identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal program is the responsibility of LSUHN's managemenL Our responsibility is to express an opinion on LSUHN's compliance based on our audit
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Govemments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perfonn the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about LSUHN's compliance with those requirements and performing such other procedures as we considered necessary in the cin^umstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on LSUHN's compliance with those requirements.
In our opinion, LSUHN complied, in all material respects, with the compliance requirements refen-ed to above that could have a direct and material effect on its major federal program for the year ended June 30, 2010.
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RSM McGiadrey Netv^ork
Internal Control Over Compliance
Management of LSUHN is responsible for establishing and maintaining effective intemal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered LSUHN's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of LSUHN's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of the intemal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in intemal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in intemal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, the Board of Directors, the Louisiana Legislative Auditor, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statue 24:513, this report is distributed by the Legislative Auditor as a public document.
A Professional Accounting Corporation
September 21, 2010
39
LSU HEALTHCARE NETWORK AND SUBSIDIARIES Schedule o f Expend i tu res o f Federal A w a r d s For the Year Ended June 30, 2010
Federal Grantor/Pass-Through Grantor Program Title
Federal CFDA
Number Grant Federal
Number Expenditures
U.S. Department of Health and Human Services
Passed through the State of Louisiana, through the Department of Health and Hospitals:
Primary Care Access and Stabilization Grant
Total U.S. Department of Health and Human Services
93.776 $ 690,014
$ 690.014
Total Expenditures of Federal Awards $ 690.014
See accompanying notes to schedule of expenditur es of federal awards
40
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Notes to Schedule of Expenditures of Federal Awards For the Year Ended June 30,2010
Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity of LSUHN and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.
Note 2. Subrecipients
There were no payments to subrecipients for the fiscal year ended June 30, 2010.
41
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Schedule of Findings and Questioned Costs For the Year Ended June 30,2010
I. Summarv of Auditor's Results
1. The auditor's report expresses an unqualified opinion on the consolidated financial statements of LSUHN.
2. A significant deficiency relating to the audit of the consolidated financial statements of LSUHN is reported in the Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.
3. No instances of noncompliance material to the financial statements of LSUHN were reported in the Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.
4. No significant deficiencies relating to the audit of the major federal award programs are reported in the Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and Intemal Control Over Compliance in Accordance with OM B Circular A-133.
5. The auditor's report on compliance for the major federal award program for LSUHN expresses an unqualified opinion.
6. There were no findings that are required to be reported in accordance with Section 510(a) of OMB Circular A-133.
7. A management letter was not issued for the year ended June 30, 2010.
8. The program tested as a major program included:
Program CFDA No.
Primary Care Access and Stabilization Grant 93.776
9. The threshold for distinguishing Types A and B programs was $300,000.
10. LSUHN was determined to be a low-risk auditee.
42
LSU HEALTHCARE NETWORK AND SUBSIDIARIES
Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30,2010
Findings - Financial Statement Audit
2010-1 Credit Card Expenses
Condition: We reviewed credit card expenses incurred during the months of September 2009, October 2009 and May 2010. We tested these expenses for proper supporting documentation and adherence to the credit card policy. Of the 167 transactions selected for testing, we noted exceptions for 56 transactions. These exceptions related to support not being retained, such as itemized receipts, to ensure adherence to the policy. There were also violations to the policy for certain expenses related to tips exceeding threshold limits.
Criteria: Management is responsible for the implementation of controls related to credit card expenses that ensure proper approval of transactions, filing and retention of supporting documentation, and adherence to the policy.
Effect: Untimely delays in detecting and correcting en-ors and omissions. Increased exposure to fraud and misappropriation of assets, and the possibility that it would not be detected in a timely basis.
Cause: Weak controls with respect to oversight and review of credit card expenses.
Recommendation: Management should strengthen existing controls over credit card expenses.
Management Response: All credit cards have been cancelled with the exception of one. LSUHN continues to maintain one corporate credit card issued in the name of the Chief Financial Officer for limited business purposes such as purchases of supplies or services for which LSUHN does not have a corporate account. Previous credit card expenses for which detailed support was not available or not retained by the card holders were approved by the CEO.
Findings and Questioned Costs - Malor Federal Award Programs Audit
None
43
LSU HEALTHCARE NETWORK AND SUBSIDIARIES Summary Schedule of Prior Audit Findings and Questioned Costs For the Year Ended June 30, 2010
I. Findings - Financial Statement Audit
None
II. Findings and Questioned Costs - Maior Federal Award Programs Audit
