VIVIAN^ LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE 30 · 2020. 12. 23. · VIVIAN^ LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE 30.2007 Under provisions of state law, this report

NORTH CADDQ HOSPITAL SERVICE DISTRICT,d/b/a NORTH CADDO MEDICAL CENTER

VIVIAN^ LOUISIANA

AUDITED FINANCIAL STATEMENTS

JUNE 30.2007

Under provisions of state law, this report is a publicdocument. A copy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date

NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDO MEDICAL CENTER

C O N T E N T S

Management's Discussion and Analysis

Independent Auditors' Report

Basic Financial Statements:

Balance Sheets at June 30, 2007 and June 30,2006

Statements of Revenues, Expenses, and Changes in Net Assetsfor the Years Ended June 30,2007 and June 30, 2006

Statements of Cash Flows for the Years Ended June 30,2007and June 30,2006

Notes to Financial Statements

Supplemental Information:

Independent Auditors' Report on Supplemental Information

Revenue, Deductions from Revenue and Direct DepartmentalExpense for the Years Ended June 30,2007 and June 30,2006

General and Administrative Expenses for the Years EndedJune 30, 2007 and June 30, 2006

Compensation Paid to Members of the Board of Commissionersfor the Year Ended June 30, 2007

Capital Assets and Accumulated Depreciation for the YearEnded June 30,2007

Summary of Operating Results

Exliibit A

Exhibit B

Schedule 1

Schedule 2

Schedule 3

Schedule 4

Schedule 5

PageNumbers

1-7

8-9

10-11

12

Exhibit C

Exhibit D

13

14-26

27

28

29

30

31

32


C O N T E N T S

PageNumbers

Other Reports:

Independent Auditors' Report on Compliance and on InternalControl Over Financial Reporting Based on an Audit ofFinancial Statements Performed in Accordance withGovernment Auditing Standards 33-34

Independent Auditors' Summary Schedule of Findingsand Questioned Costs for the Year Ended June 30, 2007 35

Management's Schedule of Prior Year Findings for the YearEnded June 30,2007 36


MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30. 2007

Our discussion and analysis of North Caddo Service District, d/b/a North Caddo Medical Center's (theMedical Center) financial performance provides an overview of the Medical Center's financial activities for the yearended June 30, 2007. Please read this in conjunction with the Medical Center's financial statements in this report.

Financial Highlights

The Medical Center's net assets increased by $505,473 as a result of this year's operations.

During the year, the Medical Center's operating revenues increased $1,575,602, or 19.98 percent, to$9,462,395 from the prior year while operating expenses increased $1,156,901, or 14.38 percent, to $9,202,596. TheMedical Center experienced operating income of $259,799 for the current year, which was 2.75 percent of operatingrevenues, versus an operating loss of $158,902 for the prior year, which was 2.01 percent of operating revenues.

Using this Annual Report

This annual report consists of three basic financial statements that are based on Governmental AccountingStandards Board (GASB) accounting principles. The Balance Sheet, the Statement of Revenues, Expenses, andChanges in Net Assets, and the Statement of Cash Flows (Exhibits A, B, and C) provide information about theactivities of the Medical Center and present short-term and long-term views of the Medical Center's finances andactivities.

Required Financial Statements

Our analysis of the Medical Center focuses on Exhibits A, B, and C. One of the most important questionsasked about the Medical Center's finances is, "Has the Medical Center's financial position been improved orworsened as a result of the year's operations?" The Balance Sheet (Exhibit A); the Statement of Revenues,Expenses, and Changes in Net Assets (Exhibit B); and the Statement of Cash Flows (Exhibit C) report informationabout the Medical Center and about its activities in a way that helps answer this question. The Balance Sheet andStatement of Revenues, Expenses, and Changes in Net Assets include all assets and liabilities using the accrual basisof accounting. All of the current year's revenues and expenses are taken into account regardless of when cash isreceived or paid.

The Balance Sheet and Statement of Revenues, Expenses, and Changes in Net Assets report the MedicalCenter's net assets balance and changes in it. You can think of the Medical Center's net assets, the differencebetween assets and liabilities, as a way to measure the Medical Center's financial health, or financial position. Overtime, increases or decreases in the Medical Center's net assets is an indicator of whether its financial health isimproving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in thecommunity, changes in Medicare and Medicaid regulations, and changes in managed care contracting.

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MANAGEMENTS DISCUSSION AND ANALYSIS


The Statement of Cash Flows reports the Medical Center's cash balance and changes in it. The Statement ofCash Flows provides information about the Medical Center's cash provided from or used by operating, investing, andfinancing activities. The Statement of Cash Flows provides information to tell you about where the Medical Center'scash came from and what the cash was used for.

In the Balance Sheet; the Statement of Revenues, Expenses, and Changes in Net Assets; and the Statement ofCash Flows, all of the Medical Center's functions and programs are reported as business-type activities. Patientrevenues (including those from third party payors), Medicaid disproportionate share payments received, and propertytaxes finance these activities. The Medical Center does not have any component units.

Financial Analysis of the Medical Center

The Medical Center operates one proprietary enterprise fund with only business-type activities for servicesprovided to the general public, primarily to patients residing in the Vivian, Louisiana area.

Net Assets

A summary of the Medical Center's Balance Sheets is presented in Table 1 below:

Table 1Condensed Balance Sheets

At June 302007 2006

Current and Other AssetsCapital Assets-Net of

Depreciation

Total Assets

Total LiabilitiesNet Assets

$ 3,537,044

1.453.636

1,611,1753.379.505

$ 2,830,590

1.406.972

1,363,5302.874.032

Increase(Decrease)

$ 706,454

46.664

753.118

247,645505.473

PercentIncrease

(Decrease)

24.96

3.32

17.77

18.1617.59

Total Liabilities andNet Assets $ 4.990.680 $: $ 753.118 17.77

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FOR THE YEAR ENDED JUNE 30.2007

Revenues, Expenses, and Changes in Net Assets

Table 1 shows us that the Medical Center's Net Assets increased $505,473 to $3,379,505 during the year.This increase is detailed in Table 2 below which summarizes the Medical Center's operations:

Table 2Condensed Statements of Revenues, Expenses and Changes in Net Assets

For the Years Ended

Operating RevenuesOperating Expenses

Operating Income (Loss)Nonoperating Revenues

Excess Revenues (Expenses)

Net Assets at Beginning of Year

Net Assets at End of Year

June 302007

259,799245.674

505,473

2.874.032

2006Increase

(Decrease^

$ 9,462,395 $ 7,896,793 $ 1,565,6029.202.596 8.045.695 1.156.901

( 148,902)223.544

74,642

2.799.390

$ 2.874.032 $:

408,70122.130

430,831

74.642

PercentIncrease

(Decrease)

19.8314.38

274.489.90

577.20

2.67

17.59

Sources of Revenue

Net patient revenues were 99 percent of the Medical Center's total revenues for the fiscal year endedJune 30,2007 versus 97 percent for the fiscal year ended June 30,2006. Included in net patient revenues arepayments from the Medicare and Medicaid programs as well as payments from patients and other third party payers.Medicare, Medicaid, and most private insurance payments are based on contracted rates that are less than the MedicalCenter's established rates. Differences between the established rates charged and the contracted rates collected arerecorded as contractual discounts. The Medical Center's net patient revenues reported on Exhibit B, Statement ofRevenues, Expenses and Changes in Net Assets, are net of contractual discounts. Other revenues include incomederived from investments, rent income, property taxes, and other miscellaneous service.

The Louisiana Medicaid disproportionate share hospital program allows for the reimbursement ofuncompensated care costs to small rural hospitals serving a disproportionate number of low-income patients. Thereimbursements are calculated based on cost reports filed by the small rural hospitals and are paid by the state fromfederal funding. Although federal appropriations have enabled the state to pay almost 100 percent of uncompensatedcosts to rural hospitals over the past several years, there is no assurance federal funding will continue and, therefore,no assurance that the Medical Center will receive any future payments. During the year ended June 30, 2007, theMedical Center received $748,733 in disproportionate share payments compared to $620,591 received the prior year.

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NORTH CAPDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDO MEDICAL CENTER



Table 3 below presents a summarized description of the mix of gross patient revenues and their relatedcontractual adjustments or discounts along with their respective percentages of net patient revenues.

Table 3Payor Mix of Gross Patient Revenues aid Related Contractual Adjustments

For the Years Ended June 30Percentage of

Net Patient2007 Revenues

$ 7333,000( 4.403.403)

2,929^97

2,878,901( 2,048,578)

748.733

1,579,056

6,583,324( 1.664.646)

4,918,678

16,795,225( 8,116,627)

9,427^31

f 1.653.261)

77.79f 46.71)

31.08

30.54( 21.73)

7.94

16.75

69.83( 17,ff>

52.17

178.16( 86.10)

... 7.94100.00

f U.54)82,46

2006

$ 4,925,799( 2.678.988)

2,246,811

2,027^92( 1,687,169)

620491

961,014

5,672374( 1.008.161)

4,664,213

12,625,765( 5374318)

7,872,038

( 1.535.948)

Percentage ofNet PatientRevenues

62.57( 34,03)

28.54

25.76( 21.43)

7.88

12.21

72.06( 12.81)

59.25

16039( 68.27)

7.88100.00

f 19.51)80.49

682,786

851309( 361,409)

910,950( 656.485)

254,465

4,169,460( 2,742309)

1,555,293

f 117313)

Gross Patient Revenues-MedicareContractual Adjustments-Medicare

Net Patient Revenues-Medicare

Gross Patient Revenues-MedicaidContractual Adjustments-MedicaidMedicaid Disproportionate Share

Payments ReceivedNet Patient Revenues-

Medicaid

Gross Patient Revenues-Other3rt Party Payers

Other Contractual AdjustmentsNet Patient Revenues-Other

Total Gross Patient RevenuesTotal Contractual AdjustmentsMedicaid Disproportionate Share

Payments ReceivedNet Patient Revenues

Bad DebtsPatient Revenues-Net of Bad Debts

Operating and Financial Performance

The following summarizes the Medical Center's Statements of Revenues, Expenses, and Changes in NetAssets between the years ended June 30,2007 and June 30,2006:

As detailed in Table 2, operating revenues increased from last year by 19.83 percent. The increase inoperating revenues can be explained by the following:

• increase in hospital patient days of 2.4 percent• increase in hospital swing days from 317 to 543, a 71.3 percent increase• increases in the Medical Center's charge master for several ancillary departments• hiring and billing for the services of a CRNA• addition of a eye surgery clinic performing cataract surgeries• increase in emergency room visits from 5,417 to 5,824, a 7.5 percent increase• increase in Medicaid Disproportionate Share payments of $128,142

30.39

41.9921.42

20.65

6431

16.0665.12

5.46

33.0251.03

20.6519.76

7.6422.70

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NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADPO MEDICAL CENTER



The 14.38 percent increase in operating expenses shown in Table 2 was due primarily to increased employeesalaries and an increase in bad debt expense. As a group, employee salaries is the Medical Center's singlemost significant operating expense. 38.92 and 40.69 percent of total operating expenses were employeesalaries in 2007 and 2006, respectively. Total salaries increased 9.55 percent from $3,293,424 in 2006 to$3,607,821 in 2007. Table 4 following details each department's payroll expense for 2007 and 2006.

Table 4Departmental Wages aid Salaries

For the Years Ended June 30Perec

2QDJ TotalNursingAides & OrderliesClericalInhalation TherapyGeneral SurgeryMaterials ManagementCentral SupplyTreatment RoomEducationLaboratoryRadiology ACT ScanPharmacyEmergency Room-ClericalKid-Med&HealthplexMedical RecordsDietaryPlant MaintenanceHousekeepingManagement & AdministrativeAmbulanceFitness CenterMarketingTotal Wages and Salaries Paid

Proprietary Fund Budgetary Highlights

Under Louisiana law, hospital service districts are not required to operate under a formal budget.Accordingly, budgetary accounting and information is not presented in our financial statements.

2007$ 1,052,366

169,53127,592

168,62815,83629,76549,057

6,64139,482

354,112291495128,10216^3771,225

172̂ 8515438459,683

146,787277,270299,2015838118361

t \607.821

Percentage ofTotal Payroll

29.174.70.76

4.670.440.83136.18

1.099.828.083.550.461.974.784.281.654.077.698.291.630.53

ioqfpo

2006S 984,859

156,67044,840

140,49111,65926,01147,9879,756

55,314322,246235^28127,18132,82377,167

108,838143,13043456

142,431283305248,97050,662

S 3.293.424

Percentage ofTotal Payroll

29.904.771.364.270.350.791.460301.689.787.153.861.002343.304351.324328.607.561.54

10Q.QQ

Increase(Decreased

$ 6740712361

( 17,248)28,1374,1773,7541,070

( 3,115)( 15,832)

3136656,067

921( 16,286)( 5,942)

63,44711,25416,1274356

( 6,035)50,2318,219

18.861S 314.397

PercentChange

6.858.21

(38.47)20.0335.8314.432.23

( 31.93)( 28.62)

9.8923.800.72

( 49.62)( 7.70)

58.297.86

37.033.06

( 2.13)20.1816.22

9.55

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Capital Assets

Capital Assets are recorded in the Balance Sheet and depreciated over their estimated useful lives. Capitalasset additions for the year ended June 30,2007 are summarized in Table 5 following:

Table5Capital Asset Additions

Chemistry AnalyzerComputer EquipmentComputer SoftwareFive Hospital BedsPrinterCell WasherTwo Nursing CartsEye EquipmentAir Condition UnitCleaning SystemCompounding Aseptic IsolatorsVital Signs MonitorTreadmill

$157,31117,7751,372

20,050934

6,715780

21,8503,7007,101

11,64010,96025.907

S286.Q95

During the year ended June 30,2007, the Medical Center discarded $460,647 of fully depreciated equipmentthat was replaced and/or obsolete. Depreciation expense for the year ended June 30,2007 is $239,429.

Changes in the Medical Center's Capital Assets are summarized in Table 6 below.

LandLand ImprovementsBuildings and Building

ImprovementsEquipmentEquipment Held Under

Capital Lease

Less-AccumulatedDepreciation

Net Capital Assets

Table 6Summary of Capital Assets

At June 302007 2006

$ 111,243 $ 111,243173,837 173,837

Increase(Decrease')

PercentIncrease

(Decrease)

2,040,5902,136,774

371.6694,834,113

3,380,477

2,040,5902,468,637

214.3585,008,665

3.601,693

( 331,863)

157.311( 174,552)

( 221.216)

( 13.44)

73.39( 3.49)

( 6.14)3.32

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NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDQ MEDICAL CENTER


FOR THE YEAR ENDED JUNE 30, 2007

Contacting the Medical Center's Financial Management

This financial report is designed to provide taxpayers, customers, and creditors with a general overview ofthe Medical Center's finances and to show the Medical Center's accountability for the money it receives. If you havequestions about this report or need additional financial information, contact the administration of North CaddoMedical Center at 1000 South Spruce Street, Vivian, Louisiana.

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WILLIAM JEFFERSON COLE, C.P.A.A. WILLIAM PETERSON, C.P.A.CAROL T. BARNES. C.P.A.C. WILLIAM GERARDY, JR., C.P.A.BARRY S. SHIPP, C.P.A.STEVEN W. HEDGEPETH, C.P.A.STEVEN R. BAYER, C.P.A.GWENDOLYN H. HAHJU, C.P.A.TIMOTHY R. DURR, C.P.A.BAILEY B. BAYNHAM, C.P.A.ROBERT A. BUSBY, C.P.A.ANNE-MARIE COLE, C.P.A.TIMOTHY W. BORST, C.P.A.ERIC D. SMITH, C.P.A.MARY WELLS CARMODY, C.P.A.

JOHN A. CASKEY, C.P.A.NINA G. GLOHtOSO, C.P.A.J. AMY HEMMINGS, C.P.A.LINDA K. BIBLE. C.P.A.JAMES D. COLLINS, C.P.A.KYLE S. DOBBINS, C.P.A.WILLIAM D. JARRETT, EC, C.P.A.MATTHEW R. HAHN, C.P.A.FAYE D. CAMPBELL, C.P.A.

COLE, EVANS & PETERSONCERTIFIED PUBLIC ACCOUNTANTS

FIFTH FLOOR TRAVIS PLACE

60O BLOCK TRAVIS STREET

SHREVEPORT, LOUISIANA 71IOI-3OI3

www.cepcpa.com

December 18,2007

M. ALTON EVANS, JR.PARTNER EMERITUS

AUSTIN G. ROBERTSON, JR., C.P.A.

OF COUNSEL

TELEPHONE (3tB) 223-8367

TELECOPIER (318) 425-4IOI

MAILING ADDRESS:P. O. DRAWER 1788

SHREVEPORT, LOUISIANA 71166-1768

INDEPENDENT AUDITORS' REPORT

Board of CommissionersNorth Caddo Hospital Service DistrictVivian, Louisiana

We have audited the accompanying balance sheets of North Caddo Hospital Service District, d/b/a NorthCaddo Medical Center, component unit of the Caddo Parish Commission, at June 30,2007 and June 30,2006 and therelated statements of revenues, expenses, and changes in net assets, and cash flows for the years then ended. Thesefinancial statements are the responsibility of the Medical Center's management. Our responsibility is to express anopinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica and Government Auditing Standards issued by the Comptroller General of the United States. Thosestandards require that we plan and perform the audits to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financialposition of North Caddo Hospital Service District, d/b/a North Caddo Medical Center at June 30, 2007 and June 30,2006 and the results of its operations, changes in net assets, and its cash flows for the years then ended in conformitywith accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued a report dated December 18,2007on our consideration of North Caddo Hospital Service District, d/b/a North Caddo Medical Center's internal controland its compliance with certain provisions of laws and regulations. The purpose of that report is to describe thescope of our testing of internal control over financial reporting and compliance and the results of that testing, and notto provide an opinion on the internal control over financial reporting or on compliance. That report is an integral partof an audit performed in accordance with Government Auditing Standards and should be read in conjunction withthis report in considering the results of our audit.

Board of Commissioners December 18, 2007North Caddo Hospital Service District Page 2

Our audits were made for the purpose of forming an opinion on the Medical Center's basic financialstatements. The supplementary information listed in the table of contents is presented for purposes of additionalanalysis and is not a required part of the basic financial statements. Such information has been subjected to theauditing procedures applied by us in the audit of the basic financial statements and, in our opinion, is fairly stated inall material respects in relation to the basic financial statements taken as a whole.

Management's discussion and analysis on pages 1 through 7 is not a required part of the basic financialstatements but is supplementary information required by the Governmental Accounting Standards Board. We haveapplied certain limited procedures, which consisted primarily of inquiries of management regarding the methods ofmeasurement and presentation of the supplementary information. However, we did not audit the information andexpress no opinion on it.

Cole, Evans & Peterson

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Exhibit A


BALANCE SHEETS

AT JUNE 30,2007 AND JUNE 30.2006

June 30A S S E T S

Current Assets:Cash and Cash Equivalents (Note 4)Accounts Receivable from Patient Services-Net of Estimated

Allowances and Uncollectible Accounts (Note 3)Other Accounts ReceivableInventories-Drugs and SuppliesPrepaid Expenses

Total Current Assets

Capital Assets: (Note 5)LandLand ImprovementsBuildings and Building ImprovementsEquipmentEquipment Held Under Capital Leases (Note 6)

Less-Accumulated DepreciationNet Capital Assets

Other Assets:Assets not in ServiceUnamortized Cost of Tax Election

Total Other Assets

Total Assets

2007

1,126,019

2,095,9788,331

179,07980.941

3,490,348

111,243173,837

2,040,5902,136,774

371.6694,834,1133,380.4771,453,636

41,6655.031

46.696

4.99Q.68Q

2006

941,624

1,705,5869,873

155,64317.864

2,830,590

111,243173,837

2,040,5902,468,637

214.3585,008,6653.601.6931,406,972

-0-

The Accompanying Notes Are An Integral Part Of These Financial Statements

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Exhibit APage 2


BALANCE SHEETS

AT JUNE 30. 2007 AND JUNE 30. 2006

June 30L I A B I L I T I E S

A N D N E T A S S E T S

Current Liabilities:Accounts Payable (Note 16)Estimated Third-Party Payor Settlements (Note 3)Accrued Salaries, Withholdings and RetirementAccrued Employee Vacation BenefitsAccrued Interest PayableCapital Lease Obligations-Current Portion (Note 6)

Total Current Liabilities

Long-Term Liabilities:Capital Lease Obligations (Note 6)Less-Current Portions

Total Long-Term Liabilities

Commitments and Contingent Liabilities (Note 7)Total Liabilities

Net Assets:Invested in Capital Assets, Net of Related DebtUnrestricted

Total Net Assets

Total Liabilities and Net Assets

2007

214,001861,530157,84581,365

16868.496

1,383,405

296,26668.496

227,770

-0-1,611,175

1,199,0352.180.4703.379.505

2006

183,036786,296128,09967,165

38.6081,203,204

198,93438.608

160,326

-0-1,363,530

1,208,0381.665.9942.874.032


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Exhibit B

NORTH CADDQ HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDO MEDICAL CBNTER

STATEMENTS OF REVENUES. EXPENSES.

AND CHANGES IN NET ASSETS

FOR THE YEARS ENDED JUNE 30. 2007 AND JUNE 30.2006

Year Ended June 302007 2006

Operating Revenues:Net Patient Revenues (Note 3)Other Operating Revenue

Total Operating Revenues

Operating Expenses:Direct Departmental ExpensesHousekeepingMaintenance and UtilitiesMedical RecordsGeneral and Administrative (Notes 8, 9,11,15 and 16)Bad DebtsDepreciation (Note 5)AmortizationInterest Expense

Total Operating Expenses

Operating Income (Loss)

Nonopcrating Revenues:Interest IncomeProperty Tax Revenues (Note 10)Rent Income (Notes 13 and 16)Contribution of Long-Lived Assets (Note 16)

Total Nonoperating Revenues

Excess Revenues Over Expenses

Net Assets at Beginning of Year

Net Assets at End of Year

9,427,33135.064

9,462,395

4,998,155212,469219,994204,215

1,648,3441,653,261

239,429

26.7299.202.596

259,799

28,794204,08012,800

245.674

505,473

2.874.032

7,872,03814.755

7,886,793

4,441,196209,791170,060132,630

1,350,5111435,948

199,9741,0924.493

8.045.695

( 158,902)

31,120182,824

9,60010.000

233.544

74,642

2.799.390


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Exhibit C


STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30.2007 AND JUNE 30.2006

2007 2006Cash Flows from Operating Activities:

Cash Received From Patients and Third-Party Payers 7,458,912 5,926,825Other Operating Receipts 49,406 14,482Cash Paid to Suppliers and Employees (7.294.778) (6.340.860)

Net Cash Provided (Used) by Operating Activities 213,540 ( 399,553)

Cash Flows from Noncapital Financing Activities:Property Tax Revenues Received 204,080 182,824Cost of Tax Election ( 5.031)

Net Cash Provided by Noncapital Financing Activities 199,049 182,824

Cash Flows from Capital and Related Financing Activities: (Note 18)Acquisition of Capital Assets ( 170,449) ( 219,583)Principal Payments on Capital Leases ( 59,979) ( 13,750)Interest Payments on Capital Leases ( 26.560) ( 4,493)

Net Cash (Used) by Capital and Related Financing Activities ( 256,988) ( 237,826)

Cash Flows from Investing Activities:Interest Income on Investments 28,794 31.120

Increase (Decrease) in Cash and Cash Equivalents 184,395 ( 423,435)

Cash and Cash Equivalents at Beginning of Year 941.624 1.365.059

Cash and Cash Equivalents at End of Year 1.126.019 941.624

Reconciliation of Income From Operations to Net CashProvided by Operating Activities:

Excess Revenues Over (Expenses) (Exhibit B) 505,473 74,642Interest Income on Investing Activities ( 28,794) ( 31,120)Property Tax Revenues ( 204,080) ( 182,824)Interest Expense on Financing Activities 26,728 4 493Non-Cash Property Contributions Received ( 10,000)Adjustments to Reconcile Excess Revenues to Net CashProvided by Operating Activities:Depreciation and Amortization 239,429 201,066Provision for Bad Debts 1,653,261 1,535,948

Changes in Operating Assets and Liabilities:(Increase) in Accounts Receivable (2,042,110) (2,016,548)Increase in Accounts Payable 150,146 10,934Decrease (Increase) in Prepaid Expenses ( 63,077) 26,029(Increase) in Inventory ( 23.436) ( 12.173)

Net Cash Provided (Used) by Operating Activities 213r54Q ( 399T553)


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Exhibit D


NOTES TO FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

The accompanying financial statements are prepared in conformity with generally accepted accountingprinciples. Application of those principles requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and thereported revenues and expenses. Actual results could differ from those estimates. See Note 12 concerningsignificant estimates.

A summary of significant accounting policies follows:

Method of Accounting

The financial statements of North Caddo Hospital Service District, d/b/a North Caddo Medical Center(Medical Center) are prepared using the accrual method of accounting. The Medical Center's accountingand reporting practices also conform to the requirements of Louisiana Revised Statute 24:514, the LouisianaGovernmental Audit Guide, the American Institute of Certified Public Accountants Audit and AccountingGuide Health Care Organizations, and standards set by the Governmental Accounting Standards Board(GASB), which is the accepted standard setting body for establishing governmental accounting and financialreporting principles in the United States of America.

Accounting Standards

Pursuant to Governmental Accounting Standards Board (GASB) Statement No. 20, Accounting andFinancial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary FundAccounting and Statement No. 29, The Use of Not-for-Profit Accounting and Financial Reporting Principlesby Governmental Entities, the Medical Center has elected to apply the provisions of all relevantpronouncements of the Financial Accounting Standards Board (FASB), including those issued afterNovember 30,1989, that do not conflict with or contradict GASB pronouncements and which weredeveloped for business enterprises.

Budgets and Budgetary Accounting

Under Louisiana law, hospital service districts are not required to operate under a formal budget.Accordingly, budgetary accounting is not presented in the financial statements.

Statement of Operations Classifications

Revenues and expenses deemed by management to be ongoing, major, or central to the provision of healthcare services are reported as components of operating income. Transactions that are peripheral or incidentalto providing health care services are reported as nonoperating.

Patient Revenue and Accounts Receivable

Patient revenues are reported net of free services and contractual adjustments, including estimatedretroactive adjustments under reimbursement agreements with third-party payers. Retroactive adjustmentsare accrued on an estimated basis in the period in which the related services are rendered and adjusted infuture periods as final settlements are determined. See Note 3.

-14-

Exhibit DPage 2

NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CAPDO MEDICAL CENTER


Note 1 - Summary of Significant Accounting Policies (Continued)

Charges to patient accounts receivable are recorded contemporaneously with the services provided based onthe established rates for those services. Reductions to patient accounts receivable results from cashcollections, discounts under contractual agreements and bad debts. The Medical Center does not make itspatient accounts receivable available for sale. Interest on unpaid balances is generally not charged.Allowances for bad debts are based on estimated percentages applied to the various age groups of accountbalances that are not receivable from Medicare, Medicaid, or certain other large third-party payers.Allowances for discounts on accounts receivable from Medicare, Medicaid and certain other large third-party payers are based primarily on the latest discount percentages experienced with each payer.

For most charges to insured patients, the Medical Center files claims with those patients' insurancecompanies and abstains from billing those patients until all insurance benefits have been collected orestablished. Once billed, the patient's charges are due within 30 days of the billing and are considereddelinquent after 90 days. Patient account balances are charged against the allowance for bad debts when allinternal collection efforts have failed and the account is referred to a collection agency or when the debtor isfound to be bankrupt.

Performance Indicator

The Medical Center's performance indicator, "excess revenues over expenses," includes operating andnonoperating revenues and expenses and excludes, consistent with industry practice, unrealized gains andlosses on investment securities and contributions of long-lived assets.

Capital Assets and Depreciation

Capital assets other than those held under capital leases are included at cost, or if donated, at fair value onthe date of receipt. Depreciation is computed using the straight-line method over the assets' estimated usefullives. See Note 5.

Gains and losses on the disposal of fixed assets are considered incidental to the provision of health careservices and, as such, are reported as nonoperating.

Capital Leases and Amortization

Assets and liabilities under capital leases are recorded at the present value of the minimum lease payments.The assets are amortized over their related lease terms which approximate their estimated productive lives.Amortization of assets under capital leases is included in depreciation.

Inventories

Inventories are reported principally at cost using a first-in, first-out cost flow assumption.

Compensated Absences

The Medical Center's policy regarding employees' vacation pay provides that employees' earned andunused vacation benefits accumulate and vest. Therefore a liability is recorded for those unpaid benefits.The Medical Center does not provide any other compensated absences that accumulate and vest.

-15-

Exhibit DPage 3

NORTH CADDO HOSPITAL SERVICE DISTRICT, d/b/a NORTH CAPDO MEDICAL CENTER


Note 1 - Summary of Significant Accounting Policies (Continued)

Advertising

Costs of advertising are expensed as incurred. See Note 11.

Charity Care

The Medical Center provides care to patients who meet certain criteria under its charity care policy withoutcharge or at amounts less than its established rates.

Income Taxes

As a component unit of the Caddo Parish Commission and the State of Louisiana (Note 2), the Hospital isexempt from federal and state income taxes.

Amortization of Intangibles

The costs of an election to levy taxes for the Medical Center^ benefit have been capitalized and are beingamortized over the life of the levy (10 years) beginning with the year ended June 30,1997, the year duringwhich the tax levy was approved.

A new tax election was voted in and is effective for year end June 30,2007. The costs of this new electionto levy taxes for the Medical Center's benefit have been capitalized and are being amortized over the life ofthe levy (10 years) beginning with the year ended June 30,2008, the year during which tax revenues are firstreceived.

Cash Equivalents

Cash and cash equivalents includes all unrestricted highly liquid deposits and debt instruments acquiredwith maturities of three months or less.

Risk Management

The Medical Center is exposed to various risks of loss from torts; theft of, damage to, and destruction ofassets; business interruption; errors and omissions; employee injuries and illnesses; and natural disasters.Commercial insurance coverage is purchased for claims arising from such matters. Settled claims have notexceeded this commercial coverage in any of the three preceding years. See Note 14.

Note 2 - Organization and Operations

The Medical Center is located in Vivian, Louisiana and provides in-patient and out-patient acute andnonacute medical care, including emergency services, primarily to patients residing in the Vivian area. SeeNote 17 concerning concentrations of economic dependence.

-16-

Exhibit DPage 4



Note 2 - Organization and Operations (Continued)

The Medical Center is organized and operated as a hospital service district under Louisiana RevisedStatutes, Chapter 10, Title 46 and is a component unit of the Caddo Parish Commission (the Commission).The Medical Center operates and is financially independent of the Commission and has no component unitsin its operations. As a hospital and governmental unit, changes in federal or state laws and regulations orinterpretations thereof may have a significant financial impact on the Medical Center.

Since the Medical Center is a component unit of the Commission it is considered part of the Commissionand is included as such for financial reporting purposes. The governing authority of the Medical Center is aboard of commissioners (the Board) consisting of nine voting members. The members are appointed by theCommission for four-year terms. The governing authority of the Medical Center board was established byan ordinance of the Commission.

The Medical Center was determined to be a component unit of the Commission due to its financialaccountability to the Commission as follows:

The Commission has the ability to appoint or remove members of the Board at will.

The Commission requires the Board to advise them on problems concerning the operation of theMedical Center and other facilities.

The accompanying financial statements present information only on the sole fund maintained by theMedical Center and do not present information on the Commission.

Note 3 - Patient Revenues and Accounts Receivable

The Medical Center has agreements with third-party payers that provide for payments to the Medical Centerat amounts different from its established rates. Contractual adjustments under third-party payment programsrepresent the difference between the Medical Center^ established rates for services and amounts paid bythird-party payers.

Medicare-The Medical Center operates under the Medicare Critical Assess Hospital (CAH) program. Underthe CAH program, the Medical Center is reimbursed under a cost reimbursement method. Under the costreimbursement method, the Medical Center is reimbursed at tentative rates with final settlement determinedafter submission of annual cost reports by the Medical Center and audits by the Medicare fiscalintermediary.

For the years ended June 30,2007 and June 30,2006, the Medical Center received approximately 44 percentand 39 percent, respectively, of its gross patient revenue (31 and 29 percent, respectively, of its net patientrevenues) from the Medicare program. These revenues are subject to health insurance program fiscalintermediary review and retroactive adjustment. Cost reports for the years ended June 30,2007,2006, and2005 are subject to examination. Provisions have been made for estimated settlements and adjustments.

-17-

Exhibit DPage 5

NORTH CADPQ HOSPITAL SERVICE DISTRICT, d/b/a NORTH CADDO MEDICAL CENTER


Note 3 - Patient Revenues and Accounts Receivable (Continued)

Medicaid-Under the Louisiana Medicaid program, inpatient services are paid at a per diem rate, andoutpatient services are reimbursed under a cost reimbursement method. Under the cost reimbursementmethod, the Medical Center is reimbursed at a tentative rate with final settlement determined aftersubmission of annual cost reports by the Medical Center and audits by the Medicaid fiscal intermediary.Under the per diem method, one established rate is used for all patient stays regardless of the magnitude orcomplexity of the services provided. The Medical Center's Medicaid cost reports for the years endedJune 30,2007,2006, and 2005 are subject to examination by the Medicaid fiscal intermediary. Provisionshave been made for estimated settlements and adjustments.

The Medical Center has also entered into payment agreements with certain commercial insurance carriers,health maintenance organizations, and preferred provider organizations which result in contractualadjustments from established rates.

A summary of patient revenues for the years ended June 30, 2007 and June 30,2006 follows:


Patient Revenues at Established Rates $ 16,795,225 $ 12,625,765

Less-Provisions for Contractual Adjustments:Current Provisions 8,116,627 5,374,318Changes in Prior Estimates - 0 - - 0 -Medicaid Disproportionate Share

Payments Received ( 748.733^ ( 62059114.753.727

Net Patient Revenues $ 9.427.331 $ 7.872.038

The Medical Center qualifies for Medicaid "disproportionate share payments" under the Louisiana 1997Rural Hospital Preservation Act. Such payments are contingent on annual federal funding and recognized asdecreases to contractual adjustments in the year received.

The Medical Center grants credit without collateral to its patients, most of whom are from the Vivian,Louisiana vicinity. The mix of gross receivables from patients and third-party payers at June 30, 2007 andJune 30,2006 is as follows:

At June 302007 2006

Medicare 24% 32%Medicaid 7 10Other Third-Party Payors and Patients 69 58

1QQ% 1QQ%

-18-

Exhibit DPage 6



Note 3 - Patient Revenues and Accounts Receivable (Continued)

Net accounts receivable from patient services is comprised as follows:

At June 302007 2006

Gross Patient Accounts Receivable $ 5,662,668 $ 3,814,707

Estimated Allowances for Bad Debts andContractual Adjustments Under Third-

Party Payment Programs (Note 12) (3.566.690) (2.109.121)

Net Accounts Receivable from PatientServices $ 2.095.978 $ 1.705.586

Note 4 - Cash and Certificates of Deposit

Louisiana law requires banks and savings and loan associations to secure a government's deposits (cash inbanks) by pledging qualifying securities as collateral. For this purpose "cash in banks" is comprised of theaccount balances according to the banks' records which at June 30, 2007 are as follows:

FirstCitizens Guaranty

Bank & Trust Bank

Cash in Banks

Insured by FDIC

Collateralization-Fair Market Value

Uncollateralized

Collateral is held by the pledging financial institutions' trust department in the name of North CaddoMedical Center.

Note 5 - Depreciation

Depreciation expense and the estimated useful lives of the major categories of capital assets are as follows:


Buildings and Building Improvements(5-40 years) $ 54,066 $ 56,418

Equipment (3-20 years) 179,844 138,037Land Improvements (8-20 years) 5.519 5.519

$ 239.429 S 199.974

-19-

Exhibit DPage?



Note 6 - Capital Leases

During the year ended June 30,2007, the Medical Center entered into a new capital lease contract withDade Behring. The lease is for a chemistry analyzer, valued at $157,311. The lease has a term of Gve yearsand will expire in August 2011.

The Medical Center leases a coagulation machine from Dade Behring Financial Services. The lease has aterm of five years and expires in January 2009.

The Medical Center leases a x-ray machine, a radiography, and two heart monitors from Philips MedicalCapital, LLC. All three leases have a term of five years and expire in March 2011.

Following is a summary of property held under capital leases:

At June 302007 2006

Coagulation Machine $ 20,085 $ 20,085Chemistry Analyzer 157,311X-Ray Machine 98,122 98,122Radiography 65,729 65,729Two Heart Monitors 30.422 30.422

371,669 214,358Less-Accumulated Depreciation 88.847 19.757Net Carrying Amount $282.822 $194.601

-20-

Exhibit DPageS



Note 6 - Capital Leases (Continued)

Minimum future lease payments under these leases are as follows:

Year Ending June 30

2008

2009

2010

2011

2012

Less-Amount

Representing Interest

Net Present Value of

Minimum Lease

Payments

Imputed Rate of Interest

Coagulation

Machine X-Rav

Two Heart Chemistry

Radiography Monitors Analyzer Total

$ 4,722

2,753

-0-

-0-

-0-

7,475

394

$ 24375

24^75

24,375

18,281

91,406

13.905

$ 16,062

16,062

16,062

12,047

60,233

8.515

$ 7,554

7,554

7,554

5,665

28327

4302

$ 39,576

39,576

39,576

39,576

6.596

164,900

28.959

$ 92,289

90,320

87,567

75,569

6.596

352341

56,075

* 7.081 $ 77.501 S 51.718 X 24.025 $135.941

6.55% 8.88% 8.18% 8.86% 9.42%

Note 7 - Commitments and Contingent Liabilities

The healthcare industry is subject to numerous laws and regulations which include, among other things,matters such as government healthcare participation requirements, various licensure and accreditations,reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Government action hasincreased with respect to investigations and/or allegations concerning possible violations of fraud and abuseand false claims statutes and/or regulations by healthcare providers. Providers that are found to haveviolated these laws and regulations might be excluded from participating in government healthcareprograms, subjected to fines or penalties or required to repay amounts received from the government forpreviously billed patient services. While management of the Medical Center believes its policies,procedures and practices comply with governmental regulations, no assurance can be given that the MedicalCenter will not be subjected to governmental inquiries or actions.

See Note 3 regarding contingencies concerning the Medical Center^ Medicare and Medicaid cost reportsand its Medicaid rural hospital disproportionate share payments.

See Note 6 concerning capital lease commitments.

See Note 8 concerning operating lease commitments.

See Note 14 regarding insurance contingencies.

See Note 15 regarding self-funded unemployment claims.

-21-

Exhibit DPage 9



Note 8 - Operating Leases

The Medical Center has entered into several operating leases for telephones, other equipment, and realestate. These operating leases range from one month to five years with expiration dates through June 2007.Rent expense under these leases for the years ended June 30, 2007 and June 30, 2006 is as follows:


Telephones $ 1,598 $ 1,480Other Equipment 50.439 45.086

Total Rent Expense $_ 52.037 S 46.566

Minimum future rental payments under noncancelable operating leases are as follows:

Year Ending June 302008 $ 45,7032009 45,7032010 45,7032011 34,2882012 12,204

$183.601

Note 9 - Pension Plan

Plan Description

The Medical Center contributes to the Parochial Employees' Retirement System of Louisiana, a PublicEmployee Retirement System (the Plan), that is a cost sharing multiple-employer plan established by theLouisiana legislature as of January 1,1953, by Act 205 of 1952. The system was revised by Act No. 765 of1979, effective January 1,1980, to replace the "regular plan" with the Plan B Fund of which the MedicalCenter is a participant. Plan B provides retirement and disability benefits and death benefits to planmembers and beneficiaries. The Retirement System is governed by the Louisiana Revised Statues, Title 11,Sections 1901 through 2015, specifically, and other general laws of the State of Louisiana.

The Parochial Employees' Retirement System of Louisiana, Inc. issues a publicly available financialstatement report that includes financial statements and required supplementary information for the Plan.That report may be obtained by writing the Parochial Employees' Retirement System of Louisiana, Inc., PostOffice Box 14619, Baton Rouge, Louisiana, 70898-4619.

Plan Funding

Employer and employee contributions to the Plan are established by state statute. Employee contributionsare 3 percent of covered wages in excess of $100 per month for each of the years ended December 31,2006and December 31, 2005. For the years ended December 31, 2005 and December 31,2004, employercontributions are 5.75 percent of covered wages in excess of $100. In addition to the aforementionedcontributions the tax collectors of various parishes contribute one fourth of one percent of all taxcollections.

-22-

Exhibit DPage 10



Note 9 - Pension Plan (Continued)

The Medical Center's contributions to the Plan, and its retirement expense, for the most recent three yearsare as follows:

Percentage ofYear Ended June 30, Amount Required Amount

2007 $268,899 100%2006 $ 146,585 100%2005 $ 135,854 100%

Note 10- Property Tax Revenues

The Medical Center received $204,081 and $182,824 in property tax revenues for the years ended June 30,2007 and June 30, 2006, respectively. This revenue is used primarily for establishing, maintaining andoperating an ambulance service for the residents of the North Caddo Hospital Service District. Anyrevenues in excess of the ambulance service costs may be used for maintaining, operating, and improvingthe Medical Center.

The property tax is assessed on January 1, levied not later than June 1, due by December 31, and liened onJanuary 1 (one year after the assessment date). The Caddo Parish Sheriff Department collects the taxes.The property tax revenues are summarized as follows:


Property Tax Assessment $ 217,453 $ 196,715Allowance for Uncollectible Assessments ( 14.137) ( 19.215)Property Tax Collected 203,316 177,500Adjustments, Interest and

Prior Period Collections 764 5.324Property Taxes Reported

The original ambulance service property tax levy expired in May 2007. A renewal vote to extend the taxlevy for an additional ten years was held in March 2007 and was approved. The renewed tax levy willexpire in May 2017.

Note 11-Advertising

Advertising costs for the years ended June 30,2007 and June 30,2006 are $24,148 and $26,747,respectively.

-23-

Exhibit DPage 11



Note 12- Significant Estimates

As described at Note 3, estimated allowances from accounts receivable for bad debts and contractualdiscounts and settlements have been provided. Due to uncertainties inherent in the estimation of suchallowances, it is at least reasonably possible that actual bad debts and contractual discounts and settlementsthat materialize in the near term could differ materially from the estimates.

As described at Note 14, the Medical Center participates in the Louisiana Hospital Association MalpracticeInsurance Trust Fund and Workman Is Compensation Group Self-Insurance Fund. Due to uncertaintiesinherent in the estimation of potential claims, it is at least reasonably possible that actual claims thatmaterialize in the near term could differ materially from the estimates.

Note 13- Rental Income

The Medical Center leases office space in its Extended Services building to Willis-Knighton Medical Centerunder a month-to-month lease (the original three-year operating lease expired June 30,2000). Rentalincome is presented in the statement of operations as nonoperating revenue. Rental income for each of theyears ended June 30,2007 and June 30,2006 is $12,800 and $9,600, respectively. See Note 16.

Note 14- Insurance

Under current Louisiana law, the Medical Center's liability for medical malpractice is statutorily limited to$500,000 per claim. To cover this exposure, the Medical Center has obtained insurance coverage of$100,000 per claim with the Louisiana Hospital Association Malpractice and General Liability Trust and anadditional $400,000 per claim with the State of Louisiana Patient's Compensation Fund.

The Medical Center is a participant of the Louisiana Hospital Association Malpractice Insurance Trust Fundand Workmen's Compensation Group Self-Insurance Fund. These trust funds retrospectively set premiumsfor members based on the loss history of each entire group. The Medical Center expenses premiums paid tothese multi-provider captive insurance companies over the policy periods covered.

According to the trust document for the Malpractice Insurance Trust (the Trust), participants are jointly andseverally liable for the obligations of the Trust with the right of indemnity among the participants for eachparticipant's pro rata share of the obligation as formulated in the trust document. Each participant has thiscontingent assessment liability for the payment of actual losses and expenses incurred while a participant inthe Trust. This contingent liability is not to exceed the amount necessary to make up trust fund deficienciesin the trust fund year in which the obligations were incurred, and such liability is not to exceed an amountequal to the charges otherwise due by such participant during such plan year.

According to the trust document for the Workmen's Compensation Group Self-Insurance Fund (the Fund),participants are liable jointly and in solido for claims not paid pursuant to Subpart J of Part I of Chapter 10of Title 23 of the Louisiana Revised Statutes of 1950, with the right of indemnity among the participants foreach participant's pro rata share of the obligation as formulated in the trust document. Each participant hasthis contingent assessment liability for the payment of actual losses and expenses incurred while aparticipant in the Fund, but only to the extent that such losses and expenses are not paid by the excesscoverage secured by the Fund.

Management does not believe that any significant contingent liabilities exist under these insurancearrangements.

-24-

Exhibit DPage 12



Note 15- Self-Funded Unemployment Claims

The Medical Center became self-funded with respect to unemployment claims effective October 1,1998.As a self-funded employer, the Medical Center must reimburse the Louisiana Department of Labor on adollar-for-dollar basis for unemployment benefits paid to former employees. The Medical Centerreimbursed the Louisiana Department of Labor $6,442 and $2,551 for claims paid on behalf of the MedicalCenter during the fiscal years ended June 30,2007 and June 30, 2006, respectively.

The Medical Center signed a three-year contract with Temple Resource Management, Inc. (TRM) for claimsmanagement services at an annual cost of $2,000. TRM evaluates all claims, recommends appropriateaction for all notices the Medical Center receives from the Louisiana Department of Labor, and audits theexperience rates and unemployment benefits charged to the Medical Center.

Management does not believe that any significant contingent liabilities exist under this arrangement atJune 30,2007.

Note 16- Related Party Transactions

The Medical Center has entered into a management contract with Willis-Knighton Medical Center(WKMC), a large metropolitan health care provider operating in Shreveport and Bossier City, Louisianaapproximately 30 miles from North Caddo. Under this contract, WKMC has agreed to manage theoperations of the Medical Center and to provide the Medical Center with a qualified administrator. Theadministrator is an employee of WKMC and acts on behalf of WKMC in the Medical Center^ best interest.The contract is on a monthly basis and requires that the Medical Center reimburse WKMC for the salary andbenefits of the Medical Center's administrator.

The Medical Center received rental income from WKMC in the amount of $12,800 and $9,600 for yearsended June 30,2007 and June 30,2006, respectively, for leased office space in its Extended Servicesbuilding. See Note 13.

During the years ended June 30, 2007 and June 30,2006, the Medical Center paid WKMC, $289,117 and$190,762, respectively, for the administrator's salary and benefits, office supplies, laundry services andvarious patient services.

At June 30,2007 and June 30,2006, the Medical Center owes WKMC $22,268 and $31,735, respectively,for various services and supplies, which is included in accounts payable.

During the year ended June 30,2006, WKMC donated a CT scan machine to the Medical Center with a fairmarket value of $10,000.

Note 17- Concentrations

The Medical Center has an economic dependence on a small number of local physicians who admitsubstantially all of the Medical Center's patients.

See Note 3 concerning revenues derived from patients who are beneficiaries under the Medicare program.

See Note 3 concerning significant financial resources provided from Medicaid Disproportionate SharePayments.

-25-

Exhibit DPage 13



Note 18- Noncash Capital and Relating Financing Transactions

As mentioned at Note 16, the Medical Center entered into a capital lease during the year ended June 30,2007. The amount of the asset capitalized under this lease is $157,311.

As mentioned at Note 16, the Medical Center entered into three capital leases during the year ended June 30,2006. The amount of the assets capitalized under these leases is $194,273.

See Note 16 concerning medical equipment donated to the Medical Center.

-26-

WILLIAM JEFFERSON COLE, C.P.A.A. WILLIAM PETERSON, C.P.A.CAROL T. BARNES, C.P.A.C. WILLIAM GERARDY, JR., C.P.A.BARRY S. SHIPP, C.P.A.STEVEN W. HEOGEPETH, C.P.A.STEVEN R. BAYER, C.P.A.GWENDOLYN H. HARJU, C.P.A.TIMOTHY R. DURR, C.P.A.BAILEY B. BAYNHAM, C.P.A.ROBERT A. BUSBY, C.P.A.ANNE-MARIE COLE, C.P.A.TIMOTHY W. BORST, C-P.A.ERIC D. SMITH, C.P.A.MARY WELLS CARMODY, C.P.A.

JOHN A. CASKEY, C.P.A.NINA G. GLORIOSO, C.P.A.J. AMY HEMMINGS, C.P.A.LINDA K. BIBLE, C.P.A.JAMES O. COLLINS, C.P.A.KYLE S. DOBBINS, C.P.A.WILLIAM D. JARRETT, TOT, C.P.A.MATTHEW R. HAHN, C.P.A.FAYE D. CAMPBELL, C.P.A.


FIFTH FLOOR TRAVIS PLACE

6OO BLOCK TRAVIS STREET

SHREVEPORT, LOUISIANA 7IIOI-3OI3

www.cepcpa.com

December 18, 2007

M. ALTON EVANS, JR.

PARTNER EMERITUS


OF COUNSEL

TELEPHONE (318) 222-8367

TELECOPIER (318) 42B-4IOI

MAILING ADDRESS:

P. O. DRAWER 1768


INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION


Our audits of the June 30,2007 and June 30,2006 financial statements of North Caddo Hospital ServiceDistrict, d/b/a North Caddo Medical Center were performed for the purpose of forming an opinion on the basicfinancial statements taken as a whole. Schedules 1 through 5 which follow are presented for purposes ofadditional analysis and are not a required part of the basic financial statements. Such information has beensubjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, isfairly stated in all material respects in relation to the basic financial statements taken as a whole.


-27-

Schedule 1

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-28-

Schedule 2


GENERAL AND ADMINISTRATIVE EXPENSES

FOR THE YEARS ENDED JUNE 30. 2007 AND JUNE 30. 2006


General and Administrative SalariesAccounting and Auditing FeesLegal FeesCost Report Preparation and ConsultingTelephoneInsuranceEmployee Benefits and Payroll TaxesSupplies and Other

Total General and Administrative Expenses

277,27053,8654,080

26,68245,703

163,299856,946220.499

283,30527,8802,313

28,76442,793

132,056694,691138.709

1.350.511

-29-

Schedule 3


COMPENSATION PAID TO MEMBERS OF THE BOARD OF COMMISSIONERS

FOR THE YEAR ENDED JUNE 30.2007

Compensation (including per diemlPaid to Board Members:

Earl G. Williamson, Jr.Kenneth D. ClayRobert GuthHelen AdgerScott WelchRobert GreenMary IrvinBrenda SmithPat White

Paid BoardMeetingsAttended

101212126

11111212

CompensationMileage

Reimbursement

-0--0--0-600-0--0--0--0--0-

TotalCompensation

1,0001,2001,2001,800

6001,1001,1001,2001,200

10.400

-30-

^ O*d oCO•t

0101OC(S

8

Schedule 4

SCr*

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U

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-31-

Schedule 5


SUMMARY OF OPERATING RESULTS

Year ended June 30

Total Gross Revenue

Discounts and Bad Debts

Cost and Expenses

Net Income (Loss)

Total Hospital Patient Days

Admissions

Inpatient Revenue per Patient Day

Inpatient Revenue as a Percentof Total Patient Revenue

Net Income (Loss) per Patient Day

Net Income (Loss) as a Percentof Gross Patient Revenues

Number of Days Net Patient Revenuesin Net Patient Receivables

Number of Days Net Patient Revenues(Without Medicaid DisproportionateShare Payment and Change inEstimate) in Net Patient Receivables

Average Length of Patient Stayin Days

2007

17,075,963

9,021,155

7,549.335

505.473

3,253

1,049

2,560

2006

12,874,064

6,289,675

6,509.747

74.642

3,176

1,035

2,015

2005

10,889,180

4,948,728

6,332.256

( 391.804̂

2,699

910

2,117

2004

10,690,791

4,262,265

6.060,355

368.171

2,942

907

2,023

2003

10,335,184

4,119,130

5,862.749

353.305

3,126

926

1,843

49.59 % 50.70 % 53.85 % 56.84 % 56.89 %

155.39 23.50 (145.17) 125.14 113.02

3.01%

81.15

88.15

3.10

.59% ( 3.69)%

79.08

85.85

3.07

64.82

71.07

2.97

3.52%

65.10

72.17

3.24

3.49 %

62.29

69.89

3.38

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WILLtAM JEFFERSON COLE, C.P.A.A. WILLIAM PETERSON, C.P.A.CAROL T. BARNES, C.P.A.C. WILLtAM GERARDY, JR., C.P.A.BARRY S. SHIPP, C.P.A.STEVEN W. HEDGEPETH, C.P.A.STEVEN R. BAYER, C.P.A.GWENDOLYN H. HARJU, C.P.A.TIMOTHY R. DURR, C.P.A.BAILEY B. BAYNHAM, C.P.A.ROBERTA. BUSBY, C.P.A.ANNE-MARIE COLE, C.P.A.TIMOTHY W. BORST, C.P.A.ERIC D. SMITH, C.P.A.MARY WELLS CARMODY, C.P.A.

JOHN A. CASKEY, C.P.A.NINA Q. OLORIOSO, C.P.A.J. AMY HEMMINOS, C.P.A.LINDA K. BIBLE, C.P.A.JAMES D. COLLINS, C.P.A.KYLE S. DOBBINS, C.P.A.WILLIAM D. JARRETT, UT, C.P.A.MATTHEW H. HAHN, C.P.A.FAYE D. CAMPBELL, C.P.A.


FIFTH FLOOR TRAVtS PLACE

6OO BLOCK TRAVIS STREET

SHREVEPORT, LOUISIANA 7MOI-3OI3

www.cepcpa.com

December 18, 2007

M. ALTON EVANS, JR.

PARTNER EMERITUS


OF COUNSEL

TELEPHONE (318) 322-8367TELECOPIER (318) 425-4IOI

MAILING ADDRESS:P. O. DRAWER I76B


INDEPENDENT AUDITORS* REPORT ON COMPLIANCE AND ON INTERNAL CONTROLOVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


We have audited the financial statements of North Caddo Hospital Service District, d/b/a North CaddoMedical Center at and for the year ended June 30,2007 and have issued our report thereon dated December 18,2007.We conducted our audit in accordance with auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered North Caddo Hospital Service District, d/b/a NorthCaddo Medical Center's internal control over financial reporting as a basis for designing our auditing procedures forthe purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinionon the effectiveness of the Medical Center's internal control over financial reporting. Accordingly, we do notexpress an opinion on the effectiveness of the Medical Center's internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in thepreceding paragraph and would not necessarily identify all deficiencies in internal control over financial reportingthat might be significant deficiencies or material weaknesses. However, as discussed below, we identified certaindeficiencies in internal control over financial reporting that we consider to be significant deficiencies.

A control deficiency exists when the design or operation of a control does not allow management oremployees, In the normal course of performing their assigned functions, to prevent or detect misstatements on atimely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adverselyaffects the organization's ability to initiate, authorize, record, process, or report financial data reliably in accordancewith generally accepted accounting principles, such that there is more than a remote likelihood that a misstatement ofthe organization's financial statements that is more than inconsequential will not be prevented or detected by theorganization's internal control. We consider the deficiencies described in the accompanying schedule of findings andquestioned costs at Findings 07-01,07-02 and 07-03 to be significant deficiencies in internal control over financialreporting.

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Board of Commissioner December 18, 2007North Caddo Hospital Service District Page 2

A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that a material misstatement of the financial statements will not be prevented ordetected by the organization's internal control.

Our consideration of the internal control over financial reporting was for the limited purpose described in thefirst paragraph of this section and would not necessarily identify all deficiencies in the internal control that might besignificant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are alsoconsidered to be material weaknesses. However, of the significant deficiencies described above, we consider themall to be material weaknesses.

North Caddo Medical Center's responses to the findings identified in our audit are described in theaccompanying schedule of findings and questioned costs. We did not audit North Caddo Medical Center's responsesand, accordingly, we express no opinion on them.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether North Caddo Hospital Service District, d/b/a NorthCaddo Medical Center's financial statements are free of material misstatement, we performed tests of its compliancewith certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct andmaterial effect on the determination of financial statement amounts. However, providing an opinion on compliancewith those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance that are required to be reported herein under GovernmentAuditing Standards.

This report is intended solely for the information and use of the Caddo Parish Commission, Board ofCommissioners, management, and others within the organization and the Office of the Legislative Auditor for theState of Louisiana and is not intended to be and should not be used by anyone other than these specified parties.However, this report is a matter of public record and its distribution is not limited. Under Louisiana Revised Statue24:513, this report is distributed by the Legislative Auditor as a public document.


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December 18,2007

INDEPENDENT AUDITORS* SUMMARY SCHEDULE OF FINDINGS AND QUESTIONED COSTSFor the Year Ended June 30,2007

We have audited the financial statements of North Caddo Hospital Service District, d/b/a North CaddoMedical Center at and for the year ended June 30,2007, and have issued our report thereon dated December 18,2007. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States. Our audit of the financial statements as of June 30,2007 resulted in anunqualified opinion.

Section 1 - Summary of Auditors' Report

a. Report on Internal Control and Compliance Material to the Financial Statements

Internal ControlMaterial Weaknesses - Yes Significant Deficiencies - Yes

ComplianceNon-compliance Material to the Financial Statements - No

b. Management Letter

Management letter issued - No

Section 2 - Financial Statement Findings

FINDING 07-01 - Estimates for annual Medicare cost report settlements are not being posted on a timelybasis.

Requirement - As a Medicare Critical Access Hospital the Medical Center is reimbursed byMedicare under a cost reimbursement method. The final settlement with Medicare is determinedwith the submission of an annual cost report. The adjustment for this final settlement can be materialto Medical Center. The Medical Center should make an quarterly adjustment for this final settlementby preparing quarterly interim cost reports.

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Recommendation - Management should ensure that someone is preparing interim cost reports, atleast on a quarterly basis, so adjustments can be posted on a timely basis.

Management's Response - Management intends to immediately implement the precedingrecommendation.

FINDING 07-02 - CRNA charges are not recorded on a timely basis.

Requirement - The charges for CRNA services must be recorded in the general ledger during themonth the services are performed.

Recommendation - Management should ensure that someone is posting the CRNA charges in thegeneral ledger during the month the services are performed.


FINDING 07-03 - Changes in estimates for contractual adjustments are not recorded on a timely basis.

Requirement - The actual discounts on accounts receivable from Medicare, Medicaid, and certainother large third-party payers should be reviewed on at least a quarterly basis so proper allowancescan be made on time.

Recommendation - Management should ensure that someone is calculating the actual discounts onthe large third-party payers at least on a quarterly basis and those discounts are used to calculate thecurrent allowances from patient accounts receivable.


Section 3 - Federal Award Findings and Questioned Costs

N/A

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MANAGEMENT'S SCHEDULE OF PRIOR YEAR FINDINGS(Findings Prior to the Year Ended June 30, 2006)

Section 1 - Internal Control and Compliance Material to the Financial Statements

N/A

Section 2 - Internal Control and Compliance Material to Federal Awards

N/A

Section 3 - Management Letter

N/A

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VIVIAN^ LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE 30 · 2020. 12. 23. · VIVIAN^ LOUISIANA AUDITED FINANCIAL STATEMENTS JUNE 30.2007 Under provisions of state law, this report

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