CHA posts $1.1 mil­lion loss

To­tal rev­enue de­clines 9% to $16.5 mil­lion

Modern Healthcare - - The Week In Healthcare - Joe Carl­son

The Catholic Health As­so­ci­a­tion re­ported sig­nif­i­cant losses for the year ended in June, driven by de­clin­ing in­vest­ment re­turns dur­ing a year when the as­so­ci­a­tion needed to dip into long-term sav­ings to fund gen­eral op­er­a­tions.

Tax forms show the St. Louis-based trade group ended the fis­cal year with a net loss of $1.1 mil­lion, a sig­nif­i­cant swing from the prior year, when the as­so­ci­a­tion closed its books with a $482,000 profit. To­tal rev­enue de­clined 9% to $16.5 mil­lion in the 12 months ended June 30, ac­cord­ing to the an­nual tax forms for the fis­cal year that were filed in mid-De­cem­ber.

How­ever, us­ing gen­er­ally ac­cepted ac­count­ing prin­ci­ples that in­clude un­re­al­ized losses on in­vest­ments, the as­so­ci­a­tion ac­tu­ally posted a loss of $7.7 mil­lion in net as­sets in the fis­cal year. That loss was buried in­side the tax forms, but re­ported at the top of a CHA man­age­ment let­ter dis­cussing au­dited fi­nan­cial state­ments.

In­vest­ments, which in the past have buoyed the as­so­ci­a­tion’s bot­tom line, hurt the or­ga­ni­za­tion’s fi­nances in 2009. The CHA booked $6.4 mil­lion in losses on its long-term in­vest­ments, in­clud­ing re­al­ized and un­re­al­ized losses, and used an­other $1.3 mil­lion of in­vest­ment in­come to sup­port gen­eral op­er­a­tions. The value of the CHA’s in­vest­ments dropped 22% to $22.5 mil­lion from $29 mil­lion at the end of the prior pe­riod.

Ex­ec­u­tives tried to cast fi­nan­cial re­sults in a pos­i­tive light, not­ing that the as­so­ci­a­tion had bud­geted to draw up to $3.4 mil­lion out of in­vest­ments for op­er­a­tions, of­fi­cials said in a man­age­ment dis­cus­sion of au­dited fi­nan­cial state­ments posted at the as­so­ci­a­tion’s Web site. “CHA con­tin­ues to be in strong fi­nan­cial health, de­spite the losses on long-term in­vest­ments. Th­ese in­vest­ment losses are an un­for­tu­nate but nat­u­ral part of the mar­ket and eco­nomic cy­cle and are con­sis­tent with over­all re­sults in the cap­i­tal mar­kets,” the man­age­ment dis­cus­sion let­ter says. “No ad­verse im­pact on CHA’s abil­ity to serve its mem­bers from the down­turn in the cap­i­tal mar­kets is an­tic­i­pated.”

Mem­ber­ship dues gen­er­ated $15 mil­lion in rev­enue in the fis­cal year, a 4% rise from $14.4 mil­lion in the pre­vi­ous fis­cal year, which the let­ter de­scribed as an un­ex­pected in­crease in dues rev­enue. To­tal ex­penses de­creased by a neg­li­gi­ble amount to $17.5 mil­lion dur­ing the fis­cal pe­riod, from $17.6 mil­lion in the year prior. That in­cludes a 15% drop in lob­by­ing ex­penses in the most re­cent fis­cal pe­riod to $821,634.

Sis­ter Carol Kee­han, pres­i­dent and CEO of the as­so­ci­a­tion, earned to­tal com­pen­sa­tion of $963,436, in­clud­ing a base salary of $664,654, bonuses of $155,000 and other mis­cel­la­neous pay to­tal­ing $143,782. The as­so­ci­a­tion says it pays Kee­han’s salary to her re­li­gious or­der, the Daugh­ters of Char­ity. For­mer top ex­ec­u­tive the Rev. Michael Place, who left in Oc­to­ber 2005, re­ceived $231,000 in com­pen­sa­tion as the fi­nal pay­ment in his post-em­ploy­ment agree­ment with CHA.

Kee­han earned a to­tal com­pen­sa­tion of $963,436 in 2009.

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