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Published on 09/21/1998 All articles from this issue

El Camino Hosptial board passes audit, prepares to address year 2000

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By Carol Tiegs

Special to the Town Crier

El Camino Hospital District received good marks on its audit and financial report for fiscal year 1997-98.

The audit report, presented to the district's board of directors Sept. 9 by the Arthur Andersen team, found no material weaknesses in the hospital's internal operations. The auditing team said it had no disagreements with management on accounting issues.

The audit team noted that "El Camino Hospital District maintains a strong balance sheet" and "achieved a strong operating margin." The team called the district's financial statements "conservatively prepared, noting as significant the $4 million in contributions from the El Camino Hospital District Foundation for fiscal year 1998.

The district's financial statement shows a 1998 excess of revenues over expenses of $22 million, compared with a deficit of $3.5 million in fiscal year 1997. Total net assets as of June 27, 1998 were $299 million, vs. $298 million on June 28, 1997.

The district board voted to accept the audit report and approved a surplus cash investment policy presented by board member and treasurer Mark O'Connor. The policy, he said, is "to invest excess cash in fixed income instruments earning a market rate of interest without assuming undue risk to the principal."

A project to address the Year 2000, the Y2K computer problem, also was on the district board's Sept. 9 agenda. The board approved a $6 million project to achieve Y2K compliance, assuring that the district's computers have a date-related computation code that can be recognized in the new millennium.

The finding covers a newly authorized project management team that will established a detailed work plan for Y2K projects, plus a computer upgrade-replacement project..

According to information presented by board president Paul Hoar, the hospital district has been working on the Y2K issue since early 1997. Since then, it has been working in partnership with IBM Global Services to manage the hospital's technology needs.

In January 1998, the hospital began the first phase of an assessment of its software, hardware and network technology, Hoar said, to determine the scope of Y2K issues. The software assessment was done by the Monterey Bay Group, a health care Y2K assessment firm.

According to an article in the Aug. 10, 1998, issue of Modern Healthcare cited in Hoar's presentation, "As of January 1998, fewer than 1 percent of health care organizations had done a detailed inventory and assessment of Year 2000 date flaws." Hoar acknowledged Richard Warren, the district's chief hospital administrator, for being "aware of early warnings about Year 2000 issues."

James Bare, IBM Global Services project executive, said he "feels confident that El Camino Hospital is in a good position to have its Year 2000 noncompliant systems fixed by Dec. 31, 1999."