Wrangell Medical Center’s auditor and former Chief Financial Officer told the hospital board last week that the medical center has serious financial problems.

The independent audit shows Wrangell Medical Center’s total assets dropped by 40 percent from the previous fiscal year. The hospital also has less than a month’s worth of operating cash on hand.

Wrangell Medical Center has about $4 million in accounts receivable, which is money owed to the hospital by insurance companies and patients.

Former WMC Chief Financial Officer Olinda White said Medicaid is a major reason for that large gap. She said the new Medicaid software is failing to reimburse the hospital for patient care.

“And so it throws a real problem into the mix. And basically, it came down to the point where we ran out of money because we weren’t getting the money in because they can’t process a claim,” White said.

White said the medical center ran out of money once before, and the city helped meet payroll for the hospital employees.

“I would hope it doesn’t come to getting money from the city,” White said. “If we have to, we have to, but then when we get solvent again, it would be best to give it back to them, because the city needs their money.”

White estimated it will take the hospital one to two years to collect half of the money it’s owed.

The hospital also lost money from the previous attempt to build a new facility.

“Well there was $3.4 million written off,” White said. “Costs that were expended for the new building–now that the building has been stopped for so long, they feel that building isn’t adequate and that they need to have a different building.”

WMC is holding on to about $1 million worth of hospital project work that could still be applied to a new facility. White said Wrangell needs to go ahead with the new hospital project because the current facility has a lot of problems.

“If we have a new building, some of the costs will go down, like utilities and things like that. Repairs—they should be nonexistent, I’d think, for a while. We will also then have interest and more depreciation to put in on our cost report, so when we get paid, we’d get paid more,” White said.

White told the hospital board that WMC has not been able to pay all of its bills.

To try to improve the hospital’s financial situation, White has directed hospital staff to make minor spending cuts.

White also said she will also raise charges at the hospital by 2, 5 or 6 percent. But she said only a very small price increase will be passed on to patients.

“We’ve been looking at how much would be passed on to the patients, and basically, a patient will pay the copay, which is 20 percent. So if you go up 2 percent—some of the charges went up 2 percent—if it’s 20 percent of 2 percent, it’s just going to be a minor amount. And I realize it’s still money, and you still have to pay it. But for the health of the hospital, I think we need to do that,” White said.

White said charges should be raised each year to at least match the cost of living, but WMC’s charges have been the same for two and a half years.