ELMHURST – An accounting error has led Edward-Elmhurst Health to overstate its accounts receivable by about $92 million.
The error accumulated over more than six years based on recommended accounting practices at each hospital, according to an Edward-Elmhurst Health statement. Nearly half of the accounting error – $42 million – occurred before July 2013 when Edward and Elmhurst hospitals merged, according to the statement.
"Appropriate and necessary changes have been implemented following a thorough review of accounting practices and procedures from independent, third party consultants and industry experts. These accounting changes will reduce our operating income for the first six months of fiscal year 2018 by $10.4 million," the statement reads. "One of the changes involved adjusting our bad debt reserve policy to fully reserve for those accounts older than 365 days, an appropriate response to the rise in bad debt in the industry."
Edward-Elmhurst Health worked closely with Ernst & Young to determine the accounts receivable overstatement was an accounting error, and therefore the most recent financial statements, fiscal year 2016 and fiscal year 2017, will be restated to reflect the reduction in accounts receivable, according to the statement.
"This is an unfortunate situation but one that we’re aggressively addressing and resolving. We understand the causes of the error and have addressed them," the statement reads. "We have updated our accounting practices to ensure reliable financial statements going forward and have the right people in place to make the needed corrections."
Edward-Elmhurst’s cash position and balance sheet remain strong, according to the statement. Volumes are high and continue to grow.