Business Plan

Presentation to Palm Drive Health Care District

Board of Directors

January 26, 2015

Agenda for Today’s Meeting

• Overview/ Executive Summary of Business Plan R. Hino

– Introduction of Sonoma West Medical Center Team

• Details of the Business Plan R. Hino

– Governance

– Services

– Specialty Institutes

– Financial Strategy

– Marketing

– Start Up Capital

• Financial Projections G. Minervini-Zick/D. Yarbrough

• Questions

Contributors To the Plan

• Jim Maresca

• Sandra DeBella Bodley

• Raymond Hino

• Jim Gude, MD

• Dan Smith

• Glenn Minervini-Zick

• David Yarbrough

• John Rinset

• Alan Bernstein, MD

• Kathy Norris

• Gail Thomas

• Tom Boag

• Kurt Hoffman

• Beth Deutsch

• Terry Newmyer

• Gerald Sullivan

Plan Overview/ Executive Summary

What’s Going to Be Different About Sonoma West Medical Center

• New Outpatient Service Lines for Urology, Endocrinology, Rheumatology, and Integrative Medicine

• No Wait Emergency Department

• Cloud based Electronic Medical Record System

• Marketing Plan

• Patient Education Center

Introduction of SWMC Team

• Raymond T. Hino, MPA, FACHE CEO• Glenn Minervini-Zick Interim CFO• James Gude, MD CMO• To Be Determined Chief of Staff• David Yarbrough, RN, BS, MS, JD Interim COO/CNO• John Rinset Interim Med

Staff/Support Svcs• Kathy Norris Dir, Human

Resources• Jerry Sullivan Project Manager• Bruce Espinoza Information

Technology• Tom Boag Interim

Facilities Support

Plan Overview/Executive Summary

Obligations of Sonoma West Medical Center

• Re-Open Palm Drive Hospital under new name of Sonoma West Medical Center

• Comply with Federal, State and Accreditation Requirements for General Acute Care Hospital

• Comply with Federal, State and Accreditation Requirements for Additional Services to include: Emergency Department, Specialty Medical & Surgical Institutes

Plan Overview/Executive Summary

Obligations of Sonoma West Medical Center

• Staff Sonoma West Medical Center, according to State and Federal requirements with a competitive wage and benefits structure

• Bill, collect and retain all patient accounts receivable, Federal, State revenues (e.g. Intergovernmental Transfers, AB 915 Supplemental Funds, HITECH)

• Implement an Electronic Medical Record System

Plan Overview/Executive Summary

Obligations of Palm Drive Health Care District

• Cooperate with SWMC to bring Palm Drive Hospital up to SB 1953 (Hospital Seismic Safety Law) Compliance for NPC2 requirements

• Maintain Hospital License

• Approve Physician Appointments and Reappointments, following a thorough vetting of physician applications by SWMC

• Contribute a Minimum of $1.5 Million per year beginning in Year 2 for Operations

• Cooperate with SWMC to transition from Management Agreement to Lease Agreement in the future

Plan Overview/Executive Summary

SWMC & PDHCD Agree to:

• Enter into a Management Agreement between Sonoma West Medical Center, Inc & Palm Drive Health Care District (5 year term + Two additional 5 year terms)

• Work together on a Chapter 9 Bankruptcy Exit Plan

Details of the Business Plan

Details of the Business Plan

Governance

• SWMC Directors are selected for business and/or health care knowledge, community involvement, governance skills and related experience.

• Initial SWMC Board Officers for Year 1 are as follows:

• Dan Smith, Chair

• Raymond Hino, President & CEO

• Paul Caracciolo, Secretary

• Mary Ely, CPA, Treasurer

Details of the Business Plan

Governance

• PDHCD Invited to Add Up to 2 District Board Directors, if desired and approved by District Counsel

• SWMC Board to Meet Monthly in Open Session Meetings

• SWMC Board to Appoint Initial SWMC Finance Committee

• Mary Ely, Treasurer/ Finance Committee Chair

• John Balletto

• Andy Pforsich

• Paul Caracciolo

Details of the Business Plan

Services

• General Acute Care Hospital Required License Services

• Outpatient Institutes

• No Wait Emergency Service

• Intensive Care Unit

• Hospitalist Service

• Telemedicine

• Patient Education Center

Upgraded Inpatient Services

• Specialists on Site and Through Telemedicine

• Accredited Continuing Medical Education

• Inviting Private Rooms for All Patients

• Organic Food on Menu

• Integrative Medicine

• Room for Relatives

• The Hospital of Choice15

Outpatient Medical and Surgical Services

• Orthopedic Surgery• Urology• Minimally Invasive Spine

Surgery• Neurology• Endocrinology• Rheumatology 16

No Wait Emergency Room

• The No Wait ER is 1 example of the emphasis that SWMC intends to implement to improve medical services and increase patient satisfaction.

• A June 30, 2014 Impact Assessment by Coastal Valleys EMS agency concluded that 20-22 patients per day will travel to Santa Rosa.

• CVEMS supports efforts to re-establish a licensed ED and hospital services.

• Both Memorial and Sutter are seeing volume above their licensed capacity.

Intensive Care Unit

• 5 bed Unit

• Staffed According to Title 22 Regulations

• The ICU Medical Director is Dr. Jim Gude, a Board Certified Intensivist

• Covered by On sight Day Hospitalist Coverage and Telemedicine Coverage at Night

• The ICU is critically important to support Inpatient Surgery

Hospitalist Service

• Led by Shelleen Denno, MD, an experienced and well known internist and hospitalist in Santa Rosa

• Hospitalists enhance the performance of hospitals by providing prompt and complete attention to all patient care needs

• Enhance care by employing quality and process improvement techniques

New Telemedicine Programs

– Array of Specialty Services Capable of Handling Complex Cases

– Stroke Intervention

– Research Support

– High Acuity Medicine

– ER Specialties20

Patient Education Center

• Single Point of Contact with Patients for phone communication, e-mails and visits

• Critical for Coverage Verification

• Interfaces with Case Managers

• Important Physician Liaison Service

• Critical for New Patient Acquisition

• Also important for Customer Relations and Patient Retention

Specialty Institutes

• The term “Institute” is a popular label that Hospitals and Doctors currently use to describe an integrated medical delivery system (doctors and hospitals working together).

• SWMC is using the label to describe new outpatient and inpatient Service Lines (Urology, Neurology, Endocrinology, Rheumatology)

• Legal forms of an integrated system include coverage agreements, co-management, medical service organizations (MSOs), 1206(d) clinics, or physician recruitment agreements.

• Doctors pay fair market value for services received from SWMC Medical Service Organization (typically based upon a % of collections).

Specialty Institutes

Services to be Provided by SWMC to Institute Doctors

• Practice Site

• Non-professional staff

• Practice Management

• Billing and Collections

• Group Purchasing Discounts

• Managed Care Contract Negotiations

Specialty Institutes

SWMC Institutes

• Bollinger Orthopedic and Sports Medicine Institute

• Pereira Brain and Spine Institute

• Bretan Urology Institute

• Integrative Medicine Institute

• North Bay Endocrinology Institute

• North Bay Rheumatology Institute

• North Bay Rheumatology Institute

• North Bay Wound Care Institute

Financial Strategy

• Recruit Specialists in Clinical Care Specialties where demand exceeds supply (Neurology, Endocrinology, Rheumatology, Integrative Medicine)

• Manage Cost Structure (FTE management, supply expenses, outsource when services can be provided more efficiently by outside resources)

• Revenue Cycle Management (Increase collections from Palm Drive Historical performance)

• Market SWMC Clinical Services Aggressively

Marketing

Marketing

The goal of Sonoma West Medical Center is to maximize revenue through the following Four Strategy Initiatives, using data driven metrics and constantly evaluating effects on profitability:

– Branding Identification

– Acquisition of New Patients

– Retention of Former Palm Drive Hospital Patients

– Physician Alignment (through Institutes)

www.sonomawesthealth.org

www.sonomawesthealth.org

Marketing New Health Plans

Start Up Capital Requirements

Total Capital Required to Open Hospital$11.4 Million*

Sources of Capital

Philanthropy ($5.0 Million Pledged, Committed) $9.0 Million**

Palm Drive Health Care District– Parcel Tax Revenue in Year 1

$2.0 Million

– Transfer from Bond Reserve Fund$2.0 Million

Lending$2.4 Million

* Includes $2.0 Cash Reserve Fund

** Includes Capital Campaign Goal of $5.0 Required for Start Up + $4.0 for Capital

Financial Projections

Glenn Minervini-Zick, Interim CFODavid Yarbrough, RN, BS, MS, JD, Interim

COO/CNO