FESC National Partners Meeting January 25, 2007 Modeling the Frontier Extended Stay Clinic Conditions of Participation and Reimbursement Methodologies:

FESC National Partners MeetingJanuary 25, 2007

Modeling the Frontier Extended Stay Clinic Conditions of Participation and Reimbursement Methodologies:

Financial Analysis for Year One

Eric Shell, MBA, CPA

The Beacon Hotel

Washington DC

2

Presentation Overview

• Overview

• Financial Modeling– Iliuliuk Family Health Services

– CrossRoad Medical Center

– Inter Island Medical Center

• Areas to be Clarified

• Summary

3

Overview

• Modeling the Frontier Extended Stay Clinic (FESC) Conditions of Participating and Reimbursement Methodologies – Assess the year one financial impact of FESC

• Scope of Work– Assess year one financial impact of FESC for:

• CrossRoad Medical Center;

• Iliuliuk Family Health Services; and

• Inter Island Medical Center

– Separate contract with David Mather to assess financial impact of FESC on tribal clinic – Klawock

• Participants– Eric Shell, Stroudwater Associates

– David Mather, Mather and Associates

• Overview• Financial Analysis

• Iliuliuk Clinic• CrossRoads• Inter Island


• Summary

4

• Illiuliuk Family Health Services, Dutch Harbor, AK• Overview• Financial Analysis



• Summary

Financial Modeling – Iliuliuk Family Health Services

5

• Illiuliuk Family Health Services, Dutch Harbor, AK (continued)





• Summary

6

• Illiuliuk Family Health Services, Dutch Harbor, AK (continued)– Geography

• 800 miles from nearest available hospitals in Anchorage

• Extreme weather conditions often delay/cancel flights

• Center for Bearing Sea fishing industry

• Population: 4,300

– Services Offered include primary care, diagnostic X-Ray and laboratory, 24-hour urgent care, minor procedures, mental health counseling, and frequent overnight stays

– Observation room:





• Summary

7

• FESC Assumptions– Fixed Costs





• Summary

1 Additional Staff Required to meet FESC Service requirementsCurrent Clinic Staffing (FESC Level): FTE Salary Total Cost

Midlevels 2.75 65,000$ 178,750$ Physicians 2.5 150,000$ 375,000$ RNs 4 62,400$ 249,600$ LPNs/Mas/EMTs 3 40,000$ 120,000$

923,350$

Clinic without FESC Services: FTE Salary Total CostMidlevels 1.75 65,000$ 113,750$ Physicians 1.5 150,000$ 225,000$ RNs 0 62,400$ -$ LPNs/Mas/EMTs 5 33,280$ 166,400$

505,150$ FESC Difference: 418,200$ FESC Difference Benefits (at 25%) 104,550$ Total FESC Salary and Benefits 522,750$

2 Incremental Salary for Midlevels for Providing FESC ServicesMidlevel Salary without FESC Services 65,000$ Midlevel Salary with FESC Services 110,000$ Incremental FESC Midlevel Salary 45,000$ Number of FESC Midlevels 2.75$ Incremental FESC Total Midlevel Salary 123,750$ FESC Difference Benefits (at 25%) 30,938$ Total FESC Midlevel Salary and Benefits 154,688$

3 Nurse and Tech Oncall PaymentsStipend Days Total Stipends

Nurse 20.00$ 365 7,300$ Tech 20.00$ 365 7,300$ Total Annual Oncall Payments 14,600$

Total FESC Incremental Fixed Costs Sum(1-3) 692,038$

Projected Annual FESC Hours (Excludes visits less than 4 hours) 1,260.00 Fixed Cost Per FESC Hour 549.24$

ILIULIUK FAMILY & HEALTH SERVICESFESC FIXED COSTS - 2007

8

• FESC Assumptions (continued) – Variable Costs





• Summary

Assumptions:MD/DO Hourly Rate 75.00$ NP/PA Hourly Rate 60.00$ RN Hourly Rate 30.00$ MA/EMT Hourly Rate 20.00$ Lab/X-Ray Hourly Rate 25.00$ Alaska Other Hourly Rate 20.00$

Overtime Differential (MD/DO and NP/PA Excluded) 50%

Indirect % of Hourly Rate 50%

Benefits % 25%

Total FESC Variable Costs:Staffing: Total Staffing Costs Variable OT Costs

Personnel 1 28,200.00$ -$ Personnel 2 5,024.37$ 301.85$ Personnel 3 939.29$ 282.87$ Personnel 4 242.19$ 156.58$

34,405.85$ 741.29$ Benefits -$ -$ Total FESC Variable Costs 34,405.85$ 741.29$

9

• FESC Assumptions (continued)– FESC Revenue





• Summary

Distinct Observation Bed UnitBillable Units <4 hours 198 Billable Units 4-8 hours 129 Billable Units 8-12 hours 52 Billable Units 12-16 hours 31 Billable Units 16-20 hours 23 Billable Units 20-24 hours 10 Billable units >24 hours 6 Payment Rate-<4 hours 1,000$ Payment Rate 4-8 hours 1,500$ Payment Rate 8-12 hours 1,500$ Payment Rate 12-16 hours 1,500$ Payment Rate 16-20 hours 1,500$ Payment Rate 20-24 hours 1,500$ Payment Rate >24 Hours 2,000$

10

• FESC Assumptions – FESC Revenue


1) Patient Number 3) Chief Complaint

Total hours in facility:

FESC Hours >4

Hours <4

Hours: >4<8

Hours: >8<12

Hours: >12<1

6Hours: >16<20

Hours: >20<24

Hours: >24

Payment: Hours <4

Payment: Hours 4-8

Payment: Hours 8-12

Payment Hours 12-16

Payment Hours 16-20

Payment Hours 20-24

Payment Hours >24

Total FESC Payment

5533 Abd. pain 2.25 0 2.25 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$ 8657 vomiting and diarrhea 2.5 0 2.5 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$ 51576 anxiety, disorientation 4.75 4.75 4 0.75 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 8530 Fever, cough, sorethroat 3.75 0 3.75 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$ 50296 chest pain, syncope 6.25 6.25 4 2.25 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 51522 fever, back pain 8.25 8.25 4 4 0.25 0 0 0 0 1,000$ 1,500$ 1,500$ -$ -$ -$ -$ 4,000$ 51505 sorethroat 13.75 13.75 4 4 4 1.75 0 0 0 1,000$ 1,500$ 1,500$ 1,500$ -$ -$ -$ 5,500$ 9399 headache, earache, diarrhea4.5 4.5 4 0.5 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 51703 >65yo 2-3 days worsening SOB20 20 4 4 4 4 4 0 0 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ -$ -$ 7,000$ 51723 >65yo 3 days fever/chills, headache, cough4.75 4.75 4 0.75 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 51450 arm caught in machinery at work1.25 0 1.25 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$ 9444 SOB, shoulder pain, vomiting8.75 8.75 4 4 0.75 0 0 0 0 1,000$ 1,500$ 1,500$ -$ -$ -$ -$ 4,000$ 51732 fever, chest discomf. 9.75 9.75 4 4 1.75 0 0 0 0 1,000$ 1,500$ 1,500$ -$ -$ -$ -$ 4,000$ 51754 bilat. chest pain, SOB, fatigue27.25 27.25 4 4 4 4 4 4 3.25 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 10,500$ 51763 low abd. pain, rectal bleeding x3days13.5 13.5 4 4 4 1.5 0 0 0 1,000$ 1,500$ 1,500$ 1,500$ -$ -$ -$ 5,500$ 4689 snowmobile accident - shoulder pain15 15 4 4 4 3 0 0 0 1,000$ 1,500$ 1,500$ 1,500$ -$ -$ -$ 5,500$ 51663 cough, chest pain 5.75 5.75 4 1.75 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 4936 medicine reaction, diaphoretic, anxious, tremors, increased HR&BP3.25 0 3.25 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$ 95768 assault, ETOH 3.75 0 3.75 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$

53866 chest pain x 2days 6.5 6.5 4 2.5 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 1057 pain in right wrist 16.5 16.5 4 4 4 4 0.5 0 0 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ -$ -$ 7,000$ 2349 burning with urination 4.5 4.5 4 0.5 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 6140 abd pain, vomiting 7.75 7.75 4 3.75 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 53098 pain left calf 3.5 0 3.5 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$ 53962 75yo fell, confused 21 21 4 4 4 4 4 1 0 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ -$ 8,500$ 53327 RLQ pain 41.5 41.5 4 4 4 4 4 4 17.5 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 10,500$ 35879 chest pain 13.5 13.5 4 4 4 1.5 0 0 0 1,000$ 1,500$ 1,500$ 1,500$ -$ -$ -$ 5,500$ 36745 SOB, diarrhea 4 0 4 0 0 0 0 0 0 1,000$ -$ -$ -$ -$ -$ -$ 1,000$ 6441 SOB 6.5 6.5 4 2.5 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 54011 altered mental status 22 22 4 4 4 4 4 2 0 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ -$ 8,500$ 8594 crushed hand/wrist 4.25 4.25 4 0.25 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 54054 fever, back pain chills 8 8 4 4 0 0 0 0 0 1,000$ 1,500$ -$ -$ -$ -$ -$ 2,500$ 4947 80yo weakness 19.5 19.5 4 4 4 4 3.5 0 0 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ -$ -$ 7,000$ 2827 abd. pain. vomiting 13.75 13.75 4 4 4 1.75 0 0 0 1,000$ 1,500$ 1,500$ 1,500$ -$ -$ -$ 5,500$ 3456 altered mental status 19.75 19.75 4 4 4 4 3.75 0 0 1,000$ 1,500$ 1,500$ 1,500$ 1,500$ -$ -$ 7,000$

1461.00 1260.00 717.00 337.25 163.75 111.75 67.75 29.00 34.50 198,000$ 193,500$ 78,000$ 46,500$ 34,500$ 15,000$ 12,000$ 577,500$ Count 198 129 198 129 52 31 23 10 6Annualized 1 1 1 1 1 1 1 1 1

11

• FESC Assumptions – Medevac/Hospitalization Costs





• Summary

Transportation Hospitalization Clinic CostM = MEDEVAC PLANE $11,000 $5,000 $0

C=COMMERCIAL FLIGHT WITH NO ESCORT $1,200 $1,500 $0

CE=COMMERCIAL FLIGHT WITH ESCORT $2,500 $2,500 $2,500

H=HOME $0 $0 $0

1 = Discharged Home $0

2 = Started as MON/OBS and then had to Medevac $0

3 = Planned to Medevac from the beginning $0

4 = None $0

5 = Planned to Medevac but Medevac was avoided and patient discharged home $0

12






• Summary

1) Patient NumberDisposition If No FESC Services Actual Transportation Description with FESC

Actual Transportation Code

Estimated Cost of Transport to Patien/Insurance without FESC

Estimated Cost to patient/insurance of Hospitalization without FESC

Estimated Cost to Clinic of Transportation without FESC

Estimated Cost of Transport to Patient/Insurance with FESC

Estimated Cost to patient/insurance of Hospitalization with FESC

Estimated Cost to Clinic of Transportation with FESC

1053 M H 11,000$ 5,000$ -$ -$ -$ -$

1057 M Discounted medevac to Anchorage M 11,000$ 5,000$ -$ 11,000$ 5,000$ -$

1057 M Commercial flight on PenAir, Patient sitting C 11,000$ 5,000$ -$ 1,200$ 1,500$ -$


1227 M H 11,000$ 5,000$ -$ -$ -$ -$


1294 CE H 2,500$ 2,500$ 2,500$ -$ -$ -$

1673 M Direct medevac to Anchorage M 11,000$ 5,000$ -$ 11,000$ 5,000$ -$

53625 CE Direct medevac to Anchorage M 2,500$ 2,500$ 2,500$ 11,000$ 5,000$ -$

53626 M H 11,000$ 5,000$ -$ -$ -$ -$

53811 M H 11,000$ 5,000$ -$ -$ -$ -$




54054 M Commercial flight on PenAir, Patient sitting C 11,000$ 5,000$ -$ 1,200$ 1,500$ -$


78962 C H 1,200$ 1,500$ -$ -$ -$ -$

95768 H H -$ -$ -$ -$ -$ -$

123456 M Coast Guard M 11,000$ 5,000$ -$ 11,000$ 5,000$ -$

Total 1,640,000$ 777,500$ 50,000$ 866,800$ 421,000$ 25,000$

Number of Services 169 169 20 99 99 10

Average 9,704$ 4,601$ 2,500$ 8,756$ 4,253$ 2,500$

13

• FESC Assumptions – Summary





• Summary

1 Additional Staff Required to meet FESC Service requirementsSalaries Non-Salaries

Midlevels 65,000$ -$

Physicians 150,000$ -$

RNs 249,600$ -$

LPNs/Mas/EMTs (46,400)$ -$ 418,200$ -$

2 Incremental Salary for Midlevels for Providing FESC Services Incremental FESC Total Midlevel Salary 123,750$ -$

3 Nurse and Tech Oncall Payments Salaries Non-Salaries

Nurse 7,300$ -$

Tech 7,300$ -$ 14,600$ -$

4 Overtime Payments to Clinical Staff 741$ -$

5 Employee Benefit % 25%

6 FESC Extended Stays Stays Payment Per Stay

Number of FESC Stays <4 hours 198 1,000$

Number of FESC Stays - 4-8 Hours 129 1,500$





Number of FESC Stays - >24 Hours 6 2,000$

7 Medevac/Commercial Flights Without FESC With FESC

Number of Transports 169 99

Cost Per Transport 9,704$ 8,756$

8 Reduced Hospitalizations Without FESC With FESC

Number of Hospitalizations 169 99

Cost Per Hospitalization 4,601$ 4,253$

14





• Summary

FQHC vs.FQHC FESC FESC

REVENUE: (I) (II) (II - I)Inpatient Revenue -$ -$ -$ Outpatient Revenue 3,762,000 4,347,000 585,000

Net Patient Revenue 3,762,000 4,347,000 585,000 Other Revenue - - -

Total Revenue 3,762,000 4,347,000 585,000

OPERATING EXPENSES:Operating Expenses 4,176,000 4,873,000 697,000

Net Operating Income (Loss) (414,000) (526,000) (112,000)

NON OPERATING REVENUE (EXPENSE)Non-Operating Revenue 1,021,000 1,021,000 -

NET CHANGE IN ASSETS 607,000$ 495,000$ (112,000)$

For Internal Purposes Only

ILIULIUK FAMILY & HEALTH SERVICESCOMPARISON OF FINANCIAL MODELS - PRO FORMA STATEMENT OF OPERATIONS

FISCAL YEAR ENDING JUNE 30, 2007

CAH Benefit (Loss) - Inpatient and Outpatient Revenue

$(400)

$(350)

$(300)

$(250)

$(200)

$(150)

$(100)

$(50)

$-

$50

1

Impa

ct (

Tho

usan

ds)

15

• Impact on Medicare Program





• Summary FQHC FESC

MEDICARE COST:

Clinic 25,186 25,186

Office Procedures 6,629 6,629

Injections/Immunizations 1,372 1,372

Radiology - Diagnostic 5,642 5,642

Laboratory 9,722 9,722

Physical Therapy 828 828

Medical Supplies Charged to Patients 810 810

Drugs Charged to Patients 10,548 10,548

Emergency 1,201 1,201

Ambulance 1,069 1,069

Distinct Observation Bed Unit - 16,394

Dental Services - -

Mental Health Counseling 858 858

Total Patient Cost 63,866 80,261

Other Program Costs

Medevac Services/Hospitalizations 67,264 35,837

Total Operating Cost 131,130 116,098

FISCAL YEAR ENDING JUNE 30, 2007

The Accompanying Assumptions are Integral to this Pro Forma

ILIULIUK FAMILY & HEALTH SERVICESPRO FORMA STATEMENTS OF OPERATIONS - MEDICARE COST ONLY

16

• Cross Road Medical Center, Glennallen, AK

Financial Modeling – CrossRoad Medical Center




• Summary

17

• Cross Road Medical Center, Glennallen, AK– Background/Geography

• FQHC owned/operated by faith-based organization

• Downsized from a Hospital during mid 1990s

• Copper River Basin nearly 200 road miles from Anchorage

• Population: 3,000 in the service area

– Services Offered include primary care, diagnostic X-Ray, laboratory, 24-hour emergency care, minor procedures, pharmacy, observation services– 2 physicians and 1 part-time NP





• Summary

18




Midlevels 2.0 96,600$ 193,200$ Physicians 1.0 142,000$ 142,000$ RNs 9.0 45,000$ 405,000$ Lab Tech 2.0 36,000$ 72,000$ LPNs/MAs 2.0 25,000$ 50,000$

16.0 862,200$

Clinic without FESC Services: FTE Salary Total CostMidlevels 1.0 96,600$ 96,600$ Physicians 1.0 142,000$ 142,000$ RNs 2.0 45,000$ 90,000$ Lab Tech 1.0 36,000$ 36,000$ LPNs/MAs 5.0 25,000$ 125,000$

10.0 489,600$

FESC Difference: 372,600$ FESC Difference Benefits (at 25%) 93,150$ Total FESC Salary and Benefits 465,750$

2 Incremental Salary for Midlevels for Providing FESC ServicesMidlevel Salary without FESC Services 80,000$ Midlevel Salary with FESC Services 96,600$ Incremental FESC Midlevel Salary 16,600$ Number of FESC Midlevels 2.00 Incremental FESC Total Midlevel Salary 33,200$ FESC Difference Benefits (at 25%) 8,300$ Total FESC Midlevel Salary and Benefits 41,500$

3 Nurse and Tech Oncall PaymentsStipend Days Total Stipends

Nurse -$ 365 -$ Tech -$ 365 -$ Total Annual Oncall Payments -$


Projected Annual FESC Hours 2,792.75 Fixed Cost Per FESC Hour 181.63$

CROSS ROAD MEDICAL CENTERFESC FIXED COSTS




• Summary

19

• FESC Assumptions - Variable Costs (from prior year**)



Personnel 1 2,303.23$ 21.56$ Personnel 2 6,951.46$ 5,499.37$ Personnel 3 8,032.16$ 6,769.65$ Personnel 4 6,057.32$ 5,010.43$ Personnel 5 3,136.15$ 2,560.32$ Personnel 6 1,240.77$ 896.88$

27,721.09$ 20,758.21$

Annualized 4 4 Total FESC Variable Costs 110,884.35$ 83,032.83$


Distinct Observation Bed UnitBillable Units <4 hours 201 Billable Units 4-8 hours 134 Billable Units 8-12 hours 81 Billable Units 12-16 hours 68 Billable Units 16-20 hours 57 Billable Units 20-24 hours 44 Billable units >24 hours 35 Payment Rate-<4 hours -$ Payment Rate 4-8 hours 1,500$ Payment Rate 8-12 hours 1,500$ Payment Rate 12-16 hours 1,500$ Payment Rate 16-20 hours 1,500$ Payment Rate 20-24 hours 1,500$ Payment Rate >24 Hours 2,000$




• Summary

20



FESC ID Numbe

3) Chief Complaint

Total hours:

FESC Hours >4

Hours <4

Hours: >4<8

Hours: >8<12

Hours: >12<16

Hours: >16<20

Hours: >20<24

Hours: >24

Payment: Hours <4

Payment: Hours 4-8

Payment: Hours 8-12

Payment: Hours 12-

16

Payment: Hours 16-

20

Payment Hours 20-

24Payment

Hours >24Total FESC Payment

148 Nausea 6.25 6.25 4 2.25 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 154 Bleeding from penis 5.25 5.25 4 1.25 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 156 Pain all over body 70.50 70.5 4 4 4 4 4 4 46.5 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 9,500$ 159 Shortness of breath 23.75 23.75 4 4 4 4 4 3.75 0 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ -$ 7,500$ 160 Shortness of breath, chest tightness99.50 99.5 4 4 4 4 4 4 75.5 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 9,500$ 178 Abdominal cramps, diarrha, LOC2.50 0 2.5 0 0 0 0 0 0 -$ -$ -$ -$ -$ -$ -$ -$ 184 Elevated heart rate 6.00 6 4 2 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 185 Blood clots in stool 6.00 6 4 2 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 186 Abdominal Swelling and tightness29.75 29.75 4 4 4 4 4 4 5.75 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 9,500$ 188 Pelvic Pain 15.50 15.5 4 4 4 3.5 0 0 0 -$ 1,500$ 1,500$ 1,500$ -$ -$ -$ 4,500$ 189 Chest Pain 7.25 7.25 4 3.25 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 190 Pain in back- rib area24.25 24.25 4 4 4 4 4 4 0.25 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 9,500$ 194 Low Back Pain 57.25 57.25 4 4 4 4 4 4 33.25 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 9,500$ 195 Cramping on right side of face, neck, chest, arm3.75 0 3.75 0 0 0 0 0 0 -$ -$ -$ -$ -$ -$ -$ -$ 198 Throwing up blood 4.50 4.5 4 0.5 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 200 Fainted, lost consciousness for 2-3 minutes20.25 20.25 4 4 4 4 4 0.25 0 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ -$ 7,500$ 203 Fever and abdominal pain24.50 24.5 4 4 4 4 4 4 0.5 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 9,500$ 205 Right heel uncontrolled pain3.00 0 3 0 0 0 0 0 0 -$ -$ -$ -$ -$ -$ -$ -$ 206 Decreased oral intake15.75 15.75 4 4 4 3.75 0 0 0 -$ 1,500$ 1,500$ 1,500$ -$ -$ -$ 4,500$ 209 Breathing problems 2.00 0 2 0 0 0 0 0 0 -$ -$ -$ -$ -$ -$ -$ -$ 210 Labor 5.25 5.25 4 1.25 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 211 MVC-- rollover 2.25 0 2.25 0 0 0 0 0 0 -$ -$ -$ -$ -$ -$ -$ -$ 214 Vomiting, abdominal pain28.25 28.25 4 4 4 4 4 4 4.25 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 2,000$ 9,500$ 215 Laceration Left Ankle 2.25 0 2.25 0 0 0 0 0 0 -$ -$ -$ -$ -$ -$ -$ -$ 216 MVC victim 17.25 17.25 4 4 4 4 1.25 0 0 -$ 1,500$ 1,500$ 1,500$ 1,500$ -$ -$ 6,000$

1535 DIESEL FUEL INGESTION10.00 10 4 4 2 0 0 0 0 -$ 1,500$ 1,500$ -$ -$ -$ -$ 3,000$ 1537 DIFFICULTY BREATHING, ABDOMINAL PAIN6.00 6 4 2 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 1615 Short of breath, Not feeling well19.75 19.75 4 4 4 4 3.75 0 0 -$ 1,500$ 1,500$ 1,500$ 1,500$ -$ -$ 6,000$ 1617 Chest pain for 1.5 hours8.50 8.5 4 4 0.5 0 0 0 0 -$ 1,500$ 1,500$ -$ -$ -$ -$ 3,000$ 1621 1. Left lower chest pain 2.Left upper quadrant abdominal pain5.00 5 4 1 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$ 1739 Epigastric Pain 3.50 0 3.5 0 0 0 0 0 0 -$ -$ -$ -$ -$ -$ -$ -$ 1767 Dyspnea and coughing yellow sputum x 2 days22.50 22.5 4 4 4 4 4 2.5 0 -$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ -$ 7,500$ 1773 Not feeling well, passed out5.75 5.75 4 1.75 0 0 0 0 0 -$ 1,500$ -$ -$ -$ -$ -$ 1,500$

2,792.75 134.00 201.00 134.00 81.00 68.00 57.00 44.00 35.00 -$ 201,000$ 121,500$ 102,000$ 85,500$ 66,000$ 70,000$ 646,000$

21

• FESC Assumptions – Medevac/Hospitalization Costs (2005 Data**)


1) Patient #

Estimated type of transport without FESC

Estimated Cost of Transport to Patien/Insurance without FESC

Estimated Cost to patient/insurance of Hospitalization without FESC

Estimated Cost to Clinic of Transportation without FESC

Estimated Cost of Transport to Patient/Insurance with FESC

Estimated Cost to patient/insurance of Hospitalization with FESC

Estimated Cost to Clinic of Transportation with FESC

3972 Personal Transport -$ 5,000$ -$ -$ 1,000$ -$ 2323 Ground Ambulance 2,000$ 2,000$ -$ -$ -$ -$ 2938 Personal Transport -$ 5,000$ -$ -$ -$ -$ 4222 Air Ambulance 10,000$ 5,000$ -$ 10,000$ 5,000$ -$ 4078 Air Ambulance 10,000$ 20,000$ -$ -$ -$ -$ 3611 Air Ambulance 10,000$ 2,000$ -$ 10,000$ 2,000$ -$ 4363 Air Ambulance 10,000$ 2,000$ -$ -$ -$ -$ 3843 Personal Transport -$ 2,000$ -$ -$ -$ -$ 4957 Personal Transport -$ 5,000$ -$ -$ -$ -$ 1186 Personal Transport -$ 2,000$ -$ -$ -$ -$ 3296 Air Ambulance 10,000$ 2,000$ -$ 10,000$ 5,000$ -$ 6457 Personal Transport -$ 5,000$ -$ -$ -$ -$ 6458 Personal Transport -$ 2,000$ -$ -$ -$ -$ 4090 Personal Transport -$ 2,000$ -$ -$ -$ -$ 6465 Personal Transport -$ 2,000$ -$ -$ 1,000$ -$ 6467 Air Ambulance 10,000$ 5,000$ -$ 10,000$ 5,000$ -$ 1711 Air Ambulance 10,000$ 5,000$ -$ -$ -$ -$ 4568 Personal Transport -$ 2,000$ -$ -$ -$ -$ 1194 Air Ambulance 10,000$ 5,000$ -$ -$ -$ -$ 2352 Personal Transport -$ 2,000$ -$ -$ -$ -$ 4363 Air Ambulance 10,000$ 2,000$ -$ -$ 1,000$ -$ 6474 Air Ambulance 10,000$ 2,000$ -$ -$ 1,000$ -$ 1745 Air Ambulance 10,000$ 2,000$ -$ 10,000$ 5,000$ -$ 2009 Air Ambulance 10,000$ 2,000$ -$ 10,000$ 5,000$ -$ 6588 Air Ambulance 10,000$ 2,000$ -$ -$ -$ -$ 6585 -$ -$ -$ -$ 6594 Air Ambulance 10,000$ 2,000$ -$ -$ -$ -$

436,000$ 273,000$ -$ 140,000$ 78,000$ -$ Annualized 4 4 4 4 4 4

1,744,000$ 1,092,000$ -$ 560,000$ 312,000$ -$ Number of Services 46 81 14 25Annualized 4 4 4 4

184 324 56 100Average Cost Per 9,478$ 3,370$ 10,000$ 3,120$




• Summary

22

• FESC Assumptions – Summary


FESC Changes:1 Additional Staff Required to meet FESC Service requirements

Salaries Non-Salaries

Midlevels 96,600$ -$

Physicians -$ -$

RNs 315,000$ -$

Lab Tech 36,000$ -$

LPNs/MAs (75,000)$ -$ 372,600$ -$

2 Incremental Salary for Midlevels for Providing FESC Services

Salaries Non-Salaries Incremental FESC Total Midlevel Salary 33,200$ -$

3 Nurse and Tech Oncall Payments Salaries Non-Salaries

Nurse -$ -$

Tech -$ -$ -$ -$

Salaries Non-Salaries4 Overtime Payments to Clinical Staff 83,033$ -$



Number of FESC Stays <4 hours 201 -$

Number of FESC Stays 4-8 hours 134 1,500$





Number of FESC Stays - >24 Hours 35 2,000$










• Summary

23





• Summary FQHC vs. FESC vs.CURRENT FQHC FESC CURRENT CURRENT

REVENUE: (I) (II) (III) (II - I) (III - I)Inpatient Revenue -$ -$ -$ -$ -$ Outpatient Revenue 1,887,000 1,887,000 2,535,000 - 648,000

Net Patient Revenue 1,887,000 1,887,000 2,535,000 - 648,000 Other Revenue 33,000 33,000 33,000 - -

Total Revenue 1,920,000 1,920,000 2,568,000 - 648,000

OPERATING EXPENSES:Operating Expenses 3,826,000 3,236,000 3,826,000 (590,000) -

Net Operating Income (Loss) (1,906,000) (1,316,000) (1,258,000) 590,000 648,000

NON OPERATING REVENUE (EXPENSE)Non-Operating Revenue 1,369,000 1,369,000 1,369,000 - -

NET CHANGE IN ASSETS (537,000)$ 53,000$ 111,000$ 590,000$ 648,000$


CROSS ROAD MEDICAL CENTERCOMPARISON OF FINANCIAL MODELS - PRO FORMA STATEMENT OF OPERATIONS

FISCAL YEAR ENDING MARCH 31, 2007


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• Impact on Medicare Program


CURRENT FQHC FESCMEDICARE COST:

Clinic 62,184 62,184 62,184

Office Procedures 11,662 11,662 11,662

Injections/Immunizations 136 136 136

Radiology - Diagnostic 4,288 4,288 4,288

Laboratory 6,625 6,625 6,625

Physical Therapy 2 2 2

Medical Supplies Charged to Patients 6,552 6,552 6,552

Drugs Charged to Patients 37,050 37,050 37,050

Emergency 7,878 7,878 7,878

Ambulance - - -

Distinct Observation Bed Unit - - 94,058

Dental Services - - -

Mental Health Counseling - - -

Total Patient Cost 136,377 136,377 230,435

Other Program Costs

Medevac Services/Hospitalizations 106,759 349,999 106,759

Total Operating Cost 243,136 486,376 337,193

FISCAL YEAR ENDING MARCH 31, 2007


CROSS ROAD MEDICAL CENTERPRO FORMA STATEMENTS OF OPERATIONS - MEDICARE COST ONLY




• Summary

25

• Inter Island Medical Center, Friday Harbor, WA

Financial Modeling – Inter Island Medical Center




• Summary

26

• Inter Island Medical Center, Friday Harbor, WA– Background/Geography

• Non-profit RHC owned/operated by community of Friday Harbor– Community provides over $1.2M in tax support to maintain clinic

• 40 mile ferry ride to closest hospital in Bellingham, WA

• San Juan Island Population: 7,200 plus tourists

– Services offered include primary care, diagnostic X-Ray and laboratory, 24-hour urgent care, pharmacy, and limited observation services – 4 MDs, and 1 NP

s




• Summary


27





• Summary



Physicians 3.3 230,904$ 761,983$ RNs 7 53,344$ 373,408$

1,135,391$

Clinic without FESC Services: FTE Salary Total CostPhysicians 3.3 156,000$ 514,800$ RNs 1 53,344$ 53,344$ LPNs/Mas/EMTs 4 30,000$ 120,000$

688,144$ FESC Difference: 447,247$ FESC Difference Benefits (at 25%) 111,812$ Total FESC Salary and Benefits 559,059$

2 Nurse Oncall and Call Back PaymentsStipend Days Total Stipends

Nurse - Weekday 30.00$ 251 7,530$ Nurse - Weekend 60.00$ 115 6,900$ Call Back Amounts (2 hours @ $35/hour) 70.00$ 365 25,550$ Total Annual Oncall Payments 39,980$


Projected Annual FESC Hours (Excludes visits less than 4 hours) 46.25 Fixed Cost Per FESC Hour 12,952.19$

INTER ISLAND MEDICAL CENTERFESC FIXED COSTS - 2007

28

• FESC Assumptions - Variable Costs• Overview• Financial Analysis



• Summary


Assumptions:MD/DO Hourly Rate 75.00$ NP/PA Hourly Rate 60.00$ RN Hourly Rate 30.00$ RN Manager Rate 35.00$ Lab Tech Hourly Rate 25.00$ Other Hourly Rate 20.00$

Overtime Differential (MD/DO and NP/PA Excluded) 50%

Indirect % of Hourly Rate 50%

Benefits % 25%


Personnel 1 9,693.75$ -$ Personnel 2 2,586.23$ 742.43$ Personnel 3 949.22$ 68.91$ Personnel 4 -$ -$

13,229.20$ 811.35$ Benefits -$ -$ Total FESC Variable Costs 13,229.20$ 811.35$

29

• FESC Assumptions – FESC Revenue• Overview• Financial Analysis



• Summary


FESC ServicesBillable Units <4 hours 191 Billable Units 4-12 hours 10 Billable Units 12-24 hours - Billable units >24 hours - Payment Rate-<4 hours 1,000$ Payment Rate 4-12 hours 2,000$ Payment Rate 12-24 hours 2,000$ Payment Rate >24 Hours 1,500$

30



Patient FESC ID 3) Chief Complaint

Total hours in facility:

FESC Hours >4 Hours <4

Hours: >4<12

Hours: >12<24

Hours: >24

Payment: Hours <4

Payment: Hours 4-12

Payment Hours 12-24

Payment Hours >24

Total FESC Payment

573 Shortness of breath, decreased level of consciousness, nausea, vomiting.3.75 0 3.75 0 0 0 1,000$ -$ -$ -$ 1,000$ 577 Dizziness, weakness 2.75 0 2.75 0 0 0 1,000$ -$ -$ -$ 1,000$ 579 abdominal pain, vomiting 2 0 2 0 0 0 1,000$ -$ -$ -$ 1,000$ 603 Possible med reaction: weak, shaky, nauseated, tingling in her head and neck area and not thinking clearl2 0 2 0 0 0 1,000$ -$ -$ -$ 1,000$ 605 nausea, vomiting, diarrhea 5 5 4 1 0 0 1,000$ 2,000$ -$ -$ 3,000$ 607 Nose bleeding for 10 hours. 2.75 0 2.75 0 0 0 1,000$ -$ -$ -$ 1,000$ 609 General Malaise 1.25 0 1.25 0 0 0 1,000$ -$ -$ -$ 1,000$ 611 Head laceration 1 0 1 0 0 0 1,000$ -$ -$ -$ 1,000$ 763 Decreased sensation on Left side 3.25 0 3.25 0 0 0 1,000$ -$ -$ -$ 1,000$ 765 weakness, a sense of chill, sweat and improvement in his cough. 3.25 0 3.25 0 0 0 1,000$ -$ -$ -$ 1,000$ 771 Chest pain 1 0 1 0 0 0 1,000$ -$ -$ -$ 1,000$ 773 Abdominal Pain 1 0 1 0 0 0 1,000$ -$ -$ -$ 1,000$ 827 Hives 2 0 2 0 0 0 1,000$ -$ -$ -$ 1,000$ 829 Right upper quadrant pain. 4.75 4.75 4 0.75 0 0 1,000$ 2,000$ -$ -$ 3,000$ 853 Syncope, Fever 2.75 0 2.75 0 0 0 1,000$ -$ -$ -$ 1,000$ 857 Fall, Femur Fracture 1 0 1 0 0 0 1,000$ -$ -$ -$ 1,000$ 863 Shoulder Pain 1.75 0 1.75 0 0 0 1,000$ -$ -$ -$ 1,000$ 865 Abdominal Pain 1.5 0 1.5 0 0 0 1,000$ -$ -$ -$ 1,000$ 873 Abdominal Pain 3.5 0 3.5 0 0 0 1,000$ -$ -$ -$ 1,000$ 875 Back pain 3 0 3 0 0 0 1,000$ -$ -$ -$ 1,000$

2407 Chest Pain 0.5 0 0.5 0 0 0 1,000$ -$ -$ -$ 1,000$ 2409 Fall 5.25 5.25 4 1.25 0 0 1,000$ 2,000$ -$ -$ 3,000$ 2413 Dizziness 2 0 2 0 0 0 1,000$ -$ -$ -$ 1,000$ 2415 Abdominal pain 1.25 0 1.25 0 0 0 1,000$ -$ -$ -$ 1,000$ 2417 Abdominal Pain 2.25 0 2.25 0 0 0 1,000$ -$ -$ -$ 1,000$ 2419 Fall, Face laceration, Neck pain 1.25 0 1.25 0 0 0 1,000$ -$ -$ -$ 1,000$ 2421 Active Labor 1.5 0 1.5 0 0 0 1,000$ -$ -$ -$ 1,000$ 2451 Neck pain, MVA 3 0 3 0 0 0 1,000$ -$ -$ -$ 1,000$ 2453 Chest Pain 1.5 0 1.5 0 0 0 1,000$ -$ -$ -$ 1,000$

363.00 46.25 352.75 10.25 0.00 0.00 190,000$ 18,000$ -$ -$ 208,000$ Count 191 10 191 10 0 0

31



Patient FESC ID

Disposition If No FESC Services Actual Transportation Code

Estimated Cost of Transport to Patien/Insurance

Estimated Cost to patient/insurance of Hospitalization

Estimated Cost to Clinic of Transportation

Estimated Cost of Transport to Patient/Insurance

Estimated Cost to patient/insurance of Hospitalization

Estimated Cost to Clinic of Transportation

573 Airlift Northwest Airlift Northwest 9,000$ 5,000$ -$ 9,000$ 5,000$ -$

577 Airlift Northwest Island Air (BLS) 9,000$ 5,000$ -$ 250$ 2,500$ -$

579 Island Air unescorted Home 250$ 1,500$ -$ -$ -$ -$

603 Island Air (BLS) Home 250$ 2,500$ -$ -$ -$ -$

605 Island Air (BLS) Home 250$ 2,500$ -$ -$ -$ -$

607 Home Home -$ -$ -$ -$ -$ -$



763 Airlift Northwest Home 9,000$ 5,000$ -$ -$ -$ -$

765 Island Air unescorted Home 250$ 1,500$ -$ -$ -$ -$






Total 1,047,050$ 732,500$ -$ 906,050$ 639,500$ -$

Number of Services 155 155 - 133 133 -

Average 6,755$ 4,726$ -$ 6,812$ 4,808$ -$

Without FESC With FESC

32

• FESC Assumptions – Summary• Overview• Financial Analysis



• Summary


1 Additional Staff Required to meet FESC Service requirementsSalaries Non-Salaries

Midlevels -$ -$

Physicians 247,183$ -$

RNs 320,064$ -$

LPNs/Mas/EMTs (120,000)$ -$ 447,247$ -$

2 Incremental Salary for Midlevels for Providing FESC Services

Salaries Non-Salaries Incremental FESC Total Midlevel Salary -$ -$

3 Nurse Oncall and Call Back Payments Salaries Non-Salaries

Nurse - Weekday -$ 7,530$

Nurse - Weekend -$ 6,900$

Call Back Payments -$ 25,550$ -$ 39,980$

Salaries Non-Salaries4 Overtime Payments to Clinical Staff 811$ -$



Number of FESC Stays <4 hours 191 1,000$


Number of FESC Stays - 12-24 Hours - 2,000$

Number of FESC Stays - >24 Hours - 1,500$







33




• Summary


RHC vs. FESC vs.CURRENT RHC FESC CURRENT CURRENT

REVENUE: (I) (II) (III) (II - I) (III - I)Inpatient Revenue -$ -$ -$ -$ -$ Outpatient Revenue 1,450,000 1,450,000 1,661,000 - 211,000

Net Patient Revenue 1,450,000 1,450,000 1,661,000 - 211,000 Other Revenue 64,000 64,000 64,000 - -

Total Revenue 1,514,000 1,514,000 1,725,000 - 211,000

OPERATING EXPENSES:Operating Expenses 2,617,000 2,017,000 2,617,000 (600,000) -

Net Operating Income (Loss) (1,103,000) (503,000) (892,000) 600,000 211,000

NON OPERATING REVENUE (EXPENSE)Non-Operating Revenue 1,090,000 1,090,000 1,090,000 - -

NET CHANGE IN ASSETS (13,000)$ 587,000$ 198,000$ 600,000$ 211,000$


INTER ISLAND MEDICAL CENTERCOMPARISON OF FINANCIAL MODELS - PRO FORMA STATEMENT OF OPERATIONS

FISCAL YEAR ENDING DECEMBER 31, 2006


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• Impact on Medicare Program• Overview• Financial Analysis



• Summary


CURR VS RHC CURR VS FESCCURRENT RHC FESC DIFF DIFF

MEDICARE COST:

Clinic 296,003 296,003 296,003 - -

Office Procedures 37,027 37,027 37,027 - -

Injections/Immunizations 7,700 7,700 7,700 - -

Radiology - Diagnostic 50,008 50,008 50,008 - -

Laboratory 46,371 46,371 46,371 - -

Drugs Charged to Patients 6,782 6,782 6,782 - -

FESC Services - - 63,300 - 63,300

Total Patient Cost 443,892 443,892 507,192 - 63,300

Other Program Costs

Medevac Services/Hospitalizations 456,870 526,012 456,870 69,143 -

Total Operating Cost 900,762 969,904 964,062 69,143 63,300

FISCAL YEAR ENDING DECEMBER 31, 2006


INTER ISLAND MEDICAL CENTERPRO FORMA STATEMENTS OF OPERATIONS - MEDICARE COST ONLY

35

• FESC Revenue– Payment amount per Billable Unit

• How to address variation in FESC volume by site– Definition of Billable Unit– How to accommodate variation in FESC volume

• Budget Neutrality– To be compared to current state operations or “regular” clinic

operations??

• Medevac and Avoided Hospitalizations– Better information to determine true cost savings

Areas to be Clarified




• Summary

36

• Financial models have been developed with 12 months of FESC data• Variances in FESC Models

– Iliuliuk and Inter Island include <4 hour stay reimbursement– Cross Roads excludes <4 hour stay reimbursement

• FESC costs are primarily fixed costs– Variation in FESC volume impacts whether FESC services contribute to

bottom line of FESC• Lower volume FESC clinics do not cover fixed costs

• FESCs are currently billing for ancillary services related to extended stay patients– Thus, FESC payment is for routine care only

• Savings on avoided/downsized transportation and hospitalization have been significant– Payers and patients are currently being rewarded for FESC services that

are not being paid– Issue when looking at Budget Neutrality

• FESC FY 2005 volume does not vary significantly from FY 2006 – Indicates patient need rather than reimbursement drives volume

Summary/Key Findings




• Summary

Documents

FESC National Partners Meeting January 25, 2007 Modeling the Frontier Extended Stay Clinic Conditions of Participation and Reimbursement Methodologies: