Upload
amory
View
20
Download
0
Tags:
Embed Size (px)
DESCRIPTION
HCE College Bowl 2013 Aaron Margulis Jesse Levi Andrew Meehan. Hospital STATUS Turnaround. financial viability. challenges to . STAND-ALONE HOSPITAL No Economies of Scale No Leverage with Payers & Suppliers No Physician Alignment Platform No deployed EMR. OPERATIONAL INEFFICIENCIES - PowerPoint PPT Presentation
Citation preview
HCE College Bowl 2013
Aaron MargulisJesse LeviAndrew Meehan
HOSPITALSTATUS TURNAROUND
FINANCIAL VIABILITY.STAND-ALONE HOSPITALNo Economies of ScaleNo Leverage with Payers & SuppliersNo Physician Alignment PlatformNo deployed EMR
LABOR SHORTAGEAlameda County is a designated RN Shortage Area (Source: OSHPD)Difficulty in recruiting physicians
OPERATIONAL INEFFICIENCIESHistorically High ALOSICU ALOS continues to be extremely high
CHALLENGES TO
LIQUIDITY & LONG-TERM DEBT LOADLiquidity: 1.8 Days Cash on Hand (FY2011)High Debt Burden (negative debt service ratio; FY2011)
INCREASING COSTSWages & Salaries up by 61% (2007-2011) MD Professional Fees up by 75% (2007-2011)Supplies up by 24% (2007-2011)
UNFAVORABLE PAYER MIX/ REIMBURSEMENT LEVELSHigh Med-Cal & Uninsured PopulationBelow Market Managed Care Reimbursement
UNCERTAINTIES & POOR OUTLOOK WITH RESPECT TO ACA Expansion of Avoidable Readmission Penalties through 2014Decreased CMS DSH Payments in 2014Does not Address 124,000 Undocumented Aliens Residing in Alameda County
THE
PLAN3 phases
FROM RED TO BLACK
PHASE 1
Restructure long-term debt
Unlock liquidity from fixed assets
Seek new capital partners
Reevaluate and realign capital expenditures
BALANCE SHEET REHAB
PHASE 2
Position Hospital for acquisition, affiliation or merger that would allow for infusion of capital for:
IT infrastructure
Physician Alignment Vehicle
PHASE 3
PARTNERSHIP
Operations Redesign
Strategic Cost Management
Clinical Transformation
Payer Contract Renegotiation
PHASE 1
FROM RED TO BLACK
Net Savings: $2,243,000 Net Savings: $300,000
Strategic Cost Management
WAGES & BENEFITS MD PROF FEES SUPPLY CHAIN
» Wages have increased by 61% in the last five years (2006-11)
» Benefits are at 22% (FY 2011)» Decreasing Wages by 1.25%
would save $993,000 annually» Bringing Benefits down to 20%
would save $1,250,000
» Constitute IM/OB Hospitalist and RAPE specialty subsidies, medical directorships and ED on-call pay
» Grown by 75% over five years to nearly $6 million dollars (2007-2011)
» Cut 5% from Management Groups in exchange for longer contract periods and place more dollars in a P4P bucket. Cut 2.5% from individual providers
» Supply costs have increased by 24% over last five years (2007-2011) to over $16 million per year
» Pursue a strategy of product and vendor standardization that can add more leverage to lower costs
» Implement caps for high-dollar items» Develop a formal process to justify
high-cost purchases especially in the presence of lower cost alternatives
Net Savings: $560,000
CLINICAL TRANSFORMATION
Managing Clinical UtilizationIntensivist Program» ICU LOS was 17.3 days in 2012» Our Goal: cut LOS to 4 days» Use of evidence-based guidelines
per SCCM standards» Multidisciplinary team approach» 12-hour in-house coverage» Net savings of $9.8 million
Managing Clinical VariationSuper Committee» Medical Staff Committee» Expedite approval process for
evidence-based protocols and order sets
» Monitoring adherence to evidence-based care for sepsis, AMI, CHF and PNA
» Refer fall-outs for peer review
MEDICARE MANAGED CARE REIMBURSEMENTSRH has generated comparable reimbursement rates from Medicare Managed Care plans relative to other hospitals in the same market.
2007 2008 2009 2010 2011 $-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
EdenWashingtonAlta BatesSt Rose
Medicare35%
Medicare MC4%
Medi-Cal25%
Medi-Cal MC14%
Third Party1%
Third Party MC13%
Indigent6%
Other Payers2%
Source: OSHPD Annual Financial Disclosure ReportNet Inpatient Revenues per DischargeSource: OSHPD Annual Financial Disclosure Report
SRH Payer Mix | Inpatient Discharges, 2011
THIRD PARTY MANAGED CARE REIMBURSEMENTSRH has generated highly unfavorable reimbursement rates from Third Party Managed Care plans relative to other hospitals in the same market.
Medicare35%
Medicare MC4%
Medi-Cal25%
Medi-Cal MC14%
Third Party1%
Third Party MC13%
Indigent6%
Other Payers2%
Source: OSHPD Annual Financial Disclosure ReportNet Inpatient Revenues per DischargeSource: OSHPD Annual Financial Disclosure Report
SRH Payer Mix | Inpatient Discharges, 2011
2007 2008 2009 2010 2011 $-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
EdenWashingtonAlta BatesSt Rose
PAYER CONTRACT RENEGOTIATION
Obtain higher reimbursement rates from third party managed care payers» Value Proposition: lower cost structure,
quality care, payer will have to pay higher costs if SRH closes
» Seeking 20% increase in rates, generating $2 million in additional revenue
Court health plans to obtain Medicare Advantage contracts to increase volume at favorable rates, once operational efficiencies have been realized and demonstrated
NET IMPACT TO SRH: $14,903,000
PHASE ONE FINANCIAL IMPACT
Strategic Intervention Financial Impact
Wages and Benefits $2,243,000
MD Professional Fees $ 300,000
Supply Chain $ 560,000
Intensivist Program $9,800,000
Payer Contract Renegotiation $2,000,000
BALANCE SHEET REHABILITATIONRestructure Long-term Debt
Unlock Liquidity in Existing Assets
Seek New Capital Partners
Reevaluate and Realign Capital Investments
STRATEGIC PARTNERSHIP
Consolidation in Regional Market» Partnership between UCSF and Children’s
Hospital Oakland» Potential acquisition of San Leandro Hospital
by Sutter Health Stand-alone hospitals cannot survive
under health reform Approach merger or acquisition
partners SRH offers a distinct value proposition
Source: California Public Policy Institute, 2011
IMPACT OF HEALTH REFORM
Most hospitals will benefit from the ACA» Expansion of Medi-Cal
Expectation that ACA will have negative effect on SRH» Revenues tied to clinical outcomes, quality of care
and cost efficiency» Expansion of CMS penalties for preventable
readmissions in 2014» Lack of physician alignment platform hinders
continuity of care» Expected decreases in DSH payments» Newly insured patients in our service area will likely
obtain plans with bronze rating or silver rating» Does not address 124,000 undocumented aliens
residing1 in Alameda County
CONCLUSION
LeadershipOperations
Balance Sheet Rehabilitation
Acquisition
THANK YOUHospital Turnaround