Where Care is the Reason We Stay

Presentation to St. Rose Hospital Board Of DirectorsProviding Healthy Hearts through Quality Care and Spirituality April, 26, 2017Leadership TeamHadeel AlmutairiFrancisco V. HernandezShweta SharmaVarotkamol (Apple) Tanyakool

Good Morning Ladies and Gentlemen of the Board I would like to take the time to thank you for the opportunity to present to you OUR retrospective review of our strategic plan we initiated back in 2012 until now, April 26, 2017 Our presenters consists of Shweta Sharma, Apple Tanya-Cool and myself, Frank Hernandez.1

Presentation to St. Rose HospitalBoard Of DirectorsProviding Healthy Hearts through Quality Care and Spirituality April 26, 2017AgendaRetrospective TimelineKey Strategies Ascending Life InitiativesHow did Affordable Care Act affect SRHRetrospective Summary

Good Morning Ladies and Gentlemen of the Board Our leadership team, (introduce members by first and last name) would like to take the time to thank you for the opportunity to present to you our retrospective review of our strategic plan we initiated back in 2012 until now, April 26, 2017

Our retrospective presentation will review the following: (Point and state Agenda) 2St. Rose Hospital TimelineHow We Got Here!5-Year Strategic Plan: Ascending Life InitiativesIncreased bed occupancyEliminated pension plan for new hiresOccupancy Rate about 55%No additional remodeling planned in the near future All Americans would have access to health care insuranceOccupancy rate above 65%Promote and Expand Centers of Excellence: Cardiology, Oncology, Pediatrics and Obstetrics

Increased reimbursement fromHealth Care ReformMeasure A fundPay for PerformanceOccupancy rate above 80%

Increased reimbursement fromHealth Care ReformMeasure A fundPay for PerformanceOccupancy rate continues to grow

Increased reimbursement fromHealth Care ReformMeasure A fundPay for PerformanceOccupancy rate close to max capacitySo How did We Get Here well with a well developed Strategic Plan, metrics coupled with sound decision making, our Ascending Life Initiatives have provide our HCO with sustainability and viability. Who would of thought 5 years ago that we would be thriving, our occupancy rate of 92.7%, EBIDA well within industry standards, our Centers of Excellence driving the community Market Share , Health Reform yielding our desired outcomes and with sound cost containment and revenue initiatives, St. Rose Hospital stands alone as the strongest Spiritual HCO in our community. We have much to be thankful about and my colleagues will highlight our successes henceforth.

Financial Viability for the Future Todays healthcare environment is becoming increasingly competitive and health care organizations (HCOs) must do more with less while providing quality care to their patients, families and communities. In previous years, SRH has been successful, but in recent years a couple of capital investments have not brought high returns. Competitive forces have continued to grow in the market and significant internal expense items (such as the HCOs pension, heavy debt, increased charitable care) have put strains on SRHs financial resources. SRH must decrease cost and yield higher returns from patient revenue and from other funding initiatives such as Medi-Cal DSH funds are almost inexistent.

SRH focuses on 2 key areasReducing costsIncreasing Revenues

3Key Strategies Ascending Life InitiativesImprove lobbying efforts to obtain higher percentage of Measure A funds to cover a larger ratio our charity careSRH to drive the market by creating its own Federally Qualified Health Center (FQHC)

Control cost- need to mirror expenses similar to FY 2009 to be sustainable; improve operational efficiencies (i.e. Cancel some of the needs that SRH has asked for such as, new windows, remodeling lobby restrooms. This will decrease cost by $3,050,118 for 2013 expenses)

Frank: SRH to petition to the state and federal government to transform the Silva Clinic to a Federally Qualified Health Center (FQHC) to provide care to the 12,000 patients, the Womens Center and Imaging Center and the Occupational Health Clinic it serves in the catchment area; FQHC is a cost-base model thus reimburses at a higher rate than the standard Medi-Medi fee schedules; moreover, physicians would be contracted and or employed and locum tenens leveraged by SRH to provide outpatient acute care to patients in the community; the service model to include weekends to improve traffic, availability to patients and community; weekend hours will also be available and will alleviate traffic to the SRH ED so that ED can handle acute emergencies and traumas. This in turn will reduce the hospitals alarming charity care.

4Key Strategies Ascending Life Initiatives (Cont)Operational Initiatives for Cost Containment & Revenue ImprovementsHuman Resource StrategiesInvest and promote in Strategic Areas of Excellence: Cardiology, Oncology, Pediatric and Obstetrics

Ascending Life Initiatives Measure A Funds before Lobby InitiativeImprove lobbying to obtain higher percentage of Measure A funding: currently only receiving 1.2M (2.5% of annual Measure A funds); need to obtain at least 8M to cover charitable care expenditures; DSH funds will be inexistent in the next coming years. (DSH Payments. Beginning 2014, payments to disproportionate share hospitals (DSH) will be dramatically reduced. Based on the comparison of charitable care in Alameda County, ACMC is receiving 75% of the Measure A funds but only has approximately 33.7 M in charity cost thus the recommendation is to lobby the Alameda County Board to distribute the Measure A funds based on their indigent care cost. Measure A dollars provided to ACMC is almost 3 times their indigent cost versus all other HCOs to include SRH is only 2.5% of the funds. The plan would be to distribute funds to cover a percentage of all institutions charitable care costs so its even throughout the county. Based on the indigent care, SRH has one of the highest percentages of patients but only obtains 2.5% of the dollars.

6Ascending Life Initiatives Measure A Funds before Lobby Initiative7Ascending Life InitiativesConvert Silva Clinic to a Federally Qualified Health Center (FQHC)Frank: . Improve Medi-Cal managed care (MCMC) contracts to maximize profit currently SRH serves approximately 50% MediCal patients and renegotiation and more vigorous negotiations may yield higher returns; further, Kaiser Haywards relocation may yield patients that do not want to travel the additional distance to the new Kaiser facility and thus a modest percentage (10-20%) of their MCMC clientele may choose to stay in the catchment area for SRH to serve this new population.

6. Consider partnering with local physicians to reduce competition for outpatient cases. An increasing number of hospitals are joint venturing with local physicians and surgery center management companies to offer outpatient services through the development of a surgery center.7. Grow case volume by attracting new physicians to your facility. Identifying and attracting additional physicians to bring cases to your hospital is another way that hospital leaders can increase profits. SRH can recruit new physicians who are willing to perform cases at their hospitals.

8. Consider adding profitable service lines. Hospitals may also be able to grow case volume and profits by adding new service lines. However, hospitals need to be careful to do their homework on the expected profitability and ROI for any new lines added, especially in a market where access to the funds required to invest in new service lines may be tight.

9. Consider hiring hospitalists to manage inpatient care. Hospitals that use hospitalists to care for patients can benefit from the more efficient care and better documentation that specialized hospitalists can potentially provide.

10. Renegotiate managed care contracts. One of the most important ways that hospitals can improve their profitability is by continually evaluating and renegotiating their managed care contracts."Hospitals must demand their fair share of premiums from third-party payors in order to subsidize the underpayment of Medicare and Medicaid," says Mr. Kaufman. "Hospitals need to focus on reducing their cost structure as much as possible to approach breaking even with Medicare reimbursement rates, but that only goes so far."Mr. Kaufman recommends that hospitals only agree to contracts that reimburse at 130-140 percent of cost. "If a facility is not big enough or strong enough to get these rates, then they should look at merging with a larger facility," says Mr. Kaufman. Ms. Worsham suggests that hospitals perform a profitability analysis by payor and by procedure in order to determine where a facility is losing money and identify any trends. She also suggests that hospitals evaluate older contracts due to changes in severity-based DRGs and carve out the reimbursement of implants in order to ensure they are reimbursed appropriately for the costs associated with these. Ms. Worsham also suggests that hospitals evaluate contracts on a quarterly basis, even if the contract is not near expiring. She suggests that hospital leaders examine the contracts with the following questions in mind: Is revenue where we thought it would be given reimbursement rates and volume of policy holders? Are we being paid as agreed upon in the contract? Are we being paid in a timely manner?Contracts that are determined to be "high risk" should be renegotiated. Make sure your contracts contains a material harm clause, which will allow you to readdress terms of contracts that have become financially harmful to the facility, according to Ms. Worsham. Renegotiating contracts can be very valuable one hospital Ms. Worsham advises will gain $500,000 this year due to renegotiations.

8Ascending Life InitiativesCost Containment & Revenue StreamsMetrics to drive staffing needsEliminate pension plan for all new hiresReduce supply costs by better managing vendorsEnsure OR is utilized by physicians efficientlyInvolve physicians in cost reduction efforts Outsourcing the management of some services

Reduce staffing costs by using data to drive staffing decisions. By eliminating the pension plan for new hires, that will decrease the liability SRH has for future payouts. Pension plans are few and far between now so its a benefit that is not consistent with industry trends; new hires will still have the option to join the 401 or 403b plan in SRHBecause labor is the largest single expense for hospitals, it is critical that hospitals are not over- or under- staffing their facilities. SRH consider the use of flexible staffing, such as part-time or hourly employees, and adjust staffing based on patient census data. Leaders should also monitor the efficiency of this staffing by continuously reviewing benchmarking data such as hours worked per case. The easiest thing SRH do to improve profitability is for the senior management team to assume responsibility for the day-to-day performance of an organization and look at the organization's performance in real time.It is important that concerns regarding efficient staffing are communicated throughout the organization and that hospital leaders work in collaboration with physicians. Flexible staffing is especially useful for OR nursing staff. OR managers should review clock-in times versus surgery-start times and determine if their staff is consistently arriving before a surgery actually begins. If this is the case, mangers can utilize flexible staffing to allow nursing staff to arrive later so that when surgeries run over, no overtime expenses are incurred.

2. Reduce supply costs by better managing vendors. Hospital leaders can reduce supply costs by working with vendors to improve contracts and encouraging physicians to make fiscally responsible supply decisions.

3. Ensure that your OR is utilized by physicians efficiently. All hospitals can benefit from tightening up the efficiency of their operating rooms, but it is especially critical that less busy facilities ensure that their ORs are used as efficiently as possible.

4. Involve physicians in cost reduction efforts. Hospitals should work to encourage physicians to become more concerned about the costs of supplies and other activities, such as unnecessary tests and inefficient coding processes that may drive up hospital costs.

5. Consider outsourcing the management of some services. During tough economic times, some hospitals may benefit from outsourcing or partnering with other organizations for certain services, such as food and laundry services, and even, in some cases, clinical services.

9Partnering with local physicians to reduce competition for outpatient casesGrow case volume by attracting new physicians to the facilityPossibly expand service line that is needed for the community (Emergency Department)Hiring hospitalists to manage inpatient care.Renegotiate managed care contracts

Ascending Life InitiativesCost Containment & Revenue StreamsFrank: . Improve Medi-Cal managed care (MCMC) contracts to maximize profit currently SRH serves approximately 50% MediCal patients and renegotiation and more vigorous negotiations may yield higher returns; further, Kaiser Haywards relocation may yield patients that do not want to travel the additional distance to the new Kaiser facility and thus a modest percentage (10-20%) of their MCMC clientele may choose to stay in the catchment area for SRH to serve this new population.

6. Consider partnering with local physicians to reduce competition for outpatient cases. An increasing number of hospitals are joint venturing with local physicians and surgery center management companies to offer outpatient services through the development of a surgery center.7. Grow case volume by attracting new physicians to your facility. Identifying and attracting additional physicians to bring cases to your hospital is another way that hospital leaders can increase profits. SRH can recruit new physicians who are willing to perform cases at their hospitals.

8. Consider adding profitable service lines. Hospitals may also be able to grow case volume and profits by adding new service lines. However, hospitals need to be careful to do their homework on the expected profitability and ROI for any new lines added, especially in a market where access to the funds required to invest in new service lines may be tight.

9. Consider hiring hospitalists to manage inpatient care. Hospitals that use hospitalists to care for patients can benefit from the more efficient care and better documentation that specialized hospitalists can potentially provide.

10. Renegotiate managed care contracts. One of the most important ways that hospitals can improve their profitability is by continually evaluating and renegotiating their managed care contracts."Hospitals must demand their fair share of premiums from third-party payors in order to subsidize the underpayment of Medicare and Medicaid," says Mr. Kaufman. "Hospitals need to focus on reducing their cost structure as much as possible to approach breaking even with Medicare reimbursement rates, but that only goes so far."Mr. Kaufman recommends that hospitals only agree to contracts that reimburse at 130-140 percent of cost. "If a facility is not big enough or strong enough to get these rates, then they should look at merging with a larger facility," says Mr. Kaufman. Ms. Worsham suggests that hospitals perform a profitability analysis by payor and by procedure in order to determine where a facility is losing money and identify any trends. She also suggests that hospitals evaluate older contracts due to changes in severity-based DRGs and carve out the reimbursement of implants in order to ensure they are reimbursed appropriately for the costs associated with these. Ms. Worsham also suggests that hospitals evaluate contracts on a quarterly basis, even if the contract is not near expiring. She suggests that hospital leaders examine the contracts with the following questions in mind: Is revenue where we thought it would be given reimbursement rates and volume of policy holders? Are we being paid as agreed upon in the contract? Are we being paid in a timely manner?Contracts that are determined to be "high risk" should be renegotiated. Make sure your contracts contains a material harm clause, which will allow you to readdress terms of contracts that have become financially harmful to the facility, according to Ms. Worsham. Renegotiating contracts can be very valuable one hospital Ms. Worsham advises will gain $500,000 this year due to renegotiations.

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Human Resource (HR) Strategies11 Patient satisfaction

These are patients that are happy, healthy and satisfied with our services. How did we do it?12Patients who reported that they "Always" received help as soon as they wanted.

SOURCE: Hospital profile. (2012). Retrieved 04/23, 2013, from http://medicare.gov/hospitalcompare/profile.aspx#vwgrph=0&profTab=1&ID=050002&loc=HAYWARD%2C%20CA&lat=37.6688205&lng=-122.0807964&dist=25&type=4&AspxAutoDetectCookieSupport=1More StaffDecreased wait timeDaily Round by the ChiefQuick Admission Before, the staffing was low at Silva Clinic so wait time and patient satisfaction was low.In 2017, we have FQHC. Because of cost-based reimbursement we could hire more physicians and staff. We could provide better care thus reducing wait time. As a result, the patient reports that they Always received help has improved by 42%

Communication about delays seems to be the key to keep the satisfaction scores high despite the wait times. Patients need to feel more informed and that we havent forgotten about them. We improved hospital-wide throughput when senior nurse leaders, including the chief nursing officer, began rounding twice daily to identify delays or issues related to patient care. This has helped in securing a quicker admission for the ED patients needing inpatient care.

13Patients who reported that their nurses "Always" communicated well.

SOURCE: Hospital profile. (2012). Retrieved 04/23, 2013, from http://medicare.gov/hospitalcompare/profile.aspx#vwgrph=0&profTab=1&ID=050002&loc=HAYWARD%2C%20CA&lat=37.6688205&lng=-122.0807964&dist=25&type=4&AspxAutoDetectCookieSupport=1Effective CommunicationThroughout SRHThis is also another example of patient satisfaction.

We reinforced our leaders in effective communication between nurses who work with both direct and indirect patient care. Also, we improved hospital-wide throughput when senior nurse leaders, including the chief nursing officer, began rounding twice daily to identify delays or issues related to patient care as we mentioned earlier.

Seen in this slide, patient who reported that their nurses Always communicated well has increased to 95% this year from 71% in 2012.

14Patients who gave their hospital a rating of 9 or 10 on a scale from 0 (lowest) to 10 (highest).

SOURCE: Hospital profile. (2012). Retrieved 04/23, 2013, from http://medicare.gov/hospitalcompare/profile.aspx#vwgrph=0&profTab=1&ID=050002&loc=HAYWARD%2C%20CA&lat=37.6688205&lng=-122.0807964&dist=25&type=4&AspxAutoDetectCookieSupport=1This slide shows that all of the hard worked weve done has paid off. Patients who gave their hospital a rating of 9 or 10 on a scale from 0 (lowest) to 10 (highest) this year is 100%! Hooray

It has improved 36% from 2012.

What does this mean?

15Patients who reported YES, they would definitely recommend SRHSOURCE: Hospital profile. (2012). Retrieved 04/23, 2013, from http://medicare.gov/hospitalcompare/profile.aspx#vwgrph=0&profTab=1&ID=050002&loc=HAYWARD%2C%20CA&lat=37.6688205&lng=-122.0807964&dist=25&type=4&AspxAutoDetectCookieSupport=1Thank youTHANK YOUContinue GoodServicesAll the actions we just mentioned have come to the conclusion here. -Patients who reported YES, they would definitely recommend SRH is 100% this year in 2017. If we take a look at 2012, percent of patients who would recommend SRH to others is only 66%. We have a tremendous improvement of 34%

-You may wonder what should we do nextSay Thank you to the patients. Without them, we are nothing!Say Thank you to our staff that work really hard and are cooperative.Continue giving good services.

Here at SRH, we guarantee patient satisfaction!16HR And Performance ImprovementPerformance ImprovementIntegrityCollaborationAccountabilityEnthusiasmRespect

Performance Improvement

In 2012, annual competencies were not established and the value of the institution was quite low. In 2017, we achieved an organizational transformation where we have sharpened our value to meet community needs. We valued Integrity, Collaboration, Accountability, and Respect and continue to promote them throughout SRH.

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Employee Satisfaction18Employee satisfaction Involve Employees In Decision MakingListenReward

This slide shows the employee satisfaction. As this year 2017, 100% of our employees are satisfied with their job and overall circumstances. We did not only make sure our patients were happy but we also cared and have listened to our staff as well. We work closely with our staff, for example, we involve our physicians in making decisions when buying new equipment.

-Listening to employees was one of the successful actions we have done. -We also rewarded them when they do well or accomplish a hospitals goal. Thank you is what we heard here daily. This short word has got us a 100% at employee satisfaction and we are proud to say this over and over again!19Cardiology Department 2012 21 cardiologists2017 Full service linePremier site for STEMI in Bay areaIncrease in cardiologists > 75 %

20Market Share 2012 Cardiology Center Of Excellence - Oncology

Accredited from the Commission on Cancer of the American College of SurgeonsTrendsetting treatment in oncology in the past few years

The oncology unit is accredited from the Commission on Cancer of the American College of SurgeonsTrendsetting treatment in oncology in the past few years 22Innovative programs

PCI (Percutaneous Coronary Intervention) Research ProgramOne of the six in CaliforniaEvaluated if elective cardiac intervention can be performed at facilities that dont have cardiac surgical unit.

Innovative Programs

PROMOTED SRH HEALTH FAIR With A 5 Year Cost Of $ 36,000 13,000 Individuals Attended

PROMOTED VOLUNTARY WORKIn 2011 780 Volunteer Hours By The Staff Rising Trend Since Then .

HEALTH EDUCATION CLASSAnnual Budget Approx. $ 60,000.Diabetes Management, Alcoholism ,Maternal & Child Health,support Groups Etc.

Emergency Department Expansion

Kaiser moved away ( 26 ED stations)SLH shut down ED (12 ED stations)SRH opened 19 more ED stations

25Affordable Care Act Insurance Coverage And Charity Expense

26Affordable Care Act & Pay For Performance

AFFORDABLE CARE ACT -MeDICAID EXPANSIONIncrease in life expectancyMore people under MedicaidIncreased revenues28Retrospective SummaryAscending Life Initiatives:Leveraging Measure A funds for charity careConverting Silva Clinic to FQHCImproved Quality MeasuresPromoting Centers of ExcellenceHindsight is 20/20 thus to summarize our key initiatives we implemented were:

Lobbying Initiative has solidified 82.7% of our Charity Cost, our FQHC is a cost-based model that has us in the black by 2.7M in our outpatient area; our customer service is at 90% effectiveness; Quality Measures are driving us as the market leader in Cardiac, Oncology, Pediatrics and Obstetrics. With strong decision-making and planning by our Board , physician leadership and our administrative leadership team we have made St. Rose Hospital a premiere HCO.

On behalf of our team, I thank you for your direction and commitment to St. Rose and its community! 29THANK YOU