NMC SVMH Presentation 7Mar2012Final-2

7/27/2019 NMC SVMH Presentation 7Mar2012Final-2

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Monterey County/Salinas Valley Memorial

Healthcare System

Afliation Proposal


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Description of Proposed Transaction

Unique Positive Local OpportunityA unique opportunity exists for the creation of a new independentPublic Hospital Authority that will consolidate into a single HealthSystem Monterey Countys (County) Natividad Medical CenterEnterprise (NMC) and the designated hospital assets of the SalinasValley Memorial Healthcare System (SVMHS). This afliation willresult in a high quality, primary and tertiary healthcare deliverysystem for the region realizing the dual strengths of Salinas Valley

Memorial Hospital (SVMH) and its associated subsidiaries and jointventures outlined as part of the Offering Memorandum (OM), andNMC, the Designated Public Safety Net Hospital within MontereyCounty. This new Health System promises business synergies thatare not duplicated in any other afliation and honors the legacyand traditions of each local organization. Other prot driven non-local healthcare organizations under consideration for afliationwith SVMHS cannot guarantee, over the long term, the samedegree of local control and commitment to innovation and optimal

healthcare at the lowest possible cost for our community.

Formation of Health System

New state legislation would form the Health System through


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Agreement for the transfer of negotiated real, personal, andintangible property interests from SVMHS and NMC to theHealth System, including negotiated lease with option topurchase agreements between the County and the HealthSystem for NMC Campus facilities;

Agreement between the County and SVMHS transferring riskmanagement, workers compensation, retirement liabilities,and other obligations of each partys existing hospitaloperations to the Health System;

Agreement regarding any necessary or appropriate interimmanagement;

Agreement between the Health System and County for FQHC

Look-Alike clinics and mental health operations;

Agreements and actions necessary for single hospitallicensure in California; and

Upon completion of above, appointment of the Health SystemBoard of Trustees by SVMHS and the County.

Features of the Health System

The new separate and distinct Health System will operateseparate and apart from Monterey County and SVMHS. Featuresof the Health System are intended to include:


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Health System Organizational Overview

Upon formation, the Health System will operate with 441inpatient licensed beds, approximately 2000 hospital

FTEs, and a combined medical staff of over 400

physicians representing a broad spectrum of specialties.

Health System Organizational Chart

100% Owned Subsidiaries

Salinas ValleyMemorialHospital

NatividadMedicalCenter

PMCCC

HEALTH SYSTEM


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Hospital System Financial Overview

This proposed Transaction is an asset merger of two publichospitals, not an outright purchase. Based on preliminaryinformation contained in the OM, prior to separating out assets

and liabilities remaining with the District and the County ofMonterey, the Hospital System would have more than $650 Min Total Assets with $83 M in Cash, and less than $183 M inliabilities and an estimated Net Worth of over $467 M.

The following balance sheet provides a rough estimate of thecombined assets and liabilities of the new entity. The combinedtotal includes an estimate for SVMHS and Natividad MedicalCenter Hospital Enterprise. In reviewing the balance sheet it

should be noted:

SVMH December 31, 2011 information is based on thenancial data contained in the OM. In the OM the balancesheet data is reported on a consolidated basis and includesassets and liabilities that will be retained by SVMHS andremain with the Hospital District;

NMC December 31, 2011 information is based on the interim

nancial statements prepared by NMC, an Enterprise of theCounty of Monterey. The Enterprise data reects encumberedassets of the County of Monterey and debt associated withthose assets. It is proposed that the Health System makenegotiated lease payments to the County for use of theencumbered assets. The Hospital System would have theoption to purchase the debt encumbered assets. The options


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Estimated Combined Health System -

Ending Balances as of December 31, 2011 (000s)

Natividad MedicalCenter, an Enterprise

of the Countyof Monterey

Salinas ValleyMemorial Healthcare

System

Combined HealthSystem

ASSETS ($)

Cash 74,147 8,915 83,062

Accounts Receivable -Net

22,203 41,106 63,309

Other Current Assets 16,078 7,502 23,580

Total Current Assets $112,428 $57,523 $169,951

Assets Whose Use isLimited 26,188 26,188

Property, Plant andEquipment

117,626 307,991 425,617

Other Assets 7,307 16,836 24,143

Funds in Trust 4 737 4 737


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The table listed below is a detailed schedule, from NMCs 2011annual nancial audit, listing liabilities outstanding as of June 30,2011. The debt is the responsibility of the County and is reectedon the Countys Comprehensive Annual Financial Report (CAFR).Currently NMC makes a lease payment to the County that isequal to the full amount of the debt on encumbered hospitalproperty and equipment.

Natividad Medical CenterLiability Transactions (000s)

BalanceJune 30, 2011 Current Portion

LIABILITIES

Certicates of Participation

2007 Series D $7,245 $260

2009 Series E 41,525 2,400

2010 Series E 17,845 65

Premiums(discount)

1,798

Refunding gain(loss)

(5,140)

Note Payable 13,571 2,905


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Strengths of Health System

The unique synergies that exist with a new Health System include:

The combination of all public and private revenue stream

sources for healthcare that no other healthcare system canoffer, including the sharing of NMCs designated publicsafety net Medicare reimbursement with SVMH (providing anestimated incremental $4 M per year or $40 M in additionalreimbursement over the next 10 years) and NMCs designatedpublic safety net MediCal and related reimbursement withSVMH (providing an estimated incremental $10 M per year or$100 M in additional reimbursement over the next 10 years);

The preservation of SVMH at-risk MediCal reimbursements,which would be eliminated if purchased by an outsidehealthcare system;

Elimination of costly duplication of clinical services resultingin the optimization of healthcare quality and business strengthin a regional business model;

Avoidance of the need to build more inpatient hospital beds

in the near term, when shortages exist at one campus andexcess beds exist at another campus, saving the payors/residents of healthcare in the region more than $200 M in onetime avoidable NMC hospital construction costs;

Strong outpatient delivery platforms in each system withgreater opportunities for growth when consolidated;


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Cost avoidance of new debt service issuance, which wouldoccur if SVMH is allocated annual debt service associatedwith an outside healthcare systems issuing debt to fund theSVMH transaction. Estimated savings for every $100 M ofpurchase price, at 7 % tax exempt interest, would be $10.2 Mannually or $102 M over the next 10 years;

MEDITECH clinical and business Information Technologysystems across both hospitals permit the integration ofmultiple systems into a new distinct healthcare informationtechnology system, at a one time projected cost savings of$20M or more;

Expansion of NMC teaching programs for physicians andother healthcare professionals together on the SVMH

campus, with an estimated incremental benet of $1.3 Mper year or $13 M over the next 10 years from Graduate andIndirect Medical Education payments from Medicare; and

Afliation between the regions two public hospitals will drawthe support of the local business community and residentsof the county once fully informed about the unique synergyvalue of a local partnership between SVMH and NMC vs. aprivate sector afliation options.

These afliation synergies indicate there are one time savings orincreased revenues of approximately $200 M over the next 10years and $554 M in reoccurring bottom line cumulative savingsor increased revenues over the next 10 years or an average of$55.4 M per year for 10 years. NMC, in consultation with expertcounsel believes regulatory agencies will look favorably upon


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Estimated Benet of Proposed

Health System Afliation Model

Annual 10 Years

New IncrementalRevenue

Incremental Medicare - Inclusion ofSVMH as Designated Public Hospital

$4,000,000 $40,000,000

Incremental Medicare - Teaching

hospital program expansion toSVMH Campus

1,300,000 13,000,000

Incremental MediCal - Inclusion ofSVMH as Designated Public Hospital

10,000,000 100,000,000

Estimated CurrentRevenue Loss if SVMH

is Purchased by Outside

Healthcare System

(Assumes SVMHS retains tax revenues)

MediCal outpatient revenuesupplemental payments - AB-915Program

1,163,000 11,630,000

Managed Care IntergovernmentalTransfer Program

2,500,000 25,000,000

Annual overhead savings - NMC


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Overview of NMC

Natividad Medical Center (NMC) is a 172-bed acute care hospital

owned and operated by Monterey County. As a successfuldesignated public safety net hospital providing health care to theresidents of Monterey County for over 125 years, NMC provideshealth care access to all patients regardless of their ability topay. NMC offers inpatient, outpatient, emergency, diagnosticand specialty medical care. With an annual operating budget of$175M, NMC provides more than 34,000 patient days each yearand more than 44,000 emergency department visits per year.NMC is ranked No. 1 in newborn deliveries in Monterey County.

The hospital has a medical staff of over 255 physicians. NMCoperates a large hospital-based specialty clinic in:

Bariatric Surgery

Cardiology

Colon and Rectal Surgery

Gastroenterology

General Surgery

Nephrology

Ob/Gyn

Orthopedics

Pediatrics

Plastic Surgery

Podiatry

Urology

Vascular Surgery


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In 2006, SVMHS and CHOMP entered in a cooperativearrangement with Monterey County which included the transferof funds totaling $10M to NMC and the provision of healthcareexecutives from each hospital to serve on the NMC Interim Boardof Trustees. Working closely with Wellspring/Huron ConsultingGroup, Inc., retained by Monterey County to manage the NMC

turnaround, SVMHS and CHOMP representatives contributedtheir considerable time and expertise in guiding the operationalimprovement and revitalization of NMC as the regional publicsafety net hospital.

Turnaround strategies deployed included:

Delegations of authority to separate purchasing, humanresources, and information technology from County to NMC

recognizing the uniqueness of hospital operations from otherCounty departments;

Development of a strategic plan focusing on high qualityhealth care, service excellence, and growth;

Implementation of initiatives improving revenue cycle, laborproductivity, clinical services redesign, and non-labor costsavings;

Development and implementation of a permanent NMC Boardof Trustees;

Improved physician billing and accounts receivablesmanagement;


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healthcare services for Monterey County. NMC has not receivedany County General Fund support since 2008 and further hasnot received any local property or sales tax revenues. NMC hasa cumulative net income of approximately $64 M in just the last4 scal years and its days of cash on hand have gone from 40 inFiscal Year 2007 to 165 at present.

NMC executive leadership experience and track record will be animportant asset in continuing the rapid operational recovery tonancial health of SVMHS, which is priority one over the nextthree years. Financial recovery will facilitate procuring tax-exemptborrowings to build upon the healthcare system.

Afliation Objectives

Can ensure that SVMH will be a high quality,

full service, cost effective healthcare provider

for the residents of Salinas and Monterey

County and will preserve signicant local

involvement in hospital governance


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NMC completed a very successful survey conducted byThe Joint Commission in November 2011. Separately, CMSrandomly selects at least 10% of the hospitals surveyed for avalidation survey. NMC recently participated in such a survey.CMS identied that the Hospital was out of compliance withthe Conditions of Participation for Quality Assessment and

Performance Improvement Program and Food and DieteticServices and specied standard level deciencies. As a result ofthe conditional-level deciencies, CMS removed the Hospitalsdeemed status through the Joint Commission and initiated stepsto terminate the Hospitals Medicare provider agreement, effective

April 25, 2012. In order to avoid termination, CMS afforded thehospital the opportunity to submit a plan of correction and toreceive a resurvey to demonstrate compliance. The Hospitalsubmitted its plan of correction to CMS on February 6, 2012 and

is awaiting a resurvey to demonstrate compliance.

NMC, as a designated public safety net hospital, brings to thenew entity nancial incentive opportunities under the ve-yearCalifornia Section 1115 Waiver Program, effective November,2010. NMC has begun to receive additional governmental fundingfor developing quality initiatives and will receive additional fundingfor meeting quality targets over the life of the ve year waiverprogram. The addition of SVMH into the newly created entity has

upside potential for increased quality incentive funding which canbe invested back into the Health System, insuring preparednessfor healthcare reform.

Wellspring/Huron Consulting, as part of the NMC turnaround,designed a labor productivity system, with customizedd t t l b h k ll i NMC t l l it


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community to establish key partnerships essential to growingthe Health System network into a high quality regional healthcaresystem, responsive to the public and positioned to thrive underhealthcare reform.

The Health System will combine a tertiary care hospital with a

primary care hospital as the cornerstone of the system. Layeredon this cornerstone will be a diverse and qualied medicalstaff, a robust network of outpatient services, complimentaryinpatient services, a physician teaching program associatedwith the University of California, San Francisco, and dedicatedstaff. A systemwide strategic plan will be developed after carefulanalytical assessment is made of all current services. The plan willidentify opportunities for collaboration on additional new clinicalservices which would benet the residents and will keep all of the

positive net cash ow from these new services reinvested withinthe community. In contrast, an afliation with other non-protor for prot entities could result in management fees paid to adistant outside healthcare system estimate to total $7 M annuallyor $70 M over the next 10 years.

There has been a long collaborative history between thehealthcare providers serving Monterey County. NMCs turnaroundperformance was supported by the local community providers,

utilizing management of SVMHS and CHOMP as guidingboard members. SVMHS and CHOMP generously providednancial assistance to fund the external consultants critical toNMCs dramatic turnaround in FY 2007. This collaboration wasrecognized as the subject of a well-received national presentationat the Healthcare Financial Management Associations AnnualN ti l I tit t J 2010 A H lth S t hi h bi


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Enhance case management between the two facilities toimprove patient care, and reduce length of inpatient stay;

Create a network of community providers who provide medicalhomes for Health System patients;

Avoid or defer the need to build more inpatient hospital bedsat NMC over the near term;

Utilize technology to provide shared access to patienttreatment data throughout the network; and

Share rather than duplicate services;

Realize economies of scale allowing needed capital for new

and expansionary programs. In healthcare, competition isinationary, and collaboration amongst providers deationary,a highly desired alternative.

There are many quality improvements than can be quicklyimplemented yielding immediate results. For example, currentlythere are two separate hospital case management departmentscoordinating patient care, transferring patients from one facilityto the other based on the clinical needs of the patient. SVMH,

a regional tertiary hospital, treats NMC patients with complexmedical needs requiring specialty services not provided at NMC,such as cardiac and neurological services. In turn, NMC treatsSVMH patients needing psychiatric and rehabilitation servicesnot available at SVMH. One example of the synergy that exists isthe opportunity for the coordination of care between the hospitalsunder a single case management system Better coordination of


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employee or hired through a contractual arrangement. Thesestrategies have resulted in signicant growth in NMCs medicalstaff membership with a 50% increase over the past four years.89% of the medical staff is board certied and of this group 20%are either double or triple board certied. The average age of themedical staff is 49 years. NMC bills for physicians and is currently

in the process of selecting a computer system to enhance thecurrent physician billing capabilities. The two hospital medicalstaffs working together and centralizing physician bill ing, whereapplicable, will be an important component in developing an

Accountable Care Organization.

NMC administers a family medicine residency program inafliation with University of California, San Francisco. NMC hasalso recently established a program with Touro University Medical

School in which third year medical students participate in a coreservice rotation at NMC. These highly successful programs forprimary care physician training, resources sorely needed in ourCounty today, result in 30% of the residency program graduatesremaining in Monterey, San Benito and Santa Cruz Counties with90% remaining in California.

NMC is currently expanding its teaching programs for physiciansand other healthcare professionals. Afliation with SVMH as part

of a teaching facility would provide an incremental benet of $1.3 Mper year or $13 M over the next 10 years from Medicare forGraduate and Indirect Medical Education payments.


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In the long-term plan maximum use can be made of NMCscampus plot which has room for growth and another 19contiguous acres as an option for healthcare system growthsubject to agreements with the County.

NMC and SVMH use the same IT vendor, MEDITECH for clinical

and business computer systems. There is at least a onetimecost avoidance of $20 M which would be needed to convertto another vendor for clinical and business computer supportin a distant healthcare system. MEDITECH can be used as thecommon platform to connect community MDs into one centralsystem allowing for the availability of patients data in all treatmentlocations in the expanded network.

Can achieve cost efciencies viaoverhead savings, group purchasingcontracts, improved clinical efcienciesand improved labor utilization

The unique combination of SVMH and NMC will have a greaterlikelihood of rapid, stronger and more sustainable protableoperations than an outside healthcare system because of thealready existing designated public safety net revenue cycleprograms of NMC which are unavailable via any other healthcaresystem. On the expense side, efciencies will be easier as well,due to the close proximity of the two hospitals working togetherin a very collaborative manner.


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Will provide SVMH with contracting capabilityand capital to successfully participate in risksharing vehicles (such as ACOs for managingthe health care of patient groups)

The Health System brings to the afliation an in-depth knowledgeof local market contracting opportunities and challenges.Continuing on the improved contracting platform, NMC is workingcurrently with local businesses to establish direct contractingarrangements for healthcare coverage of employees and theirdependents.

The Health System brings value added knowledge in contracting

for government and public programs. An analysis would be doneof the governmental programs that SVMH participates in toensure SVMH receives all available revenues.

NMC via its contracting techniques has maintained andstrengthened the very challenging physician private practiceof medicine during tough economic times with many areaphysician groups and it has the ability to employ physiciansunder its safety net designation. NMC has created a exible

physician contracting model, working with leading healthcare lawrms that takes advantage of the ability to contract directly withphysicians or to employ them. This physician strategy allows foroptimal performance of the strategic goals of any private practicephysician groups.

The County of Monterey as part of its requirements under


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as well as other administrative functions. ViaCare would establisha robust delivery network with each enrollee assigned to amedical home in one of the network FQHC sites. Upon afliation,SVMH will continue to be a LIHP provider and retain its ability toclaim additional uncompensated care reimbursement as part ofthe Health System.

Will bring improved accounting and decisionsupport tools to evaluate new and existingservice lines to achieve clinical and nancialefciencies

The Health System brings the knowledge, best practice analytics

and management tools developed during the turnaround of NMCto this new entity. Strategically using custom tools and reports,NMC has restructured its operations to:

Maximize supplemental governmental payments;

Improve third party contracting;

Improve physician recruiting and contracting;

Implement a productivity system;

Improved non-labor cost savings;

Redesign clinical services;

I th h t th h it l f bli d i t


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Will provide resources to improve employeeand union relations

NMC brings to the Health System a strong team of administratorsand managers who have developed excellent skills in working

with union leaders to improve patient care and employeerelations. NMC administration has regular meetings with unionstaff where collaboratively the two groups openly discuss andproblem solve issues. The union leaders have been supportive ofthe creation of a public hospital authority as a vehicle to positionNMC for success in the new healthcare reform environment.

NMC values its employees and strives to have excellent staffrelations. NMC contracts with an outside human relations

consultant rm to conduct semiannual employee satisfactionsurveys. After each survey, the results of the surveys aretabulated, analyzed and an action plan developed to addressidentied areas of improvement.

NMC has a series of employee recognition events such as:luncheons, holiday events, celebrations, retirement andrecognition of national nursing and hospital week. NMC provideshealth and wellness events, on-campus health fairs, and a

farmers market for employees and the community.

Will provide enhanced board, management,medical staff, and employee continuing


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treatment. The expansion of the residency program to SVMHeducation will be a key factor in developing a Best in Classresidency program.

The Health System will review the current educational programsin place at the two hospitals and select the best elements of each

program to develop a comprehensive staff education programwhich will include:

Annual Staff Education Training

Leadership Training

Quality Education Training

Compliance Training

Customer Service Training

Computer System Training

Mandatory Staff Training

Human Resource Training

The combining of the two hospitals will provide manyopportunities for employees to grow into new and expandedroles. Employees will have improved career paths in the HealthSystem as centralized administrative and business functions willbe within Monterey County keeping jobs as well as non laborexpenses as local as possible. The close proximity between the


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High Medical Cost Patients Option A Family income isat or below 350% of the current Federal Poverty Limit and allout of pocket medical expenses in the prior year exceed 10%of Family Income

High Medical Cost Patients Option B If the patient

does not otherwise receive discount as a result of third partcoverage assets will be given the same consideration as theMIA Program, and discount will vary based on assets, incomeand billed charges.

Charity Care Policy Patient is self pay or under insuredwho are at or below 100% of Federal Poverty Limit and haslimited assets. Patients may be assessed a co-paymentbased on income level and/or the nature of services received.

The afliation of SVMH into the Health System will allow the newentity to receive additional public safety net funding by leveragingthe charity care provided at SVMH into the California 1115 Waiverclaiming process.

Natividad Medical Center has developed a bi-lingual nancialcounseling department that is highly skilled in screeningapplicants for third party coverage, Medicaid, governmental

programs, Monterey County specic programs, and for charitycare. This nancial counseling program will be expanded toinclude SVMH at the start of Health System.


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July 2012

SVMHS and County sign agreement for management servicessubject to constraints of law, to include the following goals:

Implementation of shared executive management structureacross both hospitals;

Develop and implement executive, departmental and stafflevel stafng plans to optimize quality and business strengths;

Implementation of additional operational improvements atSVMH while keeping NMC nancially strong;

Creation of Executive Council, the actual governance name to

be dened, by the two systems, constituted from the Boardsof NMC and SVMHS;

Development of the Health System strategic plan includingservice line analyses, master site plans for each campus,stafng plans, and operational improvement initiatives; and

Begin migration planning for a single scal, accounting andreporting system based on same MEDITECH information

system.

November 2012


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Obligated group is created to facilitate tax exempt borrowingoptions and for the Health System to aggressively pursue andmaintain an investment rating of single A or higher.

Following full afliation, nd and execute on all opportunities forimproving the business and clinical delivery model along with a

focus on growth regarding unmet health care needs by a strategiccollaboration with all providers across the region.

Due Diligence Process

County of Monterey Due Diligence Process

The County of Monterey will conduct a comprehensive duediligence review of the proposed transaction prior to making anal proposal. The County will establish a due diligence reviewteam comprised of County of Monterey staff and externaladvisors, to perform a detailed due diligence review.

It is anticipated that the due diligence review will focus in thefollowing areas:

Hospital assets and liabilities;

Labor agreements;


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McKenna LLP will conduct nancial due diligence, the scopeof which will be determined by the County of Monterey, inaccordance with applicable standards set forth by the AmericanInstitute of Certied Public Accountants.

The County of Montereys internal legal review team, led by

County Counsel, will use the services of current external legaladvisors including Foley and Lardner LLP, Ropes & Gray LLP,and Nixon Peabody LLP to complete a comprehensive legal duediligence review.

Upon notication of selection as a nalist the County team will:

Perform a comprehensive review of all data made availableeither in the Offering Memorandum or in an electronic data

room;

The County team, with its external advisors, will develop aninternal due diligence review checklist;

The due diligence checklist will be cross-referenced againstthe information that has been made available to the team anda list of additional requests for documents and informationneeds will be prepared and provided to Cain Brothers in

writing;

The County team will coordinate its request through a singleindividual who will work with Cain Brothers to obtain neededinformation with the least disruption to SVMH operations;

It is anticipated that it will be necessary for one or more of the


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Internal TeamMembers

Department Title Role

Harry Weis Natividad Medical Center Chief Executive OfcerCo-lead County due

diligence review

Lew Bauman, PhD County Administration Chief Administrative OfcerCo-lead County due

diligence review

Charles McKee County Counsel County Counsel Due diligence legal review

Les Girard County Counsel Assistant County Counsel Due diligence legal review

Stacy Saetta County Counsel Deputy County Counsel Due diligence legal review

Mike Miller Auditor-Controller Auditor-ControllerDue diligence nancial

review

Mary Zeeb Treasurer-Tax Collector Treasurer-Tax Collector

Due diligence nancial

review

Carol Adams Natividad Medical Center Assistant Administrator Project lead

Daniel Leon Natividad Medical Center Chief Financial OfcerDue diligence nancial

review

County of Monterey

Due Diligence Review Team


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Sources and Uses of Funds for

Afliation

The Health System will be comprised of contributed assetsand liabilities of SVMHS and the County of Monterey. For thepreliminary proposal, based on available information and prior toany negotiations, it is not possible to prepare a sources and usesof fund statement for the Health System.

SourcesBased on preliminary information the combined entitywould be established with an approximated cash balance of$83 M. The NMC cash balance includes $14,200,000 which hasbeen transferred by the Board of Supervisors to a sub-fund ofthe Countys Strategic Reserve Fund for future strategic needs ofNMC. The County proposal, prior to operational improvementswhich are believed to be substantial, has estimated over the rst

ten years of operation there will be additional cash to the HealthSystem of $243 M.

Estimated Incremental Cash Flows -P i t O ti l I t


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delivery to the residents of Monterey County. One of the rst tasksin the establishment of the Health System will be a combinedstrategic plan with a detailed master facility plan. As mentionedpreviously NMC has a short term need to build additional hospitalbeds and SVMH needs to have a seismically sound replacementfacility by 2030 which will be key components of the joint master

plan.

In addition to building expansion and replacement, both NMCand SVMH have identied many new programs that are criticalto helping the residents to achieve improved health status.The incremental cash ows and excess cash from improvedoperations will allow the Healthcare System to support expandedservices at the two facilities in parallel with master facilityupgrading and replacement.

One critical high priority need identied by NMC and SVMH is theestablishment of a trauma service for the region. As a combinedentity, the development of a trauma service can be implementedfar quicker as a combined entity working together rather than twoseparate hospital efforts.

Third Party Capital Sources

The County of Monterey and SVMHS would each contributeassets and liabilities to the Health System If the County becomes


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Overview of NMC Strategic Plan: Vision 2012

The NMC Strategic Plan: VISION 2012 was developed througha planning process which included the formation of a strategicplanning steering committee consisting of many internal andexternal stakeholders. Market data was collected, service trendsof NMC and other local health care providers were analyzed,and interviews with key provider and community stakeholderswere conducted. At a planning retreat, the many ideas weretranslated into a mission, vision, and the strategic direction,critical keys to success categories and the strategic goals thatalign with the keys to success. The NMC Strategic Plan: VISION2012 was approved by the Board of Trustees and Board ofSupervisors. The NMC Strategic Plan: VISION 2012 is scheduledto be revised in 2012 beginning a new three year cycle. On initialreview, the SVMHS mission and strategies outlined in the OfferingMemorandum are congruent with the key elements of NMCStrategic Plan: VISION 2012.

Strategic Direction

Based on changing community demographics, increasing chronicdiseases reecting health disparities by income and ethnicity, andthe enactment of comprehensive health care reform that stabilizesand strengthens the local health care safety net, NatividadMedical Center will be responsive by partnering with other healthcare providers in the provision of integrated comprehensive


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Natividad Medical Center Strategic Plan: Vision 2012

KEYS TO SUCCESS STRATEGIC GOALS

Delivery System

Realignment

To Partner with others in the provision of integrated,

comprehensive, coordinated health care

Q litTo excel in providing safe, reliable, quality care to

Future State Vision

By 2012, NMC will be recognized:

Nationally and statewide as an evolving model public safetynet hospital

By the community as an accessible and desired resourcefor primary care, general medical/surgical, emergency, andwomens and childrens services

By both consumers and providers as a System associatedwith best practices, stellar outcomes, and high patient andcaregiver satisfaction levels


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Highlights of NMC Strategic Initiatives

Creating a quality vision and culture of safety

Adopting a new performance improvement framework forpatient safety initiatives

Improving the safety of medication administration andmanagement

Implementing the Section 1115 Waiver Delivery SystemReform Incentive Pool ve-year plan that denes futurequality and patient satisfaction goals

Elevating patient satisfaction/customer service as a top

priority

Rolling out Standards of Performance for all staff

Developing curriculum for leadership academy: management,physicians, and staff

Creating an inviting and friendly health care facilityenvironment that promotes healing

Completing the facility and campus master plans

Aggressively pursuing physician recruitment initiatives intargeted specialties

Developing new relationships with community provider(s)


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Contingencies, Caveats,

and Approvals

Contingencies and Caveats

As part of the formation of the Health System the followingagreements would have to be reached:

Agreement for the transfer of negotiated real, personal, andintangible property interests from SVMHS and NMC to theHealth System, including negotiated lease with option to

purchase agreements between the County and the HealthSystem for NMC Campus facilities;

Agreement between the County and SVMHS transferring riskmanagement, workers compensation, retirement liabilities,and other obligations of each partys existing hospitaloperations to the Health System;

Agreement regarding any necessary or appropriate interim

management;

Agreement between the Health System and County for FQHClook-alike clinics and mental health operations;

Agreements and actions necessary for single hospitallicensure in California; and


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Attachments

Attachment 1: NMC Hospital Campus

Attachment 2: SVMH Campus

Attachment 1: NMC Hospital Campus


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Natividad Medical Center Campus

Monterey County/Salinas Valley Memorial Healthcare System Afliatio

EXISTING CAMPUS

POTENTIAL GROWTH AREA

200

FEET

0 400

31.37 Acres

18.53 Acres

Attachment 2: SVMH Campus


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Salinas Valley Memorial Hospital Campus

Monterey County/Salinas Valley Memorial Healthcare System Afliatio

EXISTING CAMPUS

100

FEET

0 200

Documents

NMC SVMH Presentation 7Mar2012Final-2