FY 2019 Annual Budget DRAFT. Revenue. Labor. Capital Cash Flow

Transcription

1 FY 2019 Annual Budget 1 Executive 2 Financial 3 Service 4 Revenue 5 Labor 6 Operating Summary Statements Volumes 7 FQHC Expenses Look-Alike 8 Capital & Cash Flow

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3 FY 2019 Planning and Budget Calendar District Board March 28 Review preliminary patient volumes April 25 Approve patient volumes Review revenue and expense assumptions May 23 District Board meeting - review capital, volumes, revenue, expenses and other assumptions June 21 District Board budget workshop 27 District Board approves FY2019 operating and capital budget

4 FY 2019 Annual Budget Executive Summary

5 Dear Board of Directors, In the sections that follow you will find the proposed financial plan for MIHS for the 2019 fiscal year beginning July 1, Highlights include: Patient Activity and Revenue Total operating revenue anticipated in the budget plan will grow by 3% and is driven by realistic patient volume assumptions, coupled with payment increases from governmental and third-party payers. Admissions, Emergency Department visits and Outpatient Clinic visits are budgeted to increase slightly over the current year. From a reimbursement standpoint, increases are anticipated from Medicare (1.5%), AHCCCS ( %), and commercial payers (3%), and a slight increase related to pricing to help offset uncompensated care. The overall payer mix is expected to remain constant with Medicaid and uninsured approximating 60% of gross revenue. Uncompensated care, which is comprised of charity and bad debt, is assumed to remain constant at 7.5% of gross revenue. Lastly, other operating revenue is expected to be 3% less next year, due to recognition of prior period and current period 340B revenue in FY2018. Expenses Overall, expenses are projected to also increase by 3% over the current year. Almost 70% (68.5%) of the increase is related to labor costs, as a result of current year market adjustments, program expansion (Behavioral Health), new positions (Marketing, Managed Care, Foundation Liaison), and conversion of purchased services to employed staff (Reimbursement, I.T., Revenue Cycle). As expected, salaries and benefits comprise the single biggest area of expense in the budget (55%). Merit System increases of up to 3% at mid-year are included in salaries, along with a compensation contingency of 1/2 of 1% of salaries. Employee benefits will remain at 28% of salaries and include the increase from ASRS effective July 1, Medical service fees will increase by about 6% next year and is attributed to programs/physician FTEs added during FY2018, in addition to rate increases per the contract. Supply expenses will be an area of emphasis over the next year as cost/adjusted admission has increased 17% over the past two years. As mentioned earlier, purchased services are expected to decline due to conversion to staff and anticipated credits related to Revenue Cycle. Other expenses are expected to increase by 8% and includes such items as insurance, utilities, I.T. subscriptions, rent, and repairs/maintenance. The AHCCCS hospital assessment for MIHS will be reduced in FY2019 due to MIHS proportion of statewide discharges and categorization methodology. Other expenses are included in the budget to address strategic (communication plan), operational (construction auditor) and mission related (Creighton Alliance) priorities. Maryvale hospital is planned to be operational in the last quarter of FY2019 and is not included in this budget plan.

6 Non-Operating Revenue (Expense) This section includes grant, research, match program, interest income/expense, and tax levies. For FY2019, this budget includes $76.9M in operating tax support and $42.1M in bond levy support. FQHC Look-Alike Behind tab 7 you will find the presentation of the FY2019 budget as approved by the Governing Council. Visits are assumed to increase by about 2% over the current year, while the payor mix and reimbursement from AHCCCS are expected to remain the same as the current year. Expenses are budgeted to increase about 2%, resulting in a $9.3M contribution to overhead. Capital Plan & Cash Position The capital budget plan of about $15.0M includes $5.0M in contingency to provide for potential equipment replacements, as needed. In addition, investment of approximately $3.0M is planned for the imaging/radiology area to stay current. Along with continued investment in I.T. of about $2.2M, a strategic investment related to the replacement of CopaNet is also included. This budget anticipates an improvement of the MIHS cash position by about 20 days, if achieved. The days cash on hand position at year-end is projected to be about 180 days, which is below the 2017 Moody s A Rated Median of 220 days. Margin The FY2019 budgeted total margin is $8.4M or 1.7%, which is an improvement over the FY2018 breakeven budget but less than the FY2018 unaudited 3% total margin. For industry comparison purposes, 2017 Moody s A Rated Median total margin was 4.7%. Mission Last, but certainly not least, this budget portrays mission-related activities such as the $650K year one Creighton Alliance commitment to advancing medical education in Arizona. In addition, the health systems continuous commitment to improve access and provide for the most vulnerable in our community has not waivered and is reflected in the overall Medicaid and uninsured payer mix that approaches 60% (56% budgeted). Taken as a whole, we have devised a responsible budget plan that may be used to guide us financially, reflects the organization s priorities, supports operational requirements and is linked to strategic objectives. I want to take this opportunity to thank the budget team and the executive team for their work and support in developing our financial blueprint for next year. Sincerely, Richard D. Mutarelli, CPA, MBA EVP, Chief Financial Officer

7 FY 2019 Annual Budget Financial Statements

8 Maricopa Integrated Health System Maricopa Medical Center Income Statement FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav/(Unfav) Fav/(Unfav) Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 OPERATING REVENUE Net patient service revenue 410,021, ,955, ,882, ,175,925 15,293,074 4% Other revenue 56,864,991 67,877,380 71,227,848 69,072,899 (2,154,949) (3%) Total operating revenues 466,886, ,832, ,110, ,248,824 13,138,124 3% OPERATING EXPENSES Salaries and wages 206,343, ,538, ,146, ,273,636 (11,127,076) (5%) Contract labor 14,398,702 13,847,429 17,184,452 13,199,626 3,984,826 23% Employee benefits 47,238,559 66,311,156 62,345,150 66,215,892 (3,870,742) (6%) Medical service fees 59,154,557 67,172,842 69,912,456 73,775,525 (3,863,070) (6%) Supplies 61,364,347 71,751,901 75,415,639 75,806,365 (390,726) (1%) Purchased services 23,132,376 21,582,135 26,442,327 23,249,402 3,192,924 12% Other expenses 38,181,983 44,280,260 42,642,450 46,238,890 (3,596,440) (8%) Provider assessment 7,538,102 8,275,684 8,275,684 6,761,532 1,514,152 18% Depreciation 25,666,488 27,180,995 24,377,861 26,289,222 (1,911,361) (8%) Total operating expenses 483,018, ,941, ,742, ,810,092 (16,067,513) (3%) NONOPERATING REVENUES (EXPENSES) Other nonoperating revenue (expenses) 38,157,984 5,239,684 4,479,682 (1,909,625) (6,389,307) (143%) Interest expense (2,173,601) (976,741) (1,111,501) (1,369,497) (257,996) (23%) Tax levy 110,524, ,702, ,702, ,074,910 5,372,082 5% Total nonoperating revenues (expenses) 146,508, ,965, ,071, ,795,788 (1,275,221) (1%) Excess of revenues over expenses 130,376,577 38,857,541 53,439,130 49,234,520 (4,204,610) (8%) ASRS/Bond Related/Sale Proceeds Normalization (69,639,598) (38,857,149) (38,855,816) (40,842,827) (1,987,011) (5%) Normalized excess revenue over expenses 60,736, ,583,314 8,391,694 (6,191,621) (42%) Page 1 of 8

9 Maricopa Integrated Health System Budget - Fiscal Year 2019 Dashboard - Maricopa Medical Center FY 2017 FY 2018 FY 2018 FY 2019 FY 2019 % Change Total Total YTD March Total Variance from Favorable/ PERFORMANCE MEASURE Actual Budget Projection Budget 2018 Projection (Unfavorable) Net Patient Revenue/AA $15,018 $13,862 $14,319 $14,939 $ % Self Pay & Bad Debt/AA $8,265 $6,572 $5,314 $5,415 ($100) (1.9%) Operating Revenue/AA (incl. other rev) $17,100 $16,227 $16,783 $17,343 $ % Operating Expense/AA $17,691 $18,982 $18,985 $19,660 ($676) (3.6%) Labor/AA $8,085 $8,304 $8,280 $8,579 ($299) (3.6%) Supply/AA $2,248 $2,499 $2,609 $2,639 ($30) (1.1%) Operating Income (Loss)/AA ($591) ($2,756) ($2,201) ($2,317) ($115) (5.2%) Net Income (Loss) With Bond & Sale/AA $4,775 $1,354 $1,849 $1,714 ($135) (7.3%) Net Income (Loss) Without Bond & Sale/AA $2,225 $0 $505 $292 ($212) (42.1%) Page 2 of 8

10 Maricopa Integrated Health System District Property Tax History Fiscal Year 2019 Fiscal Year Amt Levied Tax Rate Rate Change 2006 $40.0M $42.9M $46.3M $49.9M $53.0M $55.7M $57.9M $57.9M* $62.5M $65.1M $67.3M ** $70.8M $73.8M $76.9M Page 3 of 8

11 Maricopa Integrated Health System Property Tax Comparison Fiscal Year 2019 No rate change FY18 Same $ as FY18 from FY18 FY19 Max $ Based on Primary Assessed Value Tax levy $73.8M $78.0M $73.8M $76.9M Rate per $ Rate change year over year (0.0029) (0.0000) (0.0104) (0.0027) % Rate change from inception 60.0% 60.0% 51.4% 57.8% Page 4 of 8

12 Maricopa Integrated Health System Recommended Levy Worksheet Fiscal Year 2019 Page 5 of 8

13 Maricopa Medical Center Budget 2019 Summary of Other Revenue FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Description Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 GME Revenue 38,432,068 33,670,195 33,670,195 36,176,611 2,506, % Disproportionate Share (DSH) 5,672,191 4,202,300 4,202,301 4,202, % Trauma Services 2,426,749 2,444,836 2,423,157 2,424,953 1, % PCMH Revenue 1,094,200 1,092,600 1,038, ,120 (921,633) (88.7%) Meaningful Use Revenue 1,225,554 1,350,000 65, , , % Interns & Residents Program 1,064,164 1,102, ,203 1,044, , % Medical Students Rotation Program 222, , , ,260 10, % Cafeteria Sales 2,561,795 2,697,467 2,559,556 2,636,342 76, % Gift Shop Sales 271, , , ,974 7, % Sales Of Copies 4,425 16,598 7,426 7,000 (426) (5.7%) Rental Income 585, , , ,047 (39,805) (7.3%) 340B Retail Revenue 0 13,782,481 19,844,594 13,059,127 (6,785,467) (34.2%) Other Misc Operating Revenue 2,695,139 5,866,198 4,812,316 7,282,882 2,470, % Grant And Research Revenue Other 608, , , ,187 (643,163) (70.8%) TOTAL 56,864,991 67,877,380 71,227,848 69,072,899 (2,154,950) (3.0%) Page 6 of 8

14 Maricopa Medical Center Budget 2019 Summary of Non-Operating Revenue (Expenses) FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Description Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 Noncapital Grants - Grants 8,355,335 10,989,110 11,174,296 11,673, , % Noncapital Grants - Research 1,056, , , ,172 (653,190) (81.6%) Noncapital Transfers From County/State 3,547,896 3,547,896 3,547,896 3,547, % Other nonoperating revenue (expenses) Grants (805,925) (2,784,952) (2,906,161) (2,660,607) 245,555 (8.4%) Other nonoperating revenue (expenses) Research 893, , , ,055 (75,138) (18.7%) Other nonoperating revenue (expenses) House Staff 0 0 (2,512,181) (2,500,000) 12,181 (0.5%) Investment Income 646, ,000 1,899,716 1,250,000 (649,716) (34.2%) Interest Expense (2,173,601) (976,741) (1,111,501) (1,369,497) (257,996) 23.2% Match Programs (TIP, APSI Dignity, APSI DMG, MCCS) (7,908,864) (8,120,730) (7,926,438) (13,694,303) (5,767,865) 72.8% Tax Levy 110,524, ,702, ,702, ,074,910 5,372, % Sale of Health Plan 32,373, % TOTAL 146,508, ,965, ,071, ,795,788 (1,275,221) (1.1%) Page 7 of 8

15 Maricopa Medical Center Budget 2019 Summary of Other Expenses FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Account Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 Repair & Maintenance 13,806,005 17,115,312 15,297,759 16,453,562 (1,155,803) (7.6%) Utilities 6,455,084 7,190,333 7,388,326 7,783,194 (394,869) (5.3%) Rent 3,789,722 6,145,575 4,211,998 4,622,610 (410,612) (9.7%) Misc Expense Risk Premiums and Claims Expenses 6,989,464 5,154,789 5,373,245 5,531,829 (158,584) (3.0%) Web-based Subscriptions 2,570,444 2,748,153 3,458,361 5,430,758 (1,972,396) (57.0%) Organizational Mermberships/Certifications/Licenses 1,075,329 1,139,249 1,050,716 1,171,336 (120,620) (11.5%) Overhead Costs (Grant & Research programs) 986, ,954 1,140,804 1,098,069 42, % Intern/Resident Allowance 570, , , ,000 (13,667) (2.5%) Bank-related Charges and Fees 739, , , ,000 (7,673) (1.6%) Freight 381, , , ,233 (25,579) (7.2%) Records Management 332, , , ,000 (33,715) (10.7%) Books, Pamphlets, and Subscriptions 141, ,622 1,043, , , % Employee Recognition Rewards 54,341 81,731 47, ,650 (155,511) (329.9%) Travel Reimbursement 152, , , ,719 44, % Mileage Allowance 122, , , ,262 (47,059) (37.3%) Printing, Binding, and Duplicating 19,778 16,998 15, ,708 (151,434) (991.4%) Seminar Fees 158,963 44,598 93, ,387 (11,096) (11.9%) Other Expenses not listed (162,517) 1,128,863 1,451,190 1,184, , % TOTAL 38,181,983 44,280,260 42,642,450 46,238,890 (3,596,440) (8.4%) Page 8 of 8

16 FY 2019 Annual Budget Service Volumes

17 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, ,253 12,160 3,376 11,035 Maricopa Medical Center Fiscal Year 2019 Budget Statistics Admissions by Year 3,814 3,858 11,475 11,454 FY 2016 FY 2017 FY 2018 Projection FY 2019 Budget Behavioral Health Acute * Does not include Mayvale Page 1 of 5

18 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,919 Maricopa Medical Center Fiscal Year 2019 Budget Statistics Emergency Department Visits by Year 75,316 74,648 74,826 FY 2016 FY 2017 FY 2018 Projection FY 2019 Budget All ED Visits * Does not include Mayvale Page 2 of 5

19 450, , , , , , , ,000 50, , , ,288 23, ,690 Maricopa Medical Center Fiscal Year 2019 Budget Statistics Outpatient Clinic Visits by Year 26,037 27, , , , , ,247 FY 2016 FY 2017 FY 2018 Projection FY 2019 Budget Dental CHC FHC & WHH * Does not include Mayvale Page 3 of 5

20 Admissions FY 2017 FY 2018 FY 2018 Variance FY 2019 Variance Variance % Total Total YTD March Projection Total Fav / (Unfav) Fav / (Unfav) Actual Budget Projection to Bud 2018 Budget Bud 19 - Proj 18 Bud 19 - Proj 18 Acute 11,035 11,447 11, ,454 (21) (0.2%) Psych 3,376 3,605 3, , % Total 14,411 15,052 15, , % Observation Admissions Transfer to Inpatient 1,464 1,398 1,283 (115) 1, % Observation Only 4,461 4,390 3,993 (397) 4, % Total 5,925 5,788 5,277 (511) 5, % Total Admissions and Observation Only Total 18,872 19,442 19,282 (160) 19, % Adjusted Admissions Total 27,303 28,708 28, ,729 (176) (0.6%) Length of Stay Patient Days Maricopa Medical Center Budget 2019 Service Volumes Acute (0.1) % Psych (1.9) % Total (2.0) % Acute 53,631 54,716 53,496 (1,220) 53, % Psych 74,236 80,688 78,282 (2,406) 80,806 2, % Total 127, , ,778 (3,626) 134,790 3, % Average Daily Census Acute (3.3) % Psych (6.6) % Total (9.9) % Adjusted Patient Days 242, , ,135 (9,115) 252,896 3, % Total Page 4 of 5

21 Maricopa Medical Center Budget 2019 Service Volumes FY 2017 FY 2018 FY 2018 Variance FY 2019 Variance Variance % Total Total YTD March Projection Total Fav / (Unfav) Fav / (Unfav) Actual Budget Projection to Bud 2018 Budget Bud 19 - Proj 18 Bud 19 - Proj 18 Surgeries - Main OR Inpatient 3,873 4,058 3,999 (59) 4, % Outpatient 3,362 3,557 3,357 (200) 3,352 (5) (0.2%) Deliveries ED Visits Total 7,235 7,615 7,357 (258) 7, % Inpatient Minutes 511, , ,674 (10,840) 535,547 7, % Outpatient Minutes 310, , ,041 (19,843) 322,941 (100) (0.0%) Total 822, , ,715 (30,683) 858,488 7, % Total 2,332 2,543 2,039 (504) 1,776 (263) (12.9%) Adult 47,706 49,015 46,649 (2,366) 46, % Peds 20,799 22,945 21,627 (1,318) 21, % L&D 4,379 4,693 3,775 (918) 3,269 (506) (13.4%) Burn 2,432 2,338 2, , % Total 75,316 78,991 74,648 (4,343) 74, % 7th Ave Walk-In Clinic Total 21,681 21,785 19,974 (1,811) 20, % OP Visits FHC & WHH 189, , ,878 (18,937) 186,247 1, % CHC 157, , ,122 (15,055) 156,952 1, % Dental 23,145 23,624 26,037 2,413 27,113 1, % Total 370, , ,037 (31,579) 370,312 4, % Page 5 of 5

22 FY 2019 Annual Budget Revenue

23 Payor Mix Assumption * - All Patients AHCCCS/Medicaid 46% Uninsured & Other 10% Medicare 17% Other Govt. 13% Commercial 14% * March 2018 YTD Based on Gross Revenue Page 1 of 4

24 Payor Mix Assumption * - Inpatient AHCCCS/Medicaid 45% Uninsured & Other 4% Medicare 17% Commercial 15% Other Govt. 19% * March 2018 YTD Based on Gross Revenue Page 2 of 4

25 Payor Mix Assumption * - Behavioral Health Medicare 33% AHCCCS/Medicaid 56% Commercial 10% Uninsured & Other 0% Other Govt. 1% * March 2018 YTD Based on Gross Revenue Page 3 of 4

26 Payor Mix Assumption * - Ambulatory Includes Outpatient and Emergency AHCCCS/Medicaid 45% Medicare 13% Uninsured & Other 19% Other Govt. 11% Commercial 13% * March 2018 YTD Based on Gross Revenue Page 4 of 4

27 FY 2019 Annual Budget Labor

28 Maricopa Medical Center Budget 2019 Labor Cost and FTE Dashboard FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 FTE/AOB WO Residents % FTE/AOB % Payroll FTEs 3, , , ,206.8 (15.8) (0.5%) Contract FTEs % Total FTEs 3, , , , % OT Hours as a % of Worked Hours 2.1% 2.1% 2.4% 2.2% 0.1% 6.2% Benefits as a % of Salary 22.9% 29.5% 28.1% 28.4% (0.3%) (1.1%) Annual Cost per Payroll FTE Salaries 67,655 69,648 69,615 72,742 (3,127) (4.5%) Benefits 15,488 20,569 19,537 20,648 (1,111) (5.7%) Total 83,144 90,216 89,153 93,391 (4,238) (4.8%) Cost per Contract FTE 55,694 58,000 62,177 52,198 9, % Page 1 of 5

29 Maricopa Medical Center Paid FTE Report - Summary Payroll and Contract Labor FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Actual Budget Projection Budget Bud 19 - YTD Mar Bud 19 - YTD Mar Maricopa Medical Center Nursing (22.3) (3.1%) Ancillary (19.0) (3.6%) Support 1, , , ,190.3 (83.1) (7.5%) Residents (4.0) (2.1%) Grants and Research % Subtotal 2, , , ,751.2 (119.3) (4.5%) Behavioral Health (32.1) (6.1%) CHC (8.7) (6.6%) FHC and 7th Avenue Walk-In (15.1) (10.9%) Dental % Vacancy Adjustment 0.0 (175.4) 0.0 (182.8) % Total Paid FTEs 3, , , , % Page 2 of 5

30 Maricopa Medical Center Paid FTE Report - Summary by Area Payroll and Contract Labor FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Service Area Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 NURSING 010Adult Progressive Care Unit % 020Burn Services (11.7) (11.9%) 030Critical Care (4.4) (6.8%) 050Maternal Child % 060Med/Surg (17.8) (14.1%) 070Pediatric Services - Hospital (6.1) (8.9%) Adult Emergency (7.3) (8.8%) 080Trauma Services (0.1) (1.4%) 090Nursing Other (10.5) (14.3%) (22.3) (3.1%) ANCILLARY 100Burn Ancillary (3.0) (18.9%) Ancillary Other (5.3) (20.6%) Clinical Laboratory (3.1) (2.9%) 110Dialysis (1.9) (7.7%) 120Hospital Pharmacy (4.8) (6.3%) 130Ambulatory Pharmacy (0.5) (1.9%) 140Imaging / Cath Lab / Angio % 150Perioperative Services - Hospital (1.4) (1.4%) 160Respiratory / Rehab (0.4) (0.7%) (19.0) (3.6%) Page 3 of 5

31 Maricopa Medical Center Paid FTE Report - Summary by Area Payroll and Contract Labor FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Service Area Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 SUPPORT 200Compliance (1.5) (41.8%) 320Environmental Services % 210Financial Services (8.4) (37.5%) 220Facilities (0.6) (1.6%) 230Food Services (0.0) (0.0%) 240Guests, Gifts & Safety (1.5) (4.9%) 250Hospital Administration (8.0) (24.0%) 270Human Resources % 280Information Technology (18.1) (10.5%) 290Medical Staff Affairs (2.3) (12.3%) 300Revenue Cycle (32.6) (8.2%) 310Security (1.7) (3.5%) 320Strategic Development (3.8) (11.5%) 330Supply Chain % 340Quality Management (6.6) (37.9%) 1, , , ,190.3 (83.1) (7.5%) RESIDENTS Residents (4.0) (2.1%) (4.0) (2.1%) GRANTS & RESEARCH 200Grants % 320Research % % Page 4 of 5

32 Maricopa Medical Center Paid FTE Report - Summary by Area Payroll and Contract Labor FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Service Area Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 BEHAVIORAL HEALTH Behavioral Health (32.1) (6.1%) (32.1) (6.1%) Dental Total CHC 200CHC (6.2) (7.5%) Pediatric Services - CHC (2.3) (12.4%) 320Perioperative Services - CHC (0.2) (0.8%) (8.7) (6.6%) FHC & 7TH AVENUE WALK-IN 2007th Avenue Walk-In Clinic (1.1) (12.2%) 320FHC (14.0) (10.8%) (15.1) (10.9%) DENTAL Dental % % VACANCY ADJUSTMENTS 350Vacancy Adjustments 0.0 (175.4) 0.0 (182.8) % 0.0 (175.4) 0.0 (182.8) % Grand Total 3, , , , % Page 5 of 5

33 FY 2019 Annual Budget Operating Expenses

34 Maricopa Medical Center Operating Expenses by Area Excludes Bad Debt and Depreciation FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Service Area Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 NURSING 010Adult Progressive Care Unit 5,751,613 5,441,271 6,577,121 4,508,294 2,068, % 020Burn Services 12,358,779 12,937,913 12,581,358 13,406,795 (825,438) (6.6%) 030Critical Care 7,828,880 8,408,120 9,240,099 9,950,869 (710,770) (7.7%) 050Maternal Child 16,504,209 18,086,770 16,033,769 14,474,272 1,559, % 060Med/Surg 12,036,849 11,623,136 11,840,728 13,087,770 (1,247,042) (10.5%) 070Pediatric Services - Hospital 10,056,213 11,206,853 9,834,578 10,980,948 (1,146,370) (11.7%) Adult Emergency 12,406,475 14,628,268 13,921,238 15,391,633 (1,470,395) (10.6%) 080Trauma Services 765, , , ,681 (38,566) (5.2%) 090Nursing Other 6,897,548 9,685,772 9,773,384 9,681,150 92, % 84,605,918 92,806,332 90,540,390 92,258,414 (1,718,024) (1.9%) ANCILLARY 100Burn Ancillary 1,913,036 2,176,749 1,905,923 2,267,504 (361,581) (19.0%) Ancillary Other 2,582,789 2,712,765 2,457,948 2,527,098 (69,150) (2.8%) Clinical Laboratory 16,920,182 18,731,912 20,004,102 21,275,816 (1,271,714) (6.4%) 110Dialysis 3,097,475 3,000,606 3,098,430 3,301,136 (202,705) (6.5%) 120Hospital Pharmacy 26,718,064 36,451,412 42,371,022 42,293,041 77, % 130Ambulatory Pharmacy 4,749,647 5,699,600 5,731,512 6,148,901 (417,389) (7.3%) 140Imaging / Cath Lab / Angio 14,968,257 15,707,415 15,198,221 15,344,374 (146,154) (1.0%) 150Perioperative Services - Hospital 22,638,075 24,567,063 24,156,323 24,489,599 (333,276) (1.4%) 160Respiratory / Rehab 5,902,599 6,213,914 6,365,888 6,189, , % 99,490, ,261, ,289, ,836,490 (2,547,121) (2.1%) Page 1 of 3

35 Maricopa Medical Center Operating Expenses by Area Excludes Bad Debt and Depreciation FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Service Area Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 SUPPORT 200Compliance 811,956 1,033, , ,694 (285,192) (44.3%) 320Environmental Services 7,578,367 7,922,827 7,987,577 8,165,698 (178,120) (2.2%) 210Financial Services 24,857,049 40,092,354 37,243,844 41,752,264 (4,508,420) (12.1%) 220Facilities 9,098,488 9,820,583 9,918,456 10,165,160 (246,704) (2.5%) 230Food Services 6,914,551 7,148,456 7,071,070 7,310,387 (239,317) (3.4%) 240Guests, Gifts & Safety 1,577,176 2,322,154 1,863,283 2,023,250 (159,966) (8.6%) 250Hospital Administration 16,170,140 15,784,902 15,598,519 17,160,361 (1,561,842) (10.0%) 270Human Resources 4,464,833 5,500,845 5,381,211 5,150, , % 280Information Technology 38,728,545 45,850,155 41,893,072 46,349,303 (4,456,230) (10.6%) 290Medical Staff Affairs 2,410,849 2,682,685 2,493,456 2,924,642 (431,185) (17.3%) 300Revenue Cycle 37,811,268 41,760,890 41,100,995 40,227, , % 310Security 3,005,206 3,371,016 3,344,144 3,479,665 (135,520) (4.1%) 320Strategic Development 3,931,904 4,963,048 4,398,602 5,047,571 (648,969) (14.8%) 330Supply Chain 2,320,159 2,448,328 1,815,748 2,092,388 (276,640) (15.2%) 340Quality Management 2,451,547 2,742,084 2,621,290 3,410,473 (789,182) (30.1%) 162,132, ,443, ,375, ,189,466 (12,813,697) (7.0%) RESIDENTS Residents 17,825,247 19,110,500 18,703,249 20,514,881 (1,811,632) (9.7%) 17,825,247 19,110,500 18,703,249 20,514,881 (1,811,632) (9.7%) GRANTS & RESEARCH 200Grants 7,196,667 7,311,360 7,104,523 7,287,795 (183,272) (2.6%) 320Research 3,235,070 2,736,359 3,093,139 2,236, , % 10,431,737 10,047,719 10,197,663 9,524, , % Page 2 of 3

36 Maricopa Medical Center Operating Expenses by Area Excludes Bad Debt and Depreciation FY 2017 FY 2018 FY 2018 FY 2019 Variance Variance % Total Total YTD March Total Fav / (Unfav) Fav / (Unfav) Service Area Actual Budget Projection Budget Bud 19 - Proj 18 Bud 19 - Proj 18 BEHAVIORAL HEALTH Behavioral Health 37,249,173 49,204,585 52,665,934 58,533,516 (5,867,582) (11.1%) 37,249,173 49,204,585 52,665,934 58,533,516 (5,867,582) (11.1%) Dental Total CHC 200CHC 8,356,849 9,577,577 8,429,645 9,214,883 (785,237) (9.3%) Pediatric Services - CHC 3,361,056 3,670,498 3,504,165 3,571,646 (67,480) (1.9%) 320Perioperative Services - CHC 2,168,734 2,764,469 2,224,358 2,239,771 (15,414) (0.7%) 13,886,638 16,012,544 14,158,168 15,026,300 (868,131) (6.1%) FHC & 7TH AVENUE WALK-IN 2007th Avenue Walk-In Clinic 3,471,128 3,529,504 3,138,941 3,029, , % 320FHC 24,113,142 28,109,720 25,755,751 25,199, , % 27,584,270 31,639,223 28,894,691 28,229, , % DENTAL Dental 4,146,602 4,392,341 4,477,546 4,529,915 (52,369) (1.2%) 4,146,602 4,392,341 4,477,546 4,529,915 (52,369) (1.2%) VACANCY ADJUSTMENTS 350Vacancy Adjustments 0 (14,218,804) 0 (10,121,332) 10,121, % 0 (14,218,804) 0 (10,121,332) 10,121, % Grand Total 457,351, ,699, ,302, ,520,870 (14,218,089) (2.7%) Page 3 of 3

37 FY 2019 Annual Budget FQHC Look-Alike

38 Quality and patient safety Patient volume growth FQHC Look-Alike Major operational focus areas Care Reimagined planning Community communication FQHC Survey (HRSA site visit) 1

39 Family Health Centers Visits Budgeting a 2.4% compared to FY 2018 projection DMG Provided FTEs by clinic Used 2017 Medical Group Management Association (MGMA) median blended productivity rates Applied vacancy factor of 4.0 FTEs Pendergast FHC not included Closure in June 2018 DMG FTEs transferred to Avondale FHC No current budget for Expanded Behavioral Health services 2

40 Whole Health Home Visits Budgeting an 88.4% compared to the FY 2018 projection All WHH clinics are scheduled to close by 09/30/2018 Provider Network Organization (PNO) moved to an internally integrated model of care 7th Avenue Walk In Clinic Budgeting a 2.5% compared to the FY 2018 projection Used 2017 Medical Group Management Association (MGMA) median blended productivity rates Clinic expected to close 05/31/2019 3

41 Comprehensive Health Center Visits Budgeting a 5.4% compared to the FY 2018 projection Antepartum Testing and the Diabetes Outreach Clinics 4.7% based on average visits per day Budget increased for Women s Care Clinic (2.3%), Pediatric (Primary) Clinic (11.3%), and Medicine (Primary) Clinic (2.3%) Used 2017 Medical Group Management Association (MGMA) median blended productivity rates Medicine (Primary) Clinic includes vacancy factor of 0.5 FTE 4

42 Dental Clinics Visits Budgeting a 4.1% compared FY 2018 projection McDowell Dental 8.9% Additional Grant monies received to expand services Pendergast Dental not included in the FY 2019 budget Providers were budgeted in Avondale Dental resulting 15.8% 5

43 FHC Clinics FQHC Look-Alike Visit Detail Historical and Projected Budget Information FY 2016 FY 2017 FY 2018 FY 2018 Budget FY 2019 Actual Actual Projection Budget Variance from Budget (Projection) Proposed Budget Variance from Variance Projection % SOUTH CENTRAL FHC 17,556 16,476 15,259 19,529 (21.9%) 16,799 1, % 7TH AVENUE FHC 19,441 17,185 16,617 18,516 (10.3%) 14,941 (1,676) (10.1%) AVONDALE FHC 21,025 20,360 22,518 19, % 24,989 2, % MARYVALE FHC 21,323 21,611 19,571 21,346 (8.3%) 19,502 (69) (0.4%) GLENDALE FHC 18,013 17,395 15,112 18,219 (17.1%) 16,247 1, % EL MIRAGE FHC 14,394 12,031 13,195 12, % 14,701 1, % MESA FHC 16,427 13,345 14,784 19,318 (23.5%) 16,500 1, % CHANDLER FHC 22,650 19,294 17,853 18,773 (4.9%) 18, % GUADALUPE FHC 9,923 8,468 8,538 9,929 (14.0%) 9, % PENDERGAST FHC ** 4,645 4,804 4,560 3, % - (4,560) (100.0%) SUNNYSLOPE FHC 20,388 16,947 18,699 21,089 (11.3%) 18,397 (302) (1.6%) MCDOWELL FHC 14,770 12,832 14,878 17,978 (17.2%) 15, % Total 200, , , ,008 (9.2%) 185,864 4, % % Change compared to Prior Year -1.0% -9.9% 0.5% WHH Clinics FSA WHH POCN COMUNIDAD ** 1,164 1,171 1,014 1,052 (3.6%) 383 (631) (62.2%) FCH WHH SWN SAN TAN ** 1, (2.7%) - (876) (100.0%) FSU WHH PIR METRO 1,486 1, (54.6%) - (198) (100.0%) FME WHH PIR EAST VALLEY 4,245 4, (20.7%) - (780) (100.0%) FSU WHH SWN HIGHLAND (1.9%) - (427) (100.0%) FSA WHH POCN CAPITOL % FSU WHH CHOICES MIDTOWN % FSC WHH CHOICES SO. CENTRAL % Total 10,733 8,604 3,295 3,807 (13.4%) 383 (2,912) (88.4%) % Change compared to Prior Year -11.4% -19.8% -61.7% ** Indicates Clinic is closing 6

44 FQHC Look-Alike Visit Detail Historical and Projected Budget Information FY 2016 FY 2017 FY 2018 FY 2018 Budget FY 2019 Actual Actual Projection Budget Variance from Budget (Projection) Proposed Budget Variance from Projection Variance % CHC Clinics MARICOPA WOMENS CARE NS 12 24,965 23,209 21,969 24,470 (10.2%) 22, % ANTEPARTUM TESTING - CHC 9,747 9,106 8,299 9,298 (10.7%) 8, % ADULT WALK-IN CLINIC 3,677 2, DIABETES OUTREACH CLINIC 2,641 2,996 3,200 2, % 3, % PEDIATRIC CLINIC (PRIMARY CARE) 20,685 19,920 19,432 21,000 (7.5%) 21,635 2, % MEDICINE CLINIC (PRIMARY CARE) 10,773 11,087 11,965 15,843 (24.5%) 12, % Total 72,488 69,063 64,864 73,191 (11.4%) 68,388 3, % % Change compared to Prior Year 1.9% -4.7% -6.1% 7th Avenue Walk-In Clinic 7TH AVENUE WALK-IN CLINIC ** 24,444 21,681 19,974 21,785 (8.3%) 20, % % Change compared to Prior Year -10.5% -11.3% -7.9% Dental Clinics CHC DENTAL 10,955 10,875 11,394 10, % 11, % CHANDLER DENTAL 2,092 2,072 2,179 1, % 2, % SOUTH CENTRAL DENTAL 1,690 1,362 2,015 1, % 2, % AVONDALE DENTAL 2,021 1,934 2,701 1, % 3, % MESA DENTAL 2,208 2,051 2,395 2, % 2, % GLENDALE DENTAL 1,666 1,296-1,412 (100.0%) MCDOWELL DENTAL CLINIC 4,016 3,144 4,628 4, % 5, % PENDERGAST DENTAL ** % - (725) (100.0%) Total 25,007 23,145 26,037 23, % 27,113 1, % % Change compared to Prior Year -6.7% -7.4% 12.5% Grand Totals 333, , , ,415 (8.3%) 302,223 6, % % Change compared to Prior Year -2.0% -9.0% -2.5% Totals without WHH Clinics 320, , , ,817 (7.9%) 301,840 10, % ** Indicates Clinic is closing 7

45 Revenue FQHC Look-Alike AHCCCS reimbursement is flat Cost based Rate = $ PCMH revenue by 88.7% Mercy Care eliminated program Movement to Accountable Care Organization (ACO) programs 8

46 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Payor Mix FY 2019 budget assumes the FY 2018 YTD through March payor mix will continue COMMERCIAL MEDICAID MEDICARE OTHER OTHER GOVT SELF PAY October November December January February March 9

47 Expenses Expenses Budgeted expenses 1.9% compared to the FY 2018 projection 1.7% when including non-operating expenses Labor costs (salaries, contract labor, and benefits) 2.1% over the FY 2018 projection A vacancy factor applied approximately 20 FTEs Includes 3% salary increase starting Dec 2018 Merit Medical Service Fees 1.4% Based on same DMG staffing that drove volume (without vacancies) 2.0% increase per the DMG contract has been added 10

48 Expenses (cont.) Expenses Supplies - New process/correction for FY 2019 Centralization of laboratory supplies and pharmaceutical expenses Moved from Supplies line to the Allocated ancillary expense line This better matches accounting guidelines Results in over $1M net reduction to FQHC Look-Alike expenses 1% reduction from their request applied to most depts Purchased services include $77K for consulting services related to HRSA site visit No significant changes to cost allocations Reviewed annually 11

49 Income Statement FHC and WHH CHC Maricopa Integrated Health System FQHC - LA FY2018 Projection vs FY2019 Budget FY18 JUN Month to Date FY19 FY18 JUN Month to Date FY19 With Ancillary Services Projection Budget % Projection Budget % Visits 184, ,247 1% 64,864 68,388 5% Operating Revenues Net patient service revenue $ 42,459,634 $ 42,646,036 0% $ 10,826,762 $ 11,510,881 6% Other Operating Revenue 67,243 24,767 (63%) - - 0% PCMH Revenue 1,038, ,120 (89%) - - 0% Total operating revenues $ 43,565,631 $ 42,787,923 (2%) $ 10,826,762 $ 11,510,881 6% Operating Expenses Salaries and wages 10,335,672 10,672,643 (3%) 3,934,674 4,201,085 (7%) Contract labor 88, % 37, % Employee benefits 3,661,995 3,689,474 (1%) 1,286,233 1,337,946 (4%) Medical service fees 13,596,463 13,753,118 (1%) 3,074,217 3,383,548 (10%) Supplies 487, ,216 9% 193, ,633 5% Purchased services 24,442 75,424 (209%) 1,303 18,451 (1,316%) Other expenses 1,313,569 1,307,253 0% 55,078 79,526 (44%) Interest expense 8, % - - Allocated ancillary expense 6,418,505 6,677,244 (4%) 1,017,117 1,024,827 (1%) Total operating expenses $ 35,935,481 $ 36,621,757 (2%) $ 9,599,860 $ 10,229,016 (7%) Margin (before overhead allocation) $ 7,630,150 $ 6,166,166 (19%) $ 1,226,901 $ 1,281,865 4% Percent Margin 18% 14% 11% 11% Non-Operating Revenue (Expense) 648, ,336 (21%) 1,171 - (100%) Margin (after Non-Operating Revenue (Expense)) $ 8,278,538 $ 6,681,502 (19%) $ 1,228,072 $ 1,281,865 4% Percent Margin 19% 16% 11% 11% Overhead Allocation 9,721,052 9,767,294 (0%) 2,436,558 2,596,245 (7%) Margin (after overhead allocation) $ (1,442,514) $ (3,085,792) 114% $ (1,209,657) $ (1,314,380) (9%) Percent Margin (3%) (7%) (11%) (11%) 12

50 Income Statement Dental 7th Ave Walk-in Clinic Maricopa Integrated Health System FQHC - LA FY2018 Projection vs FY2019 Budget FY18 JUN Month to Date FY19 FY18 JUN Month to Date FY19 With Ancillary Services Projection Budget % Projection Budget % Visits 26,037 27,113 4% 19,974 20,475 3% Operating Revenues Net patient service revenue $ 5,149,248 $ 5,193,686 1% $ 4,560,354 $ 4,614,368 1% Other Operating Revenue - - 0% - - 0% PCMH Revenue - - 0% - - 0% Total operating revenues $ 5,149,248 $ 5,193,686 1% $ 4,560,354 $ 4,614,368 1% Operating Expenses Salaries and wages 3,477,675 3,572,114 (3%) 1,012,246 1,002,771 1% Contract labor 16, % 1, % Employee benefits 1,046, ,828 7% 303, ,506 6% Medical service fees - - 1,640,130 1,433,502 13% Supplies 295, ,006 (4%) 65,020 58,360 10% Purchased services 171, ,271 (4%) 2,962 8,449 (185%) Other expenses 46,751 28,960 38% 600, ,735 5% Interest expense Allocated ancillary expense , ,396 0% Total operating expenses $ 5,055,216 $ 5,057,179 (0%) $ 3,949,546 $ 3,681,719 7% Margin (before overhead allocation) $ 94,032 $ 136,507 45% $ 610,808 $ 932,649 53% Percent Margin 2% 3% 13% 20% Non-Operating Revenue (Expense) 288, ,505 4% - - 0% Margin (after Non-Operating Revenue (Expense)) $ 382,556 $ 437,012 14% $ 610,808 $ 932,649 53% Percent Margin 7% 8% 13% 20% Overhead Allocation 1,335,366 1,335,885 (0%) 921, ,404 7% Margin (after overhead allocation) $ (952,810) $ (898,872) (6%) $ (311,113) $ 73,245 (124%) Percent Margin (19%) (17%) (7%) 2% 13

51 Income Statement All Clinics Combined Maricopa Integrated Health System FQHC - LA JUN Month to Date Variance FY2018 Projection vs FY2019 Budget FY18 FY19 Favorable With Ancillary Services Projection Budget (Unfavorable) % Visits 295, ,223 6,502 2% Operating Revenues Net patient service revenue $ 62,995,998 $ 63,964,970 $ 968,973 2% Other Operating Revenue 67,243 24,767 (42,476) (63%) PCMH Revenue 1,038, ,120 (921,633) (89%) Total operating revenues $ 64,101,994 $ 64,106,857 $ 4,863 0% Operating Expenses Salaries and wages 18,760,267 19,448,613 (688,346) (3.7%) Contract labor 143, , % Employee benefits 6,298,767 6,282,754 16, % Medical service fees 18,310,810 18,570,168 (259,358) (1.4%) Supplies 1,042, ,216 44, % Purchased services 200, ,595 (79,947) (39.8%) Other expenses 2,015,526 1,984,473 31, % Interest expense 8, , % Allocated ancillary expense 7,760,004 8,025,467 (265,463) (3.4%) Total operating expenses $ 54,540,103 $ 55,589,671 $ (1,049,568) (1.9%) Margin (before overhead allocation) $ 9,561,891 $ 8,517,187 $ (1,044,705) (10.9%) Percent Margin 15% 13% Non-Operating Revenue (Expense) 938, ,841 (122,241) (13%) Margin (after Non-Operating Revenue (Expense)) $ 10,499,974 $ 9,333,028 $ (1,166,946) (11%) Percent Margin 16% 15% Overhead Allocation 14,414,898 14,558,828 (143,930) (1%) Margin (after overhead allocation) $ (3,914,924) $ (5,225,800) $ (1,310,876) (33%) Percent Margin (6%) (8%) 14

52 Capital Federally Qualified Health Centers Look-Alike Quantity Capital Capital Capital Description FY 2019 FY 2019 FY 2020 FY 2021 CCTV (Cameras) at the FHC's 33 98,097 96,197 - Colposcopes 2 15, Drager Jaundice Meter 1 7, EKG 1 12,000-12,000 NVR for FHC's CCTV 6 21,000 17,500 - Panic Alarms at the FHC's 24 25,800 24,725 - Ritter Electric Table , Ultrasound Machines 9 1,415, Wall Mount Otoscopes - Bio-Med # B , Grand Total 85 1,624, ,422 12,000 15

53 FY 2019 Annual Budget Capital & Cash Flow

54 Maricopa Integrated Health System Maricopa Medical Center Capital FY 2019 Non-Capital (FY 2019) FY 2020 FY 2021 MMC Emergency/Contingency $5,000,000 $0 $5,000,000 $5,000,000 Clinical 1,525, ,156, ,260 Facilities 90, IT 2,212,051 1,300, ,450 30,000 Support 4,620, ,721,127 1,467,078 FQHC Look-Alike 1,624, ,422 12,000 Total $15,072,406 $1,300,000 $16,441,084 $7,127,338 Page 1 of 3

55 Maricopa Integrated Health System Maricopa Medical Center Capital Over $100K Row Description Category Capital Category $ Amount 8 CT machine-mmc Replacement Asset Support $928, Print Management Infrastructure Upgrade Upgrade Asset IT 833, MIHS Intranet Replacement (CopaNet) Replacement Asset Support 750,000 1 Ultrasound Machines Replacement Asset FQHC/Clinical 472, SQL Hardware and Licensing New Asset IT 657, Servo-I - Ventilators Replacement Asset Support 561, Enterprise Fax Management New Asset IT 546, Digital fluoroscopy room Replacement Asset Support 491, Vehicle Flt yr 1/3 Replacement Asset Support 331, M Computer Assisted Coding (CAC) New Asset Clinical 279, Digital x-ray room-2 Replacement Asset Support 267, Digital x-ray room-trauma Replacement Asset Support 267, Surgical Tables Replacement Asset Clinical 257, Rover - Epic's acute care mobile application New Asset Clinical 250, ICU Bed Mattresses Replacement Asset Clinical 180, Digital portable x-ray machine Replacement Asset Support 137, Mammography Brevera biopsy unit with specimen imaging New Asset Support 126,000 Total Capital $100K $7,335,552 Page 2 of 3

56 Sources of Cash Fiscal Year Fiscal Year Operations $ 14,583,314 $ 8,391,694 Bond Funds 38,855,816 40,842,827 Investment Liquidation 0 10,000,000 Depreciation - Non Cash Operating Expense 24,377,861 26,289,222 Total Sources of Cash 77,816,992 85,523,742 Uses of Cash Maricopa Integrated Health System Budget - Fiscal Year 2019 Projected Cash from Operations Debt Repayments - Maricopa County/Misc Other (7,791,191) (2,085,008) Debt Repayments - Bond (37,360,022) (38,928,247) Capital - Emergency/Contingency (7,000,000) (15,072,046) Total Uses of Cash (52,151,213) (56,085,301) Fiscal Year - Operating Cash $ 25,665,779 $ 29,438,441 Page 3 of 3