Alameda Health System

Transcription

1 Alameda Health System Status Report Long Term Financial Planning Compliance with the Permanent Agreement March 9, 2015 Dan Boggan, Jr., Interim CEO David Cox, CFO 1

2 AHS Monthly Report Cash, Accounts Payable, Operations 2

3 2015 FCST 7/11/14 7/25/14 8/8/14 8/22/14 9/5/14 9/19/14 10/3/14 10/17/14 10/31/14 11/14/14 11/28/14 12/12/14 12/26/14 1/9/15 1/23/15 2/6/15 2/20/15 3/6/15 3/20/15 4/3/15 4/17/15 5/1/15 5/15/15 5/29/15 6/12/15 6/26/15 AHS Cash Forecast Primary Risk is in June 2015 $220,000,000 Net Negative Balance Forecast $200,000,000 $180,000,000 $160,000,000 $140,000,000 $120,000,000 NNB FORECAST DEBT LIMIT 3

4 Core Accounts Payable has been reduced to below $20 million. AHS is now current! $45,000,000 AHS Accounts Payable $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $ Over 120 4

5 Collections on Patient Revenue Continue to Improve $30,000,000 Cash Collected On Patient Revenue $1,600,000 $1,400,000 $ Collected Per Day $25,000,000 $1,200,000 $20,000,000 $1,000,000 $15,000,000 $800,000 $600,000 $10,000,000 $400,000 $200,000 $5,000,000 Jul Sep Nov Jan Mar May Aug Oct Dec Feb Apr Jun $- Jul SepNov Jan MarMay Aug Oct Dec Feb Apr Jun Cash Collected $ Per Day 5

6 Revenue Cycle - Accomplishments PFS Established centralized correspondence unit Planned re-org is complete Denials unit creation is underway Revenue Integrity EBEW reduced from $90M in December to $45M to date Departmental organizational being developed Patient Access Training complete for 100+ patient access staff Authorization unit has been established and pilot underway for Surgery Vendor selection of QA system is underway Professional (Physician Billing) External assessment completed Qualified leadership recruited (March 16 th ) Work Plan is in place

7 Toyon Report Work Plan and Status Toyon Findings & Recommendations Action Timeline 1. Establish a culture of accountability, including metrics for key initiatives. 2. Repair the organizations revenue cycle. We are refining our annual management process to tie accountabilities to our annual operating plan, and are in the process of reviewing our organizational structure to ensure that we have clear accountabilities. We have a comprehensive work plan in place, have recruited key subject matter experts, are fixing system issues, are changing processes, have metrics in place, and are showing good progress and interrelationships. June June 3. Achieve benchmark performance on operating expenses and put appropriate controls in place. The Better II Initiative is now underway, the benchmarking analysis is in process, and the plan includes productivity improvement, clinical resource management, and supply chain initiatives. June 4. Improve Financial and Operational Reporting 5. Evaluate service line and business unit profitability. We are going to need to "re-map" our Chart of Accounts and General Ledger to achieve this objective. We need to complete the interface of DSS to epsi, and then build a service line support structure - planning, analysis, operations. June April 6. Perform a Strategic Reimbursement Analysis to best position AHS under healthcare reform and track payer mix. AHS has expanded its relationship with Toyon to encompass all Reimbursement issues, and this analysis is now underway. May 7. Assess and update the current strategic financial plan to ensure long-term financial stability. 8. Develop a plan to repay the loan to the County. We need to update our long-term strategic plan this year and then develop a financial plan that supports our objectives. To do this, we need to install and rebuild the Kaufmann Hall financial planning tool, and that is in process. We are currently assessing our ability to meet the proposed terms of the Agreement through 2018, which is contingent on a successful financial turnaround. September March 7

8 Long Term Planning Capital Expenditures and Debt Service Required Operating Performance Compliance Plan Permanent Agreement 8

9 Financial Performance Requirements are largely driven by the need for Cash to fund Capital Expenditures and pay Debt Service. $70,000 Cash Requirements $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Debt Service Capital Expenditures Debt Service $ - $ 18,681 $ 20,252 $ 20,848 $ 21,726 $ 21,726 Capital Expenditures $ 6,492 $ 28,715 $ 36,000 $ 39,100 $ 32,400 $ 24,000 Total $ 6,492 $ 47,396 $ 56,252 $ 59,948 $ 54,126 $ 45,726 9

10 AHS has underfunded capital expenditures in past years and will need to fund $30+ million per year going forward, peaking in Capital Expenditure Plan $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Highland ATR Move San Leadro Rehab Alameda Kitchen ATR Ongoing Maintenance Information Technology Routine Capital Capital Expenditure Plan Routine Capital 11,000 12,000 10,000 11,000 12,000 Information Technology 3,000 9,000 6,000 5,000 5,000 ATR Ongoing Maintenance 5,000 5,000 5,000 5,000 5,000 Alameda Kitchen - - 8,100 7,400 2,000 San Leadro Rehab - 10,000 10,000 4,000 - Highland ATR Move 9, Capital Expenditures 28,715 36,000 39,100 32,400 24,000 10

11 The Permanent Agreement will drive Debt Service Requirements $20+ million per year. $25,000 Debt Service Requirements $20,000 $15,000 $10,000 $5,000 $ NNB Debt Retirement POB Debt Retirement ATR Debt Service Other Debt Service Debt Service Requirements NNB Debt Retirement - 5,000 5,000 5,000 5,000 5,000 POB Debt Retirement - 12,681 13,252 13,848 7,726 7,726 ATR Debt Service ,000 7,000 Other Debt Service - 1,000 2,000 2,000 2,000 2,000 Total Debt Service - $ 18,681 $ 20,252 $ 20,848 $ 21,726 $ 21,726 11

12 To fund these requirements, AHS needs to significantly improve performance quickly, to an EBIDA (free cash flow) Margin of at least 8%. 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% EBIDA (Cash Flow) Margin Conservative Plan $80,000 $60,000 $40,000 $20,000 $- $(20,000) $(40,000) EBIDA (Cash Flow) $ Conservative Plan $120,000 Required Improvement $ in,000 $100,000 $80,000 $60,000 $40,000 Conservative Plan $20,000 $

13 The Plan Scenario is necessary to meet the NNB Target and fund capital expenditures; the Conservative Scenario falls short. $190,000 Net Negative Balance $170,000 $150,000 $130,000 $110,000 $90,000 $70,000 $50, Conservative Plan Target 13

14 Flexible Maximum Policy AHS will continue to require 30-35% Flex Max due to timing of Supplemental Reimbursement 210,000,000 AHS Long Term Cash Forecast 200,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000,000 NNB FORECAST DEBT LIMIT 14

15 Conclusions and Recommendations An aggressive performance improvement plan ($67+ million in 2016) is required to fund capital needs and avoid an Event of Non-Compliance. Management Cost Reductions - $20 million Revenue Cycle Improvement - $15 to $20 million Other Cost Reductions - $40 million Other Revenue Opportunities - $20 million Due to the timing of supplemental reimbursements, a Flexible Maximum policy of 30% - 35% will be required in the initial years of the Agreement. Due to the possibility on an Event of Non-Compliance, we recommend that the Agreement retain the County s current discretion: Retain discretion in the setting of the Flexible Maximum Policy, and plan on a higher percent in the early years of the agreement, then decreasing each year going forward. Establish a process to resolve an Event of Non-Compliance, short of termination of the Flexible Maximum Policy.

16 Discussion 16