Using Financial & Operational Data To Plan For Growth

Transcription

1 Using Financial & Operational Data To Plan For Growth Tony Skapinsky Project Consultant March 20,

2 Capital Link - Overview Launched in 1995, nonprofit, HRSA national cooperative agreement partner Offices in CA, CO, FL, MA, MO, and WV Over $1.1 billion in financing for over 230 capital projects - Direct assistance to health centers and complementary nonprofit organizations in planning for and financing operational growth and capital needs - Industry vision and leadership in the development of strategies for organizational, facilities, operational and financial improvements - Metrics and analytical services for measuring health center impact, evaluating financial and operating trends and promoting performance improvement 2

3 Talking Points for Today Review how data can provide a framework for identifying strengths, challenges, and opportunities for performance improvement in preparation for growth. Discuss how tracking and benchmarking financial and operational trends and comparing the data to peers can inform growth strategies. Provide guidelines on health center industry metrics and targets so health centers can recognize opportunities to improve efficiencies, reduce costs, and increase access while maintaining high quality standards. 3

4 Data Supports Strategic Planning 4

5 National Patient and Visit Trends Millions Patient Visits 5

6 Planning for Growth & Sustainability 6

7 Goal: Improved Access to High Quality Care AND Financial Sustainability Staffing Financial Operations Productivity Improved Access & Financial Sustainability Patient Satisfaction Utilization Clinical Outcomes 7

8 Putting Your Data Into Context 8

9 Performance Benchmarking Using a Benchmarking Framework WHAT do I want to track? WHERE do I find the data? WHICH metrics do I need? WHO do I compare to? WHAT does it mean? 9

10 Benchmarking Benefits Productive Teams Stable Operations High Staff and Patient Satisfaction Quality Outcomes/Access/Depth of Care Financial Sustainability 10

11 UDS Data 11

12 Aggregate Data: HRSA = 3,021 = 2,579 12

13 Aggregate Data: HRSA 13

14 Financial Data 14

15 Income Statement Spread Main Street CHC STATEMENT OF ACTIVITIES Date 2018 % 2017 % 2016 % Net Patient Service Revenue 11,148, ,411, ,717, Grants & Contract Revenue 3,508, ,385, ,723, Contributions/Fundraising Income Other Operating Revenue 322, , , Total Operating Revenue 14,978, ,183, ,035, Salaries & Related Expenses 7,815, ,271, ,255, Professional/Contracted/Consultant Fees 641, , , Fringes & Payroll Taxes 1,552, ,392, ,160, Supplies 412, , , Insurance 187, , , Training, Development, Education, Travel 55, , , Administrative & General 556, , , Utilities, Repairs, Maintenance 283, , , Rent 549, , , Depreciation 205, , , Interest Expense 16, , , Other Operating Expense 72, , , Total Operating Expenses 12,349, ,333, ,076, Change in Net Assets-Operating 2,628, , ,

16 Financial and Operational Metrics Metric 1 Operating Margin 2 Bottom Line Margin 3 Personnel-Related Expense 4 Days Net Patient A/R 5 Days Cash on Hand Why This Is Important Measuring stick of your business model; margins typically small but need to be positive Is performance dependent upon large capital grants and/or other sources of non-operating revenue? Consumes 70-75% of budget; key driver of financial performance Financial management starts with collecting your money efficiently Is there enough liquidity to keep operations running smoothly? 6 Physician Productivity (visits) Productivity is the basis for revenue generation 7 Mid-Level Productivity (visits) Productivity is the basis for revenue generation 8 Dental Provider Productivity (visits) *Capital Link Performance Benchmarking Toolkit Productivity is the basis for revenue generation 16

17 Projecting Financial Ratios Financial Ratios FY16-FY18 Historical Budgeted Projected Benchmark 3-Yr Avg. FY18 FY19 FY20 FY21 FY22 FY23 FY24 Days Cash on Hand > Unrestricted Cash & Invest. $ 3,553,405 $ 3,308,569 $ 6,596,530 $ 5,735,013 $ 6,206,329 $ 7,164,467 $ 8,136,540 Debt Service Coverage (operating) > Leverage Ratio < Operating Revenue Growth Rate NA 6.9% 2.1% 4.6% 0.5% 0.5% 12.3% 11.9% 1.3% Operating Revenue 13,935,005 14,582,029 14,647,887 14,715,720 16,529,965 18,500,197 18,735,984 Operating Margin > 3.0% 3.5% -0.3% 2.4% 2.6% 2.6% -1.9% 1.2% 0.8% Operating Surplus (Deficit) $ (41,274) $ 353,575 $ 376,855 $ 376,776 $ (315,070) $ 224,121 $ 155,417 Bottom Line Margin > 3.0% 4.4% 0.8% 2.4% 12.3% 50.6% -1.9% 1.2% 0.8% Change in Net Assets $ 105,001 $ 353,575 $ 1,803,647 $ 7,443,733 $ (315,070) $ 224,121 $ 155,417 17

18 Capital Budgeting/Funding SOURCES AND USES OF PROJECT FUNDS Sources of Funds: Amount % of Total Cash Contribution (Facility Fund) $ 1,600,000 14% Fundraising/Capital Campaign $ 1,500,000 13% Sub-Total Equity Contribution $ 3,100,000 26% Capital Grant $ 400,000 3% Debt Financing (funding gap) $ 8,280,000 70% Total Sources of Funds $ 11,780, % Uses of Funds: Property Costs (or value) $ 1,080,000 9% Hard Costs (Direct Construction-related) $ 9,000,000 76% Soft Costs (design, fees, permits, reports, etc) $ 800,000 7% Furniture, Fixtures and Equipment $ 900,000 8% Total Uses of Funds $ 11,780, % 18

19 Historical Debt Capacity Analysis Funds Available for Debt Service FY2017 FY2018 Audited Unaudited Change in Net Assets 850, ,006 Add: Depreciaton 183, ,779 Add: Interest Exp. 22,188 16,875 Funds Avail. For Debt Service 1,056, ,660 Add: Rent Rebate/Savings 306, ,000 Total Funds Avail for Debt Service 1,362,822 1,145,660 Debt Service Coverage discount (1.25) $ 1,090,258 $ 916,528 Interest Rate 5.0% 5.0% Term (years) Debt Capacity $ 16,759,932 $ 14,089,286 Interest Rate 6.0% 6.0% Term (years) Debt Capacity $ 12,505,169 $ 10,512,507 19

20 Projecting Debt Coverage Debt Service Coverage Ratio Operating Surplus (Deficit) $ 319,558 $ 163,670 $ 166,125 $ 368,882 $ 398,947 $ 429,758 Total Depreciation $ 777,448 $ 800,448 $ 812,455 $ 1,244,628 $ 1,254,276 $ 1,264,068 Total Interest $ 143,070 $ 143,070 $ 145,216 $ 593,473 $ 586,864 $ 579,863 Total Cash from Operations Before D/S $ 1,240,076 $ 1,107,188 $ 1,123,796 $ 2,206,982 $ 2,240,087 $ 2,273,688 Existing Debt Service $ 398,275 $ 388,537 $ 344,029 $ 324,819 $ 334,491 $ 151,849 Proposed Debt Service $ 637,879 $ 637,879 $ 637,879 Total Debt Service $ 398,275 $ 388,537 $ 344,029 $ 962,699 $ 972,371 $ 789,729 Debt Service Coverage Ratio

21 Making Connections between Financial & UDS Data Operating Margin 21

22 Payer Mix Modeling 22

23 Payer Mix Modeling 23

24 Payer Mix Modeling 24

25 Productivity & Sustainability Considerations 25

26 1 Understanding Performance Drivers: FFS context Provider 1 Provider 2 Provider 3 Provider Productivity (visits) 2,500 3,000 3,500 Average FFS Revenue per Visit $ 162 $ 162 $ 162 Total Revenue $ 405,000 $ 486,000 $ 567,000 Provider Salary $ 180,000 $ 180,000 $ 180,000 Direct Support Staff $ 120,000 $ 120,000 $ 120,000 Total Salary Cost $ 300,000 $ 300,000 $ 300,000 Fringe Benefits (25%) $ 75,000 $ 75,000 $ 75,000 Total Salary and Benefits $ 375,000 $ 375,000 $ 375,000 Variable $10/visit (e.g. Supplies) $ 25,000 $ 30,000 $ 35,000 Total Direct Costs $ 400,000 $ 405,000 $ 410,000 Overhead (20%) $ 80,000 $ 81,000 $ 82,000 Total Costs $ 480,000 $ 486,000 $ 492,000 Surplus/(Loss) ($75,000) $ - $ 75,000 26

27 Transition from FFS to Value-Based Reimbursement Value Based Transition 27

28 FFS to Value-Based Reimbursement Manage Costs Costs per visit/per patient Manage Utilization/Population Health Improving Patient Health Quality Incentives Increase Access (assigned patient populations) Decreasing patient utilization 28

29 Tracking Performance Drivers: Capitated Model Provider 1 Provider 2 Provider 3 Provider visits ("capacity") 2,500 3,000 3,500 Average Visits per Patient Panel Size (Members) ,000 # of Member Months (x12) 8,571 10,286 12,000 Capitation Revenue PMPM $47.25 $47.25 $47.25 Total Revenue $405,000 $486,000 $567,000 Total Expenses 480, , ,000 Surplus/(Loss) ($75,000) $0 $75,000 29

30 1 Capitated Context: Utilization Scenarios Patient A Patient B Patient C PMPM $47.25 $47.25 $47.25 Annual Revenue $567 $567 $567 Annual Cost: Cost per visit $162 $162 $162 # of visits per year Annual Cost $405 $567 $648 Surplus (Deficit) $162 $0 ($81) 30

31 Transition from FFS to Value-Based Reimbursement Metric Why This Is Important 9 Medical Provider Productivity (patients) Becomes more important in transition to team-based care 10 Medical Team Productivity Who are your teams? How do they perform? 11 Cost (Revenue) Per Visit How are your visit costs changing over time? 12 Cost (Revenue) per Patient With the move to PCMH, how are patient costs changing? 13 Medical Support Staff Ratio How strategic is the staffing of the medical teams? 14 Non-Clinical Staff Ratio Non-clinical employees are not revenue drivers 15 Visit/Patient Growth Rates Are visits growing faster than patients? Is demand growing? *Capital Link Performance Benchmarking Toolkit 31

32 Capital Link Performance Evaluation Profile 32

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34 Cash and A/R Management Key Financial Metrics Target Days Cash on Hand Peer Group Median 2017 > 45 Days Days in Net Patient Receivables < 60 Days Reducing the A/R turn cycle to 30 days would generate an additional $1.1 million in cash This is equivalent to 18 days of operating cash, increasing days cash on hand to 32 days 34

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38 Quality of Care Metrics Quality of Care Percentile Regional CHCs CA FQHCs % 55% Percentage of Children Receiving Appropriate Vaccinations by Age 2 91% 93% 43% 60% 50 32% 37% Percent of Patients with Asthma Given an Asthma Treatment Plan 25 15% 18% 75 95% 95% 67% 89% 90% 74% 50 90% 90% 25 81% 82% 75 55% 53% Percentage of Patients Screened for Colorectal Cancer 43% 49% 50% 56% 50 45% 41% Percentage of Patients 3-17 with BMI, Nutrition & Physical Activity Documented Percentage of Patients 18 and over with BMI & Follow Up Documented (If BMI outside normal) 25 35% 27% 75 86% 81% 60% 67% 64% 86% 50 72% 66% 25 50% 46% 75 88% 80% 70% 77% 81% 89% 50 79% 65% 25 57% 49% 38

39 Capital Link Benchmarking Toolkit 39

40 National Trends Report 40

41 Cost of Care Resources Both documents are available on Capital Link s Publications page Cost Per Visit Bulletin also available on NACHC s MyLearning page 41

42 Questions? Contact Tony Skapinsky Project Consultant (805) Visit us Online: Learn more about our products and services Download our free publications and resources Register for upcoming webinars Sign up for our e-newsletter, Capital Ink Subscribe to our blog at capitallinksblog.blogspot.com 42