San Joaquin General Hospital. Agenda

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2 San Joaquin General Hospital Interim Board of Trustees Meeting This meeting will be held at: San Joaquin General Hospital Conference Room 1A & 1B 500 W. Hospital Road French Camp, CA Wednesday, November 13, :30 PM Agenda I. Call to Order & Roll Call Edward Schroeder II. Approval of October 16, 2013 IBOT Meeting Minutes Edward Schroeder III. Executive and Finance Committee Edward Schroeder a. Report of November 7, 2103 Meeting IV. Financial Reports Ron Kreutner a. August 2013 V. Operations Update David Culberson a. Important Employee Recruitments b. Joint Commission Survey Preparation c. Web Page Redesign d. Upcoming Construction Projects a. Core Drilling b. Steam Tunnel e. FQHC Update VI. Looking Ahead David Culberson a. New Waiver

3 VII. VIII. Public Comments Trustee Comments IX. Adjournment to December 11, 2013, 4:30 p.m. Edward Schroeder Note: If you need disability-related modification or accommodation in order to participate in this meeting, please contact the Clerk of the Health Commission at (209) at least 48 hours prior to the start of the meeting. Government Code Section (a). Materials related to an item on this agenda submitted to the Board of Trustees after distribution of the agenda packet are available for public inspection by contacting the Clerk of the Health Commission at 7751 South Manthey, French Camp, Ca. during normal business hours.

4 Call to Order & Roll Call

5 Interim Board of Trustees Action Item Approval of October 16, 2013 Interim Board of Trustees Meeting Minutes Action Item to be Considered: November 13, 2013

6 Minutes of the San Joaquin General Hospital (SJGH) Interim Board of Trustees October 16, 2013 San Joaquin General Hospital Conference Room 1A & 1B 500 West Hospital Road French Camp, CA Board of Trustees Present: Steve Bestolarides, Chairman Ed Schroeder, Vice Chairman Sheela Kapre, MD Cyril Seligman Ken Cohen Carlos Villapudua Board of Trustees Absent: Ramiro Zuniga, MD Staff Present: David Culberson, SJGH Chief Executive Officer Ron Kreutner, CFO, San Joaquin General Hospital Monica Nino, County Administrator David Wooten, County Counsel Sue Nakata, Executive Assistant, Health Plan of San Joaquin I. Chairman Bestolarides called the meeting to order at 4:32 p.m. and Roll Call was taken. II. Approval of the September 11, 2013 Meeting Minutes The motion was made, seconded and unanimously voted to approve the September 11, 2013 meeting minutes as presented (6/0). III. Executive and Finance Committee Recommendation for Approval Vice Chair Schroeder reported that the Executive and Finance Committees met on October 3, 2013 to review the following items: June and July financial reports. June financials show a significant change from the recent trend due to significant one-time additional revenue sources recognized at year-end. Medi-Cal primary care provider payment enhancement: 28 physicians have completed applications while 2 PCP s do not qualify or are not eligible. Healthcare realignment: Mr. Culberson will work with an advisor to determine the better option for SJGH to pursue. A final recommendation about which of two formulas will be 1

7 Minutes of the SJGH Interim Board of Trustees October 16, 2013 Meeting chosen must be submitted to the Board of Supervisors for approval by end of January 2014 FQHC application will be resubmitted to HRSA for approval Ron Kreutner is working with the Revenue and Recovery Department to evaluate the benefit of pursuing the old Accounts Receivable project Consideration is underway to an alternative location for the GI lab to free up an Operating Room for the trauma program and new orthopedists An analysis of the options to renovate or replace several of the resident cottages is underway IV. Chief Financial Officer Report Ron Kreutner Ron Kreutner, Chief Financial Officer, presented on the June 2013 year-end and July financial statements, highlighting on the following reports: June 2013 Year-End Net Operating Income YTD of $780k due to unbudgeted non-patient supplemental government funding Net Patient Revenue YTD of $116M (2% less than budgeted) Total Operating Expenses YTD of $220M (2% less than budget) due to favorable variances in salaries and benefits, outside patient services, interest and other expenses July 2013 Reformatted the income statement so that its format is similar to the Brown Armstrong audited income statement. The new format will show: o Net Gain (Loss) Before Transfers o Transfers including County Contributions o Transfers from the County associated with the VLF Realignment Revenues o Change in Net Assets Net Loss Before Transfers at $1.8M; $643k less than the budgeted loss of $2.4M Total Operating Revenue of $17.3M (favorable by 2%) Total Operating Expenses of $19.1 (favorable by 2%) Patient days were 8% less than budget, clinic visits were 15% better than budget Upon reviewing the financials, extensive discussions were held regarding the supplemental government funding and the new format of the income statement. Chair Bestolarides suggested that the one-time supplemental funds will need to be identified under a separate line on the income statement to ensure that the hospital is monitoring it on a monthly basis. Mr. Kreutner agreed and also noted that the new format will provide a better view of the county contribution of one-time operational funds. Ms. Nino also noted the format will have detailed information on financials which will include the benchmark on cost center related measurements with key indicators on graph charts. Trustee Cohen inquired about how the hospital is planning on investing the AB38 Supplemental IGTs that the hospital will be receiving as supplemental income over the next 3 years.. Mr. Kreutner responded that some of the funds will be invested in new technology and systems. Trustee Cohen asked if there is any way to track new Medi-Cal patient volume. Mr. Kreutner responded that new Medi-Cal patients will be tracked based on the new IDs the patients receive. Trustee Seligman also noted that patient satisfaction will also play an important role in retaining new Medi-Cal patients. Mr. Culberson also noted to improve quality and patient satisfaction the 2

8 Minutes of the SJGH Interim Board of Trustees October 16, 2013 Meeting hospital is planning to roll out the E-Clinical Works software for practice management in January V. Operations Update David Culberson Mr. Culberson provided an update on the hospital s operation, highlighting the following: Affordable Care Act Preparation SJGH is in the process of negotiating the contract with HealthNet at moderately favorable rates Staffing: o Two new residents in Internal Medicine were hired in July 2013 o Offers have been made to two Family Medicine resident physicians o o o o o o Medical Guarded Unit Offers have been made to two external Family Medicine doctors SJGH has budgeted for 6 additional physicians in 2013 and if it is unable to obtain physicians, will hire a nurse practitioner to take at least half of the physician volume Hired two full time employees for call center In the process of hiring medical assistants for the outpatient clinics to fill vacant new hire and replacement employees Hired two Pediatricians Signed on 1,080 lives for newly enrolled patients with Health Plan of San Joaquin, many of whom are pediatric and can be assigned to the new pediatricians September 2013 averaged 12 in MGU and14 inpatients in total, including those in the ICU On October patients in MGU and none in ICU; 5 of those 22 admissions were from the new prison facility Hospital will be sending potentially 16 physicians to staff CDCR clinics at the new prison. This is more cost-effective for CDCR than shuttling the inmates over to the hospital Trustee Cohen asked when physicians visit the correctional facility, does the hospital provide supporting staff. Dr. Kapre responded that the hospital only provide the physician, not supporting staff. Trauma Center (August and September combined) Trauma activation volume; will be reporting quarterly on in depth injuries with age group o Tier I at 63 o Tier II at 98 o Tier III) at 12 Trauma Payer Mix and Trauma Program Payer Mix o Medicare at 12% Medi-Cal at 40% o Commercial at 24% o Self Pay/Cash at 20% o Other Indigent at 5% Mr. Culberson noted that the trauma program payer mix is in line with the hospital s conservative projections. Trustee Cohen stated, compared to current payer mix, there is a better mix from trauma and the net per case should be higher because the lack of SJGH s commercial insurance contracts. 3

9 Minutes of the SJGH Interim Board of Trustees October 16, 2013 Meeting Dialysis Triennial Survey (completed July 15-17, 2013) Three deficiencies were noted: o Use of disposable gloves when caring for patient and equipment o Monitor infection control policies o Measure ph before next patient Follow up visit to validate Plan of Correction was completed on September 27, 2013 and Plan of Correction was submitted on October 15, 2013 Important Employee Recruitments Health Information Manager started October 7, 2013 Facilities Manager Staff Nurse III and IV Outpatient Clinic Assistant Deputy Director of Finance requisition was approved by BOS Sterile Processing Tech Supervisor VI. Public Comments No comment. VII. Trustee Comments A few comments were made by several trustees noting the following: Supervisor Bestolarides: FHQCS application should be completed in 30 days Supervisor Villapudua: Has the hospital looked into solar panels to reduce the cost of utilities Mr. Schroeder: Upon receipt of the supplemental funds, the hospital should look into long-term investment in information technology. Mr. Culberson responded he is working with a consultant on a draft plan of different programs and models of IT hardware and software; will bring to the board upon completion. Mr. Cohen: With supplemental funds, hospital needs to relook at the capital plans if there is any viable investment, which includes the old tower. SJGH needs to look strategically at how to maximize its capital investments. VIII. Adjournment: The meeting was adjourned at 5:35 p.m. The next meeting of the SJGH Interim Board of Trustees is at 4:30 pm, Wednesday, November 13,

10 Interim Board of Trustees Information Item Executive and Finance Committee Update a. November 7, 2013 Meeting

11 Interim Board of Trustees Information Item Chief Financial Officer Report a. August 2013 Financial Statements

12 San Joaquin General Hospital Comments on Financial Statements For the Month Ending August 31, 2013 Summary For the month of August, the Hospital incurred a Net Loss Before Transfers in the amount of $861,000, which was $709,000 less than the budgeted loss of $1.6 million. Total Operating Revenue of $18.5 million and Total Operating Expenses of $19.4 million are both performing favorably by 2%. Patient days were 4% less than budget and clinic visits were 4% greater than budget. Further explanations of significant variances follow. Year-to-date the results are similar. The Net Loss Before Transfers was $2.7 million or $1.4 million less than budget. Patient days are running at 6% less than budget and clinic visits 9% greater than budget. Total Operating Revenues and Total Operating Expenses are both performing favorably against budget by 2%. Further explanations of significant variances follow. Volume & Revenue August s average daily census (ADC) of 103 was a 7% improvement over July s 97 ADC and was 4% less than budget. Average clinic visits per calendar day were 393, compared with a budget of 376, and were 4% greater than budget. Total Operating Revenue of $18.5 million in August was on target with budget and minimally greater than budget by $299,000 or 2%. Expenses Total Operating Expenses in August of $19.4 million were minimally less than budget by $410,000 or 2%. This was primarily due to favorable variances in Salaries & Benefits ($506,000), Supplies ($130,000), Purchased Services ($41,000), and Other expenses ($58,000) offset by unfavorable variances in Professional Services ($199,000), Outside Patient Services ($96,000), and Utilities ($22,000). Details of these variances are further explained below. Salaries and Benefits of $12.3 million were on target with budget and were favorably less by 4.0%. Professional Services of $1.2 million exceeded budget by $199,000 (19.9%). This was primarily due to: (1) an adjustment to the Emergency Room physician quality incentive liability owed for the period of January through July in the amount of $225,000, based on more current information; (2) the Hospital being licensed for Trauma care in August, resulted in additional surgical cases and required more physician efforts and more on call than anticipated, which caused an unfavorable variance of $80,000; and (3) staffing shortages for nurses were filled by unbudgeted temporary agencies in the amount of $65,000. Supplies of $2.2 million were favorably less than budget by 5%. Purchased Services of $1.2 million was also on target with budget with only a 3% favorable variance.

13 Outside Patient Services of $461,000 were $96,000 (26.3%) greater than budget due to more patients being referred to other outside providers for the Low Income Health Program (LIHP) and Medical Assistance Program (MAP) than was expected. Utilities of $327,000 were $22,000 (7.3%) higher than budget. Electricity, gas, and water utilities were each over budget by $5,000-$7,000. Of these variances, natural gas was the largest at $7,000 (9.4%) more than the budget of $79,000. The reason for this, as was mentioned in July, was that natural gas prices went up by 16%. Other Expenses of $236,000 were $58,000 (19.7%) less than budget. This favorable variance was primarily due to less spending than expected in two major areas: 1) $33,000 favorable variance in outside training expenditures for medical staff and nurses, including those nurses for the new Trauma program and 2) $15,000 favorable variance in advertising for employee recruiting. The favorable variance in advertising is primarily due to greater fill rates of vacant positions-executive and nursing-not requiring as much advertising as last year and not as much as anticipated.

14 San Joaquin General Hospital Statement of Revenue and Expense August 2013 Month Year to Date Variance Fav % Var Variance Fav % Var Actual Budget (Unfav) Fav(Unf) Actual Budget (Unfav) Fav(Unf) 3,202 3,336 (134) -4.0% Patient Days 6,208 6,616 (408) -6.2% 12,169 11, % Clinic Visits 23,228 21,250 1, % Revenue $ 10,445,970 $ 10,576,362 $ (130,392) -1.2% Net Hospital Patient Revenue $ 20,146,322 $ 19,975,851 $ 170, % 935, , , % Net Physician Patient Revenue 1,730,822 1,429, , % 11,381,931 11,316,327 65, % Total Net Patient Revenue 21,877,144 21,405, , % 6,475,063 6,328, , % Additional Funding 12,803,919 12,657, , % 687, ,000 87, % Other Revenue 1,177,794 1,152,945 24, % 18,544,069 18,245, , % Total Operating Revenue 35,858,857 35,216, , % Expenses 7,677,069 7,926, , % Salaries and Wages 14,977,505 15,385, , % 4,573,690 4,830, , % Benefits 9,709,026 10,257, , % 12,250,759 12,756, , % Total Salaries & Benefits 24,686,531 25,642, , % 1,200,119 1,000,864 (199,255) -19.9% Professional Services 2,009,768 2,001,089 (8,679) -0.4% 2,249,273 2,379, , % Supplies 4,244,864 4,432, , % 1,214,953 1,255,834 40, % Purchased Services 2,520,510 2,366,197 (154,313) -6.5% 460, ,955 (95,976) -26.3% Outside Patient Services 965, ,897 (251,869) -35.3% 221, ,704 3, % County Services 449, ,429 2, % 327, ,891 (22,176) -7.3% Utilities 655, ,795 (51,425) -8.5% 471, , % Insurance 934, ,849 8, % 157, ,867 (11,276) -7.7% Interest 302, ,733 (10,443) -3.6% 615, ,946 (496) -0.1% Depreciation 1,230,024 1,228,892 (1,132) -0.1% 236, ,502 58, % Other 520, ,238 31, % 19,405,529 19,815, , % Total Operating Expenses 38,518,604 39,227, , % $ (861,461) $ (1,570,049) $ 708, % Net Gain (Loss) Before Transfers $ (2,659,747) $ (4,011,697) $ 1,351, % Transfers $ 876,042 $ 876,042 $ - 0.0% Realignment Rev (Veh Lic Fees) $ 1,752,084 $ 1,752,084 $ - 0.0% 968, , % County Contributions 1,936,708 1,936, % $ 982,936 $ 274,347 $ 708, % Change in Net Assets $ 1,029,045 $ (322,905) $ 1,351, % Prepared 10/30/2013

15 San Joaquin General Hospital Balance Sheet August 2013 ASSETS LIABILITIES AND NET ASSETS August June August June Change Change CURRENT ASSETS CURRENT LIABILITIES Cash and Cash Equivalents $ 25,606,952 $ 22,981,304 $ 2,625,648 Accounts Payable $ 6,444,767 $ 6,330,218 $ 114,549 Accounts Receivable, Hospital-Net 19,842,939 21,440,129 (1,597,191) Accrued Payroll Payable 2,869,754 5,966,016 (3,096,262) Accounts Receivable, Physicians-Net 820,294 1,129,560 (309,267) Accrued Vacations Payable 6,817,484 6,487, ,598 Due from Additional Funding Agencies 11,969,843 22,690,028 (10,720,185) Accrued COP Interest Payable - 345,665 (345,665) Due from Other County Departments 1,283,193 99,432 1,183,761 Current Maturities for COP Payable 6,100,000 5,965, ,000 Supplies Inventory 3,036,325 3,252,580 (216,256) Due to Government Agencies 457, , ,254 Prepaid Expenses 2,835,242 1,080,359 1,754,882 Deferred Revenue & Grants 3,622,037 3,619,164 2,873 Other Current Assets 4,970,613 4,717, ,051 Other Accrued Expenses Payable 29,390 23,637 5,753 Total Current Assets 70,365,400 77,390,956 (7,025,556) Total Current Liabilities 26,341,006 28,883,905 (2,542,899) PROPERTY, PLANT AND EQUIPMENT LONG TERM DEBT Land 45,000 45,000 - Certificates of Participation 37,790,000 43,755,000 (5,965,000) Land Improvements 9,698,965 9,698,965 - Less Unamortized Deferred Cost (4,429,057) (4,552,087) 123,031 Buildings 98,022,136 98,014,082 8,054 Total Long Term Debt-COP 33,360,944 39,202,913 (5,841,970) Building Service Equipment 41,030,155 41,024,698 5,458 Less: Current Portion (6,100,000) (5,965,000) (135,000) Equipment 37,671,919 36,959, ,812 Net Long Term Debt-COP 27,260,944 33,237,913 (5,976,970) Construction in Progress 662, ,821 44,417 Other Post Employment Benefits 10,819,821 10,819,821 - Total Property, Plant & Equipment 187,130, ,359, ,741 Total Long Term Debt 38,080,765 44,057,734 (5,976,970) Accumulated Depreciation (112,672,148) (111,442,124) (1,230,024) Property, Plant & Equipment, Net 74,458,266 74,917,549 (459,283) Total Liabilities 64,421,770 72,941,639 (8,519,869) RESTRICTED ASSETS NET ASSETS (Fund Balance) Cash Held in Trust: San Joaquin Financi 7,055 7,055 - Unrestricted Funds 65,300,871 55,767,495 9,533,376 COP Issuance Cost, Net of Amortization 215, ,478 (5,986) Change in Net Assets 1,029,045 9,533,377 (8,504,332) Cash, Patient Gift Fund 37,395 37,611 (216) Total Unrestricted Net Assets 66,329,917 65,300,872 1,029,045 Cash, Medical Education Fund 1,628,228 1,516, ,821 Restricted Net Assets 15,960,149 15,848, ,605 Total Restricted Assets 1,888,170 1,782, ,620 Total Net Assets 82,290,065 81,149,416 1,140,650 Total Assets $ 146,711,836 $ 154,091,056 $ (7,379,220) Total Liabilities and Net Assets $ 146,711,836 $ 154,091,056 $ (7,379,220) $ - Prepared 10/30/2013

16 San Joaquin General Hospital Summary Cash Flow Year to Date: Actual vs. Budget August 2013 RECEIPTS DISBURSEMENTS YTD YTD YTD YTD Actual Budget Variance Actual Budget Variance Patient Services Operating Expenses Third Parties and Private Pay $ 21,129,383 $ 19,729,642 $ 1,399,741 Salaries $ 19,464,865 $ 18,153,032 $ 1,311,833 Cost Report Settlements 311, ,254 Benefits 8,046,862 10,585,899 (2,539,037) Collections related to Professional Fees 1,334,041 1,468,745 (134,704) Physician Services 1,882,527 1,910,276 (27,749) HPSJ Capitation 421, , ,372 Nurse Registry 323,405 82, ,408 Revenue and Recovery 398, ,289 17,189 Professional Services 102, ,250 Total 23,594,730 21,771,878 1,822,852 Supplies Expense 4,222,906 3,584, ,090 Purchased Services 2,803,362 2,161, ,478 Other Cash Receipts MIA Outside Services 425, ,163 (91,483) Other Operating Revenue 1,354, , ,104 LIHP Outside Services 187, ,603 84,455 Service to Other County Departments 52,805 75,715 (22,910) Services from Other County Depts 72,152-72,152 Total 1,407, , ,194 Utilities Expense 598, , ,197 Insurance Expense 1,638,143-1,638,143 Supplemental Funding Interest Expense 518, ,497 Managed Care IGT Supplemental 10,921,256-10,921,256 Other Direct Expenses 426, ,053 (173,369) Realignment 1,854,479 2,015,933 (161,454) Total 40,712,864 37,798,998 2,913,866 Hospital Fee 1,924,706-1,924,706 Low Income Health Program 8,430,976-8,430,976 Capital Related Financing Waiver Related Funding 2,144,770-2,144,770 Princiipal Paid on COP 5,965,000 5,965,000 - Total 25,276,187 2,015,933 23,260,254 Principal Paid on Capital Leases (829) Equipment 975,108 1,420,766 (445,658) Total Cash Receipts $ 50,278,620 $ 24,742,319 $ 25,536,301 Total 6,940,108 7,386,595 (446,487) Cash and Cash Equivalents - Ending Balances Total Cash Disbursements $ 47,652,972 $ 45,185,593 $ 2,467,379 August 2013 June 2013 Net Change in Cash and Cash Equivalents $ 2,625,648 $ (20,443,275) $ 23,068,923 Enterprise Fund $ 17,148,931 $ 14,662,286 Physicians Lockbox 674, ,982 Revolving Fund and Cashier 3,938 4,088 Healthy Parents Program 6,160 6,160 Hospital Replacement Trust 7,773,443 7,771,788 Total $ 25,606,952 $ 22,981,304 Prepared 9/26/2013

17 San Joaquin General Hospital Key Operating Indicators Fiscal Year July August September October November December January February March April May Jun YTD Bud YTD Pr Yr Average Average Volume Average Daily Census Adjusted Occup Beds Clinic Visits 11,059 12, ,625 10,804 Emergency Dept Visits 3,440 3, ,438 3,504 Surgery Cases Deliveries Labor Metrics Non-Physician FTEs 1, , , ,148.3 Physician FTEs Overtime FTEs Temp/Registry FTEs Total FTEs 1, , , ,299.0 FTEs/AOB Discharges by Financial Class Medicare Medi-Cal CDCR Indigent and Private Pay Commercial and Other Total Payor Mix Medicare 13.5% 14.5% 15.2% 15.0% Medi-Cal 46.8% 44.8% 47.3% 48.4% CDCR 9.7% 11.7% 9.0% 7.9% Indigent and Private Pay 24.5% 23.5% 22.3% 22.3% Commercial and Other 5.5% 5.5% 6.2% 6.4% Total 100.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 100.0% Prepared 9/26/2013

18 Interim Board of Trustees Information Item Chief Executive Officer Report Operations Update a) Important Employee Recruitments b) Joint Commission Survey Preparation c) Web Page Redesign d) Upcoming Construction Projects a. Core Drilling b. Steam Tunnel e) FQHC Update Looking Ahead a) New Waiver

19 Public Comments

20 Trustee Comments

21 Meeting Adjourn to December, 11, :30 PM