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Business Plan Update M edical Center

Business Plan Update M edical Center. CEC Presentation. July 10 2012. UCSF Medical Center Vision, Mission and Values. Vision: To be the best provider of health care services, the best place to work, and the best place for teaching and discovering.

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Business Plan Update M edical Center

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  1. Business Plan Update Medical Center CEC Presentation July 10 2012

  2. UCSF Medical Center Vision, Mission and Values Vision: To be the best provider of health care services, the best place to work, and the best place for teaching and discovering. Mission: Caring, Healing, Teaching, Discovering Values:PRIDE: Professionalism, Respect, Integrity, Diversity and Excellence 2

  3. Chancellor’s Plan

  4. UCSF Medical Center: FY 2013 Organizational Goals

  5. UCSF Medical Center: FY 2013 Operations Workplan

  6. UCSF Medical CenterBudget 2013 – Strategies and Issues • Strong operating income required to fund capital and strategic expansion plans. • $19M Mitigation Plan incorporated into budget to ensure strong operating income. • Market strategy investment:Opportunity to grow market share via affiliations (i.e., CHRCO). Budget includes $3M for development costs. Marketing cost increase of $2M budgeted. • Strategic growth: Two percent increase in census budgeted: heart transplant, pediatric surgery, cancer and Neurosurgical growth. Managed care rate increase of 7% is critical to budget performance, market tightening rate increases. • Funds flow model: optimize strategic support and purchased service support model to align goals around growth and efficiency. UCSF Medical Center and Medical Group aligned. FY2013 budgeted purchased services of $48M is a $6M (14%) increase from the FY2012 budget. • New APeX Clinical and Business Technology Operating: Opportunity to optimize patient safety, quality, clinical integration and business functions. Complete APeX project within $165M capital budget. Total IT operating costs increase to $47M. • Mission Bay construction management: Construction projected to be on-time and on-budget, with a close watch on contingency dollars. Due to timing of collections from our philanthropic sources, approximately $131M in interim financing will be required. • Campus and System financial challenges: Budget includes an $8M increase (22%) in campus ($3M)and UCOP ($5M) recharges. [Langley Porter losses not budgeted.] 6

  7. Operating Budget 2013 Dollars in (000’s) 7

  8. Income Roll forward FY 2012 to FY 2013 (000’s) 8

  9. Risks and Opportunities Risks: • Strategic development costs exceed budgeted amounts • Growth targets not met • Managed care rate increases not realized • Continued sponsor mix deterioration • Mitigation Plan not achieved • Impact of revised funds flow model • Regulatory/Compliance financial impact • Resources required for APeX stabilization • State Budget impact: further deterioration in Medi-Cal reimbursement • State Budget impact: on the enterprise 9

  10. Risks and Opportunities Opportunities: • Growth exceeds expectations • Clinical documentation improvement exceeds expectations • Walgreens expansion exceeds budgeted amount • Early adoption of FTE productivity improvements • SCOPE savings surpasses target • Outpatient revenue expansion • UC medical centers’ shared services 10

  11. Ten Year Plan Guiding Principles • A viable ten year plan is crucial in order to: • Offset the challenges of Healthcare Reform • Provide strategic investments for delivery system expansion • Set annual operating and capital budget targets • Key Targets include: • Maintain a minimum of 3 times debt service coverage • Unrestricted Cash does not fall below 25 days • No net operating losses except in FY 2016 11

  12. Financial Forecast Last year… Projection Model, FY 2011 • Key financial components of the 6/30/11 Ten Year Plan: • The economy has had an adverse impact on volumes and sponsor mix • Healthcare Reformhas adversely impacted government reimbursement and put pressure on commercial reimbursement • Significant increase in pension and health benefit expenses • Capital and operating expense increase due to clinical technology systems • Mission Bay contributes to additional clinical enterprise expenses and debt service • Campus support and Office of the President overhead allocation (UCOP tax) increases planned 12

  13. Financial Forecast Updated…Budget Base Model, FY 2012 • Key changes from 6/30/11 Ten Year Plan: • FY 2013 and remaining years based on lower volume • Continued deterioration of government reimbursement rates with pressure on commercial reimbursement • Heavier labor structure: growth in FTE, salary rates, pension and other benefits 13

  14. Financial Forecast Updated with…Mitigation Plan Implemented, FY 2012 • Optimizes financial performance over the next ten years offsetting the challenges of Healthcare reform, increased debt structure, multi-site operations and an increasing labor cost structure. Key Assumptions: • Volume increases achieved • Managed care rate increases negotiated • Mission Bay construction – on time, on budget • Successful APeX go-live • FY13 & 14 strong earnings performance 14

  15. Critical Mitigating Strategies are planned 15

  16. UCSF Medical CenterMitigation Plan – Progress to Date FYTD December 2012 YTD Financial Impact • Clinical Documentation Integrity – 1,153 Medicare Cases reviewed through 1/7/2013. UHC Mortality Ratio (O/E) dropped from 1.08 in Sep to 0.83 in Nov. Medicare CMI increased to 2.347 in Dec from 2.09 in baseline year. This is a 12.30%increase! • Outpatient Contract Pharmacy Expansion – program now includes 111 Walgreens sites, 10 San Francisco Safeway stores and Avella, a specialty pharmacy. • Revenue Cycle Enhancement - $40M cash flow improvement was realized over the 11 month period through Nov. Discharged, not final billed levels peaked at 16 days in August but are trending downward, having hit a low of 6.6 days in mid-December • SCOPE Non-Labor Cost Reduction - The net income effect of SCOPE initiatives for the first half of FY2013 is $5.0 million. • Labor Productivity Improvement – Medical center management has identified the targeted 300 FTE reductions. Target implementation date is May 1, 2013.

  17. Financial Forecast Income with Mitigation Plan implemented • Optimizes financial performance over the next ten years offsetting the challenges of Healthcare reform, increased debt structure, multi-site operations and an increasing labor cost structure. • Key Assumptions: • Volumes achieved • Continued managed care rate increases • Mission Bay construction – on time, on budget • APeX go-live with successful optimization • FY13 & 14 strong earnings performance 17

  18. UCSF Medical CenterMitigation Plan Income Impact and Key Indicators 18

  19. APeX Project Revised Capital Expenditure Summary (000’s) 20 20 20

  20. Mission Bay Project Sources and Uses (000’s) 21 21 21

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