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Annual Public Meeting 2014

Annual Public Meeting 2014. Agenda. Community Commitments. Total margin not to exceed Moody’s and Standard & Poor’s upper quartile $6 million annual budget for the underserved Open budget and pricing process. Spectrum Health. An Integrated Health System. Revenue $ 2.4 billion.

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Annual Public Meeting 2014

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  1. Annual Public Meeting 2014

  2. Agenda

  3. Community Commitments • Total margin not to exceed Moody’s and Standard & Poor’s upper quartile • $6 million annual budget for the underserved • Open budget and pricing process

  4. Spectrum Health • An Integrated Health System Revenue $2.4 billion Revenue $2.1 billion Access Delivery

  5. 2015 Budget (in millions)

  6. 2015 Budget Review • Revenue of$4.51 billion ($369 million increase, or 8.9%) due mostly to: • Projected membership of Priority Health is expected to increase 6.6%. Membership increases, combined with price increases and product mix changes will yield a 8.6% increase in revenue. • Membership will grow to over 600,000 by June 30, 2015. • Enrollment in Medicare will grow to 110,000 members (13%) and Medicaid will grow to 100,000 members (23%).

  7. 2015 Budget Review • Spectrum Health Grand Rapids is expected to have adjusted admissions increase 2.0% over 2014. A gross price increase of 6% will yield a 1.8% net increase. • Federal payments (Medicare) are projected to be reduced by 3%. • State payments (Medicaid) are projected to increase 1% with additional payments due to expanded coverage. • Full time equivalents (staffing) will remain flat as growth related to volume and complexity are offset by improved productivity.

  8. 2015 Budget Review • Spectrum Health Medical Group encounters will grow 30% due to new providers, programs and practice efficiency initiatives. • Spectrum Health Regional Hospital adjusted admissions will increase 3.8%. Our West Michigan facilities now include Big Rapids, Fremont, Greenville, Lakeview, Ludington, Reed City and Zeeland. • Home health and hospice visits will increase 6.9% as more people are cared for in the home. • Will adjust hiring accordingly if volume/mix targets not met.

  9. 2015 Budget Review • Expenses of $4.4 billion($391 million increase, or 9.8%) due mostly to: • $172 million additional health claims from projected growth of Priority Health. • $164 million of salary and benefit increases including additional growth in programs and associated staffing. • $40 million of additional supplies and other expense (4.4%). • $15 million of additional depreciation offset by declining interest expense. • Total capital expenditures will be consistent with 1.1 times depreciation in 2015 which approximates $200 million.

  10. Ratings Moody’s Aa3 Stable Outlook Standard and Poor’s AA Stable Outlook AM Best A- Positive Outlook We believe this budget will support our continued high quality ratings.

  11. Questions

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