Strategic Planning Clinical Programs Pediatrics and Obstetrics Services School of Medicine Retreat February 9, 2002

1. Strategic Planning Clinical Programs Pediatrics and Obstetrics ServicesSchool of Medicine Retreat February 9, 2002

2. Contents • Strategic Direction • Differences: Pediatric & Obstetric vs. Adult • Culture • Children’s Health Initiative (CHI) • Market • California Children’s Services (CCS) • Payor Mix • Outreach • FPO Principles • Organization Structure

3. Strategic Direction of Faculty Practice at LPCH No. of Beds Research Education

4. Challenges • Space limitations. • Primary care needed for education. • Limited number of faculty positions. • SoM research strategic plan linked to CHI research initiatives. • Economic impacts of mission on practice.

5. Children’s Health Initiative:$500 Million Campaign Medical Subspecialties Surgical Subspecialties Johnson Center (Neonatal/Maternal-Fetal) Heart Center Cancer/Blood Diseases Brain and Behavior Transplant/Tissue Engineering Pulmonary/Cystic Fibrosis Centers of Excellence (National Preeminence) Core Programs Critical Clinical Programs and Hospital Services Regional Programs of Excellence InformationSystems Emergency Services General Pediatrics Laboratory Pain Management Trauma/Critical Care LPCH “Brand of Care” Biotechnology Clinical Research Health Policy, Outcomes and Prevention Imaging *Business plans require substantial clinical growth & align economics of physicians and LPCH.

6. Opportunities • Open access to all children and pregnant women in the community. • Limited number of pediatric and obstetric (high risk) specialists in Northern California. • Must capture a majority of the tertiary care patients in order to have sufficient volume. • Only Children’s Hospital in the South Bay. • Principal provider of specialty services in Northern California • National Centers of Excellence

7. Differences Pediatric/ObstetricAdult • Patient AccessOpenSelective • Practice/Hospital FinancesInterdependentIndependent • SpecialistsFew Many • OutreachExtensive Less Extensive (MediCal, CCS CHI)

8. Challenges $46.5 Million for 2001 Dept. Pediatric & Ob Pro- Fee Charges MediCal Financial Issues • Practice loses $5-6 million/yr. caring for MediCal patients. • LPCH receives Govt. funds and philanthropy for these patients which is passed to the practice as clinic & program support.

9. California Children’s Services • 21 CCS Centers at LPCH. • State requires CCS patients with complex disease to be cared for by CCS Center. • CCS mandates multidiscipline team (nurses, dietitians, social workers, therapists, etc*) which costs the practice & LPCH $8-10 million/yr. • Most private payers require CCS Center approval before contracting with Center for complex procedures, such as transplant.

10. Importance of Outreach Pediatric Outreach Referrals Contribution Margin/Discharge ($) * San Mateo and Santa Clara Co. ** 8 Bay area Counties. *** Outside 10 County Area LPCH supports these activities with program support.

11. Principles for Pediatric & Obstetric FPO • Prioritize growth of clinical care to support research and teaching. • Align economic incentives among and between physicians and LPCH. • Allow faculty to assume greater authority over and responsibility for management of the clinical enterprise. • Encourage entrepreneurial behavior.

12. Pediatric & Obstetric Faculty Practice Committee Structure DRAFT SHC-SOM LPCH-SOM LPCH Ped/Ob FPO Board of Directors Adult FPO Board of Directors Pediatric & Obstetric Operations Committee* LPCH Executive Committee Adult Operations Committee Clinic Operations Finance Contracting QA/Compliance Pro Fee Billing *Responsibilities: Control practice revenue & expense; Incentives productivity & quality.