“The Best of Times……… The Worst of Times……” A Look Ahead to 2009

1. “The Best of Times……… The Worst of Times……”A Look Ahead to 2009 Wisconsin Chapter of American College of Healthcare Executives December 12, 2008

2. It’s 1983 all over again! • Democrat Governor • Democrat Senate • Democrat Assembly • Record State Budget Deficit

3. 1983 Outcomes • Wisconsin hospital rate setting commission • Restrictive CON program including tertiary service decertification • Hospitals at ground zero because of health care costs hysteria • WHA faced with member angst regarding strategies related to regulatory initiatives

4. 22% expanded coverage uninsured 51% insurance affordability 10% Quality 14% reduce spending Likely 2009 Environment 1. Health reform defined by coverage affordability. Source: Kaiser Foundation Tracking Poll * 65% - It’s the $!

5. 2. Dire state budget situation • Structural deficit of $2 billion + • Stagnant revenue growth • Built in expense growth of 5-7% • Potential that pending lawsuits will open $500 plus million dollar hole $5 BILLION

6. Labor WMC Health Insurers Health care spending 3. Political Dynamics Change Governor Doyle becomes gate keeper Look at Illinois………

7. 4. Healthy Wisconsin is in Play • 16% Payroll tax • Government imposed limits on annual total spending growth. • What happens when $ is gone? • Payroll tax increases • Benefits reduce • Providers get a haircut

8. 5. Doyle Administration Incrementalism • Medicaid tax • Medicaid expansion • Small group insurance reform • Encourage HIT But will Doyle still be Governor?

9. 6. Why The Tax? • 14 Years • $600 Million cost shifting • Federal $ left on the table • 8 hospitals = 40% of total Medicaid days. It Will Happen!

11. Hospital Assessment Proposal – FY09 Diverted for Other State Purposes $72,917,916 Net Increase in Medicaid reimbursements to hospitals: $192,259,653 ($441,962,615 increase less $249,702,962 assessment) Federal Government Matchable State Funds $176,785,046 + State of Wisconsin $249,702,962 Matching federal funds $ 265,177,569 Hospital Assessment $249,702,962 Available for Hospital Payment Increases $441,962,615 An additional $1.50 for every $1 collected comes back to the state.

12. Hospital Vulnerabilities and Opportunities + Medicaid Coverage Expansions Quality and Safety ? Medical Malpractice Labor Issues Challenges to Hospital Finances/ not-for profit status Billing and collection + – – – –

13. Essential Strategies to Prevail on Key Issue Areas • Support Doyle Adminsistration’s incremental reform agenda, including insurance reform. 2. Rallybehind “moderate” Democrats • Be prepared to compromiseon the small stuff. • Advance quality and safety agenda. • Advance value theme. • Acceleratecommunity benefits initiative(s). • Accelerate/re-commit to billing and collection pledge.

14. Major 2008 Project List

15. Major 2008 Project List

16. Major 2008 Project List

17. Major 2008 Project List

18. Major 2008/2009 Project List December • Hospital Finances January • Costs Report February • Hospital Economic Impact/Value Report