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Alameda Health System

Review of the preliminary operating and capital budget for FY20 focusing on achieving EBIDA goal through revenue enhancement and expense reduction strategies. Detailed program evaluation and budget volume analysis included.

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Alameda Health System

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  1. Alameda Health System Fiscal 2020 Operating and Capital Budget Preliminary Review Delvecchio Finley, CEO Luis Fonseca, COO Ann Metzger, Interim CFO June 13, 2019

  2. Presentation Outline • Long Range Financial Plan – Setting the Context (Slide 3) • Proposed Budget to meet EBIDA Goal (Slide 4) • Revenues Enhancement: Details (Slides 6-8) • Expenses Reduction: Details (Slides 9-12) • Program Evaluation: Details (Slides 13-17) • FY20 Budget Volume (Slides 19-22) • Consolidated FY20 Budget Income Statement (Slide 23) • Capital Budget and Long Range Financial Plan (Slides 25-28) • Questions • Supplemental Documents (Slides 31-37)

  3. Long Range Financial Plan

  4. Proposed FY20 Budget to reach EBIDA Goal

  5. 2020 Operating Budget Detail

  6. Proposed FY20 Budget to reach EBIDA Goal

  7. Revenue Enhancement / Adjustment ED Visits Reduction – reforecast ED Visits to align with current year run rate across all 3 acute care sites resulting a 5,545 ED visits reduction and $3.4M NPSR decrease from the original projection SLH Core License – Expect a $2.8M increase in Supplemental Revenue with SLH under the Core license Urgent Care – Convert Same Day Clinic to Urgent Care Center effective January 1, 2020 to capture the loss volume of patients Leave Without Being Seen (LWBS) at HGH ED EPIC Charge Capture – expect a 2% charge capture improvement 6 months after EPIC go-live; AB85 Realignment Revenue – due to higher cost in EPIC implementation in FY20, anticipated to keep the AB85 Realignment supplemental revenue AWI Impact on NPSR – new Average Wage Index for AHS would have a negative financial impact on NPSR

  8. Revenue Enhancement & Adjustment Round 2 Revenue Enhancement 1) Additional 3% increase in Primary Care Clinic volume yield $1M NPSR 2) Increase GI clinic visits and endoscopy cases resulting a $300K NPSR 3) Replacement of the Neurology contract with a 1.0 FTE Employed Provider enables collection of professional fee for this service ($330K) 4) Received $225K CalMedForce Grant to support the ED and Internal Medicine residency program

  9. Proposed FY20 Budget to reach EBIDA Goal

  10. Expense Reduction

  11. Expense Reduction by Financial Class

  12. Expense Reduction - Examples • Executives Wage freeze, Discretionary Paid Time Off (DTO), Benefit Restructure • Skill Mix Changes • Reduce sitter utilization • Reduce OT use by 30% • Eliminate various Provider FTEs • Reduce backfill in nursing units • Reduce supply cost by improving pricing alternatives • Improve provider productivity to increase clinical time and reduce cost • Reduce Provider Administrative time and Directorship expense • Reduce on-call coverage • Closure of Alameda Primary Care Clinic . . .

  13. Proposed FY20 Budget to reach EBIDA Goal

  14. Proposed Program Evaluation & Margin Analysis

  15. Recap of Methodology • Identify programs based on largest margin losses for further analysis. The following programs were identified: • Obstetric services, NICU, Outpatient Women’s services, OP Pediatric services, Outpatient Behavioral Health programs, Psychiatric Emergency services (PES), Highland Dental. • Conduct detailed and updated margin analysis for current Fiscal year FY2019. • Recommendations for programs continuance to be informed by additional criteria: • Further evaluation of revenues, contracts and expenses provide opportunity within AHS for program improvement in margin (without any adverse impact on quality, or experience). • Program is Community Sole Provider • Program primarily serves uninsured, and under-insured that cannot be accommodated by other community providers • Program is stand alone service and does not have impact on other operations at AHS • Present recommendations to Trustees to receive direction/guidance on recommendations for FY20 Budget.

  16. Margin Analysis Summary

  17. Financial Analysis of Options 17

  18. Analysis of Options

  19. 2020 Budget Volume

  20. Volume Drivers and Assumptions • Proposed closure of the Inpatient program (OB, NICU and Nursery) result a 2,783 reduced Acute Care Days and 50% reduction in deliveries effective 2nd half of FY20. • Re-opening SLH 3rd Floor, 5 ADC on the 2nd half of FY20; • Projected a 3.9% increase at HGH (Moderate increase in Cardiology cases in FY20); • Reforecast ED visits for all 3 acute care sites in anticipation of a slight reduction (0.5%) from FY19 run rate. ACUTE CARE Patient days: -5.0% ED: -0.5% Surgeries: -0.5% Deliveries: -50.0% POST ACUTE Patient Days: 0.3% • Acute Rehab will be relocating from FMT to SLH in 2nd half of FY20 • Moving from 25 beds to a maximum capacity of 28 beds.

  21. Volume Drivers and Assumptions BEHAVIORAL Patient Days: flat PES: -50% • Behavioral Health Services for both Inpatient and Outpatient stay flat in volume. • Propose closure of PES (Psych Emergency Services) 2nd half of FY20 results in a 50% reduction in visits. • FY20 will be a full year of capitation in all AHS wellness centers; • Target Primary Care Clinic to increase additional 3% by improving provider productivity; • GI Clinic is also target to grow additional 2,000 visits in FY20. • Proposed closure of Alameda Primary Care Clinic (2nd Quarter of FY20) and OP Women Services (2nd half of FY20) • Convert Same Day Clinic to Urgent Care Center with an anticipation of additional 2,014 visits AMBULATORY -2.4% Primary care: -6.8% Specialty care: 4.2%

  22. 2020 Volume Budget – System • KEY: • Actual 2018 – Based on 12 months of Actual 2018 • Projection 2019– Annualized based on 9 months actual in FY2019 • Budget 2020– proposed budget volume for FY20

  23. Key Operation Metrics Trend

  24. Consolidated Income Statement • KEY: • Actual 2018 – Based on 12 months of Actual 2018 • Projection 2019– Annualized based on 9 months actual in FY2019 • Budget 2020– proposed budget with volume, inflation and revenue assumptions

  25. 2020 Capital Budget Detail

  26. Capital Expenditure Plan

  27. Long Range Financial Plan

  28. Questions

  29. Supplemental Documents

  30. LEGAL/REGULATORY PROCESS FOR SERVICE ELIMINATION AHS retains discretion to eliminate/reduce services, provided patients may be referred to reasonable alternative providers for those services. - Before eliminating/reducing services, AHS is required to provide 60 days notice to the Board of Supervisors prior to eliminating any medical services. (Alameda County Administrative Code Section 2.120.040) Moreover, pursuant to the Belienson Act, AHS is required to provide notice to the public of the proposed reductions that detail the impact of the reductions and to conduct public hearings on the proposed changes. (California Health & Safety Code Section 1442.5) The foregoing requirements suggest initiating this process on or about September 1, 2019 with a target implantation date of January 1, 2020.

  31. Additional Patient Volume Details

  32. Volume Budget – Ambulatory Visits

  33. Key Volume Trends

  34. Labor Cost and FTE Trend Key: SWB = Salary, Wages and Benefit

  35. Non Labor Expense Trend

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