covenant health and community services, inc. …...jt young kent skolrood patrice villemure rodney...

COVENANT HEALTH AND COMMUNITY SERVICES, INC.

BOARD OF DIRECTORS MEETING July 27, 2017 at 8:30 a.m.

Conference Call: 1 (719) 457-6209

Passcode: 170672# AGENDA

(p. 1)

CONVENING OF MEETING TOM OWENS

MINUTES OF THE COVENANT HEALTH

AND COMMUNITY SERVICES BOARD OF

DIRECTORS MEETING OF MAY 25, 2017 (pp. 2-4) ***** TOM OWENS

COVENANT CARE JUNE 2017 AND

YTD FINANCIAL STATEMENTS (pp.5-13) ***** ODIN BERG

FOCUSED DISCUSSION

WFCC ***** JEFF MISLEVY

RATIFICATION OF COVENANT

AT HOME, INC. MANAGEMENT BOARD ***** ODIN BERG

QRSC COMMITTEE REPORT TOM OWENS

PRESIDENT’S REPORT JEFF MISLEVY

(pp.14-22) TODD FISHER

OTHER BUSINESS AS SUBMITTED TOM OWENS

ADJOURNMENT TOM OWENS

NOTES: **** DENOTES VOTE OR OTHER ACTION REQUIRED

1

Covenant Health and Community Services, Inc.

BOARD OF DIRECTORS MEETING

May 25, 2017

MINUTES

MEMBERS PRESENT: Brett Parra

Carey King

Don Haferkamp

Jamie Campbell

Janet Kinney

Jeff Mislevy

JT Young

Kent Skolrood

Patrice Villemure

Rodney Guttmann

Roger Poitras

Susan Davis

Steve Sarros

Teresa Dos Santos

Tom Owens

Wanda Kaye Hambrick

Xan Smith

MEMBERS ABSENT: Bill Greenhut

Janet Kinney

LEADERSHIP STAFF: Todd Fisher

Odin Berg

Aaron West

Rhonda Jordan

Kara Benedict

INTRODUCTION

Mr. Owens convened the meeting at 8:30 a.m. and thanked everyone for attending.

Draft Audit Report for YE 2016

Mr. Berg presented the final audited Consolidated Financial Statements for Covenant Health and

Community Services, Inc. for December 31, 2016 and 2015. A copy of the audited financials was

provided in Tab B of the handouts.

After discussion, Mr. Owens called for a motion to approved the audited Consolidated Financial

Statements for Covenant Health and Community Services, Inc. for December 31 2016 and 2015 as

presented.

A motion was made and passed.

2


BOARD OF DIRECTORS

May 25, 2017

cont.

MINUTES

Mr. Owens called for a motion to approve the minutes of the Covenant Health and Community

Services Board of Directors Meeting of March 23, 2017.


FINANCIAL REPORTS

Covenant Care April 2017 Consolidated Financial Report

Mr. Berg reported the following financial highlights:

Covenant Health and Community Services: operating margin for the month was ($121,338)

YTD operating income/(loss) was ($372,916)

Covenant Hospice: operating margin for the month was $52,025; YTD operating margin was

$174,534

Peoples Home Health: operating margin for the month was $164,178; YTD operating margin

was $791,315

Covenant Care consolidated operating margin for the month was $11,181; YTD operating

margin was $248,786.

Mr. Berg explained that it was anticipated an additional expense would be incurred in May due to

the CMS survey response efforts. A copy of the comprehensive financial report was provided in

Tab D of the handouts.

After discussion, Mr. Owens called for a motion to approve the Covenant Care April 2017 and

YTD Financial Reports.


FOCUSED DISCUSSION

QRSC Committee Report

On behalf of the Quality, Risk, Safety, and Compliance Committee, Mr. Owens gave an update on the

CMS validation survey findings and corresponding Plan of Correction for the Alabama service areas.

Implementation of the Plan of Correction was currently underway to include ongoing internal and

external audits, extensive staff education and training, and process improvement initiatives. Ms.

Benedict gave an overview of the cited deficiencies and respective corrective actions. Complete

implementation of the Plan will occur by June 1st. Mr. Mislevy explained that the same action plan

will be implemented throughout the Florida service areas as well.

President’s Report 3


BOARD OF DIRECTORS

May 25, 2017

cont.

Mr. Fisher presented a proposed joint initiative between Baptist Health Care and Covenant

Care. Namely, Faith Health Network (FHN) was a a faith inspired initiative that leveraged the

many resources of the healthcare community with the strength of local congregations allowing

the delivery of high quality healthcare to those families and communities that are historically

underserved. Mr. Mislevy explained that Baptist Health Care would provide operational

management; Covenant’s capital outlay of approximately $150,000 would be the initial

investment needed. A copy of the proposal was provided in Tab E of the handouts.

Mr. West explained that a capital campaign for The Residence (memory care center) was being

developed. Mr. West encouraged the members to provide input and make recommendations on

the proposed campaign structure.

ADJOURNMENT

There being no further business to discuss, the meeting was adjourned at 9:36 a.m.

__

Submitted By: Carey King, Secretary

4

Financial Report

June 30, 20175

June 2017 Consolidated Financial Statements: CEO & CFO REPORTS

1. June 2017 marked the 7th consecutive month of positive operating and overall financial performance

2. Covenant Hospice results: Covenant Hospice realized a June Operating Margin of $89,490; net non-operating revenue of $86,275 produced a Net Income of $175,655. YTD Operating Margin is $304,493 and YTD Net Income is $599,878.

3. Peoples Home Health results:Peoples Home Health, achieved a positive Operating Margin of $151,036. YTD Operating Margin is $1,173,920. (Peoples non-operating revenues or expenses are immaterial.)

4. Covenant Health & Community Services (d/b/a “Covenant Care”):Covenant Health & Community Services had a June operating loss of ($64,097) and a YTD operating loss of ($472,257). CHCS YTD expenses include $199,292 in compensation costs, and $271,172 in legal and consulting expenses.

5. Covenant Hospice Foundation:Covenant Hospice Foundation achieved Net Income of ($433) in June. YTD Net Income is $335,109.

6. Construction-in-progress: As of 06/30/17, CIP for the two outstanding construction projects is $1,545,206:

o Sacred Heart Hospital, hospice inpatient center: $837,553o Covenant Alzheimer’s Services, memory care center: $707,653

6

June 2017 Consolidated Financial Statements

STATISTICAL HIGHLIGHTS

SUMMARY OF JUNE STATISTICS:

Covenant Hospice key statistics:--Average Daily Census: 776.8 (June) vs. 779.4 (YTD)

--Average Length of Stay: 55.0 (June) vs. 53.6 (YTD)--Total admissions: 424 (June) vs 2,633 (YTD) (Average per month – 439)--Inpatient admissions: 198 (June) vs.1,293 (YTD) (Average per month – 216)--Deaths: 357 (June) vs. 2,288 (YTD) (Average per month – 381)

Peoples Home Health key statistics: --Medicare & Medicare-like episodes: 384 (June) vs. 2,533 (YTD)--Home health visits: 6,624 (June) vs. 42,728 (YTD)--Average Medicare episode payment: $2,395 vs. $2,347 (2017 budget) --YTD 30-day readmissions: 16%

Total Covenant Care activity: Admissions, June: 424 end-of-life admissions; 395 homebound admissions; 819 total admissions.Admissions, YTD: 2,633 end-of-life admissions; 2,491 homebound admissions; 5,124 total admissionsAverage daily census, June: 777, hospice ADC; 771, home health ADC; 1,548, total ADC Average daily census, YTD: 779, hospice ADC; 783, home health ADC; 1,562, total ADC

7

Covenant CareJune 2017 Financial Results

COVENANT CARE

COMBINED STATEMENT OF OPERATIONS

MONTH OF JUNE 30, 2017 ACTUAL

COMBINED BUDGET VARIANCE % VARIANCE JUNE 2016

NET PATIENT/FAMILY CARE/PROGRAM REVENUE 5,535,700 6,257,105 (721,405) -11.5% 5,996,251

TOTAL PATIENT/FAMILY CARE EXPENSES 3,800,276 4,287,528 (487,252) -11.4% 4,143,230

CONTRIBUTIONS FROM OPERATIONS 1,735,424 1,969,576 (234,153) -11.9% 1,853,021

CONTRIBUTION % 31.3% 31.5% -0.1% 30.9%

GENERAL & ADMINISTRATIVE EXPENSES

Other Direct 825,126 916,133 (91,007) -9.9% 1,023,926

Payroll 712,498 882,563 (170,064) -19.3% 612,850

Benefits 123,946 163,059 (39,113) -24.0% 109,027

Allocation from CHCS - - - 0.0% -

TOTAL G&A EXPENSES 1,661,571 1,961,755 (300,184) -15.3% 1,745,803

OPERATING MARGIN 73,853 7,821 66,031 844.2% 107,219

OPERATING MARGIN % 1.3% 0.1% 1.2% 1.8%

NON-OPERATING REVENUES

Contributions and fundraising 120,078 68,571 51,507 75.1% 120,069

Other Non-Operating Revenues 143,168 83,072 60,096 72.3% 182,580

Development/Fundraising Expense (107,145) (83,099) (24,046) 28.9% (85,747)

Other Non-Operating Expense (32,926) (28,878) (4,048) 14.0% (55,026)

Contributions to Affiliates - - - 0.0% -

NET NON-OPERATING REVENUE 123,175 39,666 83,509 210.5% 161,876

EXCESS OF REVENUE OVER EXPENSES 197,028 47,487 149,541 314.9% 269,094

Note: The above classifications may differ from those of the auditors who prepare statements in conformity with

Generally Accepted Accounting Principles

BUDGET ANALYSIS

8

Covenant CareYTD June 2017 Financial Results

COVENANT CARE .

COMBINED STATEMENT OF OPERATIONS

YEAR-TO-DATE JUNE 30, 2017 ACTUAL

COMBINED BUDGET VARIANCE % VARIANCE 2016

NET PATIENT/FAMILY CARE/PROGRAM REVENUE 34,135,908 37,910,630 (3,774,722) -10.0% 32,226,014

TOTAL PATIENT/FAMILY CARE EXPENSES 22,925,085 26,349,270 (3,424,185) -13.0% 23,385,556

CONTRIBUTIONS FROM OPERATIONS 11,210,823 11,561,360 (350,537) -3.0% 8,840,459

CONTRIBUTION % 32.8% 30.5% 2.3% 27.4%

GENERAL & ADMINISTRATIVE EXPENSES

Other Direct 5,102,833 5,273,796 (170,963) -3.2% 5,613,052

Payroll 4,841,697 5,287,754 (446,057) -8.4% 2,879,215

Benefits 868,224 978,480 (110,255) -11.3% 536,026

Allocation from CHCS - - - 0.0% -

TOTAL G&A EXPENSES 10,812,754 11,540,030 (727,276) -6.3% 9,028,293

OPERATING MARGIN 398,069 21,330 376,739 1766.2% (187,834)

OPERATING MARGIN % 1.2% 0.1% 1.1% 0.6%

NON-OPERATING REVENUES

Contributions and fundraising 615,518 410,675 204,843 49.9% 540,826

Other Non-Operating Revenues 577,269 262,657 314,612 119.8% 580,455

Development/Fundraising Expense (517,585) (485,752) (31,833) 6.6% (593,733)

Other Non-Operating Expense (183,321) (162,242) (21,079) 13.0% (344,897)

Contributions to Affiliates - - - 0.0% -

NET NON-OPERATING REVENUE 491,881 25,338 466,543 1841.3% 182,651

EXCESS OF REVENUE OVER EXPENSES 889,951 46,669 843,282 1807.0% (5,183)

Note: The above classifications may differ from those of the auditors who prepare statements in conformity

with Generally Accepted Accounting Principles

BUDGET ANALYSIS

9

107,219

19,409

(378,712)

(643,204)

(455,023)

(171,692)

76,441 93,112

4,571

137,588

11,181

77,764 73,853 79,019

98,309 99,784

269,094

7,228

(418,790)

(558,877)

(460,704)

(52,305)

972,858

57,601

137,588

347,579

211,698

39,642

166,916

40,281

86,875 88,178

$(800,000)

$(600,000)

$(400,000)

$(200,000)

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Jun 2016 Jul 2016 Aug 2016 Sep 2016 Oct 2016 Nov 2016 Dec 2016 Jan 2017 Feb 2017 Mar 2017 Apr 2017 May 2017 Jun 2017 Jul 2017PROJ

Aug 2017PROJ

Sep 2017PROJ

Operating Margin Net Income

Covenant Care: June 2016 - September 2017 Actual & Projected - Consolidated Operating Margin & Net Income

10

Covenant Care – Balance SheetJUNE 30, 2017 DEC. 31, 2016

COMBINED COMBINED

ASSETS

CASH & EQUIVALENTS 4,509,822 3,016,178

TOTAL INVESTMENTS 20,885,666 20,225,810

TOTAL CASH & INVESTMENTS 25,395,488 23,241,988

GROSS ACCOUNTS RECEIVABLES 13,403,496 14,830,123

RECEIVABLE ALLOWANCES (1,361,684) (1,183,867)

NET ACCOUNTS RECEIVABLES 12,041,811 13,646,256

OTHER CURRENT ASSETS 4,872,503 4,193,298

TOTAL CURRENT ASSETS 42,309,803 41,081,541

LAND 1,936,722 1,936,722

BUILDINGS & IMPROVENTS 12,572,987 12,572,987

LEASEHOLD IMPROVEMENTS 2,268,108 2,268,108

FURNITURE, FIXTURES & EQUIPMENT 9,328,784 9,241,649

CONSTRUCTION IN PROGRESS 1,547,302 61,975

27,653,902 26,081,441

LESS ACCUMULATED DEPRECIATION (12,564,401) (11,923,450)

NET PROPERTY & EQUIPMENT 15,089,502 14,157,990

TOTAL INTANGIBLE ASSETS 9,539,339 9,957,889

TOTAL ASSETS 66,938,644 65,197,420

LIABILITIES & FUND BALANCE

CURRENT LIABILITIES

CURRENT PORTION L/T DEBT 448,784 448,784

ACCOUNTS PAYABLE 4,924,232 2,722,940

ADVANCES AGAINST ACCOUNTS RECEIVABLE 5,688,977 6,419,509

OTHER ACCRUALS 3,160,145 3,638,772

TOTAL CURRENT LIABILITIES 14,222,139 13,230,004

LONG-TERM LIABILITIES

MORTGAGE PAYABLE 6,108,804 6,324,816

OTHER LONG TERM LOANS 9,445,768 10,095,786

LESS CURRENT PORTION (448,784) (448,784)

OTHER 14,305 15,547

TOTAL LONG-TERM LIABILITIES 15,120,092 15,987,365

TOTAL LIABILITIES 29,342,231 29,217,369

NET ASSETS:

UNRESTRICTED 34,171,413 33,372,921

BOARD DESIGNATED 889,070 71,094

TEMPORARILY RESTRICTED 2,535,929 2,536,036

TOTAL NET ASSETS 37,596,413 35,980,051

TOTAL LIABILITIES & NET ASSETS 66,938,644 65,197,421

11

Covenant CareJune 2017 Balance Sheet Ratios & Bond Covenants

BALANCE SHEET RATIOS

BALANCE BALANCE

06/30/2017 12/31/2016

CASH ON HAND 142.1 119.0DAYS REVENUE OUTSTANDING 65.4 71.7DAYS REVENUE, EXCLUDING FLORIDA MEDICAID MANAGED CARE 49.5 56.6DAYS PAYABLE OUTSTANDING 45.2 32.6DEBT TO FUND BALANCE 0.8 0.8CURRENT ASSETS TO CURRENT LIABILITIES 3.0 3.1

BOND FINANCIAL COVENANTS June 30, 2017

REQ.

Ratio of Maximum Debt to Tangible Net Worth < 2.5:1 AMOUNTS MET?

This bond covenant measures the relationship of all debt, if due and payable today, to Covenant Hospice's net worth 0.58 Y

Minimum Tangible Net Worth > $6,500,000 This bond covenant calls for a minimum tangible net worth. Net worth related to intangible assets are excluded. $33,504,289 Y

Minimum Fixed Charge Coverage of 1.10:1.0 This bond covenant compares fixed charges, including lease expense, to the earnings aviailable to pay these charges 3.56:1.0 Y

Liquidity of $5,000,000 or more This ratios measures the amount of cash or "near cash" to meet immediate or short-term obligations $5,454,614.27 Y

12

Covenant CareYear-to-date Capital Expenditures

Capital Expenditures, YTD 2017

Software…………………………………………..…………$19,800Bay Medical IPC, furniture…………………..………..$9,528Providence Hospital IPC, furniture…………..….$18,329LED TVs, various locations……………………....…...$6,000Other…………………………………………………..…..…$20,417

Total $74,068

Capital Expenditures, Construction in Progress, YTD 2017

Sacred Heart IPC…………………………………………$837,553The Residence, Memory Care Center ALF……$707,653

Total $1,5445,206

[2017 Budget - $1,245,850;unspent CapEx primarily relates to IS and leasehold improvement costs]

[2017 Budget - $4,710,000; estimated total project costs are currently tracking to budget.]

13

Memory Care Update

14

Brand and Logo

15

Executive Summary

• Launch a Covenant Care Assisted

Living Facility (ALF) focusing on

Memory Care, Alzheimer's and

Dementia patients and families

• Extends Covenant Post-Acute

Care Continuum of Services

• Complete Remodel of the Joyce

Goldenberg Residence

• Total 22 Beds

• 5 ECC (Extended Congregate

Care)

• Dedicated Activities Space

16

Executive Summary

• Original plan accounted for 2 phase opening– Phase 1 – Oct 1, 2017

– Phase 2 – February 2018

• New Plan– One opening on January 1st 2018

• Reason for the Shift– Opportunity to expedited construction timeline

– Census at JGR could be absorbed by West Florida and Sacred

– ACHA ALF licensure window is 60 days per opening

– Mandated 2 Year Proforma window to show profit. Starts from first open

date.

17

Programmatic• Executive Director – Actively recruiting

• Consulting Support: Dr. Jeff Keller, John Gonzales

• Licensure – ACHA Process 60 Days

– Working directly with GC, Alberta Grander (ACHA), John Gonzales to expedite if possible

• Assumed Annual Bed Capacity 21, max filled 21 (95%)

• Staffing Model – Part Covenant Care internal staff, part experienced Memory Care

• Key areas representing new processes: Technology, Dietary, Food Prep, Transportation, Activities

• Shift from construction focus to brand and marketing awareness

18

Financial

Capital BudgetTotal Budget $2,430,150

Current Spend $1,906,707

Projected Variance if any (511,515) (mainly furniture not purchased)

Pro FormaAssumptions: Bed Capacity 21, max filled 21 (95%)

1st year – Operating Margin Loss ($124,514)

2nd year – Operating Margin Gain $8,396

19

Construction

• Construction Started: 02/17/2017

• Percentage Complete: est 65%

• Construction Complete: 27 October

• Certificate of Occupancy: 1 November

• Licensure File Date: *1 November

• Zero-transition showers (nothing to step over or trip over getting in and out)

• New Hallway lighting system. Slightly brighter but continuous to minimize shadows

• Raised-bed garden for Residents that have a passion for gardening

• Stove for supervised resident use for those who like to cook

• Hair salon provided on-site

* File date is dependent on CO

20

Foundation

• Defined a donor centric outline of differentiators for Covenant Memory Care, to included financial assistance for specific services.

• A comprehensive list of giving levels and naming opportunities has been developed to recognize gift supporting Memory Care and The Residence.

• Currently working with brix design to complete a wall located at The Residence recognizing previous donors to the Joyce Goldenberg Residence.

• Developing a list of prospects for potential gifts supporting Memory Care services offered by Covenant Care.

21

Brand/Reputation

Local/Community

Financial Assistance-

access, affordability

charity Research-Center

Foundation

Key Opportunities

to Differentiate

Expertise (Dr. Jeff

Keller) Experience in

ALF/CAS Dementia

caregiver support,

Continuum of Care

Intimate environment of Care, Local Community, Financial

Assistance Resource

22

COVENANT HOSPICE, INC.

BOARD OF DIRECTORS MEETING July 27, 2017

AGENDA

(p. 23)


MINUTES OF THE COVENANT HOSPICE


OF MAY 25, 2017 (pp. 24-25) ***** TOM OWENS


YTD FINANCIAL STATEMENTS (pp. 5-13) ***** ODIN BERG

CORPORATE RESOLUTION (p. 26) ***** ODIN BERG




23

Covenant Hospice, Inc.


May 25, 2017

MINUTES

MEMBERS PRESENT: Brett Parra

Carey King

Don Haferkamp

Jamie Campbell

Janet Kinney

Jeff Mislevy

JT Young

Kent Skolrood

Patrice Villemure

Rodney Guttmann

Roger Poitras

Susan Davis

Steve Sarros

Teresa Dos Santos

Tom Owens

Wanda Kaye Hambrick

Xan Smith


Janet Kinney


Odin Berg

Aaron West

Rhonda Jordan

Kara Benedict

INTRODUCTION

Mr. Owens convened the meeting at 9:36 a.m.

MINUTES

Mr. Owens called for a motion to approve the minutes of the Covenant Hospice, Inc. Board of

Directors Meeting of March 23, 2017.


FINANCIAL REPORTS


24

COVENANT HOSPICE, INC.

BOARD OF DIRECTORS

May 25, 2017

cont.





$174,534


was $791,315



Mr. Berg explained that it was anticipated an additional expense would be incurred in May due to the

CMS survey response efforts. A copy of the comprehensive financial report was provided in Tab D of

the handouts.

After discussion, Mr. Owens called for a motion to approve the Covenant Care April 2017 and YTD

Financial Reports.


ADJOURNMENT


__


25

CORPORATE RESOLUTION

At the Covenant Hospice, Inc. Board of Directors meeting held on July 27, 2017 at which a

quorum was present, it was duly moved and seconded that the following resolution be adopted:

BE IT RESOLVED that the Board of Directors of Covenant Hospice, Inc. does hereby

authorize Odin Berg, Chief Financial Officer, and his successors in office to negotiate, on

terms and conditions that he may deem advisable, a contract or contracts with the

Alabama Medicaid Agency, and to execute said contract or contracts on behalf of the

Corporation. And further we do hereby give him the power and authority to do all things

necessary to implement, maintain, amend or renew said contract.

The above Resolution was passed by a majority of those present and voting in accordance with

the By-Laws and Articles of Incorporation.

IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of July 2017.

__________________________________

Carey King, Secretary

26

COVENANT HOSPICE FOUNDATION, INC.

BOARD OF DIRECTORS MEETING July 27, 2017

AGENDA

(p. 27)


MINUTES OF THE COVENANT HOSPICE

FOUNDATION BOARD OF DIRECTORS

MEETING OF MAY 25, 2017 (pp. 28-29) ***** TOM OWENS


YTD FINANCIAL STATEMENTS (pp. 5-13) ***** ODIN BERG




27

Covenant Hospice Foundation, Inc.


May 25, 2017

MINUTES

MEMBERS PRESENT: Tom Owens

Rodney Guttmann

Xan Smith

Carey King

Jeff Mislevy

Bob Peterson

John Fogg


Sue Straughn


Odin Berg

Aaron West

Rhonda Jordan

Kara Benedict

INTRODUCTION

Mr. Owens convened the meeting at 9:36 a.m.

MINUTES

Mr. Owens called for a motion to approve the minutes of the Covenant Hospice Foundation, Inc.

Board of Directors Meeting of March 23, 2017.


FINANCIAL REPORTS






$174,534


was $791,315



28

COVENANT HOSPICE FOUNDATION, INC.

BOARD OF DIRECTORS

May 25, 2017

cont.

Mr. Berg explained that it was anticipated an additional expense would be incurred in May due to

the CMS survey response efforts. A copy of the comprehensive financial report was provided in

Tab D of the handouts.

After discussion, Mr. Owens called for a motion to approve the Covenant Care April 2017 and

YTD Financial Reports.


ADJOURNMENT


__


29

covenant health and community services, inc. …...jt young kent skolrood patrice villemure rodney...

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