nmc fy’20 budget presentation: transforming hospital care ...… · 8/23/2019 · a reality...
TRANSCRIPT
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NMC FY’20 Budget Presentation:Transforming Hospital Care
while Advancing Population Health
Green Mountain Care BoardAugust 23, 2019
Jill Berry Bowen, RN Robyn Alvis Stephanie BreaultChief Executive Officer Chief Financial Officer Director of Finance
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Thank you for this opportunity to speak.A Reality Check on the Vulnerability of Hospitals
• NMC has been named one of the nation’s “Top 100 Rural & Community Hospitals” by the National Rural Health Association;
• NMC is a lean organization with an overall productivity index of 97% when benchmarked against the 75th percentile of hospitals within our national QHR peer group;
• NMC has been courageous in taking on risk, ensuring access, investing in population health, and partnering in the transformation of healthcare;
and yet …
• NMC has suffered a negative bottom line for three consecutive fiscal years;
• The current environment has made many of Vermont’s hospitals vulnerable.
The time has come to align priorities and incentives across the system.
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Hospital Issues• Wage pressures and medical inflation costs exceeding allowed revenue cap,
creating 3 consecutive years of operating losses;
• Recruitment and retention of top talent in times of shortage and uncertainty;
• Pace of change is exhausting for our staff;
• Complicated transition to an integrated electronic health record across the organization;
• Aging facilities that need to be updated for quality, efficiency, safety, & privacy;
• Aging population who still need chronic care, even with prevention focus;
• Lack of reimbursement for prevention services;
• Ensuring access to care through employment of physicians creates the illusion that hospital costs are rising;
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Areas of Risk & Opportunity• Our Community Health Needs Assessment calls on us to address mental
health, addiction, obesity, suicide, domestic/sexual assault, food insecurity, and tobacco/vaping;
• Advancing surgical optimization and Lifestyle health coaching while RiseVT works in the community on healthy culture, policy, and infrastructure;
• For-Profit Ambulatory Surgery Center’s direct negative impact;
• Shifting from 30% capitation to 70% capitation by 2022;
• Revenue cap inhibiting financial health and necessary future capital;
• Achieving an integrated electronic health record across the organization;
• Collaboration with Health Care Advocate on Financial Assistance policies;
• Partner relationships take thoughtful dialogue and evolution;
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Areas of Risk & Opportunity• Redefining our Future: Strategic planning at NMC by our Board, Medical
Leaders, and Management with input from our staff, our community, and industry experts to identify what service lines we invest in, maintain, change, or divest;
• Advancement of Technology into new care practices (telehealth);
• Violation of bond covenant related to debt service coverage ratio;
• Fluctuations in operations creating instability of financial forecasts, including a variance from our originally submitted FY'19 projections and FY'20 budget;
• The opportunity to align the visions and actions of the Green Mountain Care Board, the Legislature, the payors, and the healthcare providers to create a healthier future for all Vermonters – and giving hospitals the budgetary latitude needed if we are expected to fund and fuel that future.
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RiseVT, now a statewide movement to embrace healthy lifestyles, began in our community with NMC as a founder.
Our team is partnering with our schools, employers, and municipalities on policies, infrastructure, and culture so the healthy choice is the easy choice.
We are hitting our short-term engagement targets on our way to our mid-term goals of behavior change. This fall, we will conduct our 2nd measurement study with our schools regarding our long-term goal of reducing childhood obesity.
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Sampling of RiseVT’sEvidence-Based Impact in 2019:
• Maple Run School District’s WellSat score of strength and comprehension of wellness policy revolutionized from 33% to 82%;
• RiseVT engaged 1600+ children in 100+ classrooms across every school district, integrating wellness into curriculum;
• 20 municipal healthy infrastructure/policy projects advanced in 2019, including: sidewalks, playgrounds, smoke-free parks, economic development through recreation, trails, and expanded Farmers’ Markets;
• The Worksite Wellness Community Coalition has grown to 42 active employers who are improving policies and engaging employees in healthier habits to reduce healthcare costs;
• NMC is a Gold-level RiseVT worksite and our HealthyU program shows that high risk employees who are health coached have a $3,288-a-year lower per person cost.
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Net Patient Revenue & Fixed Prospective Payments
FY'2019 Budgeted NPR $112,773,980
Dermatology Physician Transfer Out
($711,015)
Total FY'2019 Baseline NPR
$112,062,965
3.5% Allowable NPR Growth
$3,922,268
Primary Care Transfer In $941,346
FY'2020 Budgeted NPR $116,926,579
NMC’s rate increase has 2 components:
• 7.63% increase on hospital-based services
• 0% increase on physician professional services
Results in an overall rate increase of 5.9% that will be applied to all payors
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Financial Health – Key Metrics
Rate Correction
Chart1
201320132013
201420142014
201520152015
201620162016
201720172017
201820182018
2019 Projected2019 Projected2019 Projected
2020 Budget2020 Budget2020 Budget
NPR Budget
NPR Actual
Operating Margin
Net Patient Revenue and Operating Margin
83550542
89180074
0.0778
87759305
91165412
0.0778
90795885
97798763
0.0962
98185690
99895760
0.0106
101935936
101110424
-0.0038
106128223
103317768
-0.034
112773980
108246154
-0.06
116926579
-0.002
Out of State Rev
PayerVTOut of StateTotal
Medicare67,229,694553,85567,783,5490.0081709354
Medicaid41,465,194101,29941,566,4930.002437035
Commercial/Self/Other74,916,2901,593,29476,509,5840.0208247636
Out of State Rev
VT
Out of State
553,855
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Financial Health – Key Metrics
Note – Includes ED Modernization Project CON
Chart1
20162016
20172017
20182018
2019 Projection2019 Projection
2020 Budget2020 Budget
2021 Projection2021 Projection
Column1
S&P 2018 Median A Rated Hospital
Days Cash on Hand
351
257.5
331
257.5
300
257.5
257
257.5
244
257.5
218
258
Sheet1
Column1S&P 2018 Median A Rated Hospital
2016351258
2017331258
2018300258
2019 Projection257258
2020 Budget244258
2021 Projection218258
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Financial Health – Key Metrics
Average Annual Hospital Based Growth Rate – 4.3%
Average Annual Physician Practice Growth Rate – 13.8%
• Represents NMC investment in access and the transition to a system focused on wellness and prevention. NMC’s FY'20 budget includes direct expenses for Primary Care, Pediatrics, Urgent Care, Community Case Management, Lifestyle Medicine including Health Coaching, RiseVT, and Addiction Services of over $12.5 million.
Chart1
00
00
00
00
00
00
00
Hospital Based
Physician Practice - Access
Expense Growth by Source
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Sheet1
2015$ 1.00Expense Type2018 BudgetPhysician Transfers2019 BudgetOther ChangesPercent Change
2016$ 0.92-8.0%Total Wages51,560,4333,113,60556,382,0751,708,0373.31%
2017$ 0.920.0%Other Expenses57,727,898826,72860,159,6371,605,0112.78%
2018$ 0.953.5%Total Expenses109,288,3313,940,333116,541,7123,313,0483.03%
2019$ 0.972.0%
2020$ 1.035.9%6.64%
Hospital BasedPhysician Practice - AccessTotalPhys GrowthHosp GrowthTotal Growth
FY201477,198,60410,663,31387861917
FY201581,551,85511,947,6639349951812.0%5.6%6.4%
FY201687,279,85015,039,85610231970625.9%7.0%9.4%
FY201790,849,52416,834,26710768379111.9%4.1%5.2%
FY201893,763,35519,610,49711337385216.5%3.2%5.3%
FY2019 Proj98,412,49621,373,5601197860569.0%5.0%5.7%
FY2020 Bud99,227,09423,161,1181223882128.4%0.8%2.2%
Cumulative Avg13.8%4.3%5.7%
Sheet1
FY2014FY2014
FY2015FY2015
FY2016FY2016
FY2017FY2017
FY2018FY2018
FY2019 ProjFY2019 Proj
FY2020 BudFY2020 Bud
Hospital Based
Physician Practice - Access
Expense Growth by Source
77198604
10663313
81551855
11947663
87279850
15039856
90849524
16834267
93763355
19610497
98412496
21373560
99227094
23161118
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Financial Health – Key Metrics
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Financial Overview
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Financial Overview
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Cost Drivers & Cost Containment
New expenses have been identified related to the Meditech Ambulatory implementation.
These difference between the originally submitted FY'20 budget and the revised FY'20 budget are as follows:
Clinical Staff to Support Providers – $581,592
Health Information Management Coding Staff – $352,302
Information Technology Support – $78,544
Interfaces, Licenses, and Support Fees – $248,000
All Other – $262,264
Total new expenses - $1,522,702
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Cost Drivers & Cost ContainmentsNMC’s Operational Improvement Plan --Significant Cost Reductions in FY’19 & FY’20 include:
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Financial Overview – FY'2019
Breakdown of $9.5 million net operating income unfavorable variance:• Meditech Ambulatory Implementation on May 1 (NPR) – $3.3 million• Self-insured Health Claims (Expense) – $1.7 million• Surgeon away on Family Medical Leave (NPR) – $1.2 million• Locum Physicians, Interim Management/Consulting (Expense) – $1.3 million
As of April 2019, NMC was on track to achieve our Net Patient Revenue for FY'19.
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Capital Budget PlansCertificates of Need Status:
• NMC recently closed the Medical Office Building CON;
• NMC anticipates closing the Private Inpatient Rooms & Medical Clinics CON in November of 2019;
• NMC has been granted expedited review for our Emergency Department Modernization Project – Total Cost $7,616,215
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Capital Budget Plans
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Long Range Financial Outlook
These margins reflect what would happen if NMC did nothing to improve them. They are not acceptable or sustainable. Through strategic planning with our Board, Leadership, and Medical Staff leaders, we are redefining our mix of programs and services to ensure sustainability.
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Historical Compliance with Budget Orders
3.20%
4.64%5.90%
2.39%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Requested
AverageAnnualIncrease
Range of Vermont Hospitals
Median
NMC
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Historical Compliance with Budget Orders
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Historical Compliance with Budget Orders
Chart1
Copley HospitalCopley Hospital
Northwestern Medical CenterNorthwestern Medical Center
Average of Remaining HospitalsAverage of Remaining Hospitals
Current Price of Procedure with $1.00 Price in FY2015
FY2020 Price of Procedure with $1.00 Price in FY2015
Price Comparison - FY'2015 to Present
0.9332348256
1.0246918385
0.971244
1.028547396
1.1518083826
1.1825553111
Cost per Adj Admit
Act 2016Act 2017Proj 2017Bud 2018Bud2018 RankGrowth Rate
COPLEY HOSPITAL11,057.2812,007.8013,152.5513,511.2836.909%
GIFFORD MEDICAL CENTER10,386.2010,611.0710,892.6811,386.6673.113%
GRACE COTTAGE HOSPITAL7,513.517,367.208,083.708,211.66123.006%
MT. ASCUTNEY HOSPITAL & HEALTH CTR6,272.887,258.617,501.647,666.89136.918%
NORTH COUNTRY HOSPITAL8,655.288,963.089,527.369,688.2093.829%
NORTHEASTERN VT REGIONAL HOSPITAL12,262.6410,946.9211,794.2412,217.105-0.124%
PORTER MEDICAL CENTER11,791.0612,172.3912,755.3712,843.7742.892%
SPRINGFIELD HOSPITAL6,157.775,636.026,068.946,860.55143.668%
BRATTLEBORO MEMORIAL HOSPITAL9,021.419,285.059,590.7810,600.8785.525%
NORTHWESTERN MEDICAL CENTER8,821.628,739.268,797.778,843.50110.083%
CENTRAL VERMONT MEDICAL CENTER11,217.2511,404.8111,393.3411,581.2561.070%
RUTLAND REGIONAL MEDICAL CENTER13,551.7313,610.8914,792.6215,254.0924.023%
SOUTHWESTERN VT MEDICAL CENTER9,338.998,705.119,294.449,421.82100.295%
THE UNIVERSITY OF VERMONT MEDICAL CENTER17,035.7716,897.0819,020.5119,604.9114.794%
Median9,8639,94810,24210,994
Maximum17,03616,89719,02119,605
NMC8,8228,7398,7988,843
Minimum6,1585,6366,0696,861
Average Annual Growth Rate
NMC0.083%
Median3.686%
Median9,862.609,948.0610,241.7310,993.77
Range of Vermont Hospitals10,878.0011,261.0612,951.5712,744.37
NMC8,821.628,739.268,797.778,843.50
Minimum6,157.775,636.026,068.946,860.55
Hidden Base6,157.775,636.026,068.946,860.55
Cost per Adj Admit
Hidden Base
Minimum
Median
NMC
Range of Vermont Hospitals
FTEs per 100 Adj Disch
Act 2016Act 2017Proj 2017Bud 2018Bud2018 RankGrowth Rate
COPLEY HOSPITAL6.196.396.816.8843.581%
GIFFORD MEDICAL CENTER6.816.215.875.768-5.444%
GRACE COTTAGE HOSPITAL5.315.125.595.7092.385%
MT. ASCUTNEY HOSPITAL & HEALTH CTR3.924.514.654.41134.036%
NORTH COUNTRY HOSPITAL4.754.755.185.28103.572%
NORTHEASTERN VT REGIONAL HOSPITAL7.396.156.536.646-3.514%
PORTER MEDICAL CENTER6.666.336.587.0431.880%
SPRINGFIELD HOSPITAL3.303.073.303.59142.867%
BRATTLEBORO MEMORIAL HOSPITAL4.865.135.135.9977.211%
NORTHWESTERN MEDICAL CENTER5.135.065.174.9611-1.116%
CENTRAL VERMONT MEDICAL CENTER7.046.866.976.825-1.073%
RUTLAND REGIONAL MEDICAL CENTER6.776.947.517.7124.394%
SOUTHWESTERN VT MEDICAL CENTER4.984.364.644.5112-3.232%
THE UNIVERSITY OF VERMONT MEDICAL CENTER8.778.529.219.5913.024%
Median65.645.736
Maximum98.529.2110
NMC55.065.175
Minimum33.073.304
Average Annual Growth Rate
NMC-1.116%
Median0.720%
Median6666
Range of Vermont Hospitals5566
NMC5555
Minimum3334
Hidden Base3334
FTEs per 100 Adj Disch
Act 2016Act 2016Act 2016Act 2016Act 2016
Act 2017Act 2017Act 2017Act 2017Act 2017
Proj 2017Proj 2017Proj 2017Proj 2017Proj 2017
Bud 2018Bud 2018Bud 2018Bud 2018Bud 2018
Hidden Base
Minimum
Median
NMC
Range of Vermont Hospitals
Rate Increase v1
Hospital Rate Increases2011201220132014201520162017Total Since 2011Average Annual IncreaseDateMaxMinNMCMedian
Grace Cottage Hospital5.50%10.60%6.50%6.00%5.00%5.00%5.00%52.49%6.21%-8.00%10.60%FY20116.50%1.80%1.80%5.50%1.8% (-3.7%)
Porter Medical Center6.50%10.30%5.00%6.00%5.00%5.30%5.30%52.22%6.19%FY201210.60%3.50%6.30%6.15%6.3% (0.15%)
Gifford Medical Center5.80%7.00%6.10%7.60%5.60%5.80%3.90%50.02%5.97%FY201310.30%2.90%2.90%6.05%2.9% (-3.15%)
UVM Medical Center5.70%5.90%9.40%4.40%7.80%6.00%2.45%49.67%5.93%FY20148.00%3.90%3.90%5.90%3.9% (-2%)
North Country Hospital4.40%5.10%4.60%8.00%8.30%4.80%3.50%45.61%5.51%FY20158.40%0.00%6.40%5.23%6.4% (1.175%)
Southwestern VT Medical Center6.00%5.50%6.80%7.20%4.50%3.80%3.40%43.60%5.31%FY20166.00%-8.00%-8.00%4.25%-8% (-12.25%)
Rutland Regional Medical Center5.50%9.80%10.30%4.80%8.40%3.70%-5.10%42.85%5.23%FY20175.30%-5.10%0.00%3.45%0% (-3.45%)
Northeastern VT Regional Hospital4.80%7.50%6.50%5.60%5.00%3.20%3.80%42.51%5.19%Avg Annual6.21%1.79%1.79%5.21%1.79% (-3.42%)
Central Vermont Medical Center5.20%6.00%5.00%6.90%5.90%4.70%2.45%42.18%5.16%
Mount Ascutney Hospital6.50%3.50%7.00%5.00%3.22%5.70%4.90%41.74%5.11%
Brattleboro Memorial Hospital6.00%7.40%5.20%5.80%2.70%-1.40%3.50%32.80%4.14%
Springfield Hospital3.80%5.80%6.00%4.60%5.45%2.80%0.00%32.00%4.05%
Copley Hospital5.50%6.00%3.00%6.00%0.00%-4.00%0.00%17.21%2.29%
Northwestern Medical Center1.80%6.30%2.90%3.90%6.40%-8.00%0.00%13.25%1.79%0.50%
Health Connect – Blue Cross7.70%5.90%7.30%
Health Connect – MVP15.30%3.00%8.80%
Rate Increase v1
Max
Min
NMC
-3.70%
+0.15%
-3.15%
-2.00%
+1.18%
-12.25%
-3.45%
-3.42%
Rate Increase
2011201220132014201520162017201820192020 RequestedAverage Annual IncreaseBud2019 RankGrowth Rate
Grace Cottage Hospital5.50%10.60%6.50%6.00%5.00%5.00%5.00%5.00%3.20%3.20%5.48%5165.234%
Porter Medical Center6.50%10.30%5.00%6.00%5.00%5.30%5.30%3.00%2.80%0.00%4.89%9161.175%7pm fri - 7pm sun4
Gifford Medical Center5.80%7.00%6.10%7.60%5.60%5.80%3.90%4.00%2.75%5.38%10160.316%all other times5
UVM Medical Center5.70%5.90%9.40%4.40%7.80%6.00%2.45%5.00%2.50%3.00%5.19%12161.079%
North Country Hospital4.40%5.10%4.60%8.00%8.30%4.80%3.50%5.00%3.60%4.25%5.14%4158.394%
Southwestern VT Medical Center6.00%5.50%6.80%7.20%4.50%3.80%3.40%2.90%3.00%2.80%4.58%6152.199%
Rutland Regional Medical Center5.50%9.80%10.30%4.80%8.40%3.70%-5.10%4.90%2.60%2.65%4.67%11153.741%
Northeastern VT Regional Hospital4.80%7.50%6.50%5.60%5.00%5.20%3.80%3.20%3.00%1.60%4.61%6154.420%
Central Vermont Medical Center5.20%6.00%5.00%6.90%5.90%4.70%2.45%0.70%2.30%3.00%4.20%13146.470%
Mount Ascutney Hospital6.50%3.50%7.00%5.00%3.22%5.70%4.90%4.90%2.90%3.20%4.67%8152.992%
Brattleboro Memorial Hospital6.00%7.40%5.20%5.80%2.70%-1.40%3.50%5.70%3.90%3.40%4.19%3145.844%
Springfield Hospital3.80%5.80%6.00%4.60%5.45%2.80%0.00%6.50%5.00%5.00%4.48%1147.604%
Copley Hospital5.50%6.00%3.00%6.00%0.00%-4.00%-3.70%-3.40%4.50%9.80%2.27%2113.944%
Northwestern Medical Center1.80%6.30%2.90%3.90%6.40%-8.00%0.00%3.50%2.00%5.90%2.39%14119.559%
Median5.50%6.15%6.05%5.90%5.23%4.75%3.45%4.45%2.95%3.20%4.64%153.37%
Maximum6.50%10.60%10.30%8.00%8.40%6.00%5.30%6.50%5.00%9.80%5.48%165.23%
NMC6.50%3.50%7.00%5.00%3.22%5.70%4.90%4.90%2.90%3.20%4.67%119.56%
Minimum1.80%3.50%2.90%3.90%0.00%-8.00%-5.10%-3.40%2.00%0.00%2.27%113.94%
Average Annual Growth Rate
NMC-8.37%
Median2.37%
Median5.50%6.15%6.05%5.90%5.23%4.75%3.45%4.45%2.95%3.20%4.64%
Range of Vermont Hospitals4.70%7.10%7.40%4.10%8.40%14.00%10.40%9.90%3.00%9.80%3.22%
NMC1.80%6.30%2.90%3.90%6.40%-8.00%0.00%3.50%2.00%5.90%2.39%
Minimum1.80%3.50%2.90%3.90%0.00%-8.00%-5.10%-3.40%2.00%0.00%2.27%
Hidden Base1.80%3.50%2.90%3.90%0.00%-8.00%-5.10%-3.40%2.00%0.00%2.27%
Northwestern Medical Center2.39%
Copley Hospital2.27%
HospitalAverage Annual Increase
Copley Hospital2.27%
Northwestern Medical Center2.39%
Brattleboro Memorial Hospital4.19%
Central Vermont Medical Center4.20%
Springfield Hospital4.48%
Southwestern VT Medical Center4.58%
Northeastern VT Regional Hospital4.61%
Rutland Regional Medical Center4.67%281.342
Mount Ascutney Hospital4.67%334.773
Porter Medical Center4.89%1.1899147657
North Country Hospital5.14%
UVM Medical Center5.19%
Gifford Medical Center5.38%
Grace Cottage Hospital5.48%
HospitalCurrent Price of Procedure with $1.00 Price in FY2015FY2020 Price of Procedure with $1.00 Price in FY20151.10
Copley Hospital$ 0.93$ 1.021.101.09
Northwestern Medical Center$ 0.97$ 1.03
Average of Remaining Hospitals$ 1.15$ 1.18
Rutland Regional Medical Center$ 1.06$ 1.09
Central Vermont Medical Center$ 1.11$ 1.14
Brattleboro Memorial Hospital$ 1.12$ 1.16
Southwestern VT Medical Center$ 1.14$ 1.17
Springfield Hospital$ 1.15$ 1.21
Northeastern VT Regional Hospital$ 1.16$ 1.18
UVM Medical Center$ 1.17$ 1.20
Porter Medical Center$ 1.17$ 1.17
Gifford Medical Center$ 1.17$ 1.17
North Country Hospital$ 1.18$ 1.23
Grace Cottage Hospital$ 1.19$ 1.23
Mount Ascutney Hospital$ 1.20$ 1.24
Rate Increase
Hidden Base
Minimum
Median
NMC
Range of Vermont Hospitals
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Editing this shape or saving this workbook into a different file format will permanently break the chart.
Current Price of Procedure with $1.00 Price in FY2015
FY2020 Price of Procedure with $1.00 Price in FY2015
Price Comparison - FY2015 to Present
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We have reached the tipping point.You have held our feet to the fire:• Our rates have been reduced;• Our days cash on hand have been drawn down;• We have cut expenses while fighting to preserve access;• We are all in on the shift to 70% capitation by 2022, yet we are concerned
about Vermont’s ability to get there.
We are now at the tipping point where further financial pressure jeopardizes:• Access to care in our community;• Economics in our community;• Investment in prevention for future well-being of our community;• The transformation of the healthcare system.
This budget is appropriate, transparent and requires approval as submitted.
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