MetroHealth presentation

MetroHealth County Council Briefing May 19, 2011

Goals for Today’s Discussion
Provide context on public, safety-net hospitals
Provide background on current situation at MetroHealth
Describe mission and capabilities
Provide facts about role in providing healthcare in the County
Recount actions to strengthen financial condition
Look forward to a future with health reform
Inform you of the future challenges we face
Gain your support so that we can stay focused on our mission
We welcome questions afterwards

US Public Hospitals Today
Serve a critical role in their communities, ensuring access to care for patients who are uninsured or are covered by Medicaid or Medicare
Public hospitals (National Association of Public Hospitals) are major providers of care in the nation
1 out of 4 emergency room patients 1 out of 4 babies born Just 2% of all hospital beds provide all this: 1/3 of all outpatient visits 1 out of 5 people hospitalized 1/2 of all Level 1 trauma centers 2/3 of burn care beds Train 20% of all medical residents Operate with lower margins than the rest of the hospital industry
In 1981, half of NAPH members were traditional City or county owned hospitals. Less than 10% retain that structure today

A Tale of Four Cities
St. Vincent’s – closed (April 2010)
Two bankruptcies in span of five years
One of two New York City academic medical centers
Uncompensated charity care, rising costs drove closure
Detroit Medical Center -- purchased by a for-profit healthcare management company (Dec 2010)
Michigan’s largest charity care provider, Detroit’s largest employer
Bailed out in 2003, struggled to remain in black for past seven years
Need to renew facilities in the face of limited capital drove sale
Purchased by Vanguard Health Systems ($3.4B 2009 revenue)
Cook County Hospital System – restructuring (2011)
Plans to close a hospital June 1 st , Oak Forest Hospital to convert into an outpatient center
Provides $500 million in free care to more than 800,000 patients
Illinois’ largest provider of health care to the poor and uninsured
Grady Hospital – future in doubt after years of restructuring
Drowning in debt, In need of $200 million to remain solvent
Loss of local and federal funding forcing layoffs and service cuts
Atlanta’s largest public hospital, 80% of patients are Self Pay or Medicaid

Significant Number of Public Hospitals Closed in Past Decade
Why Public Hospitals Close
Growing uninsured and underinsured population
Aggressive competition for insured patients and services
Urban Emergency Departments more likely to close
Managed care rates below better-networked systems
Declines in Medicaid reimbursement rates
Public support limited by local budget stress
Escalating cost of technology, personnel, supplies
Margin erosion in highly fixed cost operation
Required upgrades in facilities and technology …
… With limited access to capital

v Cuyahoga County Provides Average Support Source: America’s Public Hospitals and Health Systems, 2009: Results from the Annual NAPH Hospital Characteristics Survey Grady Health System Broward Health-Broward General Medical Center UMDN J-University Hospital LAC-LAC+USC Medical Center Alameda County Medical Center University Health System at San Antonio LAC-Harbor/UCL A Medical Center LAC-Olive View/UCLA Medical Center Parkland Health & Hospital System Harris County Hospital District NYC HHC-Bellevue Hospital Center Santa Clara Valley Health & Hospital System JPS Health Network University Hospital, The University of New Mexico Health Jackson Health System University Medical Center of El Paso The MetroHealth System The Health and Hospital Corporation of Marion County San Francisco General Hospital Cook County HHS-The John H. Stroger, Jr. Hospital of Cook Boston Medical Center Average of 91 NAPH Hospitals 2009 State/Local Support as % of Charity Care Charges For top 20 NAPH Member Hospitals Receiving Gov’t Subsidiary (+MH)

Value of County Subsidy Declined as Charity Care Grew MHS County Subsidy Trend 1981 - 2010 2005 2000 1995 1990 1985 2010 1981 County Subsidy ($ in 000’s) County Subsidy as % of Charity Care

Mission
Academic Health Care System
Committed to Community
Saving Lives, Restoring Health, Promoting Wellness
Outstanding, Life-long Care
Accessible to All
MetroHealth Capabilities
County Owned, 6,400 Employees (#14 in County)
500 Employed Physicians, All SOM Faculty
Engaged in Teaching (CWRU, OU, Residents)
Significant Clinical/Behavioral Research
Strength in Primary Care, Depth in Specialties
Nursing Magnet Status (Top 5%)
750+ bed Acute Care Medical Center
ED with 100,000 Visit Capacity
17 Ambulatory Locations in County
Level I Trauma, Burn Center, LifeFlight, NOTS
Senior Health and Wellness Center
Skilled Nursing Care
Integrated EPIC Medical Record Throughout
Accountable Care Organization Pilot Underway
MetroHealth: Mission-Driven Healthcare Provider 175 th Anniversary 2011

Highest Quality Healthcare
Nationally recognized in trauma, maternal-fetal medicine, burns, neonatal intensive care, pediatrics, cardiology and radiology
Attracts $37.5 million research dollars

MetroHealth is Linchpin of the County’s Safety Net Provider Inpatient Discharges (2009) Uninsured/Medicaid Cleveland Clinic Health System 151,286 18% University Hospitals Health System 72,867 24% MetroHealth 25,557 53% Parma Community General Hospital 15,193 9% St. Vincent Charity Hospital 8,028 27%

Uninsured Visits 2010 200,000 visits by uninsured patients in 2010, an increase of 25% since 2008 45% of County’s uninsured visits originate outside Cleveland: 42% growth in two years

County H&HS Subsidy 5.6% Ohio HCAP GAP $51m Medicare $173m 24.3% Uninsured $119m 16.7% Medicaid $243m 34.1% Commercial $177.1m 24.9% 2006-2010 Change by Payor Uninsured Support Total $712.1 million MetroHealth 2010 Operating Expense by Payor Deterioration in Payor Mix Threatens Survival – HHS Levy Subsidy Inadequate Serving insured patients is a mandatory funding source

Getting Into the Black has Been a Priority …
Historically System struggled to break-even; financial distress grew into 2008
Board demanded swift action to avert financial crisis …
… And directed Transformation to address uncertain future
2006 Operating Income includes additional one time payment from County
Transformation began March 2008 with $11.3 million operating loss YTD
Operating Income ($11.9) ($8.2) $3.0 $10.5 ($17.3) $8.7 * $37.7 $23.8

Consulting Investments for Operational and Financial Gains
MetroHealth needed to adopt a business-based approach
Critical issues identified:
Revenue cycle --Hospital operations
Medical home --Supply chain
Ambulatory operations --Campus renewal
Network development
Managed carefully: business case/negotiated/phased/audited
Dramatic knowledge transfer to MetroHealth people
$25.5 million short-term investment for $68 million annually in long-term viability

Along with Increasing Solvency; Bought Us Time
Key Actions
Refinancing of capital structure
Build America Bonds issued
Restrictive covenants relaxed
Maturities extended
Cleaned up balance sheets to enhance transparency
Upgrades from rating agencies
Prepared to invest to meet patient needs
Balance Sheet Strength

Health Reform Promises Increased Coverage but at Lower Rates Future ability to shift cost limited Downward Pressure On Rates Coverage Expansion
Disproportionate Share Hospital (DSH) payment reduction
Value based purchasing program in Medicare
State/Federal Budget Pressures cause rate reductions
Reimbursement methodology changes, e.g. hospital acquired infections, bundled payments, etc.
50-70% enrolled in Medicaid or
Medicaid-like health exchanges
Affordable Care Act (2014) -- Impact on MetroHealth Net Revenue Impact

Strategic Imperatives for Long-Term Viability
Increase attractiveness to insured patients
Health care increasingly delivered in ambulatory setting -- patient preference, technology evolution, lower cost, etc.
Continue transformation of operations for service and quality improvement and convenience for patients
Prepare for influx of ACA patients; develop a delivery model that serves them effectively and efficiently
Reduce cost to be sustainable at new lower reimbursement rates
We have made real progress with our Patient-Centered Medical Home
Inpatient admissions 34.8% lower than patients not enrolled in program
Emergency Department visits also 6.8% lower than patients not enrolled in this program

Ambulatory Success Drives System Health Hospital Inpatient Admissions and Outpatient Visits Source: American Hospital Association, 2005; US Census Bureau: National and State Population Estimates, July 1, 2005
Healthcare increasingly delivered in ambulatory setting
Patient preference
Convenience
Technology migration
Payor preference
Lower cost
Outpatient Visits Inpatient Admissions

Exploring All Options To Sustain the Mission Average Age of Plant, 2010
$580 million to reach “A” rating benchmarks
$400 -- $600 million for new 300-400 bed hospital
Recent engineering analysis assessed facility gaps
63% of buildings beyond useful life
Significant investment necessary to restore original condition
Renewal a valuable opportunity
Upgrade to modern functional spec
Size to need and purpose
Capture energy, maintenance, operations efficiencies
Operations contributing capital to fund renewal
Years

Our Mission is Vital to County’s Well-Being
Sustainability threatened
Our mission demands we provide the uninsured with high quality healthcare
As the safety net we are committed to provide access to all
MetroHealth performs its mission effectively and efficiently
Our recent turnaround bought us time …
… But the fundamental problem is still with us ( “no margin, no mission” )
We rely on positive margin and County subsidy to support that mission
Health reform is not a silver bullet
This condition demands further restructuring and renewal …
Restructuring of staff, support expenses to refocused mission
Network development of more efficient service locations
Campus renewal to focus acute services and reduce fixed costs
Or ???

Your Support will Safeguard Access to Medical Care for the Uninsured of Cuyahoga County
Support our mission and role in the community
Focus on passing the Levy in 2012 (10 months from now)
Preserve MetroHealth’s subsidy at current levels
Engage and support MetroHealth’s renewal plan for 2014
Ambulatory network development and main campus renewal
Engage capital need and help raise funds
Link access and economic development (in 2014)
Address governance issues through the MetroHealth Board
Appoint/reappoint to current openings and support confirmation
Plan for impending retirements/departures
Formalize dialogue through H&HS Committee

Appendix

Search Process (example) ~200 Prospects 4 Candidates 3 Candidates Final Candidate Finalist Search Firm Panel Interview Campus Visit
Physician Chair
CMO
Board member
5 administrators
3 PCU Executive Directors (physicians)
1 administrator
Final Review
External References
RSR Reference Report
Campus Visit
7 department chairs
2 administrators
Board Panel: 5 members

Note: Excludes Compliance The MetroHealth System April 1, 2011 Mark J. Moran President and CEO Daniel Lewis Vice President, HR Alfred F. Connors MD Chief Medical Officer Sharon Kelly Chief Financial Officer John McInally Vice President Information Services Phyllis Marino Vice President Marketing & Communications John Corlett Vice President, Government & Community Relations Kate Brown Vice President, Development Ronald G. Fountain Board of Trustees Thomas Goins Vice President Construction/Facilities Edward Hills, DDS Chief Operating Officer Thomas Onusko Sr. Vice President General Counsel Building Experienced, Resilient Organization

Engaged Governance William S. Gaskill Vice Chair 30 3/15/12 Audit, Finance (Chair) Legal and Government Relations, Personnel, Space and Facilities, Strategic Planning
Donna Kelly Rego
3/11/13
Finance,
Personnel,
Strategic Planning (Chair)
Brenda Y. Tyrrell, Ph.D
Secretary
3/2/11
Finance, Legal and Government Relations, Personnel,
Strategic Planning
Polly Clemo 15 3/4/15 Legal and Government Relations, Quality and Safety, Space and Facilities Terence Monnolly 5 3/3/16 Audit, Space and Facilities (Chair) Brian Murphy 1 3/2/11 Strategic Planning Thomas M. McDonald 2 3/5/14 Audit (Chair), Space and Facilities, Quality and Safety John Moss 1 3/3/16 Finance, Legal and Government Relations, Space and Facilities Charles Spain 15 3/5/14 Legal and Government Relations, Quality and Safety (Chair) Ronald G. Fountain, EDM Chair 13 3/5/13 Ex officio all committees The MetroHealth System Board of County Hospital Trustees (2010)
ORC 339 County Hospital
“… preservation of public health…”
“… care of indigent sick and disabled…”
Non-partisan
Governed by Board of Trustees
Employ administrator
Control all funds
Define mission and strategic direction
Approve contracts and capital expenditures
Monitor System performance
Represent public interest
Transparency
Stewardship
Balance
Integrity
Institutional strength
Pursue role actively
Committee roles
Monthly cadence
Regular retreats
Exemplary citizen leaders
Volunteers
Qualified
Committed
Principled

MetroHealth Select Benefits County Financially
Narrow network option provides healthcare through MetroHealth
Started with Cuyahoga County employees in 2008
County Human Resources Workgroup estimated savings in benefit costs of $3,000-$4,000 per year per employee

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MetroHealth presentation

by medcitynews on Aug 07, 2011

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