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  • Note – this is how we have presented FY08 bed changes but the numbers do not includes the decreases CVC is net 43 beds net increase – add 48 in CVC, close 10 on 4D due to connector and renovation, later reopen 5 on 4D in Jan 8D opens 10 in Jan, 10 in April – possibility of being used temporarily for 5D during renovation 848 beds available July-Jan (net 38: add CVC 48, lose 10 4DN) 873 beds available as of early April
  • Greg Joyce is sending tally of Ors, treatment rooms, etc. for CVC – to be entered
  • CRC beds decrease from 12 to 10 in March. CVC net bed increase of 43 mid-June FY07; 20 beds 8D in FY08 – use as swing spce for 5D etc. renovations, rather than add staff in spring 2007 for opening FY08.
  • To be updated
  • Hospitals

    1. 1. Hospitals & Health Centers FY08 Financial Plan Operating Budget Presented to: Hospitals & Health Centers Executive Board May 29, 2007 Presented by: Tony Denton, Senior Associate Director and COO, HHC Dave Morlock, Senior Associate Director and CFO, HHC
    2. 2. FY2008 Objectives <ul><li>Deliver safe, efficient and high quality care </li></ul><ul><li>Increase access and capacity to permit growth </li></ul><ul><li>Market-competitive pricing strategy </li></ul><ul><li>Market-competitive salary program </li></ul><ul><li>Manage to 3% margin, with emphasis on revenue maximization and cost effectiveness and productivity </li></ul><ul><li>Manage culture and expectations regarding high occupancy </li></ul>
    3. 3. FY2008 Budget Risks and Challenges <ul><li>Aggressive activity projections, especially in targeted areas </li></ul><ul><li>Managing within constrained volume adjusted budget </li></ul><ul><li>Large expense increases due to depreciation of major projects and accounting rule change </li></ul><ul><li>Continued changes in payer climate </li></ul><ul><li>CareLink implementation </li></ul><ul><li>Ambulatory Care / Faculty Group Practice Model implementation </li></ul>
    4. 4. Future Capacity: Managing Adult Inpatient Growth <ul><li>FY2008 </li></ul><ul><ul><li>June-July, 2007: CVC/UH net 37 bed increase </li></ul></ul><ul><ul><li>January, 2008: Neuro-ICU expansion, 6 bed increase </li></ul></ul><ul><li>FY2009 </li></ul><ul><ul><li>July, 2008: 8D ICU, 20 bed expansion </li></ul></ul><ul><ul><li>October, 2008: CTSA/7A, 10 beds returned to UH </li></ul></ul><ul><li>14.5% increase in adult physical bed spaces over 18 months </li></ul>
    5. 5. Adding Ancillary Capacity <ul><li>Cardiovascular Center – June 2007 </li></ul><ul><ul><li>8 operating rooms </li></ul></ul><ul><ul><li>2 endovascular procedure rooms </li></ul></ul><ul><ul><li>4 interventional cardiology labs </li></ul></ul><ul><ul><li>5 electrophysiology labs </li></ul></ul><ul><ul><li>36 patient exam rooms, 12 consult rooms, non-invasive suite </li></ul></ul><ul><li>East Ann Arbor Surgery and Medical Procedures Center </li></ul><ul><ul><li>Two additional operating rooms, April and July, 2007 </li></ul></ul><ul><li>University Hospital – January 2008 </li></ul><ul><ul><li>Open two additional operating rooms </li></ul></ul><ul><li>Mott Hospital </li></ul><ul><ul><li>Hours expansion (ORs and MRI) </li></ul></ul><ul><ul><li>Treatment room upgrade </li></ul></ul>
    6. 6. Activity Trends
    7. 7. Pent-up Transfer Case Demand <ul><li>The projected number of year-end ED to ED transfer cancellations is 1,475 cases </li></ul><ul><li>The projected number of year-end hospital to hospital transfer cancellations is 705 cases </li></ul>
    8. 8. Occupancy Rates by Hospital
    9. 9. Operating Revenues and Expenses ($ Millions)
    10. 10. Revenue and Expense per Case (Percent Change)
    11. 11. Revenue Changes – Summary (millions) <ul><li>Operating Revenue, FY 2007 $1,555.0 </li></ul><ul><li>Increase in patient activity 116.8 </li></ul><ul><li>Impact of M-Care moving to BCN rates 7.1 </li></ul><ul><li>Other changes in payer mix (5.1) </li></ul><ul><li>Changes in case mix, DRG payers 2.2 </li></ul><ul><li>Increase in reimbursement rates, all other 60.0 </li></ul><ul><li> Total increase in operating revenue 181.0 </li></ul><ul><li>Operating Revenue, FY 2008 $1,736.0 </li></ul>
    12. 12. Expense Changes – Accounting Rule and Depreciation <ul><li>Significant incremental overhead operating expense will be incurred in relation to two major changes, as follows: </li></ul><ul><li>GASB 45 ($28 million) </li></ul><ul><ul><li>An accounting change for retiree benefits </li></ul></ul><ul><li>Depreciation ($22 million) </li></ul><ul><ul><li>Primarily Cardiovascular Center opening and CareLink </li></ul></ul>
    13. 13. Expense Changes – Salary Program and Inflation <ul><li>Salary Program and Benefits ($33 million) </li></ul><ul><ul><li>3.2% increase for nurses as scheduled in contract </li></ul></ul><ul><ul><li>Other bargaining unit increases as scheduled under contracts </li></ul></ul><ul><ul><li>3% increase for non-bargained for staff </li></ul></ul><ul><ul><li>8% for health insurance premiums </li></ul></ul><ul><ul><li>$2 million labor market pool </li></ul></ul><ul><li>Activity increases ($45 million) </li></ul><ul><ul><li>Resources needed to support aggressive growth assumptions </li></ul></ul><ul><ul><li>Supplies inflation </li></ul></ul>
    14. 14. Expense Changes – Other Additions <ul><li>Clinical faculty, GME ($14 million) </li></ul><ul><li>Care Link operating ($7 million) </li></ul><ul><li>Interest, bad debt, rent, insurance, utilities ($17M) </li></ul><ul><li>Contingency ($13M) </li></ul><ul><li>SMT priorities ($2M) </li></ul><ul><li>Other ($7M) </li></ul><ul><ul><li>Geriatrics clinic relocation, MVN margin impact, one time HealthQuest replacement expenses, PTO liability increase </li></ul></ul>
    15. 15. Management Actions <ul><li>Deliberate and consider allocation of resources to areas critical to achieving increased activity </li></ul><ul><li>Accelerate LEAN initiatives </li></ul><ul><li>Supply chain optimization </li></ul><ul><li>Best practices review </li></ul>