2020 TN HFMA Virtual Fall Institute Leadership for a Pandemic Bill Griffin Executive Vice President and Chief Financial Officer Baptist Memorial Health Care Corporation
BAPTIST MEMORIAL HEALTH CARE CORPORATION 22 Hospital 800+ Employed physicians Union City 18,500 employees Arkansas Huntington NEA Baptist Tipton Tennessee Crittenden Collierville Memphis Hospitals: Desoto Booneville Memphis Women’s Union North County Children’s Mississippi Rehabilitation Crestwyn Behavioral Restorative Calhoun Golden Triangle Attala Yazoo Leake Mississippi Jackson
POLLING QUESTION #1 • Who is your favorite Star Trek Captain? 1. Captain James T. Kirk (William Shatner) 2. Captain James T. Kirk (Chris Pines) 3. Captain Jean Luc Picard 4. Captain Benjamin Sisco 5. Captain Catherine Janeway 6. Captain Jonathan Archer 7. Captain Christopher Pike
IN THE BEGINNING…………….. • As early as December/January, we were collectively discussing the threat being seen in China and Italy and what it could mean to us. • How do we address a “scorched earth” financial scenario if we were to experience long-term shut down like those in other countries? • The immediate challenge we concluded was to act quickly and decisively to prepare for the worst possible scenario. • Collectively, the finance and operations leadership developed responsive strategies.
FINANCE STRATEGIES
Finance Strategies “URGENCY IS NOT HASTE, IT IS PURPOSEFUL ACTION.” “UNDERSTANDING WHAT MUST BE DONE AND ACTING WITH A SENSE OF URGENCY ACHIEVES THE BEST RESULT ” Three immediate finance priorities were identified: 1. Ensure ongoing liquidity by protecting cash flow 2. Manage the potential loss of revenues from reduced services 3. Restore pre-COVID financial performance
Finance Strategies Anticipation of a mandatory cease in elective procedures could result in 40% to 60% reductions in net revenues. Three month 40% impact = $290,000,000 NPR loss and cash flow disruption Average bi-weekly payroll = $40,000,000; Average bi-weekly AP = $40,000,000 Avoid liquidating the corporate investment portfolio Cash Flow CHALLENGE???? YES!
Finance Strategies Government Stimulus Relief to the Rescue - with lot’s of unknowns: ▪ Stimulus payments from the government and expense recovery from the Federal Emergency Management Agency (FEMA) ▪ Little guidance initially available as to how to get the funding and criteria to utilize the monies. ▪ Complexities in the process included: ▪ How to Apply ▪ How to Attest ▪ Internal management of fund flow / inventory of the relief monies received ▪ How to account for the funds in the general ledger ▪ Bank/investment management ▪ Ongoing reconciliation of the monies received ▪ Concern over being able to provide a clear & concise accounting of all the various funding's and usage when it came time to report to the governments. ▪ And…consultants emphasizing the complexities and offering to aid for $$$$$$’s
Finance Strategies • Realizing that managing all the relief funding was going to be an organizational challenge different than anything we had faced before I quickly decided I needed an internal Finance Super Team……………. I needed The Avengers
Finance Strategies From the book “ Leadership in the Era of Economic Uncertainty ” By Ram Charan Six essential Leadership Traits for Hard Times 1. Honesty & Credibility 2. Ability to inspire (resolve, fearlessness and optimism) 3. Real-time connection with Reality Reality is a moving target • • Continuous monitoring of change with ground-level intelligence • Constantly updating your reactions and responses 4. Realism tempered with Optimism Understand and accept the magnitude of the challenge • • Few problems are unsolvable Focus the Team on vision • • Leadership is a Performing Art 5. Manage with Intensity Hands=on participation • In the Foxhole • 6. Boldness in Building the Future
Finance Strategies My Avenger’s Super Powers Competency: “One who is routinely true to their self and ➢ Extreme organizational skills others is one who can be trusted and relied upon in a crisis situation” ➢ Adaptability ➢ Detail obsession “Success in a difficult mission is often due to ➢ Rules focused those who acted when action was required ➢ Fearless in challenging and questioning and when others might not recognize reason ➢ Humble Professional to take action” ➢ Team Player Personal Integrity (in word, deed, idea and principle) “The cooperative, collaborative and corroborative efforts of an entire team will Intellectual Honesty most likely result in mission success” Great Communicator
Finance Strategies Where did I find the Super Heroes that became my Avengers ?????????????? New department…. “Department of Special Reimbursement” Established daily meeting with the Director of Special Reimbursement to review status After Assembling the Avengers, we tackled the earlier mentioned challenge of cash liquidity
Finance Strategies LIQUIDITY : How did we ensure that we could meet the potential short-term cash demands without dissolving the investment portfolio? Answer: ❖ New Bank Line of Credit ❖ Medicare Accelerated Advance Payments ❖ Deferred Employer Payroll Tax • All are basically loans and must be repaid at some point
POLLING QUESTION #2 • A recent poll ranked the songs shown below as the top 5 Beatles songs of all time. Which of these 5 would you rank as #1? 1. Please, Please Me 2. Penny Lane 3. A Day in the Life 4. She Loves You 5. Strawberry Fields
Finance Strategies What is the Provider Relief Fund? The Provider Relief Fund supports healthcare providers in the battle against the COVID-19 pandemic. Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act (PPPCHE), the federal government has allocated $175 billion in payments to be distributed through the Provider Relief Fund (PRF). Qualified providers of health care, services, and support may receive Provider Relief Fund payments for healthcare-related expenses or lost revenue due to COVID-19 . Separately, the COVID-19 Uninsured Program reimburses providers for testing and treating uninsured individuals with COVID- 19. These distributions do not need to be repaid to the US government, assuming providers comply with the terms and conditions.
Finance Strategies Phase 1 General Distribution • $30 Billion General Distribution • $20 Billion General Distribution Select Targeted Distributions • COVID-19 High-Impact Area Distribution ($22 Billion) • Rural Distribution ($11.3 Billion) • Allocation for Skilled Nursing Facilities (SNFs) ($7.4 Billion) • Allocation for Indian Health Services (IHS) ($500 million) • Allocation for Safety Net Hospitals ($14.7 Billion) • FEMA Expense Reimbursement
Finance Strategies Managing and Tracking the Stimulus Relief Payments ▪ Multiple payments received for multiple entities over multiple months ▪ Early desire to: ▪ Thoroughly understanding each funding opportunity and its application to the organization ❖ Resulted in a 50+ page log documenting descriptions, process (including attestation method and dates), reporting requirement and decisions for every funding opportunity Track every fund payment in detail….amount, entity, date, method of calculation, ▪ recalculation, reporting, usage. ❖ Resulted in a very detailed financial report that is a living document ▪ Account for every fund payment separately in the Balance Sheets as Deferred Revenue until utilized/recognized in the Income Statement ▪ Maintain separation by fund type in the bank account (utilized our investment portfolio) ▪ RECONCILE ALL THESE COMPONENTS CONSTANTLY!!!!!!!
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