Not-for-Profit Hospital FY 2018 Budget Board of Directors - PowerPoint PPT Presentation

Not-for-Profit Hospital FY 2018 Budget Board of Directors Presentation

Contents  FY 2018 Budget Process  Statistics  Revenue Assumptions  Expense Assumptions  FY 2018 Budget Summary  Challenges/Opportunities 2

FY 2018 Budget: Objectives Budget Development Budget Implementation • Worked with Vice Presidents, • Worked with Executive Hospital Line Managers & Leadership on key assumptions Executive Leadership Team of the budget process to create (ELT) to develop and lead an “What if” scenarios. integrated budget • Provided training on Premier development process. Healthcare Insights for two (2) • Department Directors and weeks to allow budgets to be FY 2018 managers inputted the built. Budget statistics and FTEs requested Presentation • Work with department managers, to run departments and own vice presidents, and executive the budgets developed leadership to track financial • Use historical trend to guide performance against budgets. expense reductions. • Developed support reporting to • Support departments in aid hospital managers in the developing operating plans to maintenance of their budgets. improve efficiency, quality • Will continue ongoing training to and cost effectiveness. ensure that all new and current managers are budget savvy. 3

Contents  Objectives  Budget Development Process  Volume Assumptions  Revenue Assumptions  Expense Assumptions  FY 2018 Budget Summary  Challenges/Opportunities 4

FY 2018 Budget Process 2017 Activity Feb Mar Apr May Jun Jul Aug Sep Budget Kickoff Volume Projections Volume Budget Completion Budget Workshop Budget Cuts 1st Round Budget 1st Draft Complete Budget Cuts 2nd Round Budget 2nd Draft Complete Executive Team Preliminary District City Council Presentation Finance Committee Approval Board of Directors' Approval 5

FY 2018 Budget Process Enhancements Year • 2016 2017 • Dec • Jan • Mar • Apr • May • Jun • Jul • Aug • Sep • Solicited Vice Presidents and Department Heads to provide empirical data, as well as detailed assumptions and caveats relating to their volume projections. • Conducted two weeks of Budget Workshops to improve departmental budget preparation and empower budget preparers with the tools necessary to master their budgets and enter the data. • Used historical trend analysis to identify opportunities to reduce expenses. • Incorporated agreed upon Gap Initiatives per the Executive Leadership Team as identified. • Conducted various rounds of budget revisions with managers and executive leadership. 6

Contents  Objectives  Budget Development Process  Volume Assumptions  Revenue Assumptions  Expense Assumptions  FY 2018 Budget Summary  Challenges/Opportunities 7

FY 2018 Budget: Volume Summary • Vice Presidents and 60,000 Department Heads provided FY 2018 50,000 Volume Projections. • All volumes are contingent upon the 40,000 EMERGENCY ROOM implementation of key VISITS initiatives. OUTPATIENT CLINIC 30,000 REFERRED • Volumes are 5.2% OUTPATIENT SAME DAY SURGERY lower for outpatient 20,000 volumes and 8.1% lower for acute 10,000 inpatient volumes and 7.3% lower on aggregate with SNF 0 2015 2016 2017 2018 8 included. Forecast Budget

FY 2018 Budget: Volume Assumptions Assumptions Contingent Volume • Assumes a reduction in • No contingent Volume provided admission due to OB program Medicine eliminations and negative publicity. • Reduction is as follows: 20% in Oct & Nov; 15% in Dec; 10% in Jan; and 5% in Feb from current projections for FY 2017. • Assumes a no volume deterioration for Skilled Nursing Facility. • No contingent volumes provided. • The budget assumes a 10.6% Psychiatry increase in volume. The department plans to add additional beds and operate at 30 beds with an average daily census of 26. Additional physicians to accommodate this increase will be provided via its purchased services contract with a Psych company . • An RFP for a new operator is 9 currently being worked through

FY 2018 Budget: Volume Assumptions Assumptions Contingent Volume • Assumptions provided by • No contingent volumes projected. hospital operations. Emergency Dept. • Assumes a 4% reduction from October –March from FY 2017 projected volumes experience. • Amounts to a 3.1% reduction from FY 2017 on aggregate • Assumes current, negative media coverage of UMC will affect volumes for 6 months. • Assume a 14.40% increase in • No contingent volume provided. Surgery Dept. volume. Primarily due to the However the team will monitor addition of the orthopedic the growth of this department services group which will bring once all renovations are back orthopedic procedures that completed to see growth from are currently being diverted. new physicians added. 10

FY 2018 Budget: Volume Assumptions Assumptions Contingent Volume • Assumes inpatient volume • No contingent volume provided decreases in Ultrasound based • The department purchased some Radiology on OB program removal. new capital equipment, which are • Assumes a 7.5% decrease in awaiting installation, which will increase its outpatient volume outpatient volumes from FY 2017 Forecast due mainly to because they will be able to OB program removal. perform new and/or currently outsourced procedures. However no contingent volumes provided. 11

FY 2018 Budget: Inpatient Volume 2016-2018 Inpatient Volume by Service 6,000 5,000 4,000 2018 Volume Budget 3,000 2017 Fore 2016 2,000 1,000 0 12 Service Line

FY 2018 Budget: Outpatient Volume 2016-2018 Outpatient Volume by Service 70,000 60,000 50,000 40,000 2018 Budget Visits Volume 2017 Visits 2016 Visits 30,000 20,000 10,000 0 EMERGENCY OUTPATIENT REFERRED SAME DAY OBSERVATION ROOM VISITS CLINIC OUTPATIENT SURGERY 2018 Budget Visits 57,526 18,006 1,020 14,646 1,168 2017 Visits 59,305 18,651 2,700 15,512 1,270 2016 Visits 59,997 20,012 2,950 17,226 1,029 13 Service Line

Contents  Objectives  Budget Development Process  Volume Assumptions  Revenue Assumptions  Expense Assumptions  FY 2018 Budget Summary  Challenges/Opportunities 14

FY 2017 Budget: Revenue Summary • Operating Revenue ($125.4 140000 Million) 120000  Based on Operator’s provided 100000 volumes and volume assumptions. 80000  Net Patient Revenue @ $116.0 million. 60000  DSH Revenue @ $0 dollars. 40000  Other Revenue @ $9.5 million. 20000  Includes Children’s Hospital Clinics. $3.0M 0  Includes funding for Hospital FY 2016 FY 2017 FY 2018 Operator’s Contract. $3.2M Actual Forecast Budget 15

FY 2018 Budget: Revenue Assumptions Assumptions Initiatives/Risks • Assumes an overall 5.00% • Clinical documentation initiatives to increase in Charges. enhance charge capturing. • Revenues determined by Charges department volumes of in and outpatient services. • Improper documentation of case • Current trend of Hospital CMI severity. of 1.0700 with a Medicare Case Case Mix • Incomplete patient files at Mix of 1.5900 and a Medicaid Case Mix of .9300. discharge resulting in patients being discharged not coded to be billed. • Assumes a LOS of 5.8 with • Contingent upon timely discharge Length Of Stay Days of 36,064 of acute days and proper case management (LOS) • LOS Calculation = Total execution as detailed in our Inpatient days (acute)/ Total initiatives. Inpatient discharges (acute) • Additional hospitalists to do more rounding for discharging. 16

FY 2018 Budget: Revenue Assumptions Assumptions Initiatives/Risks • Assumes Payor Mix will be • Emphasis needs to be placed on Payor Mix consistent with FY2017 with payor contacts renegotiations. • Financial modeling will be major contracts being reviewed provided to better guide the and renegotiated. decision making . • Assumes DSH payments will be • Continuous assessment of the Disproportionate $0 based on the discontinuation status of DSH eligibility is Share Hospital of the OB program post ongoing . (DSH) Department of Health suspension. The loss is $4.6M • Opportunity exists as • Assumes a contractual Contractual management continues its allowance with 32.3% Allowance efforts to improve collections experience, with (Collection Rate) documentation and proper revenue cycle enhancements admissions . and medical necessity • Proper differentiation of improvements. Inpatient Admissions and Observation (Proper 17 Classification)

Contents  Objectives  Budget Development Process  Volume Assumptions  Revenue Assumptions  Expense Assumptions  FY 2018 Budget Summary  Challenges/Opportunities 18

FY 2018 Budget: Expense Summary • Fiscal 2018 Expenses are 140,000 based on FY 2017 expense per 120,000 unit of service cost by area and uses FY 2018 volumes 100,000 based on adjusted patient days. 80,000 • Salary Expenses have 60,000 increased by $1.75M which includes DCNA union 40,000 increases. 20,000 • Expenses will be monitored monthly for negative 0 variances compared to budget 2016 2017 2018 and quarterly to compare to Actual Forecast Budget activity trend . 19