BOARD FINANCE COMMITTEE MEETING - Palomar Health · 10/26/2010 · Minutes Finance Committee –...

BOARD FINANCE COMMITTEE MEETING

* TUESDAY, OCTOBER 26, 2010 555 E. Valley Parkway, Escondido, CA @7:00 p.m. Meeting/Immediately following adjournment of Special Board meeting Graybill Auditorium ∗

Time Page Target CALL TO ORDER ........................................................................................................... .............. 7:00

Public Comments ...................................................................................................... ............ 5 7:05

Information Item(s) • Updated Program Review Schedule (Addendum A—pp28-29) .......................

.............. 5

7:10

1. * Approval: Minutes – Tuesday, October 5, 2010 (Addendum B—pp30-39) ............ .............. 2 2 7:12

2. * Approval: Center for Back & Neck Pain (Addendum C—pp40-97) ........................ ............ 15 3 7:27

3. * Approval: Physician Recruitment Agreement • Sue Ghosh, MD and Center for Gynecologic Oncology, Inc. – Gynecologic Oncologist ........................... 2 4-5 7:29

4. * Approval: Professional & Medical Director Services Agreements – PPH • X-Ray Medical Group Radiation Oncology, Inc. – Radiation Oncology – Extension................. ............... 2 6-7 7:31

5. * Approval: Behavioral Health Services Agreement – PPH • Arch Health Partners – New Agreement................................................................................... ............... 2 8-9 7:33

6. * Approval: Professional Services & Medical Director Agreements – PPH expresscare...............................................................................................................

.............. 2

11-16

7:35

• PIMG, Inc. – Peñasquitos • Alejandro Paz, MD, MPH – Escondido

7. * Approval: Independent Contractor Agreements – EHR Suite of Projects – PPH .............. 2 17-25 7:37 Amendments

• Branislav Cizmar, MD • Rady Children’s Specialist’s Medical Foundation • Nabil Fatayerji, MD • Michael Rafii, MD • Lachlan Macleay, MD • Stephen Fortus Signer, MD

New Contracts • Paul Polishuk, MD • William Sereda, MD

8. * Approval: September 2010 & YTD FY2011 Financial Report (Addendum D—pp98-156) ..................................................................................................................

............ 13 26 7:50

9. Review: FY2011 Initiatives Associated with Finance Committee Oversight (Addendum E—pp157-165).......................................................................................

............ 10

27

8:00

FINAL ADJOURNMENT ................................................................................................. ................ ........... 8:00

NOTE: If you have a disability, please notify us at 760-740-6383 72 hours prior to the event so that we may provide reasonable accommodations

2010-10-26 PPH BoD Finance Agenda.doc

∗ Asterisks indicate anticipated action. Action is not limited to those designated items. 1

Minutes Finance Committee – Tuesday, October 5, 2010

Form A - Minutes.doc

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Tanya Howell, Secretary BY: Bob Hemker, CFO Background: The minutes of the Board Finance Committee meeting held on Tuesday, October 5, 2010, are respectfully submitted for approval (Addendum B).

Budget Impact: N/A

Staff Recommendation: Staff recommends approval of the Tuesday, October 5, 2010, Board Finance Committee minutes.

Committee Questions:

COMMITTEE RECOMMENDATION: Motion: Individual Action: Information: Required Time:

2

Business Plan: Center for Back and Neck Pain

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Natalie Bennett, Manager of Program Development BACKGROUND: The attached business plan and addenda (Addendum C) support the development of a clinic in the Pomerado Outpatient Pavilion. This clinic structure will bring together services to provide a comprehensive spine program at PPH. The program will provide patients with access to comprehensive treatment options for the care of neck and back pain, through the delivery of the most current therapies and technology to elevate quality, profitably grow referrals and expand the service line. BUDGET IMPACT: $225,000 STAFF RECOMMENDATION: Approval COMMITTEE QUESTIONS: COMMITTEE RECOMMENDATION: Motion:

Individual Action:

Information:

Required Time:

3

Physician Recruitment Agreement

Ghosh Form A.doc

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Lisa Hudson, Director of Physician & Business Development Background: The PPH community lacks an adequate number of gynecologic oncologists as verified by Medical Development Specialists, a national consulting firm that specializes in physician manpower studies. PPH has an established physician recruitment program and has allocated resources to attract additional gynecologic oncologists to relocate to Inland North San Diego County. Sue Ghosh, MD, has signed the PPH Physician Recruitment Agreement in order to establish a practice in San Marcos with the Center for Gynecologic Oncology. She intends to begin practicing in December 2010.

Budget Impact: None

Staff Recommendation: Approval of the Physician Recruitment Agreement with Sue Ghosh, MD, and recommend approval by the full Board of Directors.


COMMITTEE RECOMMENDATION: Motion: Individual Action: X Information: Required Time:

4

PALOMAR POMERADO HEALTH - AGREEMENT ABSTRACT Section

Reference

Term/Condition

Term/Condition Criteria TITLE Physician Recruitment Agreement—Gynecologic Oncology

AGREEMENT DATE October 10, 2010 Start date December 2010

PARTIES 1) PPH

2) Sue Ghosh, M.D. 3) Center for Gynecologic Oncology, Inc.

Recitals PURPOSE Provide recruitment assistance to enable Dr. Ghosh to establish a practice within Center for Gynecologic Oncology.

Article 4 SCOPE OF SERVICES Dr. Ghosh will establish a full time gynecologic oncology practice in San Marcos and will participate in government-funded programs.

2.1; 2.2; 6.2; 6.4; 6.5

TERM 1 year of income assistance; two year repayment/forgiveness period

Recruitment procedure D.2

RENEWAL None available

Article 8; 9.17

TERMINATION Contract stipulates conditions for termination

Article 2 COMPENSATION METHODOLOGY

For monthly income guarantee physician will submit monthly report of expenses and collections. For moving expenses and start-up cost assistance physician will submit receipts.

BUDGETED X YES NO – IMPACT: None

5.1; 9.19 EXCLUSIVITY X NO YES – EXPLAIN: Government prohibits hospitals from requiring physician to exclusively have privileges or make referrals only to their hospital.

PHYSICIAN MANPOWER STUDY

Medical Development Specialists, a national consulting firm who performed our Physician Manpower Study, completed an analysis which confirmed there is a justifiable community need for this recruitment.

EXTERNAL FINANCIAL VERIFICATION

X YES NO Methodology: Medical Development Specialists (MDS) developed a pro forma for the practice to establish the contract value to cover income guarantee and cash flow needs. MDS also provided the market comparison to establish an appropriate income guarantee.

LEGAL COUNSEL REVIEW

X Yes NO No exceptions to the standard agreement. Legal Counsel has approved this contract.

APPROVALS REQUIRED X CPO X General Counsel X CFO X CEO X BOD Finance Committee on October 26, 2010 X BOD

5

InInsert Subject Here PALOMAR POMERADO HEALTH/PALOMAR MEDICAL CENTER Professional and Medical Director Services Agreement

Radiation Oncology Services TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Gerald Bracht, Chief Administrative Officer Palomar Medical Center

BACKGROUND: X-Ray Medical Group Radiation Oncology, Inc., provides exclusive radiation oncology professional and medical director services to Palomar Medical Center. X-Ray Medical has provided services to PPH for a number of years and has been responsive to the medical staff and health system in meeting their clinical needs and those of patients. The physicians of X-Ray Medical are well trained, bringing expertise to PPH in both traditional and contemporary methods of oncological treatment. Both the medical director and group in general have been supportive of operational efforts to maintain staff competency through training, involvement in the operating and capital budgeting process and assisting administration to expand services and grow business. This agreement represents an extension of the existing agreement for an additional three months. BUDGET IMPACT: None STAFF RECOMMENDATION: Approval COMMITTEE QUESTIONS:


Form A - X-Ray Medical.doc 6


Reference

Term/Condition

Term/Condition Criteria TITLE Professional and Medical Director Services Agreement

Radiation Oncology AGREEMENT DATE Original: November 1, 2007

Extension: November 1, 2010 PARTIES X-Ray Medical Group Radiation Oncology, Inc. and PPH

Recitals D PURPOSE To provide professional radiation oncology services and certain

administrative services at Palomar Medical Center for the entire district.

1.3, 1.4, Exhibit 1.3

SCOPE OF SERVICES Professional medical coverage available on call 24 hours per day 7 days per week including holidays and department staffed Monday through Friday, 8:30 a.m. to 4:30 p.m.

PROCUREMENT METHOD

Request For Proposal Discretionary

7.1 TERM November 1, 2010 thru January 31, 2011 (three months)

RENEWAL Yes

7.4 7.2

TERMINATION a. Without cause with 90 days written notice by either party following the first 12 months of the agreement.

b. Immediately for cause with written notice.

4.4 COMPENSATION METHODOLOGY

N/A

BUDGETED YES NO – IMPACT: None

1.14 EXCLUSIVITY NO YES – EXPLAIN: Hospital based physician for Radiology Department services.

JUSTIFICATION Required for the continued operation of the radiation oncology department.

POSITION NOTICED YES NO Methodology & Response: NA.

ALTERNATIVES/IMPACT N/A

Exhibit 1.5(a)

Duties All included Provision for Staff Education Provision for Medical Staff Education Provision for participation in Quality Improvement

COMMENTS This is an extension of the existing agreement. APPROVALS REQUIRED VP CFO CEO BOD Finance Committee BOD

7

Palomar Pomerado Health Behavioral Health Services Agreement with Arch Health Partners

Form A - Arch.doc

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Robert Trifunovic, MD MBA FACOG Background: Currently at PPH, the Behavioral Health Service Line is managed through a group of local independent PPH medical staff physicians. An opportunity to enhance patient satisfaction and physician engagement has been identified through the creation of a dedicated group model for the service line, with administration of the program through Arch Health Partners, assuming the cost would be within acceptable norms.

Budget Impact: Currently the FY11 budget has $450K for this service line. The proposed budget for the expense side is annualized to be $916K, with FY11 of $601K. The contract will stipulate that the fees for professional services collected will be assigned over to PPH, and the annualized projection of collections the first year is $408K, with FY11 of approximately $217K. Anticipated net budget impact of $384K for FY11.

Staff Recommendation: Approve the Contract with Arch Health Partners to provide 24/7 Psychiatric Services for PPH.



8


Reference

Term/Condition

Term/Condition Criteria Preamble TITLE Behavioral Health Services Agreement

Preamble AGREEMENT DATE November 1, 2010

Preamble PARTIES (1) Palomar Pomerado Health

(2) Arch Health Partners

Recitals PURPOSE To provide a comprehensive integrated continuum of behavioral health services for adults and seniors in the north inland San Diego County, providing both inpatient and outpatient assessment and treatment services.

Section 1&2

SCOPE OF SERVICES (1) 24/7 Inpatient Care at Palomar and Pomerado (2) Psychiatric patient assessment and evaluations at the San Marcos & Poway outpatient facilities (3) Management of Quality and Patient Satisfaction metrics for the program

PROCUREMENT METHOD

Request For Proposal X Discretionary

Section 4

TERM One year November 1, 2010 through October 31, 2011

Section 4

RENEWAL After renegotiation of contract between the parties

Section 4

TERMINATION (1) Either party may terminate without cause or penalty with 90 day notice. (2) Either party may terminate with material breach with 30 day notice.

Section 3

COMPENSATION METHODOLOGY

The annual contract amount is based upon Fair Market Valuations to the components of the delivery of medical care.

BUDGETED X YES NO – IMPACT:

EXCLUSIVITY X NO YES – EXPLAIN:

JUSTIFICATION PPH is looking to create a stable and dedicated psychiatric inpatient and outpatient service to maintain and improve patient care and patient satisfaction.

AGREEMENT NOTICED YES X NO Methodology & Response:

ALTERNATIVES/IMPACT Initiation of a dedicated psychiatric service to benefit the community.

Duties Provision for Staff Education N/A Provision for Medical Staff Education N/A Provision for participation in Quality Improvement N/A Provision for participation in budget process development

N/A COMMENTS This program is to provide a reliable, dedicated group of

physicians to meet current quality and patient satisfaction metrics.

APPROVALS REQUIRED VP CFO CEO BOD Committee Finance BOD

9

InInsert Subject Here PALOMAR POMERADO HEALTH expresscare-Penasquitos MEDICAL DIRECTORSHIP

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Sheila Brown, BSN, MBA, FACHE; Chief Clinical Outreach Officer Stonish Pierce, FACHE; Manager, Clinical Outreach Services BACKGROUND: PPH is the owner and operator of retail-based health centers known as PPH expresscare whereby Nurse Practitioners practice independently while working in collaboration with board certified family practice physicians. Physician oversight is required in the State of California. PIMG, Inc. has agreed to renew its contract with PPH to provide medical oversight for PPH expresscare. BUDGET IMPACT: Budgeted STAFF RECOMMENDATION: Staff recommends that PPH sign the Retail Health Clinics Professional Services & Medical Director Agreement with PIMG, Inc., to ensure physician supervision and oversight remains available to the District’s expresscare Nurse Practitioners. COMMITTEE QUESTIONS:


Form A – expresscare-Penasquitos Med Director 2010-11 11


Reference

Term/Condition

Term/Condition Criteria Recitals TITLE Retail Health Clinics Professional Services and Medical Director Agreement

Recitals AGREEMENT DATE November 1, 2010

Recitals PARTIES Palomar Pomerado Health and PIMG, Inc.

Recitals A-F

PURPOSE PPH is the owner and operator of retail-based health clinics known as PPH expresscare whereby Nurse Practitioners practice independently while working in collaboration with board certified physicians. As a norm in this emerging segment of the health care industry, physicians are typically available on an on-call basis during regular operating hours to respond to any questions or inquiries that Nurse Practitioners may have and/or when presenting patients should be referred to more appropriate levels of care. Physician oversight and program involvement is further recommended in the guidelines referenced by several medical professional societies (AAFP, AMA, AAP) to ensure evidence-based and quality improvement oriented medicine, to ensure that the scope of services remains limited, to ensure that a consistent referral process remains in place and a team-based approach with community physicians is emphasized to support continuity of care.

Recitals SCOPE OF SERVICES To provide medical director services and medical oversight and supervision of nurse practitioners who are responsible for diagnosing, treating, and providing education about, common illnesses and minor injuries; administering vaccinations; and performing routine physical examinations, screening and testing in the expresscare health centers.

PROCUREMENT METHOD

Request For Proposal ⌧ Discretionary

4.1 TERM 1 year (November 1, 2010 – October 31, 2011)

RENEWAL Both parties will have the option to discuss renewal of this Agreement following the end of the initial term. Any failure by PPH to request an additional term or refusal by physician to accept an additional term shall not affect the parties’ duties and obligations during the Initial Term of this Agreement.

4.2-4.3 TERMINATION Either party shall have the right to terminate this Agreement without cause upon not less than ninety (90) days prior written notice to the other party. This Agreement may be terminated pursuant to any of the following: Mutual Agreement, Material Breach, Termination with or without Cause and Special Termination.

Please see attachments


Fair Market Value Assessment of the Agreement by an independent human resources consulting firm.

BUDGETED ⌧ YES NO – IMPACT:

1.9 EXCLUSIVITY NO ⌧ YES – EXPLAIN: In consideration of the provisions of and payment for services under this Agreement, Medical Group and its participating physicians shall not, for a period of one year immediately following termination or expiration of this agreement directly or indirectly own, manage, operate, participate in, consult with or work for any other retail clinic operator or in any way compete with PPH in the provision of retail-based health clinic services. PPH will provide Medical Group with first right of refusal for any retail

12

clinic ventures for the geographic areas included in zip codes 92036, 92064, 92065, 92127-28, 92129.

JUSTIFICATION Medical and program oversight of nurse practitioners is required by law.

AGREEMENT NOTICED ⌧ YES NO Methodology & Response:

ALTERNATIVES/IMPACT There are no alternatives for physician oversight of Nurse Practitioners working in retail-based clinics.

Duties ⌧ Provision for Staff Education ⌧ Provision for Medical Staff Education ⌧ Provision for participation in Quality Improvement ⌧ Provision for participation in budget process development

COMMENTS

APPROVALS REQUIRED ⌧ VP ⌧ CFO CEO BOD Committee ___________ BOD

13

InInsert Subject Here PALOMAR POMERADO HEALTH expresscare-Escondido MEDICAL DIRECTORSHIP

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Sheila Brown, BSN, MBA, FACHE; Chief Clinical Outreach Officer Stonish Pierce, FACHE; Manager, Clinical Outreach Services BACKGROUND: PPH is the owner and operator of retail-based health centers known as PPH expresscare whereby Nurse Practitioners practice independently while working in collaboration with board certified family practice physicians. Physician oversight is required in the state of California. Alejandro Paz, MD, MPH, of Graybill Medical Group, Inc., has agreed to renew his contract with PPH to provide medical oversight for PPH expresscare. BUDGET IMPACT: Budgeted STAFF RECOMMENDATION: Staff recommends that the Board approve the Retail Health Clinics Professional Services & Medical Director Agreement with Alejandro Paz, MD, MPH, to ensure physician supervision and oversight remains available to the District’s expresscare Nurse Practitioners. COMMITTEE QUESTIONS:


Form A – expresscare-Escondido Med Director 2010-11 14


Reference

Term/Condition

Term/Condition Criteria Recitals TITLE Retail Health Clinics Professional Services and Medical Director Agreement

Recitals AGREEMENT DATE November 1, 2010

Recitals PARTIES Palomar Pomerado Health dba PPH expresscare and

Alejandro Paz, MD, MPH

Recitals A-F

PURPOSE PPH is the owner and operator of retail-based health clinics known as PPH expresscare whereby Nurse Practitioners practice independently while working in collaboration with board certified physicians. As a norm in this emerging segment of the health care industry, physicians are typically available on an on-call basis during regular operating hours to respond to any questions or inquiries that Nurse Practitioners may have and/or when presenting patients should be referred to more appropriate levels of care. Physician oversight and program involvement is further recommended in the guidelines referenced by several medical professional societies (AAFP, AMA, AAP) to ensure evidence-based and quality improvement oriented medicine, to ensure that the scope of services remains limited, to ensure that a consistent referral process remains in place and a team-based approach with community physicians is emphasized to support continuity of care.

Recitals SCOPE OF SERVICES To provide medical oversight and supervision of nurse practitioners who are responsible for diagnosing, treating, and providing education about, common illnesses and minor injuries; administering vaccinations; and performing routine physical examinations, screening and testing in the expresscare health centers.

PROCUREMENT METHOD

Request For Proposal ⌧ Discretionary

4.1 TERM 1 year (November 1, 2010 – October 31, 2011)

RENEWAL Both parties will have the option to discuss renewal of this Agreement following the end of the initial term. Any failure by PPH to request an additional term or refusal by physician to accept an additional term shall not affect the parties’ duties and obligations during the Initial Term of this Agreement.

4.2-4.3 TERMINATION Either party shall have the right to terminate this Agreement without cause upon not less than ninety (90) days prior written notice to the other party. This Agreement may be terminated pursuant to any of the following: Mutual Agreement, Material Breach, Termination with or without Cause and Special Termination.

Please see attachments


Fair Market Value Assessment of the Agreement by an independent human resources consulting firm.

BUDGETED ⌧ YES NO – IMPACT:

1.9 EXCLUSIVITY NO ⌧ YES – EXPLAIN: In consideration of the provisions of and payment for services under this Agreement, Medical Group and its participating physicians shall not, for a period of one year immediately following termination or expiration of this agreement directly or indirectly own, manage, operate, participate in, consult with or work for any other retail clinic operator or in any way compete with PPH in the provision of retail-based health clinic services.

15

PPH will provide medical group with first right of refusal for any retail clinic ventures for the geographic areas included in zip codes 92025-27, 92028, 92029, 92059, 92061, 92069, 92078, 92082.

JUSTIFICATION Medical and program oversight of nurse practitioners is required by law.

AGREEMENT NOTICED ⌧ YES NO Methodology & Response:

ALTERNATIVES/IMPACT There are no alternatives for physician oversight of Nurse Practitioners working in retail-based clinics.

Duties ⌧ Provision for Staff Education ⌧ Provision for Medical Staff Education ⌧ Provision for participation in Quality Improvement ⌧ Provision for participation in budget process development

COMMENTS

APPROVALS REQUIRED ⌧ VP ⌧ CFO CEO BOD Committee ___________ BOD

16

PALOMAR POMERADO HEALTH PHYSICIAN INDEPENDENT CONTRACTOR AGREEMENT

INFORMATION SYSTEMS SERVICES

Form A - IT.doc

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Ben Kanter, MD, CMIO Background: Palomar Pomerado Health (PPH) requires the active involvement of physicians in many aspects of Information Systems programs. Currently, PPH employs a CMIO (Benjamin Kanter, MD) who is solely responsible for the relationship between the medical staff and information systems. PPH is actively working on expanding the functions and features of our electronic healthcare record in order to prepare clinicians for their migration to PMC-West, to improve quality and safety, and to meet the goals set forth by the Obama administration in the ARRA of 2009. As part of the electronic healthcare record suite of projects being implemented, physician involvement is critical for success. Physician’s will be asked to participate on these projects (CPOE, physician documentation, ICU integration of monitors with the records, and more) and depending upon their work effort, will need to be reimbursed according to standard and customary manners and rates. There are separate contracts with each of the following physicians:

• BRANISLAV CIZMAR • NABIL FATAYERJI • LACHLAN MACLEAY • RADY CHILDREN’S SPECIALIST’S MEDICAL FOUNDATION • MICHAEL RAFII • STEPHEN FORTUS SIGNER • WILLIAM SEREDA • PAUL POLISHUK

Budget Impact: After discussion with many different sites across the U.S., a fair market value was established for the mean value hourly reimbursement for such work. All fees payable to medical staff members have been budgeted within the IT projects listed above. Staff Recommendation: Approval. Committee Questions:


17

PALOMAR POMERADO HEALTH - AGREEMENT ABSTRACT

Section Reference

Term/Condition

Term/Condition Criteria

TITLE Independent Contractor Agreement between Branislav Cizmar, M.D. and Palomar Pomerado Health

AGREEMENT DATE December 1, 2010

PARTIES Branislav Cizmar, M.D. PURPOSE To assist the CMIO in the implementation of Computerized

Physician Order Entry, computerized physician documentation, and any other required work on the Cerner Roadmap projects.

SCOPE OF SERVICES The physician will work as subject matter experts, may be asked to lead development teams, travel with PPH employees to do off site evaluations, and to attend Cerner training sessions here and in Kansas City.

PROCUREMENT METHOD Request For Proposal Discretionary TERM 1 year

RENEWAL No automatic renewal

TERMINATION 10 day notice by either party without cause

COMPENSATION

METHODOLOGY Hourly rate – itemized


EXCLUSIVITY NO

JUSTIFICATION Medical and IT subject matter expert required to assist in the planning and design of the electronic record. Fee is standard for this process and is based upon analysis from similar projects across the U.S.

AGREEMENT NOTICED YES NO Methodology & Response: ALTERNATIVES/IMPACT n/a Duties Provision for Staff Education

Provision for Medical Staff Education Provision for participation in Quality Improvement Provision for participation in budget process

development COMMENTS

APPROVALS REQUIRED VP CFO CEO BOD Committee ____________ BOD

18


Section Reference

Term/Condition


TITLE Independent Contractor Agreement between Nabil Fatayerji, M.D. and Palomar Pomerado Health


PARTIES Nabil Fatayerji, M.D. PURPOSE To assist the CMIO in the implementation of Computerized






COMPENSATION



EXCLUSIVITY NO






19


Section Reference

Term/Condition


TITLE Independent Contractor Agreement between Lachlan Macleay, M.D. and Palomar Pomerado Health

AGREEMENT DATE November 1, 2010

PARTIES Lachlan Macleay, M.D. PURPOSE To assist the CMIO in the implementation of Computerized






COMPENSATION



EXCLUSIVITY NO





APPROVALS REQUIRED VP CFO CEO BOD Committee ____________

BOD

20


Section Reference

Term/Condition


TITLE Independent Contractor Agreement between Rady Children’s Specialist’s Medical Foundation and Palomar Pomerado Health


PARTIES Rady Children’s Specialist’s Medical Foundation PURPOSE To assist the CMIO in the implementation of Computerized






COMPENSATION



EXCLUSIVITY NO






21


Section Reference

Term/Condition


TITLE Independent Contractor Agreement between Michael Rafii, M.D. and Palomar Pomerado Health


PARTIES Michael Rafii, M.D. PURPOSE To assist the CMIO in the implementation of Computerized






COMPENSATION



EXCLUSIVITY NO






22


Section Reference

Term/Condition


TITLE Independent Contractor Agreement between Stephen Fortus Signer, M.D. and Palomar Pomerado Health


PARTIES Stephen Fortus Signer, M.D. PURPOSE To assist the CMIO in the implementation of Computerized






COMPENSATION



EXCLUSIVITY NO






23


Section Reference

Term/Condition


TITLE Independent Contractor Agreement between Paul Polishuk, M.D. and Palomar Pomerado Health


PARTIES Paul Polishuk, M.D. PURPOSE To assist the CMIO in the implementation of Computerized






COMPENSATION



EXCLUSIVITY NO






24


Section Reference

Term/Condition


TITLE Independent Contractor Agreement between William Sereda, M.D. and Palomar Pomerado Health


PARTIES William Sereda, M.D. PURPOSE To assist the CMIO in the implementation of Computerized






COMPENSATION



EXCLUSIVITY NO






25

September 2010 & YTD FY2011 Financial Report

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Robert Hemker, CFO Background: The Board Financial Reports (unaudited) for September 2010 and YTD FY2011 are submitted for the Finance Committee’s approval (Addendum D).

Budget Impact: N/A

Staff Recommendation: Approval



Form A - Financial Report.doc

26

First Quarterly Update – FY2011 Initiatives

TO: Board Finance Committee MEETING DATE: Tuesday, October 26, 2010 FROM: Bob Hemker, CFO Background: Pursuant to direction of the Board upon adoption of the FY2011 Initiatives, we will be reviewing those associated with Finance Committee oversight. This will be the first quarterly review by the Finance Committee of the FY2011 Initiatives, which are appended as Addendum E.

Budget Impact: N/A

Staff Recommendation: Information only



Form A - Initiatives.doc

27

ADDENDUM A

ADD A-128

Bob HemkerArch Health PartnersNovember 20103

Gerald Bracht & Paul PatchenComprehensive Stroke ProgramJune 20119

Gerald Bracht, Sheila Brown & Bob HemkerPalomar Pomerado Imaging, LLCJanuary 20114

David Tam & Steve EllisVHA Purchasing Coalition/WestPac2September 201111

Sheila BrownWound Care1November 20102

Gerald BrachtRady’s AffiliationMarch 20116

Gerald Bracht & Bob HemkerSan Diego Radiosurgery, LLC & Stereotactic Radiosurgery (SRS)February 20115

DATE DUE FORREVIEW AT

BOARD FINANCEPROGRAM

Sheila Brown & Lorie ShoemakerPerinatology ProgramJune 201110

Sheila BrownPPH Retail Group, LLCTBD12

Gerald Bracht & Bruce Grendellda VinciMay 20118

SPONSOR(S)

April 2011

November 2010

Gerald Bracht & Lisa Hudson

Steve Gold

Physician Recruitment7

SNF Beds to Sub-Acute - Potential for future expansion1

FY2010/2011 Program Review Schedule

1 Rescheduled from original review date(s)2 New date following previous review

Rev’d 10/2010

ADD A-229

ADDENDUM B

ADD B-130

B O A R D F I N A N C E C O M M I T T E E M E E T I N G A T T E N D A N C E R O S T E R & M E E T I N G M I N U T E S

C A L E N D A R Y E A R 2 0 1 0

MEETING DATES:

MEMBERS 1/26/10 2/23/10 3/30/10 4/29/10 5/25/10 6/29/10 7/27/10 8/24/10 10/5/10

LINDA GREER, R.N. – CHAIR P P P P P P P P P DIRECTOR KLEITER P E P P P P P P E DIRECTOR KRIDER, MA P P P P P P E P P MICHAEL COVERT, FACHE P P P P P P E E P FRANK MARTIN, M.D. P E P P P P P P E JOHN LILLEY, M.D. E P P P P P E E P MARCELO RIVERA, MD – ALTERNATE E NANCY BASSETT, R.N., MBA – 2ND ALTERNATE P P P – 3RD ALTERNATE – 4TH ALTERNATE STAFF ATTENDEES BOB HEMKER P P P P P P P P P GERALD BRACHT P P E P E P P P P DAVID TAM P P P E E P P P P TANYA HOWELL – SECRETARY P P P P P P P P P INVITED GUESTS SEE TEXT OF MINUTES FOR NAMES OF GUEST PRESENTERS

ADD B-231

BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, OCTOBER 5, 2010

1. AGENDA ITEM

• DISCUSSION CONCLUSION/ACTION FOLLOW UP/RESPONSIBLE PARTY FINAL?

CALL TO ORDER • The meeting – held in Graybill Auditorium at Palomar Medical Center, 555 E. Valley Parkway, Escondido, CA – was called to order at 6:35 p.m. by Chair Linda Greer, RN

ESTABLISHMENT OF QUORUM

• See roster

PUBLIC COMMENTS

• There were no public comments

INFORMATION ITEM(S)

• BOB HEMKER TOOK THE OPPORTUNITY TO PUBLICLY ACKNOWLEDGE CORPORATE CONTROLLER TIM NGUYEN FOR STEPPING IN AND CARRYING OUT BOTH HIS OWN DUTIES AND THE DUTIES OF THE CFO OFFICE DURING BOB’S ABSENCE o He also thanked the Finance Team, with the knowledge that Stephanie Love,

Director of Finance, had stepped up to help Mr. Nguyen with his normal duties o Represents the depth of the finance team and is a shining example of succession

planning in action • BOB HEMKER ALSO PUBLICLY ACKNOWLEDGE LINDA GREER

o He offered congratulations to her on being the first Trustee ever to be awarded the Health Ethics Trust’s Trustee Fellowship for her work in compliance, an area about which she is passionate

o The award will be presented at the annual Healthcare Compliance Best Practices Forum in Washington, DC, later this month

• Information only Y

1. DRAFT AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2010 AND 2009, AND THE INDEPENDENT AUDITORS’ REPORT • The Board Audit and Compliance Committee is the formal committee for

recommendation to the Board, but the audited financials are also brought to the Board Finance Committee regarding any fiscal matters that are involved o The Board Finance Committee members were invited guests at the Board Audit &

Compliance Committee presentation made by Deloitte & Touche, the District’s auditors

• Unless there are specific questions members of the Finance Committee might have, then a motion would be requested for approval o No specific questions were raised

• The Board Audit and Compliance Committee’s recommendation will move forward to the Board at the October 11th meeting o Approved documents can then move forward and be embedded in the bond

transaction documents • Michael Covert requested that Director of Finance Stephanie Love again be recognized

for her role in moving the audit forward, noting that she has grown into the position as Director of Finance, which has freed Tim Nguyen to do other things for the District

MOTION: By Director Bassett, seconded by Director Krider and carried to move the Draft Audited Financial Statements for the Years Ended June 30, 2010 and 2009, and the Independent Auditors’ Report forward to the Board

Forwarded to the October 11, 2010, Board of Directors meeting with a recommendation for approval

Y

ADD B-332


1. AGENDA ITEM

• DISCUSSION CONCLUSION/ACTION FOLLOW UP/RESPONSIBLE PARTY FINAL? 2. MINUTES – AUGUST 24, 2010 • No discussion MOTION: By Director Krider, seconded by Director Bassett and

carried to approve the minutes of the August 24, 2010, Board Finance Committee. All in favor. None opposed.

Y

3. MINUTES – SPECIAL ICOC MEETING ON AUGUST 23, 2010 • No discussion MOTION: By Director Bassett,

seconded by Director Krider and carried to recommend approval of the minutes of special meeting of the ICOC on August 23, 2010, Board Finance Committee. All in favor. None opposed.


Y

4. PHYSICIAN AGREEMENTS • Southwest Neurology Medical Group – Emergency On-Call Agreement – Neurology – PPH [10/1/10-9/30/13] • Neighborhood Healthcare – Adult Medicine & Skilled Nursing Facility Hospitalists Agreement – First Amendment [11/1/10-3/31/11]

• Bob Hemker stated that there were two physician agreements before the Committee, and that Gerald Bracht was available to provide background and to address any questions

• SOUTHWEST NEUROLOGY MEDICAL GROUP o Previously had two separate Emergency On-Call Agreements for Neurology for

POM and PMC o Physicians are cross-covering and felt it prudent to consolidate them into one

agreement, and the agreement before the Committee represents that consolidation o No change in the cost

• NEIGHBORHOOD HEALTHCARE o An amendment is being requested in order to extend the current agreement for six

(6) months while working through the complexities of the incentive clause − Clause will provide incentive payments for meeting quality metrics, but the

metrics are still being formulated − Want to engage the hospitalists in some of activities related to the Initiatives

and CDI, not just the patients in the ER o Length of term requested will be a “3 + 1 + 1” (e.g., initial three-year term, with

option at expiration to extend for a one-year term, then for one more one-year term at that expiration) − All parties must agree to extension − Also allows opportunity to re-check Fair Market Value at the end of the first

three years

MOTION: By Director Krider, seconded by Director Bassett and carried to recommend approval of both the new three-year Emergency On-Call Agreement for Neurology at PPH with Southwest Neurology Medical Group and the six-month extension to the Adult Medicine & Skilled Nursing Facility Hospitalists Agreement with Neighborhood Healthcare. All in favor. None opposed.


Y

ADD B-433


1. AGENDA ITEM

• DISCUSSION CONCLUSION/ACTION FOLLOW UP/RESPONSIBLE PARTY FINAL? 5. PROGRAM REVIEW: VHA PURCHASING COALITION/WESTPAC • This is one in a series of periodic updates regarding VHA’s value to the District, as well

the progress of PPH’s participation in the new regional coalition, WestPac • Utilizing the presentation included in the agenda packet, Steve Ellis, Director of Supply

Chain Services, provided the updates o Feels that the WestPac provides a good program that leverages the purchasing

power of the organization When you can leverage supply demand on a regional basis, vendors will be

willing to provide the better pricing Membership in WestPac does not dilute value with VHA National, as it allows

the vendors to provide better contracts at the regional level without penalizing organizations on a national level

o WESTPAC MEMBERSHIP (ADD C-6) WestPac members are comprised of Southern California and Hawaii hospitals

that are not close enough to be in competition with each other Good mix of members consisting of small, medium and large organizations El Centro Regional withdrew its membership after this presentation was

created Replaced by Citrus Valley in the Los Angeles area Citrus Valley is a much larger organization that should provide additional

gains based on purchasing size Redlands Community is also a new member Mr. Ellis does not see this as a static list and foresees it will grow in the future,

which would be beneficial to the District o WESTPAC GOVERNANCE (ADD C-8)

There is an Executive Oversight Committee (EOC), which is chaired by Bob Hemker

Provides governance to ensure the Operations Committee proceeds to meet goals

The Operations Committee consists of Steve Ellis and his peers o Each organization also has a clinical expert assigned to assess clinical/physician

preferences/needs and assist with implementations Rhonda Wilson, Value Analysis Manager, has just been added to the Supply

Chain Services team as the clinical representative to WestPac o OPT-IN COMPLIANCE

Percentage approach was developed by the members Physician preference percentage is relatively low due to potential

differences in practice preferences among the members o PROGRESS TO GOALS (ADD C-13)

District has saved $108K FYTD

• Information only Forwarded to the October 11, 2010, Board of Directors meeting as information

• If Committee is interested, invitation to be issued to Curt Nonomaque of VHA by Michael Covert

N

ADD B-534


1. AGE A ND ITEM

• D CONCLUSION/ACTION FOLLOW UP/ISCUSSION RESPONSIBLE PARTY FINAL?

All are initiatives in which the District has agreed to participate Savings from Trocars alone are estimated at $250K

o CONTRACT PLAN (ADD C-14) Everything other than Trocars is new for the quarter Plan came out of historical view toward “what can we do better?” approaches EOC required that there be a rolling, yearly calendar to provide individual

organizations with up to a year to determine their ability/willingness to participate in a given initiative

Provided them with time to discuss with their clinicians and physicians to better enable decisions before being required to make opt-in/opt-out decisions as there are only a few allowed opt-outs allowed

o PPH STEERING COMMITTEE (ADD C-19) Dr. Robert Stein is supportive and will be participating as the new Medical Staff

Representative • Mr. Ellis thanked the Committee for their time • Chairperson Greer stated she was looking forward to seeing continued savings while

maintaining the quality of products purchased • Michael Covert stated that we’re currently reviewing opportunities presented by VHA,

but in the coming years we would like to begin developing those opportunities ourselves and providing that information to VHA, taking a stronger leadership role within that group o WestPac coalition has come a long way in a short period of time and that all the

members engaged well once the objective was recognized o If the Committee is interested, he could invite Curt Nonomaque, President and CEO

of VHA, to present at a future meeting

6. STATUS UPDATE ON THE 2010 GENERAL OBLIGATION AND REVENUE BOND ISSUES • Bob Hemker provided a status update, stating that he had added the topic in case

actionable items related to the bond issue had arisen o No actionable items at this time

• Team is In the preparatory phase, drafting the Preliminary Official Statement (POS) and Appendix A, which contains the District’s fiscal information o The Board’s approval of the audited financials will allow them to be embedded into

Appendix A o Had preliminary discussions with 3 rating agencies last month regarding the ratings

of both General Obligation (GO) and Revenue Bonds Will be updating the rating agencies next week by providing the audited

financials and filling them in on the economics and structure of issuances o The Joint Powers Authority Board (JPA) meeting will be held on October 22nd as

both a formulation meeting and to review and provide document approval o Possible investor road shows will be held in early November

Meetings with institutional investors

• Information only Forwarded to the October 11, 2010, Board of Directors meeting as information

N

ADD B-635


1. AGE A ND ITEM

• CONCLUSION/ACTION FOLLOW UP/DISCUSSION RESPONSIBLE PARTY FINAL?

Team at Citi is determining where the investor interest is and whether those meetings need to occur face to face or via the Internet

o After road shows, will immediately go to pricing, a retail order period will be opened, followed by an institutional order period

o Current schedule is for Bond Purchase Agreement (BPA) to be signed on or about November 10th, with pre-closing on November 17th, final closing and fund transfers on November 18th

o At the October 26th Special Board meeting, the Board would be asked to approve transactions for both instruments as well as an updated Financial and Capital Plan All transactions and documents as done with previous bond issues, and

Mr. Hemker does not anticipate the use of any unique instruments GO Bonds will again be Capital Appreciation Bonds (CABs), and it is not

anticipated there will be any variable rate instruments for the Revenue Bonds • This evening’s discussion is for the Committee’s information only

o No motion is necessary o Informing the Committee that the market is favorable, rates are still down from when

we started the process should be in a good position at the time of issuance o Strength of the financials also suggests that this is definitely good timing

7. AUGUST 2010 AND YTD FY2011 FINANCIAL REPORT • Utilizing the presentation included as Addendum D of the agenda packet, Bob Hemker presented the financial statements for the August 2010 and YTD FY2011. Only select slides were presented for discussion (listed below by agenda page number, with any additional comments): • BALANCED SCORECARD – 74

o Blues and greens are positive o Unique volume challenges with volume offsets are providing the strength

• EXECUTIVE SUMMARY OF KEY INDICATORS – 76 o Referred to YTD columns

− Adjusted Discharges had a 5.2% positive variance to budget 1) Increase is from the ambulatory arena

− Admissions had a .6% positive variance to budget − Patient Days had a 2.7% negative variance to budget

1) Driven by lower case mix index and LOS o Surgeries show a positive variance to budget of 1.5%

− Seeing more inpatient than outpatient surgeries o Births have about a 4% negative variance to budget

− Split equally between campuses o E/R Visits & Admissions show a positive variance to budget of 2.6%

− Down .8% year-on-year due to the H1N1 issues of last year

MOTION: By Director Krider, seconded by Director Bassett and carried to recommend approval of the August 2010 and YTD FY2011 Financial Report as presented. All in favor. None opposed.


Y

ADD B-736


1. AGENDA ITEM


o ER to Admit Rate is down at 15.7% compared to a budget of 16% − Appears small at .3%, but that translates to about 48 admissions or almost an

ADC of 3 o Seeing a softening in both Gross and Net Revenues due to lower intensity cases o YTD Net Revenues show a negative variance to budget of about $3.5M

− Most of that is being recaptured through expense control − Will be watch net revenue strength through September and October − Also affected by the fact that many budgetary expectations are smoothed

across the year o Days Cash on Hand is still strong o Cash Collections have a negative variance to budget of $8M

− Due to the trailing nature of collections, as the budget has an expected increase in revenues, but we are still collecting last year’s revenues at the lower rates

− Budget also reflects the increased cash collections goal, which is typically realized later in the year

o Also seeing strength in all the Ratio calculations • BALANCE SHEET – 83

o Total Cash appears to be down against prior year, but it is due to the movement of funds into the Board Designated category − Total Cash plus Board Designated totals $173M, which is a positive variance of

$1.3M against last year − Increase in cash didn’t come as a burden to Current Liabilities, which have

decreased by $5M vs. last year o Accounts Receivable are up about $1.5 year on year

− Days in A/R have moved about 1 day − The slower summer months will potentially affect cash collections starting in

November o General Fund Balance has grown $6.3M year on year o Mr. Hemker has seen nothing in the first 2 months of the Fiscal Year that would

suggest any material change in strength of performance from FY2010 • MTD INCOME STATEMENT – 84

o Admissions have a positive variance to budget of .5% o Patient Days have a negative variance to budget of 2.7%

− Equates to about an ADC of 273 vs. a budget of 280 − Almost half the ADC shortfall is ER as opposed to surgical

o SNF LOS has a negative variance to budget of 2.3% − The lower LOS indicates SNF patients are more transition-type

ADD B-837


1. AGENDA ITEM


o Overall Adjusted Discharges have a positive variance of 5.2% over budget o Net Patient Revenue/Adjusted Discharge has a negative variance to budget of 7.5%

− Indicative of the lighter case mix index and the type of volume coming in o Total Expenses/Adjusted Discharge are down 8.3%

− Managing P&L and adjusting to the type of business we have − Really see that in favorable labor variance of 6.2%/adjusted discharge − P&L for volume adjusted is virtually even to budget

• YTD INCOME STATEMENT – 85 o SNF Patient Day have a negative variance to budget of 4% o Shortfall in Acute Patient Days is a LOS issue o Adjusted Discharges are up against budget by 5.2% o Net Income and OEBITDA Margins are still holding at target

− Means we’re adjusting to lower volumes • YEAR-ON-YEAR INCOME STATEMENT – 86

o Patient Days are down by 6.5% − LOS issue is a contributor

o Adjusted Discharges are up 4.2% o Gross Revenue – up by 1.5% – would be expected to be much stronger due to the

8% increase in the Chargemaster o Net Patient Revenue is up about 1.5% o Total Net Revenue is up about 1.7% o Total Expenses are up about 2.5%

− SWB are higher as expected due to the change in benefit contribution percentage from last year

o Total Expenses/Adjusted Discharge are down 1.7% o Total Net Revenue/Adjusted Discharge are down 2.5% o Non-Operating Income had a positive variance

− Investment income is holding steady, with nothing material to report • CASE MIX – 116

o Can see the delta between case mix year-on-year • CASH COLLECTIONS – 125

o Watching the delta between year-on-year − Almost had a blip up against budget last year − Need to move dollars up a notch sooner rather than making it up at the end of

year as has been done in the past o HealthWoRx – 126

− Having some successes in Patient Access

ADD B-938

2010-10-05 BoD Finance Minutes.doc


1. AGE A ND ITEM

• D CONCLUSIONISCUSSION /ACTION FOLLOW UP/RESPONSIBLE PARTY FINAL?

− Coding is right in line with goal − PFS is holding close on billing edits (e.g., what is sitting waiting on edits before

it can be billed?) − RAC efforts are holding YTD

ADJOURNMENT The meeting was adjourned at 7:42 p.m.

COMMITTEE CHAIR

Linda Greer, RN

SIGNATURES: COMMITTEE SECRETARY

Tanya Howell

ADD B-1039

ADDENDUM C

ADD C-140

Center for Back and Neck PainCenter for Back and Neck Pain Business PlanBusiness Plan

Natalie BennettNatalie Bennett

October 26, 2010October 26, 2010

ADD C-241

Description

Provide innovative and comprehensive approaches for the treatment of back and neck

pain using a multidisciplinary team to facilitate an integrated approach to care.

ADD C-342

Market Analysis

• 4 out of 5 American adults will experience low back pain during their lifetime1

• Spine market share in PSA was 36.5%2

– Primary competitors• UCSD (9.3%)• Scripps Green (16.6%)

• Positioning the organization for transition to ACO’s

1

CDC2

CY 2008 Market Expert ADD C-443

Services/Program Description

• Physiatrist acts as the care coordinator and first consultant

to evaluate back pain patients• 1206d clinic‐

proposed location in the POP Corporate

Health Clinic• Program will provide a full range of services along the

continuum– Evaluation– Therapy– Pain management– Surgery– Patient and physician education– Diagnostics– Alternative therapy

• Strengthen focus on non‐interventional approaches

ADD C-544

Program Elements

Note: To participate on the panel physicians need to comply with criteria established

during the development phase of the center.

Note: To participate on the panel physicians need to comply with criteria established

during the development phase of the center.

Sample Criteria Include:Participation in education eventsCredentialed at PMC/POMBoard certifiedAgreement to work on cost management strategiesWillingness to share data for quality improvement

ADD C-645

Marketing

*Q1‐Q3 FY10 data‐

PPH Decision Support

• Patient Marketing

• Referring Physicians

• Health Plans

ADD C-746

Year 1 Year 2 Year 3 Year 4 Year 5

Cumulative Cash Flow (9,000) (35,448) 5,989 36,641 116,283 183,576

Capital - Equipment: Leasehold Improvement 5,000 0 0 0 0Capital - Equipment: New IT System 4,000 0 0 0 0Capital - Equipment: ??? 0 0 0 0 0

Total Capital Equipment 9,000 9,000 0 0 0 0NPV $148,550Discount Rate 5.00%IRR 81.31%Pay Back in Years 1.9

INCREMENTAL VOLUMESIP Discharges 21 27 27 35 35 IP Days 95 123 123 159 159

IP LOS 4.5 4.5 4.5 4.5 4.5

OP Discharges

REVENUESIP - Incremental Contribution Margin $199,076 $263,290 $263,290 $333,117 $333,117OP - Incremental Contribution Margin Total Incremental Contribution Margin 199,076 263,290 263,290 333,117 333,117

ADDITIONAL OPERATING EXPENSESLabor ExpenseSalaries & Wages $96,129 $101,897 $108,011 $114,492 $121,361Direct Benefits 14,419 15,285 16,202 17,174 18,204 Indirect Benefits 9,613 10,190 10,801 11,449 12,136 Total Labor and Benefit Expense 120,162 127,371 135,014 143,114 151,701

Other Non-Labor ExpensePhysician Fees 23,250 23,714 24,425 25,158 25,912 Supplies 22,113 29,568 30,751 41,457 43,115 Other Expenses 30,000 31,200 32,448 33,746 35,096 Marketing/Branding 30,000 10,000 10,000 10,000 10,000 Total Other Non-Labor Expense 105,363 94,482 97,624 110,360 114,123

Depreciation and AmortizationDepreciation - Lease Improvement (5yr) 1,000 1,000 1,000 1,000 1,000 Depreciation - Equipment (5yr) 800 800 800 800 800 Total Depreciation and Amortization 1,800 1,800 1,800 1,800 1,800

TOTAL EXPENSES 227,325 223,653 234,437 255,275 267,625 Net Income ($28,248) $39,637 $28,852 $77,842 $65,493

Net Change in Cash Flow ($9,000) ($35,448) $41,437 $30,652 $79,642 $67,293(Excludes Depreciation/Amortization)

PALOMAR POMERADO HEALTH

CASH FLOW ANALYSISPOMERADO OP SPINE CENTER

Total Capital

Equipment =

$9,000

Volume change

over 5 years =

145 cases

Target

ADD C-847

Financials: Pro‐forma Detail

Total Expenses = $225,000

1

Use of existing organizational resources

ADD C-948

Patient Experience

Center for

Back and

Neck Pain

Panel

Patient

Managed

Medically

Procedural

Intervention

Center for

Back and

Neck Pain

ADD C-1049

Recommendations

• Initiate the development of a spine center in the POP to grow the spine program at PPH

• Partner with physicians on the development of a physician panel

ADD C-1150

CCCEEENNNTTTEEERRR FFFOOORRR BBBAAACCCKKK AAANNNDDD NNNEEECCCKKK PPPAAAIIINNN

Business Plan

ADD C-1251

Introduction

A. Project Description

The PPH Center for Back and Neck Pain will provide innovative and comprehensive approaches for the treatment of back and neck pain using a multidisciplinary team to facilitate an integrated approach to care. The center will symbolize excellence by providing advanced treatment throughout the continuum including an initial evaluation, surgical consult, therapy, pain management, and surgery combined with providing active educational, research and preventative programs.

B. Alignment with PPH’s Strategic Direction

The PPH mission and vision are:

Mission: To heal, comfort and promote health in the communities we serve.

Vision: To be the health system of choice for patients, physicians, and employees, recognized nationally for the highest quality of clinical care and access to comprehensive services

The PPH Center for Back and Neck Pain supports the organization’s mission and vision to provide the community access to comprehensive services. It fosters the development of a key service line for the organization and aligns with the FY10/11 initiative to grow the contribution margin in Neurosciences and Orthopaedics. Facility and program development will provide patients with access to the most advanced treatment options for the care of neck and back pain, through the delivery of the most current therapies and technology to elevate quality and profitably grow referrals and expand the service line. This outcome will be achieved while providing the patient with the ideal patient experience.

C. Plan Summary

Low-back pain is one of the most common sources of pain, interfering with activities of daily living.1 An alarming statistic across the country is that 4 out of 5 American adults will experience low back pain during their lifetime. Data shows that within three months, 1 in 4 experiences at least 1 day of back pain.

1 http://www.cdc.gov/nchs/data/hus/hus06.pdf

ADD C-1352

This business plan proposes a PPH Center for Back and Neck Pain to provide advanced treatment of back and neck disorders. The programs will focus on:

• Providing patients with advanced services for chronic back and neck pain • Offering regular community and physician education, outreach and

marketing • High clinical quality and dominant market position • High patient and physician satisfaction • Increased visibility and branding in the community

D. Services/Program Description

The program model is based on a physiatrist acting as the care coordinator and first consultant to evaluate patients that need services for back or neck pain.

The proposed location for the program is the Corporate Health Clinic on the 5th floor of the Pomerado Outpatient Pavillion. The program will be structured as a 1206D clinic, licensed outpatient department of the hospital. In collaboration with the Director of Corporate Health the license and current policies and procedures will need to be reviewed/evaluated to ensure that the license encompasses using the space as a Center for Back and Neck Pain.

The Center for Back and Neck Pain will run a total of 8 hours per week and expand as the program grows.

The center operation will have both real and virtual elements given that the surgeons and other specialty providers are not co-located in the same space where the physiatrist and nurse coordinator will see and triage patients.

Other PPH programs that will be on a panel to receive patients from the center include outpatient rehab, integrative medicine, behavioral health, home health and diagnostics (imaging, lab). Outpatient rehab, integrative medicine and diagnostics are located in the POPbuilding.

The PPH program will provide a full range of services coordinated along the continuum. The services will include evaluation, pain management, surgery, patient and physician education, diagnostics, and improved outcomes in partnership with physician providers.

Startup capital investment is minimal due to the utilization of previously existing resources. The primary investment will be in IT systems and connectivity for documentation and billing purposes. The upfront capital cost will be approximately $9,000.

It is proposed that the Center for Back and Neck Pain be managed by the Manager of Program and Business Development.

ADD C-1453

II. Market Analysis

A. Competitive Programs

PPH has a low market share for spine surgery. In 2008, PPH market share for spine in the primary service area was 36.5%2. In comparison, PPH has a much higher market share of 60-65% in CV.

According to the CY2008 market share, UCSD (9.3%) and Scripps Green (16.6%) were the most significant competitors in the PSA. This data precedes Alvarado opening their outpatient spine program.

In San Diego, Alvarado Hospital is the only facility that currently has a well integrated outpatient spine program. Alvarado has implemented a model that utilizes a multidisciplinary approach to manage patients and referrals to ensure that the “right” treatment is received at the “right” time.

III. Financial Analysis

Volume – The financial impact on the organization is quantified by the number of patients that would seek spine surgery at PPH. The target incremental spine surgeries Year 1 thru Year 5 are 21, 27, 27, 35, and 35 respectively totaling 145 cases. These cases represent an increase in the PPH market share starting with 1% and ramping up to 5% recapture in Year 5. At the bottom of this section, there is a chart that shows the potential volume impact if threshold, target or max volumes were achieved.

The contribution margin and NOI are both positive for spine surgery at PPH. According to PPH FY09 average contribution margin and NOI are $9,088 and $2,574 respectively3. These numbers were built into the financial assessment of impact on surgeries. The contribution margin is subject to shifts in payor mix and charge capture.

Staffing – The program will require 1.45 FTE’s in Year 1 (1.0 RN Navigator, 0.2 secretarial support and 0.25 Administrator). The business plan outlines a phase I and phase II approach to allow for clinic ramp up time prior to hiring a full time FTE.

Equipment- A minimal IT investment is required to begin this center. Building on the ExpressCare system eCW the center would only have monthly expenses associated with the license and hosting of the server. The montly expense for this is noted below.

» For first FT provider: $400/month- license fee, $100/month eCW hosted server

2 CY 2008 Market Expert Data 3 FY09 Data, PPH Decision Support

ADD C-1554

» Additional part time providers: $250/month- license fee, $100/month eCW hosted server

The total capital outlay will be $9,000 for IT and facility improvements.

The financial impact of the proposed program is noted below in the threshold-target-maximum format to show a range of potential performance.

Total Incremental CM (Y1-Y5)

Positive Cash Flow

NPV Volume

Change over 5 years

Threshold $1.25 M 4.0 $46k 131

Target $1.39 M 1.9 $148k 145

Maximum $1.46 M 1.9 $200k 153

IV. Implementation/Operational Considerations

A. Location

The proposed location for the program is the Corporate Health Clinic on the 5th floor of the Pomerado Outpatient Pavillion. The program will be structured as a 1206D clinic, licensed outpatient department of the hospital. In collaboration with the Director of Corporate Health the license and current policies and procedures will need to be reviewed/evaluated to ensure that the license encompasses using the space as a Center for Back and Neck Pain. The center will need to lease an office from the Suite 525 timeshare to provide physician office/workspace.

B. Physician Relationships

For this program to be successful it will be important to have well respected Orthopaedic and Neurosurgeons involved in the development and operations of the center. The proposed medical consultant to lead the initial phase is Dr. Esmaile a Physiatrist currently serving as the Medical Director for our inpatient Acute Rehab Unit. He will also be the non-surgical physician to evaluate and help triage patients in the center.

C. Staffing

This requires an RN navigator, time from existing administrator along with assistance from the departmental assistant to coordinate day of care for these patients.

D. Marketing

The main marketing channels for this service will be:

ADD C-1655

Direct to patient Physician referral

V. Conclusion

The PPH Center for Back and Neck Pain is positioned to change the paradigm through multidisciplinary collaboration. The higher satisfaction and convenience of this program will help to improve market share in the PSA. According to CY2008 data, PPH had a 36.5% market share, evidence that there is a huge outmigration of patients and an opportunity to recapture some of the business in the PSA.

ADD C-1756

VI. MISSION/STRATEGIC IMPLICATIONS

A. Mission and Vision Statements

Mission: to heal, comfort and promote health in the communities we serve. Vision: to be the health system of choice for patients, physicians, and employees, recognized nationally for the highest quality of clinical care and access to comprehensive services

B. Mission and Strategic Implications of the Proposed Center

The PPH Center for Back and Neck Pain supports the organization’s mission and vision to provide the community access to comprehensive services. It also fosters the development of a key service line for the organization and aligns with the FY11 initiative to grow the contribution margin in Neurosciences and Orthopaedics. Facility and program development will provide patients with access to the most advanced treatment options for the care of neck and back pain, through the delivery of the most current therapies and technology to elevate quality and profitably grow referrals and expand the service line.

ADD C-1857

VII. MARKET ANALYSIS

A. Target Population

Target population is:

» Adults with back and neck issues in the PPH primary and secondary service area

» Referring physicians in the specialties of internal medicine, and family practice.

Target Market:

» Primary Service Area: Escondido, Pala, Pauma, Palomar Mountain, San Marcos, Santa Ysabel, Valley Center, Julian, Poway, Ramona, Rancho Bernardo and Rancho Penasquitos.

» Secondary Service Area: Bonsall, Carlsbad, Del Mar, Encinitas, Fallbrook, Oceanside, Camp Pendleton, Oceanside, Vista, Rancho Santa Fe, San Marcos, San Diego, Murietta and Temecula.

Target Demographic:

» Age: 40-70, while still recognizing that patients older and younger may experience back pain and other requiring re-evaluation after a prior surgery.

» Below is the population breakdown for the PPH service area. The patient population specifically targeted for back and neck pain makes up about 40% of the primary service area.

» Back issues progress with age in fact research shows that back issues initiate when someone is 30-40 years old and then continue for a lifetime.

ADD C-1958

Source: Market Expert 2008 data

Current Population by Age GroupArea: PPH Service Area

2009 ZIP Code ReportSelected Age Group Set: Thomson Demographic Snapshot Age Groups

Pop Age 0-1422%

Pop Age 15-175%

Pop Age 18-2410%

Pop Age 25-3412%

Pop Age 35-5428%

Pop Age 55-6410%

Pop Age 65+13%

The population within the primary service area is forecasted to grow nearly 9% by 2014. The fastest growing age group is 55 and above which matches the target market for the PPH Center for Back and Neck Pain.

2009-2014 % GROWTH Count %

Age 0-14 11,391 10.2%Age 15-17 -433 -1.8%Age 18-24 697 1.4%Age 25-34 9,114 14.7%Age 35-54 376 0.3%Age 55-64 12,893 24.3%Age 65+ 11,050 17.4%

Total Population 45,088 8.9% Source: Market Expert 2008 Data

ADD C-2059

Currently, PPH has 36.5% of the inpatient spine market share in the primary service area. This is relatively low compared to other PPH Service lines such as CV that maintains a 60-65% market share in the primary service area.

Below is a breakdown of competing spine surgeries from the primary service area by treatment site. The top competing facilities (Scripps Green, UCSD, and Sharp) are pulling the most significant number of cases from the San Diego, Escondido and Poway zip codes.

State Inpatient PivotTable Report - Market Share by HospitalDatabase: Inpatient CA (MS-DRG) 01/01/2008 - 12/31/2008Area Selection: PPH Service AreaSelected Hospital: Pomerado Hospital** Normal Newborns are Included

DataHospitalName DRG ProduPatients % DownPalomar Medical Center Spine 400 29.5%Scripps Green Hospital Spine 225 16.6%University Of Calif-San Diego Medical Center Spine 126 9.3%Pomerado Hospital Spine 95 7.0%Sharp Memorial Hospital Spine 87 6.4%Scripps Memorial Hospital - La Jolla Spine 84 6.2%Kaiser Fnd Hosp - San Diego Spine 82 6.0%Scripps Memorial Hospital - Encinitas Spine 60 4.4%Scripps Mercy Hospital Spine 56 4.1%Tri-City Medical Center Spine 54 4.0%Rady Children's Hospital - San Diego Spine 36 2.7%Grossmont Hospital Spine 20 1.5%Alvarado Hospital Spine 10 0.7%Hoag Memorial Hospital Presbyterian Spine 4 0.3%Pacific Hospital Of Long Beach Spine 2 0.1%Saddleback Memorial Medical Center Spine 2 0.1%Desert Regional Medical Center Spine 2 0.1%Mission Hospital Regional Medical Center Spine 2 0.1%Kaiser Fnd Hosp - Panorama City Spine 2 0.1%Kaiser Fnd Hosp - Sunset Spine 1 0.1%Sharp Chula Vista Medical Center Spine 1 0.1%Sharp Coronado Hospital And Healthcare Center Spine 1 0.1%Kaiser Fnd Hosp - Anaheim Spine 1 0.1%Sierra Vista Regional Medical Center Spine 1 0.1%St. John's Health Center Spine 1 0.1%Stanford Hospital Spine 1 0.1%Little Company Of Mary Hospital Spine 1 0.1%Grand Total 1,357 100.0% Source: Market Expert 2008 data

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In the secondary service area, PPH's 2008 spine market share was 8%. The graph below shows the volumes for the top 10 facilities in the secondary market. Tri-City is leading with 346 cases followed by Scripps Encinitas and La Jolla with 218 and 168 respectively.

346

218

168

160

119

92

82

70

45

30

0 50 100 150 200 250 300 350 400

Tri-City Medical Center

Scripps Memorial Hospital - Encinitas

Scripps Memorial Hospital - La Jolla

Scripps Green Hospital

Palomar Medical Center

University Of Calif-San Diego Medical Center

Kaiser Fnd Hosp - San Diego

Sharp Memorial Hospital

Scripps Mercy Hospital

Rady Children's Hospital - San Diego

Faci

lity

Market Inpatients


B. Demand Forecasting

Low-back pain is one of the most common sources of pain that interferes with the activities of daily living.4 An alarming statistic across the country is that 4 out of 5 American adults will experience low back pain during their lifetime. Statistics show that within the last 3 months 1 in 4 experienced at least one day of back pain. Typically the first incident of back pain occurs between the age of 30-40 and then the frequency increases with age.5 Individuals live with back pain for many years and studies show that living with this type of pain decreases productivity.6 With the aging population this program has the potential for significant growth over the next few years.

1. Projected Volumes

4 http://www.cdc.gov/nchs/data/hus/hus06.pdf 5 http://www.niams.nih.gov/Health_Info/Back_Pain/default.asp 6 http://www.kaiserhealthnews.org/Daily-Reports/2003/November/12/dr00020826.aspx

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The program will be implemented in a staged structure. Utilizing the assumptions listed below, the clinic is estimated to have a volume of 5 patients/day and 240 patients annually.

» One clinic day per week

» Maximum capacity for one physician is 16 patients/day (assuming 92.3% productivity). The anticipated volume for the year is based requiring a ramp up period upon initiation of the program.

» Estimated time per patients is 30 minutes- more time will be allocated for new patients to orient them to the providers in the program and what their experience will be like.

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VIII. COMPETITOR ANALYSIS

The top competitors to PPH for Spine are Scripps, Sharp, UCSD and Alvarado. Below is a brief analysis of the services that they provide for patients with back and neck pain. Scripps Health Scripps Health is a not-for-profit community based health care network that includes five acute care hospitals, nine specialty clinics, multiple medical clinics, and two exclusive medical groups. They offer surgical intervention for spine but do not have a spine center model at their facility. Sharp Healthcare Sharp Healthcare is a not-for-profit community based health care network with seven hospitals, multiple urgent care centers, four specialty centers, three affiliated medical groups and a health plan. On an inpatient basis they are involved in spine surgery and pain management but do not have a formal spine center. Sharp does offer a community outreach program for individuals with spinal cord injury. UCSD Medical Center UCSD Medical Center is an academic and research institute associated with the University of California. USCD’s medical facilities include UCSD Medical Center, Thornton Hospital in La Jolla, Moore’s Cancer Center, Shiley Eye Center and several outpatient facilities. They offer online registration, and a PM&R assists in the coordination of care for their spine patients. In the area of spine care UCSD focuses on providing the following:

» Inpatient spine surgical services, including minimally invasive surgery.

» Clinical research to find the most effective treatments

» Close coordination with the Anesthesia pain clinic

Alvarado Hospital Alvarado is one of the only hospitals in San Diego County that currently operates a formal spine center. It is called the Advanced Spine Institute and Minimally Invasive Spine Center. Their facility offers a multidisciplinary team (board certified physicians, rehab, nursing, pain management, pharmacy) to provide advanced treatment options and comprehensive care.

» Advanced Spine Institute and Minimally Invasive Spine Center

» 1 point of contact for smooth coordination

» Location: Rehab building, 3rd floor, adjacent to the hospital

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» SpineZone (Rehab)

» Spine Specialists (Surgeons

» Neurosurgeons (5MD’s)

» Orthopedic Surgeons (4 MD’s)

» Anesthesiologist (1 MD)

» Emergency Medicine (2 MD’s)

» Interventional Radiology (1 MD)

» Neurology (1 MD)

» Pain (1 MD)

» PM&R (4 MD’s)

» Psychiatry (1 MD)

» Pulmonary/Sleep (1 MD)

» Wellness (2 DO)

» SpineZone (1 PhD)

Summary In San Diego, Alvarado Hospital is the only facility that currently has an outpatient spine program. Other facilities offer different services but not utilizing an integrated structure similar to Alvarado.

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IX. CURRENT SITUATION

PPH does not currently offer a dedicated outpatient program for spine care. The primary focus has been on the provision of IP services (surgical and nursing care). The data shows that half of the inpatient spine surgery cases at PPH were Medicare patients in CY 2008. The program is projected to maintain the current payor mix when the new clinic is established.

PPH Spine Payor Mix

Medicare49%

Other Government

1%

Private Coverage

35%

Self Pay2%

Workers Compensation

7%

County Indigent Programs

2% Medi-Cal4%

County Indigent ProgramsMedi-CalMedicareOther GovernmentPrivate CoverageSelf PayWorkers Compensation

Source: Market Expert 2008 data The payor mix noted above includes medical back, which makes up 279 of the 696 cases that PPH sees on an inpatient basis. Total surgical cases for 2008 were around 417, with 370 cases at Palomar Medical Center and 47 cases at Pomerado Hospital. The 2008 payor mix for all of the spine surgical cases in the primary service area is listed below. It shows that private coverage, which includes HMO, commercial and PPO is the largest followed by Medicare.

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2008 Primary Service Area Payor Mix

Medicare39%

Private Coverage

44%

Self Pay1%


9%


1% Medi-Cal4%

Other Government

2%

Other Indigent0.1%

Other Payer0.2%

County Indigent ProgramsMedi-CalMedicareOther GovernmentOther IndigentOther PayerPrivate CoverageSelf PayWorkers Compensation


Patient Origin

226

104

65

30 2712 11

7739 38 3334

0

50

100

150

200

250

Escon

dido

San D

iego

San M

arcos

Valley

Cen

ter

Ramon

a

Fallbro

ok

Poway

Vista

Ocean

side

Temec

ula

Murriet

aOthe

r

Num

ber o

f Pat

ient

s

Source: Market Expert 2008 data Orthopaedic and Neurosurgeons at PPH currently provide spine services to the community. There are currently 7 neurosurgeons and 2 orthopaedic surgeons doing spine surgery at PPH. These physicians primarily practice at Palomar Medical Center. The majority of the volume comes from 4 of the surgeons noted above. Additionally, other specialists perform pain management procedures.

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X. PROGRAM PROPOSAL

A. Overview

PPH has a very fragmented system for delivering spine care. There are many points of entry and a lack of coordination between services in the system. Historically there has been a turf war between specialists contributing to the complexity in the delivery of services. When this clinic opens, it will offer the community a more integrated approach to care. Development of the program will symbolize excellence by appropriately managing initial evaluations, surgical consults, therapy, pain management along with regular education/research and preventative programs. Implementation of this model to medically manage patients will also provide for an environment more conducive to movement of the market towards ACO.

B. Facility

The center will be run out of the Corporate Health space in the Pomerado Outpatient Pavillion. This space is currently licensed as a 1206d clinic. A thorough evaluation would need to be conducted to ensure that all requirements are met to begin using this space for the center. If there are changes necessary they would only be a slight modification to the current license in place for the space. Physical therapy, integrative medicine and imaging are also located in the Pomerado Outpatient Pavillion making it convenient for patients requiring additional services from PPH. In addition, any pain procedures can be done in the interventional suite or operating room at Pomerado Hospital. The center will share the waiting space with the adjacent timeshare. Patients will check in and be seen in the 1206d clinic and the physiatrist and the RN will have office space in the timeshare suite. The days/times of the center will be finalized in collaboration with the Director of corporate health.

C. Program Goals and Objectives

For PPH to develop a spine program, the organization must focus on continued development of both inpatient and outpatient services. Currently PPH lacks several key elements to demonstrate for the community that we have a well-developed spine program. Some key opportunities are:

» Coordination of services along the continuum

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» Creating standards and protocols

» Developing specific education for this population

» Creating a facility based center

» Prepare PPH for future payment structure changes under healthcare reform- eg. Bundled payments.

The program goals are:

» Provide patients with advanced services for chronic back and neck pain

» Provide community and physician education, outreach and marketing

» Improve clinical quality

» Deliver a very good service leading to high patient and physician satisfaction

» Increased visibility and branding in the community to grow market share in spine

D. Operations Management

In the PPH market, an opportunity exists to strengthen the alignment between referring physicians, specialists and the hospital. Much of spine care involves management of patients prior to a surgical intervention; the center would provide a location for patients to be seen and their spine care managed.

The key services provided at the PPH Center for Back and Neck Pain will be initial consults, diagnostics, second opinions and referrals to ancillary services (therapy, imaging, pain, and nutrition), education and support. Those services will be delivered through the model below:

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Patient calls spine center phone #

PPH employee speaks with patient and coordinates the appointment time based on

physician availability + insurance type

Patient comes to spine center for initial

physician consult (non-surgical)

Patient sent for additional diagnostics

Pain specialist

Physical Therapy When appropriate first consult with surgeon

Inpatient/outpatient surgery or pain pump

insertion at PPH Facility

Patient managed at physician office

Post-surgical rehab at PPH

Feedback to PCP- coordinated by navigator

In this model patients will be seen in the clinic for their initial consult with a PM&R or Occ Med physician. The physician will evaluate and order appropriate diagnostic tests to help manage the patient. Once it is determined that a consult with an orthopedic surgeon is appropriate the patient is referred to the surgeon for the first surgical consult in the center. A designated PPH employee will assist in the coordination of the patients’ information for the consult (images, etc.). The triage process will be very clear after the development of clear pathways/protocols for care. The program implementation will require the identification of a paid medical consultant to advise the development of this program (appendix G). This physicians role will be to lead the development of the process to ensure fair opportunities for all physicians, always keeping in mind that our priority is the patient and meeting his/her needs.

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E. Program Structure

Designated Space • 1206D clinic at 15611

Pomerado Rd, Suite 525 • Utilize space 8 hours per

week • Corporate Health Clinic, in

close proximity to rehab, imaging, surgery

• 2 exam rooms, reception area

Designated Staff • RN- need an RN Navigator to

help patients manage the system and to help in office

• Potential opportunity to cross-utilize staff from another area to assist

Physician Leader • Board certified • Credentialed at PAL/POM • Respected by medical staff

Administrative Support • 0.25 of an FTE to support and

manage this clinic

Services: The following services will be provided at the center*:

» Initial Visits- 30 minutes

» Review of Diagnostic tests- 30 minutes

» Second Opinion- 30 minutes

» Follow-up appointments- 15 minutes

» Procedures: Epidural Steroid injections, trigger point injections

*Other services not provided in the facility will be referred to appropriate PPH departments (eg. Diagnostics). The number of in office appointments varies based on the patient but a typical number of visits are around five before surgery.

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The graphic below depicts how the referrals will work.

SPINE CENTER

PM&R Physician

Pain Management Specialist

Orthopaedicsurgeon

Neurosurgeon

Integrative Medicine

Behavioral Health

Rehab

Home Health

Imaging

Lab

REFERRALS

Note: Physicians on the panel need to comply with criteria established during the development phase of the center.

Physician Leadership The program will have a dedicated physician medical advisor. The duties will be outlined in a formal agreement between the physician leader and the hospital. The projected hours will be 5-7 per month. The physician medical advisor will need to be board certified with advanced training in spine. This physician will be responsible for the following items.

» Patient assessment

» Education

» Coordination with PPH administrative team for marketing, program development and outreach

» Commitment to work at the center a designated number of hours each month

» Medical oversight of patients in the department

» Lead and participate in identifying cost savings opportunities

» Managing the physician panel

A physician panel will provide the clinical support to develop the program for spine patients. For a physician to be on the panel to receive patients from the center he must meet the specified criteria for the program. The physician advisory team will finalize

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criteria for participation after business plan approval. PPH recommends that the following be considered for discussion: Spine Program Criteria

» Participation in community events and CME

» Agreement to work on cost management strategies

» Credentialed at PMC/POM for spine surgery

» Board Certified

» Willingness to share data for quality improvement

The physician panel ensures that patients referred to the center are seen by an appropriate physician for their complaint and insurance type. The physicians on the panel will represent all local contracts to ensure that it is not a barrier to see patients at the PPH Center for Back and Neck Pain. Staffing Minimal staffing is required to manage and operate the center. The staff and description of their function is noted below. FTE/Title Function 1.0 FTE Clinical Coordinator Will work with the referring physician

to expedite intake, follow-up with referring physician, coordinating return visits and facilitating the patients experience in the clinic and IP surgery. Assist with program development overall for spine and joint replacement services at PPH.

0.25 FTE Administrator Administrative oversight of the program

0.2 FTE Administrative Assistant/ Program Assistant

Provides support services to the program, checks patients in, etc

The leadership of the Center for Back and Neck Pain will work with therapy, imaging and other departments to develop dedicated teams with expertise and knowledge to work with these patients. Appendix F further describes each individual’s responsibilities. Since the center will take time for ramp up there are two options to allow PPH flexibility in hiring a full-time FTE as the program grows. The options provide initial support and ongoing coverage for vacations and sick leave.

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PHASE I PHASE II

Option I RN Consultant

Option 2 Per diem staff – COS

Newly hired RN coordinator

Equipment This new program will require some minimal capital investment in an electronic medical record. Since we are currently using eClinicalWorks in our ExpressCare clinics the recommendation is to use a similar system in the Center for Back and Neck Pain. The EMR can be used for outpatient billing, documentation, ePrescribing and additional services available upon purchase. In the future, the program needs a database to monitor outcomes, referral patterns, and trends in care issues.

Timeframe Area Task Start Date after Approval Physician Development Finalize group of

physicians that are interested and identify contract with physician medical advisor

Immediate

Space Finalize day/time of clinic and do facility upgrades

Immediate

Space Evaluate equipment and supply needs

3-4 weeks

Staff Hire RN coordinator 3-6 months Marketing Initiate marketing at least

1 month prior to opening the center

3 months

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XI. Performance Monitoring

The recommendation is to create a clear set of balanced performance metrics that will allow the organization to track the success of the Center for Back and Neck Pain. The center will focus on metrics in the areas of growth, finance, patient/customer experience, clinical and access. Key metrics are identified below. Targets will be established upon the development of the panel and hiring of key staff for the center.

Category Metric Growth Volume Target Financial Contribution Margin for IP spine surgery Patient/Customer Experience Press Ganey- Would you recommend?

Satisfaction of referring physicians Clinical Infection Rates

Bed Days Complications

Access Phone calls to clinic for referrals/triage Utilization of clinic time Access for imaging, therapy

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XII. MARKETING PLAN

Many people in the community suffer from back or neck pain on a regular basis. The marketing strategy will need to be multipronged focusing on patients that can self refer to the program and potential referring physicians that would send their patients to the center. The objectives for the marketing plan are:

» Create awareness of the new program

» Establish reputation as a hospital offering comprehensive spine services

» Grow market share

» Introduce the program to key audiences

A. Marketing Strategy

The marketing strategy will need to have three different components that address Health Plans, Referring Physicians and the Community/Patients. When the spine center opens there needs to be a fully developed marketing campaign to support the opening of the center. Community Patients: Other spine centers across the country state that 30% of their volume is self-referred. Research shows that this patient population values their friends/colleagues feedback over that of their physicians. It is recommended that PPH utilize television, internet, news, print ads, etc to promote the service direct to consumer. It will be important to strategically place physicians to respond to newly release news stories to get the name/faces out in the community. Referring physicians: It will be critical to provide personal outreach to physician offices with marketing materials demonstrating the value of the PPH Center for Back and Neck Pain. The materials can highlight 1) Education/Training, 2) outcomes, 3) Services/Technology. That opportunity will also be used to discuss how the referring physician will be informed about patient’s status and progression. This meeting would require the administrator and spine surgeon travel to the referring physician office to build relations between physicians and educate about the program. Health Plans: The health plans needs to know the value that this program brings to their patients to ensure that the referrals continue to come to the center. The approach will be to utilize the existing relationships between PPH and the health plans to share

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information about the program, outcomes and the value proposition that this type of structure creates for the patients. This program will positively impact the brand of the facility by creating a more integrated program outside of just providing a location for surgery.

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XIII. REQUIREMENTS

A. Launch/Implementation Timeline

Category Estimate for Completion Facility/space prep 2 months Secure physician medical advisor 1 month Secure coordinator 6 months Marketing Materials 2-3 months Contracting- initiation 2 months

B. Launch/Implementation Difficulty

This program may be difficult to engage a wide audience of physicians due to the one location that this program will be offered initially. There are several physicians interested in participating but for the program to be successful, it will be important that the referring physicians see value in the program for their patients. It needs to be easy to refer a patient into the program and we must demonstrate successful coordination of services for these patients. One final aspect that will be critical is to have contracts in place that allow patients to be referred to the center for excellent back and neck care.

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XIV. FINANCIAL ANALYSIS

Start-Up Capital Initial start-up capital is required for IT system implementation. The upfront capital cost is for an estimated 3 months payment upfront along with training equating to approximately $4,000. Ongoing there are license and server hosting expenses noted below. The proposed costs below would apply if we used eClinicalWorks (eCW) for documentation. $400/month- license fee, $100/month- eCW hosting server = $500/month Minor office improvements may be required to use space for a PPH spine center. eCW training costs are omitted here with the assumption that staff currently using the system can provide training to new users. Operating Costs 0.2 FTE Office Secretary = $25/hr 1.0 FTE RN Navigator = $40-45/hr 0.25 FTE Administrator = $40-45/hr (existing) Payor Mix The 2008 payor mix for spine is noted below. This data was used for the financial estimates provided in the proforma.

2008 Primary Service Area Payor Mix

Medicare39%

Private Coverage

44%

Self Pay1%


9%


1% Medi-Cal4%

Other Government

2%

Other Indigent0.1%

Other Payer0.2%

County Indigent ProgramsMedi-CalMedicareOther GovernmentOther IndigentOther PayerPrivate CoverageSelf PayWorkers Compensation

Source: 2008 Market Expert, Spine DRGs

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Total Incremental CM (Y1-Y5)

Positive Cash Flow

NPV Volume

Change over 5 years

Threshold $1.25 M 4.0 $46k 131

Target $1.39 M 1.9 $148k 145

Maximum $1.46 M 1.9 $200k 153

Assumptions for financial numbers listed above are noted in Appendix E. The center has a positive NPV for all models and varying payback depending on the level of proforma selected. It is recommended that we utilize the target as a framework with a payback period of 1.9 years.

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APPENDIX

A-G

ADD C-4180

Appendix A:

DataHospitalName DRG P DRG Patients %DownPalomar Medical Center Spine Back & neck proc exc spinal fusion w CC/MCC or disc device/neurostim 48 6.9%

Back & neck proc exc spinal fusion w/o CC/MCC 91 13.1%Cervical spinal fusion w CC 16 2.3%Cervical spinal fusion w MCC 6 0.9%Cervical spinal fusion w/o CC/MCC 44 6.3%Combined anterior/posterior spinal fusion w MCC 1 0.1%Combined anterior/posterior spinal fusion w/o CC/MCC 3 0.4%Medical back problems w MCC 16 2.3%Medical back problems w/o MCC 195 28.0%Spinal disorders & injuries w CC/MCC 2 0.3%Spinal disorders & injuries w/o CC/MCC 3 0.4%Spinal fus exc cerv w spinal curv/malig/infec or 9+ fus w CC 3 0.4%Spinal fus exc cerv w spinal curv/malig/infec or 9+ fus w/o CC/MCC 2 0.3%Spinal fusion except cervical w MCC 2 0.3%Spinal fusion except cervical w/o MCC 121 17.4%Spinal procedures w CC or spinal neurostimulators 12 1.7%Spinal procedures w MCC 6 0.9%Spinal procedures w/o CC/MCC 10 1.4%

Spine Total 581 83.5%Palomar Medical Center Total 581 83.5%Pomerado Hospital Spine Back & neck proc exc spinal fusion w CC/MCC or disc device/neurostim 7 1.0%

Back & neck proc exc spinal fusion w/o CC/MCC 16 2.3%Cervical spinal fusion w MCC 1 0.1%Cervical spinal fusion w/o CC/MCC 4 0.6%Combined anterior/posterior spinal fusion w CC 1 0.1%Medical back problems w MCC 4 0.6%Medical back problems w/o MCC 64 9.2%Spinal fus exc cerv w spinal curv/malig/infec or 9+ fus w/o CC/MCC 1 0.1%Spinal fusion except cervical w/o MCC 12 1.7%Spinal procedures w MCC 1 0.1%Spinal procedures w/o CC/MCC 4 0.6%

Spine Total 115 16.5%Pomerado Hospital Total 115 16.5%Grand Total 696 100.0%

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Appendix B. SWOT and Gap Analysis Strengths • Fellowship trained spine surgeons on

staff • Improved care coordination • Program with site location to market • Increased opportunity to manage costs • Improve connection between primary

care/specialists in NC

Weaknesses • Lack of a strong physician leadership • The program is only as good as the

physician panel • Not supported by inpatient operations • Time to ramp up program volume

Opportunities • Begin to demonstrate support for the

accountable care organization • Recruiting a newly trained neurosurgeon • To increase market share for spine in the

PSA/SSA

Threats • Other local hospitals are creating spine

centers that may pull business from PPH • Physicians satisfaction may lead to seek

other opportunities

GAP Analysis- bolded items require financial investment Existing Resources GAPs Need MDs • Fellowship training

spine surgeons on staff

• Recruiting a newly trained neurosurgeon

• Neuro/Ortho tension is manageable

• PM&R to do non-surgical back

• No clear leader • Pain

Management specialist dedicated to the success of the program

• Need to identify a physician leader to provide ongoing support leadership of spine center

• Physician medical advisor fees

Contracting • No issues from the hospital side

• New cap contract with SCMG for spine

• Minimal inmigration

• Kaiser not doing spine at PPH, but there is potential

• Outreach to other IPA contracting entities like NAMM, PCAMG, Scripps

Facility Space: Clinic

• South- POP timeshare for designated clinic days

• Not 1206D licensed

• Need to submit for 1206D approval- OSHPD III compliant

• Application fee

ADD C-4382

Facility: OR/Imaging

• Spine IP surgery adequate

• Imaging located in Pomerado on the 2nd floor (MRI, CT, XRay)

• Open suites for khyphoplasty/ vertebroplasty/ pain management

• Minimal spine surgery done at Pomerado Hospital (staff education req.)

• OP at Pom is a gap

• Staff education at Pomerado

Imaging Location • MRI- Trailer out 2nd floor

• C-Arm available • PPH X-Ray unit soon

to be located at the POP- in CHC timeshare

• Imaging is not in contiguous space with the clinic

• Coordination of appointment dates/times

Facility Administrative Team

• Administrative Assistant resource available at the timeshare (SM)

• RN Navigator to help manage the patients through the system

• RN Navigator

Therapy • IP/OP and acute rehab • OP rehab department

down the hall from proposed suite in the POP building

• Free standing therapy locations are highly competitive and PPH loses

• Free standing centers have more consistent staff assignments

• Dedicated group of therapists to work with spine patients (extra training)

• Coordination of appointment dates/times

• PPH Staff alignment consistency

• Dedicated team to work with spine patients

Patient Education • None • No program currently in place for spine patients prior to surgery

• Establish a pre-op teaching program (Need $$ to develop)

• Therapy/education sessions

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Marketing • Website • Physician Referral • Initiating marketing

campaign • Ortho brochure

• Fear that referring physician will not get patient back

• Full marketing plan • Continued

development of spine microsite

• Two way electronic communication with MDs

• Outreach to referring physician offices

Quality • Premier data (Delayed)

• Real time outcomes

• Track and compare spine outcome data

IT/ Telecommunication

• PACs system for physician viewing

• Access to inpatient medical records

• Novo

• Ability to have 2-way discussions with patients

• Coordination software

• Patient portal • Phone line/system • More significant

financial investment Equipment • POM/PMC are fully

equipped for spine surgery

• View boxes are installed at timeshare

• •

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Appendix C:

Physician capabilities and capacity To operate a high quality PPH Center for Back and Neck Pain is it important to have physicians with the appropriate credentials to manage patients. The list of physicians by specialty is listed below: Surgeons Physician Specialty Board

Certified Fellowship Practice:

Dr. Sohaib Kureshi

Neurosurgeon No (eligible 2002)

Spine, Neurosurgery

Dr. Thomas Marcisz

Neurosurgeon No Spine, Neurosurgery

Dr. Lawrence McKinley

Orthopedic Surgeon

Yes Spine Spine

De. Kenneth Ott Neurosurgeon Yes Neurosurgery, Spine

Dr. Jefferey Schiffman

Orthopedic Surgeon

Yes Yes General Ortho, Spine

Dr. Mark Stern Neurosurgeron Yes Spine Spine, Neurosurgery

Dr. Vrijesh Tantuwaya

Neurosurgeon Yes Spine, Neurosurgery

Dr. Kevin Yoo Neurosurgeon Spine, Neurosurgery

Dr. Geoffrey Zubay

Neurosurgeon Spine, Neurosurgery

New Recruit Fall 2009

Neurosurgeon Spine, Neurosurgery

Pain Management Dr. Shafi Khalid

Internal Medicine

Pain Medicine Geriatric Medicine, Interventional Pain Practice

Pain Management

Dr. Christopher Chisholm

Pain Management, Anesthesiology

Yes Pain Pain Management

Neurology ? Rehab/Occ Med

ADD C-4685

Dr. Keyvan Esmaeili

Physical Medicine and Rehabilitation

Dr. Donald Herip

Occupational Medicine

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Appendix E: Financials POM OP Spine Center Forma Assumptions and NOTEs General:

1) The new OP Spine Center will be located inside the Pomerado Outpatient Pavillion (POP) Building. The goal of the center will be to

better coordinate treatment of Outpatient Spine patients and increase Inpatient referrals to Spine Surgeons affiliated with PPH such

as Dr. Schiffman and Dr. McKinley 2) The OP Spine Center will offer patients the following services: * Referrals to PPH OP Physical Therapy * Referrals to consultations with Spine Specialists * Referrals to OP Pain Management (Non PPH) * Referrals to PPH IP Spine Surgery

3) Currently, PPH market share for Spine Surgery is low due to outmigration to competitors such as UCSD. The new Spine Center should be

able to recapture some of this market share for PPH. Currently, PPH's competitors do not have a similar OP Spine Center

Product Line Definitions:

1) The Product Line will be the IP Spine Product Line currently defined by DRG in the Growth Initiatives.

Contribution Margin

1) The ProForma will attempt to measure the largely fixed cost of the new OP Spine Center against the Contribution Margin from

additional IP Spine Surgeries referred to PPH by the OP Spine Center

2) The IP Spine Contribution Margin (and Margin per case) will be extracted from the Avega System for FY09.

Growth Projections:

1) Currently there is substantial outmigration of IP Spine Surgeries from PPHs primary service area to the competitors. The

total number of these cases is documented in our market share data.

2) Volume Projections will be forecast by assuming that PPH can recapture a growing percentage of the IP Spine Surgeries

that currently out migrate the PPH Service area. Program Expenses

1) Estimates will be made regarding the capital and non-capital expenses needed to open and run the OP Spine Center

2) Initial expenses will assume that he OP Spine Center is open 1 day per week. And open more days per week as volume increases.

ADD C-4887

THRESHOLD


Cumulative Cash Flow (9,000) (35,448) (51,654) (21,002) (1,711) 65,582




IP LOS 4.5 4.5 4.5 4.5 4.5

OP Discharges





TOTAL EXPENSES 227,325 217,082 234,437 245,799 267,625 Net Income ($28,248) ($18,006)

($9,000) ($35,448) ($16,206)$28,852 $17,491 $65,493

Net Change in Cash Flow $30,652 $19,291 $67,293(Excludes Depreciation/Amortization)

Pay Back in months 48 12 12 12 12 0



ADD C-4988

TARGET






IP LOS 4.5 4.5 4.5 4.5 4.5

OP Discharges





TOTAL EXPENSES 227,325 223,653 234,437 255,275 267,625 Net Income ($28,248)

($9,000) ($35,448)$39,637 $28,852 $77,842 $65,493

Net Change in Cash Flow $41,437 $30,652 $79,642 $67,293(Excludes Depreciation/Amortization)

Pay Back in months 22 12 10 - - -



ADD C-5089

MAXIUMUM






IP LOS 4.5 4.5 4.5 4.5 4.5

OP Discharges





TOTAL EXPENSES 227,325 223,653 243,549 255,275 267,625 Net Income ($28,248)

($9,000) ($35,448)$39,637 $89,568 $77,842 $65,493

Net Change in Cash Flow $41,437 $91,368 $79,642 $67,293(Excludes Depreciation/Amortization)

Pay Back in months 22 12 10 - - -



ADD C-5190

Appendix F: Role Description

Staffing • Office secretary (0.2 FTE- only charged for time when center is open)

• Responsible for answering phones, scheduling patients and being the ambassador for service excellence for the patients coming into the clinic.

• RN navigator (1.0 FTE) • Responsible for seeing patients in the clinic, coordination of services on an

outpatient/inpatient basis, and developing and leading programs to elevate the quality of care for the patients.

• Administrator (0.25 FTE) • Responsible for the management of day-to-day operations, formulation

and implementation of new policies and procedures, supervise clinic personnel (hiring and evaluations).

• Physician medical advisor • The physician medical advisor is responsible for assisting in the leadership

of the multidisciplinary team and oversight of program policies and procedures to ensure we are meeting the patient’s needs are met in a way that adds value to the medical community and the patients. The physician medical advisor will also be involved in program development, ongoing quality improvement, and will lead the efforts to address the other panel criteria. (5-7 hours/month)

• Physician Panel • A physician panel will be formed based on specified criteria. The

physicians on the panel will participate in programmatic efforts and will be on the referral panel for patients seen in the clinic.

ADD C-5291

42

Appendix G: Medical Consultant Duties Description

1. Assist and support the development and implementation of administrative rules and regulations, implement PPH’s policies and procedures, advise PPH in the development and implementation of an appropriate quality assurance program with respect to the program.

2. Advise and assist in the establishment and implementation of an effective Physician Panel for the program including participation criteria and a peer review process with respect to the program and related services.

3. Consult with PPH administration and medical staff regarding the efficiency and effectiveness of the program, and make recommendations and analyses as needed for PPH to improve services provided in the program and reduce costs.

4. Develop, review, and provide training programs and proctoring for Medical Staff and PPH personnel related to the program.

5. Assist center’s management to ensure that the program is operated in accordance with all requirements of The Joint Commission, CMS, and all applicable licensing requirements, and all other relevant requirements promulgated by any federal, state or local agency.

6. Participate in continuing medical education, research and teaching activities upon request by PPH

7. Participate in development and presentation of programs related to the marketing of the program services and enhancing PPH/community relations.

ADD C-5392

Addendum 1 to Business Plan

ADD C-5493

Spine Center Intake Process

Did the

patient

receive pre‐

auth?

Patient calls

center

Has Pt.

Completed

Workup/

Diagnostics?

Navigator

Completes

Patient

Interview/Phon

e Assessment

Yes

No

Center

Physician

Discusses Pt.

with PCP

Patient

Completes

Pre‐Consult

Protocol

Does

Insurance

Allow Pt.

Visit?

Does

Insurance

Req. Pre‐

Auth?

YesCompletes Pre‐

Auth

Yes

No

Explain Cash

Procedure

Center

Physician

Consults on

Pt.

Yes

No

No

ADD C-5594

Spine Center Evaluation Process

Are

Symptoms

Improved?

Center Physician

Completes Focused H&P

and Reviews Results with

PCP

Yes

Continue

with Non‐

Invasive Tx

Consult for

Invasive

Therapy

Is Pt.

Surgical

Candidate

Complete

Course of Non‐

Invasive Tx

Yes

No

Non‐Invasive Tx

No

ADD C-5695

Registration

Patient calls

center

Navigator

schedules the

appointment

Completes Pre‐

Auth and

scheduling form

Initiates patient

encounter when

individual

arrives in clinic

Navigator

inputs

information into

NexGen

ADD C-5796

Check‐in

Patient

arrives in

Suite 525

Check‐in with

employee at

desk

Corporate Health

employee

“activates“

account in NexGen

Corporate

Health

employee

notifies RN

Navigator of PT

arrival

ADD C-5897

ADDENDUM D Financial Statements

Fiscal Year 2011September

ADD D-198

ADDENDUM E

ADD E-1157

2Table of Contents

Balanced Scorecard Comparisons ......................................................................3 Executive Summary of Key Indicators ..................................................................4-5 Key Variance Month-To-Date.............................................................................................6-8 Year-To-Date ................................................................................................9-11 Balance Sheet – Consolidated..............................................................................12 Income Statements Month-To-Date.............................................................................................13 Year-To-Date ................................................................................................14 Current vs. Prior Year-to-Date ....................................................................15 Monthly Trend...............................................................................................16 Cash Flow Statement – Consolidated..................................................................17 Financial Report Narrative .....................................................................................18-21 Key Statistical Indicators .........................................................................................22-24 YTD Supplies Expense by Account ........................................................................25 Bond Covenant Ratios............................................................................................26 Budget Comparison Graphs Statistical Indicators.....................................................................................27-43 Payor Mix ......................................................................................................44 Case Mix Index Graphs...........................................................................................45-47 Budget Comparison Graphs – Adjusted Discharges..........................................48-53 Cash Collections......................................................................................................54 HealthWoRx Dashboard .........................................................................................55 SUPPLEMENTAL INFORMATION ..........................................................................................................56 Flash Report ..................................................................................................57-58 Quarterly Investment Fund Yield Analysis………………………………….59

99

3Balanced Scorecard Comparisons

July August

Actual Actual Actual Budget Variance% Actual to Budget Actual Budget Variance

% Actual to Budget

PPH Indicators:

9.90% 9.76% 10.35% 9.70% 0.65% 106.7% OEBITDA Margin w/Prop Tax 10.00% 9.71% 0.29% 103.0%11,168.27$ 11,234.26$ 11,633.01$ 12,300.04$ 667.03$ 94.6% Expenses/Adj Discharge 11,340.80$ 12,265.92$ 925.12$ 92.5%6,951.65$ 6,925.64$ 6,850.60$ 7,416.54$ 565.94$ 92.4% SWB/Adj Discharge 6,911.95$ 7,415.60$ 503.65$ 93.2%

6.58 6.58 6.60 6.75 0.15 97.8% Prod FTE's/Adj Occupied Bed 6.54 6.75 0.21 96.9%3,466 3,533 3,257 3,220 37 101.1% Adjusted Discharges 10,254 9,873 381 103.9%

PPH North Indicators:

10.04% 7.57% 17.61% 9.54% 8.07% 184.6% OEBITDA Margin w/Prop Tax 11.82% 9.58% 2.24% 123.4%10,156.98$ 10,289.04$ 10,677.29$ 11,506.83$ 829.54$ 92.8% Expenses/Adj Discharge 10,366.16$ 11,473.04$ 1,106.88$ 90.4%5,392.75$ 5,447.93$ 5,241.08$ 6,035.39$ 794.31$ 86.8% SWB/Adj Discharge 5,365.34$ 6,033.42$ 668.08$ 88.9%

5.30 5.28 5.31 5.39 0.08 98.5% Prod FTE's/Adj Occupied Bed 5.25 5.39 0.14 97.4%2,544 2,574 2,315 2,299 16 100.7% Adjusted Discharges 7,432 7,050 382 105.4%

PPH South Indicators:

7.53% 11.90% (13.42%) 7.12% (20.54%) -188.5% OEBITDA Margin w/Prop Tax 3.14% 7.20% (4.06%) 43.6%12,991.97$ 12,632.58$ 12,799.02$ 13,009.21$ 210.19$ 98.4% Expenses/Adj Discharge 12,814.52$ 12,974.09$ 159.57$ 98.8%6,537.56$ 6,274.10$ 6,070.10$ 6,554.44$ 484.34$ 92.6% SWB/Adj Discharge 6,295.92$ 6,552.50$ 256.58$ 96.1%

6.80 6.69 6.38 6.77 0.39 94.2% Prod FTE's/Adj Occupied Bed 6.64 6.74 0.10 98.5%897 937 925 902 23 102.5% Adjusted Discharges 2,757 2,766 (9) 99.7%

YTD 2011September

ADD D-3100

4Executive Summary & Highlights

Stat MTD Budget YTD Budget PYPatient Days - Acute 8,206 8,400 25,089 25,758 26,810 Discharges - Acute 2,157 2,179 6,762 6,681 6,860 OP Registrations 4,480 3,587 14,898 10,997 12,255 Total ER Visits 7,780 7,554 23,811 23,172 24,207 Deliveries 413 418 1,243 1,282 1,286

Profit & Loss (in millions) MTD Budget YTD Budget PYCapitation Breakeven Breakeven 0.6 Breakeven 1.8Net Patient Revenue 38.3 39.4 117.5 120.8 113.8Total Revenue 39.0 40.7 119.5 124.6 115.6

SWB 22.2 23.7 70.1 72.7 65.4Contract Labor 0.2 0.2 0.8 0.5 0.8Supplies 5.5 6.1 17.0 18.6 18.8Total Expense 37.9 39.6 116.3 121.1 111.9

Net Income from Ops 1.1 1.1 3.2 3.5 3.7

Net Income 2.3 2.1 6.6 6.7 7.1

ADD D-4101

5Executive Summary of Key Indicators

September 2010 FY 11 Y-T-D @ September 2010Actual Budget Variance Actual Budget Variance

Statistics:Adjusted Discharges 3,257 3,220 37 10,254 9,873 381 Acute Admissions 2,214 2,179 35 6,745 6,681 64 Acute Patient Days 8,206 8,400 (194) 25,089 25,758 (669)

Acute ALOS 3.80 3.85 (0.05) 3.71 3.86 (0.15)

Case Mix Index (w/o Births) 1.39 1.45 (0.06) 1.41 1.48 (0.06) Total Surgeries 1,393 1,493 (100) 4,520 4,575 (55) Births 413 418 (5) 1,243 1,282 (39) E/R Visits & Admissions 7,780 7,554 226 23,811 23,172 639

ER to Admit Rate 15.5% 16.0% (0.5%) 15.6% 16.0% (0.4%)Productivity % 97.6% 100.0% (2.4%) 97.8% 100.0% (2.2%)

Income Statement:Net Patient Revenue 38,267,054 39,435,272 (1,168,218) 117,515,340 120,845,410 (3,330,070) Total Net Revenue 38,995,486 40,681,240 (1,685,754) 119,458,208 124,583,314 (5,125,106) Sal., Wages, Cont. Lbr 17,423,557 18,816,272 1,392,715 55,746,601 57,684,462 1,937,861 Supplies 5,506,710 6,051,132 544,422 17,049,954 18,550,800 1,500,846 Total Expenses 37,888,729 39,606,156 1,717,427 116,288,090 121,101,384 4,813,294 Net Inc. (Loss) before Non-Op 1,106,757 1,075,084 31,673 3,170,118 3,481,930 (311,812) Net Income (Loss) 2,277,590 2,136,891 140,699 6,587,522 6,667,351 (79,829)

Cash Flow:Cash Collections 33,700,000 41,000,000 (7,300,000) 107,700,000 123,000,000 (15,300,000)

Days Cash on Hand 145.0 65.0 80.0

Ratios:OEBITDA w/ Prop. Tax 10.35% 9.70% 0.65% 10.00% 9.71% 0.29%Net Income Margin 5.84% 5.25% 0.59% 5.51% 5.35% 0.16%Bad Debt % of Net Revenue 6.2% 14.8% 8.6% 8.2% 14.9% 6.7%Return On Assets 1.9% 1.9% 0.0%Annual Debt Service Coverage 3.9Cushion Ratio 12.7

ADD D-5102

6Key Variance ExplanationsMonth-To-Date

Actual Budget Variance Detail Variance

Net Income From Operations 1,106,757 1,075,084 31,673

Total Net Revenue (1,168,218)Net Patient Revenue (1,168,218)

Other Operating Revenue (517,536)FY11 Initiative 1.1(a) Grow volume in agreed upon service lines (235,970) Rady (164,083) Other (117,483)

Salaries & Wages 1,397,946Volume Variance (214,410)Rate & Efficiency 1,612,356

Benefits 176,159Group Health 87,749Other 88,410

Contract Labor (5,231)Volume Variance (1,802)Rate & Efficiency (3,429)

ADD D-6103

7Key Variance ExplanationsMonth-To-Date (cont’d)


Professional Fees (91,636)Legal Counsel (133,427)Other 41,791

Supplies 544,422Volume Variance (69,532)Rate & Efficiency 613,954

Breakdown of Variance: Prosthesis 434,813 Pharmaceutical 64,549 Other 45,060

Purchased Services (16,754)Purchased Services (16,754)

Depreciation (58,322)Depreciation (58,322)

Other Direct Expenses (229,157)Other Direct (229,157)

Total Actual to Budget MTD Variance for September 2010 31,673 31,673ADD D-7 104

8Key Variance ExplanationsMonth-To-Date (cont’d)

Total Actual to Budget MTD Variance for September 2010 31,673

Non-Operating Income (Expense) 1,170,833 1,061,807 109,026

Property Tax 1,108,333 1,108,333 0

Investment Income (Loss) 420,728 265,264 155,464Breakdown:Pacific Inc Adv (93% Gov't Sec, 7% Corp Bonds, 0% MMF) 132,105 75,000 57,105Legg Mason (72% Gov't Sec, 28% Corp Bonds; 0% MMF) 230,543 141,667 88,876LAIF 10,489 16,250 (5,761)Other 47,592 32,347 15,245

Interest Expense (415,677) (368,060) (47,617)

Other 57,449 56,270 1,179

Net Income 2,277,590 2,136,891 140,699

ADD D-8105

9Key Variance ExplanationsYear-To-Date


Net Income From Operations 3,170,118 3,481,930 (311,812)

Total Net Revenue (3,330,070)Net Patient Revenue (3,330,070)

Other Operating Revenue (1,795,036)FY11 Initiative 1.1(a) Grow volume in agreed upon service lines (707,910) Rady (692,249) Other (394,877)

Salaries & Wages 2,211,565Volume Variance (2,207,491)Rate & Efficiency 4,419,056

Benefits 401,298Group Health 73,728Other 327,570

Contract Labor (273,704)Volume Variance (18,558)Rate & Efficiency (255,146)

ADD D-9106



Professional Fees 44,440Legal Counsel (178,738)Behaviorist 44,680Other 178,498

Supplies 1,500,846Volume Variance (715,877)Rate & Efficiency 2,216,723

Breakdown of Variance: Prosthesis 811,972 Other Medical 298,903 Other Non-Medical 216,895 Pharmaceutical 163,546 Other 9,530

Purchased Services 962,348Repairs/Maintenance 658,344Other 304,004

Depreciation (161,456)Depreciation (161,456)

Other Direct Expenses 127,957Utilities 415,451Other (287,494)

Total Actual to Budget YTD Variance for September 2010 (311,812) (311,812)ADD D-10107


Total Actual to Budget YTD Variance for September 2010 (311,812)

Non-Operating Income (Expense) 3,417,404 3,185,421 231,983

Property Tax 3,324,999 3,324,999 0

Investment Income (Loss) 1,187,225 795,792 391,433Breakdown:Pacific Inc Adv (93% Gov't Sec, 7% Corp Bonds, 0% MMF) 430,074 225,000 205,074Legg Mason (72% Gov't Sec, 28% Corp Bonds; 0% MMF) 753,416 425,000 328,416LAIF/Other 3,734 145,792 (142,058)

Interest Expense (1,241,577) (1,104,180) (137,397)

Other 146,757 168,810 (22,053)

Net Income 6,587,522 6,667,351 (79,829)

ADD D-11108

12Balance SheetConsolidated

Current Prior Prior Fiscal Current Prior Prior Fiscal Month Month Year End Month Month Year End

Assets LiabilitiesCurrent Assets Current Liabilities Cash on Hand $6,650,367 $4,702,151 $7,256,039 Accounts Payable $26,119,758 $21,374,827 $45,455,905 Cash Marketable Securities 154,173,792 154,297,738 164,318,351 Accrued Payroll 20,700,393 19,937,457 14,649,481Total Cash & Cash Equivalents 160,824,159 158,999,889 171,574,390 Accrued PTO 14,842,796 15,106,869 15,419,700

Accrued Interest Payable 10,296,041 7,489,998 7,878,762Patient Accounts Receivable 204,002,745 212,798,985 196,115,435 Current Portion of Bonds 7,465,000 7,465,000 7,395,000 Allowance on Accounts (117,892,240) (129,061,029) (114,832,813) Est Third Party Settlements 1,581,076 1,411,104 1,343,270Net Accounts Receivable 86,110,505 83,737,956 81,282,622 Other Current Liabilities 38,384,498 39,633,621 25,188,222

Total Current Liabilities 119,389,562 112,418,876 117,330,340 Inventories 6,996,671 6,967,627 6,960,962 Prepaid Expenses 3,159,980 3,137,174 3,186,269 Long Term Liabilities Other 20,365,604 19,321,262 4,853,529 Other LT Liabilities 582,588 599,194 504,151Total Current Assets 277,456,919 272,163,908 267,857,772 Bonds & Contracts Payable 905,468,423 904,693,654 904,239,361

Non-Current Assets General Fund Balance Restricted Assets 240,133,210 256,694,343 292,320,029 Unrestricted 357,042,877 353,764,866 361,319,640 Restricted by Donor 314,104 314,104 314,104 Restricted for Other Purpose 314,104 314,104 314,104 Board Designated 13,876,481 13,876,481 0 Board Designated 13,876,481 13,876,481 0Total Restricted Assets 254,323,795 270,884,928 292,634,133 Total Fund Balance 371,233,462 367,955,451 361,633,744

Property Plant & Equipment 417,023,654 416,837,796 416,499,275 Total Liabilities / Fund Balance $1,396,674,035 $1,385,667,175 $1,383,707,596 Accumulated Depreciation (237,882,822) (236,110,398) (232,483,702) Construction in Process 657,955,769 633,929,361 611,236,644Net Property Plant & Equipment 837,096,601 814,656,759 795,252,217

Investment in Related Companies 2,035,433 2,035,433 2,035,433 Deferred Financing Costs 22,023,214 22,065,161 22,212,035 Other Non-Current Assets 3,738,073 3,860,986 3,716,006Total Non-Current Assets 1,119,217,116 1,113,503,267 1,115,849,824

Total Assets $1,396,674,035 $1,385,667,175 $1,383,707,596

ADD D-12109

13Income Statement: Month-to-DateConsolidated – Adjusted Discharges

Variance $/Adjusted DischargesActual Budget Variance Volume Rate/Eff Actual Budget Variance

Statistics: Admissions - Acute 2,214 2,179 35 Admissions - SNF 86 87 (1) Patient Days - Acute 8,206 8,400 (194) Patient Days - SNF 6,160 6,383 (223) ALOS - Acute 3.80 3.85 (0.05) ALOS - SNF 73.33 75.09 (1.76) Adjusted Discharges 3,257 3,220 37

Revenue: Gross Revenue 146,932,869$ 149,008,295$ (2,075,426)$ U 1,712,207$ (3,787,633)$ 45,112.95$ 46,275.87$ (1,162.92)$ Deductions from Rev (108,665,815) (109,573,023) 907,208 F (1,259,069) 2,166,277 (33,363.77) (34,028.89) 665.11 Net Patient Revenue 38,267,054 39,435,272 (1,168,218) U 453,138 (1,621,356) 11,749.17 12,246.98 (497.81) Other Oper Revenue 728,432 1,245,968 (517,536) U 14,317 (531,853) 223.65 386.95 (163.30) Total Net Revenue 38,995,486 40,681,240 (1,685,754) U 467,455 (2,153,209) 11,972.82 12,633.93 (661.10)

Expenses: Salaries, Wages & Contr Labor 17,423,557 18,816,272 1,392,715 F (216,212) 1,608,927 5,349.57 5,843.56 493.99 Benefits 4,888,841 5,065,000 176,159 F (58,200) 234,359 1,501.03 1,572.98 71.96 Supplies 5,506,710 6,051,132 544,422 F (69,532) 613,954 1,690.73 1,879.23 188.50 Prof Fees & Purch Svc 5,585,339 5,476,949 (108,390) U (62,934) (45,456) 1,714.87 1,700.92 (13.96) Depreciation 1,820,666 1,762,344 (58,322) U (20,251) (38,071) 559.00 547.31 (11.69) Other 2,663,616 2,434,459 (229,157) U (27,974) (201,183) 817.81 756.04 (61.77) Total Expenses 37,888,729 39,606,156 1,717,427 F (455,102) 2,172,529 11,633.01 12,300.05 667.03

Net Inc Before Non-Oper Income 1,106,757 1,075,084 31,673 F 12,353 19,320 339.81 333.88 5.93

Property Tax Revenue 1,108,333 1,108,333 - - 12,736 (12,736) 340.29 344.20 (3.91) Non-Operating Income 62,500 (46,526) 109,026 F (535) 109,561 19.19 (14.45) 33.64

Net Income (Loss) 2,277,590$ 2,136,891$ 140,699$ F 24,554$ 116,145$ 699.29$ 663.63$ 35.66$

Net Income Margin 5.84% 5.25% 0.59%OEBITDA Margin w/o Prop Tax 7.51% 6.97% 0.54%OEBITDA Margin with Prop Tax 10.35% 9.70% 0.65%

F= Favorable varianceU= Unfavorable variance

ADD D-13110

14Income Statement: Fiscal Year-to-DateConsolidated – Adjusted Discharges

VarianceActual Budget Variance Volume Rate/Eff Actual Budget Variance

Statistics: Admissions - Acute 6,745 6,681 64 Admissions - SNF 264 267 (3) Patient Days - Acute 25,089 25,758 (669) Patient Days - SNF 18,822 19,577 (755) ALOS - Acute 3.71 3.86 (0.15) ALOS - SNF 73.24 75.01 (1.77) Adjusted Discharges 10,254 9,873 381

Revenue: Gross Revenue 440,397,218$ 456,919,391$ (16,522,173)$ U 17,632,562$ (34,154,735)$ 42,948.82$ 46,279.69$ (3,330.87)$ Deductions from Rev (322,881,878) (336,073,981) 13,192,103 F (12,969,127) 26,161,230 (31,488.38) (34,039.70) 2,551.32 Net Patient Revenue 117,515,340 120,845,410 (3,330,070) U 4,663,436 (7,993,506) 11,460.44 12,239.99 (779.55) Other Oper Revenue 1,942,868 3,737,904 (1,795,036) U 144,246 (1,939,282) 189.47 378.60 (189.12) Total Net Revenue 119,458,208 124,583,314 (5,125,106) U 4,807,682 (9,932,788) 11,649.91 12,618.59 (968.67)

Expenses: Salaries, Wages & Contr Labor 55,746,601 57,684,462 1,937,861 F (2,226,049) 4,163,910 5,436.57 5,842.65 406.08 Benefits 15,128,498 15,529,796 401,298 F (599,296) 1,000,594 1,475.38 1,572.96 97.58 Supplies 17,049,954 18,550,800 1,500,846 F (715,877) 2,216,723 1,662.76 1,878.94 216.18 Prof Fees & Purch Svc 15,662,909 16,669,697 1,006,788 F (643,285) 1,650,073 1,527.49 1,688.41 160.92 Depreciation 5,448,488 5,287,032 (161,456) U (204,027) 42,571 531.35 535.50 4.15 Other 7,251,640 7,379,597 127,957 F (284,779) 412,736 707.20 747.45 40.25 Total Expenses 116,288,090 121,101,384 4,813,294 F (4,673,314) 9,486,608 11,340.75 12,265.92 925.16

Net Inc Before Non-Oper Income 3,170,118 3,481,930 (311,812) U 134,368 (446,180) 309.16 352.67 (43.51)

Property Tax Revenue 3,324,999 3,324,999 - - 128,312 (128,312) 324.26 336.78 (12.51) Non-Operating Income 92,405 (139,578) 231,983 F (5,386) 237,369 9.01 (14.14) 23.15

Net Income (Loss) 6,587,522$ 6,667,351$ (79,829)$ U 257,294$ (337,123)$ 642.43$ 675.31$ (32.88)$

Net Income Margin 5.51% 5.35% 0.16%OEBITDA Margin w/o Prop Tax 7.21% 7.04% 0.17%OEBITDA Margin with Prop Tax 10.00% 9.71% 0.29%


$/Adjusted Discharges

ADD D-14111

15Income Statement: Current vs. Prior Year-to-date Consolidated – Adjusted Discharges

Variance $/Adjusted DischargesSeptember 10

YTDSeptember 09

YTD Variance Volume Rate/Eff Actual FY11 Actual FY10 VarianceStatistics: Admissions - Acute 6,745 6,766 (21) Admissions - SNF 264 280 (16) Patient Days - Acute 25,089 26,810 (1,721) Patient Days - SNF 18,822 19,406 (584) ALOS - Acute 3.71 3.91 (0.20) ALOS - SNF 73.24 69.56 3.68 Adjusted Discharges 10,254 10,068 186

Revenue: Gross Revenue 440,397,218$ 426,873,328$ 13,523,890$ F 7,886,218$ 5,637,672$ 42,948.82$ 42,399.02$ 549.80$ Deductions from Rev (322,881,878) (313,053,182) (9,828,696) U (5,783,462) (4,045,234) (31,488.38) (31,093.88) (394.50) Net Patient Revenue 117,515,340 113,820,146 3,695,194 F 2,102,756 1,592,438 11,460.44 11,305.14 155.30 Other Oper Revenue 1,942,868 1,811,715 131,153 F 33,470 97,683 189.47 179.95 9.53 Total Net Revenue 119,458,208 115,631,861 3,826,347 F 2,136,226 1,690,121 11,649.91 11,485.09 164.83

Expenses: Salaries, Wages & Contr Labor 55,746,601 52,799,603 (2,946,998) U (975,440) (1,971,558) 5,436.57 5,244.30 (192.27) Benefits 15,128,498 13,469,051 (1,659,447) U (248,832) (1,410,615) 1,475.38 1,337.81 (137.57) Supplies 17,049,954 18,760,252 1,710,298 F (346,584) 2,056,882 1,662.76 1,863.35 200.59 Prof Fees & Purch Svc 15,662,909 14,569,952 (1,092,957) U (269,171) (823,786) 1,527.49 1,447.15 (80.34) Depreciation 5,448,488 5,382,504 (65,984) U (99,438) 33,454 531.35 534.62 3.26 Other 7,251,640 6,939,268 (312,372) U (128,199) (184,173) 707.20 689.24 (17.96) Total Expenses 116,288,090 111,920,630 (4,367,460) U (2,067,664) (2,299,796) 11,340.75 11,116.47 (224.28)

Net Inc Before Non-Oper Income 3,170,118 3,711,231 (541,113) U 68,563 (609,676) 309.16 368.62 (59.46)

Property Tax Revenue 3,324,999 3,499,998 (174,999) U 64,660 (239,659) 324.26 347.64 (23.37) Non-Operating Income 92,405 (90,311) 182,716 F (1,668) 184,384 9.01 (8.97) 17.98

Net Income (Loss) 6,587,522$ 7,120,918$ (533,396)$ U 131,555$ (664,951)$ 642.43$ 707.28$ (64.85)$

Net Income Margin 5.51% 6.16% (0.65%)OEBITDA Margin w/o Prop Tax 7.21% 7.86% (0.65%)OEBITDA Margin with Prop Tax 10.00% 10.89% (0.89%)


ADD D-15112

16Income Statement: Monthly TrendConsolidated

Jul Aug Sep YTDStatistics: Admissions - Acute 2,221 2,310 2,214 6,745 Admissions - SNF 81 97 86 264 Patient Days - Acute 8,434 8,449 8,206 25,089 Patient Days - SNF 6,295 6,367 6,160 18,822 ALOS - Acute 3.69 3.64 3.80 3.71 ALOS - SNF 74.94 71.54 73.33 73.24 Adjusted Discharges 3,466 3,533 3,257 10,256

Revenue: Gross Revenue 147,489,575$ 145,974,773$ 146,932,869$ 440,397,218$ Deductions from Rev (108,209,520) (106,006,544) (108,665,815) (322,881,878) Net Patient Revenue 39,280,055 39,968,229 38,267,054 117,515,340 Other Oper Revenue 442,426 772,010 728,432 1,942,868 Total Net Revenue 39,722,481 40,740,239 38,995,486 119,458,208

Expenses: Salaries, Wages & Contr Labor 18,964,237 19,358,807 17,423,557 55,746,601 Benefits 5,130,189 5,109,468 4,888,841 15,128,498 Supplies 5,640,058 5,903,186 5,506,710 17,049,954 Prof Fees & Purch Svc 4,968,213 5,109,356 5,585,339 15,662,909 Depreciation 1,811,143 1,816,679 1,820,666 5,448,488 Other 2,194,887 2,393,136 2,663,616 7,251,640 Total Expenses 38,708,727 39,690,632 37,888,729 116,288,090

Net Inc Before Non-Oper Income 1,013,754 1,049,607 1,106,757 3,170,118

Property Tax Revenue 1,108,333 1,108,333 1,108,333 3,324,999 Non-Operating Income (56,084) 85,991 62,500 92,405

Net Income (Loss) 2,066,003$ 2,243,931$ 2,277,590$ 6,587,522$

Net Income Margin 5.20% 5.51% 5.84% 5.51%OEBITDA Margin w/o Prop Tax 7.11% 7.04% 7.51% 7.21%OEBITDA Margin with Prop Tax 9.90% 9.76% 10.35% 10.00%

ADD D-16113

17Cash Flow Statement

September YTD

CASH FLOWS FROM OPERATING ACTIVITIES: Income (Loss) from operations 1,106,757 3,170,118 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation Expense 1,820,666 5,448,488 Provision for bad debts 2,376,597 9,665,584

Changes in operating assets and liabilities: Patient accounts receivable (4,749,146) (14,493,467) Property Tax and other receivables (1,428,426) (16,312,312) Inventories (29,044) (35,709) Prepaid expenses and other current assets (22,806) 26,289 Accounts payable 4,744,931 (19,336,147) Accrued compensation 498,863 5,474,008 Estimated settlement amounts due third-party payors 169,973 237,806 Other current liabilities 859,211 19,521,274 Net cash provided by operating activities 5,347,576 (6,634,068)

CASH FLOWS FROM INVESTING ACTIVITIES: Net (purchases) sales of investments 16,685,079 48,454,897 Income (Loss) on investments 420,728 1,187,226 Investment in affiliates 297,502 347,739 Net cash used in investing activities 17,403,309 49,989,862

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Receipt of G.O. Bond Taxes 152,578 317,690 Receipt of District Taxes 231,506 482,547 Net cash used in non-capital financing activities 384,084 800,237 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of property plant and equipment (20,745,788) (36,042,285) Deferred Financing Costs 41,947 188,821 G.O. Bond Interest paid 0 (6,003,413) Revenue Bond Interest paid (482,910) (1,879,826) Proceeds from issuance of debt 0 0 Payments of Long Term Debt 0 (1,025,000) Net cash used in activities (21,186,752) (44,761,703)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,948,216 (605,671)

CASH AND CASH EQUIVALENTS - Beginning of period 4,702,151 7,256,039

CASH AND CASH EQUIVALENTS - End of period 6,650,367 6,650,367ADD D-17114

18Financial Report Narrative

StatisticsAug vs Sep Sep Act vs Bud

CONSOLIDATED Aug Sep % Change Budget % VariancePatient Days Acute 8,449 8,206 (2.9%) 8,400 (2.3%)Patient Days SNF 6,367 6,160 (3.3%) 6,383 (3.5%)ADC Acute 272.57 273.55 0.4% 280.00 (2.3%)ADC SNF 205.39 205.33 (0.0%) 212.77 (3.5%)Surgeries CVS Cases 11 9 (18.2%) 13 (30.8%)Surgeries Total 1,566 1,393 (11.0%) 1,493 (6.7%)Number of Births 419 413 (1.4%) 418 (1.2%)

NORTHPatient Days Acute 6,366 6,079 (4.5%) 6,307 (3.6%)Patient Days SNF 2,637 2,594 (1.6%) 2,671 (2.9%)ADC Acute 205.36 202.65 (1.3%) 210.23 (3.6%)ADC SNF 85.06 86.47 1.7% 89.03 (2.9%)

SOUTHPatient Days Acute 2,083 2,127 2.1% 2,093 1.6%Patient Days SNF 3,730 3,566 (4.4%) 3,712 (3.9%)ADC Acute 67.19 70.90 5.5% 69.76 1.6%ADC SNF 120.32 118.87 (1.2%) 123.73 (3.9%)

ADD D-18115


Balance Sheet Current Cash & Cash Equivalents increased $1.8 million from $159.0 million in Augustto $160.8 million in September. Total Cash and Investments are $175.0 million,compared to $173.2 million at August. Days Cash on Hand went from 143.4 days inAugust to 145.0 days in September. Net Accounts Receivable increased $2.4 million from $83.7 million in August to $86.1 million in September. Gross A/R days decreased from 45.6 days in August to 42.6 days in September.

September YTD collections including capitation are $107.7 million compared tobudget of $123.0 million.

Construction in Progress increased $24.0 million from $633.9 million in August to$657.9 million in September. The increase is attributed to Building Expansion A & Eservices, construction and interest costs of $23.6 million and Electronic HealthRecord project $0.4 million. Other Current Liabilities decreased $1.2 million from $39.6 million in August to $38.4 million in September. The decrease is primarily due to the realization ofdeferred property tax revenue of $1.1 million.

ADD D-19116


Income Statement Gross Patient Revenue reflects a YTD unfavorable budget variance of $16.6 million. Reference table for detail.

North South Outreach Consolidated

Total (12,949,214) (3,203,278) (369,681) (16,522,173) Routine (3,157,012) (184,933) - (3,341,945) IP Ancillary (12,543,719) (3,936,346) - (16,480,065) OP 2,751,517 918,001 (369,681) 3,299,837 Net Capitation reflects a YTD favorable budget variance of $0.6 million. CapPremium and In Network Claim Expense both show a favorable budgetvariance of $1.0 million and $0.4 million, respectively. The favorable variancein Cap Premium is due to retro 2010 and 2009 premium adjustments in Julyand August. Out of Network Claim Expense shows an unfavorable budgetvariance of $0.8 million. Other Operating Revenue has a YTD unfavorable variance of $1.8 million dueto FY2011 initiative “Growth in agreed upon service lines” of $0.8 million, RadyChildren’s $0.7 million, and Other of $0.3 million.

ADD D-20117


Income Statement (cont’d) Salaries, Wages & Contract Labor has a YTD favorable budget variance of $1.9 million. Reference table for detail.

YTD Actual YTD Budget Variance

Consolidated 55,746,601 57,684,462 1,937,861 North 31,416,245 33,489,419 2,073,174 South 13,845,788 14,426,797 581,009 Central 8,621,830 7,744,552 (877,278) Outreach 1,862,738 2,023,694 160,956

Employee Benefits Expense reflects a YTD favorable budget variance of $0.4 millionprimarily due to a favorable variance in pension expense of $0.4 million. Supplies Expense reflects a YTD favorable budget variance of $1.5 million due toProsthesis $0.8 million and Other $0.7 million. Professional Fees is close to budget at $6.6 million. Purchased Services reflect a YTD favorable budget variance of $1.0 million due to Repairs & Maintenance $0.7 million and Other $0.3 million.

Ratios & Margins

All required Bond Covenant Ratios were achieved in September, 2010.

ADD D-21118

22Key Statistical IndicatorsFiscal Year-to-Date

ACTUAL BUDGET VARIANCE FY 2010ADMISSIONS - Acute:

Palomar Medical Center 5,127 5,001 126 5,128

Pomerado Hospital 1,618 1,680 (62) 1,638

Total: 6,745 6,681 64 6,766

ADMISSIONS - SNF:Palomar Medical Center 114 113 1 122

Pomerado Hospital 150 154 (4) 158

Total: 264 267 (3) 280

PATIENT DAYS - Acute:Palomar Medical Center 18,841 19,341 (500) 20,486


Total: 25,089 25,758 (669) 26,810

PATIENT DAYS- SNF:Palomar Medical Center 7,840 8,191 (351) 8,067


Total: 18,822 19,577 (755) 19,406

ADD D-22119

23

ACTUAL BUDGET VARIANCE FY 2010

EMERGENCY ROOM VISITS & TRAUMA CASES:Palomar Medical Center 13,781 12,953 828 14,207


Total: 20,085 19,458 627 20,555

EMERGENCY & TRAUMA ADMISSIONS:Palomar Medical Center 2,764 2,801 (37) 2,758

Pomerado Hospital 962 913 49 894

Total: 3,726 3,714 12 3,652

SURGERIES: Palomar Medical Center 2,997 2,986 11 3,095


Total: 4,520 4,575 (55) 4,648

BIRTHS:Palomar Medical Center 958 1,006 (48) 976

Pomerado Hospital 285 276 9 310

Total: 1,243 1,282 (39) 1,286

Key Statistical IndicatorsFiscal Year-to-Date

ADD D-23 120

24

ACTUAL BUDGET VARIANCE FY 2010

ADJUSTED DISCHARGESPalomar Medical Center 7,432 7,050 382 7,338

Pomerado Hospital 2,757 2,766 (9) 2,676 Other Activities 65 57 8 54 Total: 10,254 9,873 381 10,068

AVERAGE LENGTH OF STAY- Acute:Palomar Medical Center 3.67 3.87 (0.20) 3.95

Pomerado Hospital 3.82 3.82 - 3.77

Total: 3.69 6.79 (3.10) 3.86

AVERAGE LENGTH OF STAY - SNF:Palomar Medical Center 72.59 76.55 (3.96) 67.79

Pomerado Hospital 73.70 73.94 (0.24) 70.87

Total: 74.94 63.91 11.03 65.63

Key Statistical IndicatorsFiscal Year-to-Date

ADD D-24121

25Supplies ExpenseYear-to-Date

Account Description Actual Budget Variance631000 Prosthesis 4,324,081 5,136,053 811,972 641000 Supplies Other Medical 3,373,514 3,672,417 298,903 650000 Other Non Medical 1,876,235 2,093,130 216,895 638000 Supplies Pharmaceutical 2,876,102 3,039,648 163,546 633000 Supplies Surgical Pack 522,666 588,136 65,470 643000 Supplies Food Other 601,080 656,873 55,793 632000 Sutures/Surgical Needles 484,024 516,737 32,713 639000 Supplies Radioactive 174,475 189,075 14,600 636000 Supplies Oxygen/Gas 12,042 22,806 10,764 646000 Supplies Office/Administration 250,061 259,980 9,919 645000 Supplies Cleaning 112,471 120,992 8,521 637000 Supplies IV Solutions 118,228 124,365 6,137 640000 Supplies X-ray Material 6,462 11,023 4,561 635000 Supplies Anesthesia Material 11,573 12,779 1,206 644000 Supplies Linen 7,587 8,723 1,136 648000 Instruments/Minor Equipment 128,472 128,520 48 642000 Supplies Food/Meat 138,030 137,780 (250) 646100 Supplies Forms 100,438 96,920 (3,518) 647000 Supplies Employee Apparel 49,993 44,888 (5,105) 649000 Other Minor Equipment 352,638 285,498 (67,140) 634000 Supplies Surgery General 1,529,782 1,404,457 (125,325)

TOTAL 17,049,954 18,550,800 1,500,846

ADD D-25122

26Bond Covenant Ratios

Cushion Ratio Jun-09 Jun-10 Sep-10

Cash and Cash Equivalents 117,489,914 171,574,390 160,824,159 Board Designated Reserves - - 13,876,481 Trustee-held Funds (Revenue Fund only) 34,351 3,085 8,352 Total 117,524,265 171,577,475 174,708,992

Divided by:Annual Debt Service (excludes GO Bonds) * 16,639,112 13,766,910 13,766,910 (Bond Year 11/1/2010)

Cushion Ratio 7.1 12.5 12.7 REQUIREMENT 1.5 1.5 1.5

Achieved Achieved Achieved

Days Cash on Hand Jun-09 Jun-10 Sep-10

Cash and Cash Equivalents 117,489,914 171,574,390 160,824,159 Board Designated Reserves - - 13,876,481 Trustee-held Funds (Revenue Fund only) 34,351 3,085 8,352 Total 117,524,265 171,577,475 174,708,992

Divide Total by Average Adjusted Expenses per DayTotal Expenses 436,536,225 451,348,266 116,288,090 Less: Depreciation 21,214,879 21,358,985 5,448,488 Adjusted Expenses 415,321,346 429,989,281 110,839,602

Number of days in period 365 365 92 Average Adjusted Expenses per Day 1,137,867 1,178,053 1,204,778

Days Cash on Hand 103.3 145.6 145.0 REQUIREMENT 80 65 65


Net Income Available for Debt Service Jun-09 Jun-10 Sep-10

Excess of revenue over expenses Cur Mo. (8,535,867) (840,377) 2,277,590Excess of revenues over expenses YTD 11,477,380 24,487,453 6,587,522(General Funds)ADD: Depreciation and Amortization 21,214,879 21,358,985 5,448,488 Interest Expense 16,079,661 12,198,246 1,241,577 Net Income Available for Debt Service 48,771,920 58,044,684 13,277,587

Aggregate Debt Service *

1999 Insured Refunding Revenue Bonds 8,252,512 8,250,042 2,061,8312006 Certificates of Participation 8,497,794 6,474,269 1,379,896 Aggregate Debt Service 16,750,305 14,724,311 3,441,728

Net Income Available for Debt Service 2.91 3.94 3.86Required Coverage 1.15 1.15 1.15


* The 2009 Certificates of Participation interest is pre-funded through November 1, 2011 and is excluded from the debt service total for these ratios. ADD D-26

123

27

PY

BUD

Statistical IndicatorsAdmissions – Acute

-

500

1,000

1,500

2,000

2,500

3,000PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 1,711 1,755 1,661 - - - - - - - - - 5,127 5,001 POM 510 555 553 - - - - - - - - - 1,618 1,680 CON 2,221 2,310 2,214 - - - - - - - - - 6,745 6,681 ADD D-27

124

28

PY

BUD

Statistical IndicatorsPatient Days – Acute

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 6,396 6,366 6,079 - - - - - - - - - 18,841 19,341 POM 2,038 2,083 2,127 - - - - - - - - - 6,248 6,417 CON 8,434 8,449 8,206 - - - - - - - - - 25,089 25,758 ADD D-28

125

29

PY

BUD

Statistical IndicatorsAverage Length of Stay – Acute

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 3.65 3.58 3.80 - - - - - - - - - 3.67 3.87 POM 3.84 3.82 3.81 - - - - - - - - - 3.82 3.82 CON 3.69 3.64 3.80 - - - - - - - - - 3.71 3.86

3.50

3.60

3.70

3.80

3.90

4.00

4.10

4.20

4.30PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


ADD D-29

126

30

PY

BUD

Statistical IndicatorsAverage Daily Census – Acute

-

50

100

150

200

250

300

350

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 206 205 203 - - - - - - - - - 205 210 POM 66 67 71 - - - - - - - - - 68 70 CON 272 273 274 - - - - - - - - - 273 280 ADD D-30

127

31Statistical IndicatorsPatient Days

974

959

1,049

-

-

-

-

326

156

34

-

-

-

-

660

658

665

-

-

-

-

1,001

930

837

-

-

-

-

720

738

749

-

-

-

-

822

788

797

-

-

-

-

20

-

-

-

-

-

-

-

-

-

-

1,775

1,872

1,883

-

-

-

-

120

105

-

-

-

-

-

837

871

912

-

-

-

-

439

440

392

-

-

-

-

780

912

888

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

- 2,000 4,000 6,000 8,000 10,000

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUN

ICU/CCU NICU Telemetry IMC Med-Oncology Surg-Ortho Medical Tele Med Surg Pediatrics Labor Delivery Recovery Rehb Acute MHU


128

32

PY

BUD

Statistical IndicatorsSurgeries (Inpatient only)

-

100

200

300

400

500

600

700

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 465 458 460 - - - - - - - - - 1,383 1,309 POM 159 135 169 - - - - - - - - - 463 538 CON 624 593 629 - - - - - - - - - 1,846 1,847 ADD D-32

129

33

PY

BUD

Statistical IndicatorsSurgeries (Outpatient only)

-

200

400

600

800

1,000

1,200PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 592 571 424 - - - - - - - - - 1,587 1,638 POM 338 391 331 - - - - - - - - - 1,060 1,051 CON 930 962 755 - - - - - - - - - 2,647 2,689 ADD D-33

130

34

PY

BUD

Statistical IndicatorsSurgeries – CVS (PMC only)

-

5

10

15

20

25


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 7 11 9 - - - - - - - - - 27 39 POM - - - - - - - - - - - - - - CON 7 11 9 - - - - - - - - - 27 39 ADD D-34

131

35

PY

BUD

Statistical IndicatorsTotal Surgeries

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 1,064 1,040 893 - - - - - - - - - 2,997 2,986 POM 497 526 500 - - - - - - - - - 1,523 1,589 CON 1,561 1,566 1,393 - - - - - - - - - 4,520 4,575 ADD D-35

132

36

PY

BUD

Statistical IndicatorsOutpatient Registrations (excludes Lab)

-

1,000

2,000

3,000

4,000

5,000

6,000PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



133

37

PY

BUD

Statistical IndicatorsER Visits (includes Trauma, Outpatient only)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 4,475 4,741 4,565 - - - - - - - - - 13,781 12,953 POM 2,066 2,231 2,007 - - - - - - - - - 6,304 6,505 CON 6,541 6,972 6,572 - - - - - - - - - 20,085 19,458 CON/DAY 211 225 219 - - - - - - - - - 218 212 ADD D-37

134

38

PY

BUD

Statistical IndicatorsER Admissions (includes Trauma, Inpatient only)

-

200

400

600

800

1,000

1,200

1,400

1,600PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 854 1,021 889 - - - - - - - - - 2,764 2,801 POM 310 333 319 - - - - - - - - - 962 913 CON 1,164 1,354 1,208 - - - - - - - - - 3,726 3,714 ADD D-38

135

39

PY

BUD

Statistical IndicatorsTotal ER Visits (includes Trauma & Admissions)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



136

40

PY

BUD

Statistical IndicatorsER Conversion (ER Admits as % of ER Visits)

-

2

4

6

8

10

12

14

16

18

20

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 16.0 17.7 16.3 - - - - - - - - - 16.7 17.8 POM 13.0 13.0 13.7 - - - - - - - - - 13.2 12.3 CON 15.1 16.3 15.5 - - - - - - - - - 15.6 16.0 ADD D-40

137

41

PY

BUD

Statistical IndicatorsTrauma Cases (PMC only)

-

20

40

60

80

100

120

140



138

42

PY

BUD

Statistical IndicatorsTrauma Admissions (PMC only)

-

20

40

60

80

100

120



139

43

PY

BUD

Statistical IndicatorsDeliveries

-

50

100

150

200

250

300

350

400

450

500

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 333 317 308 - - - - - - - - - 958 1,006 POM 78 102 105 - - - - - - - - - 285 276 CON 411 419 413 - - - - - - - - - 1,243 1,282 ADD D-43

140

44Payor MixBased on Gross Revenue

27

27

26

-

-

-

-

8

7

9

-

-

-

-

15

15

13

-

-

-

-

4

4

4

-

-

-

-

4

5

5

-

-

-

-

30

27

27

-

-

-

-

9

10

11

-

-

-

-

4

5

5

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUN

MEDICARE MCAR MGD MEDI-CAL MCAL MGD SELF PAY MGD CARE CAP OTHER 141

45

BUD

Case Mix Index

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTDPMC 1.29 1.29 1.23 - - - - - - - - - 1.27 POM 1.25 1.22 1.31 - - - - - - - - - 1.26 CON 1.28 1.27 1.25 - - - - - - - - - 1.27 ADD D-45

142

46

BUD

Case Mix Index by Region(excludes Deliveries)

1.00

1.10

1.20

1.30

1.40

1.50

1.60

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



143

47

BUD

Case Mix Index by RegionMedicare

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



144

48

PY

BUD

Adjusted DischargesGross Patient Revenue per Adjusted Discharges

Dolla

rs p

er A

djus

ted

Disc

harg

e

34,500

36,500

38,500

40,500

42,500

44,500

46,500

48,500PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



145

49

PY

BUD

Adjusted DischargesNet Patient Revenue per Adjusted Discharges

Dolla

rs p

er A

djus

ted

Disc

harg

e

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 10,594 10,452 12,078 - - - - - - - - - 11,008 11,741 POM 12,990 13,182 10,435 - - - - - - - - - 12,207 12,987 CON 11,333 11,313 11,749 - - - - - - - - - 11,460 12,240

8,500

9,500

10,500

11,500

12,500

13,500

14,500

15,500PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


ADD D-49

146

50

PY

BUD

Adjusted DischargesSalaries per Adjusted Discharges

Dolla

rs p

er A

djus

ted

Disc

harg

e

3,500

4,000

4,500

5,000

5,500

6,000PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



147

51

PY

BUD

Adjusted DischargesSupplies per Adjusted Discharges

Dolla

rs p

er A

djus

ted

Disc

harg

e

1,400

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



148

52

PY

BUD

Adjusted DischargesTotal Expenses per Adjusted Discharges

Dolla

rs p

er A

djus

ted

Disc

harg

e

9,100

10,100

11,100

12,100

13,100

14,100

15,100PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N



149

53

PY

BUD

Adjusted DischargesNet Operating Income per Adjusted Discharges

Dolla

rs p

er A

djus

ted

Disc

harg

e

(3,000)

(2,500)

(2,000)

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

2,500PM

C

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N

PMC

POM

CO

N


JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTDPMC 512 243 1,535 - - - - - - - - - 738 565 POM 57 700 (2,308) - - - - - - - - - (518) 172 CON 292 297 340 - - - - - - - - - 309 353 ADD D-53

150

54PBS Monthly Cash Collections

PPH Monthly Collections in Millions

$20.0$24.0$28.0$32.0$36.0$40.0$44.0

FY11 Goal $41.0 $41.0 $41.0 $41.0 $41.0 $41.0 $41.0 $41.0 $41.0 $41.0 $41.0 $41.0

Pr. Yr Actual $39.2 $40.6 $35.5 $37.5 $35.9 $38.0 $36.1 $40.1 $40.9 $41.8 $40.6 $39.7

Curr. Yr Actual $37.1 $36.9 $33.7

July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March April May June

ADD D-54151

55HealthWoRx DashboardRevenue Cycle Key Indicators

Current GoalMTD YTD

99% 85%

$ 111 K* $ 167 K$ 78 K $ 500 K

60% 85%

0.1 days 0.5 Days

$2.4 M ≤ $ 3 M

4 ≤ 5 Pts / Month18 15 Cardiac Stent & Defibrillator 1-Day Stays (YTD)

Patient Financial ServicesBilling Edits

RAC Cardiac Stent & Defibrillator 1-Day Stays (Monthly)

Patient AccessPre-Reg Rate - 2 Days Out

CodingDNFB

Timely Charge Entry Rate

Case ManagementCDI (Monthly)

CDI (YTD)

Trend FY11 Cash GoalCharge Services

(in Millions)

73.9

82

68

72

76

80

84

August FYTDFYTD Actual

(in Millions)

107.7

123.0

100.0

105.0

110.0

115.0

120.0

125.0

September FYTDBudget Actual

ADD D-55152

56

SUPPLEMENTAL INFORMATION

ADD D-56153

57Weekly Flash Report

10/7/2010 10/14/2010 10/21/2010 10/28/2010 MTD Total MTD Budget % VariancePalomar Medical CenterAverage daily census 210 206 - - 208 210 (1.13) Acute Patient Days 1,468 1,442 2,910 2,943 (1.13) PCCC Days 615 629 1,244 1,246 (0.20) Acute Discharges 378 373 751 761 (1.31) Births 79 69 148 153 (3.27) OP Visits w/o Lab 1,175 574 1,749 1,165 50.13 Lab Registrations 567 632 1,199 1,321 (9.24) ED Visits 1,246 1,291 2,537 2,398 5.80 Trauma Admits 11 29 40 42 (4.76) Trauma Outpatient 5 2 7 6 16.67 Inpatient surgeries 109 106 215 205 4.88 Outpatient surgeries 99 113 212 249 (14.86)

Pomerado HospitalAverage daily census 64 67 - - 66 70 (5.88) Acute Patient Days 450 469 919 976 (5.88) VP Days 846 861 1,707 1,733 (1.49) Acute Discharges 145 129 274 256 7.03 Births 26 26 52 42 23.81 OP Visits w/o Lab 719 488 1,207 509 137.13 Lab Registrations 440 400 840 778 7.97 ED visits 548 573 1,121 1,129 (0.71) Inpatient surgeries 39 38 77 67 14.93 Outpatient surgeries 58 50 108 92 17.39

Volu

me

ADD D-57154

58Weekly Flash Report

10/7/2010 10/14/2010 10/21/2010 10/28/2010 MTD Total MTD Budget % VariancePalomar Medical CenterAverage daily census 210 206 - - 208 210 (1.13) Acute Patient Days 1,468 1,442 2,910 2,943 (1.13) PCCC Days 615 629 1,244 1,246 (0.20) Palomar Medical CenterGross Inpatient Charges 16,890,997$ 17,921,314$ 34,812,311$ 36,370,363$ (4.28) Gross Outpatient Charges 7,738,142$ 7,424,094$ 15,162,236$ 13,832,889$ 9.61 Acute Case Mix Index 1.22 1.33

Pomerado HospitalGross Inpatient Charges 6,265,758$ 6,352,266$ 12,618,024$ 12,514,241$ 0.83 Gross Outpatient Charges 3,757,959$ 3,546,603$ 7,304,562$ 6,357,111$ 14.90 Acute Case Mix Index 1.17 1.33

Cash Collection 8,133,910 9,588,909 17,722,819 21,476,190 (17.48)Dollars Held in Billing Edits 2,419,881 2,798,490 2,419,881 3,000,000 19.34Days Cash on Hand 147 151 151 80

Productivity Hrs (PP 8) 223,336 223,336 237,739 6.06 PMC 127,753 127,753 129,586 1.41 POM 59,332 59,332 60,607 2.10 Others - 36,251 - - 36,251 47,546 23.76

Productivity $$$ (PP 8) 7,539,170 7,539,170 8,428,018 10.55 PMC 4,278,521 4,278,521 4,568,999 6.36 POM 1,915,255 1,915,255 2,040,662 6.15 Others - 1,345,394 - - 1,345,394 1,818,357 26.01

Volu

me

Fina

ncia

l and

Acu

ityPr

oduc

tivity

and

Cas

h

ADD D-58155

59

Investment Fund - Quarter Ended September 30, 2010 Yield Analysis

% of Portfolio Maturity Actual to Benchmark TotalInvestment Account: at 9/30/10 Date Yield Benchmark Variance Yield

Fidelity-Institutional Portfolio Treasury Fund 0.59% Demand 0.04% 0.00% (1) 0.04% 0.00%

State Treasurer Local Agency Investment Fund 14.08% Demand 0.51% 0.00% (1), (2) 0.51% 0.07%

Legg Mason Private Portfolio Group 32.97% Various 1.40% 2.80% (3) -1.40% 0.46%11.30% (4) -9.90%

Pacific Income Advisors, Inc. 38.92% Various 0.70% 0.60% (5) 0.10% 0.27%11.30% (4) -10.60%

Morgan Stanley & Co. 13.43% Various 0.20% 0.00% (1) 0.20% 0.03%

Total: 100.00% TOTAL YIELD: 0.83%

(1) Approximate average of 90 day T-Bills

(2) LAIF annual average return based upon monthly yields

(3) LB Intermediate Government Credits

(4) S&P 500

(5) LB 1-3 yr Government Credits

ADD D-59156

FY11 Initiative: 1.1 (a) Grow volume in agreed upon service lines

Outcome Measure: Additional contribution margin

Initiative Status:• Vascular (Salloum) and Neurosurgery (Blaskiewicz) on

board• Gyn/Onc (Ghosh) awaiting CA license and finalizing

recruitment agreement – expected start November 1 • Robotic urology (Carl Walker) expects to start October 1 • Grew volume by 3% in areas of focus through August

Milestones: 1. Recruit new specialty physicians (Vascular Surgery,

Neurosurgery, Gyn/Onc)2. Existing program expansion and new program development

via business plan development and approval (Neuro- interventional Program/Stroke, Orthopedic Alignment, Spine Center, Vein Clinic)

3. Sales and outreach to primary service area (PSA) and secondary service area (SSA)

4. Conduct focused screening at expresscare5. Physician marketing and outreach activities (CME,

Networking events, communication/education)6. Focused service line marketing

• Targeted Customer Relationship Marketing (CRM) Campaigns for strategically identified inpatient and outpatient services

• Strategic print and radio advertising• Dine with the Docs Events – 3 times/year• The HealthSource/The BabySource magazine 3 times

per year• PPH Web Strategies

Report Date: October 18, 2010Reporting Committees: Finance; EMT Finance

EMT Sponsor: Gerald BrachtInitiative Manager: Lisa Hudson

Initiative Risks:• Contribution margin erosion due to economic downturn• Inability to successfully recruit doctors

1Jul 10 Jul 11

Initiative Budget: FY11 Budgeted, capital and strategic capital budget

Budget Status: Within FY11 Budget

Outcome Measure: Threshold – $2.9 millionTarget – $2.9 millionMaximum - TBD

Sept 10 Nov 10 Jan 11 Mar 11 May 11

7. Expansion of service line relationship with Kaiser8. Establish new specialty physicians

82 3 54 6 7

ADD E-2158

FY11 Initiative: 1.1(b) Grow net primary care base

Outcome Measure: Number of new Primary Care Physicians (PCP)

Initiative Status:• Recruited 2 new PCPs. One for Arch began in August and

one for Graybill to begin October 1• PCP inventory matrix has been developed to monitor “net”

growth on a quarterly basis

Milestones: 1. Complete PPH FY11 PCP inventory and analysis 2. Recruit new Primary Care Physicians for

1. Arch Health Partners2. Graybill Medical Group

3. Outreach to other unaligned Primary Care Groups in the primary and secondary service area to secure additional medical staff members and referral sources

4. Outreach to existing PPH Primary care base to assess needs and retirement plans

Report Date: October 18, 2010Reporting Committees: Finance; EMT Finance

EMT Sponsor: Gerald BrachtInitiative Manager: Lisa Hudson, Robert Trifunovic,

Vicky Lister

Initiative Risks:• Retirement of existing Primary Care medical staff due to

improving economic conditions

1Jul 10 Jul 11

Initiative Budget: FY 11 BudgetedBudget Status: within FY11 Budget

Outcome Measure: Threshold – 2 net PCPsTarget – 3 net PCPsMaximum – 4 net PCPs


2 3 4

ADD E-3159

FY11 Initiative: 1.2(a) Revenue Optimization Committee (ROC) initiative

Outcome Measure: Achieve cash collection goal Initiative Status:

Milestones:

1. Establish processes to fix edits one day after posting

2. Expand CDI to include managed care business

3. Implement RAC processes

4. Improve discharge time

5. Strategic pricing

6. Reduce denials for no authorization / no eligibility

Report Date: October 18, 2010Reporting Committees: Board Finance; EMT FinanceEMT Sponsor: Bob HemkerInitiative Manager: Tim Nguyen

Initiative Risks:• Recoupments from RAC and/or MIC• Volume fluctuations / decline capitation membership • Shift in surgical volume from IP to OP and in payer mix

1Jul 10 Jul 11

Initiative Budget: FY11 Budgeted

Budget Status: Within Budget

Outcome Measure: AnnuallyThreshold - $480M; Target - $486M; Maximum - $492M

Sub-initiative Outcome Measure:1. PFS – Maintain billing edits reconciliation under $5M2. Case Mgmt & Managed Care – Achieve $2M CDI budget goal3. RAC – Reduce stent one-day stay by 50%, or 60 cases4. Case Mgmt – Improve discharge time (To Be Determined) 5. Charge Services – Complete 3 departments by FYE6. Patient Access – Reduce denials by 10%, or 370 accounts


63 52 4

ADD E-4 160

FY11 Initiative: 1.3(a) Realize year 3 capital campaign

Outcome Measure: Capital Campaign

Initiative Status:• Fantasy Football launched; Chalk Talk held; Moirs attended

pre-season game with the Spanos Family• AT&T installed the new high speed line October 11th so that

NetCommunity Grow and Virtual Giving programs can be launched

• PPHF Board– Tom Silberg was appointed on September 23rd

– Mike Peters to be elected electronically by October 25th

• Employee giving exceeds $1.75 million.• Drs. Ponec and Mulvihill added to Physician campaign

leadership

Milestones: 1. Launch SD Chargers Partnership program2. Implement enhanced PPHF board development program3. Operationalize NetCommunity Grow and Virtual Giving

programs4. Launch PPHF website and ePhilanthropy social networking

components5. Increase Honorary Campaign Cabinet members to 206. Increase the ratio of individual sponsorships to vendor-

related sponsors from 10/90 to 25/75

7. Increase PPHF board membership to 208. Reach $2 million employee campaign goal with 50%

participation9. Reach $3 million physician campaign goal

Report Date: October 18, 2010

Reporting Committees: PPH Board Finance; PPH Foundation Board; EMT Finance

EMT Sponsor: Terry GreenInitiative Manager: Anita Fraley; Tina Pope; Carolyn

Zollars; Tami Rudolph

Initiative Risks:• Status of the economy• Donor and dollar commitments to other charities• Full PPHF staffing

1Jul 10 Jul 11

Initiative Budget: FY 2011 PPHF budget

Budget Status: Productivity as of September 30th is $814,255

Outcome Measure: Threshold – $8,000,000Target – $11,000,000Maximum -$15,000,000


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Outcomes Measures: Approval of Financial Term Agreement

Initiative Status:1. Completed preliminary space programming and site

analysis

2. Completed Site Visit to Sutter Rehabilitation Facility on August 23, 2010

3. Interviewed potential developers on July 19th

4. Progress update to Board Facilities & Ground Committee on August 9th.

Milestones:

1. Request for Qualifications – Developer Response 2. Recommend Developer3. Present Site Alternates to Board, Facilities and Grounds4. Present Draft Financial Model - Letter of Intent5. Develop Architectural Planning6. PPH Board Review, Facilities and Grounds7. PPH Board Finance Review8. Execute Financial Term Agreement

Outcome Measure:Approval of Financial Term Agreement• Threshold: June 30, 2011• Target: April 30, 2011• Maximum: January 30, 2011

Report Date: September 20, 2010Reporting Committees: Finance, Facilities & Grounds;

EMT FinanceEMT Sponsor: Sheila BrownInitiative Manager: Sheila Brown/Bob Hemker/

Michael Shanahan

Initiative Risks:• CMS Ruling regarding the moratorium on the Long Term

Acute Care Hospital (LTACH) until 2013• Environmental-Soil Analysis• Project & Site Constraints-Costs Associated

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FY11 Initiative: 3.1 (a) Determine plan for affiliations: RehabCare FY11

Initiative Budget: FY11 budgetedBudget Status: Within FY11 budget

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FY11 Initiative: 3.1(b) Develop Satellite Facilities

Outcome Measure: Completion of Joint Venture (JV) and ground lease for Rancho Penasquitos and Ramona satellites

Initiative Status:• Discussions with potential venture partner commenced in

FY10• Assessment of market demand and probability of tenancy

commitments commenced in FY10• Mailed PPH Del Sur and PPH Ramona medical office lease

interest letters to 350 area physicians-August 16, 2010

Milestones: 1. Complete demand analysis for both locations and finalize

size and scope of projects2. Commence establishment of Joint Venture entities for each

project including ground leases3. Complete project scope, design and economic packages

for each project4. Obtain requisite funding commitments for each project5. Finalize Joint Venture structures and agreements6. Obtain BOD Finance Committee approval7. Obtain Board of Director approval

Report Date: October 18, 2010Reporting Committees: Board Finance; Facilities and

Grounds; EMT FinanceEMT Sponsor: Bob HemkerInitiative Manager: Bob Hemker / Sheila Brown

Initiative Risks:• Insufficient tenant demand resulting in inability to achieve

minimum sized project to achieve financial viability• Inability of venture partner to obtain construction and/or

permanent financing

1Jul 10 Jul 11

Initiative Budget: No operating budget impactCapital funds through JV entities

Budget Status: Within budget

Outcome Measure: Threshold – JV & ground lease for 1 site by 6/30/11Target – JV & ground lease for 2 sites by 6/30/11Maximum – JV & ground lease for 2 sites by 4/30/11

Sub-initiative Outcome Measure:


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Outcome Measure: Completion of the Integrative Medicine Business Plan identifying key physician stakeholders.

Initiative Status:1. Physician /Allied Health panel has been initiated and all participants

have been invited to attend the first panel meeting on September 29, 2010

2. Draft of the market analysis and SWOT analysis have been completed – performing additional research to refine these analyses

Milestones:1. Initiate physician/allied health panel to gather

information to assure alignment with business plan

2. Perform market analysis3. Research appropriate business model4. Investigate competitive environment and perform

SWOT analyses5. Complete program pro forma 6. Complete marketing plan7. Review final business plan with physician/allied

health panel8. Present business plan to EMT Finance

Committee for approval9. Present business plan to Board Finance

Committee for approval

Outcome Measures:• Threshold: Integrative Medicine Plan completed by 6/30/2011• Target: Integrative Medicine Plan completed by 3/31/2011• Maximum: Integrative Medicine Plan completed by 1/31/2011

Report Date: October 18, 2010Reporting Committees: Finance; EMT FinanceEMT Sponsor: Sheila BrownInitiative Manager: Ann Koeneke/Anna Ha

Initiative Risks:• Consumers continue to utilize free-standing wellness

centers• Minimal physician/community understanding/utilization of

Integrative Medicine Services

FY11 Initiative: 3.2(a) Develop services that support physician affiliations (e.g., Integrative Medicine Services)

Jul 10 Sept 10 Nov 10 Jan 11 Mar 11 May 11 Jul 11

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Initiative Budget: FY11 budgeted

Budget Status: Within FY11 budget

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FY11 Initiative: 3.3(b) Increase expresscare retail health centers

Outcome Measure: Increase the number of PPHexpresscare retail health centers

Milestones: 1. Finalize site/location selections2. Partner Design Approvals3. IT/Telecommunications Site Visit 4. Kick-Off Meeting5. Finalize Furniture, Fixtures & Equipment (FFE)6. Weekly Team Meetings 7. Agency Review 8. Finalize programmatic structure9. Recruitment 10. Bidding 11. Construction12. Deliver/Install FFE13. Credentialing 14. Licensing/Occupancy15. Grand Opening Celebrations/Tours

Report Date: October 18, 2010Report Committees: Finance; EMT FinanceEMT Sponsor: Sheila BrownInitiative Manager: Michael Shanahan, Stonish Pierce

Initiative Risks:• Pending legal issues relative to expansion areas• Structural programmatic options do not come to fruition• Board-approved funding for expansion efforts • Initiation of construction schedule allowed by retail partner

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Outcome Measure: Threshold – 1 new center by 6/30/2011Target – 2 new centers by 4/31/2011Maximum – 3 new centers by 3/31/2011


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Initiative Budget: FY11 budgeted

Budget Status: Within FY11 budget

Initiative Status:• Locations selected • Designs approved by SUPERVALU• IT/Telecommunications site visits conducted to all locations• Kick-Off Meeting complete • FFE selected • Weekly design team meetings completed • City agency reviews (to resume following program structure finalization)

• Programmatic structure (in progress)• Recruitment (suspended due to Legal issues)

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BOARD FINANCE COMMITTEE MEETING - Palomar Health · 10/26/2010 · Minutes Finance Committee –...

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