CPGH, Inc. Quarterly Report December 31, 2009

Prepared for

The Kenai Peninsula Borough Assembly and Administration

January 19, 2010

Presentation Overview

• Financial Performance– Financial data– Transfers to PREF

• Activities, Issues and Events– Dialysis Update– Physician Recruitment– Workplace Bullying– Governance Work Session– Medical Office Building

• CPGH, Inc. Budget Proposal

PresenterPresentation NotesThis is an overview of this evening’s report.

Program Highlights in acute care, behavioral health & community involvement, and long-term care.The Financial Performance section shows an overview of operating results and a capital expenditures summary for the year.Future Capital Needs focuses on the 10-year capital plan prepared in January 2006, and summarizes projected major capital needs over the next few years.

Gross Patient Revenue (in thousands)

$63,318

$68,976

58,000

60,000

62,000

64,000

66,000

68,000

70,000

YTD 12/31/09 PY 12/31/08

8.94% increase

Net Income (in thousands)

$6,741$7,276

6,000

7,000

8,000

YTD 12/31/09 PY 12/31/08

7.35% Decrease

Charity Care & Bad Debt

2,332 1,761

3,8213,644

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

YTD 12/31/09 PY 12/31/08

Charity Bad Debt

13.84% increase

Cash & Cash Equivalents (in Thousands)

$21,300$20,049

$13,000

$15,000

$17,000

$19,000

$21,000

$23,000

$25,000

Dec-09 Dec-08

6.24% Increase

Transfers to Plant Replacement & Expansion Fund

• PREF Account Balance at 12/31/09: $5,927,089

• Days Operating Cash on Hand at 12/31/09 – 101.64 days

• Transfer to Plant replacement pending: $2,432,450

• Balance after transfer - $8,359,539

Dialysis Update

• Fresenius Medical Care• Currently open – Medicare

Certification Survey12/8/09

Physician Recruitment

• Pain Management – Cynthia Kahn, MD

• Neurology – Kristen Jessen, MD

Robert MacLachlan, MD

Work Session

• March 2nd, 2010 – Hospital Denali Room – 9 a.m. to 12 noon

• Presentation by Jamie Orlikoff – Hospital Governance Expert

L&OA Section 12.b.ii. – Capital Improvements

• Prior to expending funds in excess of $150,000 for the purpose of analyzing and/or planning for capital improvement projects expected to cost in excess of $1.0M, CPGH, Inc. shall first notify and confer with the Borough Contract Administrator.

• Medical Office Building

Central Peninsula General HospitalKPB Financial Support by year

- - - - - -Property State of AK

Fiscal Mill Tax Revenue Investment Total Year Rate Amount Sharing Income Revenue

- - - - - -1973-74 0.00 $0 $01974-75 0.20 $97,972 $97,9721975-76 0.20 $124,119 $124,1191976-77 0.20 $149,946 $149,9461977-78 0.20 $200,452 $200,4521978-79 0.20 $240,949 $240,9491979-80 0.00 $0 $01980-81 0.40 $670,192 $63,750 $134,000 $867,9421981-82 0.51 $950,586 $950,5861982-83 0.58 $1,124,280 $772,022 $550,914 $2,447,2161983-84 0.89 $1,997,725 $1,997,7251984-85 0.71 $1,647,518 $1,647,5181985-86 0.65 $1,653,789 $1,653,7891986-87 0.92 $2,488,435 $754,932 $376,519 $3,619,8861987-88 0.70 $1,887,043 $802,584 $332,298 $3,021,9251988-89 0.70 $1,630,719 $504,447 $431,578 $2,566,7441989-90 0.80 $1,800,527 $457,440 $379,851 $2,637,8181990-91 0.70 $1,645,570 $423,733 $237,956 $2,307,2591991-92 0.80 $1,899,781 $438,505 $147,460 $2,485,7471992-93 0.56 $1,296,740 $416,776 $68,411 $1,781,9271993-94 0.56 $1,272,628 $453,925 $89,566 $1,816,1201994-95 0.70 $1,628,517 $517,786 $63,494 $2,209,7971995-96 0.50 $1,181,702 $387,900 $56,144 $1,625,7461996-97 0.50 $1,182,344 $349,975 $40,000 $1,572,3191997-98 0.40 $1,005,292 $326,997 $117,969 $1,450,2581998-99 0.40 $1,028,551 $298,085 $150,724 $1,477,3601999-00 0.40 $969,991 $186,203 $218,733 $1,374,9272000-01 0.40 $996,201 $159,764 $334,414 $1,490,3792001-02 0.40 $1,066,983 $185,736 $336,097 $1,588,8162002-03 0.40 $1,172,092 $193,202 $370,602 $1,735,8972003-04 0.50 $1,537,921 $0 $26,685 $1,564,6062004-05 1.00 $3,052,269 $0 $80,633 $3,132,9022005-06 1.00 $3,018,711 $0 $57,090 $3,075,8012006-07 1.00 $3,284,709 $0 $400,722 $3,685,4312007-08 1.00 $3,608,446 $0 $455,530 $4,063,9762008-09 0.90 $3,570,132 $0 $384,408 $3,954,540

2009-10 (Budget ) 0.50 $2,181,871 $0 $300,000 $2,481,871

Totals $53,264,704 $7,693,762 $6,141,798 $67,100,264From KPB Comprehensive Annual Financial ReportFrom KPB BudgetFrom CPGH Financial Statements

CPGH, Inc. Budget Proposal

• Lease and Operating Agreement

• 6th Whereas – the parties agree that CPGH, Inc. shall endeavor to operate the Medical Facilities on a self- supporting basis

Financials

L&OA Section 15.a. – Service Area Budget

• CPGH, Inc. Budget Proposal – CPGH, Inc. shall prepare and submit a proposal to the SAB and Borough administration containing anticipated funding needs from service area funds for the medical facilities and programs operated by CPGH, Inc. for the Service Area.

• No anticipated funding needs for FY 2011 from service area funds

L&OA Section 15.b & c – Service Area Budget Proposal

• SAB proposed budget to include:– Debt Service Payment– Property Insurance– Audit Fees– Operating Expenses of Compliance with the

Borough’s duties under this agreement• Borough Administration designates

necessary mill rate• KPB Assembly approves mill rate

CPH Potential Threats

• Certificate of Need• CMS RCH Demonstration Project• Health Reform

Demonstration Project

• Projected Additional Medicare Reimbursement– 2009 Rate $12,452 Per Discharge– 2010 Rate $15,271 Per Discharge– 2009 Medicare Discharges = 810– 2009 Medicare CMI = 1.1404

• $2.6 Million with rebase

�CPGH, Inc. Quarterly Report�December 31, 2009��Prepared for���The Kenai Peninsula �Borough Assembly �and Administration��January 19, 2010Presentation Overview�Gross Patient Revenue�(in thousands) �Net Income�(in thousands)Charity Care & Bad Debt�Cash & Cash Equivalents�(in Thousands)Transfers to Plant Replacement�& Expansion FundDialysis UpdatePhysician RecruitmentWork SessionL&OA Section 12.b.ii. – Capital ImprovementsSlide Number 12CPGH, Inc. Budget ProposalSlide Number 14L&OA Section 15.a. – Service Area BudgetL&OA Section 15.b & c – Service Area Budget ProposalCPH Potential ThreatsDemonstration Project