THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINIC BOARD …

THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINIC

BOARD OF GOVERNORS

JOINT MEETING OF

PLANNING & DEVELOPMENT COMMITTEE

&

(, FINANCE COMMITTEE

JUNE 24, 1992

,

JOINT MEETING OF

PLANNING AND DEVELOPMENT COMMITTEE&

FINANCE COMMITTEE

THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICBOARD OF GOVERNORS

Wednesday, June 24, 199212:30 noon - 2 :00 p.m.*

The Board Room (8-106), University Hospital

AGENDA

1.

II.

Agproval of the May 27. 1992 Planning &Deyelopment Committee Minutes

Approyal of the May 27. 1992 Finance CommitteeMeeting Minutes

Approval

Approval

1

3

III. Special Capital Project:

Sports Medicine

-Mary Ellen Wells

Endorsement 6

IV. 1992-93 Capital Budget

-Greg Hart

Endorsement 20

V. Consent Agenda Items

Major Capital Expenditure Report:Color Doppler Ultrasound System

Information/Consent

25

VI. May 31. 1992 Financial Statements

-Clifford Fearing

Information 26

VII. Other Business

VIII. Adjournment

*Lunch will be served at 12:00 noon In the Board Room.

MINUI'F.SPl.anni.nI ani Develcpaent Q:IIInittee

RlARDOF~

May 27, 1992

Present:

staff:

Guests:

leonard BieniasRobert DicklerS. Albert HanserTerence HillClint HewittWilliam Jacott, M.D.Greg HartTed '!hCl'l'p3On

Giles caverJoanne DischJean HarrisJohn L. laBree, M.D.Shannon LorbieckiHelen pittMary Ellen WellsElizabeth McGough

Elizabeth Arendt, M.D.David ArxlersonDenny BrennanPhillip McGlave, M.D.

Not Present: Peter Lyndl, M.D.

CAlL '10 CRlER:

Mr. David rentz called the meeting to order at 11:12 a.m••

Mr. Greg Hart briefly described the dialysis reIOOCieling project am the quarterlycapital expenditure report. '!hese items were recanmended for the Board ofGovernors consent agenda.

SKlRTS MEDICINE~

Ms. Mary Ellen Wells introduced arrl described the proposal for developnent of anoff-ca:npus sports medicine facility. Ms. wells i.rrlicated that due to theUniversity's space needs, the west-bank site which had been planned will not beavailable am a number of alternatives are being pursued. Dr. Elizabeth Arendtdescribed the sports medicine program arrl ernnnerated the advantages of an offsite location. '!he major advantages will be patient access am centralizationof all program components. Ms. Wells summarized the financial projections forthe outpatient program.

'!he proposal was presented for infonnation arrl will be presented for approval atthe June Ccmnittee arrl Board of Governors meetings

1.

Planning ani Developnent Meeting MinutesBoard of Governors

- Page 2 -

Mr. rentz asked for a motion to hold a closed meeting to discuss a marketingmatter ani a proprietary matter. A motion was seconded ani passed to hold aclosed meeting.

~:

'!here being no further b.1siness, the meeting was adjourned at 11:35 a.m..

ResPectfully sul::mitted,

'-~AA-~~ j,~Shannon L. lDrbieckiAssistant Directorsecretary to the Board of Directors

~.

THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICBOARD OF GOVERNORS FINANCE COMMITTEE

May 27, 1992

Minutes

Attendance

Members:

Staff:

Guests:

Call to Order

Edward Ciriacy, M.D.Robert DicklerMichael DoughertyLeo Furcht, M.D.Albert HanserNellie JohnsonArthur KyddMargaret MatalamakiJohn MorrisonRoger PaschkeVic Vikmanis

Giles CaverJoanne Disch, Ph.D.Stephen GrygarGreg HartNels LarsonShannon LorbieckiMary Ell en Wells

Elizabeth Arendt, M.D.Philip McGlave, M.D.Elizabeth McGough

Ms. Nellie Johnson called the Finance Committee meeting to order at 12:40 p.m.

Approval of the April 22, 1992 and May 14, 1992 Meeting Minutes

The Finance Committee approved the minutes of the April 22, 1992 and May 14,1992 meetings as written.

Special Capital Project:Bone Marrow Transplantation Program - Stem Cell Project

The Finance Committee closed the meeting to discuss the Stem Cell Projectproposed by the Bone Marrow Transplantation Program. After some discussion,the Finance Committee endorsed the Stem Cell Project proposal.

3.

Finance Committee MinutesMay 27, 1992Page 2 of 3

April 30, 1992 Financial Statements

The Finance Committee reopened the meeting to discuss the April 30, 1992financial statements. Mr. Nels Larson presented the April 30, 1992 financialstatements. He said April inpatient admissions totaled 1,519 or 14 admissionsover budget; average length of stay was 7.3 days or 0.8 days under budget; andpatient days totaled 11,325 or 827 days under budget. The April average dailycensus was 377.5, which was below the budgeted level of 405.1. April clinicvisits were 8.0 percent above budget.

The year-to-date Statement of Operations showed expenses exceeding revenues by$662,000, an unfavorable variance of $5,056,000. Gross patient revenue was1.1 percent below budget and operating expenditures were 2.4 percent belowbudget.

As of April 30, the balance of accounts receivable totaled $110,016,000 andrepresented 98.7 days of revenue outstanding.

Fiscal Year 1993 BUdget Projections and Comparative Data

Mr. Robert Dickler presented fiscal year 1993 budget projections andcomparative data. He recommended the Finance Committee adopt a budget with a5.9 percent rate increase and 2.0 percent total margin.

Mr. Dickler acknowledged the Board's concerns about any rate increase, butassured the Finance Committee the recommended rate increase is necessary andresponsible. He said the Hospital has haa the lowest, recent cumulative rateincrease relative to its local competitors. Moreover, the Hospital'sprofitability, liquidity, and capital structure ratios are well positionedrelative to the competition. Finally, a large number of Hospital patients arecovered by insurance which pays charges versus negotiated rates.

Mr. Dickler also assured the Finance Committee the Hospital will pursueadditional cost containment. He said the recommended budget includes expensereductions of $11,250,000, and the strategic planning process should producefurther cost reductions in future years.

The Finance Committee discussed the recommended budget and considered twoadditional resolutions. The first resolution requested University CentralAdministration determine the appropriations to which it currently charges theHospital for fringe benefit and other expenses. The second resolutionrequested Hospital Administration achieve cost reductions so no rate increasewill be requested or required for fiscal year 1994.

The Finance Committee endorsed the recommended budget and the two attachedresolutions.

4.

Finance Committee MinutesMay 27. 1992Page 3 of 3

Fiscal Year 1993 Compensation Plan

Mr. Greg Hart presented the Hospital's employee compensation plan for fiscalyear 1993. First, he said unionized employees are covered by the second yearof existing collective bargaining agreements, and University dominated classeswill receive 5.1 percent increases established by University CentralAdministration. As such, Mr. Hart said the Finance Committee did not need toaddress the compensation of those two groups.

However, Mr. Hart did recommend 5 percent pay increases for Hospital-dominatedclasses and for employees in the Hospital Administrative Personnel System. Healso reminded the Finance Committee these employees did not receive payincreases during fiscal year 1992.

The Finance Committee endorsed the Hospital's employee compensation plan forfiscal year 1993.

Special Capital Project: Sports Medicine

Ms. Mary Ellen Wells and Dr. Elizabeth Arendt presented a business plan toestablish an off-site sports medicine clinic. They said the clinic wouldprovide general medical care, orthopaedic surgery, and physical andoccupational therapies. Ms. Wells and Dr. Arendt said establishing the clinicwould have several benefits. They include: improving patient access andpublic visibility, generating additional visits and admissions, enhancingresident training in orthopaedic surgery, freeing limited on-site clinicspace, improving quality of care, and integrating services better.

Ms. Wells said she and Dr. Arendt will seek approval for the plan in June.She also said the FMC building space they had planned to use is no longeravailable, and she will identify an alternate site before the June meeting.

Adjournment

There being no further discussion, the Finance Committee adjourned the meetingat 2:34 p.m.

ReSr~~fU!11Y/"bmi tted,

'I " ,/" \ .--..11

/,j (l~,Giles caver v'Administrative Fellow

0.

UNIVERSITY OF MINNESOTA

The University ofMinnesota Hospital and Clinic

June 18, 1992

MEMORANDUM

Harvard Street at East River ParkwayMinneapolis. MN 55455

TO:

FROM:

Members, Planning and Development CommitteeMembers, Finance Committee

Mary Ellen Wells vt:tJ'~Associate Director

,Last month, Dr. Elizabeth Arendt and I presented a proposal to theBoard of Governors that consolidates and expands the UMHC SportsMedicine program and relocates it to an off-site facility.

As you know, the building that was identified as the preferred siteis not available. During the last month, other options wereexplored and there are two viable alternatives. A final decisionon the preferred location will be made after further negotiationswith the building managers.

Since both sites require equivalent rental and leaseholdimprovement expense, we are presenting a modified summary thatreflects the new site options and the resulting financialprojections. Also, we will present a marketing plan overview thatwas requested last month.

We recommend that the Board approve the leasehold improvements andequipment purchases that total $620,000. We look forward topresenting this next week.

MEW/sk

6.

SPORTS MEDICINE INSTITUTE

PROPOSAL FOR OFF SITE LOCATION

SUMMARY

The University of Minnesota Hospital and Clinic proposes tolease approximately 12,000 square feet of space in an offsitelocation to house a Sports Medicine Institute. The Institute willbe located at one of two sites: Minneapolis Business andTechnology Center, located at the edge of downtown near theMetrodome, or 2610 University Avenue, located one block west of theintersection of Highway 280 and University Avenue. Both optionsgive the Sports Medicine program access and visibility to theUniversity and the greater Twin cities population, and are withina one mile radius of the Twin cities campus.

services provided will include general medical care for theathlete by generalist and specialist faculty in orthopaedicsurgery, physical therapy and occupational therapy. UMHC and theDepartment of Orthopaedics will continue to provide services to thestudent athletes of the University of Minnesota, and will continueto expand services to the greater Twin cities population.

I. BACKGROUND

The University of Minnesota Hospital and Clinic (UMHC)established a Sports Medicine Institute in 1984 in a 2,000 squarefeet clinic in the Phillips Wangensteen Building (PWB). Becausethe space is too small to allow both physicians and therapists topractice together, the services there have been limited to physicaltherapy.

Since 1984, the Department of Orthopaedics (Orthopaedics) hasfocused its attention on developing expertise in the SportsMedicine arena. orthopaedics provides medical direction for theUnivers i ty' s student athletes. Although UMHC' s sport medicineservices have been received favorably, the lack of contiguous spacefor the physicians and therapists results in a disjointed programwith limited potential for growth.

In the fall of 1989, the University of Minnesota Men'sIntercollegiate Athletic Department indicated an interest in movingthe medical care of the athletes from UMHC and Orthopaedics tocommunity physicians. Because management and care of Universityathletes are important components of orthopaedic's residency andtraining programs, and are a key component in marketing SportsMedicine services to the pUblic, both Orthopaedics and the Hospitalwere greatly concerned about the potential of losing this business.Accordingly, they responded quickly, and instituted a number ofchanges that improved the way student athletes were handled:

7.

(1)

sports Medicine InstituteOff-site Location Proposal

Orthopaedics assigned a physician to provide medicaloversight for all care provided the athletes at UMHC.The lines of communication between the Men'sIntercollegiate Athletic Department and UMHC werestrengthened, with the lead Sports Medicine physicianassigned the task of identifying and correcting anyperceived problems, concerns and obstructions to highquality care and service;

(2) Inpatient units, clinics, the emergency room, andancillary departments were geared up to handle thespecial needs of the student athletes; and,

(3) Athletes were flagged in the Hospital's computer system,so that UMHC staff knew they were working with a studentathlete.

To address concerns about accessibility and patientconvenience, Orthopaedics and UMHC also began investigating thefeasibility of opening a Sports Medicine Institute near theUniversity campus. These actions persuaded the Men's AthleticDepartment and University Administration to retain Orthopaedics and

~ the Hospital as the medical provider for University athletes.

At the same time, UMHC's Department of Rehabilitation Servicesrecognized the need for consolidating its outpatient services, andfor improving accessibility for patients who needed only outpatientphysical or occupational therapy. Since sports medicinenecessarily includes rehabilitation therapy, and a significantportion of outpatient therapy referrals are from UMHC's SportsMedicine physicians, the scope of the Sports Medicine Instituteinvestigation was broadened to include adjacent outpatientrehabilitation therapies.

The Hospital asked a firm of health planning consultants toassess existing university sports medicine/fitness programs, andidentify programmatic and facility opportunities and needs. Theirreport recommends that the Hospital and orthopaedics establish afreestanding Sports Medicine Center, offering consolidated serviceswithin that Center. Ideally, the Center would be on or near theMinneapolis University campus.

Based on these recommendations, UMHC and Orthopaedics agreedto continue to plan a Sports Medicine Institute, consisting of amedical clinic and related therapy services.

- 2 -

~.

II.

A.

PROGRAM DESCRIPTIONS

SPORTS MEDICINE/MEDICAL


The Institute will function as a satellite operation of UMHC.The medical clinic will offer general oversight care related tosports injuries and orthopaedic specialty care. Sports Medicinephysicians focus on injuries suffered most often by athletes, butprovide services to any patient with such an injury, not onlyathletes. UMHC's Sports Medicine Institute will provide care forknee, ankle, shoulder and hand injuries.

Given the volume of X-Ray activity, The clinic will provideradiology services on site. The X-Ray unit will accommodate up to95% of radiographs necessary for Sports Medicine practice.Laboratory specimens will be collected as needed and sent to UMHCLaboratories for testing.

The Institute enhances the Department of orthopaedic'sclinical activities, and will strengthen its residency program aswell as its other academic programs. While some of the clinic'svolume is activity that will be relocated from the OrthopaedicsClinic currently located in the Phillips Wangensteen Building, mostof the activity is new business generated by physicians who arejoining the Department during the 1992-93 academic year.Currently, new sports medicine patients are waiting up to six ormore weeks to see a physician. As they build their practices, thenew physicians will fill an immediate need for relieving overbooked schedules.

B. THERAPIES

Outpatient therapy services will be provided for the sportsand other related orthopaedic patients. Currently, these servicesare provided in the sports Medicine Institute on the sixth floor ofPWB and in the Rehabilitation Services Department on the seventhfloor of the Mayo Building. Patients travel back and forth betweenthe sites depending on testing and equipment needs. Spaceconstraints in the current facility prohibit consolidation of theprogram into one area.

The therapy services will center around the needs of thesports medicine patient. Equipment and staffing are geared towardresponding quickly and completely to the special needs of theinjured athlete. However, much of the testing and exerciseequipment used by the sports medicine patient is also used by other

- 3 -

9.


patients needing rehabilitation services. Therefore, to minimizeduplication of equipment and staff, industrial rehabilitationservices will be offered at this site. Services will includeFunctional Capacity Assessments, Special Purpose Assessments, WorkHardening, and Job site Assessment. These services are now offeredon the seventh floor of Mayo.

outpatient pediatric care and adult neurologic and geriatrictherapy will remain in the Health Sciences complex, since theseservices require specialized equipment also used by the inpatientpopulation. Patients typically are wheelchair-bound, and haveaccess to parking in the Mayo garage.

C. PROGRAM BENEFITS

UMHC and orthopaedics will benefit sUbstantially fromrelocation and expansion of the Sports Medicine Institute. The newpatient visits generated by the Sports Medicine physicians willresult not only in an increased outpatient popUlation, but also inmore admissions and surgeries.

Exhibit A reflects the 1991 Sports Medicine inpatient activitythat is used to project the impact of new volume. Typically, oneadmission results from every eleven clinic visits. Assuming asimilar admission/visit ratio, the new Sports Medicine physicianswill add 230 inpatient admissions in the first year. This resultsin additional net revenue of $1,398,984 and additional net incomeof $23,661 (based on no marginal savings, i.e. fully loaded directand indirect expense allocations).

The enhanced program will strengthen an already strongorthopaedic residency and training program. Thirteen percent oftotal orthopaedic admissions are for sports medicine procedures;27% of Orthopaedics' metropolitan patients are admitted for sportsmedicine procedures. In addition, new programs for athletes, suchas orthotics, management of knee pain, and gait analysis, can bepursued. The move off-site also will open up much-needed space oncampus.

The move of some physicians to the Sports Medicine Institutewill not have a negative impact on the Orthopaedics Clinic in thePhillips Wangensteen Building. Historically, the orthopaedicsDepartment has utilized clinic space to its maximum potential. Inaddition, the Department of Orthopaedics is adding a minimum ofthree new physicians to its staff in the next fiscal year. Itanticipates that the renovated clinic on campus will not be able toaccommodate the new faculty's clinic time requests. The expanded

- 4 -

10.

,

,


clinic availability, both off-site and on campus, will fill theimmediate need to alleviate appointment backlogs and allow the newphysicians to build their practices.

Consolidating the therapy and medical programs to one sitewill improve the quality of care, allow the services to offerextended hours, integrate services, and provide easier access bothto physicians and therapists.

Currently, the diverse locations of outpatient servicesprohibit many staff efficiencies. In addition, the market demandfor physical therapists is high nation-wide, making staff retentionand recruitment a growing concern. Consolidating the services andrelated equipment in one location will increase efficiencies, allowthe staff to carry a greater and more varied patient load, andprovide a comfortable and interesting work site for valuedemployees.

III. LOCATION

Two alternatives were researched: leasing space or purchasingland and constructing a facility. Since (1) the program currentlyis not big enough to support a stand-alone facility, (2) thepurchase of land and construction would take a minimum of twoyears, and space and program constraints dictate a more aggressivetime line, and (3) no land or' building of adequate size andappropriate purchase price is immediately available near thecampus, the rental of space in an existing building is thepreferred option.

Research is progressing on two alternative locations. Onealternative is the Minneapolis Business and Technology Center,located at 511 Eleventh Avenue South, near the southeast corner ofthe Metrodome. Situated as it is on the edge of downtown directlyacross from the West Bank campus, the building has high visibilityfrom downtown and the expressways, and good access for the generalpopulation. The second alternative is 2610 University Avenue, oneblock west of the intersection of Highway 280 and UniversityAvenue.

The criteria being used to evaluate the sites are: the benefitof a downtown location versus a University Avenue location,convenience for patients, parking availability, accessibility forthe disabled, and attractiveness of the building and thesurrounding area.

- 5 -

11.


IV. FINANCIAL PROJECTIONS

Financial projections for the clinic and therapies areattached. Because lease rates and the cost of leaseholdimprovements for the two site options are equivalent, one set offinancial projections is applicable to either location.

Exhibit B summarizes the assumptions used to develop the plan,including visit projections, staffing, clinic charges, deductionsfrom charges, and leasehold improvement costs. The chargesdetailed in the exhibits are the clinic fees only, and do notinclude physicians' professional fees. UMHC and Orthopaedics haveagreed that the combined clinic and professional fee will becompetitive in the Twin cities market, and have priced theirseparate fees accordingly.

Third party payers will see no difference in chargingmechanisms from either UMHC or Orthopaedics. The Hospital ismoving an already-existing program to a new location, and there isno need to negotiate new pricing structures or develop newcontracts with any payer. The new Workers' Compensationlegislation and changes in Medical Assistance reimbursement willhave a negative impact on the level of reimbursement forapproximately 29% of the clinic patients and 18% of the therapypatients. This impact is reflected in increased deductions fromcharges detailed in Exhibit B, and reflected in the figures inExhibits C and D.

Exhibit C is the five year financial projection for themedical clinic. The detailed expenses are UMHC expenses, and donot include physicians' salaries or Orthopaedic overhead. Usingconservative estimates, the clinic will break even in the secondyear of operation and will realize a 13% margin in the fourth year.After the third year, margins increase dramatically since leaseholdimprovements are recovered in the first three years. Exhibit D isthe five year financial projection for therapy services. Therapieshave a small loss in the first year, achieve a 1% contributionmargin (surplus over net revenues) by the second year, and 9.6%contribution margin by the fourth year.

Leasehold improvement expenses total $345,000, and equipmentpurchases total $275,000. The total initial capital outlay is$620,000, which is scheduled to be taken from reserves.

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12.

V. REQUIRED APPROVAL


,

Approval from the Board of Governors is required, since thetotal project exceeds $600,000. Regential approval is notspecifically required, since the project is included in theHospital's capital budget, and the lease does not exceed threeyears.

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13.

EXHIBIT A

THE UNIVERSITYOF MINNESOTA HOSPITAL AND CLINICSPORTS MEDICINEINSTITUTE INPA TlENTACTIVITY

PROJECTED1991 ADDITIONAL

ACTIVITY ACTIVITY

NUMBER OF VISITS 1,635 2,441

NUMBER OF ADMISSIONS 154 230

Patient Care ChargesLaboratory $41,137 $61,438Operating Room 295,742 441,693Pharmacy 91,020 135,939Miscellaneous 67,839 101,318Room &Board 289,367 432,171Supply 253,888 379,183Take Home 4,041 6,035X Ray 19,035 28,429

c; Professional Fees 31 ,035 46,351TOTAL $1.093.104 $1.632.557

Deductions from Charges (156,393) (233,573)

NET REVENUE $936.711 $1.398.984

ExpendituresDirect 573,428 856,418Indirect 347,441 518,905TOTAL $920.869 $1.375.323

NET INCOME $15.842 $23.661

** Revenue and expense increases are proportional to volume increases.c;

14.

EXHIBIT B

(, SPORTS MEDICINE INSTITUTEBUDGET ASSUMPTIONS

VOLUMEPhysician Volume:Year One: 6,000 visitsYears Two through Five: 7,200 visits

Therapy Volume: Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sports Medicine 8,247 8,904 9,076 9,250 9,428Hand & Spine 4,913 5,172 5,275 5,381 5,488Industrial Rehab 396 396 396 396 396Industrial Consulting 72 96 96 96 96

STAFFINGClinic:Job Classification Full Time Equivalent

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Manager 0.10 0.10 0.10 0.10 0.10Clerical 1.20 1.20 1.20 1.20 1.20Gen Staff Nurse 1.00 1.00 1.00 1. 00 1.00Lic Prac Nurse 1. 00 1.00 1.00 1.00 1.00Radiology Technician 1. 00 1.20 1.20 1.20 1.20

Therapies:Job Classification Full Time Equivalent

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

(, Manager 0.60 0.70 0.80 1.00 1.00Physical Therapists 6.00 6.25 6.45 6.50 6.50Occupational Ther 4.00 4.25 4.15 4.25 4.50Clerical/Support 3.00 3.30 3.40 3.80 3.80

DEDUCTIONS FROM CHARGES

Clinic:Therapies:Ind Rehab:

LEASE COST (PER SO FT)

Yr 130.37%22.81%

5.00%

$11. 50

Yr 231. 01%23.20%

7.00%

LEASE EXPENSES

Yr 331. 64%23.58%

9.00%

Yr 432.27%23.97%11.00%

Yr 532.90%24.35%13.00%

USABLE SQAURE FEET: 12,000COMMON SPACE SURCHARGE: Add 15% to the usable square footageCLINIC SPACE: 3,800 square feet (3,300 usable)THERAPY SPACE: 10,000 square feet (8.700 usable)LEASEHOLD IMPROVEMENTS: $25.00 per square foot

DEPRECIATION

5 year straight-line depreciation on leasehold improvements5 year straight-line depreciation on all equipment except X-Ray10 year straight-line depreciation on X-Ray equipmentDepreciation expense increases 5% per year in anticipation of recurring equipmentpurchases

- page 1 -

14.

OTHER ASSUMPTIONS

CLINIC:

FACILITY/PROCEDURES CHARGEAverage Charge: $36.00 year one; 7% increase yrs 2 through 5

X-RAYVolume: One-third of patient visitsAverage Charge: $86.00 year one; 7% increase yrs 2 through 5

LABORATORY SPECIMEN COLLECTIONSVolume: 5% of patient visitsCharge: $7.00 year one; 7% increase years two through five

FRINGE BENEFITS26% of salaries

THERAPIES:

PROCEDURES CHARGES

Average Charge, Year One: Sports MedicineBiomechanicalHandSpineInd RehabInd Consult

$ 65$ 106$ 65$ 85$ 340$ 110

7% increase years two through five

FRINGE BENEFITS25% of salaries

June 18, 1992

- page 2 -

15.

nEXHIBIT C, Page 1

f' f'"

THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICSPORTS MEDICINE INSTITUTE

MEDICAL CLINICFIVE YEAR FINANCIAL PROJECTION

YEARONE

REVENUE

YEARlWO

YEARTHREE

YEARFOUR

YEARFIVE

VISIT CHARGES 216,000 280,800 302,400 324,000 345,600LAB (SPECIMEN COLLECTING) 2,100 2,646 2,790 2,934 3,082RADIOLOGY 172,000 220,848 232,848 252,845 270,544

TOTAL GROSS REVENUE 390,100 504,294 538,038 579,779 619,226

DEDUCTIONS FROM CHARGES (118,473) (156,382) (170,235) (187,095) (203,725)

SUBTOTAL NET REVENUE 271,627 347,912 367,803 392,684 415,500HEALTH RIGHT TAX RECOVERY 1,358 3,479 3,678 3,927 4,155

TOTAL NET REVENUE 272.985 351.392 371.481 396.611 419.655

EXPENSES

CLINIC PERSONNEL

FRINGE BENEFITS

TOTAL PERSONNEL EXPENSES

~ 18-Jun-92.

139,241

36,203

175,444

154,962

40,290

195,252

162,706

42,304

205,010

170,851

44,421

215,272

179,411

46,647

226,057

f' ~ f\EXHIBIT C, Page 2

THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINIC MEDICAL CLINICSPORTS MEDICINE INSTITUTE FIVE YEAR FINANCIAL PROJECTION

YEAR YEAR YEAR YEAR YEARONE TWO THREE FOUR FIVE

NON-PERSONNEL EXPENSESTemporary Personnel 5,173 5,432 5,703 5,988 6,288Rent 43,700 43,700 43,700 48,070 48,070Moving Expenses 2,475 0 0 0 0Office Supplies 600 630 662 695 729Medical/Unen Supp/Equip 6,600 8,316 8,732 9,169 9,627Radiology Supplies 10,000 14,969 15,717 16,503 17,328Continuing Education 500 525 551 579 608Advertising/Marketing 2,500 2,625 2,756 2,894 3,039Journals/Subscriptions 500 525 551 579 608Educational Materials 500 525 551 579 608Mail/Copy/Courier 5,400 5,670 5,953 6,251 6,564Phone 1,600 1,680 1,764 1,852 1,945Pager 300 315 331 347 365Depreciation- -Equipment 25,000 26,250 27,563 28,941 30,388Depreciation- -leasehold Improvements 31,667 31,666 31,666 0 0HealthRight Tax 2,716 6,958 7,356 7,854 8,310

TOTAL NON-PERSONNEL EXPENSES 139,231 149,786 153,556 130,300 134,478

TOTAL EXPENSES 314,675 345,038 358,566 345,572 360,535

SURP lUS/(DEFICIT) (41,690) 6,353 12,915 51,039 59,120

CONTRIBUTION MARGIN -15.35% 1.83% 3.51% 13.00% 14.23%

~ 18-Jun-92.

f'EXHIBIT 0, page 1


,.. r

OUTPATlENT PHYSICAL THERAPY AND REHABILITATlONFIVE YEAR FINANCIAL PROJECTION

YEAR YEAR YEAR YEAR YEARONE TWO THREE FOUR FIVE

REVENUE & VOLUMgACTIVITY

SPORTS MEDICINE THERAPY 546,937 634,824 682,588 749,360 809,866HAND THERAPY 208,221 236,040 254,486 280,640 304,130SPINE FITNESS THERAPY 145,350 163,800 178,092 194,792 212,010MEDICAL EQUIPMENT AND SUPPLIES 20,000 21,000 22,050 23,152 24,310TOTAL REVENUE -- THERAPY 920,508 1,055,664 1,137,216 1,247,944 1,350,316

INDUSTRIAL REHABILITATION 146,040 149,772 160,212 171,456 183,288

DEDUCTIONS FROM CHARGES - - THERAPY (209,968) (244,914) (268,156) (299,132) (328,802)DEDUCTIONS FROM CHARGES -- IND REHAB (7,302) (10,484) (14,419) (18,860) (23,827)

SUBTOTAL NET REVENUE 849,278 950,038 1,014,853 1,101,408 1,180,975HEALTH RIGHT TAX RECOVERY 4,246 9,500 10,149 11,014 1L81Q

NET REVENUE 853,524 959,538 1,025,002 1,112,422 1,192,785

EXPENSESPERSONNEL

Manager 30,488 38,424 46,109 60,528 63,565Physical Therapy 217,974 242,897 262,812 277,458 290,922Occupational Therapy 134,597 154,441 158,382 170,314 189,379Clerical and Office Staff 72,181 82,002 88,287 103,192 108,364

TOTAL SAlARIES 455,240 517,764 555,590 611,492 652,230FRINGE BENEFITS 113,810 129,545 139,120 153,423 163,710

TOTAL PERSONNEL EXPENSES 569,050 647,309 694,710 764,915 815,940

ro 18-Jun-92.

f'\EXHIBIT 0, page 2


" t"

OUTPATIENT PHYSICAL THERAPYAND REHABILITATlONFIVE YEAR FINANCIAL PROJECTION

YEARONE

YEARTWO

YEARTHREE

YEARFOUR

YEARFIVE

NON-PERSONNELRent 115,000 115,000 115,000 126,500 126,500Moving Costs 5,025 0 0 0 0Office Supplies 2,500 2,678 2,869 3,012 3,226Medical Supplies 32,000 34,272 36,705 39,311 41,245Cont Ed &Travel 9,000 9,639 10,121 10,627 11,158Marketing &Advertising 6,000 6,300 6,615 6,946 7,293Journals &Subscriptions 1,500 1,575 1,654 1,736 1,823Postage &Mailing 1,000 1,050 1,103 1,158 1,216Courier Service 500 525 551 579 608Phones 3,200 3,360 3,528 3,704 3,890Pager 420 441 463 486 511Depreciation on Equipment 20,000 21,000 22,050 23,153 24,311Dep on Leasehold Improvements 83,334 83,333 83,333 0 0Unen 600 630 662 695 729Uniform Allowance 500 563 591 621 652HealthRight Tax 8,493 19,001 20,297 22,028 23,620

TOTAL NON-PERSONNEL EXPENSES 289,072 299,367 305,542 240,556 246,782

TOTAL EXPENSES 858,122 946,676 1,000,252 1,005,471 1,062,722

SURP LUS/(DEFICIT) (4,598) 12,862 24,750 106,951 130,063

CONTRIBUTION MARGIN -0.54% 1.34% 2.41% 9.61% 10.90%

I-'

~ 18-Jun-92



June 18,1992

Harvard Street at East River ParkwayMinneapolis, MN 55455

,

TO: Members of the Board of Governors Finance Committee andPlanning and Development Committee

FROM: Greg HartSenior Associate Director

SUBJECT: 1992-1993 Capital Budget

Enclosed please find the proposed 1992-93 capital budget. Ouroperating budgets assumed cash flow for equipment and remodelingof $8,200,000.

As the attached summary indicates, we are recommending an equipmentand remodeling budget next year of $8,200,000. While slightmodifications in specific allocation may occur, the $8,200,000total capital budget will remain constant. Of this amount,$6,427,868 is for equipment purchases. The remainder is forremodeling. A departmental breakdown of the equipment andremodeling bUdgets are attached.

We are requesting Committee and Board approval for the recommendedtotal $8,200,000 capital budget at the June meetings. We will bereporting actual capital expenditures compared to budget on aquarterly basis during the fiscal year, consistent with Boardpolicy. Major capital expenditures and special capital projectswill be brought forward individually at later dates.

A preliminary draft of this material was reviewed by the ClinicalChiefs Capital Budget Advisory Committee on June 18th. Finalreview, relative to the departmental allocations, will occur inJUly.

We will be happy to answer any questions you may have on June 24th.

jth

Attachments

LO.

UNIVERSITY OF.AOTA HOSPITAL AND CLINICANNUAL CAPITA~REMENTSVersion: 19-Jun-92File: B:\CAP\BOGl3

", ~

(,

June 18, 1992

THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICCAPITAL EQUIPMENT BUDGET FOR FISCAL YEAR 92/93

DEPARTMENT

Ambulatory CareBiomedical EngineeringCardio-RespiratoryClosed Circuit TVCommunicationsCUHCCEnvironmental Services

FinanceHealthcare NetworkHome HealthHospital AdministrationHospital FacilitiesHuman ResourcesInformation Services

LaboratoriesMaint. & OperationsMaterials/CSPMedical RecordsNeurology LabNursing ServicesNutrition ServicesOperating RoomPatient RelationsPharmacyProtection ServicesQuality Assurance

RadiologyRehabilitation Center

Social WorkTherapeutic Radiology

BUDGET

$418,173$14,600

$1,070,755$40,017$50,300$26,100$65,100$79,469$30,500$28,068$85,500$2,700$4,025

$894,539$960,282

$24,725$217,600$25,345$76,000

$187,621$12,172

$524,220$12,325$32,901

$1,500$10,188

$1,378,422$42,746$4,000

$107,975

Board2

t:::3.

June 18, 1992

THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICCAPITAL REMODELING BUDGET FOR FISCAL YEAR 92/93

DEPARTMENT

Ambulatory CareBiomedical Engineering

Bone Marrow Transplant

Environmental ServicesHospital Facilities

Information Services

LaboratoriesNeurology Lab

Maint. & Operations

Materials/CSPMedical Records

Nursing Services

Nutrition

Parking Services

PharmacyProtection Services

Radiology

BUDGET

$255,000$6,000

$82,000$20,000

$256,457$34,500

$97,800$150,000

$434,250

$19,300$27,100

$120,300

$34,925

$68,500

$31,500$14,000

$120,500

Board3

~4.

Planning & Dev. Committee Review: Jme 24, 1992

Finance Committee Review: __~J~m~e:..-...=:24:::r..,.....,~1=-,,9cz9.b-2

Board of Governors Review: -_----..JJ.u.1m~e~2~4'_r,_1~9~9~2

Color Doppler Ultrasound SystemEQUIPMENT:

<;; MAJOR CAPITAL EXPENDITURE REPORT1---------------------------I

I

I

PURCHASE PRICE: $204,445

DESCRIPTION: The Departm:mt of Radiology wishes to act on the budgeted replacement and upgrade of a Biosomd peripheral vascular ultrasomd unit originallypurchased in 1987. The amomt of $150,000 was allocated and approved in thedepartment's 1991-92 capital budget. The purchase of a rep1acer.Elt upgraded unitwill cost the department $204,445. The marginal difference is financially supportedfrom budgeted funds initially designated for u1trasomd transducers no longerrequired as a result of purchasing this system.

The need to replace and upgrade this ultrasound mit is documented by the continuedgrowth in all ultrasound LTIJaging by this depart:rnent.

1988-89 9,809 (+25.1%)1989-90 10,641 (+ 8.5%)

t 1990-91 12,127 (+14.0%)1991-92 13,621 (+12.3~~) (est. )

Marginal $$22,331.10

27,424.6028,440.0057,736.0075,792.5091,769.10

The purchase of a color doppler system to replace the Biosound unit will allow thedepart:rnent to exp?TId our u1trasomd iQaging capabilities in order to better addressthe growth in the type of u1trasomd exams reflected in the volumes referencedabove. For example:

ExarnslSelective EChographyHepatic EchographyRenal BiopsyGallbladder EchographyRenal EchographyCarotid Ultrasound

1ref1ects marginal growth and gross billable charges for the period 1988-1992.

-Submlned By: _H_e_1_e_n_P_it_t__,'__",_,'_,'_--"=- _

Title: =As=so=c=io:::a:..:::t.:::e--,D::.:i~r:.:::e:.=cc::to:::..:r=---- _Approved By: ~~o:+==-:::e.-------=--I-------

Title: Senior Associate'

25.



June 24, 1992

Harvard Street at East River ParkwayMinneapolis. MN 55455

TO:

PROM:

SUBJECT:

Board of Governors Finance Committee

Clifford P. Fearing

Report of Operations for the PeriodJuly 1, 1991 through May 31, 1992

The Hospital's operations for the month of May reflect inpatientcensus and outpatient encounters to be less than budgeted levels.

INPATIENT CENSUS: For the month of May, inpatient admissionstotaled 1,432 which was 97 under budgeted admissions of 1,529. Ouroverall average length of stay for the month was 7.4 days. Patientdays for May totaled 11,003 and were 1,126 days under budget. Theareas in which admissions were most significantly under budget werePediatrics, Urology, and Gynecology. Admissions weresignificantly over budget in the areas of Neurosurgery, Neurology,and Family Practice.

OUTPATIENT CENSUS: Outpatient encounters (including CUHCC and HomeHealth) for the month of May totaled 30,356 which was 305, or 1.0%,less than budgeted visits of 30,661. CUHCC was 493 or 12.3% overbudget and Home Health was 293 or 32.9% over budget. Other areasin which encounters were significantly over budget include Surgery,Sports Medicine, Heart Cath Lab (not budgeted for), andRehabilitation. Rehabilitation includes Cardiac and Speech Rehabwhich were not budgeted for. Several areas were under budget, themost significant ones being Child Psych, Dermatology, Medicine,Ophthalmology, Orthopedics, and Radiation Therapy.

To recap our census:

Monthly Data YTDData90/91 91192 91192 % 90/91 91192 91192 %Actual ~ Actual Variance Var Actual Budget Actual Variance Var

1,474 1,529 1,432 (97) (6.3) Admissions 16,720 16,830 16,518 (312) (1.9)12,010 12,129 11,003 (1,126) (9.3) Patient Days 133,832 136,105 128,241 (7,864) (5.8)

8.0 7.9 7.4 (0.5) (6.3) Avg Length of Stay 8.0 8.1 7.8 (0.3) (3.7)387.4 391.2 354.9 (36.3) (9.3) Avg Daily Census 399.5 405.0 381.7 (23.3) (5.8)

68.0 67.9 63.3 (4.6) (6.8) Percent Occupancy 69.4 70.3 67.4 (2.9) (4.1)28,811 30,661 30,356 (305) (1.0) Outpt Encounters 309,966 318,268 320,515 2,247 0.7

(.,

~6.

, REPORT OF OPERATIONSMay 1992PAGE 2

FINANCIAL OPERATIONS: The Hospital's Statement of Operations showsexpenses being greater than revenues by $536,000, an unfavorablevariance of $(5,226,000).

Patient care charges through May totaled $339,772,000, which was1.4% under budget. Ancillary revenue was $6,206,000 (6.2%) belowbudget and routine revenue was $1,308,000 (0.5%) above budget.Inpatient revenue averaged $16,209 per admission compared to thebudgeted average of $16,339. Outpatient revenue per outpatientencounter averaged $225 per visit compared to the budgeted averageof $219.

Deductions from charges totaled $90,168,000, which was $5,166,000(6.1%) over budgeted deductions of $85,002,000. The variance islargely due to the Medicare and Medical Assistance programs wherethe average charges per case are higher than proj ected, thusresul ting in higher than anticipated deductions. Other factorscontributing to the variance include increased activity withLaboratory Outreach programs, increased write-offs associated withan increase in transplant activity, and increased contract activityfrom the Veterans Administration Hospital.

, Operating expenditures through May totaled $281,771,000 and were$7,112,000 (2.5%) below budgeted levels of $288,883,000. Theoverall favorable variance was primarily due to lower patientrelated costs (personnel, drugs and blood) and anticipated expensesthat will not be incurred.

ACCOUNTS RECEIVABLE: The balance in patient accounts receivable asof May 31, 1992, totaled $105,812,000 and represented 98.3 days ofrevenue outstanding. The overall decrease in patient receivables inMay is 0.4 days.

CONCLUSION: The Hospital's overall operating position for themonth of May was positive. We continue to take appropriate actionswith regard to our expenditure base to ensure at least a break-evenfinancial position for the fourth quarter of the 1991/92 fiscalyear.

't.7.

Variance1991-92 1991-92 Over/(Under) VarianceBudgeted Actual Budget %

Gross Patient Revenue $344,669,000 $339,772,000 ($4,897,000) -1.4%Deductions From Revenue 85,002,000 90,168,000 5,166,000 6.1%

Net Patient Service Revenue 259,667,000 249,604,000 (10,063,000) -3.9%

Other Operating RevenueAppropriation & Support 12,265,000 12,289,000 24,000 0.2%Other Revenue 10,958,000 10,688,000 (270,000) -2.5%Total Other Revenue 23,223,000 22,977,000 (246,000) -1.1%

Total Revenue From Operations 282,890,000 272,581 ,000 (10,309,000) -3.6%

Operating Expenses:Salaries 116,558,000 113,365,000 (3,193,000) -2.7%Fringe Benefits 28,192,000 27,260,000 (932,000) -3.3%Contract Compensation 18,357,000 18,389,000 32,000 0.2%Supplies And Services 64,855,000 63,655,000 (1,200,000) -1.9%Utilities And Maintenance 10,627,000 11,236,000 609,000 5.7%General Supplies & Expense 17,412,000 15,535,000 (1,877,000) -10.8%Insurance 1,716,000 1,731,000 15,000 0.9%Depreciation & Amortization 17,902,000 16,849,000 (1,053,000) -5.9%

~Interest 10,527,000 10,812,000 285,000 2.7%Provision For Unoollectibles 2,737,000 2,939,000 202,000 7.4%Total Operating Expenses 288,883,000 281,771,000 (7,112,000) -2.5%

Net Revenue From Operations (5,993,000) (9,190,000) (3,197,000)

Nonoperating Gains: Investment Income 10,683,000 8,654,000 (2,029,000) -19.0%

Revenue And Gains In ExcessOf Expense $4,690,000 ($536,000) ($5,226,000)


Admissions 16,830 16,518 (312) -1.9%

Patient Days 136,105 128,241 (7,864) -5.8%

Average Length Of Stay 8.1 7,8 (0.3) -3.7%

Average Daily Census 405.0 381.7 (23.3) -5.8%

Percentage Occupancy 70.3 67.4 (2.9) -4.1%

~Outpatient Encounters 318,268 320,515 2,247 0.7%

28.

UNIVERSITY OF MINNESOTA HOSPITAL & CLINICBALANCE SHEETS

'TS

MAY 31, 1992 AND JUNE 30, 1991

05/31/92 6/30/91 LIABILITIES AND FUND BALANCES 05/31/92 6/30/91------------- -----_ ........... _-- --------_ ... _-- -------------

CURRENT ASSETS CURRENT LIABILITIESOperating Cash S5,720,OOO S13,611,OOO Accounts Payable S13,160,OOO S11,539,OOOReserve Cash- Third Party Payable 23,813,000 21,246,000 Payable to Third Party Contr. Payors 20,998,000 18,431,000Reserve Cash- Current Indebtedness 4,654,000 5,721,000 Salaries, Wages and Payroll Taxes 9,890,000 9,833,000

Accrued Vacation 9,271,000 9,233,000Accounts Receivable Accrued Professional Fees and

Patient Receivables 105,812,000 95,679,000 Physician Compensation 1,449,000 2,171,000Other Receivables 2,061,000 1,795,000 Contracts Payable 1,966,000 522,000Third Party Receivable 1,427,000 2,145,000 Construction Retainages 139,000 307,000Appropriation Receivable 1,511,000 1,325,000 Interest Payable 3,770,000 4,684,000Promissory Notes Receivable 211,000 0 Current Portion of Long-Term Debt 3,110,000 3,157,000

................. _------ -------------111,022,000 100,944,000

Less Allowances for Lossesin Collection (8,335,000) (7,805,000)

Less Allowances for Discountsto Third Party Payors (28,022,000) (24,620,000)

...... - ...... _------- ... _-----------74,665,000 68,519,000

Inventories of Drugs & Supplies 4,706,000 4,723,000Prepaid Expenses 548,000 1,061,000 ------- ........ _-- ----_ .......... ----

------------- ---- ............ ----- TOTAL CURRENT LIABILITIES S63,753,OOO S59,877,OOOTOTAL CURRENT ASSETS S114,106,OOO S114,881,OOO

ASSETS WHOSE USE IS LIMITEDBoard Designated AssetsAvailable for Assignment

Cash & InvestmentsAccrued Interest

~Sh&Cash &

TOTAL

Invest for Debt ServiceInvest for Working Capital

S52,517,OOO $44,819,0001,353,000 148,000

.. ------------ -------------53,870,000 44,967,000

13,000,000 13,000,00016,000,000 16,000,000

------------- -------------$82,870,000 S73,967,OOO

LONG-TERM DEBT, LESS CURRENT PORTION S162,222,OOO S165,282,OOO

S192,129,OOO S191,909,OOO107,153,000 98,495,000

----_ ... _------ _............ --------299,282,000 290,404,000

(150,113,000) (133,650,000)------------- -------------149,169,000 156,754,000

9,309,000 5,581,000------------- ----_ ... -------158,478,000 162,335,000

PROPERTY, PLANT, &EQUIPMENTLand, Buildings & ImprovementsEquipment

Less Accumulated Depreciation

Construction in Progress

TOTAL PROPERTY, PLANT, &EQUIPMENTAssigned Cash &Investmentsfor Construction/Equipment 38,414,000 45,136,000

TOTAL S196,892,OOO S207,471,OOO

============= =============$423,709,000 $423,214,000

INVESTMENTS HELD BY BOND TRUSTEEPROMISSORY NOTES RECEIVABLEOTHER ASSETS

Deferred Third Party ReimbursementDeferred Debt ExpenseDeposits and Other

TOTAL

TOTAL ASSETS

S17,493,OOOS4,407,OOO

S5,793,OOO932,000

1,216,000

S7,941,OOO

S19,108,OOOSO

$6,404,0001,009,000

374,000

S7, 787, 000 UNRESTRICTED FUND BALANCE

TOTAL LIABILITIES & FUND BALANCE

S197,734,OOO S198,055,OOO

$423,709,000 $423,214,000============= =============

============= ============= ============= =============

RESTRICTED ASSETS

~Cash and Investments $8,127,000 S7,416,OOO

RESTRICTED FUND BALANCESEndowment FundsGift Funds

S2,787,OOO5,340,000

S8,127,OOO

S2,553,OOO4,863,000

S7,416,OOO

29.

UNIVERSITY OF MINNESOTA HOSPITAL & CLINIC

CASH FLOW

FOR THE PERIOD JULY 1, 1991 TO MAY 31, 1992

OPERATING ACTIVITIES AND NONOPERATING REVENUES:

Excess of operating revenues over operating expenses:Noncash revenues and expenses included in operating activity:

Depreciation and amortizationUnreimbursed University G &A servicesProvision for uncollectible accountsChange in patient receivable and other receivablesChange in due from third party reimbursement programChange in due to third party reimbursement programsChange in accounts payableChange in accrued expensesOther, net

Net cash provided by operating activities

Nonoperating revenues

Net cash provided by operating activitiesand nonoperating revenues

INVESTING ACTIVITIES:Acquisition of property, plant and equipment

Funds transferred from other sources

Cash outflows for property &plant

Increase in promissory notes receivable

Increase in assets whose use is limited

Net cash used in investing activities

FINANCING ACTIVITIES:Repayment of long-term debtRepayment of notes payable

Decrease in cash and equivalents

Cash and cash equivalents at June 30, 1991

Cash and equivalents at May 31, 1992

($9,190,000)

$17,582,000202,000

2,939,000(9,591,000)

717,0002,567,0001,621,000(265,000)(312,000)

$6,270,000

$8,654,000

$14,924,000

($12,915,000)

13,000

(12,902,000)

(4,618,000)

(565,000)

($18,085,000)

($2,490,000)(740,000)

($3,230,000)

($6,391,000)

$40,577,000

$34,186,000=============

30.

University of Minnesota Hospital &Clinic

Statement of Changes in Fund Balance

For the Period July 1, 1991 through May 31, 1992

CURRENT BOARD TOTALOPERATING DEBT SERVICE DESIGNATED PLANT TRUSTEE UNRESTRICTED

FUND FUND FUND FUND FUND FUNDS.... _------- ........ -------- ...... _- .. _---- ..... _---- ------ .. _--_ ..... ----_ .... _----- ----_ .. -------

UNRESTRICTED FUNDS_.... --_ .. _----------

Beginning Balance $53,120,000 $5,721,000 $73,967,000 $46,139,000 $19,108,000 $198,055,000

Net Income-_ .. ---- .......

Excess of Revenue over Expense 6,753,000Interest Income on Reserves 7,161,000Depreciation Expense (16,m,000)Gain on Disposal of Assets 1,000Interest Income on Trustee Held Fund 1,269,000Amortization of Deferred Bond Expense (199,000)Amort of Deferred 3rd Party Reimb. (611,000)Interest Income on Bond Proceeds 1,735,000 128,000

Total Income (536,000)

Less Expense--_ .... _--- ........

University Support: G & A 202,000 202,000,Transfers Between Funds-------_ .. _--_ .... _----_ ....

Major Building Projects- Hosp. (1,128,000) 1,128,000Capital Expenditures (5,218,000) 5,218,000Major Equipment Requisition (740,000) 740,000Bond Interest Payment 11,409,000 (10,887,000) (522,000)Bond Principal Payment 2,490,000 (2,490,000)Bond Interest Expense Funding (9,974,000) 9,974,000Bond Principal Funding 154,000 (154,000)Dermatology Loan Payment (7,000) 7,000Transfer from Gift Fund to Plant 13,000 13,000

---_ ........ _----- --------_ ........ ------- .... _--- ....... _--------- _.. _--_ ........ _--- --_ .. _--_ ....... _-Ending Balance $54,571,000 $4,654,000 $82,870,000 $38,146,000 $17,493,000 $197,734,000

============= ============= ============= ============= ============= =============

RESTRICTED FUNDS

Beginning BalanceIncomeDisbursementsTransfer to Plant Fund for Capital Exp.

Ending Balance

GIFT ENDOWMENT TOTAL...... _----_ .......... ------------- .. _-----_ .... _--

$4,863,000 $2,553,000 $7,416,000674,000 234,000 908,000

(184,000) (184,000)(13,000) (13,000)

------_ .... _--- ------------- ---_ .. -_ .. _----$5,340,000 $2,787,000 $8,127,000

============= ============= =============

31.

nUNIVERSITY OF MINNESOTA HOSPITAL & CLINICADMISSIONS & AVERAGE LENGTH OF STAY (ALOS) BY SERVICE1990/91 AND 1991/92 COMPARISON

~•. ":,~\' r-t

CLINICAL SERVICE

ANESlHESIOLOGY 0 0 1 1 1

CUNICALRESEARCH 338 368 280 (88) -23.9% (58) -172%

DENTISlRY 6 6 3 (3) -j}.0% (3) -j}.0%

ORAL SURGERY 52 45 70 25 55.6% 18 34.6%

DffiMATOLOGY 13 13 15 2 15.4% 2 15.4%

FAMILY PRACTICE 34 22 116 94 427.3% 82 241.2%

GYNECOLOGY 1,229 1,318 1,040 (278) -21.1% (189) -15.4%

MEDICINE 4,101 4,119 4,341 222 5.4% 240 5.9%

NEWBORN 323 332 300 (32) -9.6% (23) -7.1%

NEUROLOGY 322 299 334 35 11.7% 12 3.7%

NEUROSURGERY 940 898 1,079 181 20.2% 139 14.8%

OBSTEIRICS 512 515 469 (46) -8.9% (43) -8.4%

OPHlHALMOLOGY 439 430 359 (71) -16.5% (SO) -18.2%

ORlHOPEDICS 1,029 1,012 1,059 47 4.6% 30 2.9%

OTOIARYNGOLOGY 375 375 348 (27) -72% (27) -7.2%

PEDlAlRICS 2,865 2,966 2,634 (332) -112% (231) -8.1%

PHYSICAL MEDICINE & REHAB 184 195 160 (35) -17.9% (24) -13.0%

PSYCHlAlRY ADULT 752 722 695 (27) -3.7% (57) -7.6%

PSYCHIAlRY CHILD 69 57 83 26 45.6% 14 20.3%

RADIATION lHffiAPY 0 0 1 1 1

RADIOLOGY 27 23 17 (6) -26.1% (10) -37.0%

SURGERY 2,593 2,653 2,622 (31) -12% 29 1.1%

UROLOGY 517 462 492 30 6.5% (25) -4.8%

TOTAL 16,720 16,830 16,518 (312) -1.9% (202) -12%

WN.



September 2, 1992

Harvard Street at East River ParkwayMinneapolis, MN 55455

TO:

FROM:

SUBJECT:

Board of Governors

Clifford P. FearingSenior Associate Director

Report of Operations for the PeriodJuly 1, 1991 through June 30, 1992

The 1991-92 fiscal year for The University of Minnesota Hospitaland Clinic has shown a decline in inpatient admissions for thefourth straight year. At the same time, however, we experienced acontinued increase in our outpatient encounters over prior yearlevels. Below is a brief summary of maj or factors which havecontributed to our 1991-92 financial position.

Inpatient Census: Admissions for the 1991-92 fiscal year totaled18,073 compared to 18,161 for the previous year, a decrease of 88,or (0.5%). Patient days for the year totaled 139,183, down by6,482 (4.4%) from 145,665 days in 1990-91. This decline waslargely due to the drop in average-length-of-stay from 8.0 days in1990-91 to 7.7 days in the current year.

We budgeted for a slight increase in our inpatient census levels in1991-92. However, we experienced overall declines in bothinpatient admissions and patient days. While admissions in manyareas increased from the prior year or remained fairly constant,admission levels in Gynecology, Ophthalmology, Pediatrics, PhysicalMedicine and Rehabilitation, and Otolaryngology showed decreases.

Changes in medical staff resulted in the declines in Ophthalmologyand Physical Medicine and Rehabilitation, and intense competitionfrom metropolitan area providers was the major reason for the dropin Gynecology and Pediatrics.

8.

e To recap our inpatient census for the 1991-92 fiscal year:

1990-91 1991-92 1991-92 %Actual Budget Actual Variance Var

Admissions 18,161 18,335 18,073 (262 ) (1.4)Avg. Lgth. of Stay 8.0 8.1 7.7 (0.4 ) (4.9 )Patient Days 145,665 147,862 139,183 (8,679) (5.9)Percent Occupancy 69.3 70.1 67.2 (2.9 ) (4.1 )Avg. Daily Census 399.1 403.9 380.3 (23.6) (5.8 )

Outpatient Census: The Hospital's outpatient clinic census showedan increase from the 1990-91 levels, going from 338,534 encountersin 1990-91 to 353,769 in 1991-92. This represents a 4.5% increaseover the prior year levels and a 1.5% increase (5,332) over thebudgeted 1991-92 total of 348,437. The increase in encounters wasprimarily due to significant growth in Home Health and CUHCCactivity levels. In addition, the clinic areas of Sports Medicine,Family Practice, Ambulatory Surgery, and Neurology showed strongincreases. Areas that experienced decreases in activity includedRadiation Therapy, Child Psychiatry, Medicine, Orthopedics, andObstetrics/Gynecology.

To recap our outpatient census for the 1991-92 fiscal year:

1990-91 1991-92 1991-92 %

~Actual Budget Actual Variance Var

Clinic Visits 277,036 287,215 285,438 (1,777) (0.6)CUHCC Visits 50,009 50,719 54,945 4,226 8.3HHA Visits 11. 489 10,503 13,386 2,883 27.5Total Encounters 338,534 348,437 353,769 5,332 1.5

Operations - Revenue: Patient care revenue for the 1991-92 fiscalyear totaled $370,507,000 and is an increase of $19,523,000 (5.6%)over the 1990-91 fiscal year. The increase in revenue isapproximately $5,062,000 below budget and results in an overallunfavorable variance of (1.3%).

Routine revenue totaled $101,727,000, and represents an unfavorablevariance of approximately ($6,995,000). This variance is due tothe combined impact of lower admissions and a reduced averagelength of stay. Ancillary service revenue totaled $268,780,000,and was approximately $1,933,000 (0.7%) above budget. The overallancillary variance is due to higher utilization of services forboth inpatient and outpatient populations. Inpatient revenue peradmission averaged $16,108 compared to the budgeted average of$16,322. Outpatient revenue per encounter averaged $224 comparedto the budgeted average of $219. The ancillary areas experiencingthe greatest increases included clinical labs, diagnosticradiology, transplants, and the operating rooms.

Clinical Laboratories experienced greater than anticipated revenue

9.

due to greater volume in the Heart Catheterization Laboratory, moretesting related to the high transplant volume experienced, and alsothe set-up of the new Molecular Diagnostic Laboratory. DiagnosticRadiology experienced increases in MRI services and Cardiovascularexams. Transplant volumes were greater than anticipated in alltransplant types.

Deductions from Charges: Deductions from charges totaled$98,200,000 for the fiscal year and represent an overallunfavorable variance of $5,578,000. The overall variance relatesto billing adjustments and contracts, charity care, andgovernmental contractual adjustments.

Billing adjustment and contract write-offs were over budget byapproximately $3,000,000, and were primarily the result ofincreased prompt payor discounts, increased patient activity withthe V.A. Hospital and workers compensation, and increasedlaboratory outreach activity.

The unfavorable variance in charity care of $598,000 is primarilythe result of having to reclassify $809,000 from the provision foruncollectibles included within expenses. The reclassification isthe result of AICPA accounting policy changes. The accountingchange did not have an overall impact on our operations but onlychanged where we report these write-offs.

The $2,208,000 (4.5%) unfavorable variance in governmental writeoffs was due to several factors. While the average charge per casefor Medicare was over the budgeted levels, increased reimbursementfor both direct and indirect medical education, and prior periodadjustments resulted in a net favorable variance of $2,875,000 forthis program. In addition, we experienced more favorablereimbursement than anticipated in other government programs,principally MA Out-of-State ($1,246,000). Offsetting thesefavorable variances was an unfavorable variance of $5,985,000 inour Medical Assistance and GAMC programs. This was due to both ourcharges per case being higher than anticipated, and reimbursementper case being below budgeted levels.

Other Ooerating Revenue: Other operating revenue totaled$25,212,000 for the 1991-92 fiscal year, a decrease of $2,333,000(8.5%) from the prior year total of $27,545,000. The decrease is$109,000 (0.4%) below the budgeted revenue of $25,321,000, andreflects minor unfavorable variances in several of the revenuecategories.

Operations - Exoenditures: Operating expenses for the 1991-92fiscal year totaled $305,825,000 and was an increase of $11,734,000(4.0%) over the 1990-91 fiscal year. The increase in expense wasapproximately $8,781,000 under budget and resulted in an overallfavorable variance of 2.8%.

Personnel costs (salaries and fringe benefits) were under budget by$4,520,000. The lower salary costs were the result of lower than

10.

anticipated pay plans. During the 1991-92 fiscal year, we averaged3,717 FTE's, which was comparable to the budgeted total of 3,715.However, pay plan increases were restricted to a very few groups ofemployees, and awarded primarily on the basis of market forces.The favorable variance in fringe benefit expenses is because oflower than anticipated increases in benefit rates during the year,as well as the lower salary base upon which they're charged.

Supplies and expense directly related to patient care activitieswere $1,791,000 under budget in aggregate. Many of these expensesrelate directly to the decrease in census. In addition, costs forsome drugs were below budget because anticipated FDA approval ofthem was not received during the fiscal year. Blood expense wasimpacted favorably by changes in protocol for treatment of somebone marrow patients. Offsetting these favorable variances was anunfavorable variance of $1,826,000 in medical supplies andservices. Primary reasons for this were increased costs oftransplant contracts because of higher volumes, and increased costsof implantable devices due to both volume and price increases.

Expenses related to buildings, building services, and equipmentwere $1,126,000 over budget. These costs include utilities,maintenance and repair, communications, building rental, anddepreciation. The unfavorable variance is due to expensing$1,427,000 of architectural and contract management fees for thePhase II Renewal Project, and to extensive painting andrefurbishing of different areas of the Hospital.

For the balance of our expenses, we had a favorable variance of$3,596,000 in the aggregate. Insurance costs were $346,000 belowbudgeted levels, and our provision for uncollectibles was$1,560,000 under budget. The reduction in our provision foruncollectibles was the result of reclassing $809,000 to deductionsfrom charges and a $750,000 reduction in our accounts receivableallowance that reflects an improvement in the overall quality ofour receivables. Other major variances include reductions inadvertising, contracted services, consulting, and general officeand miscellaneous supplies.

Non-Operating Revenue: Non-operating revenues totaled $9,254,000in 1991-92 and represent an unfavorable variance from budget of($2,303,000). The overall variance is mainly due to decreasedinterest rates earned on the reserve funds and the investments heldby the trustee.

Accounts Receivable: The balance in net patient accountsreceivable as of June 30, 1992 totaled $72,209,000 and represents87.2 days of revenue outstanding; this is an decrease of 7.7 daysand a decrease of $2,053,000 from June 30, 1991. The majority ofthe decrease was seen in Medicare, Minnesota Medical Assistance,and Blue Cross AWARE. In addition, we saw a significant decreasein receivables due to increased collection agency efforts.

11.

Capital Expenditures: During the 1991-92 fiscal year, UMHCexpended $7,856,000 from hospital operating funds, and $10,417,000from the hospital plant and trustee funds for current year capitalexpenditures. The major components of our capital spending were:(1) $7,070,000 for recurring equipment, remodeling, and renovation,(2) $7,927,000 for major capital projects (Neuro-AngiographySystem, Heart Cath Room, etc.), and (3) $3,276,000 in principalpayments on debt and capital leases.

Conclusion: For the fourth straight year UMHC experienced adecline in our admission levels. At the same time, our averagelength of stay decreased and our outpatient encounters increased.While a shift from inpatient activity to an outpatient venue isconsistent with the industry, the continued decline in admissionsis of concern. Al though we appear to be retaining our share of theseven-county metropolitan market for most clinical services, wehave experienced a decline in referrals from out-state Minnesota.We must work towards not only regaining our share of the healthcaremarket, but expanding it in order to help maintain the integrity ofUMHC's financial position.

UMHC continued to experience increasing pressure from third partypayors as HMO's, insurance companies, and self-insured companiesmoved to contract for specific services. Coalitions of maj orcompanies within the state have begun looking at new ways ofmanaging their own health insurance costs, thereby applyingincreased pressure on the providers of heal thcare to be moreeffective on both a cost and quality basis. At the same time, newstate and federal regulations are forcing UMHC, as well as otherproviders, to reduce operating expenses while maintaining highquality of care. UMHC must keep working with the HMO's, PPO's, andother insurers to develop pricing strategies which will enhance ourcompetitive position while enabling us to meet our financial goalsand objectives.

The competitive and cost conscious environment we are in willcontinue, and will challenge us to find new sources of revenue andways to reduce costs. Over the past fiscal year, UMHC hascontinued its numerous efforts aimed at reducing costs, increasingefficiency and productivity, and minimizing the number ofunnecessary or duplicative procedures performed while maintaininga high quality of patient care. Many of these efforts have beenincorporated into the strategic planning initiatives currentlyunderway, with specific focus on cost reductions, serviceenhancements, and market strategies. We completed our firstacquisition of an out-state clinic, and continue to strengthen ouraffiliations with referring physicians and clinics. In addition,we have initiated discussion with other external parties andhealthcare providers to establish new affiliations or jointventures. We are exploring new avenues for market penetration, andprogram diversification and expansion in order to continue tosustain UMHC's mission of patient service, education, and research.

12.

f' nUniversity of Minnesota Hospital and Clinic

fit

......w.

1990-91 ActualRevenue Summary

Other Revenne 2%

Interest Income 4%

Appropriations 4%

Routine Revenue 26%

1991-92 PreliminaryRevenue Summary

Other Revenue 2%

Interest Income 3%Appropriations 3%

Routine Revenue 25%

f' ".

University of Minnesota Hospital and Clinic

".

.......+:::0.

1990-91 ActualExpense Summary

General Snp & Exp 16%

1991-92 PreliminaryExpense Summary

General Sup & Exp 14%

" "University of Minnesota Hospital. and Clinic

Admissions1987-88 through 1991-92

f',

I-'111.

22,000

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0I

1987-88 1988-89 1989-90 1990-91 1991-92

~niversityof Minnesota Hospital & Clinic

'-'patientAdmissionsby Clinical Service

For Fiscal Years 1987-88 through 1991-92

IAdmissions 1987-88 II 1988-8911 1989-90 II 1990-91 II 1991-92 i

Clinical Research 434 416 360 361 321

Dentistry 56 47 39 66 81

Dermatology 24 32 21 13 15

Family Practice 27 24 26 36 130

Gynecology 1,336 1,249 1,477 1,330 1,128

Medicine 4,354 4,660 4,226 4,462 4,756

Neurology 367 357 294 359 365

Neurosurgery 898 937 946 1,027 1,169

Cewborn 345 354 358 349 328

Obstetrics 575 586 560 552 512

Ophthalmology 968 574 443 464 401

Orthopedics 1,193 1,205 1,107 1,116 1,143

Otolaryngology 447 415 403 412 374

Pediatrics 3,080 3,024 3,314 3,122 2,894

PM&R 173 206 206 192 177

Psychiatry - Adult 827 854 824 806 757

Psychiatry - Child 95 91 56 76 93

Surgery 3,093 2,960 2,956 2,831 2,862

Urology 943 839 688 557 546

Other 11 26 27 30 21

Total,16.

n nUniversity of Minnesota Hospital and Clinic

Average Length of Stay1987-88 through 1991-92

n

......

.........

10

9

8

7

6

5

4

3

2

1

0I

1987-88

8.4

1988-89 1989-90 1996-91 1991-92

f'

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

o

eUniversity of Minnesota Hospital and Clinic

Patient Days1987-88 through 1991-92·158~375r.'......••.........~.....~.~.~.~.~.~.~.~.~.~.:.:.:.:.:.:.:.:.:.

",

......00.

1987-88 1988-89 1989-90 1990-91 1991-92

~ f'

University of Minnesota Hospital and ClinicAverage Daily Census

1987-88 through 1991-92

n,

I--'lO.

550

500

450

400

350

300

250

200

150

100

50

0I

1987-88

433.9.'.~.:.y.:.'.'.'.'.'.":':':':':':':':':

1988-89 1989-90 1990-91 1991-92

n eUniversity of Minnesota Hospital and Clinic

Outpatient Encounters1987-88 through 1991-92

f'

400,000

360,000

320,000

280,000

240,000

200,000

160,000

120,000

80,000

40,000

° I

1987-88 1988-89

I'\Ja.

335,073.'.~.~.'.~.:.~.'.~.~.~.~.:.:.'.:.:.'.:.:.:.'.:.:.:-,.:.:.:.

1989-90 1990-91 1991-92

~niversityof Minnesota Hospital & Clinic

~utpatientEncounters

For Fiscal Years 1987-88 through 1991-92

IClinical Service 1987-88 II 1988-8911 1989-90 II 1990-91 II 1991-92 I

Ambu latorySurgery 3,631 3,030 2,777 2,710 3,288

Dentistry 5,270 5,524 3,759 4,747 4,563

Dermatology 13,854 16,313 15,721 15,426 15,322

Emergency Room 15,401 16,938 19,300 20,677 20,954

Family Practice 9,882 11,646 11,196 12,123 15,816

Gynecology 17,886 15,127 13,939 13,563 13,831

Heart Cath Lab 0 0 0 0 2,145

Medicine 45,400 49,859 51,985 54,272 54,160

Neurology 4,595 4,569 4,987 5,962 6,464

~eurosurgery 3,982 3,991 4,099 3,998 4,339

bstetrics 2,595 2,429 2,194 2,003 1,568

Ophthalmology 26,905 23,576 22,382 21,260 21,789

Orthopedics 16,640 19,337 18,508 18,458 20,714

Otolaryngology 9,985 9,758 10,368 11,381 10,918

Pediatrics 14,600 15,547 15,967 15,969 16,310

PM&R 2,039 2,102 1,833 1,620 1,488

Psychiatry 24,405 26,368 24,881 27,055 25,375

Clinical Psych 4,215 4,182 4,923 4,531 5,111

Radiation Therapy 18,953 17,487 18,349 17,992 14,950

Rehabilitation 0 0 0 0 1,870

Surgery 14,731 15,458 15,433 15,825 16,856

Urology 9,536 9,081 8,155 7,464 7,607

264,505 272,322 270,756 277,036 285,438

CUHCC 48,305 48,265 53,062 50,009 54,945

Home Health 9,409 12,070 11,255 11,489 13,386

Otal 322,219 332,657 ~~p.Q"l3 338.534 353,769

21.

rt "University of Minnesota Hospital and Clinic

Revenue Days in Accounts Receivable1982-83 through 1991-92

,..

NN.

110

I101.4

At~)))))2!1100

90

80

70

60

50

40

30

20

10

0

1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92

f't '"University of Minnesota Hospital and Clinic

Revenue by Payor (in OOOs)Fiscal Years 1989 through 1992

n

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

o

1989

II Medicare

1990

~f{f Medical Assistance............•

1991 1992

• Blue Cross

NW.

HMO/PPO _, Commercial InsurancetmW Other

f' f'

UNIVERSITY OF MINNESOTA HOSPITAL & CLINIC

REVENUE BY PAYOR

t"

1989 1990 1991 1992Amount %of Amount %of Amount %of Amount %ofin l000s Total in l000s Total in l000s Total in l000s Total

MEDICARE $83,229 26.9% $84,104 26.3% $88,097 25.1% $101,014 27.3%

MEDICAL ASSISTANCE 37,689 12.2% 36,305 11.4% 40,775 11.6% 49,054 13.2%

BLUE CROSS 40,637 13.1% 37,998 11.9% 43,207 12.3% 45,892 12.4%

HMO/PPO 27,369 8.8% 27,520 8.6% 38,711 11.0% 52,430 14.2%

COMMERCIAL INSURANCE 74,001 23.9% 86,965 27.2% 87,580 25.0% 73,524 19.8%

OTHER 46,812 15.1% 46,933 14.7% 52,614 15.0% 48,593 13.1%

$309,737 100.0% $319,825 100.0% $350,984 100.0% $370,507 100.0%

N~.

f\

16,000

eUniversity of Minnesota Hospital and Clinic

Inpatient Cost per Admission1987-88 through 1991-92

f'

14,000

12,000

10,000

8,000

6,000

4,000

2,000

o

NU1.

1987-88 1988-89 1989-90 1990-91 1991-92

~ nUniversity of Minnesota Hospital and Clinic

Outpatient Cost per Encounter1987-88 through 1991-92

('

NO'l.

220

200

180

160

140

120

100

80

60

40

20

0I I

1987-88 1988-89 1989-90 1990-91 1991-92

PRELIMINARY

UNIVERSITY OF MINNESOTA HOSPITAL & CLINICSUMMARY STATEMENT OF OPERATIONS

FOR THE PERIOD JULY 1, 1991 TO JUNE 30, 1992

Variance1990-91 1991-92 1991-92 Over/(Under) Variance

Actual Budgeted Actual BUdget %Gross Patient Revenue $350,984,000 $375,569,000 $370,507,000 ($5,062,000) -1.3%Deductions From Revenue 84,654,000 92,622,000 98,200,000 5,578,000 6.0%

Net Patient Service Revenue 266,330,000 282,947,000 272,307,000 (10,640,000) -3.8%

Other Operating RevenueAppropriation & Support 16,015,000 13,380,000 13,611,000 231,000 1.7%Other Revenue 11,530,000 11,942,000 11,601,000 (341,000) -2.9%Total Other Revenue 27,545,000 25,322,000 25,212,000 (110,000) -0.4%

Total Revenue From Operations 293,875,000 308,269,000 297,519,000 (10,750,000) -3.5%

Operating Expenses:Salaries 120,762,000 126,698,000 123,184,000 (3,514,000) -2.8%Fringe Benefits 27,867,000 30,675,000 29,669,000 (1,006,000) -3.3%Contract Compensation 18,572,000 20,030,000 19,945,000 (85,000) -0.4%Supplies And Services 62,555,000 70,695,000 68,904,000 (1,791,000) -2.5%Utilities And Maintenance 11,454,000 11,600,000 12,213,000 613,000 5.3%General Supplies & Expense 17,179,000 18,964,000 17,468,000 (1,496,000) -7.9%

C; InsLl"ance 2,247,000 1,874,000 1,528,000 (346,000) -18.5%Depreciation & Amortization 18,509,000 19,612,000 20,126,000 514,000 2.6%Interest 12,103,000 11,476,000 11,366,000 (110,000) -1.0%Provision For Uncollectibles 2,843,000 2,982,000 1,422,000 (1,560,000) -52.3%Total Operating Expenses 294,091,000 314,606,000 305,825,000 (8,781,000) -2.8%

Net Revenue From Operations (216,000) (6,337,000) (8,306,000) (1,969,000)

Nonoperating Gains:Investment Income 12,283,000 11,557,000 9,254,000 (2,303,000) -19.9%

Revenue And Gains In ExcessOf Expense $12.067,000 $5,220,000 $948.000 ($4,272,000)

Variance1990-91 1991-92 1991-92 Over/(Under) Variance

Actual Budgeted Actual BUdget %

Admissions 18,161 18,335 18,073 (262) -1.4%

Patient Days 145,665 147,862 139,183 (8,679) -5.9%

Average Length Of Stay 8.0 8.1 7.7 (0.4) -4.9%

Average Daily Census 399.1 403.9 380.3 (23.6) -5.8%

C; Percentage Occupancy 69.3 70.1 67.2 (2.9) -4.1%

Outpatient Encounters 338,534 348,437 353,769 5,332 1.5%

27.

PRELIMINARY

UNIVERSITY OF MINNESOTA HOSPITAL AND CLINIC

BALANCE SHEETS

JUNE 30, 1992 AND JUNE 30, 1991

ASSETS 6/30/92 6/30/91 LIABILITIES AND FUND BALANCES 6/30/92 §/3Q§L

General Funds General Funds

Current assets: Current liabilities:

Cash and cash equivalents $ 44,247,000 $ 40,577,000 Current maturities of long-term debtand capital lease obligations $ 3,141,000 $ 3,157,000

Receivables:Patient services, net of allowances Accounts payable 26,256,000 25,240,000and uncollectible accounts of

$32,575,000 In 1992 and Due to third-party payars 16,890,000 16,286,000$31,623,000 In 1991. 72,209,000 74,262,000

State appropriations 1,173,000 1,326,000 Accrued liabilities:Other 2,274,000 1,795,000 Salaries, wages and employee

benefits 19,931,000 19,067,000Inventories 5,291,000 4,723,000 Interest 4,299,000 4,684,000

Prepaid expenses and ather 767,000 1,061,000 Construction retalnages 139,000 307,000

Total current assets 125,961,000 123,744,000 Total current liabilities 70,656,000 68,741 ,000

Cisets whose use is limited:...• By board for properly an d equipment

replacement and expansion 118,699,000 119,104,000

Under bond indenture agreementheld by 1rustee 17,612.000 19,108,000

Total assets whose use is limited 136,311,000 138,212,000

Property and equipment, net 156,556,000 162,335,000Long-term debt and capital

leases obligations,Other assets: less current maturities 166,455,000 165,282,000

Long-term portion promissory note: 4,355,000Deferred third-party reimbursemen1 5,738,000 6,404,000Deferred fin ancin g costs 925,000 1,009,000Other 5,n8,000 374,000

Total other assets 16,796,000 7,787,000 Fund balance 198,513,000 198,055,000

TOTAL LIABILITIESTOTAL ASSETS $ 435,624,000 $ 432,078,000 AND FUND BALANCE $ 435,624,000 $ 432,078,000

Restricted Funds

C;; Investments

Fund balances:Endowment fun ds 2,n6,000 2,553,000

8,162,000 7,416,000 Specific purpose funds 5,386,000 4,863,000

$ 8,162.000 $ 7,416,000 $ 8,162,000 $ 7,416,000

28.

, PRELIMINARY----------------

UNIVERSITY OF MINNESOTA HOSPITAL & CLINICSTATEMENT OF CASH FLOWS OF GENERAL FUNDSFOR THE PERIOD JULY 1, 1991 TO JUNE 30, 1992

OPERATING ACTIVITIES AND NONOPERATING REVENUES:

Revenue and gain in excess of expensesAdjustments to reconcile revenue and gain in excess

of expenses to net cash provided by operatingactivities and gain:

Depreciation and amortizationUnreimbursed University general and administrative servicesDecrease in receivablesIncrease in accounts payableIncrease in net amounts due to third - party payorsIncrease in accrued liabilitiesIncrease in inventoriesIncrease in prepaid expenses and other assetsDecrease in deferred thrd - party reimbursement

Total adjustments

Net cash provided by operating activities and gain

INVESTING ACTIVITIES:Acquisition of property, plant and eqUipmentFund transferred from other sourcesCash outflows for property & plant

Cash outflows for acquisition

Decrease in assets whose use is limitedNet cash used in investing activities

FINANCING ACTIVITIES:Repayment of long-term debtRepayment of notes payable

Increase in cash and equwalents

Cash and cash equivalents at June 30, 1991

Cash and equivalents at June 30, 1992

$948,000

20,126,000211,000

1,938,000652,000604,000311,000

(568,000)140,000667,000

24,081,000

$25,029,000

($14,753,000)17,000

(14,736,000)

(5,243,000)

1,900,000($18,079,000)

($2,490,000)(790,000)

($3,280,000)$3,670,000

$40,577,000

$44,247,000

29.

PRELIMINARY----------------

UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICSTATEMENT OF CHANGES IN FUND BALANCES

FOR THE PERIOD JULY 1, 1991 THROUGH JUNE 30, 1992

Donor Restricted FundsSpecific Endowment$4,863,000 $2,553,000Balance at beginning of year

Additions:Revenue and gain in excess of

expensesUnreimbursed University general

and administrative servicesAdjustment to Shared BuildingTransfer to finance property

and equipment additionsGifts and investment income

Deductions:DisbursementsTransfer for operationsFund balance transfer to

non-hospital University fundsMar1<et Evaluation

Bala1ce at end of period

General$198,055,000

948,000

211,000(718,000)

17,000

$198,513,000

(17,000)750,000

(127,000)(11,000)

(72,000)

$5,386,000

271,000

(6,000)

(42,000)$2,776,000

30.

f' ", t"':UNIVERSITY OF MINNESOTA HOSPITAL AND CUNICCAPITAL EXPENDITURES7-1-91 THRU 6-30-92

ROLLFORWARD 91-92 90-91RECURRING EQUIP & REMOD BUDGET FROM 6-30-91 TOTAL ACTUAL ROLLFORWARD TOTALEQUIPMENT PURCHASES

91-92 BUDGET $6,818,850 $6,818,850 $3,488,872 $0 $3,488,872ROLLFORWARD $4,871,763 $4,871,763 $0 $2,402,288 $2,402,288

$6,818,850 $4,871,763 $11,690,613 $3,488,872 $2,402,288 $5,891,160REMODEUNG PROJECTS

91-92 BUDGET $1,692,150 $1,692,150 $431,078 $431,078ROLLFORWARD $1,446,000 $1,446,000 $748,339 $748,339

$1,692,150 $1,446,000 $3,138,150 $431,078 $748,339 $1,179.417$8,511,000 $6,317,763 $14,828,763 $3,919,950 $3,150,627 $7,070,577

PRINCIPLE PAYMENTSLAB CHEMICAL ANAUZERS $126,841 $126,841 $118,467 $118,467

CTSCANNER $71,575 $71,575 $71,575 $71,575COMPUTER EQUIP $139,517 $139,517 $135,033 $135,033

MRI2 $462,648 $462,648 $461,005 $461,005$800,581 $800,581 $786,081 $786,081

TOTAL: $9,311.581 515,629.344 54,706,031 $7.856.658

BOND PAYMENTS: $2,490,000 (PAYMENTS MADE FEB. 1, 1992)

CAPITAL PROJECTS: UMHC ADDI110NAL 1st QUARTER 2nd QUARTER 3rd QUARTER 4th QUARTER CURRENT &FUNDS FROM FUNDS FROM TOTAL EXPEND. EXPEND. EXPEND. EXPEND. PRIOR YEAR (~

RESERVES OTHER SOURCES BUDGET 1991-92 1991-92 1991-92 1991-92 EXPENDITURE(1) ARCHITECT FEES PH /I $104,166 $274,038 $276,791 ($0) $301,55

(1) AUTOPSY $415,000 $415,000 $86,365 $32,933 $56,046 $382 $358,84(1) OBINPT. (TEMP) $370,000 $370,000 $119,782 $43,721 $10,224 ($910) $326,04

(1) REHAB THERAPY SA T. $240,000 $240,000 $6,554 $6,708 $13,26(1) PYSCH. TEMP RENOV. $100,000 $100,000 $14,476 $1,714 $16,19

(1) UROLOGY TEMP. $100,000 $100,000 $3,618 $396 $4,01(1) MAYOCODE/ABESTOS $2,500,000 $2,500,000 $5,528 $5,52

BMTACU 4F $100,000 $100,000 $1,874 $1,689 $0 $89,30BONE MARROW IRAN. EXP. $220,000 $220,000 $8,900 $116,071 $174,945 $0 $303,38

NEURO-ANGIOGRAPHY SYST $1,900,000 $1,900,000 $1,345,114 $73,928 $346,988 $9,529 $1,805,55CUHCC $1,800,000 $550,000 $2,350,000 $15,036 ($15,306) $46,266 $6,033 $2,275,06

COMPUTER UPGRADE $4,348,000 $4,348,000 $28,338 $209,219 $492,294 $205,197 $1,675,48AF15 SOFTWARE UCENSE $783,000 $783,000 $782,157 $782,15

HEART CATHROOM $3,100,000 $3,100,000 $1,515,073 $781,603 $392,851 $2,702,63UNEAR ACCELERA TOR $2,100,000 $2,100,000 $344,545 $344,54

MRI $3,000,000 $3,000,000 $1,820 $1,82

TOTAL $21,076,000 $550.000 $21,626.000 $2.491,733 52,251.367 52,209,805 $973,791 $11.005,38

:....> 1.) THESE PROJECT COSTS ARE BUDGETED FOR IN THE $37.62 MILLION RENOVATION PROJECT... ARCHITECTFEES AND CONSTRUCTION MANAGER FEES ASSOCIATED WITH PHASE" PLANS TOTAL $1,728,000.

OF TI-HS AMOUNT $1.426. 704 HAS BEEN ABANDONED AND WRITTEN-OFF IN 1991-92.

~ " t"!UNIVERSITY OF MINNESOTA HOSPITAL & CLINICADMISSIONS & AVERAGE LENGTH OF STAY (ALOS) BY SERVICE1990/91 AND 1991/92 COMPARISON

I ADMISSIONS I1990/91·· . 1991192 CHANGE % CHANGE

JUNE YIn JUNE YIn JUNE YIn % FROM FROM

CUNICAL SERVICE ACTUAL BUDGET ACTUAL VARIANCE VARIANCE PRIOR YR PRIOR YR

ANESlHESIOLOGY 1 0 1 1 0 0.0%

CLINICAL RESEARCH 361 401 321 (80) -20.0% (40) -11.1%

DENTIS1RY 6 6 3 (3) -50.0% (3) -50.0%

ORAL SUR GERY 60 49 78 29 59.2% 18 30.0%

DERMATOLOGY 13 14 15 1 7.1% 2 15.4%

FAMILY PRACTICE 36 24 130 106 441.7% 94 261.1%

GYNECOLOGY 1,330 1,436 1,128 (308) -21.4% (202) -152%

MEDICINE 4,462 4,487 4,756 269 6.0% 294 6.6%

NEWBORN 349 362 328 (34) -9.4% (21) -6.0%

NEUROLOGY 359 326 365 39 12.0% 6 1.7%

NEUROSURGERY 1,027 978 1,169 191 19.5% 142 13.8%

OBSTEIRICS 552 561 512 (49) -8.7% (40) -72%

OPHlHALMOLOGY 464 468 401 (67) -14.3% (63) -13.6%

ORlHOPEDICS 1,116 1,103 1,143 40 3.6% 27 2.4%

OTOlARYNGOLOGY 412 408 374 (34) -8.3% (38) -92%

PEDlAlRICS 3,122 3,231 2,894 (337) -10.4% (228) -7.3%

PHYSICAL MEDICINE & RFHAB 192 212 177 (35) -16.5% (15) -7.8%

PSYCHIA1RY ADULT 806 787 757 (30) -3.8% (49) -6.1%

PSYCHIAlRY CHILD 76 62 93 31 50.0% 17 22.4%

RADIATION lHERAPY 0 0 1 1 1

RADIOLOGY 29 25 19 (6) -24.0% (10) -34.5%

SURGERY 2,831 2,891 2,862 (29) -1.0% 31 1.1%

UROLOGY 557 504 546 42 8.3% (11) -2.0%

TOTAL 18,161 18,335 18,073 (262) -1.4% (88) -0.5%

WN.



August 27, 1992

Harvard Street at East River ParkwavAlinneapolis, AlN55455 .

TO:

PROM:

SUBJECT:

Board of Governors

Clifford P. Fearing

Report of Operations for the PeriodJuly 1, 1992 through July 31, 1992

The Hospital's operations for the month of July reflect inpatientcensus and outpatient encounters to be more than budgeted levels.

INPATIENT CENSUS: FQr the month of July, inpatient admissionstotaled 1,582 which was 65 over budgeted admissions of 1,517. Ouroverall average length of stay for the month was 7.4 days. Patientdays for July totaled 11,808 and were 316 days under budget. Theareas in which admissions were most significantly over budget werePediatrics, Medicine, and Surgery.

OUTPATIENT CENSUS: Outpatient encounters (including CUHCC and HomeHealth) for the month of July totaled 32,704 which was 2,746, or9.2%, more than budgeted visits of 29,958. Other areas in whichencounters were significantly over budget include Surgery, SportsMedicine, Ophthalmology, and Rehabilitation. Only the FamilyPractice clinic showed a significant variance under budget.

To recap our census:

Monthly Data YTDData91192 92/93 92/93 % 91192 92/93 92/93 %Actual Budget Actual Variance Var Actual ID!!!m Actual Variance Var

1,640 1,517 1,582 65 4.3 Admissions 1,640 1,517 1,582 65 4.312,664 12,124 11,808 (316) (2.6) Patient Days 12,664 12,124 11,808 (316) (2.6)

8.1 8.0 7.4 (0.6) (7.5) Avg Length of Stay 8.1 8.0 7.4 (0.6) (7.5)408.5 391.1 380.9 (10.2) (2.6) Avg Daily Census 408.5 391.1 380.9 (10.2) (2.6)71.6 69.7 67.9 (1.8) (2.6) Percent Occupancy 71.6 69.7 67.9 (1.8) (2.6)

30,089 29,958 32,704 2,746 9.2 Outpt Encounters 30,089 29,958 32,704 2,746 9.2

33.

tREPORT OF OPERATIONSJuly 1992PAGE 2

FINANCIAL OPERATIONS: The Hospital's Statement of Operations showsrevenues being greater than expenses by $1,309,000, a favorablevariance of $729,000.

Patient care charges through July totaled $34,592,000, which was3.0% over budget. Ancillary revenue was $1,076,000 (4.5%) overbudget and routine revenue was $60,000 (0.6%) below budget.Inpatient revenue averaged $16,744 per admission compared to thebudgeted average of $17,585. Outpatient revenue per outpatientencounter averaged $248 per visit compared to the budgeted averageof $230.

Deductions from charges totaled $9,369,000, which was $674,000(7.8%) over budgeted deductions of $8,695,000. The variance islargely due to increased volume in our HMO/PPO patients. We haveseen a significant increase in patient volumes for the PreferredOne/Affordable Contract and other transplant contracts.

Operating expenditures through July totaled $27,005,000 and were$454,000 (1.7%) below budgeted levels of $27,459,000. The overallfavorable variance was primarily due to general supplies expensebeing less than anticipated for the month.

ACCOUNTS RECEIVABLE: The balance in net patient accountsreceivable as of July 31, 1992, totaled $73,346,000 and represented87.37 days of revenue outstanding. The overall decrease in patientreceivables in July is 0.2 days.

CONCLUSION: The Hospital's overall operating position for themonth of July was positive. The outcome for July was favorable dueto patient volumes being above budgeted levels while expenditureswere below budget.

34.


Admissions 1,517 1,582 65 4.3%

Patient Days 12,124 11,808 (316) -2.6%

Average Length Of Stay 8.0 7.4 (0.6) -7.5%

Average Daily Census 391.1 380.9 (10.2) -2.6%

Percentage Occupancy 69.7 67.9 (1.8) -2.6%

Outpatient Encounters 29,958 32,704 2,746 9.2%

35.

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