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Securing the Future of the State’s Public Academic Health Center

Clinical Facilities Planning at John Dempsey Hospital

Higher Education and Employment Advancement Committee

March 8, 2007

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We come to you with a plan for a new replacement hospital which will assure the future of the state’s only public academic health center

We propose to enable this plan through:

1) Reallocation of our existing UCONN2000 funding

2) The state’s help in securing favorable borrowing rates in order to limit the financing costs we will repay AND because the University and its hospital are state assets, state backing would have a public cost benefit

3) Repayment of all bonded indebtedness from the new revenues we will generate from the hospital and from donations

4) No additional state funding is required for the project as proposed

5) These actions would not establish a new hospital; rather, they would enable JDH to move forward with OHCA’s standard Certificate of Need process, which cannot be undertaken without a financing plan.

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UCHC’S Primary Mission: Education and ResearchUCHC’S Primary Mission: Education and Research• 3 Schools:

– Medical School (320 students) – Dental School (160 students)– Graduate School in bio-medical sciences (380 students)

• Research: More than $90 million per year of innovative research is conducted and discoveries are translated into advances in patient care e.g. cancer vaccines, hormone therapies for Osteoporosis, new materials for Dental Implants, and Stem Cell research.

• Residency Training: For approx 600 residents/year who train in local hospitals

• John Dempsey Hospital (JDH) and UConn Medical Group (UMG), the multi-specialty faculty practice, are sites for learning and represent key elements in attracting talented faculty who want to teach, do research and provide patient care. (Time/reimbursement pressures mean that fewer community physicians now give time to teaching.)

BENCH BEDSIDECOMMUNITY

HEALTH CARE

POPULATION HEALTH

T1T1 Research T2T2 Research Public Health Research

and Practice

Research Methods

CoreCHIN

BEHAVIORAL / EDUCATION RESEARCHBEHAVIORAL / EDUCATION RESEARCH

GCRC Biostatistics

Center

C4IC4I

Tertiary → Secondary → Primary Care

Cancer

Cardiology

Musculo-skeletal

Connecticut Health

Health Services

Research Unit

HPPCRC

Prediction,

Prevention & Health

Promotion Portal

C4IC4I

S I GNATURE

PROGRAMS

EDUCATION

Undergrad

Graduate

Continuing

UCHC: Separate Components But one Vital SystemUCHC: Separate Components But one Vital System

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UCHC: Separate Components But one Vital SystemUCHC: Separate Components But one Vital System

• UCHC must maintain a productive core of full-time faculty committed to our academic mission

• UCHC needs to grow its full time faculty base to stabilize and enhance its education programs

– UCHC has a smaller faculty size compared to other regional schools

• We must be competitive in attracting faculty. Medical faculty want to be where:

– Their teaching is highly valued

– Their research is enabled

– And they can practice close to their teaching and their research

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• Service to Medicaid Patients• Among the top 5 hospitals in state in Medicaid inpatient days as a percentage of total

inpatient days• Largest single provider of dental services to Medicaid clients and the under-and

un-insured• 61% of patient visits to the UCHC dental clinic in Farmington are Medicaid clients• 70% of all student/intern/resident dental care activity is service to Medicaid

clients

• Clinical Service Collaboration:• Department of Public Health, Department of Correction, Department of Mental Health

& Addiction Services, Department of Veteran Affairs (Rocky Hill), Department of Mental Retardation

• Community Service:• South Park Inn Medical Clinic (Hartford)• South Marshall Street Homeless Clinic (Hartford)• Connecticut Poison Control Center• YMCA Adolescent Girls Medical Clinic (Hartford)• Camp Courant Dental Screening Program• Migrant Worker Clinic• Covenant House (Willimantic)

UCHCUCHC: : A Resource to the Community and the StateA Resource to the Community and the State

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• Trained physicians and staff of Waterbury and St. Mary’s for regional cardiac surgery and interventional cardiology program.

• Trained staff and assisted ECHN in establishing a Level II nursery at Manchester Hospital.

• Pediatric dentistry program at CCMC.

• Statewide Neonatal Transport Program and Regional Neonatal Intensive Care Unit. In the past 18 months, premature babies came to JDH from 109 Connecticut towns.

• Provide workforce at Burgdorf Clinic.

• Provide cardiac perfusionist services to St. Mary’s and Waterbury Hospitals.

• Regional dental emergency room service.

• Training site for nursing, allied health schools.

UCHC: A Resource to Other HospitalsUCHC: A Resource to Other Hospitals

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About John Dempsey Hospital (JDH):

• Opened in 1975, JDH is the only public university acute care hospital in Connecticut and the 2nd smallest academic health center hospital in the United States.

• Originally planned at 400 beds, the first phase of JDH was built at 200 beds. The second tower was never built.

• Has 224 fully staffed and licensed beds, of which 116 are very specialized (Neonatal,Prison, Psychiatry, Maternity), leaving only 108 medical/surgical (flexible) beds.

• Receives no state general fund support for operations or capital program.

• Faces the same set of challenges as the state’s other 29 acute care hospitals: Medicaid/Medicare cutbacks, uncompensated care, low reimbursement rates, nursing and other health care profession shortages and the realities of an intensely competitive marketplace.

• 16.2% of JDH inpatient cases are Medicaid recipients. JDH is in the top five hospitals in Connecticut for Medicaid inpatient days as a percentage of total inpatient days. JDH is a disproportionate share hospital for Medicaid and Medicare.

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JDH Physical Plant Status:• 30-year-old facility with no major upgrades since it opened

• Undersized and becoming increasingly outdated

– Inadequate to accommodate today’s evolving standards of care and technologies, privacy concerns, and patient/ provider expectations, including operating rooms, inpatient rooms, neonatal intensive care unit, outpatient diagnostic and treatment areas and support spaces

– Present design precludes efficient staffing ratios (32-bed units) or cost-effective renovation

– Almost no remaining capacity to accommodate steady increase in admissions, patient days, occupancy rates, as well as emergency room visits, radiology and rehab visits

– Demand for service will outstrip capacity by 2008.

* Used outside experts to analyze financials, design and demand; Based on outside expert

analysis regarding health care utilization and demographic trends in the region and statewide, there is a need for 158 additional beds in the region by 2014.

JOHN DEMPSEY HOSPITALADMISSIONS BY FISCAL YEAR

6923

7518

8580

8940

9407

9845 9826

10234 10200

6.07%

8.59%

14.13%

4.20%

5.22%

4.66% -0.19%

4.15% 3.81%

6000

7000

8000

9000

10000

11000

FY 2000 FY 2001 FY 2002FY 2003 FY 2004 FY 2005 FY 2006 FY 2007Projected

FY2007Budget

JOHN DEMPSEY HOSPITALAVERAGE DAILY CENSUS BY FISCAL YEAR

136.2

141.5

147.3

152.8

158.3

166.7

162.1

167.0165.0

120

130

140

150

160

170

FY2000

FY2002

FY2004

FY2006

Fy2007

Budget

JOHN DEMPSEY HOSPITALOUTPATIENT VISITS BY FISCAL YEAR

140588 138711

168720

203099

227099241582

255909270200

280000

20.38%

-1.34%

21.63%

11.82%6.38%

5.93%5.58%

6.06%

15.90%

100000

175000

250000

325000

FY 2000FY 2001 FY 2002FY 2003 FY 2004 FY 2005 FY 2006 FY 2007Projected

FY 2007Budget

DENTAL CLINICSPATIENT VISITS BY FISCAL YEAR

76820 77340

8161583343

86625

92569 9361192000

98000

8.64% 0.68%5.53%

2.12%3.94%

6.86% 1.13% -1.72%

5.87%

55000

65000

75000

85000

95000

105000

115000

FY 2000FY 2001 FY 2002FY 2003 FY 2004FY 2005FY 2006FY 2007Projected

FY 2007Budget

John Dempsey Hospital/Dental ClinicsTOTAL REVENUE PER ADJUSTED DISCHARGE BY

FISCAL YEAR

10,79311,087

10,70811,022 11,188

11,80412,206

10,977

12,092

2.72%-3.43%

2.93% 1.51%

5.50%3.40%

-10.07%

-0.93%

-1.97%

9000

10000

11000

12000

13000

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007YTD

FY2007

Budget

John Dempsey Hospital/Dental ClinicsEXPENSE PER ADJUSTED DISCHARGE BY

FISCAL YEAR

12,055

11,575

10,626

10,974

11,327

11,89811,577

11,869

10,797

-3.98%

-8.20%1.61%

1.64%

3.22%

5.04%

-2.70%

2.52%-0.66%

9000

11000

13000

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007YTD

FY2007

Budget

John Dempsey Hospital FTE's Per Adjusted Occupied Bed by Fiscal Year

4.96

4.69 4.66 4.684.79

4.564.42

5.11

5.29

3.6

3.8

4

4.2

4.4

4.6

4.8

5

5.2

5.4

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007YTD

FY 2007Budget

UConn Medical GroupVOLUME BY FISCAL YEAR (Unique Patient Visits)

360,360

394,706

488,622 488,541497,236503,859507,967

537,429 541,568

9.53%

23.79% -0.02% 1.78%

5.67%

7.48%5.80%0.82%1.33%

200000

300000

400000

500000

600000

FY 2000 FY 2001 FY 2002FY 2003 FY 2004FY 2005FY 2006 FY 2007Projected

FY 2007Budget

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What We Propose:

• Construction of a new University hospital to ensure continued provision of medical/dental professionals to the region and the state, and to meet the growing demand and changing demographics of the Farmington Valley

• A new six story, 546,000 square foot facility with:– New operating suites, neonatal intensive care units, maternity, emergency department and

radiology, lobby/entry and parking spaces– 352 beds (128 net new beds)

• Financing construction primarily with bonds to be repaid by the UConn Health Center through hospital revenues, not by the state

New Construction Will:

• Attract/retain high quality faculty, physicians and other health professionals to the region and state, and strengthen the Schools of Medicine and Dental Medicine, and our intern and residency programs

• Enable JDH physicians, nurses and other healthcare providers to continue providing the most advanced care available in the most efficient setting possible

• Allow JDH to meet growing demand for services, especially for aging populations in our key Signature Program areas: cancer, musculoskeletal, cardiology and public health

• Expand programs (such as bone oncology, the clinical trials network) that support other Connecticut hospitals and health clinics, allowing Connecticut residents to stay in our state for top quality, leading edge care

• Create over 300 new jobs at JDH and, during the construction phase, stimulate the region’s economy through the creation of construction jobs

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EXISTING

ARB BUILDING 'C'

EXISTING

HOSPITAL

P MECH MECH

7 RESEARCH RESEARCH

6 RESEARCH MECH RESEARCH

5 RESEARCH MECH SUPPORT BEDS-32 RESEARCH

4 RESEARCH BEDS-32 SUPPORT BEDS-32 RESEARCH

3 RESEARCH BEDS-32 SUPPORT BEDS-32 RESEARCH

2 RESEARCH BEDS-32 SUPPORT BEDS-32

CARDIOLOGY CENTER / PHARMACY/ CATH LABS / LABS RESEARCH

1 RESEARCH BEDS-32 SUPPORT BEDS-32 DENTAL CLINICS RESEARCH

M RESEARCH BEDS-32

LOBBY / SUPPORT BEDS-32 CANCER CENTER RESEARCH

GRESEARCH /

LOBBY SUPPORT RESEARCH

B MECH

SB Total Beds 352 MECH

OR / ED / RADIOLOGY

MECHPARKING

NEW CONSTRUCTION

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Fiscal Assumptions:

• 352 beds• A preliminary project cost estimate of $495 million exclusive of

financing • Bonds backed (but not paid for) by the state• Bonds to be repaid with UCHC clinical revenues• Current interest rate estimate of 4.75% (with state backing)• Legislative designation as a named project in UCONN 2000 to

enable possible reallocation of $45 million within existing annual and aggregate limits under the law

• Philanthropic contributions of $20 to $25 million

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Financial Challenges Unique to JDHFinancial Challenges Unique to JDH

• A more complex delivery system due to the education and research A more complex delivery system due to the education and research functions of an academic medical center.functions of an academic medical center.

• Using its profit margin to support the medical and dental schools ($19.3 Using its profit margin to support the medical and dental schools ($19.3 million over the past 5 years) rather than reinvesting in capital plant.million over the past 5 years) rather than reinvesting in capital plant.

• Paying state fringe benefit rates. (In 2005, that rate was 38.7%, far higher than Paying state fringe benefit rates. (In 2005, that rate was 38.7%, far higher than the CHA member hospital average of 27.4%. The dollar value of the the CHA member hospital average of 27.4%. The dollar value of the difference between those rates was $8.1 million in 2005 alone. The ’07 state difference between those rates was $8.1 million in 2005 alone. The ’07 state rate is 40.9%, estimated to cost $10.5 million more than the average hospital rate is 40.9%, estimated to cost $10.5 million more than the average hospital rate. rate.

• Underwriting certain unprofitable essential health services because of its Underwriting certain unprofitable essential health services because of its public mission. Examples:public mission. Examples:

• Department of Corrections inpatient servicesDepartment of Corrections inpatient services• Higher percentage of inpatient psychiatry bedsHigher percentage of inpatient psychiatry beds• Department of Mental Retardation dental servicesDepartment of Mental Retardation dental services

• Among the top 5 hospitals in the state in Medicaid inpatient days as a Among the top 5 hospitals in the state in Medicaid inpatient days as a percentage of total patient dayspercentage of total patient days

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Necessary Legislative Action:

• We would request that the General Assembly designate the new university teaching hospital a named project under the UCONN 2000 program.

• We would request that the state permit a financing structure to enable us to secure favorable borrowing rates and limit financing costs. This might include state issuance or guarantee (with the State Treasurer) of the bonds. Because the University and its hospital are state assets, state backing would have a public cost benefit. No additional state funding is required for the project as proposed.

• These actions would not establish a new hospital; rather, they would enable JDH to move forward with OHCA’s standard Certificate of Need process, which cannot be undertaken without a financing plan.

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We come to you with a plan for a new replacement hospital which will assure the future of the state’s only public academic health center

We propose to enable this plan through:

1) Reallocation of our existing UCONN2000 funding

2) The state’s help in securing favorable borrowing rates in order to limit the financing costs we will repay AND because the University and its hospital are state assets, state backing would have a public cost benefit

3) Repayment of all bonded indebtedness from the new revenues we will generate from the hospital and from donations

4) No additional state funding is required for the project as proposed

5) These actions would not establish a new hospital; rather, they would enable JDH to move forward with OHCA’s standard Certificate of Need process, which cannot be undertaken without a financing plan.

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Post-Baccalaureate Program

(Postbac Students)

Pre-College Enrichment Program (PCEP)

(College Pre-freshman)

College Enrichment Program (CEP)

(College Sophomores)

Medical/Dental Preparatory Program

(MDPP)(College Juniors/Seniors)

Summer Research Fellowship Program

(College Juniors)

Great Explorations

(6th-8th grades)

Jumpstart(9th-10th grades)

Junior DoctorsAcademy

(11th-12th grades)

Health Career Discovery Program(11th-12th grades)

Health Professions Academy – Bulkeley & Weaver High Schools

(9th-12th grades)

Bridge to the Future Science Mentorship

Program(6th-16th grades)

Mini Medical/Dental School Program(11th-12th grades)

High School Summer Research Apprentice

Program(12th grade)

University of ConnecticutSchools of Medicine, Dental Medicine and Graduate

School

Bridges to the Baccalaureate Program

(Community College Students)

DEPARTMENT OF HEALTH CAREER OPPORTUNITY PROGRAMS (HCOP)

HEALTH PROFESSIONS PARTNERSHIP INITIATIVE (HPPI)

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• Community Service:

• South Park Inn Medical Clinic (Hartford)• South Marshall Street Homeless Clinic (Hartford)• Connecticut Poison Control Center• YMCA Adolescent Girls Medical Clinic (Hartford)• Camp Courant Dental Screening Program• Migrant Worker Clinic• Covenant House (Willimantic)• Huntington’s Disease Program• A.J. Pappanikou Center

UCHCUCHC: : A Resource to the Community and the StateA Resource to the Community and the State