Fiscal Year 2017 Draft Budget Presentation Central Health Board of Managers; Budget and Finance Committee July 20, 2016 Jeff Knodel, CFO Dr. Mark Hernandez, Community Care Collaborative CMO

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Our Mission: Esma’s Story

Esma Kitchum, Patient, Central Health Southeast Health & Wellness Center Esma will be featured in an upcoming episode of our podcast “Central Health Stories.” www.centralhealthstories.org

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FY16 Achievements & Improvements

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Our Mission: FY16 Achievements

Community and Partnerships •  Increased enrollment in Affordable Care Act insurance by 11.5% to 73,093 •  Sendero Health Plans increased IdealCare enrollment •  Creation of Healthy ATC partnership with county and city •  Community Health Champions launched in January with 58 enrolled •  Welcoming of Dell Medical School’s inaugural class

Stewardship •  Maintaining lowest tax rate among major Texas hospital districts •  Funding for 33 Delivery System Reform Incentive Payment (DSRIP) projects •  Achievement of 96% success on Demonstration Year 4 DSRIP projects •  On target to achieve over 90% of DY5 DSRIP goals

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FY16 Infrastructure Improvements

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•  January – Health and Wellness Center at Huston-Tillotson University

•  February – Central Health Southeast Health & Wellness Center expansion celebration

•  March –ATCIC Mental Health Crisis Center groundbreaking

•  April – People’s Community Clinic grand opening

•  June – Dell Medical School welcomes its inaugural class

FY 16 CCC/IDS Progress

Delivery System Transformation •  Specialty care

–  Additional access: orthopedics; urology –  Primary care physician-to-specialist consultations –  Reduced wait time in pulmonology and urology

•  Obstetrics (OB) redesign IT Initiatives •  Organized Health Care Arrangement (OHCA) •  Successful data center move •  Retinal Scanning equipment and remote diagnostic

evaluation tool installed at CommUnityCare and Lone Star Circle of Care

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FY16 Budget Summary Where we ended up

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FY2016 Central Health Sources and Uses Summary - no changes as presented in the 5-year forecast

FY2016 Approved Estimate

Sources of Funds Property Tax Revenue 160.7 160.7 Seton Lease Revenue 34.4 34.4 Other Revenue 2.0 3.0 Total Revenues 197.1 198.1 Contingency 98.7 95.3

Total Sources of Funds 295.8 293.4

Uses of Funds Healthcare Delivery 286.1 247.6 Administration 8.3 8.3 Tax Collection 1.4 1.4

Total Uses of Funds 295.8 257.3

Ending Balance – Contingency Reserve - 36.1

Inmillions

FY16 Central Health Estimated Year End Conclusions

•  Central Health continues to utilize the financing mechanism of Intergovernmental Transfers (IGTs) to maximize our local dollars and transform care.

•  IGT timing issues will be resolved by end of fiscal year.

•  IGT amounts are still unpredictable.

•  Contingency Reserve ending balance: $36.1 million

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FY17 Proposed Budget

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Central Health Funding Model – The Big Picture

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$ $$$

$$$

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FY17 Strategic Plan Initiatives

Transforma)on

CCCSpecialtyCareImprovement CCCBenefitPlanRedesign CCCBehavioralHealth—SubstanceUseDisorderServices Continue Women’s Health Services Redesign Payment Reform

Stewardship CentralHealthBrackenridgeCampusRedevelopment AffordableCareActSubsidyProgram CCCDeliverySystemReformIncenEvePayment(DSRIP)DeliveryYear6

Partnership Medicaid1115WaiverRenewalPlanningCollaboraEon CentralHealthEquityPolicyCouncil DellMedicalSchool

Central Health FY17 Proposed Budget

DESCRIPTION FY 2016 APPROVED BUDGET

FY 2017 PROPOSED BUDGET

TAX RATE 0.117781 0.111516 SOURCES Property Taxes 160,705,076 172,905,808 Seton Lease Revenue 34,371,988 27,209,925 Interest 400,000 400,000 Tobacco Litigation Settlement 1,600,000 1,800,000 Subtotal Revenue 197,077,064 202,315,733 Contingency Reserve 98,700,000 36,100,000

Total Sources 295,777,064 238,415,733 USES Healthcare Delivery 286,088,392 227,657,916 Administration 8,262,466 9,271,226 Tax Collection 1,426,205 1,486,591

Total Uses 295,777,064 238,415,733 RESERVES (ending balance) Capital - - HMO Risk-based Capital Reserve - - Contingency Reserve - - Emergency Reserve 28,515,000 29,865,000

Total Reserves 28,515,000 29,865,000

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Central Health FY17 Proposed Budget Overview •  FY 17 healthcare delivery budget is significantly less than FY16 due to the

resolution of IGT timing issues which are included in the contingency reserve. All Intergovernmental Transfers (IGT) delayed from the prior year will be made in FY16, thus reducing the contingency reserve moving forward into the FY17 Central Health budget.

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•  Employee Pay-for-Performance increases assumed at 3% •  Employer health insurance benefits for employees are assumed to

increase by 6%

FY15 FY16 FY17 Proposed

Total Healthcare Delivery 259.1 286.1 227.7

Less Contingency Reserve 76.5 97.1 30.4

Net Healthcare Delivery 182.6 189.0 197.3

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Tax Rate Discussion

5-Year Forecast - 4.5% over Effective Property Tax Rate Year Over Year

$0$20$40$60$80$100$120$140$160$180$200$220$240

FY17 FY18 FY19 FY20 FY21

TotalSources TotalUses TotalReserves EmergencyReserve

FY 17

Proposed FY17 FY18 FY19 FY20 FY21 Total Sources 202.3 200.9 196.0 207.5 219.0 230.9 Total Uses 208.0 207.3 212.4 212.0 217.4 225.7 Total Reserves 61.7 59.6 44.2 40.2 42.6 48.6

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Central Health Property Tax Impact Statement TCAD appreciation 2015-2016

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Actual Appreciation

Rate Home Value Homestead

Value

4.5% Over Effective Tax

Rate Tax Bill Annual Inc/

(Dec) % Inc/(Dec)

- 200,000 160,000 0.1264 $202 - -

- 300,000 240,000 0.1264 $303 - -

- 400,000 320,000 0.1264 $404 - -

- 500,000 400,000 0.1264 $506 - - 9.2% 218,400 174,720 0.117781 $206 $4 1.8% 8.7% 326,100 260,880 0.117781 $307 $4 1.3% 8.0% 432,000 345,600 0.117781 $407 $3 0.6% 7.5% 537,500 430,000 0.117781 $506 $1 0.2% 9.2% 238,493 190,794 0.111516 * $213 $7 3.4% 8.7% 354,471 283,577 0.111516 * $316 $9 2.9% 8.0% 466,560 373,248 0.111516 * $416 $9 2.3% 7.5% 577,813 462,250 0.111516 * $515 $9 1.8%

FY 2

015

Bas

elin

e FY

201

6 FY

201

7

*EsEmated

In the News: Challenges Facing Major Texas Hospital Districts

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Percentage Share of Travis County Taxing Jurisdictions - FY16

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21.2%

16.39%

52.93%

4.84%

4.63%

CityofAusEn

TravisCounty

AusEnISD

AusEnCommunityCollege

CentralHealth

Major Texas Hospital Districts: FY2016 Tax Burden Comparisons

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Major Texas Hospital Districts: Debt Principal and Payments

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$730 million in FY 2015 DEBT PRINCIPAL $ 8 million in FY 2015 DEBT PAYMENTS

$12.31 million in FY 2015 DEBT PRINCPAL

$1.37 million FY 2015 DEBT PAYMENTS

Major Texas Hospital Districts: Debt and Pension Comparisons

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Sources of Revenue

Central Health - Sources FY17 Proposed Budget

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DESCRIPTION FY 2016 APPROVED BUDGET

FY 2017 PROPOSED BUDGET

TAX RATE 0.117781 0.111516

SOURCES

Property Taxes 160,705,076 172,905,808

Seton Lease Revenue 34,371,988 27,209,925

Interest 400,000 400,000

Tobacco Litigation Settlement 1,600,000 1,800,000

Subtotal Revenue 197,077,064 202,315,733

Contingency Reserve 98,700,000 36,100,000

Total Sources 295,777,064 238,415,733

Taxable Assessed Values with % Change Over Prior Year (By Tax Year)

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-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0

20

40

60

80

100

120

140

160

180

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

TaxableAssessedValue %YOY

Central Health Tax Rate per $100 of Taxable Valuation

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7.79 7.797.34

6.93 6.79 6.747.19

7.89

7.89

12.9012.64

11.78

11.15

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(Est.)

Cents

FiscalYear

Projected Seton Lease Revenue from UMCB

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0

5

10

15

20

25

30

35

40

FY15 FY16 FY17 FY18 FY19 FY20 FY21

(in millions of dollars)

Major Initiatives FY17

•  Expanded Central Health ACA premium subsidy strategy

•  UMCB Campus Redevelopment •  Begin Implementation of FY17-19

Strategic Plan

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Affordable Care Act (ACA) Subsidy Worksheet

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SlidingFeeScale(SFS)Pa)entsbetween101-150%FederalPovertyLevel(FPL) Estimate of eligible SFS patients between 101-150% FPL 5,400

Estimate of enrollment rate 60%

Estimated ACA Enrollment 3,240

Average Annual ACA Premium Cost $519 $1,681,421

Average Annual SFS Claim Cost $1,607 $5,207,976

Potential Reduction in Unfunded Cost $3,526,555

Travis County Health Care Coverage Eligibility—Proposed FY17

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FY17 Uses of Funds

Central Health - Uses FY17 Intergovernmental Transfers

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•  FMAP Decrease in 2017 – larger proportionate share of local match

•  Increase In Disproportionate Share for amounts previously funded by State

Intergovernmental transfers: FY 2016 FY 2017

IGT - Private UC 27,900,000 27,900,000

IGT - Public UC 28,700,000 25,000,000 IGT - Disproportionate Share 23,300,000 32,500,000

IGT - CCC DSRIP 28,530,000 29,300,000

IGT - Seton DSRIP 25,670,000 26,250,000 IGT - St. David's DSRIP 600,000 620,000

Total 134,700,000 141,570,000

Central Health – Uses FY17 Health Care Delivery Operations

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DESCRIPTION FY16 APPROVED BUDGET FY17 PROPOSED BUDGET Subtotal Intergovernmental Transfers 134,700,000 141,570,000

Healthcare Services Member Payment to CCC 26,245,166 26,245,166 Charity care - Seton 4,251,733 4,251,733

Initiatives: ACA education and enrollment 1,745,000 2,745,000 Health Promotion 353,713 353,713

Subtotal Initiatives 2,098,713 3,098,713 Subtotal Healthcare Services & Charity Care 32,595,612 33,595,612 Service expansion 3,300,000 2,000,000

Subtotal Healthcare Services & Service Expansion 35,895,612 35,595,612 Personnel Expenses:

Salary & Fringe Benefits 2,976,926 3,763,563 Operating Expenses: UMCB Redevelopment Operations 0 2,047,675

Legal 25,000 25,000 Consulting 334,000 234,000 Primary Care - Planned Parenthood 585,000 585,000 Integrated Care Collaboration (ICC) 617,275 617,275 Other professional services 168,471 519,271 Marketing & community relations 11,500 23,500 Leases, security & maintenance 799,444 894,847 Phones, computer equipment & utilities 578,507 703,029 Printing, copying, postage & signage 164,344 194,269 Travel, training and professional development 35,539 34,339 Other operating expenses 196,151 207,369

Subtotal Operating Expense 3,515,231 6,085,574

Central Health - Uses FY17 Health Care Delivery Operations

•  ACA Subsidy •  Medicaider •  MAP On-line Application •  MAP Texting/messaging •  UMCB Campus operations

– VP of Redevelopment/Facilities – Redevelopment Project Manager – Campus Operations

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ACA Subsidy Initiative

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FY 2016 FY 2017 proposed Public Information and outreach 300,000 150,000 Education, Enrollment & Advocacy 465,000 465,000

Subsidy (A) 980,000 2,130,000

Total 1,745,000 2,745,000

(A) Subsidy includes: •  CHAP •  HAAM/SIMS Partnership •  SFS 101-150% ( New in FY 2017)

UMCB Redevelopment

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Building Operations 947,883 Parking Operations 369,792 Marketplace Planning 330,000 Innovation Zone 250,000 Contingency 150,000 Total 2,047,675

Central Health - Uses Fy17 Reserves/Debt Service

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DESCRIPTION FY 2016 APPROVED BUDGET

FY 2017 PROPOSED BUDGET

Subtotal Intergovernmental transfers 134,700,000 141,570,000 Subtotal Healthcare Delivery Operations Operating Expense 3,515,231 6,085,574

Reserves, appropriated uses & transfers: Transfer to capital reserve 3,000,000 1,500,000 Transfer to emergency reserve 2,539,279 1,350,000 Sendero risk-based capital 5,000,000 6,000,000 Contingency reserve appropriation 97,092,539 30,420,364

Subtotal Reserves, appropriated uses & transfers 107,631,818 39,270,364 Debt service:

Debt service - principal retirement 950,000 975,000 Debt service - interest & amortized costs 418,805 397,803

Debt service 1,368,805 1,372,803 Total Healthcare Delivery 286,088,392 227,657,916

Central Health - Uses FY17 Reserves/Debt Service

•  $1.5 million - Capital Reserve –  $500,000 CommUnityCare medical equipment –  $500,000 Facilities –  $500,000 IT equipment

•  $1.35 million - Emergency Reserve to maintain 15% of budgeted eligible expenditures

•  $6 million – Sendero risk-based capital requirements

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Central Health - Uses FY17 Administration

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DESCRIPTION FY 2016 APPROVED BUDGET

FY 2017 PROPOSED BUDGET

Personnel Expenses

Salary & Fringe Benefits 4,058,822 4,513,442

Operating Expenses Legal 966,500 1,166,500 Consulting 1,038,000 1,138,000 Investment Services (Travis County) 98,351 103,351 Benefits & Payroll administrative services 282,800 296,940 Other professional services 435,300 485,300 Marketing & Community Relations 131,400 181,400 Leases, security & maintenance 163,842 183,842 Insurance & Risk Management 125,000 150,000 Phones, computer equipment & utilities 139,794 164,794 Printing, copying, postage & signage 84,570 99,570 Travel, training and professional development 213,737 263,737 Other operating expenses 524,350 524,350

Subtotal Operating Expense 4,203,644 4,757,784 Total Administration 8,262,466 9,271,226

Tax Collection Appraisal District Svcs 880,000 924,000 Tax Collection Expense 546,205 562,591

Subtotal Tax Collection Expense 1,426,205 1,486,591 TOTAL USES 295,777,064 238,415,733

Central Health - Uses FY17 Administration

•  Additional Resources: – Compliance – Federal/State Policy – Purchasing – BOM Special Projects Manager

•  Increases to Purchased Goods/Svcs – Legal - $200K – Consulting - $100K

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Preview of CCC FY17 Budget Initiatives

Central Health Funding Model – The Big Picture

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Transformation: Specialty Care

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Non-Hospital Locations

Dell Med School Integrated Practice Unit E-Consult Pilot Expand

Services Orthopedics ü ü ü ü

Gastroenterology ü ü ü

Cardiology ü ü

Urology ü

Rheumatology

Endocrinology ü ü

Neurology ü ü

Ophthalmology ü

Otolaryngology ü

Complex Gynecology ü

Dermatology ü

Pulmonology ü

Allergy ü

Wound Care ü

Exi

stin

g N

ew in

FY

2017

Transformation: Primary Care

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Partner with additional

convenient, walk-in care

Review network capacity; move to value-based

payments

Expand urgent care network,

launch education effort

Expand care management

Convenient Care

Primary Care Home Urgent Care Emergency

Department

Least costly Most costly

Transformation: Health Information Technology

Health Information Technology Initiatives •  Data Integration •  Patient Portal Development & Support •  Care Management Software •  Medical Access Program (MAP) On-line Application

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Transformation: Health Care Coverage

Medical Access Program (MAP) Benefit Redesign Affordable Care Act

•  Subsidy Program •  Enroll ATX

Enhanced Eligibility Services •  Online renewals and applications process

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Medical Access Program/Sliding Fee Scale Patient Utilization Chronic Disease Status w/Proxy Cost Data

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Category Patients % Patients % Costs Cost per Patient

Zero Chronic Conditions 120,718 67% 34% $1,172 One Chronic Conditions 35,774 20% 25% $2,917 Two-plus Chronic Conditions 24,230 13% 41% $6,977

Total 180,722 100% 100% AVG $2,296

Medical Access Program/Sliding Fee Scale Patients, fiscal years 2014-15

Medical Access

Program

MAP Redesign - Considerations

Sliding Fee

Scale

•  Health Risk Assessment •  No copay for preventive services •  Alternative therapies for pain

management •  Group health education •  Post-Acute Care* •  No co-pay for certain

medications •  Palliative care, including hospice •  Primary care behavioral health •  Substance Abuse treatment •  Complex care management

*launched in FY16

Proposed Benefits Pilots

2+ Chronic Conditions

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Budget Timeline

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July 20 Central Health Budget and Finance Committee

July 27 Central Health Board of Managers

Aug. 10 Central Health Budget and Finance Committee

Aug. 17 Central Health Board of Managers •  Board action needed on budget & notice of proposed increase to tax rate

Aug. 23 Travis County Commissioners Court

Aug. 31 First public hearing •  followed by BOM meeting at 6:00 pm

Sept. 7 Second public hearing •  followed by BOM meeting

Sept. 14 Central Health Board of Managers •  Budget and tax rate adoption

Sept. 20 Travis County Commissioners Court •  Action taken on budget and tax rate

(512) 978-8000 www.centralhealth.net @centralhealthtx