metrohealth presentation
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MetroHealth County Council Briefing
May 19, 2011
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Goals for Today’s Discussion
Provide context on public, safety-net hospitals
Provide background on current situation at MetroHealth
Describe mission and capabilities
Provide facts about role in providing healthcare in the County
Recount actions to strengthen financial condition
Look forward to a future with health reform
Inform you of the future challenges we face
Gain your support so that we can stay focused on our mission
We welcome questions afterwards
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US Public Hospitals Today► Serve a critical role in their communities, ensuring access to care for
patients who are uninsured or are covered by Medicaid or Medicare
► Public hospitals (National Association of Public Hospitals) are major providers of care in the nation
1 out of 4 emergency room patients
1 out of 4 babies born
Just 2% of all hospital beds provide all this:
1/3 of all outpatient visits
1 out of 5 people hospitalized 1/2 of all Level 1 trauma
centers
2/3 of burn care beds
Train 20% of all medical residents
Operate with lower margins than the rest of the hospital industry
► In 1981, half of NAPH members were traditional City or county owned hospitals. Less than 10% retain that structure today
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A Tale of Four Cities
► St. Vincent’s – closed (April 2010)► Two bankruptcies in span of five years ► One of two New York City academic medical centers ► Uncompensated charity care, rising costs drove closure
► Detroit Medical Center -- purchased by a for-profit healthcare management company (Dec 2010)
► Michigan’s largest charity care provider, Detroit’s largest employer► Bailed out in 2003, struggled to remain in black for past seven years► Need to renew facilities in the face of limited capital drove sale► Purchased by Vanguard Health Systems ($3.4B 2009 revenue)
► Cook County Hospital System – restructuring (2011)► Plans to close a hospital June 1st, Oak Forest Hospital to convert
into an outpatient center► Provides $500 million in free care to more than 800,000 patients► Illinois’ largest provider of health care to the poor and uninsured
► Grady Hospital – future in doubt after years of restructuring► Drowning in debt, In need of $200 million to remain solvent► Loss of local and federal funding forcing layoffs and service cuts► Atlanta’s largest public hospital, 80% of patients are Self Pay or Medicaid
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Significant Number of Public Hospitals Closed in Past Decade
Why Public Hospitals Close
Growing uninsured and underinsured population
Aggressive competition for insured patients and services
Urban Emergency Departments more likely to close
Managed care rates below better-networked systems
Declines in Medicaid reimbursement rates
Public support limited by local budget stress
Escalating cost of technology, personnel, supplies
Margin erosion in highly fixed cost operation
Required upgrades in facilities and technology …
… With limited access to capital
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Cuyahoga County Provides Average Support
Source: America’s Public Hospitals and Health Systems, 2009: Results from the Annual NAPH Hospital Characteristics Survey
15%18%20%21%22%22%
30%31%32%32%
40%41%41%
53%54%57%
70%70%
89%90%
144%
Grady Health SystemBroward Health-Broward General Medical CenterUMDN J-University
Hospital
LAC-LAC+USC Medical CenterAlameda County Medical CenterUniversity Health System at San
AntonioLAC-Harbor/UCL A Medical CenterLAC-Olive View/UCLA Medical CenterParkland Health & Hospital
SystemHarris County Hospital DistrictNYC HHC-Bellevue Hospital CenterSanta Clara Valley Health & Hospital
SystemJPS Health NetworkUniversity Hospital, The University of New Mexico Health Jackson Health SystemUniversity Medical Center of El
PasoThe MetroHealth SystemThe Health and Hospital Corporation of Marion County
San Francisco General Hospital
Cook County HHS-The John H. Stroger, Jr. Hospital of Cook
Boston Medical Center
Average of 91 NAPH Hospitals
2009 State/Local Support as % of Charity Care Charges
For top 20 NAPH Member Hospitals Receiving Gov’t Subsidiary (+MH)
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Value of County Subsidy Declined as Charity Care Grew
MHS County Subsidy Trend 1981 - 2010
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
0%
50%
100%
150%
200%
250%
300%
350%
2005
2000
1995
1990
1985
2010
1981
County Subsidy ($ in 000’s)County Subsidy as % of Charity Care
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Mission
Academic Health Care System
Committed to Community
Saving Lives, Restoring Health, Promoting Wellness
Outstanding, Life-long Care
Accessible to All
MetroHealth Capabilities
County Owned, 6,400 Employees (#14 in County)
500 Employed Physicians, All SOM Faculty
Engaged in Teaching (CWRU, OU, Residents)
Significant Clinical/Behavioral Research
Strength in Primary Care, Depth in Specialties
Nursing Magnet Status (Top 5%)
750+ bed Acute Care Medical Center
ED with 100,000 Visit Capacity
17 Ambulatory Locations in County
Level I Trauma, Burn Center, LifeFlight, NOTS
Senior Health and Wellness Center
Skilled Nursing Care
Integrated EPIC Medical Record Throughout
Accountable Care Organization Pilot Underway
MetroHealth: Mission-Driven Healthcare Provider
175th
Anniversary2011
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Highest Quality Healthcare
Nationally recognized in trauma, maternal-fetal medicine, burns, neonatal intensive care, pediatrics, cardiology and radiology
Attracts $37.5 million research dollars
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MetroHealth is Linchpin of the County’s Safety Net
Provider Inpatient Discharges (2009)
Uninsured/Medicaid
Cleveland Clinic Health System
151,286 18%
University Hospitals Health System
72,867 24%
MetroHealth 25,557 53%
Parma Community General Hospital
15,193 9%
St. Vincent Charity Hospital
8,028 27%
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Uninsured Visits 2010
200,000 visits by uninsured patients in
2010, an increase of 25% since 2008
45% of County’s uninsured visits originate outside Cleveland: 42%
growth in two years
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County H&HS
Subsidy5.6%
Ohio HCAP
GAP$51m
2.2%1.5%
-4.0%
0.3%
Commercial Medicare Medicaid Uninsured Medicare$173m24.3%
Uninsured$119m16.7%
Medicaid$243m34.1%
Commercial$177.1m
24.9%
2006-2010 Change by Payor UninsuredSupport
Total $712.1 million
MetroHealth 2010Operating Expense by Payor
Deterioration in Payor Mix Threatens Survival – HHS Levy Subsidy Inadequate
Serving insured patients is a mandatory funding source
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Getting Into the Black has Been a Priority …
Historically System struggled to break-even; financial distress grew into 2008
Board demanded swift action to avert financial crisis …
… And directed Transformation to address uncertain future
• 2006 Operating Income includes additional one time payment from County• Transformation began March 2008 with $11.3 million operating loss YTD
-$20.0
-$10.0
$0.0
$10.0
$20.0
$30.0
$40.0
2003 2004 2005 2006 2007 2008 2009 2010
Operating Income
($11.9) ($8.2) $3.0
$10.5
($17.3)
$8.7 *
$37.7
$23.8
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Consulting Investments for Operational and Financial Gains
MetroHealth needed to adopt a business-based approach
Critical issues identified:
– Revenue cycle --Hospital operations
– Medical home --Supply chain
– Ambulatory operations --Campus renewal
– Network development
Managed carefully: business case/negotiated/phased/audited
Dramatic knowledge transfer to MetroHealth people
$25.5 million short-term investment for $68 million annually in long-term viability
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Along with Increasing Solvency; Bought Us Time
Key Actions
Refinancing of capital structure
– Build America Bonds issued
– Restrictive covenants relaxed
– Maturities extended
Cleaned up balance sheets to enhance transparency
Upgrades from rating agencies
Prepared to invest to meet patient needs
Balance Sheet Strength
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Health Reform Promises Increased Coverage but at Lower Rates
Future ability to shift cost limited
Downward PressureOn Rates
CoverageExpansion
Disproportionate Share Hospital (DSH) payment reduction
Value based purchasing program in Medicare State/Federal Budget Pressures cause rate
reductions Reimbursement methodology changes, e.g. hospital
acquired infections, bundled payments, etc.
50-70% enrolled in Medicaid or
Medicaid-like health exchanges
Affordable Care Act (2014) -- Impact on MetroHealth
Net Revenue Impact
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Strategic Imperatives for Long-Term Viability
Increase attractiveness to insured patients
Health care increasingly delivered in ambulatory setting -- patient preference, technology evolution, lower cost, etc.
Continue transformation of operations for service and quality improvement and convenience for patients
Prepare for influx of ACA patients; develop a delivery model that serves them effectively and efficiently
Reduce cost to be sustainable at new lower reimbursement rates
We have made real progress with our Patient-Centered Medical Home
Inpatient admissions 34.8% lower than patients not enrolled in program
Emergency Department visits also 6.8% lower than patients not enrolled in this program
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Ambulatory Success Drives System Health
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Adm
issi
ons/
Vis
its p
er T
hous
and
Hospital Inpatient Admissions and Outpatient Visits
Source: American Hospital Association, 2005; US Census Bureau: National and State Population Estimates, July 1, 2005
Healthcare increasingly delivered in ambulatory setting
•Patient preference•Convenience•Technology migration•Payor preference•Lower cost
Outpatient VisitsInpatient Admissions
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Exploring All Options To Sustain the Mission
02468
101214161820
MetroHealth "A" RatedHospitals
Average Age of Plant, 2010
• $580 million to reach “A” rating benchmarks
• $400 -- $600 million for new 300-400 bed hospital
Recent engineering analysis assessed facility gaps 63% of buildings beyond useful life Significant investment necessary
to restore original condition
Renewal a valuable opportunity
Upgrade to modern functional spec
Size to need and purpose
Capture energy, maintenance, operations efficiencies
Operations contributing capital to fund renewal
Yea
rs
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Our Mission is Vital to County’s Well-Being
Sustainability threatened Our mission demands we provide the uninsured with high quality healthcare As the safety net we are committed to provide access to all
MetroHealth performs its mission effectively and efficiently
Our recent turnaround bought us time …
… But the fundamental problem is still with us (“no margin, no mission”) We rely on positive margin and County subsidy to support that mission Health reform is not a silver bullet
This condition demands further restructuring and renewal … Restructuring of staff, support expenses to refocused mission Network development of more efficient service locations Campus renewal to focus acute services and reduce fixed costs
Or ???
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Your Support will Safeguard Access to Medical Care for the Uninsured of Cuyahoga County
Support our mission and role in the community
Focus on passing the Levy in 2012 (10 months from now)
Preserve MetroHealth’s subsidy at current levels
Engage and support MetroHealth’s renewal plan for 2014 Ambulatory network development and main campus renewal
Engage capital need and help raise funds
Link access and economic development (in 2014)
Address governance issues through the MetroHealth Board Appoint/reappoint to current openings and support confirmation
Plan for impending retirements/departures
Formalize dialogue through H&HS Committee
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Appendix
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Search Process (example)
~200 Prospects
4 Candidates
3Candidates
Final Candidate
Finalist
Search Firm Panel Interview Campus Visit
Physician Chair
CMO
Board member
5 administrators
Physician Chair
CMO
Board member
5 administrators
3 PCU Executive Directors (physicians)
1 administrator
3 PCU Executive Directors (physicians)
1 administrator
Final Review
External References
RSR Reference Report
External References
RSR Reference Report
Campus Visit
7 department chairs
2 administrators
7 department chairs
2 administrators
Board Panel:
5 members
Board Panel:
5 members
24Note: Excludes Compliance
The MetroHealth SystemApril 1, 2011
Mark J. Moran President and CEO
Mark J. Moran President and CEO
Daniel LewisVice President, HR
Daniel LewisVice President, HR
Alfred F. Connors MDChief Medical Officer
Alfred F. Connors MDChief Medical Officer
Sharon Kelly Chief Financial Officer
Sharon Kelly Chief Financial Officer
John McInally Vice President
Information Services
John McInally Vice President
Information Services
Phyllis MarinoVice President
Marketing & Communications
Phyllis MarinoVice President
Marketing & Communications
John CorlettVice President, Government &
Community Relations
John CorlettVice President, Government &
Community Relations
Kate BrownVice President, Development
Kate BrownVice President, Development
Ronald G. FountainBoard of Trustees
Ronald G. FountainBoard of Trustees
Thomas GoinsVice President
Construction/Facilities
Thomas GoinsVice President
Construction/Facilities
Edward Hills, DDSChief Operating Officer
Edward Hills, DDSChief Operating Officer
Thomas OnuskoSr. Vice President General Counsel
Thomas OnuskoSr. Vice President General Counsel
Building Experienced, Resilient Organization
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Engaged Governance
William S. GaskillVice Chair
30 3/15/12Audit, Finance (Chair) Legal and Government Relations,
Personnel, Space and Facilities, Strategic Planning
Donna Kelly Rego27 3/11/13
Finance,Personnel,
Strategic Planning (Chair)
Brenda Y. Tyrrell, Ph.D
Secretary 10 3/2/11
Finance, Legal and Government Relations,
Personnel, Strategic Planning
Polly Clemo15 3/4/15
Legal and Government Relations, Quality and
Safety, Space and Facilities
Terence Monnolly5 3/3/16
Audit, Space and Facilities (Chair)
Brian Murphy1 3/2/11
Strategic Planning
Thomas M. McDonald2 3/5/14
Audit (Chair), Space and Facilities, Quality and Safety
John Moss1 3/3/16
Finance,Legal and Government Relations, Space and
Facilities
Charles Spain15 3/5/14
Legal and Government Relations, Quality and Safety
(Chair)
Ronald G. Fountain, EDMChair
13 3/5/13Ex officio all committees
The MetroHealth SystemBoard of County Hospital Trustees
(2010)
• ORC 339 County Hospitalo “… preservation of public health…”o “… care of indigent sick and
disabled…”o Non-partisan
• Governed by Board of Trustees o Employ administratoro Control all fundso Define mission and strategic directiono Approve contracts and capital
expenditureso Monitor System performance
• Represent public interesto Transparencyo Stewardshipo Balance o Integrityo Institutional strength
• Pursue role activelyo Committee roleso Monthly cadenceo Regular retreats
• Exemplary citizen leaderso Volunteerso Qualifiedo Committedo Principled
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MetroHealth Select Benefits County Financially
Narrow network option provides healthcare through MetroHealth
Started with Cuyahoga County employees in 2008
County Human Resources Workgroup estimated savings in benefit costs of $3,000-$4,000 per year per employee