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TEXAS VOICE 1

HFMAHealthcare FinancialManagement Association

TEXASVOICE

HFMA TEXAS CHAPTERS NEWS MAGAZINE March 2013, Volume 14, Issue 4

Gulf Coast Chapter

LoneStar Chapter

South Texas Chapter

2 TEXAS VOICE TEXAS VOICE 3

TOPICS INCLUDE:CEO PerspectivesRetail Pharmacy / 340B ImplementationCollection Practices / 990Health Reform: Financial Impact and Opportunities for PharmacyMAP Awards Best PracticesAccounting/FASB UpdateIgnorance Is Not Bliss: The Importance of ICD-10 Preparation Despite the DelayU.S. Economic Conditions and the Relation to Healthcare ReformCFO Panel on the Texas 1115 WaiverManaged Care ContractingMedicaid: The Pursuit for Quality and Cost ContainmentPhysician Recruitment & CompensationHealthcare Exchange PanelCMS Update on HCAHPsPhysician AlignmentSocial Media 911: Steering Your Brand Through a Real Virtual CrisisFiscal Controls in Dept. of Defense MedicineUsing Analytics to Improve Financial PerformanceCapital Markets UpdateA Horse of a Different Color: Physician Buy-InER Review ProcessEMTALA Update

SAVE THESE DATES!HFMA Texas State Conference 2013March 24-26, 2013Hyatt Regency| Austin, Texas

Mark your calendars for the 7th Annual HFMA Texas State Conference.

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TEXASVOICE

FEATURESAlternative Financing: Exploring New Ways to Finance Hospital Projects and Green Initiative by Shannon Clouse, Bank of America ............................8 Denial Management Moves to Front End Denial Avoidance by Steve Chrapla, Avadyne Health ................................10Thinking bout Merging. Considerations for your To Do List by Jonathan Randolph, Lancaster Pollard .....................12Baylor Health Care System Awarded 2012 MAP Award for High Performance .............................................................15Brenda Cox, Region 9 Representative ..............................17

DEPARTMENTSPresidents’ Corner ..................................................................................4Officers and Board Members .............................................................. 6-7New Chapter Members .........................................................................14Chapter Sponsors ................................................................................ 16Upcoming Events ................................................................................. 18

EDITORIAL POLICY:Opinions expressed in articles or features are those of the author(s) and do not reflect the view of the Lone Star Chapter, Gulf Coast Chapter, or South Texas Chapter of the Healthcare Financial Management Association, or the Publications Committee. Questions regarding articles or features should be addressed to the author(s). The Healthcare Financial Management Association and Publications Committee assume no responsibility for the accuracy or content of any articles or features published in the newsmagazine. The Publications Committee reserves the right to accept or refuse contributions whether solicited or not. All correspondence is assumed to be a release for publication unless indicated. All article submissions are requested to be typed and provided in electronic format, if possible.

REPRINT POLICY:The Lone Star Chapter, Gulf Coast Chapter or South Texas Chapter of HFMA will not reprint articles published in the “Texas Voice” newsmagazine. Individuals wishing to obtain reprint authorization must obtain it directly from the author(s) of article. The reprint may not imply endorsement from HFMA, directly or indirectly.

Gold

SILVERBKD, LLPCleverly + AssociatesEmdeon Executive Health ResourcesFirstsource SolutionsHCFS, Inc. Healthcare Management SystemsHospital Receivables Service, Inc.M2SYS TechnologyParallon Business SolutionsRegions BankResource Corporation of AmericaRevClaimsThe SSI GroupTransUnionTriage Consulting Group

BRONZEAmerican ExpressAvadyne Health.Cirius Group, Inc.CNA HealthProGrant & Weber Texas, Inc.MASH, Inc.PMAB LLCPNC HealthcareProtivitiWinthrop Resources Corp.

STATEWIDE SPONSORS


PRESIDENTS’ CORNERA decade ago, my big bank employer suggested I join a local chapter of HFMA in order to meet healthcare executives so that I could sell our treasury services to the Texas marketplace. I joined and went to my first Lone Star meeting armed with product knowledge and stacks of business cards. I arrived early and stumbled right into the arms of a Baylor Health executive – Cynthia Sterrantino – who suggested I sit with her and a couple of other folks and discuss HFMA Lone Star Social Committee activities. Little did I know, I had just joined my first committee! I went along with the game and soon found that I had something to contribute. Within a few months, I had also developed a whole new group of friends. The more I gave, the more I received. In 2008, I was directly impacted by the banking crisis and lost my job. Within just a few months, my friends at HFMA helped me identify and secure new employment within the healthcare community. HFMA has delivered on its promise to open up fruitful business development channels, yet I am most thankful to HFMA for having given me lifelong friends (like Cyndy) who I cherish and professional acquaintances who work with me and teach me because they trust me.

Phillip McColloughLone Star Chapter President

I originally joined HFMA strictly for the education. I was new to healthcare and understood HFMA was an obvious option to obtain the information I needed. After attending a few meetings, I was quickly acquainted with all of the other benefits--the networking, the resources, the opportunities, and the friendships. Terry Allison is responsible for getting me involved. She approached me with an opportunity to sit on the Membership Committee that she then chaired. I have been “drinking the Kool Aid” ever since. It has been an incredible experience for which I will always be grateful.

Tammie JacksonSouth Texas Chapter President

I had been a member of HFMA for several years but never actively involved. I was approached by Ron Dieterich, Senior Vice President, Consulting Services and Controller of St. Luke’s Episcopal Health System (my employer as well) who also served on the Board of the Texas Gulf Coast Chapter. Sadly, Ron had been diagnosed with cancer and was unable to fulfill his commitment to the chapter board. He asked me to step in and finish his term as the St. Luke’s representative which I agreed to. After having attended a few Board meetings, I became vocal and was later asked to attend a mini-LTC which I agreed to. Ron is responsible for my involvement and I would not change a thing. “All you have to do is ask.”

Mark EvardGulf Coast Chapter President

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GULF COAST CHAPTEROFFICERSPresidentMark Evard, MBASt. Luke’s Episcopal Health System

President-ElectNatasha B. Mehta, FHFMA, FACHEDeloitte Consulting

Vice PresidentMark S. Worthen, FHFMA, CPATrustmark National Bank

SecretaryJacqueline LewisAlegis Revenue Group, LLC

TreasurerSteven HandMemorial Hermann

Past Chapter PresidentJulie Rabat-Torki, CFE, FHFMACHRISTUS Health

BOARD MEMBERSLisa DixonCardon Outreach

Mark G. Kline, FHFMACommunity Health Choice, Inc.

Dena Regas McNeillPwC

Pam PotterBone & Joint Clinic of Houston

Cindy PriceParallon Business Performance Group

Alice SandsM*Modal

Kent WaltersUT M.D. Anderson Cancer Center

Rachel M. BeasleyTexas Children’s Hospital

Nancy L. Brock, CPA, FHFMA

James L. MatthewsNearterm Corporation

Scott McBrideBaker & Hostetler

Kim ReynaUT M.D. Anderson Cancer Center

Scott SetteWitt/Kieffer

COMMITTEE CHAIRSAcademic Affairs ChairMark G. Kline, FHFMACommunity Health Choice, Inc.

Audit ChairRachel M. BeasleyTexas Children’s Hospital

Awards ChairScott McBrideBaker & Hostetler

Certification ChairMark S. Worthen, FHFMA, CPATrustmark National Bank

Community Service ChairLisa DixonCardon Outreach

Charity Golf Event ChairLaura C. Comer, FHFMAUT M.D. Anderson Cancer Center

Membership ChairJames L. MatthewsNearterm Corporation

Newsletter ChairScott SetteWitt/Kieffer

Nominating ChairEric DepewMC AnalyTXs, Inc.

Programs ChairNancy L. Brock, CPA, FHFMA

Sponsorship ChairDena Regas McNeillPwC

DCMS ContactMark Evard, MBASt. Luke’s Episcopal Health Syste

Founders ContactKim ReynaUT M.D. Anderson Cancer Center

OFFICERS AND BOARD MEMBERS

Program Co-ChairChristopher Snyder, MBAAvadyne Health

Nominating Committee ChairJohn Montaine, FHFMANHPN

SOUTH TEXAS CHAPTER (contd.)Region 9 ContactJohn Montaine, FHFMANHPN

Region 9 ContactBrenda CoxPathology Resource Consultants

Sponsorship ChairSusan Jones, R.N.HealthshareTHA

OFFICERSPresidentPhillip [email protected]

President-ElectWilliam J. Galinsky, FHFMA, CPAScott & White [email protected]

Vice PresidentElizabeth A. Pulliam, FHFMA,[email protected]

SecretaryJonathan M PhillipsGE [email protected]

TreasurerChris [email protected]

Past PresidentChristian P. O’ConnorDiversified Healthcare Services, [email protected]

BOARD MEMBERSRay R. Dziesinski, FHFMAChildren’s Medical Center Of [email protected]

Mark A. TeresiBaylor Healthcare [email protected]

OFFICERS AND BOARD MEMBERSLONE STAR CHAPTER

SOUTH TEXAS CHAPTEROFFICERSPresidentTammie JacksonTransUnion

President-ElectJohn T. Montaine, FHFMANHPN Vice-PresidentChristopher A. Snyder, MBAAvadyne Health

SecretaryCynthia GrayHospitalists Now, Inc

TreasurerWesley Fountain, FHFMASt. Davids South Austin Hospital

Immediate Past PresidentDavid K. Glazener, CPACentral Texas Medical Center

DIRECTORSShawn A. BarnettCHRISTUS Santa Rosa Health System

Melissa S. Crenwelge-NedbalekErnst & Young LLP

George K. HillCommunity Hospital Corporation Susan K. Jones, R.N.HealthshareTHA

David KornBKD, LLP

Patty Mc CarrollUniversity of TX Health Science Center

Clint Owen, Sr.Owen Alliance Group LLC

COMMITTEESCertification ChairGeorge K. HillCommunity Hospital Corporation

Founders Points ChairRobert J. Scofield, Jr. CPASan Antonio AirLife

LINK ChairDavids South Austin Hospital

LINK Co-ChairPatty McCarrollUniversity of TX Health Science Center

Membership ChairPatty McCarrollUniversity of TX Health Science Center

Newsletter ChairChristopher A Snyder, MBAAvadyne Health

Program Co-ChairJohn Montaine, FHFMANHPN

Billy K. Richburg, FHFMAMedassets (Revenue Cycle Management)[email protected]

John F. Dragovits, CPAAnthelio Healthcare Solutions [email protected] Pat A. KeelGood Shepherd Health [email protected]

Terrell D. Thrasher, FHFMAUMC Health System [email protected]

James D. LogsdonTexas Health [email protected]

Malisa A [email protected] COMMITTEE CHAIRSLink Committee ChairWilliam J. Galinsky, FHFMA, CPAScott & White [email protected] NewsmagazineCyndy Sterrantino Healthcare Financial Consultant [email protected]

SponsorshipShannon M Clouse Bank of America Public Capital Corp. [email protected]

Founders ContactRichard Humphrey FHFMA, CPATexas Health Ft. [email protected] ProgramsGloria DoehlingEncore Health [email protected] MembershipJorge [email protected]

CertificationTimothy Nese, CPABaylor Health Care [email protected] Social Media Sarah Shealy HCFS, [email protected]

Nominating Christian O’ConnorDiversified Healthcare [email protected]


Financial ChallengesFinancial challenges such as uncertainty in reimbursement trends and pressure to providers’ liquidity are forcing healthcare executives to make difficult decisions regarding capital allocation. Tapping medium-term financing opportunities can provide healthcare entities a range of alternatives that can assist them with managing their financial responsibility. Using medium-term bank direct lending options for tax-exempt or taxable loans and leases can assist with meeting ongoing capital requirements, managing liquidity and complimenting current and long-term financing strategies.

Alternative FinancingBank direct tax-exempt lending has long been an option for healthcare entities, but its popularity has begun to surge as organizations seek a well rounded capital strategy. While public market bond issuance tends to be the default choice for finance managers experienced with this long-tenored alternative, more decision makers are complementing these market issues with bank direct lending opportunities to meet medium-term needs.

In fact, bank direct tax-exempt financing activity occurs across all credit profiles, from AA-rated to BBB-rated entities as providers seek to employ a medium-term strategy.

Bank Direct Tax-Exempt FinancingThe public bond market is one frequently utilized avenue to access tax-exempt capital. Another increasingly utilized alternative is tax-exempt financing offered by banks and other financial institutions. In these transactions, the obligation is a direct financing between the lending institution and the provider and/or conduit issuer.

Bank direct transactions offer a number of compelling reasons for finance managers to consider when seeking tax-exempt capital. These transactions lack the public issuance components of an official statement, reserve requirements, public disclosure and onerous documentation. In contrast, most typical bank direct tax-exempt financing utilize a more standard documentation process, have a funding timeline of 90 days or less

and can work on transaction sizes as small as $2 million.

Medium-Term FinancingMedium-term capital is one area in which bank direct financing plays a significant role for healthcare providers capital needs. As finance managers focus more on managing liquidity, employing strategies to take advantage of favorable medium-term capital markets help minimize cash outlay for ongoing capital requirements. Typically, medium-term tenors fall in the three- to 10-year range and are appropriate for a variety of projects related to equipment acquisition, IT infrastructure (electronic medical records projects), energy efficiency improvements or medical transportation such as ambulances and helicopters.

Medium-term capital solutions are loaded with features that healthcare entities enjoy; primarily, financial decision makers appreciate the ease to market, speed to market, lower fees and expenses, and fixed-rate financings.

By Shannon ClouseSenior Vice President, Healthcare Finance

Bank of America Merrill Lynch

Master Document FinancingOften times a bank direct structure can be easily set up to accommodate future draws under the initial master documentation. Healthcare providers enjoy the flexibility in funding timelines, efficiency in the legal expense process and ready access to capital when unexpected financing needs call for a quick turn-around for capital.

In a master document financing scenario, a healthcare entity executes a master contract up front and then takes down various financings as schedules under the master. The schedules are structured to match the useful life of the equipment that is being financed -- for example, IT hardware on a three- to five-year term and energy or aviation equipment up to 10years.

Performance Contract FinancingAcross the country, healthcare entities are engaging in energy-efficiency retrofitting to replace their facilities’ aged infrastructure with efficient, new systems. While these green initiatives produce material cost savings over time, significant upfront investment is required.

Procuring capital to replace systems can be challenging for hospitals. The reality is that often these retrofit projects are born of necessity: for example, a hospital’s 25-year-old boiler nearing breakdown must be replaced.

Performance contract financing through bank direct tax-exempt lending can be an effective way to procure capital for energy-efficiency initiatives without tapping into capital resources. It is a proven, savings-based model that enables healthcare entities to acquire assets and finance those assets by virtue of the savings that are generated by the financed initiatives. These projects can sometimes go beyond cash-flow neutral to cash-flow positive.

How does the performance contract process work? Healthcare entities solicit proposals from energy service companies (ESCOs), which conduct an energy audit to identify opportunities to improve facilities. The focus is on electricity, lighting, water, cooling and building control. Once the healthcare entity selects an ESCO, an agreement is struck between the two and the ESCO

Alternative Financing: Exploring New Ways

for Hospitals to Finance Projects and

Green Initiatives

then performs the work, which is often financed by a private lender. Often the contract includes a savings guarantee.

ConclusionHealthcare entities seeking medium-term capital alternatives are tapping a funding source that fills the gap between short- and long-term financing, helping them manage their financial positions more effectively.

For those considering alternative financing, it is advisable to find a lender that can deliver on multiple fronts. Examine factors beyond the upfront structure and rates, including everything from origination, credit analysis and documentation to servicing. Also important is a lender’s longevity in terms of its ability to weather market challenges and provide consistent solutions into the future.

“Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, leasing, equipment finance, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., all of which are registered broker dealers and members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. ©2013 Bank of America Corporation.

For those considering alternative financing, it is advisable to find a lender that can deliver on multiple fronts. Examine factors beyond the upfront structure and rates, including everything from origination, credit analysis and documentation to servicing. Also important is a lender’s longevity in terms of its ability to weather market challenges and provide consistent solutions into the future.


Feedback. o Work Flows that automatically adapt to changes in reimbursement patterns. o Automates entire work steps. o Work flow with checklists to ensure work is performed optimally on both Front-End and Back-End. o Pre-Service and Point of Service Workflow with alerts based on rules and actual denial outcomes. o Event-driven Denial Follow-up Work flow based on historical denial behavior.

This thorough and data-driven approach will move the management of the claim denials to the Front-End and allow for the transformation from Denial Management to Denial Avoidance.

For more information on how to transform your operation from managing denials to avoiding them by intergrating the Pre-Access processes please contact Avadyne Health. www.avadynehealth.comSteve Chrapla is Director of 3rd Party Solutions for Avadyne Health and a member of the First Illinois HFMA Chapter. He can be reached at (847) 395-7655.

Denial Management has long been identified as the central process to improve cash flow, as well as reduce accounts

receivable and write offs, through the management of rejected claims. While this process has been a valuable endeavor over the years, it has been built on the premise that denials are inevitable, and re-work is simply an integral part of the work flow.

Now is the time to establish a more effective approach -- eliminate denials, or at least dramatically reduce them; the ultimate way to do this is at the beginning of the process: Pre-Access, and the front end of the Revenue Cycle.

To begin with, there must be recognition that the back end/patient accounting department is not accountable for denials. While employees in this area re-process the claims, file the appeals, and generate the resulting cash flow, true accountability for a denial resides with the source of the information represented on the claim. Only when these data sources are scrutinized and

improved can a denial avoidance program become truly effective. All claim information comes from other source-departments such as:

• admitting physician, • scheduling, • registration, • clinical documentation• and many others.

These departments, along with the systems that support their functions, are ultimately accountable for denials; therefore, an analysis of their role in creating denials must be the cornerstone of any effective denial avoidance program.

To put things in full perspective, you must identify the true magnitude of the denials. That means measuring not only how many denials occur, but also the reasons behind the denials: identify the root cause.

To measure the true volume of denials, we must account for all claims that are rejected or fail to pass billing system edits. It is critical to avoid measuring

only those denials that result in a write off. Denied claims that are re-processed and eventually get paid still need to be accounted for because they required some type of re-work and consume valuable personnel resources. The objective to capturing the true denial rate or volume is to monitor every claim that did not pass an edit, either within the provider’s billing system, or within the payer’s system, or was an actual claim rejection by the payer. This approach is called the “First Pass Denial” rate (FPD).

Measuring (for the most recent 90 day period) the number of claims that failed an edit or were rejected, then dividing that by the total number of billed claims during the 90 day period, yields the most effective way to capture all claims that require additional handling to get the claim paid.

When you measure this monthly, it provides you with a true FPD rate that can be assessed without being influenced by case mix or dollar-amount of the claim.

Understanding the reasons behind the denials, the claims failing to pass billing edits, or payer rejections is also crucial. To get to the root causes, you need to track the specific reasons the claims are delayed or not getting paid. This analysis includes reviewing claim submission reports to identify edit failures as well as payer denial reports and claim EOB’s. In addition to EOB’s that are zero-pays you must also review underpayments, since they may represent a portion of a claim being denied.

Following the 80/20 rule, you now know where to focus your attention. The key is to design your solution to the root cause at the very beginning of the process and that is where your Front End applications need to be integrated into the solutions. Identify claims failing edits or payer rejections for reasons such as:

• Patient identifier information is incorrect.• Patient coverage not available.• Authorization or pre-certification not received.• Referrals required from primary care physician.• CPT, ICD-9 codes or modifiers not properly populating the claim.• Payer contract requirements not followed.• Non-covered services.

Once root causes are identified, the next step is to bring the area responsible for the data elements into the resolution process on a realtime

basis (or as close to real-time as possible). This information can then be used to design process improvements, procedures, and work flows that will prevent future denials. It is critical that the re-design processes are structured to be flexible– flexibility allows for ongoing evaluations and solution maximization to compensate for events such as regulatory changes and new payer contract requirements.The design of a Denial Avoidance Program must consider the following elements:

• An approach to address both current and retrospective denials from both Front-End and Back-End processes.• Data and Root Cause identification and analysis of the denials. • Dashboards and ongoing detailed reporting need to have at minimum: o Denial rates as well as dollars written off. o Denials per avoidance/ service area. o Benchmarking of rates and dollars to goals.• Standardized identification of denials with feedback at every organizational level and clear identification of responsibilities for resolution to include all departments. Access /Coding/UR/Contracting/Reimbursement /Clinical/etc.• Pre and Point of Service process re-designed that is perpetually optimized to prevent future denials.• Technology support and work flow management to drive processes and improvements to include: o Permanent Back-to-Front

Denial Management Moves to Front End

Denial AvoidanceBy Steve Chrapla, CHFP

Director 3rd Party SolutionsAvadyne Health

First Pass Denial Rate Calculation

# of denied claims in a 90 day period / # billed claims in same 90 day period = FPD Rate

Calculate and track FPD Rate monthly based on rolling 90 day period


Thinking about Merging? Considerations for Your To-Do List By Jonathan Randolph, Vice President

Lancaster Pollard

Spurred on by growing economic challenges, many remaining independent community hospitals are currently

considering some degree of affiliation with a larger health care system. This is not surprising as hospital mergers and acquisitions have steadily been increasing since the recession of 2007-2009.

According to Irving Levin Associates, there were 51 merger or acquisition deals in 2009, 75 in 2010 and 86 in 2011 – the highest number in the past decade. Moody’s Investors Service reported in March 2012 that this consolidation trend is expected to continue.

Drivers of Hospital ConsolidationThere are several factors driving the pace of mergers and acquisitions for independents: volume growth constraints; struggling local job economy; continuing cuts to Medicaid and Medicare reimbursements—two major payer sources; rapidly changing technologies; other hospital consolidations in the regional market; limited geographical growth opportunities; poor payer mix; and difficulty in accessing capital to make

needed improvements. Any one of these market forces would put enough pressure on a hospital’s revenue base to push it toward affiliating with a bigger, more financially stable hospital or hospital system.

Furthermore, the Patient Protection and Affordable Care Act– ACA for short – is expected to push independents to strongly consider an affiliation with other hospitals as health care reform is phased in. Its implementation for hospitals is projected to raise the costs of doing business (increased compliance) and to reduce revenues (reimbursement cuts), making it more difficult for smaller hospitals to remain autonomous. Additionally, by mandating new delivery models to reduce health care costs and improve quality, the ACA will encourage hospital consolidation by rewarding integrated health care systems that can achieve these goals.1

The Need To AffiliateWhile the economic pressures cited above are external drivers, there are several internal indications that may signal when an independent hospital should consider aligning itself with another hospital or hospital system. When conducting an assessment of a

stand-alone hospital’s ability to remain independent, leadership should focus on some of these key indicators:

• Ongoingfinancialproblems,including a strained balance sheet and an unfavorable cost position hindering the ability to reduce expenses to stay competitive

• Limiteddebtcapacitytomeetcurrent or long-term capital needs

• Inabilitytoattractandretainphysicians, in both primary care and key specialties

• Reductionintotalmarketshareanda lack of profitable service lines

• Poorclinicalperformance• Deterioratingutilizationand

financial performance trends• Weakenedpositioninnegotiating

rates with insurers• Abilityandwillingnesstopursuenew

opportunities.

Once the assessment has been made and leadership believes the hospital can no longer remain independent, it is not always a “merge or perish” situation. There is a range of affiliations that a hospital’s leadership can consider from a fairly simple cooperation agreement between hospitals for some mutual benefit, such as group purchasing, to

an acquisition of one facility by the other in which all control is surrendered to the acquiring facility. In between are management agreements, clinical affiliations and lease transactions – each one a formal partnership with legal and financial commitments by each party.

It is important that board members and senior management understand what is involved with each type of affiliation – the resulting legal, governance and financial aspects of the transaction structure under consideration. While the idea of partnering may seem to be the obvious decision, the benefits of any type of affiliation must be weighed against the loss of independence, local control and flexibility.

Do Your Due DiligenceOnce a decision is made to move forward with some level of affiliation, the community hospital needs to find a suitable partner. The first step is to determine the goals of the partnership and the desired characteristics of the larger hospital or health system. A chief consideration for any independent looking to partner with a larger hospital or health system is to achieve financial stability. Ideally, the potential partner should have a strong credit rating, a stable credit profile and a willingness to support and invest in the smaller facility.

The next step for the independent is to try to rectify any problems that would deter potential suitors regarding any financial (bond issuances, pension liabilities, capital leases, interest rate swaps and other debt) or regulatory liabilities. It also needs to provide a complete compliance plan, detailed histories of accreditation reviews, Medicare audits, environmental surveys and financial and billing audits.2

Financial ConsiderationsWhile due diligence is being undertaken, a comprehensive balance sheet analysis along with an evaluation of the debt instruments of both entities needs to be completed. Special attention

should be given to the documents of any existing financings that may be in place with either party. Some of the provisions that might need to be addressed include the following:

• Redemptionordefeasance–Willthe documents require that a current financing be either redeemed or advance refunded through a defeasance? If yes, how will this impact or hinder the transaction? Redemption is less costly; however, if there is a lock-out period on the bonds, then defeasance will be required.

• Membershipsubstitutionorassettransfer – Will a trust indenture allow a substitution in membership or transfer of assets? Leadership should know the requirements that need to be met in order to allow for this.

• Transferofassetsoutoftheobligatedgroup – How will the new parent be supported financially?

• Changeincontrol:Althoughmostdebt structures have broad provisions for mergers and acquisitions, they often require prior approval from bondholders or lenders prior to the transaction. How does a change of control affect the hospital being acquired?

• Approvalsandconsents–Whatparties are required to approve changes to these provisions? Typically the trustee, who serves on behalf of the bondholders and issuing authority, may be required to approve any changes.

• Restrictionsonadmissionintotheobligated group – Bond documents address how an asset or entity may become a member of an obligated group. An obligated group allows organizations to combine assets or entities to create a single entity that becomes jointly and severally liable for debt.

• Interest-ratemitigationcontracts–Swaps, caps or collars may impact the decision or timing of the transactions.

Additionally, hospitals must also evaluate the impacts of a merger on their individual investment portfolios. The best way to protect investments is to have a highly liquid, well-diversified portfolio. The acquiring system also may choose to liquidate the investment portfolio to pay down existing debt, or if existing debt is not paid down, liquidated investments are re-invested by the acquiring institution. In the case where a merger is between two smaller hospitals, the investment strategy should be reviewed before, during and after the merger. To stabilize, ensure liquidity and in anticipation of a very different debt structure of the resulting entity, they should introduce a new strategy for the risk profile as determined by the new entity’s financial strength and risk propensity of its board members.

Here’s the ThingHospital affiliations, particularly mergers, can be challenging. During the process it’s important to have a certain degree of alignment in terms of mission, strategies, services and culture plus a shared understanding of what facility will assume the predominant role after the merger.

Deals often take time and are slow to coalesce. At the same time, market conditions can change rapidly, so hospitals looking to partner must be nimble and react quickly to new realities. Transparency, flexibility, attention to details and open communications with stakeholders will make the transition from being an independent to being a health system…not exactly easy, but easier.

1 “Current Trends in Hospital Mergers.” Thomas C. Brown, Jr., Krist A. Werling, Barton C. Walker, Rex J. Burgdorfer and J. Jordan Shields. www.hfma.org. March 1, 2012.

2 “Outlook for Independent Community Hospitals: Uncertain.” Scott Clay and Peter Bruton. hfm Magazine. Nov. 1, 2012.


WELCOME NEW MEMBERS - Lone Star

Drake Alldaffer Mid-Market Sales RepresentativeZirMed, Inc.

Alexander Benavides Sr. Financial AnalystUT M.D. Anderson Cancer Center

Letichel Blancett Regional Managed Care ManagerIntrafusion

Paula C. Clutter Assistant ProfessorUTHSCSA School of Nursing

Lynda L. Evans Senior Director, Physician Patient AccountsAurora Health System

Sam Fulton Director - Revenue Cycle Physician PracticesSt. Joseph Regional Health Center

Marlene Gonzalez Director Patient Access ServicesThe Methodist Hospital

Harry L. Hendrix Chief Operating OfficerCapitol Anesthesiology Association

Timothy R. Howard Chief Financial Officer

Isabel S. Mahmood Medical Plan Program ManagerCHRISTUS Health

Shelley Muhs Sr. Consultant/Account ManagerNearTerm Corporation

Melissa Roca Director, FinanceMethodist Health Center

Chalonda L. White Patient Business Services DirectorMemorial Hermann Healthcare System

Perry D. Wiggins VP, FinanceThe Right Step Behavioral Health

WELCOME NEW MEMBERS - South TexasDavid ZamoraAccounting AssistantGreater SA Emergency Physicians

Mark BowenController/CFORevenue Cycle, Inc.

Deborah Kendall-GallagherAssistant ProfessorUTHSC San Antonio

Albert PazDirector of AccountingChristus Santa Rosa Health Care

Jeff KnodelChief Financial OfficerCentral Health

Brianna MerrillBusiness AnalystPublic Consulting Group

WELCOME NEW MEMBERS - Gulf Coast

Shannon StahlVP, Sales, Mktg & RecruitmentJackson Surgical Assistants

Juan GarzaVP of Finance & DevelopmentCentral Health

Samantha Block Public Consulting Group

Bradley Henderson Chief Operations OfficerMedpoint Medical

John E Morkavich, MS Director Materials ManagementCHRISTUS ST. MICHAEL HEALTH SYSTEM

Chris Watt Vice President FinanceRheumatology Associates

Kandi Kraner Financial AnalystTitus Regional Medical Center

Lori OHaver Division Director, Revenue Cycle1405 Caruth Ln

Seth Herrick Financial Reporting ManagerMedical Center Arlington (HCA)

Ben Gerhold Senior Director, Audit OperationsMargin Recovery International, LLC

Renee Mauldin Revenue Integrity AnalystTexas Health Resources

Baylor Health Care System Awarded 2012 MAP Award for High Performance

The Healthcare Financial Management Association (HFMA) announced the winners of the MAP Award for High Performance in Revenue Cycle this past June at ANI: HFMA’s 2012 National Institute in Las Vegas,

NV. Winners were recognized at ANI and their achievements shared with three major rating agencies—Moody’s Investor Services, Standard and Poor’s Corp., and Fitch Ratings.

HFMA’s MAP Award for High Performance in Revenue Cycle recognizes healthcare organizations that demonstrate excellence across all the MAP Key indicators of revenue cycle performance. Winners show innovative and effective revenue cycle practices that deliver sustainable financial performance. More than 160 organizations downloaded the application for this year’s award.

Joseph J. Fifer, HFMA’s President and CEO, said, “Winners of the MAP Award for High Performance demonstrate leading revenue cycle practices that set the bar for the industry and, ultimately, enable better patient care.”

Baylor Health Care System hospitals in Irving, Ft. Worth, Waxahachie, Grapevine, Plano and Jack & Jane Hamilton Heart & Vascular in Dallas were among the winners of the 2012 MAP Award for High Perfor-mance. Phillip McCollough, President of Lone Star Chapter added, “We’re delighted to recognize Baylor Health Care System as a local hospital who has met the rigorous standards required to meet this accom-plishment. Join us in celebrating this honor and taking a moment to learn, from our neighboring hospi-tals, best practices that have helped them achieve success.”

Please join us in congratulating our local winners. To learn more about the MAP Awards, including how to apply for the 2013 MAP Award for High Performance (deadline: Feb. 28, 2013), go to hfma.org/

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2011-2012 CHAPTER SPONSORS

Gold

SIlVERBanc of America Public Capital CorpBKD, LLPCBE Group, Inc.Cleverley + AssociatesEmdeon Executive Health ResourcesFirstsource SolutionsHarris & HarrisHCFS, Inc.Healthcare Management SystemsHospital Receivables Service, Inc.M2SYS TechnologyMacquarie Equipment FinanceParagon Revenue GroupParallon Business SolutionsRegions BankResource Corporation of AmericaRevClaimsSPi HealthcareThe SSI GroupTransUnion LLCTriage Consulting Group

BRonzEAmerican ExpressAvadyne HealthCirus Group, Inc.CNA HealthProGrant & Weber Texas, Inc.MASH, Inc.PMAB LLCPNC HealthcareProtivitiWinthrop Resources

LONE STARGOLD

SILVERBKD, LLP CBE Group, Inc.CHRISTUS HealthCleverly + AssociatesCost Control SolutionsCymetrixEmdeonExecutive Health Resources Firstsource Solutions USA LLC Harris & HarrisHCFS, Inc.Healthcare Management Systems Hospital Receivables Services, Inc.Jackson WalkerM2SYS TechnologyMemorial Hermann System Services Parallon Business SolutionsRegions BankResource Corporation of AmericaRevClaimsSPi HealthcareThe SSI GroupSullins Johnston Rohrbach & MagersTransUnion Triage Consulting Group

BRONZEWinthrop ResourcesThe Outsource GroupSt. Luke’s Episcopal Health SystemProtiviti PNC HealthcarePMAB LLCParrish ShawMethodist Hospital SystemMASH, Inc.Grant & Weber Texas, Inc.CNA HealthProCirus Group, Inc.Avadyne HealthAmerican ExpressAccretivePAS®Abbott Diagnostics

GULF COASTGOLD

SILVERBKD, LLPCleverly and AssociatesExecutive Health ResourcesEmdeon Firstsource SolutionsHCFSHealthcare Management SystemsHospital Receivables Service Inc.M2SYS TechnologyParallonRegions Financial CorporationRevClaimsSPi HealthcareTransUnionTriage Consulting Group

BRONZEAmerican ExpressAvadyne HealthCirus Group, Inc.CNA HealthProGrant & Weber Texas, Inc.MASH, Inc.PMAB LLCPNC HealthcareProtivitiWinthrop Resources

SOUTH TEXASBrenda Cox, FHFMA, CPC, MT ASCP and Region 9 ExecutiveThe South Texas Chapter is very excited Brenda Cox will be represent-ing Region 9 as Regional Executive in the 2014-2015 membership year. Brenda will serve as the link between Region 9 chapters and our national HFMA board.

Region 9 requires a Region Executive to be an advanced member or national life member of HFMA in good standing and they must have served at least two years as an elected chapter officer including a

term as chapter president.

Brenda joined the South Texas chapter in 2003 and achieved Fellowship status in 2008. Bren-da is a current member of HFMA’s National Advisory Council and a recent past president of the South Texas HFMA chapter. Brenda is currently the South Texas Chapter contact for the devel-opment of a new Texas state-wide webinar program. Brenda’s HFMA resume includes: • 2011-2013 National Advisory Council member• 2010-2011 Chapter President• Fall 2010 Chapter Certification Advisory Committee member• 2008-2009 Chapter President Elect and Program Chair• 2007-2008 Chapter Secretary and DCMS contact• 2005-2008 Board of Directors, Certification Chair

To be successful as an RE, an individual must be knowledgeable about both Chapter and As-sociation matters and have demonstrated abilities as an HFMA leader through recent chapter and/or national involvement. The individual must be genuinely interested in future involvement in national leadership, have the ability to make a commitment to meet the responsibilities of the position, and be a knowledgeable and astute professional in health care financial management.

Congratulations Brenda!!! We look forward to a spectacular future under your leadership!

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HFMA MISSION STATEMENT

HEALTHCARE FINANCIAL MANAGEMENT ASSOCIATION MISSION STATEMENT

VISIONHFMA’s vision is: “To be an indispensable resource for healthcare finance.”

PURPOSE STATEMENTTo define, realize and advance the financial management of health care by helping members and others improve the business performance of organizations operating in or serving the healthcare field.

QUALITY STATEMENTQuality is the foundation of the association and the keystone of its efforts to ensure member and customer satisfaction.

HFMA’S OBJECTIVE IS TO:Consistently provide services and products that meet the quality expectations of its members, customers, and employees.

Actively pursue a program of continuous quality improvement that enables employees and volunteers to do their jobs right.

Quality is a major, strategic association goal. It lies at the heart of everything done for members and customers. HFMA strives continu-ally to improve the quality of services and products offered, the processes and procedures used to produce them, and the manner in which they are delivered.

The Lone Star Chapter - Chartered 1959 - More than 900 members throughout North Texas

CALENDAR OF EVENTS

SOUTH TEXAS CHAPTERMay 23-24 – Annual State Institute, South Padre Island, TX

GULF COAST CHAPTERMarch 15 – Monthly Luncheon MeetingApril 8 – “Mad Hatter” Charity Golf Tournament

LONE STAR CHAPTERMay 20-21 - Lone Star Major League Institute at Ranger Stadium

20 TEXAS VOICE

HFMA Lone Star ChapterP.O. Box 631206Houston, TX 77263-1206

SAVE THESE DATES!HFMA Texas State Conference 2013March 24-26, 2013Hyatt Regency| Austin, Texas

Mark your calendars for the 7th Annual HFMA Texas State Conference.

texas voice - lonestar hfmalonestarhfma.org/2016/wp-content/...2013lowres.pdf · sponsorship chair...

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