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THE UNIVERSITY OF MINNESOTA HOSPITALAND CLINIC
BOARD OF GOVERNORS
FINANCE, PLANNING AND DEVELOPMENTCOMMITTEE
JULY 28, 1993
THE UNIVERSITY OF MINNESOTABOARD OF GOVERNORS
FINANCE,PLANNING AND DEVELOPMENT COMMITTEE
Wednesday, July 28, 199312:30 - 2:00 p.m.
University Hospital Board Roo~, 8-106
AGENDA
I. Opening of Meeting and Approval ofMinutes of Finance, Planning andDevelopment Committee Meeting held6/23/93 (Approval) pp. 1 - 3
Nellie Johnson
II. Preliminary Year-End FinancialStatements(Information) (To be Distributedat Meeting)
III. Quarterly Capital Expenditure Report(Information) (To be Distributed atat Meeting)
IV. Fourth Quarter 1992-93 Bad Debts(Endorsement/Consent) pp. 4 - 19
V. 1992-93 Capital Budget(Approval) pp. 20 - 31
VI. Creation of a New Not-For-ProfitCorporation by UMHC (CLINICO)(Approval) pp. 32 - 35
VII. External Relations Update(Information)
Clifford Fearing
Clifford Fearing
Clifford Fearing
Clifford Fearing
Greg Hart
THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICBOARD OF GOVERNORS FINANCE,
PLANNING & DEVELOPMENT COMMITTEEJune 23, 1993
MINUTES
ATTENDANCE:
Members: Leonard BieniasEdward Ciriacy, M.D.Cliff FearingMaria GomezStephen HansenGreg HartWilliam Jacott, M.D.Nellie JohnsonArthur KyddJohn MorrisonRoger Paschke
Guests:
Staff:
Michael Fay, Board Member
Beth BeyerAl DeesMark KoenigNels LarsonShannon LorbieckiTed Thompson, M.D.Mary Ellen Wells
CALL TO ORDER:
The meeting of the Finance, Planning & Development Committee wascalled to order by Nellie Johnson, Committee Chairperson, onJune 23, 1993 at 12:32 P.M.
APPROVAL OF THE MINUTES:
The Board of Governors Finance, Planning & Development Committeeseconded and passed a motion to approve the Finance, Planning &Development Committee minutes of the May 26, 1993 meeting aswritten.
MAY 31, 1993 FINANCIAL STATEMENTS:
Mr. Nels Larson reported to the Committee that for the month ofMay, inpatient admissions totaled 1,382 which was 5 less than
1.
MAY 31, 1993 FINANCIAL STATEMENTS (CONT.):
budget; average length of stay was 7.2 days; patient days totaled10,486 which were 607 days below budget.
Outpatient encounters for the month of May totaled 32,108 whichwas 4.9% more than budgeted volumes. While some of this variancereflects real increases in activity, a portion of it is due to achange in the reporting systems for outpatient encounters.
Mr. Larson indicate that the Hospital's Statement of Operationsshow revenues being greater than expenses by $4,601,000 and anunfavorable variance from budget of $1,635,000. Operatingexpenditures through May totaled $282,047,000 and were 1.7% belowbudgeted levels.
1993/94 CAPITAL BUDGET:
Greg Hart presented to the Committee, for approval, the CapitalBudget for the 1993-94 fiscal year; the $8.8 Million in recurringcapital expense. After much discussion regarding the levels ofexpenditure on capital and strategic importance, the Committeeasked staff to return the Capital Budget in July, consistent withthe strategic plan.
~ CREATION OF A NEW NOT-FOR-PROFIT CORPORATION:
Mr. Fearing presented the proposal to create a new not-for-profitcorporation which will manage and govern clinics and otherhealthcare organizations which are acquired and/or managed byUMHC.
Specific approval for financing will be requested from the Boardof Governors when necessary for working capital loans oracquisition activities.
This item was presented to the Committee for information and willbe brought back for approval at the July Board meeting.
SPECIAL CAPITAL PROJECT:
Mr. Al Dees and Ms. Mary Ellen Wells presented a proposal topurchase a computer system for outpatient registration,scheduling, and physicians' billing. Following a lengthydiscussion the Board seconded and passed a motion to approve thepurchase of a registration, scheduling and professional feebilling system contingent on the UMCA Board of Directors approvalof a 7 year lease of this billing system and portion of thecomputer required to operate the system for the current estimatedannual rate of $404,000.
2.
RIVERSIDE OB/NICU PROGRAM:
Mr. Hart presented the Riverside OB/NICU Program proposal to theCommittee. A motion was made and seconded to approve theRiverside OB/NICU Program.
A motion was seconded and passed to convene a non-public sessionof the Board of Governors Finance, Planning and DevelopmentCommittee. A non-public session of the Committee was called at1:35 p.m. to discuss specific marketing strategies. There beingno further discussion, the June 23, 1993 meeting was adjourned at2:05 p.m.
Respectfully submitted,
Beth BeyerRecording Secretary
3.
UNIVERSITY OF MINNESOTA
The University ofMinnesota Hospital and Clinic
July 28, 1993
Harvard Street at East River ParkwayMinneapolis, MN 55455
,
TO: UMBC Board of Governors Finance, Planning andDevelopment Committee
FROM: Clifford P. FearingSenior Associate Director,
SUBJECT: Bad Debts - Fourth QuarterFiscal Year 1992-93
The total amount recommended for bad debt for Hospital and Clinicaccounts receivable during the fourth quarter of 1992-93 is$1,133,359.85 represented by 1873 accounts. Bad debt recoveriesduring the period amounted to $11,658.75 (68 accounts) leaving anet charge-off of $1,121,701.10.
The net bad debts of $1,121,701.10 for the quarter were 1.2% ofgross charges. This compares to a budgeted level of bad debts of.86% ($830,000).
For the fiscal year, the net bad debts to-date of $3,548,856.87were .93% of gross charges. This compares to a budgeted level ofbad debts of .86% ($3,298,000).
A statistical summary is attached along with a detaileddescription of losses $10,000 and recoveries $200 for each monthof the first quarter.
Along with the quarter attachments, we have also included fiscalyear statistical summary and a breakdown of bad debts byresidence and admitting clinical services.
CPF:bab
Attachments
4.
Total#of Total # of
Accounts Amount Accounts
Anesthesiology 0.00 0Clinical Research 2,112.22 4 5,731.91 9Dentistry 0.00 0Dennatology 0.00 0Family Practice 0.00 0
OB 168.02 1NB 0.00 0
GYN 955.05 2 5,732.04 8Pediatrics 1,966.73 1 1,966.73 1
Hemotology 761.9 1 12,272.46 5GYN-Oncology 52,012.84 12 132,271.53 56Medicine-General 81,155.28 3 102,156.76 24Medicine-Blue 5,351.63 5 48,415.11 30
Green 1,067.20 2 2,066.22 7Masonic (One) 3,984.14 7 18,746.61 22Purple 13,024.12 6 41,475.95 14Red A 2,145.40 2 54,190.23 7RedB 0.00 0Rose A 2,275.47 2 4,678.36 9RoseB 580.00 2 1,553.56 4White A 15,588.23 10 32,120.59 33WhiteB 3,936.59 5 39,602.78 33
~WhiteC 341.80 1 6,017.70 11Yellow A 3,151.25 10 63,255.26 41Yellow B 13,266.62 5 24,215.00 21
Neurology 18,189.08 8 47,808.66 35Neuro-epilepsy 1,316.55 1Neurosurgery 79,731.59 9 192,553.96 42New Born-General 1,519.65 3 2,924.44 7Obstetrics-General 18,546.40 6 44,533.69 21
-Midwife 0.00 0Ophthalmology 81.87 1 10,808.50 17Oral Surgery 5135.28 1 12,784.71 5Orthopaedic Surgery 56,041.25 18 114,611.20 58Otolaryngology 1,048.42 2 8,823.94 14Pediatrics-General 17,771.55 5 57,322.76 21
BMT 6,539.12 3 6,539.12 3Cardiology 54872.44 1 56,923.36 6Dentistry 0.00 0Dermatology 0.00 0Gastro-Intestinal 233.65 2Hematology Oncology 20,778.54 8Immunolog 2,286.91 3InfDis 1,146.90 2Neonatology 1,809.93 1 28,598.85 7Neurology 3,957.38 2 4,495.78 5Neurosurgery 7,062.77 8Opthalmology 1,232.50 3
~Orthopaedics 3782.38 1 4,666.98 2Otolaryngology 448.78 2 448.78 2Pulmonary 4,329.82 6 4,329.82 6Renal 5,985.75 1 5,985.75 1
C:\123\RPTlBD\SVC-Q493.WKI jmb5.
Total#of Total # of
Accounts Amount Accounts
Surgery Green 3,566.34 4Surgery Orange 876.90 2Surg. Transplant 1,515.94 2 92,572.15 9Urology 2,770.68 3 10,689.70 13
Physical Med. & Rehab. 32,229.84 5 39,175.24 16Psychiatry-Child 532.20 I 14,069.94 4
-Adult 14,606.19 17 176,510.28 56Radiology 1,478.15 4 2,893.19 7Surgery-Blue 78,959.80 9 195,311.58 82
Orange 923.00 2 15,024.11 7Purple 8,789.02 8 37,564.49 36Red 9,484.27 5 36,539.59 26White 907.21 3 58,173.24 27
Therapeutic Radiology 0.00 0Urology 22,240.63 7 54,364.00 23Unknown 2,936.71 2 545,457.45 3,596Outpatient 385,076.53 1,794 909,505.56 4,145
Total 1,045,917.33 2012 3,427,148.70 8668
Medicare Bad Debt* (26,688.36) (146) (1l7,543.03) (663)Legal Settlements 36,859.98 3 145,255.59 12
~ad Debt Agcy Uud $50 99.91 I 99.91 I. ad Debt - Med NC Chgs 77,170.99 3 140,063.83 12
Grand Total 1,133,359.85 1,873 3,595,025.00 8,030
Recoveries (11,658.75) 68 (46,168.13) 235
Net Total 1,121,701.10 1,873 3,548,856.87 8,030
• N01E: Medicare Bad Debts are included in the StateBreakdown but are no longer included as a Bad Debt.
C:\123\RPT\BD\SVC-Q493.WKl jrnb 6.
Cf Fourth Y-T-D TotalQuarter #of Total # of
State Amount Accounts Amount Accounts
Alabama 4,111.76 8 4,718.73 11Alaska 1,981.75 3 2,037.38 4Arizona 4,868.43 9 10,398.07 28Arkansas 589.37 2 6,042.95 7California 1,008.50 6 8,975.14 39Colorado 1,703.23 9Connecticut 288.51 5Delaware 110.66 3Dist. ofColombia 837.10 1Florida 2,515.40 12 8,871.88 64Georgia 8.50 1 568.28 8Hawaii 180.46 1Idaho 2,214.12 7Illinois 72,660.66 18 78,823.55 42Indiana 5,089.67 27Iowa 12,637.75 6 17,719.49 36Kansas 349.16 3 850.64 8Kentucky 0.00 0Louisiana 273.50 2 1,043.06 8Maine 2,976.44 7
~Maryland 126.54 1 634.84 8.•..•.. 'Massachusetts 107.50 1 222.10 3
Michigan 15,086.80 12 17,352.06 30Minnesota 705,895.99 1,727 2,526,070.19 7,432Mississippi 2,278.04 8Missouri 6,411.80 15 15,100.28 34Montana 45,196.92 1 49,833.87 7Nebraska 5,557.15 6 12,519.20 10Nevada 21.50 1New Hampshire 271.37 2New Jersey 6,125.40 2New Mexico 863.66 4New York 6,642.67 6 16,809.74 34North Carolina 18,108.92 8 26,052.79 18North Dakota 33,425.65 20 63,560.39 81Ohio 9.58 1 154.58 3Oklahoma 7,353.38 17Oregon 61,388.05 6Pennsylvania 14,581.71 17Puerto Rico 23,027.07 4Rhode Island 189.50 1South Carolina 1,903.08 4 8,582.17 11South Dakota 23,889.04 28 189,195.69 182
C:\123\RP1\BD\ST-Q4-93.WKl jrnb 7.
t Fourth Y-T-D TotalQuarter #of Total #of
State Amount Accounts Amount Accounts
Tennessee 29,206.09 11Texas 3,204.23 3 10,053.57 18Utah 1,118.18 2 1,199.94 6Vermont 35.10 1Virginia 3,538.97 17 4,057.32 21Washington 235.32 2West Virginia 372.08 3Wisconsin 71,453.55 84 164,241.73 329Wyoming 0.00 0Out-of-Country 3,235.98 6 22,110.61 47
Total 1,045,917.33 2,012 3,427,148.70 8,668
Medicare Bad Debt* (26,688.36) (146) (117,543.03) (663)
Legal Settlements 36,859.98 3 145,255.59 12
Bad Debt Agcy Und $50 99.91 1 99.91 1
Bad Debt - Med NC Chgs 77,170.99 3 140,063.83 12
Grand Total 1,133,359.85 1,873 3,595,025.00 8,030
Recoveries (11,658.75) 68 (46,168.13) 235
'Net Total 1,121,701.10 1,873 3,548,856.87 8,030
• NOTE: Medicare Bad Debts are included in tbe StateBreakdown but are no longer included as a Bad Debt.
C:\123\RP1\BD\ST-Q4-93.WKI jrnb 8.
,L\ IVER5ITY OF ivl1 01 01E50TA
The Cniversity of.Hinnesota Hospital and Clinic
July 28, 1993
HalTanl SI/'eer ar F.asr Rner P,lrk\t <II
Jfinneapo/il. J1.V.'5-1.'5
TO:
FROM:
SUBJECT:
Board of Governors - Finance Planning & Development Committee
Clifford P. FearingSenior Associate Director
Report of Operations for the PeriodJuly 1, 1992 through June 30, 1993
The 1992-93 fiscal year for The University ofMinnesota Hospital and Clinic has shown a declinein inpatient admissions from 1991-92. At the same time, however, we experienced a continuedincrease in our outpatient encounters over prior year levels. Below is a brief summary of majorfactors that have contributed to our 1992-93 financial position.
Inpatient Census: Admissions for the 1992-93 fiscal year totaled 17,819 compared to 18,073for the previous year, a decrease of 254, or (1.4%). Patient days for the year totaled 132,188,down by 6,995 (5.0%) from 139,183 days in 1991-92. This decline was largely due to the drop inaverage length of stay from 7.7 days in 1991-92 to 7.4 days in 1992-93.
While we budgeted for a decrease in our inpatient census levels in 1992-93, our actual experiencein admissions for the year were 740 (4.3%) over budgeted levels. However, patient days werebelow budgeted levels as our average length of stay continued to decline. Admission levels inMedicine, Neurosurgery, Ophthalmology, Surgery, and Urology have decreased. Admissions inmost other areas increased slightly from the prior year or remained fairly constant. Some of thechanges in medical staff can be attributed to the decline in Neurosurgery and Surgery. Thedecline seen in Medicine was due to many of the cardiology patients being seen in an outpatientsetting whereas they previously had been seen on an inpatient basis. In addition we haveexperienced an overall decline in cardiology referrals. Competition from metropolitan areaproviders was the major reason for the drop in Ophthalmology and Urology.
Some of the geographical trends we have experienced over the last several years have continued.Admission levels from outside Minnesota have continued to decline. Offsetting the decline fromoutside Minnesota, was an increase in admissions from the ten county metro area. Outside themetropolitan area we saw an increase in admissions from Goodhue County (Red Wing). Morethan offsetting this increase was a significant decrease experienced in St. Louis County where wehave seen a decline primarily in cardiology referrals.
Outpatient Census: The Hospital's outpatient encounters showed an increase from 1991-92levels, going from 353,750 encounters in 1991-92 to 390,023 in 1992-93. This represents a
c
10.3% increase over prior year levels and a 10.7% increase (37,698) over the budgeted 1992-93total of 352,325. While most of the variance reflects real increases in activity, a portion of it(16,332) is due to a change in the reporting systems for outpatient encounters. The increase inencounters was primarily due to growth in Adult Psych, Masonic Day Hospital, Family Practice,and CUHCC activity. Areas that experienced decreases in activity include Emergency Room andEndoscopy. The new Services for Teens at Risk (STAR) clinic opened for business in the secondhalf of the 1992-93 and resulted in 618 new clinic encounters this year.
Census recap for the 1992-93 fiscal year:
1991-92 1992-93 1992-93 %Actual Budget Actual Variance Var
Admissions 18,073 17,079 17,819 740 4.3Avg. Lgth. of Stay 7.7 8.0 7.4 (0.6) (7.5)Patient Days 139,183 136,510 132,188 (4,322) (3.2)Percent Occupancy 67.2 66.7 64.5 (2.2) (3.3)Avg. Daily Census 380.3 374.0 362.2 (11.8) (3.2)Outpatient Encounters 353,750 352,325 390,023 37,698 10.7
Operations - Revenue: Patient care revenue for the 1992-93 fiscal year totaled $380,162,000and is an increase of $9,655,000 (2.6%) over the 1991-92 fiscal year. The increase in revenue isapproximately $1,810,000 below budget and results in an overall unfavorable variance of(0.5%).
Routine revenue totaled $103,052,000, and represents an unfavorable variance of approximately$3,016,000. This variance is due to the impact of a reduced average length of stay. Ancillaryservice revenue totaled $277,110,000, and was approximately $1,206,000 (0.4%) above budget.The overall ancillary variance is due to the increase in outpatient activity levels. Inpatient revenueper admission averaged $16,228 compared to the budgeted average of $17,556. Outpatientrevenue per encounter averaged $233 which was equal to the budgeted revenue of$233.
A portion of the reduced inpatient ancillary revenue is the result of efforts within the strategicplanning initiative to reduce ancillary service utilization wherever it is clinically appropriate.Clinical laboratories experienced a reduction in revenue due to a coordinated effort with thephysicians to decrease tests ordered. This effort has especially been effective with transplantpatients. Phannacy experienced a reduction in revenue from budget as a result of several newdrugs not being available in the marketplace as anticipated and significant efforts to substituteexpensive drugs with lower cost drugs.
Deductions from Charges: Deductions from charges totaled $101,172,000 for the fiscal yearand represent an overall unfavorable variance of $2,260,000. The overall variance relates toHMO/pPO discounts and billing adjustments, .
The unfavorable variance in HMO/pPO discounts of $3,833,000 is primarily the result of theincrease in transplant business that has increased our deductions by $2,500,000. Otherunfavorable variances were primarily the result of an increase in the average charge per case withV-Care and Affordable Health Care patients along with increased business with Medica-Choice.Minor favorable variances were noted with Blue Cross and Blue Shield and Medica-Prime.
Billing adjustment write-offs were over budget by approximately $2,746,000 and was the result ofout-of-state welfare write-offs being greater than anticipated and a collective effort to clean upaged accounts receivables.
Other Operating Revenue: Other operating revenue totaled $27,675,000 for the 1992-93 fiscalyear, an increase of $2,463,000 (9.8%) from the prior year total of $25,211,000. The increaseover prior year primarily reflects the reinstatement of the one year reduction of Operations andMaintenance appropriations from the Vniversity. Other operating revenue is $164,000 (6%)above the budgeted revenue of $27,512,000, and reflects minor variances in several of therevenue categories.
Operations - Expenditures: Operating expenses for the 1992-93 fiscal year totaled$307,723,000 and was an increase of $809,000 (0.2%) over the 1991-92 fiscal year. Expenseswere approximately $5,434,000 below budget and resulted in an overall favorable variance of1.7%.
Personnel costs (salaries and fringe benefits) were over budget by $1,982,000. During the1992-93 fiscal year, we averaged 3,533 FTE's, which was a reduction of 184 FTE's from the1991-92 fiscal year and 50 FTE's greater than the budgeted total of 3,483. Reductions in FTE'sfrom 1991-92 were experienced in almost all departments. While we ended the 1992-93 fiscalyear with staffing levels below targeted levels, it took us longer than anticipated to get there dueto higher than expected census levels. As a result, we experienced the unfavorable variance insalary and fringe benefit costs.
Supplies and expense directly related to patient care activities were $6,385,000 under budget inaggregate. Many of these expenses relate directly to the decrease in inpatient census. Themajority of the favorable variance is due to drug expense being below budget. This is becauseintroduction of new drugs into the marketplace did not occur as anticipated and because of theincreased use of lower cost drugs. Blood expense was also significantly below budget as a resultof the effort to reduce the use ofblood products.
Expenses related to buildings, building services, and equipment were $377,000 below budget.These costs include utilities, maintenance and repair, communications, building rental, anddepreciation. The favorable variance is due to the lower than anticipated building rent andintentionally restraining the spending for recurring equipment and remodeling during the year.
For the balance of our expenses, we had a favorable variance of $654,000 in the aggregate.Insurance costs were $941,000 below budgeted levels as a result of a lower premium on thegeneral and professional liability insurance policy and the reduction of accrued liability of
$600,000. Interest expense was $680,000 below budgeted levels. Of the total, approximately$480,000 is due to the early retirement of the 1986 term bonds. The balance is due to the earlierrestruturing of the variable rate 85 E-I series bonds with the University. Our provision foruncollectible accounts was $362,000 under budget and was the result of the reduction in ouraccounts receivable balance.
Non-Operating Revenue: Non-operating revenues totaled $11,198,000 in 1992-93 andrepresent a favorable variance from budget of $1,825,000. A significant portion ($1,506,000) ofthe variance is due to the recognition of the gain on the unit value of the funds withdrawn fromthe grouped investment pool (GIP) for the bond defeasance transactions that took place in May,1993. The balance of the variance is primarily due to greater than anticipated principal balances inreserves resulting from the accounts receivable improvement program.
Extraordinary Loss: In the month of May, the Hospital undertook the first step in the processof restructuring some of UMHC's debt. The process involved the early defeasance of three of the1986 term bonds with a face value of $70,435,000 and an average interest rate of 7.6%. Theresult of the transaction was to incur an extraordinary loss of $7,227,000. The current year lossresults from; (1) the net write off of issuance costs and original issue discount associated withthe 1986 term bonds ($1,793,000); and (2) having to provide additional cash ($5,434,000) intothe escrow fund to compensate for the difference in interest rates between what the escrow fundwill earn and the interest rates on the 1986 bonds. Overall the transaction will provide a netpresent value savings of approximately $9.0 million or approximately $1.5 million per year for 10
(, years.
Accounts Receivable: The balance in net patient accounts receivable as of June 30, 1993,totaled $50,541,000 and represents 65.2 days of revenue outstanding; this is a decrease of22 daysand a decrease of $20,232,000 from June 30, 1992. The majority of the decrease was due to acoordinated effort to reduce the accounts receivable balances.
Capital Expenditures: During the 1992-93 fiscal year, UMHC expended $13,075,000 fromhospital operating funds, and $6,408,000 from the hospital plant and trustee funds for current yearcapital expenditures. The major components of our capital spending were: (1) $6,337,000 forrecurring equipment, remodeling, and renovation, (2) $6,408,000 for major capital projects (MRI,Computer Upgrade, Operating Room expansion, etc.), and (3) $6,738,000 in principal paymentson debt and capital leases..
Conclusion: UMHC continued to experience a decline in our admission levels. At the sametime, our average length of stay decreased and our outpatient encounters increased. While a shiftfrom inpatient activity to an outpatient venue is consistent with the industry, the continued declinein admissions remains a concern. Although we appear to be increasing our share of the ten countymetropolitan market for most clinical services, we have experienced a decline in referrals fromoutside Minnesota.
UMHC continues to experience pressure from third party payors as HMO's, insurance companies,and self-insured companies move to contract for specific services at the lowest competitive rate
At the same time, new state and federal regulations are forcing UMHC, as well as other providers,to reduce operating expenses while maintaining high quality of care. UMHC must keep workingwith the HMO's, PPO's, and other insurers to develop pricing strategies that will enhance ourcompetitive position while enabling us to meet our financial goals and objectives.
Over the past fiscal year, UMHC has continued its numerous efforts aimed at reducing costs andincreasing efficiency and productivity, while maintaining a high quality of patient care. Many ofthese efforts have been incorporated into the strategic planning initiatives currently underway,with specific focus on cost reductions, service enhancements, and market strategies. Building onour experience with Interstate Medical Center in Red Wing, we continue to have discussions withseveral clinics throughout the state with regard to possible acquisition or strengthened affiliation.In addition, we have initiated discussion with other external parties and healthcare providers toexplore how UMHC can best posture itself within the Integrated Service Network (ISN)mechanism established under the MinnesotaCare legislation. We are also exploring new avenuesfor market penetration, and program diversification and expansion in order to sustain UMHC'smission of patient service, education, and research.
** PRELIMINARY **UNIVERSITY OF MINNESOTA HOSPITAL & CLINIC
C SUMMARY STATEMENT OF OPERAnONSFOR THE PERIOD JULY 1,1992 TO JUNE 30,1993
Variance1991-92 1992-93 1992-93 Over/(Under) VarianceActual Budgeted Actual Budget %
Gross Patient Revenue $370,507,000 $381,972,000 $380,162,000 ($1,810,000) -0.5%Deductions From Revenue 96,100,000 98,912,000 101,172,000 2,260,000 2.3%
Net Patient Service Revenue 274,407,000 283,060,000 278,990,000 (4,070,000) -1.4%
Other Operating RevenueAppropriation & Support 13,611,000 15,516,000 15,469,000 (47,000) -0.3%Other Revenue 11,601,000 11,995,000 12,206,000 211,000 1.8%Total Other Revenue 25,212,000 27,511,000 27,675,000 164,000 0.6%
Total Revenue From Operations 299,619,000 310,571,000 306,665,000 (3,906,000) -1.3%
Operating Expenses:Salaries 123,184,000 121,561,000 123,260,000 1,699,000 1.4%Fringe Benefits 29,669,000 31,079,000 31,362,000 283,000 0.9%Contract Compensation 20,011,000 20,061,000 20,371,000 310,000 1.5%Supplies And Services 68,904,000 73,665,000 67,280,000 (6,385,000) -8.7%Utilities And Maintenance 12,212,000 12,649,000 12,673,000 24,000 0.2%General Supplies & Expense 17,591,000 17,873,000 19,110,000 1,237,000 6.9%Insurance 2,028,000 2,104,000 1,163,000 (941,000) -44.7%Depreciation & Amortization 20,126,000 18,960,000 18,693,000 (267,000) -1.4%
CInterest 11,768,000 10,107,000 9,427,000 (680,000) -6.7%
Minnesota Care Tax ° 1,800,000 1,448,000 (352,000) -19.6%
Provision For Uncollectibles 1,422,000 3,298,000 2,936,000 (362,000) -11.0%
Total Operating Expenses 306,915,000 313,157,000 307,723,000 (5,434,000) -1.7%
Net Revenue From Operations (7,296,000) (2,586,000) (1,058,000) 1,528,000
Nonoperating Gains: Investment Income 9,254,000 9,373,000 11,198,000 1,825,000 19.5%
Revenue And Gains In Excess Of ExpenseBefore Extraordinary Item 1,958,000 6,787,000 10,140,000 3,353,000
Extraordinary Gain (Loss) ° ° (7,227,000) (7,227,000)
Revenue And Gains In Excess Of Expense $1.958,000 $6,787,00Q $2,913,000 ($3,874,000)
Variance
1991-92 1992-93 1992-93 Over/(Under) Variance
Actual Budgeted Actual Budget %
Admissions 18,073 17,079 17,819 740 4.3%
Patient Days 139,183 136,510 132,188 (4,322) -3.2%
Average Length Of Stay 7.7 8.0 7.4 (0.6) -7.5%
(; Average Daily Census 380.3 374.0 362.2 (11.8) -3.2%
Percentage Occupancy 67.2 66.7 64.5 (2.2) -3.3%
Outpatient Encounters 353,769 352,325 390,023 37,698 10.7%
UNIVERSITY OF MINNESOTA HOSPITAL AND CUNICBALANCE SHEETS
JUNE 30,1993 AND JUNE 30,1992
** PRELIMINARY **I
I,.--------------
$28,981,000 Current maturities of long-term debtand capital lease obligations $7,512,000
ASSETS
General Funds
Current assets:
Cash and cash equivalents
Receivables:Patient services, net of allowances
and uncollectible accounts of$25,071,000 at June '93 and$32,575,000 at June '92
State appropriationsOther
Inventories
Prepaid expenses and other
Total current assets
6/30/93
50,541,0001,293,0003,317,000
5,250,000
748,000
90,130,000
6/30/92
$44,280,000
70,773,0001,173,0002,274,000
5,291,000
767,000
124,558,000
LIABILITIESAND FUND BALANCES
General Funds
Current liabilities:
Accounts payable
Due to third-party payors
Accrued liabilities:Salaries, wages and employee
benefitsInterest
Construction retainages
Total current liabilities
6/30/93
22,563,000
10,545,000
21,039,0001,725,000
o63,384,000
6130/92
$7,241,000
24,910,000
14,822,000
19,931,0004,700,000
139,000
71,743,000
~ whose use is limited:y board for property and equipment
•.•.••. replacement and expansion 84,974,000 118,699,000
Under bond indenture agreementheld by trustee 11,616,000 17,612,000
Total assets whose use is limited 96,590,000 136,311,000
Property and Equipment, net 151,214,000 156,556,000 Long-term debt and capitallease obligations,less current maturities 86,489,000 162,955,000
Other Assets:
Long-term portion -promissory note 4,373,000 4,355,000
Deferred third-partyreimbursement 5,071,000 5,738,000
Deferred financing costs 252,000 925,000Other 5,140,000 5,778,000
Total other assets 14,836,000 16,796,000 Fund Balance 202,897,000 199,523,000
TOTAL UABILITIESrOTAL ASSETS $352.770.000 $434.221,000 AND FUND BALANCE $352.770.000 $434.221 ,000
Restricted Funds Fund Balances:Endowment funds $2,878,000 $2,776,000
(;,westmentsSpecific purpose funds 5,307,000 5,386,000
$8.185.000 $8,162.000 $8.185,000 $8,162.000
** PRELIMINARY **
UNIVERSITY OF MINNESOTA HOSPITAL & CLINICSTATEMENT OF CASH FLOWS OF GENERAL FUNDS
FOR THE PERIOD JULY 1, 1992 TO JUNE 30, 1993
OPERATING ACTIVITIES AND NONOPERATING REVENUES:
Revenue and gain in excess of expensesAdjustments to reconcile revenue and gain in excess
of expenses to net cash provided by operatingactivities and gain:
Depreciation and amortizationUnreimbursed University general and administrative services(Increase) decrease in receivables(Decrease) increase in accounts payable(Decrease) increase in net amounts due to third-party payors(Decrease) increase in accrued liabilities(Increase) decrease in inventories(Increase) decrease in prepaid expenses and other assets
Total adjustments
Net cash provided by operating activities and gain
INVESTING ACTIVITIES:
Acquisition of property, plant and equipment
Cash outflows for acquisition
Decrease in assets whose use is limitedNet cash used in investing activities
FINANCING ACTIVITIES:Repayment of long-term debtRepayment of notes payableFunds transferred from other sourcesDefeasance of long-term debt
Decrease in cash and equivalents
Cash and cash equivalents at June 30, 1992
Cash and equivalents at June 30, 1993
$10,140,000
19,480,000227,000
19,069,000(2,347,000)(4,278,000)(2,006,000)
41,000948,000
31,134,000
$41.274,000
($12,745,000)
(1,572,000)
39,722,000$25,405,000
($6,150,000)(588,000)370,000
05,610,000)
($81,978,000)
($15,299,000)
$44,280,000
$28,981.000
** PRELIMINARY **
UNIVERSITY OF MINNESOTA HOSPITAL AND CUNICSTATEMENT OF CHANGES IN FUND BALANCESFOR THE PERIOD JULY 1, 1992 TO JUNE 30, 1993
Donor Restricted FundsGeneral Specific Endowment
Balance at beginning of year $199,523,000 $5,386,000 $2,776,000Additions:
Revenue and gain in excess ofexpenses 2,913,000
Unreimbursed University generaland administrative services 227,000
Medical School Funding of Stem Cell 166,000Transfer to finance property
and equipment additions 204,000 (204,000)Gifts and investment income 460,000 114,000
Deductions:, Adjustment to Shared Building (136,000)
Disbursements (335,000) (12,000)
Balance at end of period $202,897,000 $5,307,000 $2,878,000
,
t) n f'UNIVERSITY OF MINNESOTA HOSPITAL & CLINIC
ADMISSIONS & AVERAGE LENGTH OF STAY (ALOS) BY SERVICE
1991/92 AND 1992/93 COMPARISON
I I II
ADMISSIONS AVERAGE LENGTH OF STAY _I
1991/92 1992193 CHANGE % CHANGE 1991192 1992/93JUNYTD JUNYTD JUNYTD % FROM FROM JUNYTD JUNYTD
CLINICAL SERVICE ACTUAL BUDGET ACTUAL VARIANCE VARIANCE PRIOR YR PRIOR YR ALOS ALOS CHANGE
ANESTHESIOLOGY 1 4 2 (2) -50.0% 1 100.0% 1.5 6.0 4.5
CLINICAL RESEARCH 321 266 360 94 35.3% 39 12.1% 3.1 3.5 0.4
DENTISTRY 3 4 2 (2) -50.0% (1) -33.3% 2.3 0.0 (2.3)
ORAL SURGERY 78 113 75 (38) -33.6% (3) -3.8% 1.6 1.5 (0.1)
DERMATOLOGY 15 16 2 (14) -87.5% (13) -86.7% 6.8 6.0 (0.8)
FAMILY PRACTICE 130 121 182 61 50.4% 52 40.0% 3.4 4.2 0.8
GYNECOLOGY 1,128 1,115 1,369 254 22.8% 241 21.4% 4.6 4.4 (0.2)
MEDICINE 4,756 4,172 4,267 95 2.3% (489) -10.3% 6.4 6.5 0.1
NEWBORN 328 336 342 6 1.8% 14 4.3% 1.9 1.8 (0.1)
NEUROLOGY 365 360 418 58 16.1 % 53 14.5% 6.4 5.1 (1.3)
NEUROSURGERY 1,169 1,240 1,129 (111) -9.0% (40) -3.4% 5.7 5.3 (0.4)
OBSTETRICS 512 494 504 10 2.0% (8) -1.6% 3.0 3.0 0.0
OPHTHALMOLOGY 401 352 330 (22) -6.3% (71) -17.7% 2.6 2.4 (0.2)
ORTHOPEDICS 1,143 1,196 1,147 (49) 4.1% 4 0.3% 5.4 4.7 (0.7)
OTOLARYNGOLOGY 374 408 363 (45) -11.0% (11) -2.9% 4.1 4.5 0.4
PEDIATRICS 2,894 2,877 2,972 95 3.3% 78 2.7% 8.9 8.5 (0.4)
PHYSICAL MEDICINE & REHAB 177 182 208 26 14.3% 31 17.5% 18.3 18.4 0.1
PSYCHIATRY ADULT 757 717 764 47 6.6% 7 0.9% 14.6 14.1 (0.5)
PSYCHIATRY CHILD 93 70 96 26 37.1% 3 3.2% 25.0 24.5 (0.5)
RADIATION THERAPY 1 2 0 (2) -100.0% (1) -100.0% 1.0 0.0 (1.0)
RADIOLOGY 19 15 43 28 186.7% 24 126.3% 1.4 1.4 0.0
SURGERY 2,862 2,482 2,796 314 12.7% (66) -2.3% 9.4 9.0 (0.4)
UROLOGY 546 537 448 (89) -16.6% (98) -17.9% 4.8 4.3 __ ~.5)
TOTAL 18,073 17,079 17,819 740 4.3% (254) -1.4% 7.7 7.4 (0.3)
University of Minnesota Hospital and ClinicInpatient Census
1988-89 through 1992-93
25,000
20,000
15,000
10,000
5,000
o
i',
II
1988-89 1989-90 1990-91
I•Admissions
1991-92 1992-93
!!::;
1992-93
1992-93
250,000
200,000
150,000
100,000
50,000
01988-89 1989-90 1990-91 1991-92
• Patient Days:.:-.~!O:-::o.":-:o •• :;: ",
12.0
10.0
8.0
6.0
4.0
2.0
0.0
C 1988-89 1989-90 1990-91 1991-92
• Average Length of Stay:-:......·x.............. , '"
(\ ~ "University of Minnesota Hospital and Clinic
Geographical Origin of Inpatients1988-89 through 1992-93
9-')..
"p"•
100%~.!f'
) ~~.
100%
m100%100%100%
,~~_~~.~-.41
0%
120%
20%
100%
~ 80%
=.....fI)
] M%
< 40%
1988-89 1989-90 1990-91 1991-92 1992-93
• 10 County Metro Area II Outstate
III 4 State Region ~ Outside 5 State Region
,..~
University of Minnesota Hospital and ClinicOutpatient Encounters
1988-89 through 1992-93
f'
440,000
400,000
360,000
320,000
280,000
240,000
200,000
160,000
120,000
80,000
40,000
° I
1988-89 1989-90 1990-91 1991-92
390,023
1992-93
(\University of Minnes~taHospital & Clinic
1991-92 Actual and 1992-93 PreliminaryRevenue & Expense Summary
f'~
Ancillary Revenue 66.3%
s;s.~::m::m::~.
Other Revenue 2.9%Interest Income 2.3%
Appropriations 3.4%
Routine Revenue 25.1%
1991-92Revenue
:»'''>>''<;.~~~---'''i
~1
Salaries & Fringes 49.8%
Ancillary Revenue 66.1 %
Other Revenue 3.3%Interest Income 2.3%
Appropriations 3.7%
Routine Revenue 24.6%
;""';>"§,~~<':§,~;K~<':_ili.<>"',~;"§;;:K<::<"'>';;:;:«;;;";;:<·;""§§;":'!~~:~:~""f.".;.;.;.",.;.; ...;.;...y.;.;.;.;.;•••••••••;.;.;.;.";.;.;•••y.;.;.;.;.;.,••;•••;•••••••••"',••,,.;.;•••••;.;.;.w••I~11
Salaries & Fringes 50.2%
Contract Comp 6.5%
Med Supp,Drugs,Blood 21.2%
•
;0;
~Oen Supp & Exp 15.9% ~$
Depreciation 6.6%
1991-92Expenses
Contract Comp 6.6%
Moo Supp,Drogs,Blood 20.7%
Oen Supp & Exp 16.4%
Depreciation 6.1%
1992-93Expenses
(\ n
University of Minnesota Hospital and ClinicRevenue by Payor
1988-89 through 1992-93
f'
120%I
100% 100% 100% 100% 100%
100% +~"'-"l'~ ,.Ja~.~-b~.~ -:>').dte~ -:>,,-,.
S I W~~~ W/#~/1 W44/~ V:Y7/:YY/i _fl.. rf/yyff/J ~.,~.= 80%E-4= I ~///~~<L~.V///vj .• ~///Ad .~ ...~).~~~.~ 60%
= I ~::I ..."J').·~ &.,.~ tt..~:I~"·~I~').·~
~ 40% t ~~. ~::r:r:r::::::::::}::::::::}rm::r:::::::1111 ~~""'II;;:::::I::::::I::::::::::::I::::::::::::::.....~,. : -:>-" r:::::::::::::::::::::::::::::::::::::::::::::::. .,*-:>-
~20% .f- ...",,. ...",~. • !IIo .,.......~ ...'\~ ..,-,-
0%
1988-89 1989-90 1990-91 1991-92 1992-93
II Medicare II Medical Assistance II Blue Cross
1&81 HMO/PPO ~ Commercial Insurance ~ Other
r fit
University of Minnesota Hospital and ClinicRevenue Days in Accounts Receivable
1983-84 through 1992-93
f'• "
110
I101.4
100At}},:::::}:;
90
80
70
60
50
40
30
20
10
0
1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93
f'
UNIVERSITY OF MINNESOTA HOSPITAL AND CUNIC
CAPITAL EXPENDITURES7-1-92 THRU 6-30-93
f't f" "" ,
BUDGET LESS
ANfljAL BUDGET AND R>LLFOfM(ARD ACTUAL EXPENDITUf£S ACTUAL
R>LLFORWAfI> 92-93 91-92
FECU Rfl NG EQUI P & f£MOD BUDGET FROM 8=-30=92 IQIAL ACTUAL ROLLFORWAfI) IQIALEQUIPMENT PURCHASES
92-93 BUDGET $6,427,868 $6,427,868 $2,914,382 $2,914,382 $3,513,486
ROLLFORWARD $5,486,746 $5,486,746 $2,487,nO $2,487,nO $2,998,976
$6,427,868 $5,486,746 $11,914,614 $2,914,382 $2,487,no $5,402,152 $6,512,462
f£MODEUNG PR>JECTS
92-93 BUDGET $l,n2,132 $l,n2,132 $444,501 $444,501 $1,327,631
ROLLFORWARD $1,835,000 $1,835,000 $711,657 $711,657 $1,123,343
$l,n2,132 $1,835,000 $3,607,132 $444,501 $711,657 $1,156,159 $2,450,973
$8,200,000 $7.321.746 $15.521 ,746 _$3~,§lP _ ~1~.427' $6,558,310 $8,963,436
PfiNCIPLE PAYMENTS
LAB CHEMICAL ANAUZERS
MR/2
KODAK COPIER
TOTAL:
BOND PAYMENTS:
VAR/-RATEBOND (PAlD10/t/92)
1986A BOND (PAlD2/1I93)
TOTAL:
$111,671
$498,262
$0
$609,933
$8,809.933
$111,671
$498,262
$0
$609,933
$16.131,679
$85,878
$498,262
$4,270
$588,410
$3,947,294
$3,500,000
$2,650,000
$6,150,000
$85,878
$498,262
$4,270
$588,410
$7,146.720
$3,500,000
$2,650,000
$6,150,000
$25,793
($0)
($4,270)
$21,523
$8,984,959
f\
UNIVERSITY OF MINNESOTA HOSPITAL AND CUNIC
CAPITAL EXPENDITURES7-1-92 THRU 6-30-93
f" '"~
CAPITAL PR>,JECTS UMHC ADDITIONAL 1st QUARTER 2nd QUARTER 3rdQUARTER 4th QUARTER CURRENT &
FUMlS FIDM FUM>S FIDM TOTAL EXPEND. EXPEND. EXPEND. EXPEND. PFiOR YEAR(S)
RESERVES OTtER SOUR;Es BUDGET 1992-93 1992-93 1992-93 1992-93 EXPENDllU RES
(1) ARCHITECTFEES PH /I $252,731
(1) AUTOPSY $400,000 $400,000 $3,262 ($8,161) $353,942
(1) REHAB THERAPY SAT. $240,000 $240,000 $1,229 $518 $25,244 $40,253
(1) PYSCH. TEMP RENOV. $100,000 $100,000 $1,589 $17,n9
(1) UROLOGY TEMP. $100,000 $100,000 $195 $36,119 $40,328
(1) MAYO CODE/ABESTOS $2,500,000 $2,500,000 $37,980 $30,058 $47,102 $120,668
(1) PHAFlAACYRENOVATION $750,000 $750,000 $458 $4,179 $43,740 $48,378
(1) RELOCAnON COSTS $1,000,000 $1,000,000 $858 $7,031 $62,405 $70,294
(1) MAYO SYS UPGRADE $2,500,000 $2,500,000 $3,447 $6,223 $9,670
(1) REHAB THERAPY $1,000,000 $1,000,000 $719 $719
(1) OR EXPANSION $2,000,000 $2,000,000 $101,823 $101,823
(2) PHARMACY WORKSTATION $400,000 $400,000 $35,000 $75,000 $110,000
CUHCC $1,800,000 $550,000 $2,350,000 $5,228 $5,983 $396 $33,557 $2,320,227
COMPUTER UPGRADE $3,890,000 $3,890,000 $195,834 $229,010 $298,628 $384,512 $2,783,469
HEART CATH ROOM $3,100,000 $3,100,000 $163,185 $747 $113,217 $37,565 $3,017,350
UNEAR ACCELERATOR $2,100,000 $2,100,000 $589,739 $103,140 $118,252 $53,138 $1,208,815
MRI $3,000,000 $3,000,000 $1,896,064 $109,681 $670,786 $2,678,341
BMT - STEM CELL san,ooo $8n,ooo $471,074 $217,308 $67,486 $80,179 $836,047
STARCUNC $47,600 $47,600 $47,026 $47,026
TOTAL $25.757.000 $550.000 $28.307.000 $1.42fJ.2Q~ . $2.521.262 $888.755 $1.587.448 $14.057.858
1.) THESE PROJECT COSTS ARE BUDGETED IN THE$20.48 MILUON RENOVAnON PROJECT.
* ARCHITECT FEES AND CONSTRUCTIONMANAGER FEES ASSOCIATED WITH PHASE /I PLANS TOTAL $1,898,000
OF THIS AMOUNT$1,645,529 HAS BEEN ABANDONEDAND WRITTEN-OFF
2.) THIS PROJECTIS ANTICIPATED NEW TECHNOLOGY WHICH HAS A BUDGET OF $2,000,000.
(.,
UNIVERSITY OF MINNESOTA
The University ofMinnesota Hospital and Clinic
July 23, 1993
Harvard Street at East River ParkwayMinneapolis, MN 55455
TO:
FROM
Finance, Planning and Development Committee
Greg HartGeneral Director
(.,
Attached please find the proposed 1993-94 capital budget and related information.This information was presented at the June Finance, Planning and DevelopmentCommittee meeting where action was postponed until additional information couldbe provided. That additional background information is included in the attached andreferenced below.
Capital expenditures in 1993-94 are anticipated to total $43,221,240. All but $8.8million of this sum has either been approved by the Board already or will comebefore the Board again for final approval. All capital expenses outlined in theattached are consistent with the "capital expenditures" assumptions documented inthe 1993-94 operating budget approved in May. The proposed budget has beenreviewed by our Clinical Chiefs Capital Review Committee. The 1993-94 capitalexpenditures are grouped into the following categories.
Capital Commihnents Approved in Prior Years
These expenses represent the 1993-94 portion of Board approved projects andcommitments made in previous years. $1,567,857 in approved special projects andmajor projects are included here. A listing of those projects is contained in the fiveyear projection of capital requirements included on page 4. Approved 1993-94Renewal Project Phase II expenditures have been revised downward to $7,650,000reflecting the shift of two projects (Short Stay and PACU renovation) to the specialproject list. Both of these projects have changed in scope and cost to the extent thatfurther Board review was deemed appropriate. Other minor changes in the RenewalProject Phase II budget are documented in the summary on page 10. It is anticipatedthat approximately $2,500,000 of approved equipment purchases and remodelingprojects will be rolled-forward from FY 1993. $6,898,888 will be spent for debtservice on equipment, bonds and capital lease payments. Total expenditures forprevious commitments are $18,616,740. This information is provided as a statusreport only. No further action is required from the Board on these expenditures.
Proposed Current Year Projects
The revised Board policy definition of special projects (projects over $750,000) andmajor projects (projects between $250,000 and $750,000) was used in developing this
20.
year's budget. Nine special projects with an estimated cost of $13,819,500 are offeredhere for information only. Each project will be resubmitted for detailed review andapproval prior to implementation. Five major projects with an estimated cost of$1,985,000 are submitted for approval pending final detailed review of each projectprior to implementation. Special and major projects are specified in the projection ofcapital requirements on page 4.
Proposed Current Year Recurring Capital
The proposed 1993-94 budget for recurring remodeling projects and equipmentpurchases under $250,000 is $8,800,000. Approximately 20% of those funds will beallocated to remodeling and 70% to equipment purchases as noted on page 5.$800,000 will be held back for cost reduction purposes or unanticipated urgentexpenditures. Pages 6 and 7 illustrate the breakdown of recurring funds byDepartment. Page 8 breaks down the proposed equipment purchases by dollar valueand page 9 breaks down equipment and remodeling by purpose for the request andcategory of equipment.
Each equipment purchase of greater than $10,000 will undergo further financialanalysis and management review and approval prior to purchase.
The $8,800,000 for recurring equipment and remodeling purchases is submitted forapproval at this time.
A brief description of how the proposed capital budget relates to the Board ofGovernors strategic planning initiative is attached on pages 11 and 12.
This capital budget is submitted today for review and approval as noted above.
21.
16-Jul-93
UNIVERSrrY OF MINNESOI'A HOSm"AL.t CLINIC1993-19MCAPITAL BUDGET
SI3,616,740 I
CAPITAL OOMMrITMENTSAPPROVHD IN PRIOIlYEARS i ... .. ... . ... ....•••••••
ANTICIPATED19M EXPENSES
Special Proiect! ud MajOl' pmjec" Appnw!ecI ill Prior Yean Sl,567,tm
lleHWlI1 Project PUR U S7,6SO,000
Aalici..ted Eqlli,.eat aael Re.ocIdiac Roll Porward fro. Py 1993 s:z.soo.OOO
Anal PriKip&! .t Leue Paf!!ea"
1. Series 198M Boael PriKipai Pa,.aea.. S2,ll3O.0002. Series 1985E Boad PrillCipai Pa,.aea.. $3.soo.0003. F.:Iialia,; ~pital Leue PaJ8eata $S(i8,1&3
I!Sabtotal PriKipal.t Leue Pa,.eata $6,89&,ll&3
ITotal ~pitalea..itmea" Appl'OWlcl ill Prior Yean
iPROPOSED CURRENT YEARPR~!(APPROVED OR REVIEWED PRIOR TO IMPLEMENTATION)
ANTICIPATED19M EXPENSES
Special Projecta (fotal Project Co.t)
1. Repbce CT SeaDer (SI,369,soo)2. Silort Stay Prof:n. ($2,100,000)3. ea.pater Uppade ($3.400,000)4. Heart ~tll Eqaip.eat, Roo•• I .t 2 ($4,300,000)5. C.V. S.r,;eIJ Roo. 7 Eqllip.eat (SI,soo,ooo)6. Partia& Ra.p Addilioa (SI,35O,ooo)7. NICU at Ri\Oenide ($3,250,000)8. 3C Reaovalioa ($3,100,000)9. PACU Reaovalioa ($I,OSO,ooo)
$1,369,soo
SI.soo.000$3,400,000$2,000,000
SI.soo.000S6OO,OOO
$3,000,000$200,000S2S0,OOO
$13;U9,soo
Major Projectl (fotal Project Co.t)
1. NeuoradiolOf;Y Uppade (SS75,OOO)2. MTS Uppade or Repbce.eal (S340,ooo)3. Bed AIIocatioa CUa&es (S200,000)4. Pbraacy Reaovalioa (S3S0,ooo)
,5. Repbce Si.llialor (SS20,ooo)
SS75,OOOS340,OOO$200,000S3S0,OOOSS20,OOO
SI,985,OOO
;Total Special Projectl aid Major Projec.. SI5,804,soo I
PROPOSED CURRENT YEAR RECUIUIDlG CAPITALANTICIPATED1994 EXPENSES
cAaticipated Re.odelia&Aaticipated Eqlli,.eal PurellalesBlldf:et RedllClio. Tar~et
Total Recani.s~piUl '93-'94 B.dset
$1,746,0&2$6,253,918
$800,000
GRANDlUfAL ANTICAPATEDCAPITAL EXPENSES FOR 1993-1994 $43,221,240 I
22.
UN.......V 01' MINNESUfA IK)St>ITALANDCUN£1'RQa, .li) ANN UALCAJ'ITAI. REQUIREMENTS
ts-J"-93
e f"
18,88S.00016.soo.0003,362.0001.706,897
40.4»,897
1.....000o
851.143oo
1.000.000900.000
3.600.000&25.000400.000'JUZ.OOO
9.364.143
19.015.000
:z.soo.ooo
2,139.0001.100,000
S20.ooo3.W.000
11,360.0002,300.0004,300.0001.soo.OOOI~.OOO
340.0003,2S0.000
700.0003,100.000
350.000700.000
6.000.0002.100.0001.050.000
SUQ.OOO
. 92,9j--::..."'~. lUTAL
.$~"
oI 1I'l.&S!.cMo I
N:ruAI. .
1992 1993 1994 t99S 1996 t997 1tJ!IIl< .•.•.•.•••.
APIROVEI> I'ROJEC1S
I Replaa: MRI-I 1,920,000 1,080,000 0 0 0 0 02 ellllr. t26,96S 0 0 0 0 0 03 C~DcerCe."r 142,llS7 142,llS7 142,857 142,857 142,857 142,857 142,8574 Co....ler Uptnule 2,190,000 0 0 0 0 0 05 NellroCAdiolO&y UptrAde 1,440,000 0 0 0 0 0 06 lleut C...... Equip.e.1 (Roo•• 3 &4) 2,086,891 1,000,000 0 0 0 0 07 1.illCu Aa:clcnlor 450,000 900,000 0 0 0 0 08 PRelia: Acquisilio. 4,146,000 600,000 600,000 600,000 600,000 600,000 600,0009 S....I. Mcdieiac II 0 825,000 0 0 0 0
10 PI.u••ey Robol 0 400,000 0 0 0 0 0It S". Cell Soopport 0 102,000 0 0 0 0 0
Approved ....qceb; SublolAl 12,502,713 4,824,llS7 1.5(i7,8S7 742,llS7 742,llS7 142,&S7 142,&S7
RENEWAI.I'RCUECT PIIASE .. 762,308 615,000 1,650,000 4,850,000 5,960,000 0 0
EQUIP. &REMOI>. ROUHI> ~)RWARD ('ROM flY '93 2,SOO,000
ANNUAl. IRINCIPAL&lHASE PAYMENTS
Serie. 19lI6A Do.d ....iuci..1 hy.c... 2,490.000 2,650,000 2,830,000 3,Ots,OOO 3,230,000 3,455,000 3,70S,000Serie. 19M E DoDd PriDcipul I'loy~... II 3,SOO,OOO 3,SOO,OOO 4,SOO,OOO 5,000,000 0 0VRDII Pri.cil..1Eacrow 0 II 0 0 0 1,681,000 1,681,000ElIi.lilll: C..pilal bue hy.c." 800,5&3 609,936 568,883 528,078 0 0 0
A.....I ....iuci..1 hy.cD" S.blolAl 3,290.583 6,759,936 6,898,883 8,043,078 8,230,000 S,I36,ooo S,386,ooo
ANTICIPAllm IROJI\CTS
1 Replaa: CT Sea .IOCR 0 0 1.369,SOO 0 1.369,SOO 0 02 Replace CT Si••btor 0 0 0 0 1,100,000 0 03 Repbce Si...btor 0 0 520,000 0 0 0 04 Replace UllCAr Accele... tor 0 0 0 1.583,000 0 1,600,000 05 Co....ler Upt...de 0 1,700,000 3,400,000 2,860,000 2,300,000 2,600,000 4,soo,0006 NeDrorAdioIO&y UptrAde 0 0 515,000 1,725,000 0 0 07 lleut c... liqlOip..,.t (Roo•• 1 &2) 0 0 2,000,000 2,300,000 0 0 08 CV Slqery Replace Roo. 7 Hqllipae.t 0 0 1,soo,OOO 0 0 0 09 hrt~ RA.p Addilio. 0 0 600,000 750,000 0 0 0
10 MTS Upt...de 01" Replace_.1 0 0 340,000 0 0 0 0.. NI:U AI Ri""'rside 0 0 3,000,000 250,000 0 0 012 lled AlIOClltiOD CU"'l:e. 0 0 200,000 SIlO,OOO 0 0 013 3C Re..... tiOD 0 0 200,000 2,900,000 0 0 014 PlIor.Aey Re..... tiOD 0 0 350,000 0 0 0 0ts CIi.ie Upgnde. 0 0 0 350,000 350,000 0 016 A.lieipated New TeelollOlO&y I ~rA. De"",lop.eut 0 0 0 1,soo,000 1,soo,000 1,soo,000 1,soo,ooo17 Sioort SlAy ....0&.... 0 0 1,SOO,OOO 600,000 0 0 018 PN:U Re.....tio. 0 0 250,000 800,000 0 0 0
A.licipa"d ProjeCI. S.btolal 0 1,7tlll,IIII0 LS ,804,SOO 16,118,000 6,619,soo S,700,OOO 6,000,000
RECURRING EQUIPMENT ANDREMOWLING
A.licipaled Rec....illg Eq.ip_.t &Reaodeillg (carn:.t Yr.) 8,947,304 9,509,000 8,800,000 9,400,000 10,000.000 10.600.000 tl,2OO,lIQQ
ANN UAI. CAPITAl. REOUIREMENT lOTAI. 25502.908 23 418193 43 771?40 39 ts393S 31551351 22 178llS1 23.32&.&51 I '
I~
I
NW.
n.July 16, 1993
f"
93/94 TOTAL RECURRING CAPITAL BUDGET
",
N~.
REQUESTED ADJUSTMENT PROPOSED BUDGET
EQUIPMENf $6,614,476 ($360,558) $6,253,918
REMODELING $3,626,935 ($1,880,853) $1,746,082
COST REDUCTION GOAL $800,000 $800,000
I TOTAL $11,041,411 ($2,241,411) $8,800,000l.JlI
RECURCAP
July 13, 1993
THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICPROPOSED CAPITAL EQUIPMENT BUDGET FOR FY 93/94
(,
(, BRD94
DEPARTMENr
Ambulatory Care
Biomedical Engineering
Bone MarrowCardio-Pulmonary
Communication CenterCUHCC
Diagnostic Radiology
EndoscopyFinance
Home Health CareHuman Resources
Information Services
Laboratories
Maint. & Operations
Material Services
Medical OutreachMedical Records
Nursing ServicesNutrition Services
Operating RoomPatient Care-General
Pharmaceutical Services
Planning and Marketing
Protection Services
Quality Support Services
Rehabilitation Services
Social Work
Therapeutic RadiologyEquipment Installation
GRANDTOfAL
-6-
REQUEST
$323,329
$10,300
$31,800
$549,575
$11,200
$46,373$1,363,300
$111,000$68,653
$2,500$5,500
$798,663
$841,382
$5,050$134,500
$1,995
$100,570$181,515
$45,640$429,815
$575,000
$44,824
$95,000
$18,961
$117,467
$63,956
$2,000
$131,400
$142,650
$6,253,918
25.
July 13, 1993
THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICPROPOSED CAPITAL REMODELING BUDGET FOR FY 93/94
(, CRR94
DEPARTMENf
Ambulatory Care
EndoscopyFacilities OfficeFinance
LaboratoriesMaint. & Operations
Material ServicesNursing Services
Nutrition ServicesPharmaceutical Services
Social WorkTherapeutic Radiology
Amenities
GRANDTOfAL
-7-
REQUEST
$606,900$10,000$38,000$47,500
$70,000$429,670
$5,000
$203,290$7,500
$115,000
$13,100$5,000
$195,122
$1,746,082
26.
July 12, 1993
(;, 1993/94 CAPITAL EQUIPMENT BUDGET DISTRIBUTION
RANGE PIECES OF EQUIPMENT DOLLAR AMOUNT
$500 TO $5,000 615 $1,211,648
$5,001 TO $10,000 347 $867,629
$10,001 TO $25,000 54 $869,052
$25,001 TO $100,000 316 $1,746,724
Over $100,000 6 $1,401,215
Equipment Installation $142,650
TOTAL 1,061 $6,238,918
(;,
" Range94
-8-
27.
July 20, 1993
THE UNIVERSITY OF MINNESOTA HOSPITAL AND CLINICCAPITAL EQUIPMENTIREMODELING REQUESTS
FISCAL YEAR 93/94
EQUIPMENT AND REMODELING REQUESTS CATEGORTZRD BYPURPOSE:
,
PATIENT SAFETYILIFE SAFETY/CODE
NEW TECHNOLOGY
REPLACEMENT
NEW GROWTH
EQUIPMENT INSTALLATION
GENERAL REMODELING
TOTAL
$662,555
$2,074,441
$3,372,135
$1,138,632
$142,650
$609,587
$8,000,000
EQUIPMENT AND REMODELING REQUESTS CATEGORIZED BY TYPE:
PATIENT CARE
FACILITY IMPROVEMENTS
INFORMATION SYSTEMS
OTHER
TOfAL
$3,529,386
$1,915,991
$2,046,283
$508,340
$8,()()(),()()()
, CATSORT
-9-28.
n July 13, 1993 10:4511.m. n nRENEWAL PROJECT PHASE II
«>.~Nf:\V AL '. .•••........~NIi\VAI., .'... /. ..... ....... i><i/ ~TIQre~I~9·T::E. '::i:..«< PRQJECTBUOOET . PROJECT BUPGBT REMAINING EXPENSasCUIUmNT:/::':::
.'., ·:4ii6192··· ·i(lffiviSED»<P EXPENSEs/ iFYI994:::::S+ATtJ'$mUn?/i
S250,OOO On going
.~ 1,4S0,<lQ<) .. 99$#iJIS:/:$250,000 On going
$6~O,()()() 9~aCtw$<'S200,OOO On
.' S1,()()(),()()() J)~i$~lItllrt.«
SIOO,OOO Concept only~25 ,()()() ColICC»t onlyS25,OOO Concept only~30,()()() (:()~~~~<:~()#.:<
S300,OOO Concept only$1,000,000 Scb~rJlaticc()mplc:t~
SO CompleteC;()Jl1Jl,~ei.··.····
Const. documents
M#Y~!oCapitil1.·fll#t ••::Concept onlyC()ncePt9nlY>':'" :'.Construction
M()y~.·~() ••gaJ>~w·.r~~: ••••Construction
S2,350,OOOS2,475.()()()
S700,OOO$1,400.(}()()
S970,OOO$10(),()()()
SI,490,OOOS3,OOO,000
$500,000S570,OOO$30,000
S500,OOOSI,450,OOO
SOSO
SI,950,OOO$0
S250,OOOS500,000SI40,OOO
$0S71O,OOO
SI,500,000S3,000,000
$500,000S570,OOOSI00,OOOS500,OOO
$1,480,000S60,OOO
S370,000S2,OOO,OOO
SOS250,000S500,000S200,OOO
SOS750,000$400,000
S2,500,OOOS2.500,000
S700,OOOSI,500,OOOSI,OOO,OOO
$100,000
SI,500,000S3,000,000
S500,000S570,000SIOO,OOOS500,000
SI,OOO,OOO$240,000S370,OOO
$2,000,000SI,500,000
$250,000S500,OOOSIOO,OOOS25O,OOOS750,000$400,000
S2,500,000S2,500,OOO
S700,OOOSI,500,OOOSl,ooo,OOO
S50(),ooo
RENEWAL PROJECT
PSYCH UNIT J INPATIENTPSYCH MAYO INPATIENT
PSYCH CLINICPSYCH DAY HOSPITAL
PSYCH TEMP FIX
REHAB INPATIENT
REHAB THERAPYREHAB THERAPY SATELLITE
OB INPATIENT (TEMP)OR EXPANSION
SHORT STAY UNITUROLOGY CLINIC
UROLOGY CYSTO
UROLOGY TEMP FIX
PACU RENOVATIONPHARMACY
AUTOPSYMAYO CODE ASBESTOS
MAYO SYSTEMS UPGRADEMAYO MISC RENOVATION
FACULTY OFFICE RENOVATION
RELOCATION
CONTINGENCY
I.......'0
I
RENEWAL PROJECT TOTAL $22.230,000 S20,480,OOO I S19,085,OOOI$7,65O,OOO
N\0
Rcnew21
RELATIONSHIP TO SIRATEGIC PLAN
The proposed 1993-94 Capital Budget is reflective of the Board approved strategicplanning assumptions of cost reduction, external strategies and service qualityimprovements.
Cost Reduction
The preliminary budget estimate of $8.8 million in recurring capital requirements hasbeen targeted for a 9% or $800,000 reduction as a cost savings measure. To date, thebudget review process has been successfully completed without allocating the$800,000. We are seeking Board approval for the full $8.8 million with theassumption that $800,000 will be used only for unanticipated urgent purchases.
We have also strengthened our management review process on capital purchases.All capital purchases greater than $10,000 must now undergo a structured financialanalysis as well as a review by our Capital Expenditures Committee.
External Strategies
Efforts to develop and improve external linkages are reflected in the capital plan in asignificant way through the funding of our acquisition of the practice at Red Wing,Minnesota and our proposed project to move NICU to the Riverside campus. Notreflected on the projected capital requirement summary are the outcomes of ourdiscussions with several potential local and outstate partners. Expenses associatedwith these proposals will be added to the projection of capital requirements onceprobable outcomes are clarified.
Service! Quality Improvements
The proposed capital budget reflects our efforts to improve service and provide animproved environment as viewed by the patient.
The long range capital requirement plan assumes $1.3 million will be allocated toimprove ambulatory care facility's over the next 3 years. These renovations arespecifically targeted to improve patient flow, clinic efficiency and upgrade theappearance of the clinics involved.
The Renewal Project Phase II is a major capital commitment designed to significantlyupgrade the patient care areas most urgently in need of repair. The anticipatedexpenditures of $1.45 million in the" Mayo system upgrade will specifically addresstwo very serious patient and staff complaints; elevator service and air conditioningquality. These expenditures will significantly improve elevator service and providethe core requirements for improved air conditioning in the Mayo building now andas future remodeling occurs.
-11-
30.
Many of the proposed major and special projects will directly improve service topatients. The proposed expenditure of $2.1 million for the Short Stay program, forexample, will significantly improve our ability to keep pace with the trend towardshort term and same day procedures.
The $8.8 million in recurring capital expenses will provide the new technology andreplacement equipment necessary to provide quality service.
-12-
31.
,UNIVERSITY OF MINNESOTA
The University ofMinnesota Hospital and Clinic
July 28, 1993
To: Board of Governors Finance,Planning and Development Committee
From: Clifford P. Fearing
Harvard Street at East River ParkwayMinneapolis, MN 55455
Subject: Creation of a New Not-For-Profit Corporation by UMHC
In fulfillment of it's mission of service, education andresearch, and in accord with the strategic plan adopted by theBoard of Governors, UMHC seeks to expand it's base of operations,and increase efficiencies through closer relationships with bothclinic and hospital providers. As UMHC expands it's physicianbase through acquisition and/or management of new clinics (andother Health care organizations), it will become increasinglyexpensive and time-consuming to manage and govern the clinics ona clinic by clinic basis. We believe the creation of an umbrellaorganization to both manage and govern these provider entities isan essential next step in the evolution of UMHC's expandedprovider network.
In conjunction with our legal counsel and advisors, we havedeveloped a structure for a new entity, called "Clinico" for thepurpose of discussion, which is summarized in the attachedconceptual overview.
A more detailed document outlining the proposed governanceand committee structure is also attached for your review. Thisproposed organization is similar in nature to the structure ofInterstate Medical Center in Red Wing, but is designed to governseveral clinics versus a single organization.
Action Requested and Follow-Up. At this time we areproviding this proposal for your information. We will ask theBoard of Governors to approve the Clinico concept in July.Assuming such authorization, UMHC's administration and legalcounsel will then proceed to establish Clinico and continueactively pursuing the acquisition of prospective constituentclinics. In connection with discussions with prospectiveconstituent clinics, others within UMHC will be involved at theappropriate juncture to help establish and thereafter implementmedical education, medical research, community outreach and othersuch programs to be conducted by Clinico, or to be pursuedjointly by Clinico and UMHC. Once Clinico has sufficientconstituent clinics, it likely will hire administrator(s) and/orother employees(s)to perform centralized administrative,management and similar such functions. Funding for the operationof Clinico will be requested from the Board of Governors whenneeded for acquisition or other appropriate activities.
CPF:bb
32.
ember
sl.cians
Draft 6/7/93
CLINIcal - CONCEPTUAL OVERVIEW
Purpose. From Clinico's standpoint, to own and operate (as a taxexempt organization) several relatively small clinics inMinnesota. (Generally, five or fewer physicians per clinic.)From UMBC's standpoint, to enable it to provide better medicaleducation, medical research and community outreach. (OMBC willbe able for example, to place family practice residents insmaller clinic settings, where they can gain experience with adifferent patient base, in a setting that may be much more "trueto life" for their prospective practice than the urban hospital.The primary care opportunities are consistent with the way thathealth care demand seems to be moving. UMBC will also have theopportunity to conduct medical research projects focusing on adifferent patient demography and different patient concerns thanmay be present in the urban hospital setting.) From thephysicians standpoint, to be able to participate in medicaleducation, research and community outreach, and to havecentralized administration and management (centralized billing,accounting and the like) so as to be able to better focus on thedelivery of health care services, and on the medical education,research and community outreach aspects.
Governance. Governance will be structured so as to vest ultimatecontrol in UMBC, but ensure representation of the community orcommunities served, and the physicians. Following is a summaryproposed governance structure:
Clinico Governance
SoleMember *
./
3 UMHC MemberBoard of Directors Chair of Phys
Committeer , r-nmmunity M
Physicians Exempt Functions CompensationCommittee Committee Committee
** The Chair-elect of the Physicians Committee.
The Regents of the University of Minnesota.,Membership to bethe Clinic MedicalDirector for eachClinic. Position ofChair to rotate.
*
1 UMHC Member1 Community Member1 Physician Member**
1 UMHC Member1 Physician Member***Outside Advisor
*** The last year's Chair of the Physician's Committee.
I This is a temporary name being used for convenience only. 33.
Since many different communities will be served, it may beappropriate to have an extra advisory group or co~ttee, withadditional community representation, from which the communitymember of the Clinico Board of Directors and the Exempt FunctionsCommittee could be drawn (probably on a rotating basis) .
It is anticipated that each of the constituent clinics willoperate much like a "division" of Clinico. Each will have aMedical Director who will be responsible for day-to-day deliveryof health care services. However, administrative, management,quality assurance/peer review, medical education programs, andother overall functions will be centralized.
Funding. Clinico will require capital contributions from UMHC tofund the purchase of the assets of its constituent clinics. Itwill also require working capital, which UMHC can provide bycapital contribution, loan, or some combination of the two. Oncea given clinic is acquired by Clinico, except for initial workingcapital funding (until the clinic has built up a sufficientreceivables to cover payables on an ongoing basis), it isexpected that the clinic would generally be self-sustaining. Butto the extent each constituent clinic is involved in medicaleducation, research, community outreach or other activities thatdo not generate revenues, those activities will have to besustained by a combination of earnings that Clinico retains overits existence, and possibly by some continuing funding from UMHC.
Clinico Governance DRAFT ~~1$/93
SoleMember (Regents)
LI")C")
Board of Directors
I3 UMHC MembersChair of Physicians Committee1 Community Member
Physicianscommittee
Membership to bethe Clinic MedicalDirector for eachClinic. position ofChair to rotate.
Exempt FunctionsCommittee
1 UMHC Member1 Community Member1 Physician Member*
CompensationCommittee
1 UMHC Member1 Physician Member**outside Advisor
* Perhaps the Chair-elect of the Physicians committee.
** Perhaps the last year's Chair of the Physicians committee.
See attached pages for a description of the possible make-up of each group, and areas ofauthority to be established by Clinico's Articles of Incorporation or bylaws.
stjd2163.msc
Q
-1-
g
9309,041 06/08/93 10:11~ dZI
g
RESOLUTIONESTABLISHMENT OF "CLINICO"
WHEREAS, in fulfillment of its mission of service, education and research, and
in accord with the Strategic Plan adopted by the Board of Governors, UMHC seeks to
expand its base of operations and increase efficiencies through closer relationships with
both clinic and hospital providers; and
WHEREAS, such integrated service network reationships are a critical part of the
State's health care reform process; and
WHEREAS, increased efficiency and effectiveness will be produced by the
creation of a new not-for-profit organization to both manage and govern provider
entities, and to provide other services as appropriate;
THEREFORE, BE IT RESOLVED, that the Board of Governors hereby approves
the formation of a new not-for-profit corporation, identified for the purposes of
discussion as "Clinico", and directs the Hospital Administration to proceed with the
establishment of Clinico in accord with the principles set forth in the Administration's
presentations to the Board in June and July, 1993;
BE IT FURTHER RESOLVED, that the Board is not at this time authorizing any
funds for the capitalization of Clinica, and is not authorizing the appointment of UMHC
representatives to the Board of Directors of Clinico, and that the administration is
directed to return to the Board at the appropriate time with specific requests for
capitalization, and appointment of Board members.
7/28/93