Critical Access Hospital (CAH

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CriticalAccessHospital(CAH)FinancialAnalysis2016,NDCAHACOExperiences,PlansandPossibilities

NDCriticalAccessHospitalBoardBootCampApril13,2018

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SupportfortheFinancialAnalysis

� The CAH Financial Reporting project is supported by funding from the North Dakota Medicare Rural Hospital Flexibility Program, administered by the Center for Rural Health at the UND School of Medicine and Health Sciences. Funding is provided through the Federal Office of Rural Health Policy by the U.S. Department of Health and Human Services.

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NorthDakotaCAHFinancialAnalysis

�Agenda

� CAHFinancialsforAll36NorthDakotaCAHs� Eastern/WesternNDCAHFinancialAnalysis� 27OriginalNDCAHsReportingfor10Years� AccountableCareOrganizations(ACO)

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NDCAHFinancialAnalysis

All36NorthDakotaCAHs

Calendar2016

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NorthDakotaCAHFinancialAnalysis�DefinitionofTermsUsed

� OperatingRevenue� Revenuegeneratedfromhealthcarerelatedservicesprovided

� ContractualDeductions� Thedifferencebetweenwhatischargedforservicesandwhatisallowed/paid

� BadDebt/CharityCare� Uncompensatedcareprovidedbyfacilities

� Expenses� Expensesincurred

� OperatingMargin� Operatingrevenuelesscontractualdeductionsandexpense

� Non-operatingRevenue� Revenuerealizedfromnonoperationalsourcessuchasdonations,foundation,

investments,governmentsubsidies,etc.� NetMargin

� NetMarginrealizedfromallsourcesofrevenueandexpense

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NorthDakotaCAHFinancialAnalysis�Calendar2016Observations

� 10th yearoftheCAHFinancialAnalysis� 36CAHshavereportedfinancialssince2010� 772LicensedCAHHospitalbeds� 32of36FacilitiesOwn/OperateaClinic� 32FacilitiesWhoOwn/OperateClinics,Operate53Clinics� 42ofthe53ClinicsAreRuralHealthClinics(RHCs)� 13of36FacilitiesOwn/OperateaNursingHome(585beds)� 6FacilitiesOperateBasicCare(132beds)� 8FacilitiesOperateAssistedLiving(136apartments)� 8FacilitiesOwnandOperatetheLocalAmbulance� 2FacilitiesOwn/OperateHomeCare(someprovideRHCvisitingnurse)

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NDCAHAcute/SwingBedOccupancy(PatientCensus)Survey

� SnapshotataPointinTime� August2016andPriorYears� LicensedBeds&Occupancyfor36Facilities

2000 2006 2013 2016CAHLicensedBeds 1,439 1,045 766 772AcutePatients 345 171 112 80SkilledSwingBedPatients 249 223 71 64NonSkilledSwingBed 95 121

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NorthDakotaCAHFinancialAnalysis

�2016Observations(continued)� CAHshad104,261ERVisits� CAHsreported367,565ClinicVisits

� HospitalandClinicRevenue 36CAHs Orig.27� $304,993,808Medicarerevenue (39%) (46%)� $218,106,179BCBSrevenue (28%) (23%)� $117,902,582Otherrevenue (15%) (11%)� $65,534,194Medicaidrevenue (8%) (9%)� $46,839,671SelfPayrevenue (6%) (7%)� $27,481,023 MedicaidExpansion (4%) (3%)� $780,857,457TOTAL $780,857,457$247,414,013

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39%

8%

4%

28%

6%

15%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Medicare Medicaid Medicaid Expansion BCBS Self Pay Other

North Dakota Critical Access Hospitals2016 Hospital/Clinic Patient Revenue By Payer

Medicare Medicaid Medicaid Expansion BCBS Self Pay Other

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NorthDakota2016CAHFinancialAnalysis

� 36CAHObservations

� Description 2013 2014 2015 2016� CAHswithPositiveOperatingMargin 13 8 19 18� MeanOperatingMargin -3.5% -4.5% 0.1% 0.2%� MedianOperatingMargin -2.3% -5.1% -1.5% .03%

� CAHswithPositiveNetMargin 18 17 24 25� MeanNetMargin 0.6% 2.1% 2.7% 3.8%� MedianNetMargin 0.2% -0.3% 3.1% 2.6%

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NorthDakotaCriticalAccessHospitalsStatementofOperations,Comparing2010to2016

36Facilities 36Facilities Variance%2010Total 2016Total 2010- 2016

OperatingRevenue* $537,401,689 $871,543,563 +62.2%ContractualDeductions -$156,390,822 -$267,966,998 +71.5%BadDebt/CharityExpense - $15,981,219 - $32,517,690 +103.9%NetRevenue $365,029,648 $571,058,874 +56.4%*(Otheroperatingrevenuegrew123%) $13,007,817 $29,661,790

Expenses $368,653,823 $570,889,393 +54.9%OperatingMargin -$3,624,175 169,481 -104.7%OperatingMarginMean% -0.7% 0.03%OperatingMarginMedian% - 1.4% 0.2%

NonOperatingRev. - $2,639,921 $21,639,817 +919.7%NETIncome/Loss - $6,264,096 $21,809,298 +448.2%NetMarginMean% -1.2% 3.8%NetMarginMedian% -0.7% 2.6%

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NorthDakotaCriticalAccessHospitalsStatementofOperations,Comparing2014to2016

36Facilities 36Facilities Variance%2014Total 2016Total 2014- 2016

OperatingRevenue* $708,815,428 $871,543,563 +22.0%ContractualDeductions -$188,777,096 -$267,966,998 +42.2%BadDebt/CharityExpense - $37,740,043 - $32,517,690 - 13.8%NetRevenue $483,298,288 $571,058,874 +18.2%*(Otheroperatingrevenuegrew61%) $18,538,618 $29,661,790

Expenses $505,107,418 $570,889,393 +13.0%OperatingMargin -$21,809,130 $169,481 100.8%OperatingMarginMean% -4.5% 0.03%OperatingMarginMedian% - 5.1% 0.2%

NonOperatingRev. $31,768,771 $21,639,817 -31.9%NETIncome/Loss $9,959,642 $21,809,298 +119.0%NetMarginMean% 2.1% 3.8%NetMarginMedian% -0.3% 2.6%

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-28% -28%

-20%

-13% -12%

-7% -5% -5% -4% -4% -4% -4% -3% -3% -2% -1% -1%

0% 0% 1% 1% 1% 2% 2% 3% 4% 5% 5% 5% 5% 6% 7%

8% 9% 10%

24%

0.25% 0.03%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Ope

rati

ng M

argi

n

West of HWY 83 East of HWY 83 Median (0.25%) Mean (.03%)

NorthDakotaCriticalAccessHospitals2016OperatingMargins

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-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Ope

rati

ng M

argi

nNorth Dakota Critical Access Hospitals

2014, 2015, 2016 Operating Margins

2014 Operating Margins 2015 Operating Margins 2016 Operating Margins

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-22%

-17%

-10%

-6% -5% -5% -4% -2% -2% -1%

0% 1% 1% 1% 1% 2% 2% 3% 3% 3% 3% 5% 5% 5% 6% 7% 7% 8% 8% 9% 9% 9%

17%

24%

31%

46%

2.6% 3.8%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Net

Mar

gin

West of HWY 83 East of HWY 83 Median (2.6%) Mean (3.8%)

NorthDakotaCriticalAccessHospitals2016NetMargins

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-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Net

Mar

gin

North Dakota Critical Access Hospitals2014, 2015, 2016 Net Margins

2014 Net Margins 2015 Net Margins 2016 Net Margins

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111,727,623 107,759,922 105,751,786 106,519,680 108,782,065 124,492,288 138,285,881

275,106,239312,236,770

357,270,585 367,847,739 380,498,287

432,437,633470,209,745

58,665,595

70,204,748

77,427,522102,374,667

110,907,110

113,997,022

137,715,148

78,894,415

86,319,651

84,008,509

79,383,74689,933,228

90,949,548

95,671,000

2010 2011 2012 2013 2014 2015 2016

REVE

NUE

NORTHDAKOTA36CRITICALACCESSHOSPITALSOPERATINGREVENUE

Inpatient Outpatient Clinic Other

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3.44%

4.73%

5.62% 5.79% 6.03% 5.42%

4.19%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2010 2011 2012 2013 2014 2015 2016

BadDe

btPercentage

NorthDakota36CriticalAccessHospitalsBadDebtExpense%Inpatient,Outpatient,Clinic,SwingBedRevenue

NDCAHFinancialAnalysisComparison

EastofHighway83&

WestofHighway83

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NorthDakotaCriticalAccessHospitalsStatementofOperationsAnalysis

24CAHs 12CAHSEastof83 Westof832016Total 2016Total

OperatingRevenue $438,887,567 $432,655,995ContractualDeductions -$120,889,412 -$147,077,587BadDebt/CharityCare -$11,765,587 -$20,752,103NetOperatingRevenue $306,232,569 $264,826,306

Expenses $297,363,112 $273,526,282OperatingMargin $8,869,457 - $8,699,976OperatingMarginMean% 2.9% -3.3%OperatingMarginMedian% 0.9% -3.9%

NonOperatingRev. $14,445,840 $7,193,977NETIncome/Loss $23,315,297 - $1,506,000NetMargin%Mean 7.6% -0.6%NetMargin%Median 3.8% 1.2%

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NorthDakotaCriticalAccessHospitalsStatementofOperationsAnalysis

Westof83 Westof832014 2016 2014-2016Total Total Variance%

OperatingRevenue $336,128,051 $432,655,995 +28.7%ContractualDeductions -$94,438,111 -$147,077,589 +56.4%BadDebt/CharityExpense -$25,507,865 -$20,752,103 -18.6%NetRevenue $216,182,076 $264,826,306 +22.5%

Expenses $229,229,085 $273,526,282 +19.3%OperatingMargin -$13,047,010 -$8,699,976 +33.3%OperatingMarginMean% -6.0% -3.3%OperatingMarginMedian% -6.9% -3.9%

NonOperatingRev. $14,237,473 $7,193,197 -49.5%NETIncome/Loss $1,190,463 -1,506,000 -226.5%NetMargin%Mean 0.6% -0.6%NetMargin%Median 2.9% 1.2%

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-27.7 -27.6

-19.6

-11.7

-5.0 -4.1 -3.6 -2.4

2.2 2.5

5.1

8.6

-3.9 -3.3

-30.0

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

Per

cent

ages

West of HWY 83 Median (-3.9%) Mean (-3.3%)

ND Critical Access HospitalsOperating Margin Calendar Year 2016

The CAHs West of Highway 83

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47,711,857 51,417,318 49,777,532 53,313,73469,244,663 79,296,683

134,091,182157,309,299 165,220,966

176,238,738

204,791,453

227,608,31243,236,513

47,262,25665,940,086

70,647,753

74,316,302

83,260,426

26,431,524

24,212,751

23,932,947

27,774,366

26,072,513

28,005,655

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

2011 2012 2013 2014 2015 2016

Revenue

NorthDakotaCriticalAccessHospitalsWestofHwy83Revenue


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4.29% 4.02% 3.85% 3.11% 3.11%

7.14% 7.70%

8.27%

5.22% 5.22%

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

2012 2013 2014 2015 2016

BadDe

btPercentageofHospitalIn

p,Outpt,S

wingbed,C

linicRe

venue

NorthDakotaCriticalAccessHospitalsBadDebtPercentageofRevenue,EastVsWestofHwy83

East West

27OriginalCAHsintheAnalysis

Calendar2016

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-28% -28%

-20%

-13% -12%

-7% -6%

-4% -4% -4% -3% -3% -2% -1% -1%

1% 1% 1% 2% 2% 4% 5% 5% 6% 7%

8% 9%

-1.3% -2.9%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Percentages

WestofHWY83 EastofHWY83Median(-1.3%) Mean(-2.9%)

NDCriticalAccessHospitalsOperatingMarginCalendarYear2016

27OriginalFacilities

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NDCAHOriginal27FacilitiesStatementofOperationsAnalysis

27Facilities 27Facilities2007 2016 2007-2016Total Total Variance%

OperatingRevenue $194,605,635 $326,227,846 +67%BadDebt/CharityCare - $3,522,554 -$9,980,619 +183%OtherDeductions -$35,571,417 -$46,086,061 +31%NetPatientRevenue $155,511,664 $270,161,166 +73%(Otheroperatingrevenuegrew520%)

Expenses $161,465,871 $278,009,944 +72%OperatingMargin - $5,954,207 - $7,848,777 -31%OperatingMarginMean% -3.8% -2.9%OperatingMarginMedian% -3.0% -1.3%

NonOperatingRev. $4,112,571 $9,994,426 +141%NETIncome/Loss -$249,444 $2,095,749NetMargin%Mean -0.2% 0.8%NetMargin%Median -1.7% 1.7%

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31,578,867 33,974,027 32,852,204 30,692,375 28,343,736 26,532,438 26,527,212 24,961,299 26,055,987 24,029,481

82,825,55293,034,353 101,634,537 107,004,892 114,324,183 124,930,643 128,929,049 135,277,828

147,274,462 153,969,771

20,417,754

23,112,67923,450,801 23,215,516

32,360,82336,290,658 37,929,952

40,344,028

44,654,89148,730,168

56,662,419

57,816,52261,940,518 65,747,351

73,110,95172,721,678 70,252,628

77,671,504

78,132,42480,699,556

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue

27OriginalNorthDakotaCriticalAccessHospitals

Revenue


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NorthDakotaCAHFinancialAnalysis� Observations

� Ofthe27Reportinginall10years� 5HadOperatingLossesall10years� 8HadOperatingLossesin9of10Years

� Ofthe27Reportinginall10YearsFacilitiesWithPositive OperatingMargin� 2007 - 6� 2008 - 5� 2009 - 8� 2010 - 7� 2011 - 11� 2012 - 6� 2013 - 9� 2014 - 6� 2015 - 14� 2016 - 12

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CAHFinancialsThoughts…� InpatientutilizationatthesmallerCAHscontinuestodecline� OutpatientandClinicRevenuecontinuestoexperiencegrowthinCAHs� MedicaidExpansionaccountedfor$27millionor4%ofpatientrevenue� Baddebt/charitycareexpensehascontinuedtostabilizeanddecline

� Decreased14%or$5millionfrom2015to2016� The340bprogramaccountedfor$7.5millionin(otheroperating)revenue

� HalfofCAHsparticipatedin340bprogram� CAHsincurred$16millionincontractnursingexpensein2016

� $3millionmorethanin2015� Operatingmarginscontinuedtoimprove� 18facilitieshadapositiveoperatingmarginin2016

� 10ofthoseutilizedthe340bprogram� Netmarginscontinuedapositivetrend� VolumetovaluetransitionandMIPSwillimpactusinthefuture

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AccountableCareOrganization(ACO)???

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ProjectedChangeinMedicareEnrollment

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ProjectedMedicareSpending2013- 2023

$586 $597 $615

$671$695

$722

$794

$849

$911

$1,018$1,064

$500

$600

$700

$800

$900

$1,000

$1,100

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Medicare Spending in Billions

0%

20%

40%

60%

80%

100%

2012 2017 2022 2027

MedicarePartATrustFundBalance%ofAnnualExpendituresInbillions:

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MedicareSpending

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AccountableCareOrganization� ACO Guidelines Established in the Affordable Care Act (ACA)� CMS Initiative to Shift from Volume to Value Based Payment� Accountable Care Organization (ACO)

� “A group of health care providers who come together to coordinate the quality and cost of care provided to patients attributed to the ACO”

� Types of ACOs

� Pioneer ACO, Next Generation, Medicare/Medicaid ACO, Medicare Shared Savings (MSSP)

� MSSP Models� One-Sided (Share in Savings)� Two-Sided (Share in Savings and Losses)� Both models incorporate quality metrics

� Patient experience, care coordination, population health

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AccountableCareOrganization� Separate Organization – Legal structure and governance� Can Include Hospitals, Clinics, Physicians� Attribution of at least 5,000 lives� How is it done

� Annual Wellness Visit� Care Coordination� Transitions of Care� Advanced Care Planning� Data, Data Data

� Quadruple AIM� Improve Health Outcomes� Improve how we Deliver Care� Reduce Cost� Improve Satisfaction

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ClinicalQualityMeasureso ExamplesofQualityOutcomes

Ø PotentiallyPreventableERvisitsØ PotentiallyPreventableAdmissionsØ PatientSatisfactionSurveysØ ClaimsDataØ HealthOutcomes

ü Atriskpopulationü Chronicdiseasemanagementü Preventativehealthscreensandservicesü Immunizationsthroughoutthelifespanü Wellnesspromotionforall…

DataAnalyticso DataAnalytics– MedicareClaimsData

Ø CostbytypeofserviceprovidedØ Acute,ER,NursingHome,Hospice,Clinic

Ø CostbyproviderorganizationØ LocalProvider,Tertiary,NursingHome,Etc.

Ø EncountersbyproviderØ Physician– PrimaryCare,Specialist

Ø EncounterdatabyDiagnosis

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NorthDakotaMedicareACOHighSierrasNorthernPlainsACO� Submittedapplicationsin2015� StartedJanuary1,2016� NorthDakotaandCaliforniaprovidersgroupedtomeetattribution� OnesidedriskMedicareSharedSavings(MSSP)� ReceivedCMSAIMFunding

� ACOInvestmentModel(AIM)� PrepaidSharedSavings� EncouragedruralparticipationintheACOmodel

� BoardofDirectorsthatmanagetheACO� ACOChampionsthatleadtheACOwork

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HighSierrasNorthernPlainsACO

� NorthDakotaParticipants� FirstCareHealthCenter ParkRiver� HeartofAmericaMedicalCenter Rugby� McKenzieCountyHealthcareSystems WatfordCity� SakakaweaMedicalCenter/CCCHC Beulah/Hazen� SouthwestHealthcareServices Bowman

� CaliforniaParticipants� BartonHealth,MammothHospital,RidgecrestRegionalHospital,Truckee

TahoeMedicalGroup

� ArizonaParticipants� GilaHealthResources

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ExampleofACOinfo

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CMSShiftfromVolumetoValue

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Whatdoesthefuturehold� Federaldeficitwillcontinuetobeachallenge� MedicareTrustFundwillbeofcontinuedconcern� CMSiscontinuingtheshiftfromvolumetovalue� FutureCMSvaluebasedinitiativesmaynotbecalledACO’s,butthe

transitiontovaluewillcontinue� Patientswillexpectmorequalityandoutcomebasedresults� Commercialinsurersarealsotransitioningtovaluebasedpayment

� BCBSBlueAlliance� ManystateshaveMedicaidmanagedcare� 2019CMSACOapplicationsdueinsummerof2018

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ThanksforListening!

Questions?

Darrold BertschSakakawea Medical CenterCoal Country Community Health [email protected] 701-880-1440

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Critical Access Hospital (CAH

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