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B O A R D F I N A N C E C O M M I T T E E M E E T I N G A T T E
N D A N C E R O S T E R & M E E T I N G M I N U T E S
C A L E N D A R Y E A R 2 0 1 0
MEETING DATES:
MEMBERS 1/26/10 2/23/10
LINDA GREER, R.N. – CHAIR P P TED KLEITER P E BRUCE KRIDER, MA P
P MICHAEL COVERT, FACHE P P FRANK MARTIN, M.D. P E JOHN LILLEY,
M.D. E P MARCELO RIVERA, MD – ALTERNATE E NANCY BASSETT, R.N., MBA
– 2ND ALTERNATE P – 3RD ALTERNATE – 4TH ALTERNATE STAFF ATTENDEES
BOB HEMKER P P GERALD BRACHT P P DAVID TAM P P TANYA HOWELL –
SECRETARY P P INVITED GUESTS SEE TEXT OF MINUTES FOR NAMES OF GUEST
PRESENTERS
2010-02-23 BoD Finance Minutes.doc 1
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BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, FEBRUARY
23, 2010
1. AGENDA ITEM
• DISCUSSION CONCLUSION/ACTIO FOLLOW UP/RESPONSIBLE PARTY
FINAL?
CALL TO ORDER • The meeting–held in the First Floor Conference
Room at 456 E. Grand Avenue, Escondido, CA – was called to order at
6:03 p.m. by Chair Linda Greer, RN
ESTABLISHMENT OF QUORUM
• See roster
PUBLIC COMMENTS
• There were no public comments
INFORMATION ITEM(S)
• Request to change date of April 2010 BoD Finance Meeting o
Email poll of Committee members placed Thursday, April 29, 2010, as
the best option o Meeting will be held at the same time and place
(5:30 dinner/6:00 meeting, 1st Floor Conference
Room, 456 E. Grand Avenue, Escondido) • Updated program review
schedule
o Bob Hemker distributed an updated schedule (Attachment 1) o At
the request of the sponsor, the Perinatology Program review was
moved to April
• Financial Performance Bonus Barometer o Bob Hemker distributed
the new tool (Attachment 2) that was created as a collaborative
effort
between HR, Finance and Marketing o Goal was to have a simple
metric to assist staff in remaining engaged, enabling them to
see
where the district stands regarding financial performance and
potential for an incentive compensation payout for year end
o If you achieve the goal on the left side, the amount of money
on the right side is how much we will be able to pay
o Chair Greer inquired what staff needed to do make reaching the
bonus fund goal a reality We need to continue to be right on
budget, then push for extra to fund the incentive payout
fund This includes getting all the charges in, not being
wasteful, etc. – basically being as
efficient as we can in our daily tasks • Marketplace – bonds,
interest rates, etc.
o Bob Hemker stated that the 2006 Auction Rate Securities
(Revenue Bonds) are still showing favorable resets
o Based on these results and other market factors, there is
still no reason for the district to exit that strategy and look for
a fixed-rate alternative at this time
Information only • Forwarded to the March 8, 2010, Board of
Directors meeting as Information
Y
1. MINUTES – JANUARY 26, 2010
2010-02-23 BoD Finance Minutes.doc 2
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BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, FEBRUARY
23, 2010
1. AGENDA ITEM
• DISCUSSION CONCLUSION/ACTIO FOLLOW UP/RESPONSIBLE PARTY
FINAL?
• No discussion MOTION: By Dr. Lilley, seconded by Director
Krider and carried to approve the minutes of the January 26, 2010,
Board Finance Committee meeting as presented. All in favor. None
opposed.
Y
2. PHYSICIAN INDEPENDENT CONTRACTOR AGREEMENTS – EHR PROJECTS –
INFORMATION SYSTEMS SERVICES • Jay Federhart, MD [2/1/10-1/31/11] •
Sudabeh Moein, MD [11/1/09-10/31/10] • Mikhail Malek, MD
[2/1/10-1/31/11] • Rod Serry, MD [2/1/10-1/31/11] • Elizabeth
Rafii, MD [2/1/10-1/31/11]
• No discussion MOTION: By Director Bassett, seconded by
Director Krider and carried to recommend approval of the 1-year
Physician Independent Contractor Agreements for EHR Projects with
all physicians/groups for terms as listed. All in favor. None
opposed.
Forwarded to the March 8, 2010, Board of Directors meeting with
a recommendation for approval
Y
3. JANUARY 2010 AND YTD FY2010 FINANCIAL REPORT • Utilizing the
presentation included in the revised agenda packet as Addendum B,
Bob Hemker presented the January 2010 and YTD FY2010 financial
statements. Only select slides were presented for discussion
(listed below with any additional comments):
• BSC (ADD B-3) o Collective OEBITDA is at 10.9%
− YTD Budget is 10.8% − Above 100%, so blue indicator
o Raw dollars are ahead of budget o Productivity is just under
budget
− Premium pay continues to show constant improvement
• Executive Summary (ADD B-4) o YTD
− Adjusted Discharges – negative variance of 1.5% 1) Strong
outpatient business is offsetting the negative inpatient
activity
− Acute Admissions – negative variance of 6.5% − Total surgeries
– negative variance of 6.4%
1) Due in large part to Inpatient Surgeries – negative variance
of 460 − ER Admissions were down by 298 − Acute Patient Days –
negative variance of 5.4% − Births – negative variance of 7.2% − ER
Visits & Admissions – positive variance of 8.7% − ER to
Admission Conversion Rate – negative variance of 2%
1) Roughly 1100 admissions below what we would expect for the
amount of ER volume 2) Doing really well with documentation
initiative, which has an effect on conversion
MOTION: By Director Krider seconded by Director Bassett and
carried to recommend approval of the Financial Report for January
2010 and YTD FY2010 as presented. All in favor. None opposed.
Forwarded to the March 8, 2010, Board of Directors meeting with
a recommendation for approval
Y
2010-02-23 BoD Finance Minutes.doc 3
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BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, FEBRUARY
23, 2010
1. AGENDA ITEM
• DISCUSSION CONCLUSION/ACTIO FOLLOW UP/RESPONSIBLE PARTY
FINAL?
rate − Net Patient Revenue – slight negative variance of .29%
−
dollars up $568K
s
• nce of $299K
• D0K
o ta is a positive variance of $240K
o n−
1) rates for health coverage in January contributed to the
negative variance of
• laash is up about $17M compared to prior year
is $351M vs. $329M
• e and rate efficiencies
o rate efficiency, with a positive variance of $460K
• Do
ng the business g up the delta
o
•
Total Net Revenue – negative variance of $900K ess 1) $700K of
that delta is the January book of busin
− Net Income is still about a quarter million− Bottom bottom
line – positive by − Cash on Hand is up to 117 day
MTD Variance Explanations (ADD B-8) o Investment Income –
positive varia
YT Variance Explanations (ADD B-9) o Salaries & Wages –
negative variance of $73
Contract Labor – positive variance of $970K − Net delBe
efits
Group Health, FICA and pension will start normalizing though the
remainder of the year Employer contribution to FICA increases at
the beginning of a calendar year, and new plan$1.18M
Ba nce Sheet (ADD B-12) o Total of Cash with Board Designated Co
Projects have grown by about $100M o Liabilities have dropped by
about $15M o Year on year Total Fund Balance
MTD Income Statement (ADD B-13) o About half of the delta is
made up in terms of volum
Negative Net Income volume variance of $19K − Opportunity column
becomes
YT Income Statement (ADD B-14) Net Income – positive variance of
$279K − Driving about $400K of profitability based on how we’re
managi− $364 per Adjusted Discharge is more than makinNon-Operating
Income – positive variance of $290K − Investment Income – negative
variance of $284K
TD (ADD B-15) Income Statement vs. Prior Y
2010-02-23 BoD Finance Minutes.doc 4
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BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, FEBRUARY
23, 2010
1. AGENDA ITEM
• DISCUSSION CONCLUSION/ACTIO FOLLOW UP/RESPONSIBLE PARTY
FINAL?
o e igures setting the stage for the FY2011 budget cycle o j
−
−
2) n units of measure, which are up about 3.6% ncy of
contractual realizations
djustments
argin, which is up 9% o OEBIT om 10.3% o ve
$1.9M
• udgeted
o
− d arou 28M to achi 100% f nding of performance bonus
W are now at the 7-month mark, with fAd usted Discharges
Effectively 2 years that are similar
Net Revenue has grown by $8.5M 1) Raised rates 8%, but Gross
Revenues are up 9.3%
Net Revenue realization can be seen o3) Growing through Managed
Care contracts and the efficie
(a) Stronger in ambulatory contracts up about 2.7% year on year
o Salaries, Wages & Contract Labor –
− Consistent with union negotiations and non-union labor ao
Total Expenses are up about 2.2%
er Net Income Mo Translates to a strongDA is up to 10.9% fr
In stment Income − Last year was $3.3M − Budgeted $2.2M this
year and sitting at− Up another $17M in cash to invest
Income Statement – FY Projection (ADD B-16) o 7 months of actual
with 5 months of b
Project about $13.8M in Operating Income o Bottom-bottom line of
about $26.4M
Nee nd $ eve u
4. P R –VHA P CROGRAM EVIEW URCHASING OALITION
• Bob ground o In 2
− 1) els 2)
a) chael Covert sitting on their Board nd Gerald
Information only Forwarded to the March 8, 2010, Board of
Directors meeting as Information
Y Hemker provided historical back006, the District made a
decision to convert from Premier to VHA Premised on many
factors
Better pricing – access to contracts available at national,
regional and local levAbility to integrate into and become involved
in their networking structure
PPH is a member owner, with CEO Mib) CFO Bob Hemker (leadership
role)—along with CAO’s David Tam a
Bracht—sits on the CFO/COO Forum c) CHRO Brenda Turner is
involved in a leadership role in their HR Forum
• Mr. Hemker then introduced Steve Ellis, Director of Corporate
Supply Chain Services
2010-02-23 BoD Finance Minutes.doc 5
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BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, FEBRUARY
23, 2010
1. AGENDA ITEM
• DISCUSSION CONCLUSION/ACTIO FOLLOW UP/RESPONSIBLE PARTY
FINAL?
o Utilizi chment 3), Mr. Ellis provided an analysis of the
benefits deriv
year, not fiscal year
o PPH join
for local pricing to become better than that available
−
ng the attached presentation (Attaed since the move to VHA
− Information is based on calendar − Savings since 2006 total
over $5M
ed WestPac in January 2009 − Southern California collaborative
formed last year
1) Will aggregate purchasing powernationally
PPH is still part of VHA, but Westpac allows for regional
purchasing opportunities − Comprised of 11 healthcare systems − We
now have access to the purchasing power of the larger systems by
co-oping with them
5. PROGRAM REVIEW – SAN DIEGO RADIOSURGERY LLC &
STEREOTACTIC RADIOSURGERY
• Utilizing the attached presentation (Attachment 4) Gerald
Bracht and Bob Hemker provided an
y (SRS) with U. S. Radiosurgery (formerly known as NeoSpine,
LLC), under the
d that Sheila Brown and a member of the SDRS board might join
them for future prog
• Mr. was structured, with operations beginnin in lat
o PPHTrilo ided both SRS and soft tissue capabilities
design in order to wait for and take advantage of the newer with
a small
o
edures
o − 9
o Althou profit in CY2009
Information only Forwarded to the March 8, 2010, Board of
Directors meeting as Information
Y
update on the first full the first full calendar year of
operations for the District’s joint venture in Stereotactic
Radiosurgername San Diego Radiosurgery, LLC (SDRS)
• Mr. Bracht indicateram review updates
Bracht then provided background on how the transaction g e
2008
was the first provider in San Diego County to obtain the
Stereotactic upgrade to Varian gy, which prov
− Ramp up was slow bytechnology, which provided the ability to
tap into the radiation therapy side capital outlay
SDRS Services – (ATT 4-2) − PPH leases back the equipment 6
hours a day for traditional radiation therapy − SDRS utilizes the
equipment for 6 hours a day to perform SRS proc
Marketing was implemented exactly as that done previously for
the Denver market 39 contacts translated into 32 cases
− There were many reasons for the conversion percentage (ATT
4-7) 1) A large percentage was related to the San Diego County
market, which has a much
larger proportion of HMOs than that to which provider was
accustomed
gh not up to expectations, the venture did turn a small
2010-02-23 BoD Finance Minutes.doc 6
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ATTACHMENT 1
ATT 1-1
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DATE DUE PROGRAM FOLLOW-UP AT BOARD FINANCE SPONSOR(S)
5 April 2010 Da Vinci Gerald Bracht &Bruce Grendell
6 April 20102 Perinatology Program Sheila Brown &Lorie
Shoemaker
7 June 2010 Palomar Pomerado Imaging, LLCGerald Bracht,Sheila
Brown &Bob Hemker
8 August 2010 Wound Care Sheila Brown
9 TBD NICU Expansion Gerald Bracht
10 TBD PPH Retail Group, LLC Sheila Brown
11 TBD Residency Programs (e.g., Family Practice, ED, etc.)
Gerald Bracht &David Tam
1 December 2009 SNF Beds to Sub-Acute1 Steve Gold
2 January 2010
February 2010
Physician Recruitment
February 2010
3 San Diego Radiosurgery, LLC & Stereotactic Radiosurgery
(SRS)
Gerald Bracht &Lisa Hudson
Gerald Bracht &Bob Hemker
4 David Tam &Steve Ellis
VHA Purchasing Coalition
FY2010/2011 Program Review Schedule
1 Reviews have been completed on those topics in green font2
Topics in red font have been rescheduled from original review
date(s)
ATT 1-2
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ATTACHMENT 2
ATT 2-1
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ATT 2-2
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ATTACHMENT 3
ATT 3-1
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VHA Purchasing Coalition Report to the Board of Directors
February 2010
David Tam, MDChief Administrative Officer
&Steve Ellis, MBA, CMRP
Director, Corporate Supply Chain Services
ATT 3-2
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Background • PPH Joined VHA in 2006 for administrative
support and access to contracts available within the group
purchasing organizations portfolio
• Additionally, In January 2009, PPH joined the VHA Southern
California Purchasing Coalition (WestPac)– 10 Healthcare Systems
(Cedars Sinai, Presbyterian,
Cottage, Pomona, Methodist, others)– Purpose: Leverage pricing
through volume
aggregation
ATT 3-3
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33
VHA Services / Benefits
3
• Capital Equipment Group Buys• Supplier & Distribution
Contracts (Food, Medical/Surgical, Laboratory, Pharmacy,
Laundry/Linen, Office & Administrative, & More)
• Advisory & Consulting Services • Benchmarking • Spend
Analysis & Solutions• Education Programs
ATT 3-4
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PPH Participation
Anesthesia Medical ProductsCapital Equipment OncologyCardiology
OrthopedicDiagnostic Imaging PharmacyFacilities Mgmt.
Plasma/BloodFood & Nutrition RespiratoryI.V. Therapy Systems
SurgicalLaboratory Womens/Infants/Children
PPH Participates (Utilizes) 461 Contracts within the categories
listed below:
ATT 3-5
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Spend & Savings
2006 2007 20082009 (Q1-
Q3) Total
Contract Purchases $27,983,706 $37,995,968 $ 39,796,240
$34,778,881 $140,554,795
StandardizationRebates $27,445 $97,159 $132,097 $121,302
$378,003 AdditionalManufacturerRebates $78,615 $75,429 $85,250
$61,681 $300,975
Savings $308,433 $113,520 $2,121,016 $2,536,079 $5,079,048
ATT 3-6
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ATTACHMENT 4
ATT 4-1
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San Diego Radiosurgery, LLC
Board Finance CommitteeProgram Update
Gerald Bracht - CAOBob Hemker - CFO
ATT 4-2
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2
SDRS Background• Linear accelerator replacement approved in
FY07• Operating agreement entered into on April 10, 2008• Ownership
distribution: 51% NeoSpine LLC; 49% PPH• Structure:
– Operating Agreement– Services Agreement
• Provisions for Stereotactic Radiosurgery services– Block Lease
Agreement
• Lease of space occupied by SDRS• PPH use of space for
Radiation Therapy
– Contribution Agreement• Site improvements by PPH for Novalis
TX equipment
• Radiation Therapy operational May 2008 • Stereotactic upgrade
October 2008, operational November 2008
ATT 4-3
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3
SDRS Services• PPH Radiation Therapy
– M-F 6 hours/day access– Treatment of soft tissue tumors–
Enhanced IMRT capability
• Stereotactic Radiosurgery– M-F 6 hours/day access– Brain
tumors– Neurosurgeon directed
ATT 4-4
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4
PPH Benefits• State-of-the-Art service locally• Ancillary
services activity:
– MRI, CT, PET– Surgical placement of fiducial markers– Surgical
tumor debulking
• Benefits neurosurgical physicians• Enhanced marketing
campaign• Spin-off radiation therapy activity
ATT 4-5
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5
SDRS, LLC PerformanceActivity
CY08 CY09
Budget 0 94Actual 7 32Variance 7
ATT 4-6
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6
SDRS, LLC PerformanceFinancial
CY08 CY09Net Income (Bud) $52,044 $457,640
EBIDTA $410,006 $1,262,278
Net Income (Act)
Distributions 0 $200,000 *
* Distribution in June 2009, NeoSpine, LLC $110,000; PPH
$90,000
ATT 4-7
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7
SDRS Marketing
Contacts by category:
TV 302Radio 33Website 42Print 9MD* 8
Total 399
*through SDRS phone line
ATT 4-8
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8
SDRS Contact Conversions/Treatments
• Conversions out of 399 contacts:– 24 consults– 3 Stereotactic
patients (out of 32 total)– 3 Conventional Radiation Therapy/IMRT
patients
• Reasons for lack of conversions call to consult and treatment–
Callers have out of network insurance
• Example 58 patients that gave insurance information were
Kaiser patients– Callers were not candidates for either
modality
• Example no cancer, widespread disease, not a condition that is
treated with Radiation of any type
– Callers were under treatment elsewhere already– Patients
without certain tests completed were turned away until they had
results– Lack of physician confidence in the physicist prevented
the patients being treated
ATT 4-9
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9
SDRS CY10 Budget
CY10Activity 60Net Income $107,749
• January actual 5• February actual 7
ATT 4-10
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10
SDRS CY10Marketing Strategy
• Coordinated SDRS and PPH activities• Direct to Physician
visits
– PCP’s, IM, Oncologists, Neurosurgeons, Urologists,
Pulmonologist, Endocrinologists, Nephrologists, Neurologists,
– Involving Radiation Oncologist– Involving Physicist
• Community presentations• Gain access to all area contracts•
Continued targeted TV campaign• CPM “Innovations” direct mail
campaign• Print advertising
ATT 4-11
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11
San Diego Radiosurgery, LLC
Questions
ATT 4-12
2010-02-23 BoD Finance Minutes.pdfADP5B.tmpBackground VHA
Services / BenefitsPPH ParticipationSpend & Savings
ADP63.tmpSan Diego Radiosurgery, LLCSDRS BackgroundSDRS
ServicesPPH BenefitsSDRS, LLC Performance�ActivitySDRS, LLC
Performance�FinancialSDRS MarketingSDRS �Contact
Conversions/TreatmentsSDRS CY10 BudgetSDRS CY10�Marketing
StrategySan Diego Radiosurgery, LLC
ADP156.tmpBoard Finance Committee MeetingABoard Finance
Committee MeetingAttendance Roster & Meeting Minutes