California Telehealth Network (CTN) Healthcare Connect Fund (HCF) Program Network Narrative
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1 California Telehealth Network (CTN) Healthcare Connect Fund (HCF) Program Network Narrative k:\hcf\rfp\usac comments 2013_9\ctn narrative_final.docx
2 California Telehealth Network Network Narrative Table of Contents 1. Goals and Objectives of the Network Strategy for aggregating the specific needs of HCPs (including providers that serve rural areas) within a state or region Strategy for Leveraging Existing Technology to Adopt the most efficient and cost effective means of connection those providers How the Broadband Services will be used to improve or provide Health care delivery... 2 i. Institutionalize the use of ehealth as a core business practice in health care facilities ii. Reduce health care costs while improving health care quality Any Previous Experience in Developing and Managing Health IT (including telemedicine) Programs A Project Management Plan outlining the project s leadership and management structure, and a work plan, schedule and budget Project Leadership and Management Structure... 3 Work Plan & Schedule... 3 FCC RHCPP... 3 FCC Healthcare Connect Fund (HCF)... 3 Fair Share sites... 4 Participation Fee Revenue from CTN Connect Powered By Vidyo... 4 Eceptionist... 4 Budget: CTN Board of Directors... 5 Attachment 1 Financial Projections k:\hcf\rfp\usac comments 2013_9\ctn narrative_final.docx
3 California Telehealth Network Network Narrative The most critical factor in sustaining broadband adoption is the value of the new network-based services that users are able to access. In the health care arena, the value of these services will be determined by their ability to simultaneously improve quality and improve efficiency, while decreasing costs. 1. Goals and Objectives of the Network The CTN vision is for broadband connections among all health facilities and activities in California and to regional and national resources to support advanced health information systems that enable coordination of all administrative, clinical and educational activities. i. Goal 1 - Create a statewide broadband telehealth network dedicated to healthcare and health education, connecting public and non-profit healthcare providers and other public facilities in California s rural and urban areas, as well as other consultant providers and resources, to bring the benefits of telehealth and telemedicine to all areas of California, particularly those where the needs are most acute ii. Goal 2 - Link California s statewide telehealth network to a nationwide backbone, creating greater access for the state s healthcare providers and the general population to continuing education, research, and peer networking iii. Goal 3 - Leverage and expand upon California s historic and recent investments in telehealth 2. Strategy for aggregating the specific needs of HCPs (including providers that serve rural areas) within a state or region Aggregating thousands of sites into one market will encourage broadband service providers to lower unit costs for service, ehealth application service providers who wish to access this aggregated market will pay CTN for the cost of using the network, thus further lowering costs to CTN and end-users. This network will have advantages over the public Internet because of the network s superior level of privacy and security as well as the explicit quality of service built into the service level agreements that will be essential to providers of ehealth applications. 3. Strategy for Leveraging Existing Technology to Adopt the most efficient and cost effective means of connection those providers CTN will leverage existing physical network infrastructure available from telecommunications carriers, as well as maximizing the use of preexisting design, implementation, management and support resources will : i. make it feasible to construct a large, statewide network on a very accelerated schedule with a minimum of operational and administrative resources; ii. will leverage well proven routing and transport technologies that are increasingly being adopted by top tier financial, governmental and industrial organizations. 1 P a g e
4 4. How the Broadband Services will be used to improve or provide Health care delivery i. Institutionalize the use of ehealth as a core business practice in health care facilities. Technology is increasing its role as a core component of America s health care delivery system. Recent federal policies that provide financial incentives to health care providers to adopt electronic health records are just one example of the central role that ehealth will play in the near future. The ability to capture health care information electronically so it can be exchanged with other providers within communities or across the state is rapidly becoming a requirement to provide quality health care. As a result, access to a fast, secure, and reliable broadband will be a requirement. ii. Reduce health care costs while improving health care quality. The use of telemedicine has already demonstrated the potential to reduce health care costs and increase quality. Examples include: A decrease in the need for patient transfers for critical care increases the savings for regional hospitals and enhances the ability for remote/rural hospitals to generate revenue. Access to healthcare, especially specialty services, is improved via telemedicine, providing savings to providers by decreasing health care personnel travel and time cost. A number of other benefits accrue to providers, patients and families, and communities. Using broadband technology, providers can partner to ensure that people get access to timely, effective healthcare expertise; patients in underserved areas can gain access to medical resources; and providers can gain access to current medical records as well as consultative services, educational opportunities, and medical networks. Technology enabled health care will help facilitate new, more efficient models of health care delivery and disaster preparedness coordination across the economic and geographic spectrum. The increased use of health care technology supported by broadband can improve the management of chronic illnesses which account for 75% of health care expenditures nationally. In a technology-enabled model of care, the patient would have an electronic health record (EHR) available to all of his or her healthcare providers. Should the patient experience a severe complication the local emergency physician could consult with a specialist who had remote access to the EHR to assist in providing emergency treatment via telemedicine. These benefits and cost savings will further the incentives for health care providers to utilize ehealth technologies and the broadband infrastructure necessary to support health information exchange. 5. Any Previous Experience in Developing and Managing Health IT (including telemedicine) Programs CTN was originally incubated at University of California Medical Center in Sacramento, CA. Since the inception of CTN, funded by the Rural Health Care Pilot Program, there was always the goal of becoming an independent, stand alone 501 (c)(3). That process happened incrementally over the course of two years and contracts with the master vendor, AT&T, and the funding agency, Universal Services Administrative Company, were signed over to the independent entity on April 1, Since that time CTN has made major headway in the state by providing subsidized circuits to its members as well as working diligently to determine value added services that would be of most interest to its 2 P a g e
5 members. CTN recently hit upon two (2) initiatives it believes will be key to becoming self sustaining and also to providing the best healthcare in the state of California. Please see the Project Plan and funding assumptions later for more detailed explanation. 6. A Project Management Plan outlining the project s leadership and management structure, and a work plan, schedule and budget. Project Leadership and Management Structure California Telehealth Network is a 501 (c) 3, non-profit organization with a governing board comprised of Stakeholders from four classes of Designators: (a) Donor Designators: Non-governmental organizations which have contributed or made a legally binding pledge to contribute at least $1,000,000 to the California Telehealth Network project. (b) Public-Agency Designators: California State Governmental agencies that have the ability to impact the success of this corporation by exercise of their official powers and responsibilities. (c) Provider/Stakeholder Designators: Organizations that are familiar with the needs and concerns of rural and underserved healthcare providers, or parties engaged in partnership and collaboration with this corporation to expand health care access to rural and medically underserved communities. (d) University of California Board instructions are communicated to the President & CEO who works through twelve additional staff to complete the various tasks as directed. Work Plan & Schedule California Telehealth Network is committed to the following initiatives for the fiscal year of July 1, 2013 through June 30, 2014: FCC RHCPP Staff will manage RHCPP site count to fully expend the $22.1 million FCC RHCPP award while maintaining a minimum of 300 routers deployed to satisfy the terms of the current AT&T agreement. Any sites dropping off the network will be offset by site substitutions. CTN RHCPP sites generally have 36 month membership agreements at which point they will be converted into the FCC Healthcare Connect Fund (HCF). Migration begins in December 2013 for sites initially installed in December 2010 and will continue through June Benchmarks For Success (BFS): o Budgeted monthly site count of 300 sites throughout the year FCC Healthcare Connect Fund (HCF) Assuming standard FCC/USAC approval lead times of 30 days for each location, with an additional 120 days from the time orders are placed until installation, CTN will begin generating HCF revenues 150 days after the completion of the RFP process. Target to complete 150 HCF installations by fiscal year end CTN plans to apply 65% HCF subsidy and 17.5% California Teleconnect Fund (CTF) match passing through the remaining 17.5% cost to CTN site 3 P a g e
6 CTN will pay AT&T broadband rates until other providers can be included in HCF. Inclusion of additional broadband providers requires completion of FCC/USAC approved competitive selection process which is expected to be completed during [INSERT DATE HERE] time frame. Benchmarks For Success (BFS): o Complete USAC approved selection process by [INSERT DATE HERE] to drive more attractive broadband pricing to HCF member sites o Generate 50 new HCF members per quarter beginning fourth quarter 2013 Fair Share sites CTN has entered into agreements with Charter Business, Time Warner Business Class (TWC), and TelePacific to provide broadband services to non RHCPP CTN sites. CTN anticipates adding broadband providers as they meet CTN s financial terms & technical specifications CTN will be the agency of record placing the order on behalf of the site for broadband services and handling the provider billing and payment CTN will provide one free Vidyo license to each participating CTN site location with additional licenses available for a fee Benchmarks For Success: o Achieve quarterly site growth of 80 fair share sites beginning third quarter 2013 Participation Fee Revenue from CTN Connect Powered By Vidyo Web based video conferencing application will be provided to all CTN sites (RHCPP, HCP, fair share, and sites not in need of broadband circuits) During FY 2014 CTN plans to brand the offering CTN Connect and use the application as the signature offering to all CTN sites to improve the non broadband value equation Each CTN participating site will receive a directory of CTN locations built into the application. Customized directories will be provided for $500 for each directory Joint marketing to be implemented with Regional Extension Centers, neighboring Western State Telehealth Networks, and other complementary organizations. Benchmarks For Success: o Achieve quarterly growth of 150 CTN Connect license sales Eceptionist CTN has entered into an agreement with Eceptionist, a web based patient referral and scheduling software platform. Eceptionist is interoperable with multiple EHR platforms and can be used to dramatically reduce administrative costs for hospitals and medical centers to handle patient referrals from rural and community clinics. CTN has a one year exclusive with Eceptionist in California which will be extended if meaningful deployment progress is demonstrated. Eceptionist bills Hospitals/Medical Centers directly for software/ehr integration costs Benchmarks For Success: o One hospital or major medical center deployment per quarter 4 P a g e
7 Budget: Overall year on year non grant related revenue growth is projected to be $3.2 million driven by increased revenue from CTN FCC Rural Health Care Pilot Program (RHCPP) membership fees ($196K) and revenue from implementation of CTN s Strategic and Operating Plan Initiatives : Eceptionist - $1,290k, Fair share sites - $1,217k, and CTN Connect Driven Participation Fees - $615k. Overall budgeted revenue for FY 2014 is $4,271k for growth of $1,942k versus the previous year. Importantly, FY 2014 is the year CTN projects to make the transition from a grant sustained organization to become self funded from operating revenues generated from membership services provided. Overall budgeted core overhead expenses for FY 2014 are $2,457k down $762k from the previous year. Importantly, during FY 2014, CTN plans to sustain current staffing to assume implementation of the FCC Healthcare Connect Fund as the successor program to the RHCPP. Total net operating cash flow improves from ($890k) for FY2013 to ($775k) for FY The three year plan projects positive cash flow in FY 2015 of $1,201k. 7. CTN Board of Directors Co-Chairs: Margaret LAWS, Director, Innovations for the Underserved California Health Care Foundation Michael N. MINEAR, Chief Information Officer UC Davis Health System UC Davis Health System Gary BALDWIN, Deputy Director Deputy Director for Plan and Provider Relations Department of Managed Health Care Carol BROWN, Chief of Staff - Office of President Peevey California Public Utilities Commission Gregory FRANKLIN, Deputy Director of Health Information Technology California Technology Agency Lawrence FRIEDMAN, M.D., Medical Director, Ambulatory Care, Quality & Safety, and Clinical Telemedicine, CMA UC San Diego Health System Mario GUTIERREZ, Executive Director, Center for Connected Health Policy; CSRHA Board Delegate The National Telehealth Policy Resource Center Steven HENRY, Senior Director, Treasury Investment Management UnitedHealthcare, West Region Patrick JOHNSTON, President and CEO California Association of Health Plans 5 P a g e
8 Pamela LANE, MS, RHIA, CPHIMS, Deputy Secretary, HIE California Health & Human Services Agency Sunne Wright MCPEAK, President and CEO California Emerging Technology Fund Cathryn NATION, M.D., Associate Vice President, Health Sciences University of California Office of the President Andie Martinez PATTERSON, Deputy Director of Regulatory Affairs California Primary Care Association Patrick SOON-SHIONG, Chairman & CEO All About Advanced Health & the Health Transformation Institute Peggy WHEELER, Vice President, Rural Health & Governance California Hospital Association 6 P a g e
9 Fiscal Year End 2013 FY 2014 Projection Change % Change FY 2015 Projection Change % Change FY 2016 Projection Change % Change Net Revenues Grants $ 2,388,193 $ 2,555,922 $ 167,729 7% $ 298,264 $ (2,257,658) -757% $ 325,075 $ 26,811 8% FCC RHCPP $ 336,078 $ 531,638 $ 195,560 37% $ 637,684 $ 106,046 17% $ 468,230 $ (169,454) -36% FCC HCF $ - $ 408,465 $ 408, % $ 1,310,826 $ 902,361 $ 2,186,490 $ 875,664 40% Fairshare sites $ 7,135 $ 358,800 $ 351,665 98% $ 2,170,740 $ 1,811,940 83% $ 4,969,380 $ 2,798,640 56% Eceptionist $ - $ 612,000 $ 612, % $ 2,121,600 $ 1,509,600 71% $ 3,657,600 $ 1,536,000 42% Participation Fee $ - $ 229,735 $ 229, % $ 1,120,280 $ 890,545 79% $ 2,451,900 $ 1,331,620 54% Earned Income - Core $ 121,259 $ - $ (121,259) $ - $ - $ - $ - Other - MMKT Interest $ 1,454 $ 1,303 $ (151) -12% $ 1,303 $ - 0% $ 1,303 $ - 0% Total Revenue $ 2,854,119 $ 4,697,863 $ 1,843,743 39% $ 7,660,697 $ 2,962,834 39% $ 14,059,977 $ 6,399,281 46% Cost of Services?? Cost of Services Grant Deliverable $ 875,922 $ 531,017 $ (344,904) -65% $ 298,264 $ (232,753) -78% $ 325,075 $ 26,811 8% RHCPP $ 336,078 $ 531,638 $ 195,560 37% $ 637,684 $ 106,046 17% $ 468,230 $ (169,454) -36% Healthcare Connect Fund (HCF) $ 408,465 $ 408, % $ 1,310,826 $ 902,361 69% $ 2,186,490 $ 875,664 40% Fairshare sites $ 4,459 $ 312,000 $ 307,541 99% $ 1,887,600 $ 1,575,600 83% $ 4,321,200 $ 2,433,600 56% Eceptionist $ 135,000 $ 207,885 $ 72,885 0% $ 642,535 $ 569,650 89% $ 857,915 $ 288,265 34% Participation Fee $ 135,864 $ 135, % $ 321,432 $ 185,568 58% $ 563,160 $ 377,592 67% Total Cost of Services $ 1,351,459 $ 2,126,869 $ 775,411 36% $ 5,098,341 $ 3,106,472 61% $ 8,722,070 $ 3,832,478 44% Net Contribution Grant Deliverable $ 1,512,272 $ 2,024,904 $ 512,633 25% $ - $ (2,024,904) $ - $ - RHCPP $ - $ - $ - #DIV/0! $ - $ - Healthcare Connect Fund (HCF) $ - $ - $ - $ - $ - $ - $ - Fairshare sites $ 2,676 $ 46,800 $ 44,124 94% $ 283,140 $ 236,340 83% $ 648,180 $ 648, % Eceptionist $ (135,000) $ 404,115 $ 539, % $ 1,479,065 $ 1,074,950 73% $ 2,799,685 $ 2,799, % Participation Fee $ - $ 93,871 $ 93, % $ 798,848 $ 704,977 88% $ 1,888,740 $ 1,888, % Total Net Contributions $ 1,379,947 $ 2,569,690 $ 1,189,743 46% $ 2,561,053 $ (8,637) 0% $ 5,336,605 $ 5,336, % Core Expenses Personnel Expense $ 1,535,702 $ 1,737,862 $ 202,160 12% $ 1,828,673 $ 90,811 5% $ 1,905,841 $ 77,168 4%
10 Fiscal Year End 2013 FY 2014 Projection Change % Change FY 2015 Projection Change % Change FY 2016 Projection Change % Change Travel $ 121,117 $ 174,000 $ 52,883 30% $ 191,400 $ 17,400 9% $ 210,540 $ 19,140 9% Facilities $ 71,050 $ 72,590 $ 1,540 2% $ 74,630 $ 2,040 3% $ 75,820 $ 1,190 2% Communications Services $ 75,707 $ 109,041 $ 33,334 31% $ 110,241 $ 1,200 1% $ 110,241 $ - 0% CENIC $ 211,280 $ 94,274 $ (117,005) -124% $ 125,699 $ 31,425 25% $ 125,699 $ - 0% Office Supplies $ 23,315 $ 29,540 $ 6,226 21% $ 32,498 $ 2,958 9% $ 35,788 $ 3,289 9% Legal & Professional Services $ 44,229 $ 55,400 $ 11,171 20% $ 56,000 $ 600 1% $ 56,541 $ 541 1% Insurance $ 21,113 $ 49,007 $ 27,894 57% $ 58,146 $ 9,139 16% $ 63,967 $ 5,821 9% Consultants $ 105,294 $ 344,350 $ 239,056 69% $ 448,100 $ 103,750 23% $ 352,000 $ (96,100) -27% Total Expense $ 2,208,806 $ 2,666,064 $ 457,258 17% $ 2,925,387 $ 259,323 9% $ 2,936,436 $ 11,049 0% Net $ (706,145) * $ (95,071) $ 611, % $ (363,031) $ (267,960) 74% $ 2,401,472 $ 2,764, % *Fiscal Year deficit covered by Cash in bank at beginning of the year at $911k, plus payment of grant Note: Expenses for USAC RHCPP Connections has been removed from this budget. Costs are covered by funds from USAC and CETF.
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