Jackson Health System Observations and Recommendations. Duane J. Fitch, CPA, MBA President March 15, 2010

Transcription

1 Jackson Health System Observations and Recommendations Duane J. Fitch, CPA, MBA President March 15, 2010

2 JHS Observations

3 Jackson Health System An academic health system with a public healthcare mission Mission Statement To build the health of the community by providing a single, high standard of quality care for the residents of Miami-Dade County. Vision Statement Our strategic vision is to be a nationally and internationally recognized, world-class academic medical system and to be the provider of choice for quality care. Values Service Excellence and Quality, Commitment, Compassion, Teamwork and Communication, Respect, Confidentiality, Integrity and Stewardship, Inclusion

4 Jackson Health System: Brief Observations Unqualified Audit Opinion on September 30, 2009 Financial Statements with a Report Date of February 25, $232 MM of Improper Revenue ($50 MM in FY2008; $182 MM in FY2009) $116 MM Capital Spending in FY2009; $75 MM Needed to Complete Projects under Construction Operating Revenues Relatively Consistent Between 2009 and 2008 after Consideration of $50 MM adjustments. 4

5 Brief Observations Overall Expense Growth of 3.5%. The Large Growth in Accounts Payable has the Potential to Cause Patient Harm and Increase Professional Liability Exposure. Non-operating Revenue Decreased by $79 MM due to Suspension of Miami-Dade County Special Assistance $45 MM, $8.5 MM Reduction in Investment Income, and Decline in Sales Tax of $14.5 MM. 5

6 Brief Observations Lack of Credibility in Internal Financial Reporting Makes Data Driven Decision Making Very Difficult. Profitability By Analysis Requires Major Restatement. Revenue Allocations and Cost Accounting Analytics Yield Inaccurate Conclusions. 6

7 Brief Observations Sources of Revenue: Medicare 15% 16% Medicaid 24% 29% Provider Agreements 30% 23% Patient Responsibility 31% 32% 7

8 Reconciliation of 2009 Loss Increase in Net Assets FY 2008 $25,679 Less: revenue improperly recorded in FY 2008 ($50,000) Less: revenue reversed in FY 2009 ($50,000) Less: 3.5% increase in operating expenses ($62,800) Less: organic revenue reduction in 2009 ($28,464) Non-operating decrease ($79,000) Decrease in Net Assets FY 2009 ($244,585) 8

9 Jackson Health System The Current Situation is Nothing New: Miami-Dade Special Assistance of $45 MM in FY2008. Miami-Dade Special Assistance of $30 MM in FY2006. Large Growth in Gross Revenue/Accounts Receivable with No Corresponding Increase in Cash Collections Since System Conversion. 9

10 Jackson Health System Explosive Growth of Accounts Payable; $156 MM in FY2008, $219 MM in FY2009. Consistent Reduction in Days Cash on Hand: in FY2009; in FY2008; in FY2007; in FY2006; in FY

11 FHC Approach Phase I: Immediate Term

12 The FHC Approach FHC focuses on Achieving Sustainable Results. All Stakeholder Groups Provide Input in a Transparent, Inclusive, and Accountable Process. All Recommendations are Evaluated Against Their Impact on Patient Access, Patient Safety, Clinical Quality, Patient/Physician/Employee Satisfaction, Market Share, Accreditation and Regulatory Compliance, Operational Efficiency and Effectiveness, Mission and Strategy. 12

13 The FHC Approach Key Stakeholders include Governance, Community, Patients, Medical Staff, Government, Employees, Vendors, Financial Payers and Financial Institutions. Data Driven Approach 13

14 The FHC Approach- Phase I Accumulate as Much Cash as Possible and Reduce Expenses as Quickly as Possible Without Compromising the Mission of the Organization or Adversely Impacting Patient Access, Patient Safety, or Clinical Quality. CASH = TIME 14

15 The FHC Approach- Phase I Accumulating Cash Allows for the Development of a Thoughtful Plan that Does Not Contain Permanent and Irreversible Adverse Consequences for the Miami-Dade County Community. 15

16 The FHC Approach- Phase I FHC Believes that JHS Needs to Tangibly Demonstrate A Proactive, Thoughtful, Creative and Sustainable Approach to Addressing the Financial Issues to All Stakeholder Groups as a Vital Component of Requesting Financial Assistance. 16

17 Phase I Possibilities: Cash Accumulation and Preservation Prepare a Weekly Cash Flow Report Documenting all Estimated Sources and Uses of Cash. Monetize the Net Accounts Receivable Balance of $231.7 MM at September 30, May Need to Negotiate with the Bond Trustee if these Assets are Encumbered. 17

18 Cash Accumulation and Preservation Pursue $52.5 MM of Cash Acceleration Initiatives Noted in the Proposed Recovery Plan. Transfer all Available Restricted Funds and Assets whose use is Limited Funds to Operations. 18

19 Cash Accumulation and Preservation Take Steps to Collect or Monetize the $28.0 MM Receivable from Miami-Dade County at September 30, Enter into Sale/Leaseback Arrangements for Allowable Assets to Generate Cash. Sell any Non-Mission Critical Assets. Aggressively Pursue all Avenues to Borrow Money. 19

20 Cash Accumulation and Preservation Aggressively work with the County, State, and Federal Agencies to Secure Capital. Restrict all Capital Spending to Items Directly Related to Patient Care and Patient Safety. Evaluate the Availability of Grants under ARRA and Other Stimulus Type Grants. 20

21 Phase I Possibilities: Aggressively Manage Expenses Take Steps to Eliminate Nurse Agency and All Overtime Expenses. Proactively Manage Inpatient Length of Stay Through the Use of Evidence Based Medicine and Clinical Guidelines. Implement Meaningful Policies and Procedures to Address Non-Compliant Physicians. 21

22 Aggressively Manage Expenses Benchmark Nurse to Patient Ratios and All Other Supporting Functions to Best Practices and Make Adjustments as Needed. Perform a Detailed Review of All Major Contracts and Purchased Services. 22

23 Aggressively Manage Expenses Examine Productivity of Employed Physicians Related to Best Practices and Industry Benchmarks. Thoroughly Examine the Supply Chain Process and Policies and Make Adjustments as Needed to Achieve Savings. 23

24 Aggressively Manage Expenses Review Span of Control of all Supervisory Personnel and Consolidate Positions if Required. Engage in Discussions with all Service Providers about Price Concessions for Goods/Services Provided. 24

25 Phase I Possibilities: Revenue Cycle Assemble a Broad Based Revenue Cycle Team: Nursing Information Technology Patient Registration Utilization Review Case Management Health Information Management Pharmacy Patient Accounting Finance Physician Leadership 25

26 Phase I Possibilities: Revenue Cycle Develop and Implement a Revenue Cycle Dashboard. Consider Outsourcing all or a Portion of the Revenue Cycle Process for Immediate Gains in the Conversion Process. The goal of the team is to maximize the conversion of providing services into cash collections. 26

27 FHC Approach Phase II: Longer Term

28 The FHC Approach- Phase II SWOT Analysis Inclusive Process- All Stakeholder Groups Used to Build Accurate Current State Assessment : Financial Performance Market Share Satisfaction/Service Clinical Quality Accreditation and Regulatory Compliance 28

29 Phase II: SWOT Analysis Operational Efficiency and Effectiveness Patient Safety Patient Access Mission Strategy 29

30 Phase II: SWOT Analysis The Continuous Quality Improvement Model: Current State Desired State What do we need to do? Intervention Outcome 30

31 SWOT Areas of Review Market Share Growth Opportunities and Trends Detailed Analysis of Patient Flow and Operational Efficiency Specific Review of Utilization Management including Length of Stay Data, Appropriateness of Admissions and Site of Care 31

32 SWOT Areas of Review Review of Physician-Specific Quality Indicators and Practice Patterns Assessment of Unit Specific Efficiency and Effectiveness Staffing Patterns and Efficiency Physician Satisfaction 32

33 SWOT Areas of Review Facility and Medical Equipment Review Review of Long-Term Plans (IT, Facility, Capital, Strategic, Physician Manpower, etc.) Federal, State, and Other Grants 33

34 SWOT Areas of Review Fund Raising Efforts and Goals Governance Succession Planning/Education Operations Performance vs. Benchmarks 34

35 SWOT Areas of Review Internal and External Communications Marketing Assessment Review of Patient Satisfaction Data and Trends Review of Employee Satisfaction Data and Trends Assessment of Executive Team Roles and Accountabilities 35

36 SWOT Areas of Review Assessment of Contracted Services Assessment of Financial Relationship with Medical School Evaluate Outmigration of Emergency Room Patients in a Data Driven Fashion 36

37 Development of Targets: Future State Operating Margin Total Margin Days Cash on Hand Days in Accounts Receivable Average Payment Period Inventory Turnover Hours Worked per Adjusted Patient Day Personnel Expense as a % of Revenue 37

38 Develop Interventions to Achieve Targets Take Advantage of Strengths and Opportunities. Minimize/Address Weaknesses and Threats. Assemble a Multi-Disciplinary Team to Identify and Evaluate Interventions to Achieve Targets. Evaluate Each Recommendation Against Current State Analysis Criteria. 38

39 Develop Interventions to Achieve Targets Prepare Stoplight Report for all Interventions Accepted for Implementation: Description of the Initiative Financial Impact Accountable Individual Target Date Current States Review Stoplight Report in Detail with Governance and Administration. 39

40 Develop Centers of Excellence Recognize that we can not Simply Reduce Expenses to Achieve Financial Sustainability and Mission. Identify Service Lines that we have a Demonstrated Advantage in Service, Facilities, Equipment, Physicians, and Outcomes: Academic Medicine (University of Miami Miller School of Medicine) Ophthalmology 40

41 Develop Centers of Excellence Ear, Nose, and Throat Neurology and Neurosurgery Geriatrics Adult and Pediatric Trauma (Ryder Trauma Center) Holtz Children s Hospital- Level III NICU Miami Transplant Institute Burn Center 41

42 Develop Centers of Excellence Compete in these Service Lines and all Others for ALL Patients by Being the Best in Service, Clinical Quality and Outcomes. 42

43 FHC Approach Phase III: Implementation

44 Phase III: Implementation Implementation is all about Leadership and Accountability. Develop a Culture of Accountability, Data Driven Decision Making, Inclusiveness, Transparency, and Mutual Respect Timely Course Correction if Needed Prepare Accurate and Timely Financial Reporting to Guide Decision Making Get Stakeholder Input in a Genuine Manner Provide Feedback and Communicate 44

45 The FHC Approach: Timeline Phase I- First 10 weeks Cash Accumulation and Preservation/Expense Management Phase II weeks SWOT Analysis, Establish Targets, Intervention Development and Evaluations Phase III months Implementation of Interventions, Governance Dashboard Reporting, and Operations Stoplight 45

46 Jackson Health System is Critical to the Economy and Health of Miami-Dade County. Every Effort should be Made to Preserve the Mission, Vision, and Values of the Organization. This Effort will Require Collaboration, Transparency, Creativity, and Desire from Multiple Stakeholders. JHS must Take Timely and Thoughtful Actions to Help Itself in Order to Enroll Others in the Journey. The Time is Now. 46