MINUTES University of Connecticut Health Center Finance Subcommittee Meeting Monday, January 30, 2006

Transcription

1 MINUTES University of Connecticut Health Center Finance Subcommittee Meeting Monday, Voting Members (Phone) Claire Leonardi, Chairperson Brian Hehit Robert Hennessey Voting Members Present Jay Haberland Excused Absence James Abromaitis Anne Gnazzo David Marks Also in Attendance Lorraine Aronson, VP and Chief Financial Officer Philip Austin, President Sharon Blanchette, Asst. Dir. Internal Audit Tony Borda, Assoc. VP, Operations Bruce Carlson, Chief of Staff Peter J. Deckers, MD, Exec. Vice President Lisa Danville, Assoc. VP, Budget Chris Dugger, COO, UConn Medical Group Jeff Geoghegan, Director Fiscal Services Linda Flaherty-Goldsmith, VP and CAO Anne Horbatuck, Director Signature Programs William Kleinman, Esq., Assistant Attorney General Ellen Leone, Director of Nursing Joann Lombardo, Director Government Relations Joan Mazzone, Assoc. VP Human Resources Cass Mitchell, Assoc. VP, Reimbursement John Noonan, Office of Policy and Management Peter Robinson, DDS,PhD, Dean of Dental School Jeff Small, Assoc. VP, Fiscal Admin./Research Steve Strongwater, MD, Assoc. Dean, Clinical Affairs James Thibeault, Director Signature Programs Tom Trutter, Dir. Campus Planning, Construction Daniel Upton, Chief Financial Officer Jim Walter, Assoc. VP, Communications Scott Wetstone, MD, Dir. Health Affairs & Policy Plan. Susan Whetstone, Chief Administrative Officer The meeting of the Finance Subcommittee of the University of Connecticut Board of Directors was held on Monday,, in the Academic Research Building (EG013). The meeting was called to order at 8:05 a.m. by Ms. Leonardi, Chairperson. There were no requests for public comment. Approval of Minutes On a motion duly made and seconded, the Committee approved the Minutes of November 30, Financial Reports Executive Summary- Year to Date Highlights for 6 months ended 12/31/05 The challenges for Fiscal Year 2006 that have surfaced early are a declining trend in clinical volume and a decrease in Research awards and revenue. The first six months of the Fiscal Year produced results of operations that show a deficiency of $4.8 million compared to a budgeted excess of revenues over expenses of $115,000. The primary areas causing the deficiency are $1.3 from clinical operations, $1.4 million from research operations and $640,000 from Correctional Managed Health Care (CMHC). The budgeted excess in the clinical operations historically covers a portion of the Academic and

2 2 Institutional Support expenses. The amount of State Support, while substantial, does not fully subsidize the Academic and Institutional Support areas. The Academic and Institutional Support business units are favorable to the budget plan. This is only because the budget assumed available clinical revenue in excess of expenses. This is unfortunately not the case at this time. The results for the month of December produced a deficit of $489,000 however; the deficit for the month is from the CMHC business unit (explained below). Without the CMHC deficit the result would be an excess of revenues over expenses of $102,000. The CMHC deficit has occurred due to the implementation of a Supplemental Overtime Staffing Pilot Program. This initiative is the result of a pilot program awarded by an arbitrator in the most recent statewide 1199 collective bargaining agreement. Because of representations made during negotiations, it is anticipated that any deficits created by this program will be funded by additional appropriations to the Department of Correction. A receivable has not been recognized until management is able to confirm with the State Office of Policy and Management that additional funds will be made available. There is a $1.3 million loss on the clinical side. The primary reason for the loss in the clinical operations is lower than expected volumes caused by employed physician turnover, medical leaves and higher than expected vacation activity. Net Patient Revenue per case is also impacted due to the lower volume in inpatient surgical cases, which has lowered the case mix index. In addition, external market changes include the expansion of cardiology programs at New Britain and Waterbury hospitals, and a change in referral patterns from the Department of Veterans Affairs. To address the budget problem, a corrective action and contingency plan was presented at the October Finance subcommittee. John Dempsey Hospital (JDH) revenues improved in the months of November and December, which produced an excess of revenues over expenses; a portion of the rebound is due to the one-time items that were outlined in the plan, along with the other action items. UConn Medical Group (UMG) is showing volume below the prior year and budget for the month. Research operations are been impacted by the 6.3 % decline in awards in FY 2005 and the first six months of FY 2006 is showing a decline of 8.5%. Research revenues recognized in the financial report are 11% below budget and 1.4% below the prior year. Expenses are also below budget but have not declined as steeply as revenue. In addition, the decline in direct research revenues is in the federal line, which carries the higher Facilities and Administrative, or indirect cost, add-on. Since budget also presumed the availability of indirect cost dollars that have not materialized, use of departmental reserve funds will have to be used. When you back out the one time items, the effect on the bottom line is $3.1 million. Correction noted on Page 18. Discussions evolved around the UMG deficit and how it is related to physician vacancies. There are ongoing, aggressive searches to fill the physician vacancies in both JDH and UMG. It was also noted that delays and cutbacks with NIH are causing shortfalls in the research area. The Research Services Enhancement Working Group has been developed to investigate the recent changes in the research areas and its effects on UCHC.

3 3 Ms. Leonardi requested a productivity oriented report an alternative and easy way to look at the research numbers. Jeff Small produces a quarterly productivity statement that may serve this purposes. UMG RECRUITING UPDATE Mr. Dugger reported on recruiting physicians for UMG. The competition is tough. Academic positions are paid approximately 30% less than private practice, which only adds to the difficulty in recruiting competent physicians. It was also noted that this geographical area in general has a shortage in physicians. One way that UCHC has been addressing this shortfall is by shifting around some physicians in the practice to better meet urgent needs. The goal is to try and increase faculty base by approximately 20-30%, filling positions. The current recruitment process will produce start-up costs which will hopefully entice attractive candidates. This has been taken into consideration from a budgetary viewpoint. MANAGEMENT FORECAST & ACTION PLAN The report forecasts consolidated financial results for UCHC for the period ending June 30, Since the Action Plan that was presented on November 30 was focused primarily to the clinical operations and the deficit is also impacted by declining research revenue and CMHC issues, a preliminary list of other actions items are presented. Significant Assumptions by Business Unit included in the forecast School of Medicine: New revenue for the contract services and the current spending trend, which, is favorable to the budget, continues. School of Dental Medicine: The current spending trend, which, is favorable to the budget, continues. Dental Faculty Practice Plan: The current deficit for the six months trends without improvement to June 30. Research: The effect of the higher Facilities and Administrative rate impacts the second half of the fiscal year but a deficit of $1.9 million is forecasted. John Dempsey Hospital: Admission levels will remain below budget however will rebound to last years level. This based on new Physician recruits and January s activity. Outpatient visits will continue the current trend Farmington Surgery Center results are included JDH received a one-time reimbursement for Medicaid Cost Reports for FY 92 through 97, which totaled $4.7 million. The Medicare FY 2005 cost report generated a receivable higher by $1.0 million than anticipated. Expenses Reduction actions are being realized as demonstrated by reduced fte s and agency expenses. In addition other expenses are anticipated to decrease over the next six months. Contract Manger continues to identify underpayments. Department of Veterans Affairs paid the outstanding receivable.

4 4 Based on the above items, JDH will meet the budgeted excess of revenues over expenses of $6.7 million. Dental Clinics: The trend in visits is expected to follow the first six months which is slightly ahead of last year but below the budgeted plan which is showing a deficit of $250,000. UConn Medical Group: This unit is forecasted to have a deficit if 1.7 million. The forecast assume an improvement over the next six months due to new physician hires. Contract Manger was expected to recover additional reimbursements from underpayments or incorrect payments however, has not generated any material amounts to re-bill. Correctional Managed Health Care: The model assumes that the deficit driven by the pilot overtime project (awarded in the arbitrated 1199 contract) will be covered by additional appropriations to the Department of Corrections. CMHC Pharmacy Program: This business unit is on target against the budget plan through December and is forecasted to meet the year-end target. Institutional Support: This unit is favorable to the budget through December, however the model is forecasting expenditures to increase due to utilities and other expenses in the second six months. Other Action Items that have not been factored into the forecast: Implement a Hiring Freeze on all new and vacant positions with the exception of essential clinical personnel; grant funds supported positions and Faculty recruitments tied to clinical or grant revenues. Target goal $1,500,000. Review and freeze all food service catering costs. Total annual cost is $800,000. Target goal $150,000. Schedule meeting with Dental Clinical management to review Dental Clinic and Dental Faculty Practice Plan receivables. Target goal $300,000. Freeze all travel expenses not supported by Direct Grant Funds. Target goal $250,000. During the next 30 to 60 days schedule budget review meeting with selected departments to evaluate expenses reduction or revenue opportunities. Target goal $800,000. Material Management will review all vendor agreements based on a high to low analysis. Target goal $400,000. Review all unrestricted Foundation accounts for possible additional revenue that can be transferred. Potential impact unknown. Clinical Management will make a brief presentation at the January 30, 2005 meeting on Clinical Recruitment Plans. Total targeted goal $3,400,000 Dr. Deckers spoke to the point that there is virtually no projectability in medicine and research. Philanthropy and running hospital in most efficient way is what will help us be successful.

5 5 FARMINGTON SURGERY CENTER Physician investment in the Center is not happening as expected. Low volume has necessitated a capital call. UCHC is currently looking to increase productivity by the service of frozen sections, needle localizations and GI procedures. There was a concern of what the impact would be to UCHC with a $2.2m deficit. Anticipate a breakeven by A detailed business model will be presented to this Committee at it s March 6 th meeting. In the meantime, Mr. Upton will send some detailed performance data about the Farmington Surgery Center to the whole Committee. CLINICAL INCENTIVE PRESENTATION Mr. Dugger presented the new clinical incentive performance plan. The presentation handout outlined in detail the plan s goals, structure and administration. MANAGED CARE REVIEW PROJECT The Finance Subcommittee and the UCHCFC Board of Directors were updated on this project when it was being coordinated through the Connecticut Hospital Association (CHA). The Board of Directors of CHA had recently voted to disengage from this project. Management believes the opportunity for recoveries of reimbursement are real and recommends the continued participation in the project. Currently twelve (12) hospitals have authorized the same law firms to represent them. Since there was no quorum, Dan Upton will send resolution to full committee to either agree or disagree so that the process can move forward. Ms. Leonardi and Mr. Haberland voted to approve but Ms. Leonardi suggested that no more than the initial $175,000 be spent. Updates Medical Services Building Financing Capital Lease is more attractive but People s Bank is also being considered. Memorandum of Understanding Dept. of Corrections Mr. Upton informed the Committee that UCHC is very close. Final version should be brought to the Committee at its March 6 th meeting. KPMG Audit Update Copies of the Audit Report were distributed with meeting materials. By unanimous agreement, the Committee moved into Executive Session at 9:45 a.m. Pending litigation and on-going contract negotiations Attendees: Aronson, Austin, Carlson, Deckers, Flaherty-Goldsmith, Haberland, Leonardi, Robinson, Strongwater, Upton, Wetstone Executive Session concluded 10:05 a.m. There being no further business to discuss, the meeting was adjourned at 10:06 a.m. Respectfully submitted, Daniel L. Upton For the Committee The next meeting will be Monday, March 6, 2006 at 8:00 a.m. in the Academic Research Building [EG013]