METROPOLITAN GOVERN E AND DAVIDSON COUNTY equa November 29, 2017 ‘Members ofthe Hospital Authority, Late Monday, the Department of Finance received word from Metro Legal which indicated the imminent artval of a sugplemental funding request from Metro General Hospital in excess of $19 milion, When combined with the operating subsidy for FY2018, this request wil bring General Hospita’s total Metro funding this year to over $54 milion—the largest since 2010 when the city \wrote off $31 millon in capital debt forthe hospital. Additionally, despite a dally census down {rom 63 to 34 fiscal yearto-date and no longer spliting the annual $35 million subsidy withthe Bordeaux and Knowles Homes, General Hospital's operating costs have continued to increase, ‘As the Director of Finance, itis my responsibility to provide accurate financial information to Policy makers and the puoic so they can make informed decisions and achieve the best results for the community, To that end, the Department of Finance has prepared the attached list of ‘questions, Your timely and thorough response to these inquiries wil allow us to better vet any proposal you submit, That, in turn, wil allow me to make a well-imed recommendation to the ‘Administration who will utimately submit a request tothe Metro Counc for approval. My primary obligation is to the taxpayers and to make sure the finite resources of this government are managed responsibly. This isa goal I know you all share, which is why | look ferward to your timely response and to our continued collaborative relationship, ‘Thank you for all you do for this community and for taking on the responsibilty to serve in the role you do | knowit is not easy, but itis appreciated, Please reach out to me directly if | can be (of assistance during this process. Regards, Ypuanodnan Tala Lomax-O'dneal Director of Finance cc: Tanaka Vercher, Chair of Budget & Financewestions Rs ital Supplemental Fun Submitted by the Department of Finance 0 2 3) 4 5) 4 ‘The document fram your NGH Board Meeting entitled “Key Considerations for FY 2018 Supplemental Request” (Attached) references a “series of operational ntatives and reductions” that were approvee bythe Board and defered in implementation. Based on that document: |. Please pronde a detailed ist of those approved reductions by line of business. 'b._Willthese reductions sil be implemented in this proposed new budget? ‘cf 30, what athe timeline for that implementation? 1d, Please provide a detalled listing of line itom expeneltures projected for this fiscal year 8 compared to last fiscal year. Please provide explanations for any variances sreate/les than 5% foreach line iter. ‘The key considerations document references “improvements in Revenue Cycle staffing productivity, Supp and Pharmacy standardization and pricing.” ‘a. Please provide specifics on each of those items and the amount saved fr the hospital byline of business and expenditure account. Please expan how this has impacted your supplemental estimate. ‘The key considerations dacument includes almost $2M for stay or retention pay as wells $1M for retention and $125K for longevity a, Please provide a specific budget for these bonuses, broken out by position. 'b.Willany executive staff be eligible for these bonuses? If so, which positions and at ‘what level of compensation? "What i the diference between the $1M for retention and $125K fr longevity awards ‘and the net line item of $1.7M for stay and retention pay? 44. Are any errployees eligible for multiple incentives? ‘The key considerations document notes $613,183 more in chart care than pre-budget. ‘a. Please explain the rationale behind this inrease assertion. “The key considerations document anticipates an increase in contract labor of $600,000. ‘a. Please provide a more detailed financial analysis ofthis expenditure that includes specie on where these cost inereases will occur ‘The key consderatons document notes that hospital anesthesia and ED physician subsidies will ise as collections decline wth fewer patents. Pease detall how thisimpact might be minimized through your staffing resourcing Initiatives.7) Te key considerations document notes $300,000 In anticipated legal expenses needed fr any restructuring oF ater costs related to change in character or operations of Hospital 2. Isitthe Authority’ intention to retain outside legal counsel? b, Does this antipate that the Hospital Authority will adopt changes to the operating ‘model of NSH? ‘The key considerations document outlines diferences between the anticipated budget prior to the onnouncemert of closing Inpatient services (pe-budet), and the anticipated budget ofter that announcement (pat-budget) '8) The pre-budget presumes $235,116 448 for FY18 which farived at by simply multiplying the fiat ical quarter a:tuals bya factor of 4, The actuals were below the projected VID atthe end ‘ofthe fst fiscal uate. ‘8. What were the orginal revenue projections for Metro General prior tothe start of Fr2018? When did tre Hospital Authority adopt a revised budget with an antielpated $235M in patient revenues? What s the anticipated monthly numberof admisions you will need to meet to hit this revenve goal? How does that compa 4. What s the rationale for basing the remaining three quarters on the budget actuals for at, rather than your iil projections? id the October actuals track with this assessment? {Of the revised $235M projection, how much is anticipated to come from inpatient ‘care? How much from outpatient care? i: The Average Daily Census (ADC) dropped from 36.1 In September to 28.2in October, ‘what impact did this have on your budget actuals? to your current admissions rate? 19), Pre-budget anticipates $36,119,668 in salaries and $9,855,240 in benefits Likewise, there were 529 FTE's in September; eight fewer than the $37 budgeted according the September fnancial report ‘2, What does thi equate ton terms of employment, FTES and PTES? 'b, How manyFTEs were anticipated on a monthly bass fr each ofthe remaining months {post September of the fiscal year? 10) Inthe pre-budget, how much ofthe $13.1M subsidy would be used to pay Meharry or: AP (serves already provided)? Bb. How much would be used to pay for future services through the end of FYI? 13) For this pre-budget scenario, please provide the FY18 budget for every department and clinic within NGH.12) Post-budget anticipates $222,772,830in total patient revenues ‘3. Whatis the anticipated monthly numberof admissions you wil need to meet to hit ‘this revenue goal? How does that compare to your eutrent admissions rate? b. Of the $222M projection, how much is anticipated to come from inpatient care? How ‘much fromoutpatient care? ‘With the reduction inpatient volume, wil this result in reduction In staff o services? How wil yeu plan for staffing over the next 6 months? ‘4, How many hospital employees are dedicated solely to Inpatient services? Outpatient? 13) Post-budget anticipates an increase of $2,062,153 n salaries and benefits over the pre-budget. ‘3. How many FTEs and PTES does this anticipate foreach ofthe remaining months (pst- ‘September ofthe fiscal year? b, Please proside the numberof FTE and PTES fr each ofthe past twelve months (November 2016 to November 2017) Pleas include the numberof staff departures and new hires fr each of those months 14) Inthe post budget, how much ofthe $19.7M subsidy would be used to pay Meharry for a. AP (services already provided)? bs. How much would be used to pay for future services through the end of FYI8? 15) For this post-budget scenario, please provide the FYB budget for every department and clinic within GH, 16) Please provide lis of al current NGH staf postions with salaries and benefits. Staff member names may be redacted 17) At the close of November 2017, what is the outstanding accounts payable to Meharry? 18) The most recent cash low provided tothe Department of Finance by NGH showed the Meharry 6/30 AP at $3,892,050. However, the supplemental request documents show Meharry 6/30 AP 3 $5,000,000. ‘3. What account forthe difference in these two figures? by Please provide a detailed reconciliation and explanation of these numbers 419) Please provide a deal sting ofthe amounts pad to other hospitals for patient referrals in FY17, and P38, 20) Pease provide the October 2017 financial report inthe format typically reported tothe Board 21) For each NGH clin, please provide: a. FYA7 VID patient visits b. FYIBYID patient visits22) Please provide an vodated monthly cash low statement showing your current assumptions. 23) Please provide a ising ofall vendor contracts, scope of services, contract duration, payment terms and spending year to date, 2A) Please provide a listing of aged account receivable balances by payer. Please explain any accounts receivable balances that are greater than 80 days.{Wovided You Wesgerae. Netiecdy ‘© Initial FY 2018 Budget required a $20-22M shortfall be addressed based on METRO Finance guldance on subsidy at $35M (© Aserles of operational initiatives and reductions were advanced and approved by the Board which effectively narrowed the gap to $10-11M (© Deferrals ia implementation of those changes, at request of other parties, has Inflated the need for the supplemental subsidy above the $20 11M target noted above. = Improvements in Revenue Cycle, staffing productivity, Supply and Pharmacy standardization and pricing have significantly improved financial performance in FY 2018 ~ prior to closure announcement © With those deferred actions stil pending, we had estimated a Supplement need of approximately $13.1 M as recently as 60 days ago (©. With recent news of the Meharry HCA announcement and the Mayor's expressed desire to close IP services at NGH, the updated Supplement has risen 0 $19.7M ‘or FY 2018 ‘© Thathas been modified as staff attrition will negatively impact labor costs, and patient concems will hurt Insured patient revenues and the subsidies needed to keep our ER, Hospitalist and Anesthesia programs whole through June 30%, © Key Drivers ofthisincreased subsidy are: (© Gross Revenue declines by 5% initaly and approaches 25% as near 6/30~ blended 7% decline modeled. CCharty care increases slightly vs paying patients — up 1% Salary costs increase $1M for retention and $125K for Longevity Awards Stay or Retention pay estimated at $1.7M using 10% premium over 6 months. Contract Labor rises rapidly - doubling over last 6 months vs run rate $1.34 impact (© Hospitalist, Anesthesia and ED physician subsidies rise as collections decline with fewer paying patients impact at $540K final 6 months. ‘©. Added $300k for anticipated Legal Expenses needed for any restructuring or ‘other costsrelated to change n character or operations of Hospital ‘©. Added $60,000 for minor maintenance identified during mock JCAHO visit—fre doors, penetrations, pressure and HVAC issues etc.Pre-Dudge+ [METRO MASHUILLE GENERAL HOSPITAL SUPPLEMENTAL REQUEST AS OF DECEMBER 2017 Revenues: otal Pationt Revenue 2as.16408 Dedietion from Revenue Contractual Ad 114.948372 Bad Debt 32162316 Charity 30,753,231 ther Ad. 14,536,664 Total Deductions 192,460,583, Net operating* 42,655,681 18.1% (other Revenue 3970332 Essential Access 15,127,132 ‘ty Supplement 5 Total Net Revenue ae Expenses: ‘Sataros 36,119,658 Benefits 9,855,240, ‘Contract Labor 3.800352 Supplies 15,068418 Contract Services 8378540 Physician Servicos 9,600,132 Repair and Halntenanco 3,773,668, other 7.816564 Interest 127,000 otro indirect expanse 3,603,900, Metro IF foe 95,280 ‘otal Expense 85 802 Operating Margin COE) 2,351,000 4,000,000, $900,000 ae XDSET 35,000,000 (5,092,137Post - Dud ae + [METRO NASHVILLE GENERAL HOSPITAL SUPPLEMENTAL REQUEST AS OF DECEMBER 2017 Revenues: “Total Pationt Revenuo Deduction from Revenue ‘Contractual Adj Bad Debt Chasity Other Ad Total Deductions Not operating Other Revenue Essanlal Access, City Supplement Total Net Revenue ‘Supplies Contract Services Physlelan Services Repair and Maintenance other Invorest Metro inirect expense Metro SF fees Total Expens Operating Margin Total ther Cash Paymants LOCAP for BLTCICH {Lease Payment Payment on Meharry oustanding AP 6/30 Not Cash (Deficiy* ‘Current Subsidy ‘Aitonal Subsidy Nosed 22,780 108,913,582 30,473,794 si36510 13,830,338 29 38,168,701 ma% 3.970332 15,127,132 oe 37,869,401 10,167,660, 4400 352 14,466,418 8.398510 910,132 3,238,668, Ba16.664 "17,000 3,608,900, 95,280 00,606 015, (3e0 50) 2.351.600 ‘000,000 500,000 (S471 450) 35,000,000 (39,713,450)