The agenda and materials are posted on the website. Most of the action items will be presented at the District Board Meeting.
1. January financials. Highlights are cash was 10k at the end of January. Net income was +24k due to a looking back 160k adjustment for long-term care beds offsetting the loss of 187k in IGT accrual. ADC for critical care was 5.1 making the 3 consecutive months Nov-Jan the highest census in the ICU for the last five years. Average length of stay is at the high for the year, but it jumps around.
2. Wound care program due diligence is solid. I cannot support it at the present time; I want resolution on the Hospital's status prior to such a large investment of time, energy, and money (about 900k in capital). I have no reason to doubt that the program can be profitable, but any positive impact on the bottom line will not be seen for at least 8 months and probably longer.
3. Financing seems reasonable from the Bank of Alameda, but the covenants seem risky. When I questioned the necessity to have at least 1.00 net income, I found out there is 1 to 1.5 million in non-cash income that will likely be realized prior to the close of the fiscal year. This significantly revises my estimate of a 100-400k loss. With that amount available as a cushion, there is every likelihood of a profit although cash flow may continue to be problematic. (It might be time to consider expensing some of the seismic since those expenditures have to be considered somewhat impaired given the delay in the project.) The covenants tie the Hospital to a 1.75 DSCR for the seismic financing which would mean that the monthly positive cash flow number would need to be at least 200k in order to cover the existing debt plus the new seismic debt.
4. Line of Credit from Bank of Alameda same issues as above. It seems to me that the LOC will almost certainly need to be drawn upon for the IGT transfer.
5. New equipment for the Hospital funded by a 2002 donation (Jaber funds). The 10 new defibrillators will replace disparate equipment and there may or may not be credit for the older equipment.
6. Purchase of PC's with carts for the EHR. (These are known as COW's). The cost is about 6k per unit which seems high to me, but I'm incredibly cheap when it comes to computer purchases. Also, the mobile cart is a big piece and I've never bought one of them. The bid accepted is 6 percent higher than the lowest bid. Reasons for choosing this bid over the low bid such as support, timeliness of delivery, etc. will be documented.
These items were very meaty and required a lot of time so the other items got somewhat short shrift. Since I attended this meeting, hopefully the Board meeting will move faster without me asking a lot of clarifying questions.
Board meeting is 3/7 I believe.
Wednesday, February 23, 2011
Wednesday, February 16, 2011
Notes for 2/7
Because of the delay, I don't know how complete I can make these notes.
1. Announcements from closed session - Reports approved.
2. Consent Calendar approved.
3. ECG Monitoring system is old, outdated, and prone to glitches. The ER had a system from the same company (Nihon Kohden) installed previously so the telemetry antennas are already available to be used. The price is around 300k or about 6500 per month. This is urgent and a patient safety issue. It's another 300k that has to be paid off over time that the Hospital can't afford, but the safety issue wins out so I voted for. Financing will be from Bank of America on the existing 2.5 million master equipment lease (from May 2010 for the PAC, about 700k remains available). Other systems were more expensive because they could not use the existing antennas (don't know if it's a radio frequency, lease, or proprietary protocol issue and did not ask).
4. Stroke certification proceeds apace. The TJC has assigned an account manager. (The TJC charges hospitals to provide certifications so the structure of some of these things is almost like a vendor/client relationship.)
5. Monthly statistics for January are again ahead of budget which would suggest that January financials would be favorable again (like November and December) which has brought the Hospital back from a several hundred thousand YTD loss of only 49k. Surprisingly even a 139k positive result for December was still over 100k short of the December budget. I knew that this fiscal year budget was optimistic, but I guess I had not thought it was so optimistic as to expect that any single month would have net income of almost a quarter million dollars (239k is the exact number). The problem with expecting a positive January is due to a probable restructuring of IGT funds, the last month that IGT revenue will be accrued is December. This means January has to absorb a 187k negative hit. It's possible that there might be a slight positive given the patient census and an offsetting favorable adjustment to some long-term care reimbursement dollars, but I think it would be somewhat of a surprise if any month from now to the end of the year is positive. There may be some future political relief in sight that might restore some of these funds, but it is not anticipated at the present time.
6. ICU financial analysis - Ms Stebbins answered most/all of my questions. The preliminary financial analysis may not be 100% accurate. The numbers seemed low to Doctors Deutsch and Yeh for the ICU charges. They appeared to be consistent with some numbers available via a web search. It's not clear what was included or excluded. ICU days apparently are, on par, about the same amount of contribution as regular med/surg days although that analysis is skewed for the previous year (Kaiser cases?) The numbers for November and December were higher than historical and the 5.3 ADC was the highest for the past 5 years. The 5.0 ADC was second or third highest in the same timeframe. As an aside, it looks like this increase was one or two particular patients whose families wanted to continue aggressive care.
6. IT projects - See the table provided in the Board material. Quite a few ambitious projects especialy the PACS which will go live shortly. The Hospital anticipates capturing meaningful use dollars for its IT upgrades, but I am more than a little skeptical. Not really a criticism of this Hospital since all IT projects suffer from undue optimism, but especially healthcare IT projects. I have seen Kaiser and UCSF software updates over two years later. The table has some old dates and some typos so it will be updated (and posted?). I'm not sure when the update will be provided. If not by the next Board meeting then I will ask.
7. Updates/Events - Get your stroke screening. The Hospital sent out postcards to most Alamedans; we got ours. It looks like you can get a free mini-physical. HR tenure event on 2/28.
8. Facilities - NPC2 Discussion is below. Only addition to this is that I have confirmed that indeed the NPC2 requirements are applicable, but not being enforced. That information comes straight from OSHPD. So, although Alameda Hospital's license is valid, there is no legal reason it should remain so except forebearance on the part of OSHPD. Also reported is that the wound care lease terms and the letter of intent terms were different in several material ways so those are being worked out. The wound care financing will likely be through a credit line from the Bank of Alameda with the Hospital's equity commitment likely coming from the generous support of the Foundation. It is anticipated that the package will be voted upon in March. My tentative position is, although I believe in seeking out new revenue and offering new services where appropriate, that the capital commitment is too high and the potential contribution too speculative for me to vote in favor given, what I perceive is the looming crisis. Until a plan is in place for addressing the question of acute care services and long-term financial viability (without the parcel tax subsidy), I do not believe I can support these type of initiatives.
9. Community Relations Committee failed to make a quorum. Let Stewart Chen know if you wish to serve.
I am sure I forgot a lot. Comments are open if someone who was there or one of the six people so far (as of 10:00 am 2/16) who watched the video wants to correct any errors or omissions.
1. Announcements from closed session - Reports approved.
2. Consent Calendar approved.
3. ECG Monitoring system is old, outdated, and prone to glitches. The ER had a system from the same company (Nihon Kohden) installed previously so the telemetry antennas are already available to be used. The price is around 300k or about 6500 per month. This is urgent and a patient safety issue. It's another 300k that has to be paid off over time that the Hospital can't afford, but the safety issue wins out so I voted for. Financing will be from Bank of America on the existing 2.5 million master equipment lease (from May 2010 for the PAC, about 700k remains available). Other systems were more expensive because they could not use the existing antennas (don't know if it's a radio frequency, lease, or proprietary protocol issue and did not ask).
4. Stroke certification proceeds apace. The TJC has assigned an account manager. (The TJC charges hospitals to provide certifications so the structure of some of these things is almost like a vendor/client relationship.)
5. Monthly statistics for January are again ahead of budget which would suggest that January financials would be favorable again (like November and December) which has brought the Hospital back from a several hundred thousand YTD loss of only 49k. Surprisingly even a 139k positive result for December was still over 100k short of the December budget. I knew that this fiscal year budget was optimistic, but I guess I had not thought it was so optimistic as to expect that any single month would have net income of almost a quarter million dollars (239k is the exact number). The problem with expecting a positive January is due to a probable restructuring of IGT funds, the last month that IGT revenue will be accrued is December. This means January has to absorb a 187k negative hit. It's possible that there might be a slight positive given the patient census and an offsetting favorable adjustment to some long-term care reimbursement dollars, but I think it would be somewhat of a surprise if any month from now to the end of the year is positive. There may be some future political relief in sight that might restore some of these funds, but it is not anticipated at the present time.
6. ICU financial analysis - Ms Stebbins answered most/all of my questions. The preliminary financial analysis may not be 100% accurate. The numbers seemed low to Doctors Deutsch and Yeh for the ICU charges. They appeared to be consistent with some numbers available via a web search. It's not clear what was included or excluded. ICU days apparently are, on par, about the same amount of contribution as regular med/surg days although that analysis is skewed for the previous year (Kaiser cases?) The numbers for November and December were higher than historical and the 5.3 ADC was the highest for the past 5 years. The 5.0 ADC was second or third highest in the same timeframe. As an aside, it looks like this increase was one or two particular patients whose families wanted to continue aggressive care.
6. IT projects - See the table provided in the Board material. Quite a few ambitious projects especialy the PACS which will go live shortly. The Hospital anticipates capturing meaningful use dollars for its IT upgrades, but I am more than a little skeptical. Not really a criticism of this Hospital since all IT projects suffer from undue optimism, but especially healthcare IT projects. I have seen Kaiser and UCSF software updates over two years later. The table has some old dates and some typos so it will be updated (and posted?). I'm not sure when the update will be provided. If not by the next Board meeting then I will ask.
7. Updates/Events - Get your stroke screening. The Hospital sent out postcards to most Alamedans; we got ours. It looks like you can get a free mini-physical. HR tenure event on 2/28.
8. Facilities - NPC2 Discussion is below. Only addition to this is that I have confirmed that indeed the NPC2 requirements are applicable, but not being enforced. That information comes straight from OSHPD. So, although Alameda Hospital's license is valid, there is no legal reason it should remain so except forebearance on the part of OSHPD. Also reported is that the wound care lease terms and the letter of intent terms were different in several material ways so those are being worked out. The wound care financing will likely be through a credit line from the Bank of Alameda with the Hospital's equity commitment likely coming from the generous support of the Foundation. It is anticipated that the package will be voted upon in March. My tentative position is, although I believe in seeking out new revenue and offering new services where appropriate, that the capital commitment is too high and the potential contribution too speculative for me to vote in favor given, what I perceive is the looming crisis. Until a plan is in place for addressing the question of acute care services and long-term financial viability (without the parcel tax subsidy), I do not believe I can support these type of initiatives.
9. Community Relations Committee failed to make a quorum. Let Stewart Chen know if you wish to serve.
I am sure I forgot a lot. Comments are open if someone who was there or one of the six people so far (as of 10:00 am 2/16) who watched the video wants to correct any errors or omissions.
Wednesday, February 9, 2011
Quo Vadis?
So if the Hospital is going to close (only my opinion), what happens to the Healthcare District?
First, the District is not just the acute care services at the hospital although that is its most visible piece. There is a community clinic at South Shore, outpatient surgery, lab and imaging services, skilled nursing, and sub-acute beds. Also, keep in mind that rightly or wrongly the political will of Alamedans is tilted towards keeping the Hospital open. Whether that is an informed opinion or not is another discussion, but clearly Alamedans (even if they hardly pay attention) have a default position in favor. On the other hand, people more informed regarding healthcare policy are probably more likely to be open to closing/restructuring the Hospital despite their lack of public comment.*
Some ideas that make sense to me (and not fully developed):
1. An urgent care center with comprehensive lab and imaging. This would satisfy the need of non-Kaiser residents of the District to have a place to go to provide immediate medical care. Many people do not want to go out of Alameda for their relatively minor issues. I don't know where the line between emergency and urgent gets crossed so I don't know what could or could not be treated here. A lot probably depends regulations and liability issues. An additional advantage of this approach is such a place could serve as the focal point for emergency services should the "big one" hit that isolates the Island.
2. Non-acute care beds. Alameda already has more of these patients than acute care patients so this is already part of the business model. Where it makes financial sense (that is, adds to the bottom line so as to reduce or eliminate the need for the parcel tax subsidy), these should be investigated. There are certainly opportunities for rehab beds, complex discharges (such as IV antibiotics), or wound care. The main driver here, in my mind, is finances (looking for a profit), but there might be some benefit for Alamedans to have these beds available closer to their homes.
3. New services such as the wound care clinic that is being developed. The argument here is very similar to the argument for non-acute care beds: financial sense + some convenience for District residents who desire these services.
4. Outpatient services such as surgery, dialysis, infusion.
5. Finally, some number of acute care beds could be retained if it made sense financially. A drastic reduction from 30-40 beds down to 5 or 6 to serve the nursing homes on the Island (and possibly the patients of existing and potential District services 1-4 above). Another alternative might be a partnership with some entity, but I have no idea what form that might take. The idea of the VA has intrigued me and others, but the Board consensus seems to be that the VA's plans are nebulous and too far out in time to consider any action at this time.
Well, I will not be able to update meeting notes for some time due to my other life, but I thought I should put this out here given the prediction of hospital closure I made in my last post.
*Of course, I think I also have support from those with an anti-tax philosophy. I'm actually very pro-tax in general (go Measure A!) but I want my taxes to buy something of value. I voted for the District's parcel tax, but have concluded that I have got less than nothing for my family's $2980 (paid so far, 2002-2011).
First, the District is not just the acute care services at the hospital although that is its most visible piece. There is a community clinic at South Shore, outpatient surgery, lab and imaging services, skilled nursing, and sub-acute beds. Also, keep in mind that rightly or wrongly the political will of Alamedans is tilted towards keeping the Hospital open. Whether that is an informed opinion or not is another discussion, but clearly Alamedans (even if they hardly pay attention) have a default position in favor. On the other hand, people more informed regarding healthcare policy are probably more likely to be open to closing/restructuring the Hospital despite their lack of public comment.*
Some ideas that make sense to me (and not fully developed):
1. An urgent care center with comprehensive lab and imaging. This would satisfy the need of non-Kaiser residents of the District to have a place to go to provide immediate medical care. Many people do not want to go out of Alameda for their relatively minor issues. I don't know where the line between emergency and urgent gets crossed so I don't know what could or could not be treated here. A lot probably depends regulations and liability issues. An additional advantage of this approach is such a place could serve as the focal point for emergency services should the "big one" hit that isolates the Island.
2. Non-acute care beds. Alameda already has more of these patients than acute care patients so this is already part of the business model. Where it makes financial sense (that is, adds to the bottom line so as to reduce or eliminate the need for the parcel tax subsidy), these should be investigated. There are certainly opportunities for rehab beds, complex discharges (such as IV antibiotics), or wound care. The main driver here, in my mind, is finances (looking for a profit), but there might be some benefit for Alamedans to have these beds available closer to their homes.
3. New services such as the wound care clinic that is being developed. The argument here is very similar to the argument for non-acute care beds: financial sense + some convenience for District residents who desire these services.
4. Outpatient services such as surgery, dialysis, infusion.
5. Finally, some number of acute care beds could be retained if it made sense financially. A drastic reduction from 30-40 beds down to 5 or 6 to serve the nursing homes on the Island (and possibly the patients of existing and potential District services 1-4 above). Another alternative might be a partnership with some entity, but I have no idea what form that might take. The idea of the VA has intrigued me and others, but the Board consensus seems to be that the VA's plans are nebulous and too far out in time to consider any action at this time.
Well, I will not be able to update meeting notes for some time due to my other life, but I thought I should put this out here given the prediction of hospital closure I made in my last post.
*Of course, I think I also have support from those with an anti-tax philosophy. I'm actually very pro-tax in general (go Measure A!) but I want my taxes to buy something of value. I voted for the District's parcel tax, but have concluded that I have got less than nothing for my family's $2980 (paid so far, 2002-2011).
Tuesday, February 8, 2011
Placeholder on 2/7 Meeting Notes
1. Although discussion of the memo in the material was not deferred, I came away no more the wiser. The Hospital missed the 1/1/2002 deadline. OSHPD has taken no license action for this clear violation of the regulations in the intervening nine years. There is no legal bar from OSHPD taking action at any point because Alameda Hospital is in clear violation. Therefore, if I stated that Alameda Hospital has no legal authority to operate then I was incorrect, but only in a technical sense so let me try to be more precise although this may not be exactly right either:
3. I conclude and this is my opinion only that the numbers suggest that Alameda Hospital will be closed within the next four years because it cannot meet the state seismic requirements. There are many hospitals that have struggled to meet the requirements, but the last statutory exemption available for the SPC -2 deadline is 1/1/2015. At that point 95% or more (I have to check but I think the actual number if you believe the reports is over 97%) of the hospitals in the state will be compliant and that counts those hospitals with valid 2020 extensions in the non-compliant category. Given the fact that the CNA (nurses union) opposes the extension of deadlines and that so many hospitals would have already been closed and/or expended large sums to become compliant, in my opinion, the pendulum will have shifted in the Legislature to AGAINST offering additional opportunities for extensions. Only a political solution can save Alameda Hospital and I do not foresee the political will or clout to make that happen.
The Board can start planning now for a future that ends acute care services in the present location or can let events overtake them, but I would be willing to gamble (if my wife would let me and if it was not the worst conflict of interest) that Alameda Hospital will look nothing like its present form by 1/1/2016.
Alameda Hospital is in clear violation of state building code at the present time operating with acute care services in a building that is NOT certified as NPC-2 or higher. Based on this violation, the Hospital is subject to license action that would lead to closure at any time. What defenses the Hospital might have because of the non-action by OSHPD for the last nine years is unclear to me, but it is clear that the Hospital is in violation and remains in violation.2. The restructuring of IGT has led to an anticipated reduction in revenue by the Hospital of about 1 million dollars. This will mean that the best the Hospital can hope to do this year from a financial point of view (based on its present trajectory and barring a political intervention that restores this money) is break even. The more likely outcome is a loss of between 100,000 and 400,000 dollars. The weakening of the balance sheet due to expenditures for various capital purchases and accruals will be more significant than that suggests. So seismic retrofitting is off the table for the near and possibly intermediate future.
3. I conclude and this is my opinion only that the numbers suggest that Alameda Hospital will be closed within the next four years because it cannot meet the state seismic requirements. There are many hospitals that have struggled to meet the requirements, but the last statutory exemption available for the SPC -2 deadline is 1/1/2015. At that point 95% or more (I have to check but I think the actual number if you believe the reports is over 97%) of the hospitals in the state will be compliant and that counts those hospitals with valid 2020 extensions in the non-compliant category. Given the fact that the CNA (nurses union) opposes the extension of deadlines and that so many hospitals would have already been closed and/or expended large sums to become compliant, in my opinion, the pendulum will have shifted in the Legislature to AGAINST offering additional opportunities for extensions. Only a political solution can save Alameda Hospital and I do not foresee the political will or clout to make that happen.
The Board can start planning now for a future that ends acute care services in the present location or can let events overtake them, but I would be willing to gamble (if my wife would let me and if it was not the worst conflict of interest) that Alameda Hospital will look nothing like its present form by 1/1/2016.
Monday, February 7, 2011
2/7 Meeting - Official Agenda and Attachments Posted
Here. If there was any way to post them sooner, I wish that Hospital management would try. I know that there are limited resources, but with meetings being on a Monday, the late Friday afternoon postings I think, limit review for some and risk having to cancel the meeting if there are any glitches (a la 11/1/2010). I've already posted some questions I will have about the cash flow for the IGT and the November/December financials so the only new thing is a strongly worded memo by Kerry Easthope about the Hospital's lack of compliance with the applicable regulation for NPC-2 or higher in all buildings offering acute care services.
I have asked that discussion of this memo be deferred if the legal basis for the opinion expressed is not solid. If OSHPD concurs with Mr. Easthope's interpretation then I will be surprised that nothing supporting his argument exists on the OSHPD website. Of course, if OSHPD agrees with Mr. Easthope, I will be retracting my claim that the 1/1/2002 deadline was firm although mystified as to the lack of documentation as to OSHPD's authority to waive this requirement. Interestingly, at last month's Board meeting, Mr. Easthope agreed with me that there was no extension to the 1/1/2002 deadline; something must have changed his mind and we will possibly find out tonight.
I have asked that discussion of this memo be deferred if the legal basis for the opinion expressed is not solid. If OSHPD concurs with Mr. Easthope's interpretation then I will be surprised that nothing supporting his argument exists on the OSHPD website. Of course, if OSHPD agrees with Mr. Easthope, I will be retracting my claim that the 1/1/2002 deadline was firm although mystified as to the lack of documentation as to OSHPD's authority to waive this requirement. Interestingly, at last month's Board meeting, Mr. Easthope agreed with me that there was no extension to the 1/1/2002 deadline; something must have changed his mind and we will possibly find out tonight.
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