This may describe my individual circumstances, but certainly describes Alameda Hospital (actually, the Hospital's condition is much worse). I will try to quickly hit the highlights of the May 9 meeting so I can proceed to identifying my concerns with the proposed financial documents submitted for approval for tomorrow morning's finance committee meeting (June 1). The words incredible, unbelievable, fantastic, and misleading probably give you some idea of what I think of next year's budget. Management does not even attempt to reconcile reality with the budget;I guess it's just numbers on a spreadsheet to them since I was promised (on May 9) that there would be alternative scenarios presented if the Hospital could not be viable as an ongoing operation.
1. Jordan Battani reported out closed session announcements. The main point was that, in response to a complaint received (and published on at least one website) by Dr. Jerrold Kram, the Board decided no action was needed at this time. No current business relationship between the care facility and Alameda Hospital exists although discussions with various facilities have taken place. [6/3/11 UPDATE: There is some concern that the previous sentence may reveal a closed session discussion of trade secrets. Let me assure you this is not the case. 1. My assertion of discussions taking place with SNF's in the District is based on a casual open session statement Stebbins made in a previous Board meeting (cannot remember exactly which one but I remember distinctly being surprised when she stated it in open session). 2. The text of Dr. Kram's letter specifically alluded to such a discussion taking place, "Expansion of the Alameda Hospital sub acute is a goal that has been affirmed by Deborah Stebbins in a conversation I had with her shortly after this situation unfolded." which I have no reason to doubt. 3. This goal is mentioned in the strategic plan presented at last Board meeting and 4. The budget narrative for next year specifically calls out a term sheet offered to such a facility. So it is obvious that the statement above is true regardless of any participation in closed sessions. Of course, I feel obligated to repeat once again that I think the transparency in both the nature and the disclosure of closed session items is lacking, but this has nothing to do with any closed session. Let me make it clear that Jordan Battani did not reference these discussions in her summary at the beginning of the 5/9 open session nor reference these discussions in her response to Dr. Kram.]Without commenting on the appropriateness of the transition described in the letter, the issue is not relevant to the Board at the present time. Ms Battani has written a letter to the same effect to Dr. Kram.
2. The consent agenda was approved with the following items taken out for further discussion:
- Financial statements for March. The relatively good cash position was associated with payroll being on a Friday (April 1). So even though the liability had been accrued, the cash remained on the books. Also, parcel tax revenue receipt timing is fortunate. Additional dollars in bad debt (non-cash expense) were charged off in March which offset some of the non-cash revenue from the reversal of the third party liability.
- MILD is a new procedure that will now be offered at Alameda Hospital. Director Chen had some questions about the procedure.
- I was going to pull the Bank of Alameda loan mods but Director Battani beat me to it. There was a back and forth about whether this new provision mattered. Everyone agreed that the District is always reponsible for its indebtedness and pretty much does not have an option of declaring bankruptcy and defaulting on its debts. Of course, if that was the case then why grant Bank of Alameda the loan mod. While negotiating home sale or purchase transactions, this is what I would ask real estate people when they told me a clause didn't matter; I would say then why can't I have it the way I prefer? Whether the rest of the Board wants to concede that the Rubicon may have been crossed or not, I think that a symbolic vote to have the people of Alameda keep on paying for the District's mistakes even after services are terminated is a big deal.
3. The strategic goals discussion was long, boring, and informative in some ways, but since I believe that the premise that they are based on is untenable (the continued operation of the Hospital), the discussion seemed, ultimately, futile. Some additional information and more precision was requested for various items so a vote was postponed.
4. Congratulations to the new members of the Community Relations and Outreach Committee. This means that the Committee can achieve a quorum going forward. The four are:
Hien Doan, Attorney, active in the Vietnamese community
• Shubha Fanse Chairperson of League of Women Voters Health Care Committee,
active in the Indian community
• Monica Valerio, Active in CERT program (Alameda community disaster
preparedness) and volunteer for schools
• Tracy Zollinger, Licensed Acupuncturist in Alameda, active in local schools,
offers community health programs
5. Nothing of particular note that I can recall happened during the remainder of the meeting.
The video is up at the District's website.
Now to the documents that are in the packet for the Finance Committee Meeting. I cannot do justice to these so you will have to read them yourself for the full effect. I will not be able to attend, but trust that I will be asking these questions at the full Board meeting.
1. The Hospital lost almost 1.4 million dollars in April (1,389,000 to be precise). That is, perhaps, an unprecedented poor performance under the current management's tenure. It was not forecast and means that the Hospital will not end the year with a profit. The Hospital starts off in violation of the Bank of Alameda loan provisions so how does the wound care center even get to its first day of operation? I suppose 642,000 was a bit of a surprise; also, the IGT funds appear to be several hundreds of thousands less than anticipated when the Hospital stopped accruing (180k/month). The final number is closer to 3/4 of a million rather than a million. The forecast miss on this number from last year's budget was more than 1.4 million dollars.
2. The management efforts at remediation will possibly provide about 75k benefit per month, but that is obviously not nearly enough. Given the extent of these changes, one has to wonder what suffers in terms of quality.
3. The operating budget for 2011/2012 seems, charitably, to be optimistic. It suggests that with a net reimbursement rate of only 22.4%, the Hospital will be profitable. As an aside, the whole use of gross revenues by Alameda Hospital has been a thorn in my side for over 10 years. Not many other healthcare systems report gross revenues except maybe in a footnote. They are relatively meaningless in understanding the Hospital's finances, but this presentation continues year after year. UPDATE: My sincere apologies to the people who put the budget together. Gross revenues appear to have been ELIMINATED for this year's budget. Thank you!!
4. Some other questions just from skimming the operating and capital budget.
- Where does the 262k of "other non-operating revenue" come from? This needs an explanation.
- If lab draw services are closing at Towne Center, how can we be sure that this will not impact negatively the clinic's financials (not that we have a good handle on them currently).
- What is the seismic plan? The Hospital is out of compliance currently. Even if OSHPD won't act, a lawsuit could shut things down precipitously.
- All of the SNF and sub-acute plans depend on the higher reimbursement rates associated with facilities affiliated with acute care hospitals. This creates a dependency on keeping the acute care services that seems foolish to me.
- How can you assume revenue from the wound care program when the District will not be in compliance with the loan covenants?
- What happens to benefit expenses as the Hospital's workforce skews older due to the inevitable dynamic of younger, more mobile workers leaving while older ones stay?
- When will a response be due to the request for 12 more beds? Shouldn't this budget be based on NOT obtaining approval since it is not given yet. It would be irresponsible of the Board to approve a budget based on speculation. UPDATE: Another mea culpa. The additional 12 beds are not included in the budget. Discharges are increased by 11.5% and LOS decreased to 4.0 Certainly the initiative to minimize observation days and increase actual admits is desireable, but this (if I am understanding the assumptions correctly) overestimates the budgetary impact because the case mix index is going to decrease as a result. So the question remains, can these anticipated changes be realized although the budget does NOT (my fault for skimming) rely on approval of the 12 beds.
- What about unanticipated capital expenses? the boiler costs seem to be lowball to me.
- What about interest expense. It seems in the ballpark, but I cannot get a good handle on the District's indebtedness and the average rate it pays. 148k is about 6% on 2.5 million. I need to get confirmation on the real numbers.
Given the budget as proposed, an alternative should be placed in front of the Board that closes the Hospital in an orderly fashion. That would be the responsible thing to do. I won't hold my breath.
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