1. The loss for October after backing out adjustments from prior periods (+815k for AB97, - 502k for IGT accrual, net +313k) was a 42,000. This is basically break even for the District.
2. The results are somewhat more favorable than the negative 42,000 suggests since it includes 54k to HFS for revenue cycle consulting and 37k to the state for SNF licensing application fees. or a total of 91k. Without these expenses, the District would have shown a slight profit for the month of October (after applying the parcel tax revenues and before applying prior period adjustments).
3. There is a slight offset in the unrecognized liability of the 50,000 fine from the state which I consider material and which I do not believe the District's chances of prevailing on appeal are high enough as to justify not reserving for this expense.
4. The current assets "cushion" is down to 436k. This is important because of the modified terms to the bank of Alameda loan. It may be difficult, but not impossible to maintain the 1.00 Current Ratio once the borrowing for wound care construction kicks in.
5. The District has some opportunities in terms of uncompensated care reimbursement from Alameda County. This was brought forward a few months ago. I will query Ms Stebbins at the next Board meeting as to when we will have a more definitive answer to this including an estimate of its impact.
6. Maybe a typo or maybe the schedule on page 24 will be provided at the actual meeting, but I could not locate the information referenced in the first bullet point of the overview. ("See schedule on Page 24 for
detail of the impact of the adjustments and a roll forward from the October actual to adjusted results.")
In summary, not great, but not terrible especially when you discount the need to finance seismic retrofit or other capital improvements. Alternatively, you might believe the income from the SNF expansion (Water's Edge) will take care of future capital financing needs. Opinions differ.
Monday, November 28, 2011
Sunday, November 27, 2011
Alameda Politics
(Actually most politics)
It consists of the Cowards, the Corrupt, the Cliquish, and the Cranks. Which one are you?
It consists of the Cowards, the Corrupt, the Cliquish, and the Cranks. Which one are you?
Friday, November 18, 2011
Fortune Cookie
"Nothing in the world is more dangerous than sincere ignorance."
That indeed was what the slip of paper said. On another note, I have not updated the blog, not because I don't have anything to say, but because there is no urgency. At this time, the District is like a ski jumper who has started their descent. The next thing that will happen is the launch, but only after a quick buildup where nothing remarkable generally happens and the only things that can happen are all bad. October will be a positive income number due to adjustments and closer to break even on an ongoing basis (maybe even slightly positive) due to the favorable decision by CMS on the sub-acute reimbursement adjustments. October financials will be available prior to the 11/30 finance meeting so we will see exactly how the 1.8 million dollar positive surprise (~ 150k monthly) will have relative to budget.
That indeed was what the slip of paper said. On another note, I have not updated the blog, not because I don't have anything to say, but because there is no urgency. At this time, the District is like a ski jumper who has started their descent. The next thing that will happen is the launch, but only after a quick buildup where nothing remarkable generally happens and the only things that can happen are all bad. October will be a positive income number due to adjustments and closer to break even on an ongoing basis (maybe even slightly positive) due to the favorable decision by CMS on the sub-acute reimbursement adjustments. October financials will be available prior to the 11/30 finance meeting so we will see exactly how the 1.8 million dollar positive surprise (~ 150k monthly) will have relative to budget.
Saturday, November 5, 2011
11/7/11 Board Meeting - Preliminary
1. The Closed Session agenda has a trade secrets item that does not meet Brown Act disclosure requirements. I hate the fact that I am associated with a Board that does not have a sufficient commitment to transparency. Of course the vote is 4 to 1 against changing anything. Mr. Driscoll, the District's counsel stands firmly behind his interpretation of the law (against fuller disclosure) even though the Brown Act if fairly explicit about the form that closed session agendas should take and most interpretations of the law I have read suggest placeholder type of language is inappropriate. Of course, from a practical point of view, Mr. Driscoll is right because there is little to no downside to this type of violation.
2. September financial reports. It would seem that based on Debi Stebbins statements on 11/2 that the District would have a loss for the first quarter. She estimated the decision by the State to withdraw the sub-acute rate changes to be worth about 1.5 million annually. I'm not sure why, but the impact is much greater than that; it appears the positive is to the tune of about 2.4 million annually (about 200k per month). This is surprising since the 1.5 million came straight from Stebbins and, I think, the budget for this year stated 2.1 million total including the SNF rate changes and those were approved. Not sure why the large discrepancy but, in this case, not a case of her being overly optimistic. By rights, given the huge swing to the positive, the District should be swimming in net income. Unfortunately, the IGT numbers had to be adjusted the other direction so that the YTD loss will be reported as 272k. If you would like to keep FY11 stuff in FY11 and FY12 in FY12 then the YTD is the original -585k + 617k for sub-acute - 121k for IGT or at YTD loss for just FY12 numbers of 89k. That is obviously considerably better than previous and suggests that District has a chance of not having a miserable year. It's only 284k below budget. Certainly,holding losses to below 100k and missing budget by more than a quarter of a million dollars represents a stellar performance on the part of CEO Stebbins. She is to be complimented.
3. Modification of Bank of Alameda loans. I thought we had done this already, but the Board needs to approve the changes to the agreements that are necessitated by poor financial performance. Bank of Alameda is more than willing to accommodate since the District is pretty much legally obligated to make good on these debts. This minimization/elimination of risk is one reason that Chris Zimmerman is so eager to lease to the District. He really does not have to worry about the District ever going bankrupt. It is unfortunate for the citizens of Alameda because their liability just keeps on piling up due to mismanagement. Stebbins is very comfortable putting other people's money at risk.
4. Waters Edge. I am sadly thinking it will be approved. Chris Zimmerman gets a partner and payments totaling over 20,000,000 through the years for a lease rate that is higher than comparables in the Bay Area and for more beds than will actually be occupied. Debi Stebbins gets a mulligan on her dismal performance. Alamedans gains not a single SNF bed. Alamedans take on a huge risk that depends on the Hospital staying open for 20 years despite consistent operational losses, questionable quality of outcomes, and current violation of OSHPD regulations. All I can really do is witness this since the votes appear to be there.
2. September financial reports. It would seem that based on Debi Stebbins statements on 11/2 that the District would have a loss for the first quarter. She estimated the decision by the State to withdraw the sub-acute rate changes to be worth about 1.5 million annually. I'm not sure why, but the impact is much greater than that; it appears the positive is to the tune of about 2.4 million annually (about 200k per month). This is surprising since the 1.5 million came straight from Stebbins and, I think, the budget for this year stated 2.1 million total including the SNF rate changes and those were approved. Not sure why the large discrepancy but, in this case, not a case of her being overly optimistic. By rights, given the huge swing to the positive, the District should be swimming in net income. Unfortunately, the IGT numbers had to be adjusted the other direction so that the YTD loss will be reported as 272k. If you would like to keep FY11 stuff in FY11 and FY12 in FY12 then the YTD is the original -585k + 617k for sub-acute - 121k for IGT or at YTD loss for just FY12 numbers of 89k. That is obviously considerably better than previous and suggests that District has a chance of not having a miserable year. It's only 284k below budget. Certainly,holding losses to below 100k and missing budget by more than a quarter of a million dollars represents a stellar performance on the part of CEO Stebbins. She is to be complimented.
3. Modification of Bank of Alameda loans. I thought we had done this already, but the Board needs to approve the changes to the agreements that are necessitated by poor financial performance. Bank of Alameda is more than willing to accommodate since the District is pretty much legally obligated to make good on these debts. This minimization/elimination of risk is one reason that Chris Zimmerman is so eager to lease to the District. He really does not have to worry about the District ever going bankrupt. It is unfortunate for the citizens of Alameda because their liability just keeps on piling up due to mismanagement. Stebbins is very comfortable putting other people's money at risk.
4. Waters Edge. I am sadly thinking it will be approved. Chris Zimmerman gets a partner and payments totaling over 20,000,000 through the years for a lease rate that is higher than comparables in the Bay Area and for more beds than will actually be occupied. Debi Stebbins gets a mulligan on her dismal performance. Alamedans gains not a single SNF bed. Alamedans take on a huge risk that depends on the Hospital staying open for 20 years despite consistent operational losses, questionable quality of outcomes, and current violation of OSHPD regulations. All I can really do is witness this since the votes appear to be there.
Thursday, November 3, 2011
Memo to Debi Stebbins
In the past, I have suggested that you should resign.
If you want to avoid criticism by me with regard to the financial performance of the District (loses money), your credibility (the escape clause is weak, at best, based on Chris Zimmerman's own statements), and the quality of the financial analysis you endorse (the Water's Edge project numbers are overly optimistic and the "Return on Investment/Contract Risk" presentation is a completely non-standard/useless presentation) then there is an easy solution. Resign. One would suspect though that the significant compensation that you receive and the severance of almost 500,000 promised in your contract would preclude you from taking advantage of that solution to your problem.
If you want to avoid criticism by me with regard to the financial performance of the District (loses money), your credibility (the escape clause is weak, at best, based on Chris Zimmerman's own statements), and the quality of the financial analysis you endorse (the Water's Edge project numbers are overly optimistic and the "Return on Investment/Contract Risk" presentation is a completely non-standard/useless presentation) then there is an easy solution. Resign. One would suspect though that the significant compensation that you receive and the severance of almost 500,000 promised in your contract would preclude you from taking advantage of that solution to your problem.
Wednesday, November 2, 2011
11/2 Board Meeting (Actually the Water's Edge Public Forum)
Just some odds and ends:
1. AB97 cuts for distinct part SNF's were approved. The rate cut chart is here. The sub-acute rates for distinct part were not cut due to a shortage in beds. The impact on the District's finances will be substantial - somewhere around 1.5 million dollars or more (I believe it is more) positive. I think one way to calculate it is to go to here and compare the difference between the 08/09 reimbursement rate and the most current reimbursement rate. The District has somewhere between 900 and 1000 sub-acute days per month and it looks like the difference is around $725 vs. about $875 so about $150 per day. This makes the first three month loss out to be somewhere between 150k and 250k which is quite an improvement from the $585k in the current financial report through September. This will be updated for the 11/7 Board meeting.
2. The South Shore facility was originally estimated to contribute 800k per year to the bottom line. A comparison between that number and the actuals may be available for the next Board meeting.
3. Mr. Zimmerman of Waters Edge wants a partnership to continue operation of Water's Edge. He sees this as an opportunity to do estate planning and make sure that the facility stays locally operated. One glitch is that he was not prepared to allow that the Board can exit the deal by exercising the "escape clause" with an exit from acute care services. It is clear that he does not envision that this will happen, but I believe that it is clearly a possibility especially over a 20 year period. He was NOT willing to say that such an event would trigger this "escape clause". He felt that discussion was too speculative to commit to allowing the Board to exit the deal in that fashion. Debi Stebbins wants to insist that she is being unfairly maligned, but this is exactly what I feared and if that cannot be part of the deal then the District is potentially liable for the entire 20,000,000 of lease payments.
4. Both Stebbins and Battani talked about using this deal so that the District would be "less reliant on the parcel tax." That suggests that without the parcel tax, the District loses money, but that with the assistance of the parcel tax, the Hospital stays open. The truth is without additional revenue, the parcel tax is not enough to allow the District to continue to operate the Hospital. In addition, the Waters Edge project has to meet the numbers in the pro forma's or it might not be enough to save the Hospital.
5. Stebbins does not want an urgent care center in Alameda. As best I can recall, the statement went, "That is so nineties; read the literature. Why would we want to open an urgent care center when we have a fully staffed emergency room available for people to use?" My answer was that there was a difference in cost for people, but I confess, I do not have the literature. I do know at Kaiser, there is a separate clinic that triage will divert patients to at the ER that looks, to me, a lot like an urgent care center. I also know that many Alameda residents I have spoken with want to keep the Alameda Hospital ER open for urgent care issues, but are not interested in being admitted to Alameda Hospital for acute care. So I don't know if that makes Stebbins right and me wrong or vice-versa, but clearly these Alamedans would be just as satisfied with an urgent care center and clearly they value the Hospital's ER because it can offer those services. I will point out that the tremendously successful Washington Hospital runs an urgent care (and an ER as well)
1. AB97 cuts for distinct part SNF's were approved. The rate cut chart is here. The sub-acute rates for distinct part were not cut due to a shortage in beds. The impact on the District's finances will be substantial - somewhere around 1.5 million dollars or more (I believe it is more) positive. I think one way to calculate it is to go to here and compare the difference between the 08/09 reimbursement rate and the most current reimbursement rate. The District has somewhere between 900 and 1000 sub-acute days per month and it looks like the difference is around $725 vs. about $875 so about $150 per day. This makes the first three month loss out to be somewhere between 150k and 250k which is quite an improvement from the $585k in the current financial report through September. This will be updated for the 11/7 Board meeting.
2. The South Shore facility was originally estimated to contribute 800k per year to the bottom line. A comparison between that number and the actuals may be available for the next Board meeting.
3. Mr. Zimmerman of Waters Edge wants a partnership to continue operation of Water's Edge. He sees this as an opportunity to do estate planning and make sure that the facility stays locally operated. One glitch is that he was not prepared to allow that the Board can exit the deal by exercising the "escape clause" with an exit from acute care services. It is clear that he does not envision that this will happen, but I believe that it is clearly a possibility especially over a 20 year period. He was NOT willing to say that such an event would trigger this "escape clause". He felt that discussion was too speculative to commit to allowing the Board to exit the deal in that fashion. Debi Stebbins wants to insist that she is being unfairly maligned, but this is exactly what I feared and if that cannot be part of the deal then the District is potentially liable for the entire 20,000,000 of lease payments.
4. Both Stebbins and Battani talked about using this deal so that the District would be "less reliant on the parcel tax." That suggests that without the parcel tax, the District loses money, but that with the assistance of the parcel tax, the Hospital stays open. The truth is without additional revenue, the parcel tax is not enough to allow the District to continue to operate the Hospital. In addition, the Waters Edge project has to meet the numbers in the pro forma's or it might not be enough to save the Hospital.
5. Stebbins does not want an urgent care center in Alameda. As best I can recall, the statement went, "That is so nineties; read the literature. Why would we want to open an urgent care center when we have a fully staffed emergency room available for people to use?" My answer was that there was a difference in cost for people, but I confess, I do not have the literature. I do know at Kaiser, there is a separate clinic that triage will divert patients to at the ER that looks, to me, a lot like an urgent care center. I also know that many Alameda residents I have spoken with want to keep the Alameda Hospital ER open for urgent care issues, but are not interested in being admitted to Alameda Hospital for acute care. So I don't know if that makes Stebbins right and me wrong or vice-versa, but clearly these Alamedans would be just as satisfied with an urgent care center and clearly they value the Hospital's ER because it can offer those services. I will point out that the tremendously successful Washington Hospital runs an urgent care (and an ER as well)
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