Friday, October 14, 2011

Public Forum Scheduled

November 2, 7:00 pm. 

This was posted on the District's website with no other details.  I assume there will be a presentation with a Q and A following, but nothing else.  I intend to be there so if two of my fellow Board members are going to be there as well (I think Stewart Chen said he planned to come) then it will probably have to be noticed as an official special meeting.

Wednesday, October 12, 2011

Predictions and Observations

Predictions:

1.  The District will never realize the contribution identified in the presentation.  I cannot say if theis SNF proposal will lose money, but I am 95% sure it is overly optimistic.  The tell is the "sensitivity analysis' that showed a $39k contribution assuming that the District was reimbursed at free-standing SNF rates.  Mr. Zimmerman is no dummy; he is a skilled businessman.  If it was that easy to make money then he would not be giving up this lucrative business.  That 39k contribution is after the Zimmerman's are paid their lease and is with lower reimbursement rates than they receive now (since their private pay rates are higher than the Medi-Cal freestanding rate).  Also, the 39k is with higher expenses than the Zimmerman's currently have.  The District can argue that they are better able to maximize Medicare reimbursement, but, if it was so easy and lucrative then Mr. Zimmerman could hire very expensive expertise to recruit Medicare patients (there is no "distinct part" Medicare) and come out way ahead.  Ergo, the numbers are inflated - 95% certain.

2.  The South Shore Medicare reimbursement rate average is less than $619 per day.  I make that prediction with an estimated 50% chance of being right.  When someone asks for a single number and, instead, the answer given is something slippery like "72% of the South Shore patients are reimbursed at or above $619" then you either do not have a clear understanding of how to answer a question clearly or you are trying to obfuscate the answer.   $619 is not the right number for South Shore - only 50% chance.

3.  AB97 reductions with respect to distinct part will be approved.  This is 99% sure thing.  The standard CMS must use is whether the Medi-Cal rate will cause unequal access for Medi-Cal patients vs. private pay.  Since the distinct part rates exceed private pay rates, CMS would not have a leg to stand on in denying this part of the state plan amendment.  There are other parts of AB97 that certainly may cause CMS to deny portions of the SPA, but this part will be approved.  AB97 is not a all or none thing so even if parts are denied, this part can still take effect.  In fact, that is how the bill was written to allow any parts that were approved to go forward even if CMS denied other parts.  All of Stebbins's talk about her hope that AB97 changes will be rejected by CMS ignores this part of the equation.  AB97 reductions in distinct part are eventually upheld - 99% chance.

Observations:

1.  There is a certain amount of hubris/risk in relatively tiny Alameda operating the 2nd largest distinct part SNF in the State (that is what my preliminary research shows - please correct me if I'm wrong).    Somebody might see that as inappropriate use of this program and move to amend it to exclude this kind of blatant opportunism. 

2.  I'm sure that Jordan Battani's interest in expanding SNF options is sincere, but since this proposal adds zero beds to those already available in Alameda, I'm at a loss as to how she thinks this helps.  In fact, by removing private pay beds from circulation, it actually goes against her and Director McCormick's stated preferences.  I mean, look at the assumptions, most of the private pay patients who are stably housed at Waters Edge will be forced by economic pressure to move - the exact opposite of Battani's and McCormick's stated desire. 

3.  The District was ready with a press release trumpeting the vote the Board took, but has no concrete plans for the public forums.

4.  Certain Hospital building might meet 2030 SPC requirements (but not 2002 NPC requirements? hmm) but not without expensive work to shore up or tear down other structures so, in fact, in the broader context, that is not really an accurate statement.  A March 24, 2006 letter from Roy Lobo assigns a SPC-1 rating to the West Wing so I am unclear why Management thinks it is close to SPC-3 unless soil testing submitted this year has changed something (and what about NPC-4?).  Also, the letter dated January 13, 2005 states that the South Wing is declared SPC-3, but that testing needs to be done to confirm that.  I don't know if the "steel moment resisting frame joints' have been tested subsequent to that letter. [Both these letters were in the 1/10/11 Board packet..]

Sunday, October 9, 2011

Incomplete, Rushed, and Risky

That would be my analysis of the proposal that has been laid before the public for the 10/10/11 Board meeting.  This discussion has been going on in closed session much longer, but, even after multiple attempts, I do not have the questions I asked answered.   Hopefully, I can provide a useful framework for people who are trying to get this quickly.

Opportunity:  Skilled Nursing expansion.  The reason this is "expansion" rather then "new" is because the District already operates SNF (Skilled Nursing Facility) beds at South Shore.  You can see those additional beds on page 62 of the packet (page 19 of the August unaudited financials) where, in FY 2008, there was a bed capacity of 135 and it increases to the current 161 in FY 2009.

Revenue:  SNF compensation for the District has 5 (updated from 4) components.
1.  Private pay -  This is very small because, unlike the Hospital,  SNF beds are not allocated without evaluation of ability to pay.  Similar to how you are evicted or foreclosed upon if you do not pay your rent or mortgage, the same would happen if the SNF bill was left unpaid.  Because the District is reimbursed by Medi-Cal at a significantly higher rate (distinct part reimbursement)  than private, freestanding nursing homes (such as how the current Water's Edge) there is little reason for private pay patients to use District beds at a higher cost to them than the alternatives.  This is why virtually all of the private pay clients left South Shore when it was taken over by the District and why the plan presented, similarly, calls for private pay to be reduced to less than 5%.

2.  Medi-Cal - This is the bulk of the beds.  These beds are reimbursed on a cost basis up to a cap.  The current rate is $315, if I read the financial information in the packet correctly.  This is after the AB97 changes have been rolled into the analysis.  I believe that CMS will approve the AB97 reductions, but CEO Stebbins has always expressed the hope that CMS will reject AB97.   [I would like to see this decision delayed until the Board sees whether a pessimistic outlook for reimbursement is appropriate (my view) or a more optimistic one (Stebbins's view).]  The majority of the patients at South Shore and at the proposed Water's Edge will be Medi-Cal.

3.  Medicare - These are Medicare patients who are placed in short term care for, I believe, up to 100 days per incident.  The rules can be complex for both the patient and the facility, but this revenue is higher than that offered by Medi-Cal because Medicare, in general, is a more generous payer, and because these patients need more services so the reimbursement is correspondingly higher.  [I believe the $619 per day average that this proposal uses is overly optimistic.]  Management should provide a comparison to South Shore reimbursement averages to validate the $619 average rate.

4. Other (Updated because I forgot this one in the first iteration of the post) - This would be private, 3rd party insurance.  The numbers are not large and the rate ($450/day)  is half way between the Medi-Cal rate and the Medicare rate.  It is unclear to me what this rate is based upon. 

5.  Dilution - This one is non-intuitive and here I will agree with those who bemoan the complexity of healthcare accounting.  Basically, this component of revenue is embedded in the $315/day Medi-Cal rate because that number is partially cost based.  Since Water's Edge operating as part of the District uses District resources that also are used in operation of the Hospital, the cost allocation for reimbursement is shared between all of the services/operations of the District.  By acquiring the Water's Edge beds, these shared resources can be cost allocated across a broader base.  At the Hospital level, this means cost savings (for the most part).  At the SNF level, it is an additional expense, but an additional expense that is compensated for by the government as a cost of doing business so this dilution of overhead becomes revenue to the District in the form of higher reimbursement rates on SNF beds.  Because it already is revenue in the reimbursement area, it becomes negative revenue when calculated for presentation purposes (because the allocation interacts with a reimbursement cap for Medi-Cal rates).


Expenses:

I do not have to say much about expenses except to observe that Management plans to operate Water's Edge more cheaply than South Shore.  In fact, I wish there was a pro forma comparison of this expense with South Shore's on a per bed basis, but that has not (and my understanding is will not) been provided.
 

Risks:


1.  Overly optimistic budget forecasts:  I think this one is the most obvious.  Stebbins and I may disagree about the quality of her success in meeting budget projections in 2009/2010, but there is no question that 2010/2011 was a failure.  So far, in 2011/2012, the budget projections versus actuals have not been encouraging.  In just two months of reported results, the District is missing its budget by over $500,000.  Projected over the year, that would be a miss of millions which means that the Water's Edge proposal, even if it meets all of the budget projections (formed by the same people who formed the District's budget projections) does not make up the gap.

To put a spotlight on what I mean by overly optimistic, in actual operation, the District has missed its budget projections for revenue in just the first two months of the year in the 6 to 7% range.  When I asked for a sensitivity analysis on the projections in this proposal, the District's pessimistic scenario reduced first year patient days by only 5%.  So in a business that they have been intimate with for years, the District misses budget by 6-7%, but Management considers a "pessimistic" scenario to be one where they only miss budget by less than 5%.   That is just one example.

2.  Acute Care Services are interrupted so Distinct Part Reimbursement is unavailable:  The District must operate acute care services to be entitled to the higher Medi-Cal reimbursement rates.  For me, this is a huge negative to the proposal, but, I suspect, it may be a positive for other Board members because it raises the stakes for changing acute care services.  There are two risks that I can see here.  The first one is that the State finally decides to enforce current seismic retrofit regulations.  There are both NPC and SPC requirements, but the ones that the Hospital is currently not in compliance with

The NPC-2 requirements

"After January 1, 2002, any general acute care hospital
building which continues acute care operation must, at
a minimum, meet the nonstructural requirements of
NPC 2, as defined in Article 11, Table 11.1 or shall no
longer provide acute care services."
If the state were ever to enforce this regulation or subsequent SPC regulations then the Hospital would lose distinct part reimbursement and thus, lose money on the SNF.    The proposal goes out 20 years to 2031/2032.  I think that it behooves the Board to understand the risk of not being able to complete seismic work relative to this proposal.

 The second risk is one I touched on in risk #1 above which is, despite the District's best efforts, acute care services continue to lose so much money that a radical restructure would be needed.  This proposal does not fully incorporate this risk.   In fact, I consider the "ROI/Contract Risk" analysis as to be so wildly misleading that they should be pulled from the packet.  I have never seen anything like that in my career.

3.  Reimbursements are Reduced:  This one speaks for itself.  The California budget crisis is not over.  Beds are available to Medi-Cal at freestanding SNFs at a much lower rate than distinct part rates.  That seems to me to be low hanging fruit for budget people at the State.  Sure there might be challenges for the State if they did that (such as Laguna Honda in San Francisco), but I think those challenges would be overcome by special deals that excluded the District.  There would be little political sympathy for a small, money-losing entity that had still not spent the money to complete seismic retrofit.  I think the Board could get a sense of what direction this might go by, as I suggested above, waiting to see if AB97 is rejected before approving this proposal.

Hopefully this helps people trying to digest the Water's Edge material.  Any comments are welcome (although I understand that blogger has a tendency to swallow comments - movement to wordpress may be  imminent.)  If you have a question and do not wish to or cannot comment here then email me and I will try to respond ASAP.

Friday, October 7, 2011

Placeholder for 10/10 Board Meeting

I want to wait until the District gets the full Board packet up this evening before commenting.  My earlier post is here.  This opportunity does not increase the number of beds available for SNF services since Waters Edge is currently operating and will, as far as I know, continue operating whether the District takes it over or not.  Thus, it must be evaluated on the basis of whether it makes financial sense.  For that question to be answered, a critical look at the numbers that Management has provided is necessary.  Of course, the initial take is very good; otherwise, why would they bring it to the Board?   The question is whether the incentives to shade the presentation so as not to have to admit a mistake (or the futility of the Hospital's financial plight) is overwhelming accurate analysis.

Update:  I may soon move from blogger to wordpress.  It looks like an easy transition and although I don't know it to be better than blogger, that's what everyone has told me.

Thursday, October 6, 2011

I Admit It

I guess it's time to stop blaming others, own up to my mistakes, and come clean.

Not for suggesting the Alameda County Registrar of Voters made a mistake when they failed to use my official declaration for my ballot designation.  It's pretty clear they made a mistake on that one:

If a candidate is licensed by the State of California to engage in a
profession, vocation or occupation, the candidate is entitled to consider it
one of his or her “principal” professions, vocations or occupations if (i) the
candidate has maintained his or her license current as of the date he or she
filed his or nomination documents by complying with all applicable
requirements of the respective licensure, including the payment of all
applicable license fees and (ii) the status of the candidate's license is active
at the time he or she filed his or her nomination documents.
 Not for suggesting that the Alameda County Registrar of Voters should not have altered my official declaration and, instead, should have notified me if they were proposing to use an alternate.  At which time, I could have argued for my original designation (which I 100% was entitled to) or chosen another alternative:

An official copy of the decision of the Secretary of State regarding a
candidate's ballot designation will be made in writing and transmitted directly to
the candidate by registered or certified mail, return receipt requested, to the
address provided by the candidate. The Secretary of State shall also provide a
copy to the elections official in the candidate's county of residence and to the
elections official of each county within the political subdivision. Copies may also
be made available to all other candidates in the race.
And (Indeed, I did request to be contacted if there was any issue):
At the request of the candidate, the Secretary of State will transmit an
unofficial copy of the decision of the Secretary of State regarding the candidate's
proposed ballot designation by facsimile transmission sent to the facsimile
number listed on the candidate's Ballot Designation Worksheet. When the
candidate does not have reasonable access to a facsimile machine, the Secretary
of State will transmit to the candidate, at the candidate's request, an unofficial
copy of the decision by means of overnight express delivery to the address listed
on the candidate's Ballot Designation Worksheet provided. If the candidate has
not submitted a Ballot Designation Worksheet, the Secretary of State will
transmit an official copy to the facsimile number provided by the candidate or, if
the candidate does not have reasonable access to a facsimile machine, by
overnight express mail to the address provided by the candidate.
I won't apologize for not being ashamed of being designated a pharmacist when the Alameda County Registrar of Voters made their mistake and took away my first option because, of the choices left, "pharmacist' was unfortunately, probably the most accurate (it is truly a shame that intern pharmacist was removed as a choice without notification to me):

4030. Intern Pharmacist
"Intern pharmacist" means a person issued a license pursuant to Section 4208.
4114. Intern Pharmacist: Activities Permitted
(a)
An intern pharmacist may perform all functions of a pharmacist at the discretion of and under the direct supervision and control of a pharmacist whose license is in good standing with the board.
1793.1. Duties of a Pharmacist.
Only a pharmacist, or an intern pharmacist (emphasis added) acting under the supervision of a pharmacist, may:
(a)
Receive a new prescription order orally from a prescriber or other person authorized by law.
(b)
Consult with a patient or his or her agent regarding a prescription, either prior to or after dispensing, or regarding any medical information contained in a patient medication record system or patient chart.
(c)
Identify, evaluate and interpret a prescription.
(d)
Interpret the clinical data in a patient medication record system or patient chart.
(e)
Consult with any prescriber, nurse or other health care professional or authorized agent thereof.
(f)
Supervise the packaging of drugs and check the packaging procedure and product upon completion.
(g)
Perform all functions which require professional judgment.
I will not apologize for my article in Synapse.  I am actually quite proud of the quality of the writing in the article.  It perhaps does not have the tone of gravitas that some people hoped for and there are some minor editorial errors which certain people have tried to latch onto so as to shift the blame to me.   I like the last paragraph especially since it sums up the campaign for me.  I like the whole article, but I'll just quote that final paragraph:

The race is a minor one far down a relatively long ballot so who knows what the ultimate result will be. In my favor is the healthcare related profession listed next to my name, the fact that there are three positions for four slots, (I may feel a slight sting of humiliation if I can’t win with those odds.) and that there may be more people who agree with me than I thought. After all, the owner of the local pizza place surprised me by telling me that she voted for me as she handed me my order for our street’s Halloween party. She told me that until she saw my name on the ballot she didn’t even know I was running. For me, it hadn’t occurred to me that anyone would notice.
(ed.:For the record, "intern pharmacist" has just as much a healthcare related ring to it as "pharmacist" so I doubt that the difference of one word swayed those people who were comparing my ballot designation to "Business Owner/Attorney".  After all my margin of victory was over 750 people.)
I will not apologize for expecting that people who hold themselves out as leaders in the community and bloggers who claim to be unbiased observers should be able to easily see when someone has crossed a line of decency using words like "election fraud" and attacking me purely for purposes of revenge with inaccurate complaints that could literally destroy my livelihood.  Leaders and bloggers should not be hypocrites and/or cowards just because that's the most comfortable position for them to take:

OBAMA: We don’t believe in that. We don’t believe in standing silent when that happens. We dont’ believe in them being silent since. You want to be commander in chief, you can start by standing up for the men and women who wear the uniform of the United States even when it’s not politically convenient.
I will not apologize for contacting Leah Williams and asking one last time (before the year statute of limitations is up for a defamation suit)  for an apology.  I will not apologize when Leah Williams not only refuses to consider an apology to me but  could, maybe, even now, long after the election, be trying to make life difficult for me.

I will apologize for using a blogging system that, apparently, has a very poor interface for comments.  It led John Knox White to put up a maliciously inaccurate statement that he refuses to correct directly and only kinda sideways corrects in a subsequent post.  It has also led to consternation for supporters of my position such as Denise Lai so this is not a political alliance issue.

I absolutely apologize.  My fault for being too comfortable with a solution that was convenient and easy for me.  I should have realized that this would cause problems down the road.  I was warned and I ignored those warnings.  I promise, beginning tomorrow, to investigate other platforms.  As soon as I find one that is better (and free), I will switch to it.  Mea Culpa.

Tuesday, October 4, 2011

Generating More Heat Than Light

Some people will never be convinced no matter the documentation or the facts.  If anyone wants to read the 3 navel gazing posts then email me.  I am disgusted with many in Alameda and will not be shy about saying so, but I will not have arguments within my family.  For the record, the reaction was not, "That's wrong and unfair to Leah Williams".  The reaction was, "You don't understand, they don't care if people die, why should they care if your life is destroyed.  Truth means nothing to these people."

P.S.  I'm sure people have screen shots.  It is what it is.
P.P.S.  John Knox White's and Lauren Do's blog posts suggesting I am "the source" of all that happened are nothing more than a sophist "he was asking for it" defense of their political allies.

Monday, October 3, 2011

Hospital loses $100,000 in August

At this point the District is over 1/2 million dollars behind in its budget.  Not much else to say.  The entire packet can be found here.  I would be surprised if September can be positive since the 50,000 administrative fine will hit for that month and although there may be some modification to that in the future, my guess is it would be too early, from an accounting point of view for this to be recorded as anything but an expense/liability.