Presentation Transcript

1. Golden View Terrace PresentationSpecial Board Meeting

   February 6, 2012 John White, CEO
2. Decisions about GVT’s Future Two paths: Continuation of Operations Closure Goal tonight is to explore each, considering the benefits and detriments, public comments, in order to support a decision by the Commission
3. KVH Status Report KVH organization includes the following entities: Klickitat Valley Hospital, Family Practice Clinic, KVH Home Health, KVH Hospice, KVH Ambulance, and Golden View Terrace District lives with financial results of each of the six businesses added together. Success or failure of one affects the others Cash flow continues to be tight at $1.2 million or 25 “days cash” on January 1, 2012 Results of overall District operations loss of $1 million or about -6% margin, excluding special one-time federal/state payments for Phase I Meaningful Use M&O and UTGO Taxation proceeds brings District to break-even “bottom line” However, 5% operating profit is required to be financially viable long term which is an 11% difference (about $2 million) from where we are today Financial outlook is gloomy for 2012 and beyond. Loss in revenue from changes to Medicaid Program is primary threat, but there are others
4. Risk Assessment With current level of cash flow (lean) and poor financial performance, the District is risk averse. We are very cautious in doing things that have major financial implications because we have no reserve to recover from mistakes or missed expectations Future hospital funding will be less than today, worsening the loss and forcing us to deal with it in a meaningful and timely way All business lines with major losses contribute to this situation – and all must be resolved in order for the District to become sustainable and able to take advantage of growth opportunities
5. GVT Overview Originally developed by NCM and operated by the Memorial Foundation. Occupied in 1999. Acquired by KVH in 2007. $4,080,000 debt refinanced as part of sales transaction 41 unit complex now reduced to 26 units, housing 7 residents (after March 1) on floors 1 and 2 and KVH Business Office on 3rd floor Predominantly Medicaid payment for residents avg $59/day $3.6 million in remaining debt principal, maturing 2031 $463,000 in revenue and $932,000 in expense for 2011 Current and projected revenue streams do not cover variable costs, meaning more residents = more loss
6. GVT Conundrum GVT is a valuable service to the community but serves few residents Care is high quality as evidenced by deficiency-free WA State surveys Continuing financial loss in 2011 is $469,000 and since acquisition in 2007 totals $2,390,000 No good alternatives for continuing operations at this level of loss Opportunity cost is high (loss prevents spending of similar amount on other items) Current District cash flow position of $1, 200,000 is minimal and continuing large losses jeopardize overall District operation, including hospital, clinic, and ER.
7. Drivers of District Financial Loss 2011 Annual Operating Loss driven by four areas: Inpatient Acute Care ($ 561,000) Golden View Terrace ($ 469,000) Ambulance Service ($ 364,000) Surgery ($ 354,000) Total Loss ($1,748,000)
8. Solutions for Each Area Golden View Terrace Continuation or Closure Operating loss worsens with increasing resident census Financial environment created by: Large Debt Burden Predominantly Medicaid population Low reimbursement for Medicaid Residents High allocated overhead costs due to small bed size (less than 100 beds) and as part of hospital district with critical access hospital
9. Option 1: Continuation Several different scenarios under continuation: Status Quo (no changes) Full Capacity (aggressive marketing) Major Payer Shift to Private Pay Contracted Management Lease Building to independent assisted living company for them to operate Refinance Debt; cut wages and benefits
10. Option 1: Continuation All preserve service to community Lesser impact on employees None of these Continuation scenarios fully address underlying cost drivers of financial loss: Hospital District wage and benefit burden Debt Service CAH Allocations Several options include additional operating and/or capital costs Changes in revenue streams are possible but not likely to be the required 200% in order to break-even
11. Option 1: Continuation We can explore one, some, or all of the Continuation Options at the Board’s discretion See the matrix entitled “Continuation” for a summary of the options and their PROS and CONS
12. Option 2: Closure Closure and re-use of the GVT building as a Medical Office Building results in greatest benefit to District of any of the Continuation or Closure options Benefits are primarily financial but include increased ability to provide primary and specialty care and drive hospital volumes, a top priority Detriments are primarily related to impacts on residents and employees Risk is greatest with costs and approval for alternative use as rural health clinic
13. Option 2: Closure Impact on Residents Census down to 7 residents by March 1 GVT and KVH staff will work with residents and families to make the transition as smooth and stress-free as possible New adult family home in Goldendale may be able to take 4 or 5 residents Remaining placements should be do-able Swing bed program is buffer for any difficult placements, allowing us sufficient time under almost any circumstance 60 to 90 day transition time, maximum of 120 days
14. Option 2: Closure Impact on Employees Goal is to minimize impact by using “soft landing” techniques including attrition and voluntarily actions, internal transfer, retraining, and job hunting skill development and unemployment counseling. 13 GVT employees involved directly totaling 7.5 FTEs. One low census and one layoff during probationary period already in place Five NA-Rs interested in retraining as NA-Cs with improved marketability and potential in-house placement Dietary Department also impacted. 9.55 FTEs already reduced to 7.8 due to voluntary reductions in hours and relocations, resignations Full labor benchmarking analysis of Dietary Department will determine target staffing levels, likely less than the adjusted 7.8 FTEs currently in the department Transition begins immediately and ends when final resident is placed and “soft landing” work is complete
15. Option 2: Closure Alternative uses for GVT building Highest and best purpose is for Medical Office Building which would otherwise require new construction elsewhere on District property Providers housed in current FPC space would be relocated to floors 1 & 2 of GVT building after evaluation and limited remodel of space Third floor would continue to house Business Office and Administration and Accounting would likely make the move up as well. Other moves in accordance with Master Facilities Plan in an abbreviated Phase I set of moves (IP, PT, HHH, Medical Records, helipad, etc)
16. Option 2: Closure We can explore one, some, or all of the Closure Options at the Board’s discretion See the matrix entitled “Closure” for a summary of the options and their PROS and CONS
17. Guiding Principles, GVT Decision The safety and health of our residents, including their overall quality of life The welfare of the District’s business lines and core services, including our staff members Use of our resources to their highest and best purpose Our relationships with families and community

18. Action Plan Summaries, Non-GVT Departments

19. Solutions for Each Area Inpatient Care Hire of family practice/internal medicine physician and orthopedic and general surgeons drive volumes Increase and consolidation of inpatient space in current PT area Separation of Swing Bed residents from IP area Continuing action around staffing efficiencies Loss can be cut in half
20. Solutions for Each Area Surgery Hire of family practice/internal medicine physician and orthopedic/general surgeons drive volumes Restructure of existing surgery coverage arrangement will yield more volumes at similar cost Permanent anesthesia crew in place Loss can be cut substantially or eliminated
21. Solutions for Each Area Ambulance Consolidation/collaboration with Skyline Ambulance to right-size service with focus on quality, availability, and sustainability Consideration of EMS tax levy to support low volume operations for county Consolidation plus levy would convert loss to 5% operating margin in order to fund capital needs over long term