PowerPoint Presentation San Joaquin County

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                          San Joaquin General Hospital
                                    French Camp, California


                                        September 29, 2009
Counties with Unemployment Rates Greater than 15 percent

                                  California Counties with Unemployment Rates
                                              greater than 15 Percent
                                             As of September 18, 2009

                                                    Unemployment          County
                                 County                 Rate              Hospital


                                 Imperial                 28.7%             No
                                 Yuba                     17.5%             No
                                 Merced                   16.7%             No
                                 Trinity                  16.5%             No
                                 Stanislaus               15.8%             No
                                 Colusa                   15.7%             No
                                 San Joaquin             15.7%              Yes
                                 Glenn                    15.6%             No
                                 Tulare                   15.2%             No
                                 Shasta                   15.2%             No
                                 Alpine                   15.1%             No
                                 Lake                     15.1%             No

                               Source: California Employment Development Department




THE CAMDEN GROUP                                                                 7/06/2009 ι 2
Public and Non-Public Hospitals

   2007 Office of Statewide Health Planning and Development (“OSHPD”)
    data shows:
     21 public hospitals are 6 percent of all hospitals statewide, yet
       provide:
        27 percent of Medi-Cal admissions and

        40 percent of uninsured admissions

       337 non-public hospitals are 94 percent of all hospitals statewide, yet
        provide:
         73 percent of Medi-Cal admissions and

         60 percent of uninsured admissions




THE CAMDEN GROUP                                                           7/06/2009 ι 3
Public and Non-Public Hospitals

                                             Payer Mix


                    Publics (21 hospitals)                   Non-publics (337 hospitals)




                                Commercial                       Medi-cal
                                   17%                            19%
                                                                                   Commercial
                   Medi-cal                                                           35%
                                                            Uninsured
                    45%                Medicare                6%
                                         16%



                               Uninsured                                Medicare
                                 22%                                      40%




       Medi-Cal and Uninsured: 76 percent                Medi-Cal and Uninsured: 26 percent
THE CAMDEN GROUP                                                                                7/06/2009 ι 4
Introduction

Key Events and Dates
 This Business Plan has evolved over the past year and has been shaped by
  many internal and external events. The highlights of the most significant
  events are outlined as follows:

        Date                                   Event
                   San Joaquin General Hospital (“SJGH” or the “Hospital”)
 July 2007
                   reports losses of $30.5 million for FY 2006-07.
                   SJGH reports losses of $21.3 million for FY 2007-08.
 July 2008         SJGH management presents budgeted losses of $11.9
                   million for FY 2008-09.
                   County makes first quarter budget adjustments and SJGH’s
 October 2008
                   budgeted loss is reduced from $11.9 million to $11.4 million.




THE CAMDEN GROUP                                                           9/29/2009 ι 5
Introduction

Key Events and Dates (cont’d.)
         Date                                      Event
                    Realignment revenue falls below $1.6 million for the second
                    month in a row and continues to stay at a similar level for the
 April 2009
                    remainder of the year. Overall shortfall at the end of the fiscal
                    year from Realignment was $2.6 million.

                    State budget crisis begins impacting SJGH cash balances as
 April – June       the State slows down Medi-Cal payments and delays cost report
 2009               settlements. By June, management estimates that $12 million
                    in payments were deferred into FY 2009-10.

               The FY 2009-10 County Budget Hearing includes a $11.9 million
               budgeted loss for SJGH. A Beilenson Hearing is held and the
 June 24, 2009 BOS approves the closure of three outpatient clinics and the
               Outpatient Pharmacy. These changes were recommended to
               achieve the proposed FY 2009-10 $11.9 million deficit budget.

 THE CAMDEN GROUP                                                                9/29/2009 ι 6
Introduction

Key Events and Dates (cont’d.)
       Date                                             Event
                    Discussions regarding the Managed Care Intergovernmental Transfer
                    (“IGT”) continue between the Center for Medicare and Medicaid Services
June 2009           (“CMS”), California Department of Health Care Services (“DHCS”), and the
                    County. Estimated payments to SJGH are $3.9 million in FY 2008-09 and
                    $4.7 million in FY 2009-10.
                    SJGH Management advises BOS that FY 2008-09 budget was missed by
                    an estimated $3.0 million resulting in losses of $15 to $16 million for FY
July 14, 2009       2008-09 on a cash basis. After the County’s books closed at the end of
                    August, the losses were confirmed to be $15.8 million. Additionally, the
                    receipt of an estimated $12 million in payments related to FY 2008-09 was
                    delayed into the next fiscal year.
                    The Hospital Fee Legislation (AB 1383) is passed by the State Senate in
                    an amended form (without an urgency clause and without an
September           appropriation). It is pending signature of the Governor. Original estimated
11, 2009            payments to SJGH were $2.3 million in FY 2008-09, $9.1 million in FY
                    2009-10, and $4.5 million in FY 2010-11. The status of this bill is unclear
                    and its implementation is highly reliant on actions by DHCS and CMS.
 THE CAMDEN GROUP                                                                        9/29/2009 ι 7
Executive Summary

Business Plan Findings
 Significant capital investment is required to:
     Replace Old Tower building
     Install Health Information Technology infrastructure
     Replace aging equipment in the 1997 Building
   Projected operating losses in excess of $11-15 million annually are likely
    to continue due to:
       Increased operating costs
       Deteriorating payer mix
   The County’s ability to support losses of this magnitude will significantly
    limit other policy options for county discretionary revenue
   Other hospital competitors are well capitalized and positioned to maintain
    profitable service lines
   Short-term supplemental funds are unlikely to remain long-term solutions

 THE CAMDEN GROUP                                                            9/29/2009 ι 8
Executive Summary

Future Option Considerations
 Profitable services of Neonatal Intensive Care Unit (“NICU”) and Postpartum
  Overflow are currently housed in the Old Tower building
   Seismic mandates require the Old Tower building to be replaced by 2020
   Significant capital is required to maintain and replace the Old Tower building
   Information technology investment is $2-5 million to meet minimum federal
    standards
   New services, such as trauma and cardiac surgery, require investment of
    people and capital to be successful
   The County is one of the smallest California counties operating a hospital
   Only one option achieves all the business goals and requirements of the
    Business Plan: minimal capital investment, keeping net county cost under
    $12 million annually, exiting the Old Tower building, and maintaining access
    for the County’s Section 17000 obligation


 THE CAMDEN GROUP                                                          9/29/2009 ι 9
Executive Summary

Potential Action Items
  1. Restructure teaching programs to include regional and/or county-wide
     partnerships
  2. Implement Medical Staff Independent Practice Association (“IPA”) model
  3. Increase volume in and market profitable Obstetrics (“OB”),
     Neonatology, and Dialysis Services
  4. Continue evaluating programs for consolidation and improvement
     including program closures, downsizing, and policy and structure
     changes
  5. Explore transitioning primary care clinics into a private Federally
     Qualified Health Center (“FQHC”) model or equivalent
  6. Explore partnerships to manage, lease, or operate hospital inpatient
     facility to improve operating position and provide capital improvements
     to the Hospital
  7. Meet with local hospitals to jointly determine how to financially support
     1) the County’s high level of uninsured and self-pay patients and 2) the
     Residency Programs
 THE CAMDEN GROUP                                                      9/29/2009 ι 10
Executive Summary

Market Position
 SJGH provides care to 62 percent of the County’s indigent and self-pay
  patients
   The FY 2008-09 average daily census (“ADC”) was 108, including 28
    uninsured: indigent (18) and self-pay (10) patients
   Current volume is just barely adequate to cover the teaching needs of the
    Residency Programs
   SJGH’s payer mix is eroding, similar to other area hospital trends
   Hospital does not have full scope of services to attract significant number of
    Medicare patients
   Realignment funding to care for County indigents decreased $2.8 million or
    11 percent last year
   Realignment funding is expected to decrease another $2.6 million or 13
    percent next year

 THE CAMDEN GROUP                                                          9/29/2009 ι 11
Executive Summary

Market Assessment
 Hospital inpatient and Emergency Department (“ED”) capacity is not
  sufficient in the County to absorb those patients treated by SJGH
   An estimated 41 percent of patients seen in EDs county-wide could be
    handled in urgent care or outpatient clinics




THE CAMDEN GROUP                                                       9/29/2009 ι 12
Executive Summary

History of Hospital’s Funding and Financial Performance
 FY 2001-02 was the last year that SJGH had sufficient revenue to cover
  costs
   County General Fund contributions designated for a Public Health
    Services building project were divested to the Enterprise Fund in FY
    2007-08
   Limiting the loss to the $11.9 million contribution from the County General
    Fund is becoming more difficult to achieve
   In future years, without an augmentation of the County contribution for
    operations and capital purchases, additional service and staffing cuts will
    be required to keep up with salary inflation and reductions in state and
    federal funding




 THE CAMDEN GROUP                                                          9/29/2009 ι 13
Executive Summary

California Counties’ Hospital Services Comparison
 Of the 58 counties in California, 13 currently operate General Acute Care
  (“GAC”) hospitals; only two counties smaller than San Joaquin continue
  to operate a county hospital
   Nine of the 21 counties with population greater than 400,000 have
    contracts with other hospitals and do not operate a county hospital




THE CAMDEN GROUP                                                          9/29/2009 ι 14
Executive Summary

SJGH Service Lines
 Outpatient dialysis, NICU, Pediatrics (after staffing revisions), and
  Obstetrics (“OB”) are profitable or break even
   Losses from outpatient services were approximately $4.0 million in FY
    2008-09
   Many other counties have implemented FQHC clinics or contract with
    private FQHC clinics
Medical Staff
 Physician staffing requires 24/7 coverage in three departments

   Four Residency Programs cannot flex faculty or resident hours if census
    changes
   The Faculty/Resident Model does not provide optimum productivity levels
    in clinics
   The Residency Programs have contributed to physician recruitment at
    SJGH and within the Region
THE CAMDEN GROUP                                                          9/29/2009 ι 15
Executive Summary

Hospital Leadership Recruitment and Retention
 Management compensation is below other hospitals in the region and
  other county hospitals in California
   Eight of the 52 management positions are filled by contracted employees
   Hospital CEO needs direct responsibility for Human Resources (“HR”)
    and Hospital CFO
   Hospital needs more flexibility in staffing, cross training, job sharing, and
    recruiting
   Limited outsource opportunities exist for cost savings because of state
    statutes




THE CAMDEN GROUP                                                             9/29/2009 ι 16
Future Options

Description of Options
The following future options were explored:

 Option 1 - Replacement of all beds in the Old Tower building with growth
 Option 2 - Replacement of OB and NICU in the Old Tower building
 Option 3 - Replacement of NICU only in the Old Tower building
 Option 4 - No replacement of any beds in the Old Tower building
 Option 5A.1 – Delivery System Reorganization @ Current 300% FPL – Lease Buildings
 Option 5A.2 – Delivery System Reorganization @ Current 300% FPL – Sell Buildings
 Option 5B.1 – Delivery System Reorganization @ Current 200% FPL – Lease Buildings
 Option 5B.2 – Delivery System Reorganization @ Current 200% FPL – Sell Buildings




 THE CAMDEN GROUP                                                              9/29/2009 ι 17
Future Options

                   Management     Physician     Routine       Major       Available
       Option
                    Structure     Strategy      Capital       Capital       Beds
                Contract CEO,      Faculty/                     $115
 1. Replacement
                CFO, CNO, and      Resident                    million      177
   with Growth
                 Key Directors      Model                    (estimate)
 2. Replacement                                                 $35
    of OB and                     Residency     $4 million     million      135
       NICU                        Programs      annually    (estimate)
                     County       Consortium    (estimate)      $14
 3. Replacement    Employees or   or Contract
                                                               million      125
  of NICU Only       Contract      Physician
                                                             (estimate)
                                    Groups
     4. No
                                                                            107
  Replacement
                                   Contract                    None
   5. Delivery
                   Oversight by      with
    System                                        None                      None
                      HCS         Community
 Reorganization
                                  Physicians

THE CAMDEN GROUP                                                            9/29/2009 ι 18
 Future Options

                       Annual Net Cost to County in Millions for FY 2009-10 to FY 2014-15
               $40


               $35                                                                            4 - No Replacement

               $30
                                                                                              3 - Replace NICU only

               $25                                                                            1 - Replace w/ Growth
In Millions




                                                                                              2 - Replace OB & NICU
               $20
                                                                                              5A.1 - 300% FPL Lease

               $15                                                                            5B.1 - 200% FPL Lease
              Target
               $10                                                                            5A.2 - 300% FPL Sell

                                                                                              5B.2 - 200% FPL Sell
                $5


                $0
                       FY 2009-10   FY 2010-11   FY 2011-12   FY 2012-13   FY 2013-14   FY 2014-15


         THE CAMDEN GROUP                                                                                9/29/2009 ι 19
Future Options
     Net Cost to County over Six Years in Millions for FY 2009-10 to FY 2014-15
                                                             Existing Debt Service          Routine Capital        New Debt Service            Net Operating Costs
                                   $160

                                   $140

                                   $120

                                   $100
                     In Millions




                                   $80

                                   $60

                                   $40

                                   $20

                                    $0

                                            Option 1        Option 2         Option 3           Option 4        Option 5A.1      Option 5A.2          Option 5B.1      Option 5B.2
                                                                                                                 Delivery          Delivery            Delivery          Delivery
                                                                                                                 System            System              System            System
                                                                                                              Reorganization    Reorganization      Reorganization    Reorganization
                                          Replacement     Replacement      Replacement            No           @ 300% FPL -      @ 300% FPL -        @ 200% FPL -      @ 200% FPL -
            In Millions                    with Growth   of OB and NICU    of NICU Only      Replacement      Lease Buildings    Sell Buildings     Lease Buildings    Sell Buildings

     Net Operating Costs                          $8             $18                 $39              $75              $54               $59                 $43               $48
     New Debt Service                             38              12                   5                -                -                 -                   -                 -
     Routine Capital                              24              24                  24               24                -                 -                   -                 -
     Existing Debt Service                        48              48                  48               48               48                 -                  48                 -
     Net Cost to County over
     Six Years                                   $119            $102                $116            $146             $102                $59                 $91               $48

     Remaining New Debt                         $250             $77                 $31                -                -                 -                   -                 -

     Remaining Existing Debt                     $23             $23                 $23              $23              $23                 -                 $23                 -


THE CAMDEN GROUP                                                                                                                                                        9/29/2009 ι 20
Business Goals and Objectives

Business Goals and Objectives Applied to Options 1-5 (all)
                           Option 1       Option 2         Option 3         Option 4        Option 5A.1       Option 5A.2      Option 5B.1        Option 5B.2
                                                                                           Delivery System   Delivery System   Delivery System   Delivery System
                                                                                           Reorganization    Reorganization    Reorganization    Reorganization
   Objectives             Replacement   Replacement of   Replacement of                     @ 300% FPL -      @ 300% FPL -      @ 200% FPL -      @ 200% FPL -
                          with Growth    OB and NICU       NICU Only      No Replacement   Lease Buildings    Sell Buildings   Lease Buildings    Sell Buildings




                                  
   Meet obligation for
   Section 17000
   patients




                                                                                                                                                   
   Annual net cost to
   county $12 million
   annually or less



   No increase in


                                                                                                 
   debt service or
   capital for facility
   equipment or
   infrastructure




   Exit Old Tower
   Building in Year 3
                                  
 THE CAMDEN GROUP                                                                                                                                9/29/2009 ι 21
SJGH Market Position

Summary of Findings
 SJGH is faced with competitive pressures resulting from a combination of
  the following:
    The payer mix reflects extensive service to the medically indigent.
       The Hospital has not been able to attract a sufficient payer mix to
          compensate for the indigent, resulting in an overall inadequate level
          of financial reimbursement.
    Area hospitals are strategically pursuing Medi-Cal Managed Care
     patients, in direct competition with SJGH for this patient population.
       SJGH continues to lose Medi-Cal Managed Care patients despite its
          affiliation with the HPSJ.
       The composition and organization of the SJGH medical staff does
          not lend itself to a competitive model for insured patients.
       SJGH does not attract Medicare patients due to the lack of services
          that are typically utilized by an older or growing baby boomer
          population.
 THE CAMDEN GROUP                                                        9/29/2009 ι 22
SJGH Market Position

Summary of Findings (cont’d.)
    The lack of revenue generated by the low volume of privately insured
     patients forces SJGH to rely heavily on government payers that have
     historically not compensated for the rising costs of hospital expenses.
    The current mix of service lines does not promote growth in a broader
     spectrum of ancillary service volumes.
        The lack of cardiac surgery hinders the growth of cardiology
          services.
        The lack of growth in oncology impacts general medicine, surgical,
          and outpatient ancillary services.
        The cost and risk of successful competition in these service lines
          makes them difficult to implement.
    SJGH must improve its operational structure to better support patient
     needs, develop a payer strategy to improve financial performance, and
     create a comprehensive physician group model for the Hospital.


THE CAMDEN GROUP                                                     9/29/2009 ι 23
SJGH Market Position
                                                            San Joaquin General Hospital
                                                          Hospital Competitor Profile Matrix
                                                                      CY 2007

                                                 San Joaquin      St. Joseph's                       Lodi     Sutter Tracy    Doctor's
                                                   General          Medical         Dameron        Memorial   Community      Hospital of
                                                   Hospital          Center         Hospital       Hospital     Hospital      Manteca



     Licensed Beds (staffed and available may
     be low er)                                          196             273                188        107            82            73
     Discharges                                        9,033          17,628              11,299      7,426        4,435         3,859

     Average Length of Stay                              4.5              4.4                3.9        4.1          4.1            4.7
     Average Daily Census                                112             213                119          83           50            50
     Occupancy Rate                                   57.1%            78.0%              63.3%      77.6%        61.0%          68.5%

     ED Stations                                          19               24                13          16           14            11
     ED Visits                                       39,824           41,648              29,825     20,374       30,426        22,376

     ED Visits per Day                                   109             114                 82          56           83            61

   Source: OSHPD ALIRTS and Inpatient Discharge Database (2007), HospitalBenchmarks.com


 Occupancy rate fell from                                                 ED visits decreased by 5.8 percent
 71.1 percent in CY 2006 to                                               from CY 2006 to 39,824 in CY
 57.1 percent in CY 2007.                                                 2007, moving the Hospital from
                                                                          first to second place in the market.

Note that 2007 is the latest publicly available data.
THE CAMDEN GROUP                                                                                                                 9/29/2009 ι 24
SJGH Market Position
SJGH Market Share Trend
                                                      San Joaquin General Hospital
                                           San Joaquin County Market Share by Total Discharges
                                                             CY 2003 - 2007


                                                                                                                 Percent
                                                                                                                 Change
                                                        2003         2004        2005       2006      2007      2003-2007



             County Population                         625,556      643,929      659,707    671,115   675,463       8.0%
             Total County Discharges                    65,313       65,827       68,217     67,693    67,205       2.9%
                                                                                                                            SJGH overall market
             Use Rate (1)                                 104.4        102.2       103.4      100.9      99.5       -4.7%   share decreased by
                                                                                                                            1.1 percent.
             San Joaquin General Hospital                 14.5%        14.2%        14.6%     14.0%     12.9%

             St. Joseph's Medical Center                  25.0%        25.5%       25.2%      25.4%     25.7%

             Dameron Hospital                             19.0%        18.8%       17.8%      16.4%     15.9%

             Lodi Memorial Hospital                        9.1%         9.2%         8.8%      9.4%      9.3%               County residents
             Sutter Tracy Community Hospital               5.7%         5.7%         5.6%      5.7%      6.2%               seeking inpatient
             Doctors Hospital of Manteca                   4.9%         4.4%         5.5%      5.6%      5.5%               care outside the
             St. Dominic's Hospital - Kaiser (2)           2.9%         2.5%         3.1%      3.9%      3.4%               service area
              Sub total                                  81.2%        80.3%        80.6%     80.5%     78.9%                increased from 19.5
             All Other Hospitals
                                   (3)
                                                          18.8%        19.7%       19.4%      19.5%     21.1%               to 21.1 percent.
              Total                                      100.0%       100.0%      100.0%     100.0%    100.0%

        Source: OSHPD Inpatient Databases: 2003-2007, California Department of Finance
        (1) Use rate is defined as total number of discharges per 1,000 population
        (2) In 2006, St. Dominic's Hospital became Kaiser Hospital of Manteca
        (3) All Other denotes hospitals w ith less than tw o percent of market share
THE CAMDEN GROUP                                                                                                                       9/29/2009 ι 25
SJGH Market Position
SJGH Medi-Cal Market Share Trend
                                                                  San Joaquin General Hospital
                                                         San Joaquin County Market Share Trend - Medi-Cal
                                                                         CY 2003 - 2007
 SJGH continued its decline
                                                                                  2003                            2007
 in Medi-Cal market share,                                         Medi-Cal                             Medi-Cal
 in particular Medi-Cal                                            Managed Medi-Cal Medi-Cal            Managed Medi-Cal Medi-Cal     Trend
                                                                    Care     FFS     Total               Care     FFS     Total     2003-2007
 Managed Care.

               San Joaquin General Hospital                            34.2%           33.3%    33.6%     23.3%    35.7%    31.3%
                                                                                                                                        `
               St. Joseph's Medical Center of Stockton                 36.9%       19.2%        24.4%     44.7%    20.8%    29.2%       `
               Dameron Hospital                                         0.0%       20.7%        14.6%      6.1%    15.1%    11.9%
                                                                                                                                        `
               Lodi Memorial Hospital                                  12.4%           6.0%      7.9%     10.9%     8.3%     9.2%       `
               Sutter Tracy Community Hospital                          2.0%           4.7%      3.9%      6.1%     4.9%     5.3%

               Doctor's Hospital of Manteca                             2.4%           2.7%      2.6%      0.0%     2.2%     1.4%

               St. Dominic's Hospital - Kaiser (1)                      5.4%           2.8%      3.6%      0.3%     0.3%     0.3%

               Sub total                                              93.4%        89.3%        90.5%     91.3%    87.2%    88.7%

               All Other(2)                                             6.6%       10.7%         9.5%      8.7%    12.8%    11.3%

               Total                                                  100.0%      100.0%       100.0%    100.0%   100.0%   100.0%

               Total Discharges                                       4,334      10,386        14,720     5,630   10,329   15,959

             Source: OSHPD Inpatient Discharge Database, 2003 - 2007
             Notes: Excludes normal new borns (DRG 391).
             (1) St. Dominic's Hospital became Kaiser Hospital of Manteca in 2006
             (2) Includes hospitals w ith less than tw o percent of total discharges



THE CAMDEN GROUP                                                                                                                                9/29/2009 ι 26
Market Assessment

Market Assessment
 Hospital inpatient capacity is not sufficient in the County to absorb those patients treated by
  SJGH. The migration of patients was based on the hospital’s geographic proximity to the
  patients’ residences.
                                          All Other
                                           1,335
                                            13%
                    Doctors Hospital of
                        Manteca
                           581
                           6%
                                                                           St. Joseph's
              Sutter Tracy                                               Medical Center of
           Community Hospital                                               Stockton
                  480                                                          4,169
                  5%                                                            42%

                      Lodi Memorial
                         Hospital
                           585
                           6%


                                 Dameron Hospital
                                     2,800
                                      28%
 THE CAMDEN GROUP                                                                            9/29/2009 ι 27
Market Assessment

Total ED Visits Redistribution
 St. Joseph’s would be the most likely alternate hospital and would receive an
  additional 21,000 ED visits in CY 2011. The migration of patients was based
  on the hospital’s geographic proximity to the patients’ residences.
                                   Doctors Hospital
                                     of Manteca
                        Sutter Tracy    3,998
                        Community        9%
                         Hospital
                          2,876
                            7%

                        Lodi Memorial
                          Hospital
                            2,644
                             6%
                                                        St. Joseph's
                                                       Medical Center
                                                        of Stockton
                                                            21,106
                                                             49%
                    Dameron Hospital
                        12,818
                         29%




 THE CAMDEN GROUP                                                       9/29/2009 ι 28
Market Assessment

Capacity Projection Summary
 If patients are redistributed, the following capacity situation in the market
  would occur:

                                       St.                                   Lodi                      Doctors of
         CY 2011                    Joseph’s         Dameron               Memorial     Sutter Tracy    Manteca
                                                                             Has           Has
  Medical/Surgical
                                                                           Capacity      Capacity
  ICU/CCU
                                                                             Has
  OB
                                                                           Capacity
                                                        Has               No Licensed   No Licensed    No Licensed
  Pediatrics
                                                      Capacity               Beds          Beds           Beds
                                                        Has               No Licensed   No Licensed    No Licensed
  NICU
                                                      Capacity               Beds          Beds           Beds
                                                                             Has
  ED
                                                                           Capacity
        = At or Above Functional Capacity   = At or Above Full Capacity

 THE CAMDEN GROUP                                                                                          9/29/2009 ι 29
History of Hospital’s Funding and Financial Performance

Summary of Findings
 FY 2001-02 was the last year that SJGH had sufficient revenue to cover
  costs.
   The Hospital Replacement Fund was depleted in FY 2006-07.
   The Enterprise Fund has been historically supplemented $2.5 million by
    the County General Fund above the legally required Maintenance of
    Effort (“MOE”) of $2.1 million. In FY 2008-09, the County General Fund
    contribution increased to $11.9 million inclusive of the MOE.
   The $11.9 million target was not met in FY 2008-09, as the year ended
    with losses around $15.8 million on a cash basis.




 THE CAMDEN GROUP                                                      9/29/2009 ι 30
History of Hospital’s Funding and Financial Performance

Summary of Findings (cont’d.)
 County General Fund contributions designated for a Public Health
  Services building project were divested to the Enterprise Fund in FY 2007-
  08.
   SJGH relies heavily on state and federal supplemental funding as a source
    of revenue.
      These short-term supplemental funds are unlikely to be long-term
         solutions.
   In FY 2009-10 the County General Fund contribution target of $11.9 million
    will be more difficult to achieve given inflation and Cost-of-Living
    Adjustment (“COLA”) increases. While the Hospital has targeted areas of
    improvement, some of the strategies are aggressive and require reduction
    in services and staffing levels.




 THE CAMDEN GROUP                                                       9/29/2009 ι 31
History of Hospital’s Funding and Financial Performance

Net Losses from Hospital Operations

                                                 San Joaquin General Hospital
                           Net Losses from Hospital Operations (Including Capital) - Modified Cash Basis
                                                    FY 1997- 98 to FY 2008- 09
                $15

                $10                                             $7.7

                  $5
                                      $0.3
                  $0
                         ($1.0)                   ($1.2)
                 ($5)
  In Millions




                                                                            ($4.3)
                ($10)
                                                                                        ($11.3)      ($10.2)
                ($15)
                                                                                                                 ($14.0)
                                                                                                                                                              ($15.8)
                ($20)
                                                                                                                             ($20.8)               ($21.3)
                ($25)

                ($30)
                                                                                                                                         ($30.5)
                ($35)
                        FY 97-98    FY 98-99      FY 99-     FY 00-01     FY 01-02     FY 02-03     FY 03-04    FY 04-05    FY 05-06    FY 06-07   FY 07-08   FY 08-09

                                               Net Losses from Hospital Operations                Linear (Net Losses from Hospital Operations)




            Note: In FY 2008-09 there was also $12 million in delayed payments that will be received in
            FY 2009-10, primarily related to State sources.

 THE CAMDEN GROUP                                                                                                                                             9/29/2009 ι 32
History of Hospital’s Funding and Financial Performance

Cash Balances in the Hospital Related Funds



                                    Enterprise and Hospital Replacement Fund Balance in Millions with External Events Noted
                                                                   FY 1997-98 to FY 2008-09
              $50
                                  New building                 $41        $43                                                             New Medi-Cal DSH Waiver,
                                                                                       $39                                                Medi-Cal changes to cost-
              $40                (1997 Building)                                                     $36
                                     opens                                                                                                  based reimbursement,
              $30
                                                    $28                                                             $28                   competition increases for
                                                                                                                                            Medi-Cal patients, and
              $20                                                                                                                           cash flow delays with
                                      $15
                                                                                                                                           Waiver Implementation
In Millions




              $10                                                                                                                $7
                        $3

               $0

              ($10)
                                                                                                                                             ($12)
              ($20)
                                                                                      Hospital                  2nd Staffing                                           ($20)
                                                                                    Competitors                   Ratios
              ($30)
                                                                                     pursue OB
                                                                                                                                                        ($31)
              ($40)
                      FY 97-98       FY 98-99      FY 99-00   FY 00-01   FY 01-02     FY 02-03     FY 03-04       FY 04-05     FY 05-06    FY 06-07    FY 07-08      FY 08-09
                                                                                                                                                                  Realignment
                                                                                                 1st Staffing
                                                                                                                                                                     down
                                                                                                    Ratios
                                                                                                                                                      3rd Staffing
                                                                                                                                                         Ratios


        THE CAMDEN GROUP                                                                                                                                        9/29/2009 ι 33
History of Hospital’s Funding and Financial Performance

Sources of Funds for Hospital Related Funds



                            Sources of Funds for Hospital Related Funds (Dollars in Millions)
                                                                                                            Actual
                                                                                FY 2005-06      FY 2006-07      FY 2007-08       FY 2008-09 (*)



   Sources of Funds

     County AB 8/Realignment Matching Funds (Required MOE)                           $2.1            $2.1             $2.1              $2.1

     County General Fund Contribution                                                 2.5             2.5              2.5                9.3

     County Contribution for Clinical Hospital Lab Construction (Tobacco Tax)        14.0             0.4                    -                  -

     Notes Receivable                                                                 0.2             0.2              0.3                      -

     Interest Income                                                                  2.0             2.5              1.7                      -

     County Contribution from Capital Projects Fund (PH Lab)                                -               -         27.0                      -

     Note Receivable Buyout - Airport and Juvenile Hall (April 2008)                        -               -          5.1                      -

       Total Sources of Funds                                                       $20.8            $7.7            $38.7             $11.4


  (*) Budget was cut by $500k mid-year.




 THE CAMDEN GROUP                                                                                                                  9/29/2009 ι 34
History of Hospital’s Funding and Financial Performance
FY 2009-10 Projected Supplemental Funding including County Contribution
 The chart below shows the erratic projected payment schedule by month for the FY 2009-10
  supplemental funding. Only the County General Fund, HPSJ, and Realignment funds are
  received on a routine basis.
                    $25,000,000


                    $20,000,000


                    $15,000,000


                    $10,000,000


                    $5,000,000


                            $0
                                  July      Aug      Sep     Oct   Nov    Dec       Jan     Feb   Mar    Apr      May     Jun

                    -$5,000,000
                                         SB 1732                         AB 915                         Realignment
                                         County Contribution             HPSJ                           Hospital Fee
                                         Stabilization (*)               SNCP (*)                       DSH (*)
                                         Physician SPA (*)               Managed Care IGT               Monthly Average
 THE CAMDEN GROUP                                                                                                               9/29/2009 ι 35
History of Hospital’s Funding and Financial Performance
FY 2009-10 Projected Supplemental Funding including County Contribution (In Millions)

Most of the         Supplemental Funding
                                                  Projected
                                                                  Expiration Date                         Status
federal                                          FY 2009-10

and state           Physician SPA                     0.8         August 30, 2010       Replacement funding not acted on
supplemental        DSH                              25.8         August 30, 2010       Replacement funding not acted on
programs            SNCP                              3.7         August 30, 2010       Replacement funding not acted on
for public          Stabilization                     7.5         August 30, 2010       Replacement funding not acted on
hospitals           Managed Care IGT (SB 12)          8.2       September 30, 2010      Contract drafted, awaiting CMS approval
expire within       Hospital Fee (AB 1383)            9.1       December 31, 2010
                                                                                        Passed Assembly and Senate 9/11/2009,
the next 18                                                                             pending Governor approval
                     Total Expiring before or
months. The          by 12/31/2010
                                                    $55.3
expiration
dates and                                                     Ongoing, current contract New contract being drafted; to begin
                    HPSJ Safety Net Payments         $3.6
status are                                                      expires 12/31/2009      January 2010
                    County Contribution
shown on the        (Required MOE)
                                                      2.1             Ongoing           Ongoing
right.              County General Fund
                                                      9.8             Ongoing           Ongoing
                    Contribution
                    Realignment (Sales Tax and                                          Ongoing, but decreased with economic
                                                     18.5             Ongoing
                    VLF)                                                                downturn
                    SB 1732 and AB 915                7.7             Ongoing           Ongoing

                     Total Ongoing                  $41.7

                     Total Projected                $97.0

 THE CAMDEN GROUP                                                                                                      9/29/2009 ι 36
 THE CAMDEN GROUP                                                                                                      9/29/2009 ι 36
History of Hospital’s Funding and Financial Performance

Hospital Expenses                                                                Hospital Expenses
 Between FY 2001-02 and FY 2008-                     $250
                                                                                        Capital       Operating
  09, expenses increased by 43.6
  percent, while net revenue                          $200
  increased by 35.7 percent.
 Decreased expenses in FY 2003-04
                                                      $150
  were due to lay-offs of




                                        In Millions
  approximately 200 Full-Time
  Equivalents (“FTEs”) in April 2004.                 $100


 Capital purchases have been
  deferred in all years.                               $50




                                                       $0
                                                             FY 01-02 FY 02-03 FY 03-04 FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09



                                                                             1st Staffing
                                                                                Ratios

                                                                                                                  3rd Staffing
                                                                                            2nd Staffing
                                                                                                                     Ratios
                                                                                              Ratios



                                                                                       This does not include negotiated equity adjustments.
 THE CAMDEN GROUP                                                                                                         9/29/2009 ι 37
History of Hospital’s Funding and Financial Performance

Volume
 Inpatient days and outpatient clinic visits have decreased significantly since
  FY 2005-06 and FY 2002-03 respectively. The implementation of a higher
  co-pay for self-pay/non-MAP patients, decreased availability of physicians,
  and increased competition for Medi-Cal patients contributed to the volume
  decrease.

                       Hospital Average Daily Census                                          Clinic Outpatient Visits per Worked Day (M-F)
 150                                                                             750
                                                                                                  696
                 139                         138                                 700
 140    133                         134                                                 652               652
                           131                                                   650                                609
 130
                                                                                 600
                                                      117                                                                    543               528      537
 120                                                           115               550                                                  504
                                                                        108      500
 110
                                                                                 450
 100
                                                                                 400
  90
                                                                                 350
  80                                                                             300
       FY 01-02 FY 02-03 FY 03-04 FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09         FY 01-02 FY 02-03 FY 03-04 FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09




 THE CAMDEN GROUP                                                                                                                              9/29/2009 ι 38
 History of Hospital’s Funding and Financial Performance

Hospital Salary Costs
As noted previously, COLA and equity raises continued at levels consistent
with the hospital industry and local hospitals.
  Meanwhile, over the past three years, FTEs have been reduced in
    nursing, ancillary, finance, and administrative areas.
       The chart on the left shows FTEs trended for the last three years and the
        chart on the right shows FTEs per adjusted occupied bed (“AOB”). The
        term “adjusted” refers to the adjustment made to ADC to account for
        outpatient services.
                              Total Full Time Equivalents                                                                        Paid FTEs per Adjusted Occupied Bed
1,450                                                                                              9.5


                                                                                                   9.0
1,400

                                                                                                   8.5
1,350
                                                                                                   8.0

1,300
                                                                                                   7.5


1,250                                                                                              7.0
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                                                                                                               2008-2009              2007-2008           2006-2007          Budget 2008-2009
             2008-2009              2007-2008             2006-2007         Budget 2008-2009


   THE CAMDEN GROUP                                                                                                                                                         9/29/2009 ι 39
History of Hospital’s Funding and Financial Performance

Financial Summary (cont’d.)
 Limiting the loss to the $11.9 million contribution from the County General
  Fund is becoming more difficult to achieve. For the FY 2009-10 budget, the
  following strategies were and are being employed to offset cost increases:
      Close three clinics with low volume in October (8.5 FTEs)
      Close outpatient pharmacy in November (11.0 FTEs)
      Reduced staff in medical records, collections, and other finance areas in
        July (13.0 FTEs)
      Cross trained and combined staffing in pediatrics and post partum
        inpatient units (7.5 FTEs)
      Reduce supply costs another $2 million
      Reduced internal medicine physician (1.0 FTE) and dentist (0.75 FTE)
      Reduced staff in other ancillary and general services areas (2.7 FTEs
        plus $1 million in reduced overtime)
 Additional reductions in physician services through reducing locum physicians
  in OB and Anesthesia.

 THE CAMDEN GROUP                                                          9/29/2009 ι 40
History of Hospital’s Funding and Financial Performance

Financial Summary (cont’d.)
 In future years, without an augmentation of the County contribution for
  operations and capital purchases, additional service and staffing cuts will
  be required to keep up with salary inflation and reductions in state and
  federal funding. Some areas under discussion include:
     Contract with local physician groups, especially for some specialties
       that have been difficult to recruit.
     Close additional clinics or migrate the clinics to another organizational
       structure, such as an FQHC.
     Partner with other hospitals in some or all of the Graduate Medical
       Education (“GME”) programs.
     Change the organizational structure and management compensation
       to avoid the high cost of contracted employees.




 THE CAMDEN GROUP                                                        9/29/2009 ι 41
California Counties’ Hospital Comparison
                               Of the 58 counties in California, 13 currently
                                operate acute care hospitals.
                               San Diego, Orange, and Sacramento
                                Counties have agreements with University
                                of California (“UC”) System and other
                                community hospitals.
                               Stanislaus County closed its acute care
                                hospital in 1997 and has a long-term
                                agreement with a for-profit hospital.
                               Six counties have long-term agreements
                                with nonprofit systems or independent
                                hospitals.
                               All other counties contract with local
                                nonprofit or district hospitals for acute care
                                services, including San Luis Obispo and
                                Tuolumne, which have closed their acute
                                care hospitals within the past five years.
                               The counties that operate acute-care
                                hospitals are shaded red.
THE CAMDEN GROUP                                                     9/29/2009 ι 42
California Counties’ Hospital Comparison
                                                                                 Long-Term Contract   No Long-Term
                                          Contracts with UC Long-Term Contract     with Non-Profit     Agreements,
                        Operates County   Hospitals, but Not  with For Profit       Hospitals or    Contracts with Non-
       Counties            Hospital         Exclusively          System               Systems       Profit or UC System


       Los Angeles
       San Diego
       Orange
       Riverside
       San Bernardino
       Santa Clara
       Alameda
       Sacramento
       Contra Costa
       Fresno
       Ventura
       San Francisco
       Kern
       San Mateo
       San Joaquin
       Stanislaus
       Sonoma
       Tulare
       Santa Barbara
       Monterey
       Solano


       Totals                 12                                             9

THE CAMDEN GROUP                                                                                                  9/29/2009 ι 43
SJGH Service Lines

 The chart below shows the services currently offered at SJGH:


                                                                    Emergency Department
                      Clinics
        Residency

         & Faculty




                     Medi-Cal
        Programs




                                                          Inpatient Hospital
                     Indigent/ Self-pay                      Contracts

                     Employee Health
                     Services
          Practice
          Private




                     Geriatric/Medicare    Obstetrics           NICU            Pediatrics
                     Dialysis
                     Other

                                          Perioperative                Medicine
                                            Services
                                           General
                                           Orthopedics       Specialty        Correctional
                                           Urology           Services          Medicine
                                           Other

 THE CAMDEN GROUP                                                                        9/29/2009 ι 44
SJGH Service Lines

 In order to understand the options considered in this report, we have categorized the SJGH
    services as follows:
                                      Services Required to Maintain    Services that Require Capital
     Services Required for Growth
                                      and Grow Profitable Medi-Cal        and New Resources to
       in Medicare and Seniors
                                                Business                        Implement
                                                                       Trauma
     Cardiology
                                                                       Cardiac Surgery
     Cardiovascular Surgery           NICU
                                                                       Oncology and related
     Oncology                         OB
                                                                        imaging services
     Orthopedic Surgery
                                                                       Most specialty services
     Physician Specialties that are
                                       Services that Require Fixed    Services that “Break Even” or
      Sized to Reflect Residency
                                             24/7 Coverage                  Operate at a Profit
       Program Requirements
                                                                       Outpatient Dialysis

                                       ER                             NICU
     Surgery                                                          Pediatrics (after staffing
                                       Anesthesia
     Internal Medicine                                                 revision)
                                       OB
     Family Medicine                                                  Labor, Delivery,
                                       Surgery
                                                                        Recovery, Post Partum
                                                                        (“LDRP”)
 THE CAMDEN GROUP                                                                             9/29/2009 ι 45
Clinics

Payer Mix by Clinic                        Clinics - FY 2008-09 Payer Mix
 The payer mix for all
  clinics is shown below.      Self-Pay/
  Most of the MAP patients      Other
  are seen in the specialty       5%
  clinics and the two family           Insurance
  medicine clinics.
                                          9%


                                  Medicare
                                   12%

                                                                   Medi-Cal
                                                                    (FFS &
                                    Indigent                         HMO)
                                      18%                             56%




 THE CAMDEN GROUP                                                             9/29/2009 ι 46
Clinics

Primary Care Models –
                                                              Operates                       FQHC Look-       FQHC
                                                2008           County           County       alike (County (Operated by
                            Counties          Population      Hospital          Clinics       employees)    non-profits)
Other California
Counties                    Los Angeles       10,363,850
                            San Diego          3,146,274
                            Orange             3,121,251
                            Riverside          2,088,322
                            San Bernardino     2,055,766
                            Santa Clara        1,837,075
                            Alameda            1,543,000
                            Sacramento         1,424,415
                            Contra Costa       1,051,674
                            Fresno               931,098
                            Ventura              831,587
                            San Francisco        824,525
                            Kern                 817,517
                            San Mateo            739,469
                            San Joaquin          685,660
                            Stanislaus           525,903
                            Sonoma               484,470
                            Tulare               435,254
                            Santa Barbara        428,655
                            Monterey             428,549
                            Solano               426,757



                        Sources: Claritas, Inc. and survey of county outpatient services representatives
THE CAMDEN GROUP                                                                                            9/29/2009 ι 47
Medical Staff

Summary of Findings
 An analysis of national hospitals, other California county hospitals, and other
  hospitals in the Central Valley found that:
     Few stand-alone hospitals operate independent residency programs
       nationally due to the stringent GME research and education
       standards/requirements.
     Other California county hospitals have residency programs and partner with
       large academic medical centers (“AMCs”) and/or medical schools.
     The hospitals in the Central Valley with residency programs have strong
       affiliations with AMCs and medical schools to spread out clinical experience
       requirements.
   SJGH medical staff costs are fixed because:
       The Hospital must have 24/7 coverage for OB, Anesthesiology, ED, and
        Surgery.
       GME faculty requirements dictate the Hospital’s Internal Medicine and
        Family Medicine Departments staffing and cannot be flexed.

 THE CAMDEN GROUP                                                          9/29/2009 ι 48
Medical Staff

Summary of Findings (cont’d.)
 The SJGH multi-disciplinary work group evaluating the Residency Programs
  determined that discontinuing the Residency Programs would be disruptive
  and that they should continue, but must:
     Develop affiliations with the University of California (“UC”) medical
       schools and other hospitals
     Improve financing through operational improvements, physician
       productivity monitoring, and better contracting
     Continue with structural improvements, such as involving physicians in
       the turnaround and contingency planning for lower census scenarios
   During this upcoming business cycle (three to five years), the disruption caused
    by eliminating the Residency Program physicians and re-implementing some
    key services could be overwhelming and threaten the success of any turnaround
    initiative.




 THE CAMDEN GROUP                                                               9/29/2009 ι 49
Medical Staff

Summary of Findings (cont’d.)
 A decline in census will accelerate the need for an alternate physician strategy.

   Recent experience has suggested that even at a census of 108, there may not
    be enough cases in vascular surgery and pediatrics to meet minimum teaching
    requirements in two of the Residency Programs.




 THE CAMDEN GROUP                                                           9/29/2009 ι 50
Medical Staff

Residency Programs as a Recruitment and Retention Strategy
 In the past, the Residency Programs have been an effective recruitment tool
  for SJGH faculty: 35 percent of the FY 2008-09 faculty graduated from the
  SJGH Programs.

                                                      FY 2008-09     SJGH
                                                       Faculty     Graduates
              Internal Medicine (including clinics)       9           6
              Family Medicine (including clinics)        10           2
              Surgery (including subspecialties)         12           3
                       Total                             31           11
                       Percent of Total                              35%




 THE CAMDEN GROUP                                                              9/29/2009 ι 51
Medical Staff

    This year, two residents                 By Area
                                                                                   FY 2008-09   Percent
                                                                                   Graduates    of Total
     remained at SJGH and
     several stayed in Northern               San Joaquin County                          5      33.3%
     California. Kaiser, in                   Alameda County                              3      20.0%
                                                                                                                  73%
     particular, benefitted from              Bay Area                                    2      13.3%
     the Programs this year.                  Stanislaus                                  1       6.8%
    The Programs have served                 Other California Counties                   2      13.3%
     as a physician recruitment               Undecided                                   2      13.3%
     tool for a broader region                               Total                       15     100.0%
     and, historically, for SJGH.
                                                        FY 2008-09   Percent of
    By Hospital
                                                        Graduates      Total
    Kaiser                                                  3             20.0%
    Lodi Memorial Hospital                                  2             13.3%
    SJGH                                                    2             13.3%
    University of Southern California                       1             6.8%
    Other Groups or Hospitals in California                 5             33.3%
    Undecided                                               2             13.3%
                             Total                         15             100.0%
THE CAMDEN GROUP                                                                                      9/29/2009 ι 52
Medical Staff

Barriers to Migrating from the Residency Programs – Availability of
Physicians
  The San Joaquin Valley has a shortage of physicians and is one of the
   highest physician shortage areas in the state of California.
   Given the shortage in the area, it would not be possible to replace the
    Residency Programs with physicians in the first year, so some services
    might be limited or closed pending physician recruitment.
   As noted previously in this report, a consortium should be pursued with
    other area hospitals to expand the number of clinical sites at which the
    residents rotate to broaden their work experience.




THE CAMDEN GROUP                                                         9/29/2009 ι 53
Hospital Leadership Recruitment and Retention

Summary of Findings
 Management compensation was reviewed from two perspectives:
    Survey of other counties that operate acute care hospitals
    Published salary surveys for all hospitals

   Both methodologies showed that management compensation at SJGH is
    frequently not competitive.
   There are currently six hard-to-find positions under contract management at
    SJGH (CEO, CFO, CNO, Perioperative Director, Health Information
    Management (“HIM”) Director, and Supply Chain Director). The County is
    paying a premium for these contracted positions compared to the cost of
    paying County employees in the 75th percentile of market rates.




THE CAMDEN GROUP                                                        9/29/2009 ι 54
Hospital Leadership Recruitment and Retention

Summary of Findings (cont’d.)
 The County benefit structure results in total compensation that is close to
  median in many instances. However, as is the case in other industries,
  hospital leaders frequently are focusing more on salary and less on benefits
  as a major factor in recruitment decisions.
   There is fierce competition in the County for healthcare executives and
    directors. CHW, Kaiser, Tenet, and Sutter have well-organized and flexible
    recruitment and compensation practices.
   For scenarios that require growth, adjustments in the organizational structure
    are needed to attract qualified individuals and give them the authority and
    autonomy to be successful. Recommended changes include giving CEO full
    responsibility for the Director of HR and the CFO.




 THE CAMDEN GROUP                                                         9/29/2009 ι 55
Consideration for Option 5
                                                                                      2008
Federal Poverty                           Counties                                  Population   FPL Requirement

Level (FPL)                               San Joaquin                                 685,660      Below 300%
Requirements for                          With County Hospital
Other County                               Riverside                                2,088,322       Below 200%
                                           San Bernardino                           2,055,766           200%
Indigent Programs                          Santa Clara (CI)                         1,837,075    At or below 200%
                                           Alameda (CI)                             1,543,000    At or below 200%
                                           Contra Costa (CI)                        1,051,674    At or below 300%
                                           Ventura (CI)                               831,587           200%
                                           San Francisco (CI)                         824,525    At or below 500%
                                           Kern (CI)                                  817,517           200%
                                           San Mateo (CI)                             739,469           200%
                   Above 200% FPL          Monterey                                   428,549           250%

                   At or below 200% FPL   Without County Hospital
                                           San Diego (CI)                           3,146,274    At or below 165%
                                           Orange (CI)                              3,121,251           200%
                                           Sacramento                               1,424,415           200%
                                           Fresno                                     931,098            63%
                                           Stanislaus                                 525,903       Below 250%
                                           Sonoma (CMSP)                              484,470           200%
                                           Tulare                                     435,254           275%
                                           Santa Barbara                              428,655           200%
                                           Solano (CMSP)                              426,757           200%
                                           Merced                                     255,250    At or below 100%
                                          Other
                                           County Medical Services Program (CMSP)                At or below 200%
                                           Health Care Coverage Initiative (CI)                  At or below 200%

THE CAMDEN GROUP                                                                                       9/29/2009 ι 56
Executive Summary Recap

Business Plan Findings
 Significant capital investment is required to:
     Replace Old Tower building
     Install Health Information Technology infrastructure
     Replace aging equipment in the 1997 Building
   Projected operating losses in excess of $11-15 million annually are likely
    to continue due to:
       Increased operating costs
       Deteriorating payer mix
   The County’s ability to support losses of this magnitude will significantly
    limit other policy options for county discretionary revenue
   Other hospital competitors are well capitalized and positioned to maintain
    profitable service lines
   Short-term supplemental funds are unlikely to remain long-term solutions

 THE CAMDEN GROUP                                                           9/29/2009 ι 57
Executive Summary Recap
Potential Action Items
  1. Restructure teaching programs to include regional and/or county-wide
     partnerships
  2. Implement Medical Staff Independent Practice Association (“IPA”) model
  3. Increase volume in and market profitable OB, Neonatology, and Dialysis
     Services
  4. Continue evaluating programs for consolidation and improvement
     including program closures, downsizing, and policy and structure
     changes
  5. Explore transitioning primary care clinics into a private Federally
     Qualified Health Center (“FQHC”) model or equivalent
  6. Explore partnerships to manage, lease, or operate hospital inpatient
     facility to improve operating position and provide capital improvements
     to the Hospital
  7. Meet with local hospitals to jointly determine how to financially support
     1) the County’s high level of uninsured and self-pay patients and 2) the
     Residency Programs
 THE CAMDEN GROUP                                                      9/29/2009 ι 58

				
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