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Sequoia Capital Presentation

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					                             MINUTES OF MEETING
                             BOARD OF DIRECTORS
                           SEQUOIA HEALTH SERVICES
                                  MAY 7, 2003

Present:       Director Wheat, Chair         Also present: Ms. Vaskelis
               Director Bartaldo                           Dr. Marmor
               Director Kaher                              Ms. Bottarini, Recorder
               Director Kane
               Director Krakower
               Director MacNaughton
               Director McTernan
               Director Mead

Excused:       Director Faro

CALL TO ORDER:
At 1640 hours, Chairman Wheat called the meeting of the Board of Directors of Sequoia
Health Services to order.

PUBLIC COMMENT ON AGENDA ITEMS:
Mr. Bob Parkhurst commented that he spoke here previously and the reason he is still
here is because the hospital saved his life. Mr. Parkhurst stated that there were reports
that the neighbors wanted the hospital to leave. Mr. Parkhurst stated that some people
buy their homes here because they want to be close to the hospital. Mr. Parkhurst
stated that the public should pick the new Board member and the voters should make
the choice if the hospital moves. Mr. Parkhurst added that the Board has rushed its
decision to move. The negative press is not good for the hospital. Mr. Parkhurst
suggested that Warren Gibson should be on the Board and they should seat Hickey and
Gibson.

Mr. Jack Hickey requested that agenda item 9. d. accepting the resignation of
Dr. Jerry Shefren be moved to the first item of business. Mr. Hickey stated the Board
should acknowledge the vacancy, do the right thing, show good faith and let him sit on
the Board. Mr. Hickey added that there have been two meetings without oversight
of an elected representative from the Healthcare District. Mr. Hickey commented that if
they want the community’s respect they can do that, nothing is stopping them. It is not a
violation of the Brown Act.

Director Krakower responded that it would not be appropriate according to the Bylaws.
Director Kane added that no one is elected to the Hospital Board. Chairman Wheat stated
that a lot of effort was put into developing the Bylaws and they will follow the guidelines
with a recommendation from the District Board.
                                                            Minutes – Board of Directors
                                                                Sequoia Health Services
                                                                             Page 2 of 7

CONSENT CALENDAR:
On a motion offered by Director Kane and seconded by Director Krakower, the
Consent Calendar was unanimously approved.

PROFESSIONAL STAFF REPORT:
Dr. Marmor announced that the hospital has developed an alliance with David Jablons,
MD, a thoracic surgeon from the University of San Francisco who is a specialist in
lung cancer to enhance the oncology program at Sequoia.

Dr. Marmor announced that the General Staff meeting is scheduled for Monday, June
9th at 1900 hours. The guest speaker will be Daniel Tennenhouse, JD, MD and Board
members are invited to attend.

FINANCE REPORT:
February & March Reports
Ms. Hayden reviewed the financial statements included in the board packet. For
February, $0.7 million net income compared to $0.4 million net income budgeted. Total
net patient revenue was over budget due to strong revenue performance of outpatient
ancillary departments. For March, net income of $1.2 million, compared to $1.0 million
net income budgeted. The patient volumes improved.

At the request of Director MacNaughton Ms. Hayden explained how patient census,
length of stay and payer mix impacts the budget for the hospital. Ms. Hayden stated that
the expense of salaries and benefits were over the original budget. Ms. Hayden added
that pension costs and worker’s compensation accounts for the variance.

On a motion offered by Director Krakower and seconded by Director Mead, the financial
reports for February and March 2003 were unanimously accepted.

Operating and Capital Budget 2003-2004
Ms. Hayden highlighted areas from the budget assumptions in the board packet. Ms.
Hayden stated that the proposed budget decreases the number of acute admissions and
days and projects an increase in the outpatient volume. The projected increase in
outpatient volume is 8%. Adjusted admissions will be almost the same. The budget
includes a 15% rate increase. Wage increases will average 5%. Pension expenses will be
increased to fund the Sequoia pension.

Ms. Hayden reviewed the Income Statement which compares the revenue versus
expenses. Ms. Hayden stated that the nurse-patient ratios will increase the cost of
wages. The cost of hospital supplies such as valves, stents, pacemakers and
pharmaceuticals has increased. Malpractice is self-funded and is currently underfunded.
Ms. Hayden commented that it will be a challenge to keep the bottom line close.
                                                             Minutes – Board of Directors
                                                                 Sequoia Health Services
                                                                              Page 3 of 7

Contract negotiations are scheduled with the California Nurses Association. The budget
includes a 1-½% Medicare increase. It is expected that there won’t be any significant
changes in the payer mix, length of stay, case mix. The expected growth is in outpatient
revenue. Director MacNaughton suggested that Ms. Hayden include operating expense
percentages in the next review.

The capital budget is not finalized. The capital summary is being reviewed by CHW as
submitted by Sequoia Hospital. The capital expenditures minus the Foundation funding
were reviewed. The second phase of the Cerner project which includes nursing
documentation were reviewed. Ms. Hayden added that equipment needs replacing in the
cath lab, nuclear medicine to keep the hospital up to current standards. The hospital may
be asked to asked to cut some items from the capital budget.

On a motion offered by Director Bartaldo and seconded by Director Krakower the
Operating and Capital Budgets for Sequoia Health Services were unanimously approved.

Strategic Action Plan
Ms. Vaskelis presented the Strategic Plan for FY04. The top priorities will be work on
the new hospital project, growing inpatient and outpatient volume and meeting financial
targets. Ms. Vaskelis highlighted projected activities under the three main Strategic Plan
categories: Our Patients, Our People and Our Future. Ms. Vaskelis reported that the
second phase of the Cerner program is going to be underway soon. A palliative care
program is being developed with Tom Harshman, Director of Spiritual Services.

Ms. Vaskelis asked Linda Kresge, Chief Nurse Executive, to explain how the hospital
plans to meet the nurse-patient ratios. Ms. Kresge reported that the hospital is working
with Canada College and the College of San Mateo to have 20 additional students in the
existing program. The idea is to have students working at the hospital all three shifts, 7
days a week. Nurses would be offered a sign-on bonus as a scholarship for tuition. The
nurse would have the option to work for Sequoia Hospital or pay back the tuition for
nursing school. The funds would be used to educate another student. A brief discussion
ensued regarding the advantages of having students on the floors and time needed to
work with the students. Ms. Kresge stated that this would be different than the traditional
nursing program. Ms. Kresge stated that the nursing contract expires June 30th. Sequoia
Hospital will be negotiating with 9 other CHW facilities.

Ms. Vaskelis stated that currently there are several physician recruitment projects in
process. Some of the new physicians are very busy. There is the possibility of a new
endocrinologist joining Dr. Gavin’s practice. This practitioner would possibly work
between Sequoia and Seton Hospital. Dr. Koenig will be retiring in July. Dr. Greenwald
will be taking over his practice.
                                                             Minutes – Board of Directors
                                                                 Sequoia Health Services
                                                                              Page 4 of 7

Ms. Vaskelis reported that employee satisfaction is at 78%. A new automated time card
system is going to be implemented. The hospital is trying to build up the radiology
volume. Dr. Olcott and a vascular group from Stanford will be working with an
interventional radiologist when the angiography suite is completed. The hospital is
exploring a surgery center with the physicians. The marketing department is advertising
on cable TV. The hospital is also looking into developing an Occupational Medicine
program in Palo Alto.

On a motion offered by Director MacNaughton and seconded by Director Bartaldo the
Strategic Action Plan was unanimously accepted.

QUALITY REPORT:
Ms. Jeffords reported that the Subacute Care Unit completed its annual Department of
Health Services licensing survey. Eight deficiencies were noted. No significant patient
care deficiencies were found. Minor deficiencies are being addressed.

Ms. Jeffords reported that the hospital continues to monitor several Performance
Improvement Indicators such as acute myocardial infarction which shows Sequoia
continues to exceed goals for ordering beta blockers on discharge. Lacerations at the
time of delivery are reviewed by the Department of OB/GYN.

Ms. Jeffords stated that there have been practice changes to decrease the risk of
medication errors, including improved use of appropriate abbreviations.

Ms. Jeffords highlighted the very positive patient satisfaction of the Emergency
Department. A patient satisfaction team is working with two departments (CSU & Lab)
to improve customer satisfaction. These efforts will be rolled out to other departments
throughout the year.

Ms. Jeffords informed members of the hospitals involvement in a national demonstration
project on reducing surgical site infections. The project has shown a decrease in surgical
site infections. The hospital is following the Center for Disease Control’s guidelines for
timely antibiotics and glucose control. Director MacNaughton questioned if Sequoia’s
data could be compared with other local hospitals. Ms. Jeffords reported that the hospital
compares rates with other CHW facilities. On a monthly basis, the surgical site infection
study looks at 50 community hospitals in the United States. Comparable rates are
available by State.

Ms. Jeffords added that the hospital participated in a national data base to compare stats
on myocardial infarction and congestive heart failure. Director MacNaughton suggested
the hospital market these successes. Ms. Jeffords stated that the hospital is marketing that
they received an award for being #1 Cardiac Hospital based on clinical outcomes and the
                                                               Minutes – Board of Directors
                                                                   Sequoia Health Services
                                                                                Page 5 of 7

awards that the Emergency Department received. Marketing is being done through direct
mail and the Sequoia Circle newsletter. Another area that will be marketed is the “DOC”
employee satisfaction survey results showing that Sequoia Hospital is a great place to
work.

On a motion offered by Director Kane and seconded by Director Krakower the Quality
Report was accepted.

MANAGEMENT REPORT
Sequoia Health Services: Ms. Vaskelis reported that the Annual Teddy Bear Clinic is
scheduled for Saturday from 1-4 p.m. There has been a lot of publicity about this popular
event. Ms. Vaskelis added that they are looking into adding newspaper articles to the
hospital website. Meeting dates, agendas and minutes will also be posted on the web-
site. Dr. Hardwin Mead was recently featured on Dr. Dean Edell.

Ms. Vaskelis stated that the new HIPAA compliance went into effect April 14th. Board
members are reminded to sign and return their forms to Ms. Johnson.

Ms. JoAnn Kemist gave a brief presentation regarding the “Influencers Campaign” from
the California Healthcare Association which focuses on educating the public regarding
the healthcare crisis in California. Areas being addressed include; caring for the
uninsured which creates shortfalls in the system, reimbursement paid to healthcare
providers, seismic upgrades, nursing ratios, recruitment, technology and pharmaceutical
advances.

Ms. Vaskelis reported that land negotiations for a new hospital site are underway between
the District and current owners. There have been several public meetings to keep the
community involved. The District decided not to hold a special election this summer.
They will evaluate the concerns from the community and address those concerns at a
public meeting. Ms. Vaskelis stated that there have been staff reductions at OSHPD
which will cause delays in construction.

Director Krakower expressed his concerns over the nurse-patient ratios on MSO.
Director Krakower complimented the nursing staff for their clinical expertise and
dedication but feels there are not always enough nurses on the floors to provide the care
patients need. Director Krakower felt the hospital’s priority should be nurse recruitment
and retention. Ms. Kresge provided background as to how the nurse-patient ratios are
calculated for the different levels of care. Director Krakower added that if a physician
does not feel that a patient will receive the level of care required on a medical floor, they
will admit their patients to a unit which provides a higher level of care.
                                                            Minutes – Board of Directors
                                                                Sequoia Health Services
                                                                             Page 6 of 7

Members discussed that the acuity of the patients has become higher on MSO than
previous years. Patients are often utilizing surgi-centers for minor procedures. Members
discussed that the MSO unit is beautiful but too spread out for efficiency. Ms. Kresge
stated that a new nurse manager has been hired for CSU. Ms. Costello is dedicated to
MSO. Currently, there are 7 positions open on MSO. The goal is to increase the nurse-
patient ratio on the afternoon and night shifts. Director Krakower was invited to sit on a
committee looking into ways to improve the care on MSO and define what type of patient
is appropriate for the unit. An update on the progress of the MSO unit will be given at a
future meeting.

CHW: Director McTernan reported that she attended the American Hospital Association
meeting recently, visited legislators and shared information. CHW received a national
award for their environmental and ecology efforts with recycling.

NEW BUSINESS:
Resolution 03-1 Regarding HIPAA Compliance. The Board approved waiving reading
the Resolution as it was included in the Board packet. A roll call vote on Resolution 03-1
was called. It was moved, seconded and unanimously carried by the eight members
present to approve Resolution 03-1 Regarding HIPAA Compliance.

Resolution 03-2 Regarding CHW Human Protections Program and Amendment to the
CHW Federal Assurance to oversee the Institutional Review Board. The Board approved
waiving reading the Resolution as it was included in the Board packet. It was moved by
Director Mead, seconded by Director McTernan and a roll call vote was unanimously
carried by the eight members present to approve Resolution 03-2 to Amend the CHW
Federalwide Assurance.

Fifth Amended and Restated Bylaws of Sequoia Health Services. Ms. Vaskelis presented
the Bylaws noting that they have been reviewed by CHW and the District’s legal counsel.
Each board member received a red-lined copy of the amendments in their board packet.
There being no questions, Director Krakower offered a motion to approve the Bylaws as
presented. Director McTernan seconded the motion which was unanimously approved.

Resignation of Dr. Gerald Shefren from Sequoia Health Services Board. Chairman Wheat
stated that it is with personal regret that Director Jerry Shefren has resigned from the
Sequoia Health Services Board. Chairman Wheat commented that Director Shefren was
an asset to the board and there will be a tremendous void. Chairman Wheat read Dr.
Shefren’s letter of resignation. A motion was offered by Director Krakower and
seconded by Director Kane to accept the resignation of Director Shefren, with regret.
                                                               Minutes – Board of Directors
                                                                   Sequoia Health Services
                                                                                Page 7 of 7

For clarification purposes Mr. Frank Gibson, CEO of the Sequoia Healthcare District,
explained the process established in the Bylaws to nominate a new representative to the
Board. Mr. Gibson also explained the difference between the Sequoia Health Services
and Sequoia Healthcare District Boards for the audience.

PUBLIC COMMENT ON NON-AGENDA ITEMS:
Mr. Hickey praised the staff for their presentation skills. Mr. Hickey commented that
he feels strongly that he would like to serve on the Board and feels that he has skills to
bring to the table.

ADJOURN:
Following a motion duly made, seconded and unanimously passed, the meeting was
adjourned at 1830 hours.

Respectfully submitted,



Kathleen M. Kane
Secretary

				
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