Tackling Two CAH Financial Challenges HFMA Forum Networking Event July 17, 2014, 10 a.m. to 11 a.m. Central Standard Time Lenne Bonner CFO St. Mary’s/Clearwater Valley Hospital and Clinics Ralph J. Llewellyn, CPA, CHFP Partner Eide Bailly, LLP Chad Mulvany Director, Healthcare Finance Policy, Strategy and Development HFMA

Course Agenda and Learning Objectives Agenda: 1.Emergency Department and Pharmacy Issues in the CAH Setting 2.A Provider Case Study: Emergency Department—Physician Availability Allowed in Cost Report 3.Q&A/Discussion Learning Objectives: Understand how to restructure ED on-call physician contracts to address costs and physician availability. Identify new strategies for ED physician compensation Understand how CAHs can tackle pharmacy challenges, including improving customer service and handling pressure to enter the retail pharmacy market. Identify methods to improve pharmacy accuracy, communication with physicians, and customer service. 2

Emergency Department And Pharmacy Issues In the CAH Setting Ralph J. Llewellyn, CPA, CHFP Eide Bailly LLP 3

Polling Question #1 What is your greatest challenge with physician staffing in your emergency department (ED)? Ability to staff the ED with physicians Developing payment models for ED physicians services Structuring contracts with ED physicians All of the above 4

ED Physician Availability Operational history – Rural “old-time” physicians covered the ED in addition to their daytime clinic/hospital obligations  Minimal cost  No Cost 5

ED Physician Availability Operational history – As time progresses  Demands for time in ED increase  Societal norms change  Costs rise  Some providers opt out of covering ED 6

ED Physician Availability Reimbursement history – Part B component (cost for providing professional services)  Unallowable cost on cost report  Patient specific  Reimbursed based on various fee schedules 7

ED Physician Availability Reimbursement history – Part A component (on-call or availability)  Nonpatient specific  Greater good of all  Cost allowable on cost report Not on-call elsewhere Not providing professional services elsewhere Originally had to be onsite 8

ED Physician Availability Challenge – How to structure contracts with providers to supply the best documentation that supports allowable costs – Strategies vary  Free-standing physicians  Provider-based physicians  Rural health clinic physicians 9

Polling Question #2 What is your greatest challenge with pharmacy services in your hospital? Physician/pharmacy communication Ability to staff pharmacy with qualified staff Pharmacy/hospital management communication about processes for dispensing medication All of the above 10

Pharmacy Historically, local retail pharmacies in rural America thrived – Independent – Stable professional workforce – Profitable – Multiple entities in the community 11

Pharmacy Current – May be dependent–more corporate entities – Less stable professional workforce  Major competition for labor  Lifestyle changes 12

Pharmacy Current – Financial viability may be at risk  Reimbursements  Mobility of customer base  Mail order – 340B may offer some financial benefits 13

Pharmacy Rural providers may find themselves in a bind – No retail pharmacy – Single retail pharmacy – Limited hours of service – Frustrated community looks to hospital to resolve the issue  They remember the past level of service 14

Pharmacy Addressing the issues – Purchasing – Managing – Competing 15

Pharmacy Challenge – Addressing the community concern – Preserving or improving overall financial performance of the organization  Retail pharmacy  Cost report 16

Polling Question #3 What solutions are you planning to implement to meet ED and pharmacy challenges? Developing a team of healthcare leaders to develop recommendations for solutions Assigning one healthcare leader to reach out to stakeholders Relying on senior leaders to make recommendations for solutions Conducting surveys of stakeholder opinions to develop recommendations for solutions 17

A Provider Case Study: Emergency Department— Physician Availability Allowed in Cost Report Lenne Bonner CFO St. Mary’s/Clearwater Valley Hospital and Clinics 18

ED Physician Availability What is allowed in cost report? – The time the physician is paid to be “available” Time Studies – Required: Two separate two-week time studies per year – Allow for dictating, documenting, reviewing test results, etc. 19

ED Physician Case Study Physicians requesting a pay increase Medical Group Management Association (MGMA) showed us at median with current compensation structure Current ED physician pay model – $30 per hour Monday-Friday from 8 a.m. to 6 p.m. – $50 per hour Monday-Friday from 6 p.m. to 8 a.m. and weekends Current availability percentage from ED time studies is 80 percent 20

ED Physician Case Study New pay model – $0 per hour Monday-Friday from 8 a.m. to 6 p.m. (disallowed time) – $100 per hour Monday-Friday from 6 p.m. to 8 a.m. and weekends – Increased total call pay $234,000 annually, which is $39,000 per year per physician with six in the call rotation – Only cost facility $155,000 – Puts us at 75 percent MGMA total compensation – Saved us 34 percent by changing ED call pay rather than base salary 21

Pharmacy Case Study Scenario – Local retail pharmacy independent of hospital – Only pharmacy in town, no competition – Receiving many complaints  Delay in filling prescriptions  Out of medication, causing delays  Delays in filling bubble packs, causing us discharge problems  Wrong medications filled  Multiple medications in same bottle 22

Pharmacy Case Study What we did – Met with pharmacist (CEO, CFO, COO, physician) – Discussed concerns What was discovered – Frustrations with some of our processes – Cash flow problems – Short staffed 23

Pharmacy Case Study Ideas to Explore – Set up communication process for pharmacist to direct problems to us (e.g., discharge orders, questions on prescriptions, paper versus electronic prescriptions) – Rent pharmacy retail space in our hospital to minimize traffic in the pharmacy store and offer convenience to our patients – Research 340B contract pharmacy agreement – Caution: Involve cost report preparers in all analysi s 24

Questions & Answers Ask the speakers a question or share your CAH experiences. Just type your question or comment into the Q&A box on your computer screen. 25

Contact Information Lenne Bonner CFO St. Mary’s/Clearwater Valley Hospital and Clinics Ralph J. Llewellyn, CPA, CHFP Partner Eide Bailly, LLP Chad Mulvany Director, Healthcare Finance Policy, Strategy and Development HFMA 26