WMC Performance Improvement Trends and Plans 2008-2009

Watauga Medical Center FY 2008 Improvement Plan* Impact Actual 8 Months FYTD E/A @ Current Run Rate *Improvement Initiatives Revised E/A @9/30/08 Net Revenue 61,082,000 91,622,000 282,000 91,904,000 Operating Expenses 61,456,000 92,184,000 514,000 91,670,000 Operating Margin (374,000) (562,000) 796,000 234,000 Non-Operating Revenue 1,689,000 2,000,000 Net Income (Loss) $1,315,000 $1,438,000 $796,000 $2,234,000

Watauga Medical Center FY 2008/2009 Improvement Plan Impact 2009 Revenue Enhancement 282,000 1,952,000 Expense Reduction 514,000 2,464,000 Total $796,000 $4,416,000

Watauga Medical Center FY 2009 Proposed Budget Target (from Operations) 2008 2009 Change Net Revenue 91,622,000 94,245,000 2.86% Expenses 92,184,000 95,812,000 3.90% Operating Margin (562,000) (1,567,000) Improvement Initiatives 796,000 4,416,000 $ 234,000 $ 2,849,000 3.00%

FY 2008/2009 Performance Improvement Initiatives Reduce Travel / Education Raise Cafeteria Prices to cover total actual food costs Improved supply chain management Reduce Agency Staff Utilization Manage staffing against local and national benchmarks Health Insurance Modifications Lost Charges Capture Program Improve Quality of Coding Additional Opportunities will be found by collaborating with frontline staff

Who’s Been to the Grocery Store Lately? This year’s food budget is $1,000,000.00 Does that surprise anyone? We need to cover food costs When was the last time the Dining Room had an across the board price increase?

Weight Comparisons Maran

Travel/Education Major impact: Off-site conference attendance ($45,000 year end savings) CE’s provided by medical center: Netlearning CBLs, Competency Fairs, Monthly NW-AHEC videoconference programs, Department specific, ACLS/BLS/PALs Directors flexibility to target specific department needs Critical/new/change in job skills required by the medical center will be considered Tuition reimbursement process unchanged Majority, if not all, of your required continuing education hours can be obtained at the medical center.

Health Insurance Changes Health Plan History No individual premium increases during last three plan years. Premiums for dependent coverage have gone down for the last two plan years. No plan changes since Jan, 2006 Health Changes for FY2009 (communicated in Oct) Increase in bi-weekly premiums (effective Jan, 2009) Plan Changes (effective January, 2009) Higher annual deductible Higher out-of-pocket limit Higher co-pays for physician visits Implement hospitalization co-pay Renegotiation of reinsurance contract

Charge Capture Example Reimbursement System DRG Fixed – 68% % of Charges – 32% Charge Capture Example Gross Charges $62,000,000. % Collection 70% $43,400,000. Error Rate 5% Lost Revenue $2,170,000.

Marketing Cost Containment Plan There are over 150 forms used by departments of Watauga Medical Center Think strategically about the forms your department is utilizing to determine if form is still needed, could it be utilized differently, in a more effective manner? Contact the Marketing Department to discuss new ideas for form utilization