August 20, 2015

Call to Order – Charles Ayscue - Board Chair Approval of Minutes from Last Meeting Medical Staff Report ASH Committee Reports and Recommendations Quality Assessment Performance Improvement

Utilization Review Compliance/Risk Management Financial Report CEO Report New Business Old Business Executive Session – if needed Adjournment

 Appointments/Reappointments  New Appointments / Re-Appointments approved by the Medical Exec. Committee- action required  Q2 Clinical Policies & Procedures –  No Action Required  Formulary – Submitted for information  Reviewed and approved by MEC, Dr. Jacobs, CEO, and Director of Nursing.  Appointments/Reappointments  New Appointments / Re-Appointments approved by the Medical Exec. Committee- action required  Q2 Clinical Policies & Procedures –  No Action Required  Formulary – Submitted for information  Reviewed and approved by MEC, Dr. Jacobs, CEO, and Director of Nursing.

ASH Committee Reports/Recommendations ASH Committee Minutes: ◦ MEC Minutes – 08/06/15  New locum- Dr. Agunobi ◦ Safety Committee Minutes – 07/29/15  No loss of days to employee injuries  April – 1 Workers Comp claim denied  May & June - None ◦ QAPI Meeting Minutes –07/29/15  Recommendation from Jill Hiers on contracts & tracer activity.

KePro is the new QIO and UR will refer Medicare cases for independent review. No HINN letters were issued Pre-admission assessments & criteria reviews completed within 48 hours. Continued stay criteria reviewed weekly Utilization Review

PATIENT SATISFACTION Oct – June 2015

Hospital Acquired Pressure Ulcers HAPUs per 1,000 Patient Days OCT NOV DEC JAN FEB MAR APR MAY JUN OCT NOV DEC JAN FEB MAR APR MAY JUN HAPUs -- Total # # of Patients with HAPUs

Risk Management Jun -Billing Issue not related to patient care.

Falls Reduction – Falls with Injury 0.00/1,000 patient days. Green Condition. Goal is < Reduce CLABSIs – Apr 1.8 –May 1.4-May 1.4 Q3 AVG 1.53 Goal is <0.65 Increase compliance with blood administration vital sign compliance =93% compliant on hourly checks: Up to 100% compliant on end of transfusion Goal is >98.9% Core Quality Measures Q3

Compliance Program LTCH-Quality Reporting Program Compliant with CMS transmissions YTD. ASHiCARE/ASH AlertLine & Webpage No reports in Q3. Annual Education-FY’15 ICD-10 Training ASH Clinical Staff – In process Compliance Program Module- Sept ‘15 Accountability Statements- Sept ‘15 Survey Readiness: Joint Commission Accreditation – Met with Consultant for 3 rd review of gap analysis. ASH Leadership continues to implement Tracer analysis. Hospital Compliance

CMS Hospital Recertification Survey Tuesday, Aug 11, Representatives from NC Division of Health Service Regulation arrived at 9:00 a.m. to conduct a recertification survey on behalf of CMS. The survey lasted 3 days with an exit interview on Thursday, Aug. 13 th. The following Standard deficiencies were noted: QAPI – Action plans and Contractual performance measures need improvement. All contracts must include performance measures including purchased services from Mission Hospital. § Condition of participation: Quality assessment and performance improvement program. Life Safety/Physical Environment– No doors on Nutrition Stations and a lock on hallway door 4S,Recycle bins out in hallway 4S., ASH specific fire drills & log. Sprinkler heads not correct for area location, Lobby alarm in main box failed. § Condition of participation: Physical environment. Infection Control- Telemetry monitors dirty, labeling of patient foods Condition of participation: Infection control

Hospital Recertification Survey All Conditions of Participation for Acute Care Hospitals were surveyed. The following domains had No Issues: Subpart B—Administration § Condition of participation: Compliance with Federal, State and local laws. § Condition of participation: Governing body. § Condition of participation: Patient's rights. Subpart C—Basic Hospital Functions § Condition of participation: Medical staff. § Condition of participation: Nursing services. § Condition of participation: Medical record services. § Condition of participation: Pharmaceutical services. § Condition of participation: Radiologic services. § Condition of participation: Laboratory services. § Condition of participation: Food and dietetic services. § Condition of participation: Utilization review. § Condition of participation: Discharge planning. § Condition of participation: Organ, tissue, and eye procurement. Subpart D—Optional Hospital Services § Condition of participation: Surgical services. § Condition of participation: Anesthesia services. § Condition of participation: Nuclear medicine services. § Condition of participation: Emergency services. § Condition of participation: Rehabilitation services. § Condition of participation: Respiratory care services.

Hospital Recertification Survey Issues found and corrected during survey: Refrigerator temps in Nutrition Stations Dietary: Soup Temps when delivering to patient rooms, uncovered food trays in holding areas HR – Documented verification of education for employee records.

Financial, Medical Staff, Legislative, Planning

Income Statement JulyNI - $103,298YTD ($44,615) CMI was up,, agency use dropped off and orientation is winding down. Expenses: Salaries & Contract labor have been our biggest issue. In preparation for the new rules in October, we had to upgrade staff and staff competencies. High amount of orientation costs and agency use during this time. Agency nurses are now down to zero. Revenue: Net Revenue YTD 4.3% below budget. Slow months in November & December are part of this and low CMI is the other factor. 3 rd quarter revenues were up as was census and CMI.

Income Statement PPD Expenses: Salaries & Contract labor both high as previously discuss. Supply expense is due to medication expense. Jluy PPD expenses also dropped to $1,445 PPD from $1,467 in the 3 rd quarter. Revenue: 3 rd quarter was our highest NI PPD. CMI has improved due to higher acutiy and bringing coding in-house. July NI PPD was $1,566.

5th Floor Mission Hospital

Space Details 34-beds – larger rooms – all private 5 th floor of main campus 3 floor plans under review All clinical departments but pharmacy are on the unit Pharmacy will only fit if some space from mother/baby overflow unit given up. We have not looked into this yet. We would need about 3,400 – 4,000 square feet of administrative and pharmacy space elsewhere in the building. Reviewing internally and then will discuss with facilities for more accurate pricing. Expect somewhere in the $5 million range.

Existing Conditions

Scenar io 1 Pros: Unit Visibility and Security Decentralized Support Services for operational flow Centrally located PT / OT Cons: Lack of Storage No Emergency Treatment Space Separated Patient Rooms

Scenar io 2 Pros: Observation bed Configuration Patient Unit Configuration Safety and Security Cons: Unit Visibility / Nurse Station Division Lack of Storage No Emergency Treatment Space

Scenar io 3 Pros: Observation bed Configuration Patient Unit Configuration Safety and Security Cons: No Pharmacy Lack of Storage No Emergency Treatment Space

If managed well this could present a great opportunity for us. Summary of relevant proposed rule Must be discharge from and IPPS Acute Care hospital, CAH do not count. Need a 3-day ICU stay or on prolonged mechanical ventilation > 96 hours at LTCH. ICU is defined as all cases in Revenue Code Centers 20x & 21x – Includes step down ICU units Medicare Advantage and "site neutral cases excluded from 25- day LOS rule All cases (LTCH & Site neutral) are included in 25% rule (75% for ASH under market dominant) Regulatory Update – LTCH Cases

 Next two years it will be the lower of cost or blended IPPS/LTCH rates, then;  It is the lower of cost or IPPS per diem up to IPPS rate  Cases that did not have 3-day ICU stay  Cases not admitted from an IPPS hospital (Includes Observation admits)  These cases will have to be managed as any other ACH case Regulatory Update: Non - LTCH Cases

Impact Analysis of New Rule (Assumes No Change in Cases or management of cases) Baseline FY 2016FY 2017FY 2018 CasesFY 2015 PaymentsFY 2016 Payments% ChangeFull Phase-In% ChangeFully Implemented% Change Overall 133,356 $5,435,199,413$5,301,188, %$4,966,896, %4,357,719, % NALTH Membership Member15,484 $665,665,604$635,995, %$608,734, %$547,291, % Non-Member117,872 $4,769,533,809$4,665,193, %$4,358,162, %$3,810,428, % Location Type Urban127,693 $5,233,120,440$5,112,670, %$4,796,799, %$4,218,572, % Rural5,663 $202,078,973$188,517, %$170,097, %$139,146, % Ownership Type For-Profit113,816 $4,611,557,857$4,508,041, %$4,203,992, %$3,668,859, % Non-Profit17,319 $721,784,466$693,226, %$665,755, %$599,057, % Bed size 0 to 24 Beds2,523 $92,699,671$89,643, %$82,683, %$69,955, % 25 to 49 Beds45,031 $1,775,179,757$1,707,076, %$1,611,685, %$1,414,009, % 50 to 74 Beds37,541 $1,564,340,585$1,510,823, %$1,427,953, %$1,255,937, % 75 to 124 Beds22,002 $945,426,815$940,717, %$877,544, %$783,089, % 125 to 199 Beds14,887 $589,244,925$586,202, %$540,224, %$463,273, % 200 or more Beds11,372 $468,307,660$466,724, %$426,804, %$371,454, % Census Region South Atlantic18,382 $777,156,317$767,330, %$734,430, %$672,463, % Asheville Specialty Hospital261 $ 10,063,201 $ 9,545, % $ 9,545, % $ 8,814, % FY 2016 & 2017 is a blended transition rate between the LTCH rates and IPPS rates is the fully implemented new rates.

Impact by Payment Change Type Patient CategoryCasesFY 2015 PaymentsFY 2016 Payments Percent Difference Non-Qualifying74 $ 2,784,738 $ 2,258, % Regular LTCH-PPS131 $ 5,996,813 $ 6,078,7571.4% SSO Case38 $ 846,250 $ 872,5673.1% SSO Non-Qualifying18 $ 435,399 $ 334, % Total261 $ 10,063,201 $ 9,545, % 1. Non-LTCH cases is where the biggest change will occur. 2.LTCH case payments actually increase 3.Assumes no changes in patient selection, CMI and LOS. 4.The more LTCH cases the better 5.Improved flexibility to take short stay – non-LTCH cases

Plan to Address New Rules LTCH patients Focus on the three primary ICU groups, APA, Trauma, Cardiovascular Target Step-down units for referrals - ?MMA/AHG Working on plans to accept ICU admits 24/7 Make sure we are compliant with LTCH rules The 24/7 admits would be limited to Medicare part A cases and possibly unfunded cases as all other insurers require precertification Discussing LVAD payment bundle pilot that would allow for free movement between Mission and ASH. Work through physician issues to do this.

Plan to Address New Rules Non-LTCH Cases Targeting two programs Pulmonary/COPD (ALOS 5-9 days)At best breakeven or loose a little. Looking to be a direct admit option for APA Care Path to meet DRG LOS guidelines Wound (ALOS 6-10 Days)- Biggest potential for improved profitability Bringing in new wound physician group that also rounds at 30 nursing homes. Looking to do direct admits for wound care excisional debridement and/or grafts and back to nursing home. Non-LTCH cases will have to be managed like IPPS cases We could also admit from Mission ER during high occupancy, including vent cases if there is physician support.

What has been done already We have upgraded staff capabilities through hiring and training over the past 6-10 months. 56% of staff have now been here < 2 years This has been more costly then expected with agency use and orientation expenses being very high. All nursing agency is now done 45% of our RNs are ICU nurses and evenly split on days and nights. We have had some intubated patients on the unit recently. Liaisons are former ICU nurses from Mission

Physician Search is ongoing Physician coming in October to interview One Local physician may be interested Use of Locums Dr. Agor had to move closer to home due to family issues We will be using some different locums over the next 2 months to see how the recruiting goes. Other Updates

New Business – Old Business - Executive Session – If Needed Adjournment