1. Arizona Rural Hospital Flexibility Program Using Flex Monitoring Team (FMT) Financial Indicator Reports to Support Arizona CAHs National Conference of State Flex Programs July 11, 2012 Kevin Driesen, PhD & Howard Eng, DrPH Arizona Rural Hospital Flexibility Program

2. Arizona-Flex

3. FMT Financial & Operational Indicators Total Margin ProfitabilityCash Flow Margin Return on Equity Operating Margin Current ratio LiquidityDays Cash on Hand Net Days Revenue in A/R Equity Financing Capital StructureDebt Service Coverage LT Debt to Capitalization O/P Revenue to Total Revenue RevenuePatient Deductions Medicare I/P Payer Mix Medicare O/P Payer Mix Medicare O/P Cost to Charge Medicare Revenue per Day UtilizationADC Swing-SNF Beds ADC Acute Beds

4. What do the indicators mean?

5. Proposed Outpatient Expansion Primary Diagnosis (Top 20) $ Claim Total Charge Amount Claim Payment # Patients # Claims Avg. $ Charge / Pt. Avg. $ Payment Due Provider Avg. # Annual Visits / Pt.

6. Use in Arizona Support hospital management – Reports sent to 11/14 AZ-CAH, CFOs & CEOs – Useful for Board members – Peer, state, and national comparisons – Data limits Information is 2-years-old, limits utility for real-time management Some missing and unlikely values Support AZ-Flex program development —Reports printed & sent —Webinar with Sheps Center Faculty —Contact distressed hospitals (2012) —Guidance for site visits —Identify distressed hospitals (3), target resources —Identify Arizona best practice hospitals —Track by year, distribute compendium at annual PI Summit Support state advocacy

7. Distress Model Predictions Three AZ-CAHs distressed – Within 6 months One hospital laid off 21 employees One hospital CEO fired One CAH-based LTC closed

8. Distress Model – Predictive Value AZ-CAH Distressed FMT PredictedNoYes No 62 Yes 03

9. Distressed Hospital: Days in Accounts Receivable

10. Distressed Hospital: Days Cash-on-Hand

11. Benchmark to AZ-CAH Best Practice: Days in Accounts Receivable 63

12. AZ-US Comparison: Total Margin, 2004-2009 Source: Cecil G. Sheps Center CAH Financial Indicators Reports

13. AZ-US Comparison: Days Cash on Hand Source: Cecil G. Sheps Center CAH Financial Indicators Reports

14. AZ-Flex Program Evaluation: $ Margin & # Licensure Citations

15. AZ-Flex Program Evaluation: CAH Negative Margin

16. Thank you! Kevin Driesen, PhD & Howard Eng, DrPH Arizona Rural Hospital Flexibility Program kdriesen@email.arizona.eduaeng@ahsc.arizona.edu (520) 626-5837 (520) 626-5840 Arizona Rural Hospital Flexibility Program