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1. 2 Annual Public Meeting 2014 3 Agenda WelcomeRichard C. Breon President and CEO Report on Community Commitments Martin Jennings Interim Chair, Finance.

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Presentation on theme: "1. 2 Annual Public Meeting 2014 3 Agenda WelcomeRichard C. Breon President and CEO Report on Community Commitments Martin Jennings Interim Chair, Finance."— Presentation transcript:

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2 2 Annual Public Meeting 2014

3 3 Agenda WelcomeRichard C. Breon President and CEO Report on Community Commitments Martin Jennings Interim Chair, Finance Advisory Committee Review of Fiscal Year 2015 Spectrum Health Budget Ronald J. Knaus Senior Vice President and CFO Question and AnswerAll

4 4 Community Commitments Total margin not to exceed Moody’s and Standard & Poor’s upper quartile $6 million annual budget for the underserved Open budget and pricing process

5 Spectrum Health An Integrated Health System Access Delivery Revenue $2.4 billion Revenue $2.1 billion 5

6 Budget (in millions)

7 2015 Budget Review Revenue of $4.51 billion ($369 million increase, or 8.9%) due mostly to: ■ Projected membership of Priority Health is expected to increase 6.6%. Membership increases, combined with price increases and product mix changes will yield a 8.6% increase in revenue. ■ Membership will grow to over 600,000 by June 30, ■ Enrollment in Medicare will grow to 110,000 members (13%) and Medicaid will grow to 100,000 members (23%). 7

8 2015 Budget Review ■ Spectrum Health Grand Rapids is expected to have adjusted admissions increase 2.0% over A gross price increase of 6% will yield a 1.8% net increase. ■ Federal payments (Medicare) are projected to be reduced by 3%. ■ State payments (Medicaid) are projected to increase 1% with additional payments due to expanded coverage. ■ Full time equivalents (staffing) will remain flat as growth related to volume and complexity are offset by improved productivity. 8

9 2015 Budget Review ■ Spectrum Health Medical Group encounters will grow 30% due to new providers, programs and practice efficiency initiatives. ■ Spectrum Health Regional Hospital adjusted admissions will increase 3.8%. Our West Michigan facilities now include Big Rapids, Fremont, Greenville, Lakeview, Ludington, Reed City and Zeeland. ■ Home health and hospice visits will increase 6.9% as more people are cared for in the home. ■ Will adjust hiring accordingly if volume/mix targets not met. 9

10 Expenses of $4.4 billion ($391 million increase, or 9.8%) due mostly to: ■$172 million additional health claims from projected growth of Priority Health. ■$164 million of salary and benefit increases including additional growth in programs and associated staffing. ■$40 million of additional supplies and other expense (4.4%). ■$15 million of additional depreciation offset by declining interest expense. ■Total capital expenditures will be consistent with 1.1 times depreciation in 2015 which approximates $200 million Budget Review 10

11 Ratings Moody’s Aa3 Stable Outlook Standard and Poor’s AA Stable Outlook AM Best A- Positive Outlook We believe this budget will support our continued high quality ratings. 11

12 12 Questions

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