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Business Plan Update Medical Center July 10 2012 CEC Presentation.

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Presentation on theme: "Business Plan Update Medical Center July 10 2012 CEC Presentation."— Presentation transcript:

1 Business Plan Update Medical Center July CEC Presentation

2 2 UCSF Medical Center Vision, Mission and Values Vision: To be the best provider of health care services, the best place to work, and the best place for teaching and discovering. Mission: Caring, Healing, Teaching, Discovering Values: PRIDE: Professionalism, Respect, Integrity, Diversity and Excellence

3 Chancellor’s Plan 3

4 UCSF Medical Center: FY 2013 Organizational Goals 4

5 UCSF Medical Center: FY 2013 Operations Workplan 5

6 6 UCSF Medical Center Budget 2013 – Strategies and Issues –Strong operating income required to fund capital and strategic expansion plans. –$19M Mitigation Plan incorporated into budget to ensure strong operating income. –Market strategy investment: Opportunity to grow market share via affiliations (i.e., CHRCO). Budget includes $3M for development costs. Marketing cost increase of $2M budgeted. –Strategic growth: Two percent increase in census budgeted: heart transplant, pediatric surgery, cancer and Neurosurgical growth. Managed care rate increase of 7% is critical to budget performance, market tightening rate increases. –Funds flow model: optimize strategic support and purchased service support model to align goals around growth and efficiency. UCSF Medical Center and Medical Group aligned. FY2013 budgeted purchased services of $48M is a $6M (14%) increase from the FY2012 budget. –New APeX Clinical and Business Technology Operating: Opportunity to optimize patient safety, quality, clinical integration and business functions. Complete APeX project within $165M capital budget. Total IT operating costs increase to $47M. –Mission Bay construction management: Construction projected to be on-time and on- budget, with a close watch on contingency dollars. Due to timing of collections from our philanthropic sources, approximately $131M in interim financing will be required. –Campus and System financial challenges: Budget includes an $8M increase (22%) in campus ($3M)and UCOP ($5M) recharges. [Langley Porter losses not budgeted.]

7 7 Operating Budget 2013 Dollars in (000’s)

8 8 Income Roll forward FY 2012 to FY 2013 (000’s)

9 9 Risks and Opportunities Risks: 1.Strategic development costs exceed budgeted amounts 2.Growth targets not met 3.Managed care rate increases not realized 4.Continued sponsor mix deterioration 5.Mitigation Plan not achieved 6.Impact of revised funds flow model 7.Regulatory/Compliance financial impact 8.Resources required for APeX stabilization 9.State Budget impact: further deterioration in Medi-Cal reimbursement 10.State Budget impact: on the enterprise

10 10 Risks and Opportunities Opportunities: 1.Growth exceeds expectations 2.Clinical documentation improvement exceeds expectations 3.Walgreens expansion exceeds budgeted amount 4.Early adoption of FTE productivity improvements 5.SCOPE savings surpasses target 6.Outpatient revenue expansion 7.UC medical centers’ shared services

11 11 Ten Year Plan Guiding Principles A viable ten year plan is crucial in order to: –Offset the challenges of Healthcare Reform –Provide strategic investments for delivery system expansion –Set annual operating and capital budget targets Key Targets include: –Maintain a minimum of 3 times debt service coverage –Unrestricted Cash does not fall below 25 days –No net operating losses except in FY 2016

12 12 Key financial components of the 6/30/11 Ten Year Plan: –The economy has had an adverse impact on volumes and sponsor mix –Healthcare Reform has adversely impacted government reimbursement and put pressure on commercial reimbursement –Significant increase in pension and health benefit expenses –Capital and operating expense increase due to clinical technology systems –Mission Bay contributes to additional clinical enterprise expenses and debt service –Campus support and Office of the President overhead allocation (UCOP tax) increases planned Financial Forecast Last year… Projection Model, FY 2011

13 13 Financial Forecast Updated…Budget Base Model, FY 2012 Key changes from 6/30/11 Ten Year Plan: –FY 2013 and remaining years based on lower volume –Continued deterioration of government reimbursement rates with pressure on commercial reimbursement –Heavier labor structure: growth in FTE, salary rates, pension and other benefits

14 14 Optimizes financial performance over the next ten years offsetting the challenges of Healthcare reform, increased debt structure, multi-site operations and an increasing labor cost structure. Key Assumptions: –Volume increases achieved –Managed care rate increases negotiated –Mission Bay construction – on time, on budget –Successful APeX go-live –FY13 & 14 strong earnings performance Financial Forecast Updated with…Mitigation Plan Implemented, FY 2012

15 15 Critical Mitigating Strategies are planned

16 16 UCSF Medical Center Mitigation Plan – Progress to Date FYTD December 2012 YTD Financial Impact Clinical Documentation Integrity – 1,153 Medicare Cases reviewed through 1/7/2013. UHC Mortality Ratio (O/E) dropped from 1.08 in Sep to 0.83 in Nov. Medicare CMI increased to in Dec from 2.09 in baseline year. This is a 12.30% increase! Outpatient Contract Pharmacy Expansion – program now includes 111 Walgreens sites, 10 San Francisco Safeway stores and Avella, a specialty pharmacy. Revenue Cycle Enhancement - $40M cash flow improvement was realized over the 11 month period through Nov. Discharged, not final billed levels peaked at 16 days in August but are trending downward, having hit a low of 6.6 days in mid-December SCOPE Non-Labor Cost Reduction - The net income effect of SCOPE initiatives for the first half of FY2013 is $5.0 million. Labor Productivity Improvement – Medical center management has identified the targeted 300 FTE reductions. Target implementation date is May 1, 2013.

17 17 Financial Forecast Income with Mitigation Plan implemented Optimizes financial performance over the next ten years offsetting the challenges of Healthcare reform, increased debt structure, multi-site operations and an increasing labor cost structure. Key Assumptions: –Volumes achieved –Continued managed care rate increases –Mission Bay construction – on time, on budget –APeX go-live with successful optimization –FY13 & 14 strong earnings performance

18 18 UCSF Medical Center Mitigation Plan Income Impact and Key Indicators FY 13FY 14FY 15FY 16FY 17 Total Income Impact, cumulative $ 19.3$61.0$ 70.5$ 80.7$ 91.4 Key Operating Indicators Cash (millions)$ 202$ 159 $ 194$ 175$ 183 Days Cash on Hand Debt Service Coverage Net Income Margin %6%7%3%(1%)0.1%

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20 20 APeX Project Revised Capital Expenditure Summary (000’s)

21 21 Mission Bay Project Sources and Uses (000’s)


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