1. 1 Securing the Future of the State’s Public Academic Health Center Clinical Facilities Planning at John Dempsey Hospital Higher Education and Employment Advancement Committee March 8, 2007

2. 2 We come to you with a plan for a new replacement hospital which will assure the future of the state’s only public academic health center We propose to enable this plan through: 1)Reallocation of our existing UCONN2000 funding 2)The state’s help in securing favorable borrowing rates in order to limit the financing costs we will repay AND because the University and its hospital are state assets, state backing would have a public cost benefit 3)Repayment of all bonded indebtedness from the new revenues we will generate from the hospital and from donations 4)No additional state funding is required for the project as proposed 5)These actions would not establish a new hospital; rather, they would enable JDH to move forward with OHCA’s standard Certificate of Need process, which cannot be undertaken without a financing plan.

3. 3 UCHC’S Primary Mission: Education and Research 3 Schools: –Medical School (320 students) –Dental School (160 students) –Graduate School in bio-medical sciences (380 students) Research: More than $90 million per year of innovative research is conducted and discoveries are translated into advances in patient care e.g. cancer vaccines, hormone therapies for Osteoporosis, new materials for Dental Implants, and Stem Cell research. Residency Training: For approx 600 residents/year who train in local hospitals John Dempsey Hospital (JDH) and UConn Medical Group (UMG), the multi-specialty faculty practice, are sites for learning and represent key elements in attracting talented faculty who want to teach, do research and provide patient care. (Time/reimbursement pressures mean that fewer community physicians now give time to teaching.)

4. BENCHBEDSIDE COMMUNITY HEALTH CARE POPULATION HEALTH T1 T1 Research T2 T2 Research Public Health Research and Practice Research Methods Core CHIN BEHAVIORAL / EDUCATION RESEARCH GCRC Biostatistics Center C4I Tertiary → Secondary → Primary Care Cancer Cardiology Musculo- skeletal Connecticut Health Health Services Research Unit HPPCRC Prediction, Prevention & Health Promotion Portal C4I SIGNATUREPROGRAMSSIGNATUREPROGRAMS E D U C A T I O N Undergrad Graduate Continuing UCHC: Separate Components But one Vital System

5. 5 UCHC must maintain a productive core of full-time faculty committed to our academic mission UCHC needs to grow its full time faculty base to stabilize and enhance its education programs –UCHC has a smaller faculty size compared to other regional schools We must be competitive in attracting faculty. Medical faculty want to be where: –Their teaching is highly valued –Their research is enabled –And they can practice close to their teaching and their research

6. 6 Service to Medicaid Patients Among the top 5 hospitals in state in Medicaid inpatient days as a percentage of total inpatient days Largest single provider of dental services to Medicaid clients and the under-and un-insured 61% of patient visits to the UCHC dental clinic in Farmington are Medicaid clients 70% of all student/intern/resident dental care activity is service to Medicaid clients Clinical Service Collaboration : Department of Public Health, Department of Correction, Department of Mental Health & Addiction Services, Department of Veteran Affairs (Rocky Hill), Department of Mental Retardation Community Service : South Park Inn Medical Clinic (Hartford) South Marshall Street Homeless Clinic (Hartford) Connecticut Poison Control Center YMCA Adolescent Girls Medical Clinic (Hartford) Camp Courant Dental Screening Program Migrant Worker Clinic Covenant House (Willimantic) UCHC : A Resource to the Community and the State

7. 7 Trained physicians and staff of Waterbury and St. Mary’s for regional cardiac surgery and interventional cardiology program. Trained staff and assisted ECHN in establishing a Level II nursery at Manchester Hospital. Pediatric dentistry program at CCMC. Statewide Neonatal Transport Program and Regional Neonatal Intensive Care Unit. In the past 18 months, premature babies came to JDH from 109 Connecticut towns. Provide workforce at Burgdorf Clinic. Provide cardiac perfusionist services to St. Mary’s and Waterbury Hospitals. Regional dental emergency room service. Training site for nursing, allied health schools. UCHC: A Resource to Other Hospitals

8. 8 About John Dempsey Hospital (JDH): Opened in 1975, JDH is the only public university acute care hospital in Connecticut and the 2 nd smallest academic health center hospital in the United States. Originally planned at 400 beds, the first phase of JDH was built at 200 beds. The second tower was never built. Has 224 fully staffed and licensed beds, of which 116 are very specialized (Neonatal,Prison, Psychiatry, Maternity), leaving only 108 medical/surgical (flexible) beds. Receives no state general fund support for operations or capital program. Faces the same set of challenges as the state’s other 29 acute care hospitals: Medicaid/Medicare cutbacks, uncompensated care, low reimbursement rates, nursing and other health care profession shortages and the realities of an intensely competitive marketplace. 16.2% of JDH inpatient cases are Medicaid recipients. JDH is in the top five hospitals in Connecticut for Medicaid inpatient days as a percentage of total inpatient days. JDH is a disproportionate share hospital for Medicaid and Medicare.

9. 9 JDH Physical Plant Status: 30-year-old facility with no major upgrades since it opened Undersized and becoming increasingly outdated –Inadequate to accommodate today’s evolving standards of care and technologies, privacy concerns, and patient/ provider expectations, including operating rooms, inpatient rooms, neonatal intensive care unit, outpatient diagnostic and treatment areas and support spaces –Present design precludes efficient staffing ratios (32-bed units) or cost- effective renovation –Almost no remaining capacity to accommodate steady increase in admissions, patient days, occupancy rates, as well as emergency room visits, radiology and rehab visits –Demand for service will outstrip capacity by 2008. * Used outside experts to analyze financials, design and demand; Based on outside expert analysis regarding health care utilization and demographic trends in the region and statewide, there is a need for 158 additional beds in the region by 2014.

12. 12 What We Propose: Construction of a new University hospital to ensure continued provision of medical/dental professionals to the region and the state, and to meet the growing demand and changing demographics of the Farmington Valley A new six story, 546,000 square foot facility with: –New operating suites, neonatal intensive care units, maternity, emergency department and radiology, lobby/entry and parking spaces –352 beds (128 net new beds) Financing construction primarily with bonds to be repaid by the UConn Health Center through hospital revenues, not by the state New Construction Will: Attract/retain high quality faculty, physicians and other health professionals to the region and state, and strengthen the Schools of Medicine and Dental Medicine, and our intern and residency programs Enable JDH physicians, nurses and other healthcare providers to continue providing the most advanced care available in the most efficient setting possible Allow JDH to meet growing demand for services, especially for aging populations in our key Signature Program areas: cancer, musculoskeletal, cardiology and public health Expand programs (such as bone oncology, the clinical trials network) that support other Connecticut hospitals and health clinics, allowing Connecticut residents to stay in our state for top quality, leading edge care Create over 300 new jobs at JDH and, during the construction phase, stimulate the region’s economy through the creation of construction jobs

13. 13

14. 14

15. 15 Fiscal Assumptions: 352 beds A preliminary project cost estimate of $495 million exclusive of financing Bonds backed (but not paid for) by the state Bonds to be repaid with UCHC clinical revenues Current interest rate estimate of 4.75% (with state backing) Legislative designation as a named project in UCONN 2000 to enable possible reallocation of $45 million within existing annual and aggregate limits under the law Philanthropic contributions of $20 to $25 million

16. 16 Financial Challenges Unique to JDH A more complex delivery system due to the education and research functions of an academic medical center. A more complex delivery system due to the education and research functions of an academic medical center. Using its profit margin to support the medical and dental schools ($19.3 million over the past 5 years) rather than reinvesting in capital plant.Using its profit margin to support the medical and dental schools ($19.3 million over the past 5 years) rather than reinvesting in capital plant. Paying state fringe benefit rates. (In 2005, that rate was 38.7%, far higher than the CHA member hospital average of 27.4%. The dollar value of the difference between those rates was $8.1 million in 2005 alone. The ’07 state rate is 40.9%, estimated to cost $10.5 million more than the average hospital rate.Paying state fringe benefit rates. (In 2005, that rate was 38.7%, far higher than the CHA member hospital average of 27.4%. The dollar value of the difference between those rates was $8.1 million in 2005 alone. The ’07 state rate is 40.9%, estimated to cost $10.5 million more than the average hospital rate. Underwriting certain unprofitable essential health services because of its public mission. Examples:Underwriting certain unprofitable essential health services because of its public mission. Examples: Department of Corrections inpatient services Department of Corrections inpatient services Higher percentage of inpatient psychiatry beds Higher percentage of inpatient psychiatry beds Department of Mental Retardation dental services Department of Mental Retardation dental services Among the top 5 hospitals in the state in Medicaid inpatient days as a percentage of total patient daysAmong the top 5 hospitals in the state in Medicaid inpatient days as a percentage of total patient days

17. 17 Necessary Legislative Action: We would request that the General Assembly designate the new university teaching hospital a named project under the UCONN 2000 program. We would request that the state permit a financing structure to enable us to secure favorable borrowing rates and limit financing costs. This might include state issuance or guarantee (with the State Treasurer) of the bonds. Because the University and its hospital are state assets, state backing would have a public cost benefit. No additional state funding is required for the project as proposed. These actions would not establish a new hospital; rather, they would enable JDH to move forward with OHCA’s standard Certificate of Need process, which cannot be undertaken without a financing plan.

18. 18 We come to you with a plan for a new replacement hospital which will assure the future of the state’s only public academic health center We propose to enable this plan through: 1)Reallocation of our existing UCONN2000 funding 2)The state’s help in securing favorable borrowing rates in order to limit the financing costs we will repay AND because the University and its hospital are state assets, state backing would have a public cost benefit 3)Repayment of all bonded indebtedness from the new revenues we will generate from the hospital and from donations 4)No additional state funding is required for the project as proposed 5)These actions would not establish a new hospital; rather, they would enable JDH to move forward with OHCA’s standard Certificate of Need process, which cannot be undertaken without a financing plan.

19. 19 Post-Baccalaureate Program (Postbac Students) Pre-College Enrichment Program (PCEP) (College Pre-freshman) College Enrichment Program (CEP) (College Sophomores) Medical/Dental Preparatory Program (MDPP) (College Juniors/Seniors) Summer Research Fellowship Program (College Juniors) Great Explorations (6 th -8 th grades) Jumpstart (9 th -10 th grades) Junior Doctors Academy (11 th -12 th grades) Health Career Discovery Program (11 th -12 th grades) Health Professions Academy – Bulkeley & Weaver High Schools (9 th -12 th grades) Bridge to the Future Science Mentorship Program (6 th -16 th grades) Mini Medical/Dental School Program (11 th -12 th grades) High School Summer Research Apprentice Program (12 th grade) University of Connecticut Schools of Medicine, Dental Medicine and Graduate School Bridges to the Baccalaureate Program (Community College Students) Implications for the Future  With federal funding no longer available, the number of students served in the academic year DEPARTMENT OF HEALTH CAREER OPPORTUNITY PROGRAMS (HCOP) HEALTH PROFESSIONS PARTNERSHIP INITIATIVE (HPPI)

20. 20 Community Service : South Park Inn Medical Clinic (Hartford) South Marshall Street Homeless Clinic (Hartford) Connecticut Poison Control Center YMCA Adolescent Girls Medical Clinic (Hartford) Camp Courant Dental Screening Program Migrant Worker Clinic Covenant House (Willimantic) Huntington’s Disease Program A.J. Pappanikou Center UCHC : A Resource to the Community and the State