1. “The Best of Times……… The Worst of Times……” A Look Ahead to 2009 Wisconsin Chapter of American College of Healthcare Executives December 12, 2008

2. It’s 1983 all over again! Democrat Governor Democrat Senate Democrat Assembly Record State Budget Deficit

3. 1983 Outcomes Wisconsin hospital rate setting commission Restrictive CON program including tertiary service decertification Hospitals at ground zero because of health care costs hysteria WHA faced with member angst regarding strategies related to regulatory initiatives

4. Likely 2009 Environment 1. Health reform defined by coverage affordability. * 65% - It’s the $ ! 51% insurance affordability 22% expanded coverage uninsured 10% Quality 14% reduce spending Source: Kaiser Foundation Tracking Poll

5. 2. Dire state budget situation Structural deficit of $2 billion + Stagnant revenue growth Built in expense growth of 5-7% Potential that pending lawsuits will open $500 plus million dollar hole $5 BILLION

6. Governor Doyle becomes gate keeper Look at Illinois……… 3. Political Dynamics Change Labor WMC Health Insurers Health care spending

7. 4. Healthy Wisconsin is in Play 16% Payroll tax Government imposed limits on annual total spending growth. What happens when $ is gone? Payroll tax increases Benefits reduce Providers get a haircut

8. 5. Doyle Administration Incrementalism Medicaid tax Medicaid expansion Small group insurance reform Encourage HIT But will Doyle still be Governor?

9. 6. Why The Tax? 14 Years $600 Million cost shifting Federal $ left on the table 8 hospitals = 40% of total Medicaid days. It Will Happen!

11. Matchable State Funds $176,785,046 Federal Government State of Wisconsin $249,702,962 + Hospital Assessment $249,702,962 Matching federal funds $ 265,177,569 An additional $1.50 for every $1 collected comes back to the state. Available for Hospital Payment Increases $441,962,615 Net Increase in Medicaid reimbursements to hospitals: $192,259,653 ($441,962,615 increase less $249,702,962 assessment) Diverted for Other State Purposes $72,917,916 Hospital Assessment Proposal – FY09

12. Medicaid Coverage Expansions Quality and Safety ? Medical Malpractice Labor Issues Challenges to Hospital Finances/ not-for profit status Billing and collection + + – – – – 7.Hospital Vulnerabilities and Opportunities

13. Essential Strategies to Prevail on Key Issue Areas 1.Support Doyle Adminsistration’s incremental reform agenda, including insurance reform. 2.Rally behind “moderate” Democrats 3.Be prepared to compromise on the small stuff. 4.Advance quality and safety agenda. 5.Advance value theme. 6.Accelerate community benefits initiative(s). 7.Accelerate/re-commit to billing and collection pledge.

14. Major 2008 Project List

18. December Hospital Finances January Costs Report February Hospital Economic Impact/Value Report Major 2008/2009 Project List