1. 2009 Critical Access Hospital Conference Dublin Ga Discussion topics Discussion topics –State Budget $900 million - $1.5 billion shortfall $900 million - $1.5 billion shortfall $477 million Medicaid hole 2011 $477 million Medicaid hole 2011 $44 million 2009 Amended – Rollover Surplus $44 million 2009 Amended – Rollover Surplus $83 million – Rollover Surplus $83 million – Rollover Surplus Discussion Topics Discussion Topics –CMO’s 5 Field visits No gatekeeper No utilization control No case management Governor say no to change Next governor must be vetted –Trauma $23 million legislated – probably will not occur in this yea

2. 2009 Critical Access Hospital Conference Dublin Ga Discussion Topics Discussion Topics –Cash less than 5 days –RAC’s –MAC’s –OIG Program Integrity –EDS Conversion Discussion Topics Discussion Topics –Physicians demand hospital employment –Depreciation –ERP’s: Medicaid and Medicare –Banks and covenants

3. 2009 Critical Access Hospital Conference Dublin Ga State Budget Trends State Budget Trends –$20.5 billion down to about $17 billion and falling –2009 – Medicaid cust were transferred to other agencies - $102 million – Grass Roots worked –2010 – Medicaid roll over surpluses covered –2011 – Medicaid internal cuts and rollover surpluses but ….. 1.6% cut 1.6% cut

4. 2009 Critical Access Hospital Conference Dublin Ga 2011 has a 2011 has a $477 million shortfall $477 million shortfall

5. 2009 Critical Access Hospital Conference Dublin Ga Considerations Considerations –Provider Taxes –Other Agency Cuts –Rate Cuts $477 million more than the $350 million of 2009 $477 million more than the $350 million of 2009

6. 2009 Critical Access Hospital Conference Dublin Ga Future Trends Future Trends –Regionalization –Imaging based medicine –Natural orifice surgery –RHC’s and off site clinics –EMR’s –EDS –Telemedicine –Midlevel providers

7. 2009 Critical Access Hospital Conference Dublin Ga Federal Federal –DSH in jeopardy –Medicaid Cuts in $500 billion to fund Obama Care –Physician payments cut –RAC’s, MAC’s, OIG

8. 2009 Critical Access Hospital Conference Dublin Ga CAH Operational Issues – after 10 years CAH Operational Issues – after 10 years –Cost to Charge ratio explosion –Cash flow –Payor Mix –ERP’s –County Subsidies –Technology – EMR –EDS Conversion

9. 2009 Critical Access Hospital Conference Dublin Ga Hierarchy of Jeopardy Hierarchy of Jeopardy –Stand alone; no county subsidy –Stand alone; Less than $6 million net revenue –Stand alone; Less than 5 days cash –Stand alone; More than 60 days payables –Standalone; Line of credit almost exceeded

10. 2009 Critical Access Hospital Conference Dublin Ga Hierarchy of Jeopardy Hierarchy of Jeopardy –CAH with Hospital based nursing home –CAH with mothership – owned or leased –CAH with $2 million County Subsidy

11. this is a typical payor mix for rural hospitals in Georgia CAH Hospital Actual Data CAH Hospital Example before ICTF and UPL Payor % cost reimbursement % Net Revenue by Payor Weighted Reimbursement by Payor Medicare93.000%47%43.710% Medicaid95.000%14%13.300% No Pay 2.000%14%0.280% Commercial150.000%25%37.500% To Break even 100%94.790% Hospital Name Net Revenue CostProfit $10,000,000.00$10,549,636.04-$549,636.04 Before CMO's and Medicare AdvantageBefore CMO's and Medicare AdvantageBefore CMO's and Medicare AdvantageBefore CMO's and Medicare Advantage

12. 2009 Critical Access Hospital Conference Dublin Ga Cost to Charge ratio Chronology Cost to Charge ratio Chronology –CCR =.80; Increase Revenue 20% w/2 new docs 600,000 EOY payback 600,000 EOY payback –CCR =.60;Decrease expenses 20% 600,000 EOY payback 600,000 EOY payback –CCR =.40;Revise Chargemaster up 15% $600,000 EOY payback $600,000 EOY payback

13. 2009 Critical Access Hospital Conference Dublin Ga What to do????? What to do????? –Business Office Must be maximized out Must be maximized out –ntelagent – process improvement, incentives, –Education, collect co-pays –Reduce self pay at all costs –Increase commercial –Cash flow must be met Squeeze expenses – Interim CCR adjustments Squeeze expenses – Interim CCR adjustments Add Revenues - Interim CCR adjustments Add Revenues - Interim CCR adjustments Chargemaster reviews - Interim CCR adjustments Chargemaster reviews - Interim CCR adjustments

14. 2009 Critical Access Hospital Conference Dublin Ga What to do????? What to do????? –All CAH are now subsidy dependent Need $2,000,000 annual subsidy Need $2,000,000 annual subsidy –Business Office total maximization of revenues versus services rendered –Strategically plan to maintain status quote to avoid giving it back

15. 2009 Critical Access Hospital Conference Dublin Ga What to do????? What to do????? –Executive Branch last year defined acceptable closure rate with their proposed cuts where $350,000,000 proposed would equal equivalent of 25+ rural hospitals closing

16. 2009 Critical Access Hospital Conference Dublin Ga What to do????? What to do????? State says too many hospitals too close together seeing too few patients State says too many hospitals too close together seeing too few patients So it takes full use of every resource to survive. CEO’s must become experts in So it takes full use of every resource to survive. CEO’s must become experts in  Cost to charge ratio  Business Office