Alameda Hospital Seismic Planning and Financial Committee Meeting Summary
The Alameda Hospital Seismic Planning and Finance Committee met to review capital cost estimates, consider various seismic options, and assess financial projections. The Joint Planning Committee (JPC) collaborated to evaluate maintaining the current footprint, reconfiguring the hospital, and optimizing service lines. Baseline financial projections and comparisons were analyzed to make informed decisions regarding the hospital's future. The committee members worked together to ensure the hospital's sustainability and efficiency moving forward.
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Alameda Hospital: Seismic Planning Finance Committee 1/3/2024 1
Alameda District Hospital Agenda Agenda 1. Our Process Journey and the Joint Planning Committee (JPC) 2. Updated Capital Cost estimates provided by Ratcliff. Capital Cost Comparison from Original Estimates 3. Review Baseline and Key Assumptions 4. Review Options considered 5. Joint Planning Committee (JPC) recommendation 2
Alameda Hospital Journey and Options Considered Our Process Journey The Joint Planning Committee (JPC) was established by the District board. Over the past year, there has been collaboration between the District Board members, medical staff, community members, AHS leaders, and government. Committee Members: - Debi Stebbins - Dr. Robert Deustch - David Sayen - Gayle Codiga - Rowena Manlapaz - Mark Fratzke - Kim Miranda - Jeanette Dong - Mario Harding - Mark Friedman - Dr. Nikita Joshi - Dr. Indhu Subramanian - Dr. Terri Hughes - Dr. Nicholas Pirnia - Dr. Tamina Isolani-Nagarvala Committee reviewed various seismic options including maintaining current footprint, reconfiguring the hospital, reducing acute beds and converting to a SNF or a Substance Abuse unit, and closing the acute hospital. Committee reviewed all the current services provided by Alameda Hospital entity, including a deep dive down to the detail patient level by service line to determine optimal configuration and identify opportunities to improve performance including eliminating or changing the mix of elective surgeries, not accepting or limiting inter-facility transfers, and implementing new programs. 3
Alameda District Hospital Comparison of Capital Cost Estimates 4
Alameda District Hospital Baseline Financial Projections BASELINE ER Room Activity Wound Care/ Marina Elective Sub-Acute SNF Other (lab) Total Operating Revenue ------------------ Net Patient Revenue HPAC Parcel tax Revenue Other Government Programs Other Operating Revenues Total Revenue - All Sources Collection % Operating Expenses ----------------- Labor costs Physician contract services Purchased services Materials and supplies Facilities Depreciation and amortization General and administrative Estimated call fee Flex Fixed Total Operating Expenses Operating Income (Loss) Operating Margin 58,879 2,215 2,628 8,170 15,084 1,299 821 4,596 14,760 4,204 134 169 594 22,223 1,194 77 49 220 116,343 3,724 5,136 16,618 128 141,950 16.5% 606 481 19 864 2,557 82 26 2 71,973 16.2% 21,825 12.8% 15,865 18.6% 5,101 17.3% 25,645 19.6% 1,541 18.7% 43,801 4,116 691 4,831 100 467 16,553 1,650 1,162 3,419 11,621 3,764 72 556 799 174 437 12,284 131 874 1,591 289 88,312 6,002 3,808 12,018 594 1,154 31 325 1,251 212 2 201 127 46 232 60 2 61 85 324 3,560 18,972 $6,673 26.0% 1 9 1 7 5 1 20 7 4 98 1,157 6,026 12,983 74,191 -$2,218 -3.1% 795 1,882 4,055 29,802 -$7,976 -36.5% 154 2,192 9,956 23,026 147,161 -$5,212 -3.7% 1,614 2,188 17,255 -$1,390 -8.8% 111 240 982 $559 36.3% 5,960 -$859 -16.8% Paid FTE 262.0 96.4 80.1 22.7 148.3 3.6 613.0 5
Alameda District Hospital Baseline Stats BASELINE ER Room Activity Wound Care/ Marina Elective Sub-Acute SNF Other (lab) Total Volume: Acute Patient Day ED Visit Surgery Case Surgery Minute Subacute Day SNF Day Bed Hold Wound Care visits 11,209 16,908 271 18,982 2,779 - 1,351 70,727 - - - - - - - - - - - - - - - - - - - - - - - - 13,988 16,908 1,622 89,709 12,292 41,493 - - - - - - - - 12,292 - - - 41,493 - - - 8,223 8,223 Length of Stay (LOS) ACT LOS Expected LOS - - - 5.1 3.8 6.0 3.1 - - - - - - 5.2 3.7 Payor Mix Insurance Medi-Cal Medi-Cal MC Medicare Medicare MC Other Govt Self Pay 11% 6% 27% 40% 12% 2% 2% 100% 7% 9% 48% 22% 5% 8% 1% 100% 2% 94% 1% 1% 0% 0% 2% 100% 11% 0% 31% 43% 15% 0% 0% 100% 1% 61% 32% 1% 4% 0% 1% 100% 4% 23% 44% 17% 6% 4% 3% 100% 7% 27% 28% 26% 8% 2% 2% 100% Rates Net pt reveue per pt day Total Revenue per pt day Total operating expenses per pt day $ $ $ 5,253 6,421 6,619 $ $ $ 5,428 7,854 10,724 $ $ $ 1,201 1,291 1,404 $ $ $ 536 618 457 6
Alameda District Hospital: Key Assumptions used to Develop Baseline Proforma The financial model was developed based on FY23 Alameda Hospital entity financial statement. Assumption changes made to the FY23 entity financial statement: Collection % based on actual closed patient accounts, increasing revenue ($5.5M). AB85 Realignment (HPAC amendment and reserve) for AHS was decreased assuming $16.5M based on average revenue over the last 6 years, allocated based on all Medi-Cal, HPAC, and self-pay gross charges ($6.0M). AB915 Certified Public Expenditures decreased based on allocation of hospital Medi-Cal Traditional Outpatient gross revenues ($0.4M). SNF cost reimbursement goes away with CalAim moving reimbursement to Managed Medi-Cal; assumed ongoing reimbursement of $0.7M annually to reflect the State s intention to hold public DP-NFs harmless through the transition increasing revenue ($0.3M). AHS physician expenses are not directly expensed to where services are performed, for this analysis, we used a more precise methodology reducing physician expenses to AH by $6.1M. Physician contract expenses are based on actual invoices. Employed physician expenses are allocated based on their specialty charges across AHS. South Shore moved to Fairmont campus in November 2022. Fairmont excluded from proforma. South Shore adjusted to reflect a full year at AH increasing profitability by $0.4M. 7
Alameda District Hospital: Key Assumptions used to Develop Baseline proforma Consistent with FY23 entity financial statement: Rate Range (RRT) is allocated based on gross charges for covered services including SNF under Medi- Cal Managed Care agreements (excludes FQ & JGP). EPP is allocated based on Medi-Cal Managed care gross revenues, excluding JGP and FQ. SPA #17-030; Prop 56 is allocated based on professional Gross Charges. DHCS Physician SPA is allocated based on professional Gross Charges excludes FQ. SB239 Hospital Fee is allocated based on HPAC & Self Pay Gross Revenues (excludes FQ, JGP & SNF). HPAC Block Grant is allocated based on percent of Alameda hospital HPAC charges against AHS HPAC total charges. System overhead costs (i.e. admin, HR, finance, IT, billing), Measure A, QIP, and GPP are not allocated. Overall supplemental revenue to AHS does not materially change based on mix of services and amounts can vary by year depending on timing. 8
Alameda District Hospital: Key Assumptions used to Develop Baseline proforma Key Points: 50% of ED activities are from the city of Alameda, indicating that Alameda residents are using Alameda Hospital. High Medicare payor at 40% in ED, indicating high Medicare population on the island. The current SNF Payor mix is unfavorable due to referring patterns from Highland. Licensed acute beds are 66 and average daily census is 38, occupancy is at 58%. To maintain the current FY23 volume, Alameda Hospital needs 48 acute beds at 80% occupancy. For our analysis, we assumed 80% occupancy is optimal; allowing for bed turn over for discharges and admits. LOS is currently above expected by 1.5 days with opportunity to improve throughput and financial performance. Surgery volumes are 1,622 (4 per day) with 271 (<1 per day) originating from the ED; 42% of elective cases are Ophthalmology (average case 17 mins). 9
Alameda District Hospital Baseline & Recommendation Baseline Option A Maintain existing acute beds, add 18 Medi-SNF beds in 2South (In Thousands) Capital costs PROFITABILITY Baseline (includes South Shore) Remove Parcel tax Revenue Eliminate Elective Surgery & Transfers OR minium staffing Convert acute to SNF; Loss of HB SNF Rate AH Substance Abuse Unit 16 beds Convert 27 Acute to Medi-SNF 16 beds 2South Medi-SNF 18 beds Operating Income (Loss) Reduce LOS Net Operating Income (Loss) $53M ($4,812) (5,136) ($4,812) (5,136) 2,468 ($7,479) 1,563 ($5,917) ($9,948) ($9,948) KEY STATS (annual) Acute Patient Days Surgery Cases Acute Length of Stay (LOS) MediCare LOS Transfers in from HGH/SLH 13,988 1,622 13,420 1,622 5.2 3.7 619 5.0 3.7 619 BED COUNTS/ADC's ICU Tel & Med/Surg Substance Abuse Unit Total Acute Sub-Acute SNF Total Sub-Acute/SNF Licensed 58.0 ADC 32.6 Occupancy Licensed 58.0 ADC Occupancy 8.0 5.7 75% 62% 8.0 5.7 31.0 72% 54% 66.0 35.0 146.0 181.0 38.3 33.7 113.7 147.4 58% 96% 78% 81% 66.0 35.0 164.0 199.0 36.8 33.7 129.0 162.7 56% 96% 79% 82% 10
Alameda Hospital: Options Considered Option B Option C Option D Option E Convert 27 acute beds to 16 Medi-SNF beds; No elective surgeries or transfers Convert 27 acute beds to 16 Medi-SNF Beds, Add 2nd 18 Medi-SNF beds in 2South; No elective surgeries or transfers Convert 27 acute beds to 16 IP Substace Abuse Unit; No elective surgeries or transfers Close hospital. Convert 66 acute beds to 35 SNF Beds (In Thousands) Capital costs PROFITABILITY Baseline (includes South Shore) Remove Parcel tax Revenue Eliminate Elective Surgery & Transfers OR minium staffing Convert acute to SNF; Loss of HB SNF Rate AH Substance Abuse Unit 16 beds Convert 27 Acute to Medi-SNF 16 beds 2South Medi-SNF 18 beds Operating Income (Loss) Reduce LOS Net Operating Income (Loss) $53M $78M $53M $120M ($4,812) (5,136) 8,690 (1,579) ($4,812) (5,136) 8,690 (1,579) ($4,812) (5,136) 8,690 (1,579) ($4,812) (5,136) 8,690 (1,579) (9,851) (9) 2,194 2,194 2,468 $1,826 1,563 $3,389 ($642) 1,563 $920 ($2,845) 1,563 ($1,282) ($12,687) 1,563 ($11,124) KEY STATS (annual) Acute Patient Days Surgery Cases Acute Length of Stay (LOS) MediCare LOS Transfers in from HGH/SLH 10,563 271 10,563 271 15,308 271 - - - - 4.8 3.7 - 4.8 3.7 - 5.3 3.7 - BED COUNTS/ADC's ICU Tel & Med/Surg Substance Abuse Unit Total Acute Licensed 31.0 ADC Occupancy Licensed 31.0 ADC Occupancy Licensed 31.0 16.0 39.0 35.0 146.0 181.0 ADC 113.7 147.4 Occupancy Licensed ADC Occupancy 8.0 5.7 23.2 72% 75% 8.0 5.7 23.2 72% 75% 8.0 5.7 23.2 13.0 28.9 33.7 72% 75% 81% 74% 96% 78% 81% 39.0 35.0 162.0 197.0 28.9 33.7 127.3 161.0 74% 96% 79% 82% 39.0 35.0 180.0 215.0 28.9 33.7 142.6 176.3 74% 96% 79% 82% Sub-Acute SNF Total Sub-Acute/SNF 35.0 181.0 216.0 33.7 146.9 180.6 96% 81% 84% 11
Joint Planning Committee: Recommendation JPC Recommendation to move forward with Option A; Maintain existing acute beds and add 18 Medi-SNF beds in 2South: Revised capital estimates were significantly lower allowing us to maintain our current licensed beds and improve the hospital profitability with the addition of a Medi-SNF unit. Capital costs are $53.1M to convert 27 acute beds to 16 SNF in Stephens wing OR to maintain the 27 acute beds and build out 2 South as an 18 bed SNF unit. Committee felt that keeping these beds will allow for future program needs. Recommendation to appoint a transition committee to include physicians and other key stakeholders to improve the financial viability of the hospital. Review surgery mix and implement block efficiency Reduce length of stay (LOS) Consider other program development Current estimated capital costs at $53M are within the maximum funding limit of $70M provided by bond counsel, reducing potential risk of insufficient funding for unforeseen events and inflation. Recommend JPA to allow redirection of the parcel tax for payment of the bonds 12
Timeline to move project forward Page 1 of 2 2024 Jan 2025 Jan 2026 Jan 2027 Jan Feb March April May June July Aug Sept Oct Nov Dec Feb March April May June July Aug Sept Oct Nov Dec Feb March April May June July Aug Sept Oct Nov Dec Feb March April Funding Gates at Plan Approval Preconstruction and Estimate for NPC 4 Costs - Series A Funding Series B Funding Bond process - 4-5 months Statutory Lien signed by Govenor July 1 2024 Design and Engineering Proposals submitted and approved Pre work design fees for HCAI $200,000 Release funds for design-Aug 15 2024 $3.065,700 Release funds for construction by Dec 1 2025 $19,531,00 (all seismic project construction) HCAI Deadline for NPC Permit submittal Submit NPC 4 and 5 Construction Documents to HCAI by Jan 1 2026 Pre-work Coordination with HCAI Locate existing drawings for South Wing and Emergency Department Submit to HCAI Confirm if any retrofit is required Respond to HCAI backcheck on NPC submittals Possible NPC4D operational plan Design Project #1 NPC 4 Anchor ceiling, lighting, sprinklers, etc HCAI Plan review and approval 7 months Two Back Checks Construction Mobilization - Close Out 4 mo HCAI plan check 7 mo Construction 6 mo 13 Source: Katy Ford, Ratcliff
Timeline to move project forward Page 2 of 2 2024 Jan 2025 Jan 2026 Jan 2027 Jan Feb March April May June July Aug Sept Oct Nov Dec Feb March April May June July Aug Sept Oct Nov Dec Feb March April May June July Aug Sept Oct Nov Dec Feb March April Design Project #2 NPC 5 upgrades 6 mo Determine location and constructiability of tanks Solicit Geotech Report before Design Commences Design Documentation NPC 5-10,0000 gal Sewer Tank NPC 5-5000 gal Water Tank NPC 5-emergency generator and 72 hr fuel storage HCAI Plan review and approval 9-12 months Geotechnical review Two Back Checks Construction Mobilization - Close Out HCAI plan check 12 mo Bidding + Construction 8 mo Design Project #3 WEST WING and STEPHENS WING SPC-4D 6 mo Design Documentation Materials Testing Seismic Upgrade of Stephens Wing to SPC 4D Seismic Upgrade of West Wing to SPC 4D HCAI Plan review and approval 9-12 months Geotechnical review Two Back Checks Bidding Construction Mobilization - Close Out HCAI plan check 12 mo Bidding + Construction 8 mo Design Project #4 South Wing 2nd Floor 8 mo Flexibility to push out schedule Design Documentation New SNF Bed Unit HCAI Plan review and approval 5-7 months Two Back Checks Bidding Construction Mobilization - Close Out HCAI plan check 6 mo Bidding + Construction 12 mo 14 Source: Katy Ford, Ratcliff
Alameda Hospital Financial Report Questions 15
APPENDIX 16
Alameda District Hospital Recommendation Financial Projections Option A ER Room Activity Wound Care/ Marina AH SNF 18 beds Elective Sub-Acute SNF Other (lab) Total Operating Revenue ------------------ Net Patient Revenue HPAC Parcel tax Revenue Other Government Programs Other Operating Revenues Total Revenue - All Sources Collection % Operating Expenses ----------------- Labor costs Physician contract services Purchased services Materials and supplies Facilities Depreciation and amortization General and administrative Estimated call fee Flex Fixed Total Operating Expenses Operating Income (Loss) Operating Margin 58,879 2,215 2,628 8,170 15,084 1,299 821 4,596 14,760 4,204 134 169 594 22,223 1,194 77 49 220 4,317 120,660 3,724 5,136 16,820 606 481 19 864 2,557 202 82 26 2 128 71,973 16.2% 21,825 12.8% 15,865 18.6% 5,101 17.3% 25,645 19.6% 1,541 18.7% 4,519 28.3% 146,469 16.8% 43,801 4,116 691 4,831 100 467 16,553 1,650 1,162 3,419 11,621 3,764 72 556 799 174 437 12,284 131 874 1,591 289 1,645 89,956 6,017 3,915 12,238 599 1,155 102 2,203 10,000 23,026 149,212 -$2,743 -1.9% 31 325 1,251 212 2 15 107 220 201 127 46 232 60 2 61 85 324 3,560 18,972 $6,673 26.0% 1 9 1 5 7 5 1 20 7 4 3 1,157 6,026 12,983 74,191 -$2,218 -3.1% 795 1,882 4,055 29,802 -$7,976 -36.5% 154 11 43 1,614 2,188 17,255 -$1,390 -8.8% 111 240 982 $559 36.3% 5,960 -$859 -16.8% 2,050 $2,468 54.6% Paid FTE 254.5 96.4 80.1 22.7 148.3 3.6 9.3 631.7 17
Alameda District Hospital Recommendation: Stats Option A ER Room Activity Wound Care/ Marina AH SNF 18 beds Elective Sub-Acute SNF Other (lab) Total Volume: Acute Patient Day ED Visit Surgery Case Surgery Minute Subacute Day SNF Day Bed Hold Wound Care visits 10,641.0 16,908.0 271.0 18,982.0 2,779 - 1,351 70,727 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 13,420 16,908 1,622 89,709 12,292 47,078 - - - - - - - - 12,292 - - - 41,493 5,585 - - - - - 8,223 8,223 Length of Stay (LOS) ACT LOS Expected LOS - - - 4.8 3.1 6.0 3.1 - - - - - - - - 5.0 3.7 Payor Mix Insurance Medi-Cal Medi-Cal MC Medicare Medicare MC Other Govt Self Pay 11% 6% 27% 40% 12% 2% 2% 100% 7% 9% 48% 22% 5% 8% 1% 100% 2% 94% 1% 1% 0% 0% 2% 100% 11% 0% 31% 43% 15% 0% 0% 100% 1% 61% 32% 1% 4% 0% 1% 100% 4% 23% 44% 17% 6% 4% 3% 100% 7% 27% 28% 26% 8% 2% 2% 100% Rates Net pt reveue per pt day Total Revenue per pt day Total operating expenses per pt day $5,533 $6,764 $6,972 $ $ $ 5,428 7,854 10,724 $ $ $ 1,201 1,291 1,404 $ $ $ 536 618 457 18
Alameda Hospital Amortization of Bonds Notes from meeting with bond consultant: Interest rates vary based on bond rating: AA3 at 4.25% BBB at 5.00% Non rated at 5.5% Generally, bond term is 30 years for COP (Certification Of Participation) bonds Per consultant, our parcel tax will allow us to borrow approximately $70M 90% of the parcel tax can be used to guarantee bonds (90% of $5.6M = $5.05M) Cost of bond issuance estimated to be between .5%-.75% of bond amount which includes underwriter, campaign consultant, bond counsel. JPA needs be amended to facilitate the bond offering Time frame to complete bond issuance is between 18-24 months 19
Alameda District Hospital Updated Capital Expenses received from Ratcliff OPT 3 - Renovate 2 South to Medi-SNF AND convert 27 med surg beds in Stephens Wing to 16 SNF beds OPT 1 (old OPTION 3) - 3rd flr Stephens Wing 27 bed to 16 medi-SNF beds OPT 2) - Renovate 2 South to 18 Medi-SNF. Keep 27 med surg beds in Stephens Wing (in thousands) Wing Spc4D West Wing Spc4D NPC Med Surg- SNF South Wing SNF Upgrades $5,689 $3,791 $9,521 $13,264 $13,264 $32,266 $32,266 $45,530 Hard Construction: Soft Costs: Equip + Furnishings A+E fees Consultants Permits and Fees Inspection Testing Project Management Owner Contingency TOTAL SOFT COST 50% $4,909 $1,724 $332 $398 $464 $332 $3,316 $11,475 $24,739 $4,909 $1,724 $332 $398 $464 $332 $3,316 $11,475 $24,739 $4,909 $4,195 $807 $968 $1,129 $807 $8,066 $20,880 $53,146 $4,909 $4,195 $807 $968 $1,129 $807 $8,066 $20,880 $53,146 $9,818 $5,919 $1,138 $1,366 $1,594 $1,138 $11,383 $32,355 $77,885 $740 $142 $171 $199 $142 $1,422 $2,816 $8,505 $493 $95 $114 $133 $95 $948 $1,877 $5,668 $1,238 $238 $286 $333 $238 $2,380 $4,713 $14,234 13% 3% 3% 4% 3% 25% Medi-SNF Med-Surg CCU SubAcute 16 31 8 35 18 58 8 35 34 31 8 35 Source: District Board engaged Ratcliff to provide capital estimates 20
Alameda Hospital Original Capital Estimates from the District Board 21
Alameda Hospital: Supplemental Revenues Key Drivers of Major Supplemental Revenues under Medi-Cal* Program Is program funding fixed? Can AHS increase its portion, and if so, how? What drives amount available to earn? What drives how much we earn of the available amount? External program risk Global Payment Program (GPP) Yes Yes, by increasing uninsured utilization (HPAC, self-pay, others), but only until we hit our budget AHS budget is constant % of statewide allotment Points earned for IP, OP, BH services, both AHS and County services Federal DSH cuts; waiver non- renewal or funding reduction by CMS after 2026 Quality Improvement Program (QIP) Yes Yes, by increased unique count of Medi-Cal Managed Care patients* AHS % of all public hospitals patient counts Achievement of quality metrics Federal gov. approves continuation annually, needs to be satisfied it s helping Rate-range No No: calculated without reference to AHS service levels Total Alliance enrollment & capitated rates, no matter where patients get care Alliance willingness to let us fund the amount available (completely at Alliance discretion) Changes to how CMS allows DHCS to calculate rates it pays to plans (e.g.. whether they keep allowing this add-on) Enhanced Payment Program (EPP) Yes Yes, by increasing Medi-Cal Managed Care utilization Statewide amount approved annually Prorata share out of most public hospitals--65% of pool IP-driven, 35% of pool OP-driven Federal gov. approves continuation annually, needs to be satisfied it s helping Cost-based supplementals (AB 915, PNPP, DP-NF SPA) No Yes, if more costs are incurred for Medi-Cal FFS services in three categories: hospital OP (AB 915), provider visits (PNPP), SNF days (DP-NF) Uncompensated FFS costs in each service category, net of Medi-Cal rates paid Our own uncompensated costs, no other factor State enrolling Medi-Cal patients more completely or rapidly in Managed Care, reducing FFS volume * Does not include patients seen out of network if AHS has no overall contract with their health plan. Does count patients assigned to AHS but not seen (ABNS). In practice, this patient count is dominated by ambulatory and ABNS patients.
Alameda Hospital: Supplemental Revenues Key Drivers of Other (Minor) Supplemental Revenues under Medi-Cal* Program Is program funding fixed? Can AHS increase its portion, and if so, how? What drives amount available to earn? What drives how much we get of the available amount? External program risks Medi-Cal Graduate Medical Education No Yes, by providing more Medi-Cal Managed Care IP days, or increasing MMC case mix index, but impact is small Complex calculation of GME add- ons to Medi-Cal MC IP day counts - Direct GME: Medi-Cal MC payor mix from IP - Indirect GME: constant % of statewide total, but that total is tied to MMC IP day count and acuity n/a Hospital Quality Assurance Fee No No State and CHA collaboration to maximize program size (program primarily benefits private hospitals) Allocation of some of HQAF collection amount to DPHs as direct grant (not federally matched) Congress or CMS further limiting such fee programs
