2009 Critical Access Hospital Conference Dublin Ga

1. Discussion topics State Budget $900 million - $1.5 billion shortfall $477 million Medicaid hole 2011 $44 million 2009 Amended – Rollover Surplus $83 million – Rollover Surplus 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 2009 Critical Access Hospital Conference Dublin Ga

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

3. 2009 Critical Access Hospital Conference Dublin Ga • 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

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

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

6. 2009 Critical Access Hospital Conference Dublin Ga • 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 • 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 • 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 • 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 • 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

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

13. 2009 Critical Access Hospital Conference Dublin Ga • What to do????? • Business Office • 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 • Add Revenues - Interim CCR adjustments • Chargemaster reviews - Interim CCR adjustments

14. 2009 Critical Access Hospital Conference Dublin Ga • What to do????? • All CAH are now subsidy dependent • 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????? • 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????? • 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 • Cost to charge ratio • Business Office