Monterey County/ Salinas Valley Memorial Healthcare System

Transcription

Monterey County/
Salinas Valley Memorial
Healthcare System
Affiliation Proposal
March 7, 2012
Overview
On behalf of the County of Monterey and Natividad
Medical Center we are pleased to submit the Monterey
County/Salinas Valley Memorial Healthcare System
Affiliation Proposal. The proposed Transaction is for
the creation of a new independent Public Hospital
Authority that will consolidate into a single Health
System Monterey County’s Natividad Medical Center
Enterprise and the designated hospital assets of the
SVMHS. This Transaction is an asset merger of two
public hospitals, not an outright purchase. This local
affiliation will honor the legacies and incorporate the
strengths of both SVMH and NMC. These two public
healthcare systems are approximately 4 miles apart
and offer a wide variety of complementary services,
creating significant positive synergies that we believe
can not be accomplished with any external healthcare
system affiliation.
This is a unique time in healthcare. It is clear that
healthcare reform will favor larger systems, as
opposed to smaller ones. Working together, we
believe, will offer the brightest and strongest long
term future for SVMH and for NMC as each seeks
to innovate and to improve their healthcare delivery
systems, particularly in light of coming changes. With
all the uncertainties on the horizon, the opportunity
to affiliate with a known and respected local partner
would be a further positive – for our two institutions
and the general public.
When the wide variety of strategic affiliation options
are fully understood, we anticipate that the residents
of the region will be most excited about the two public
organizations affiliating. We believe that creating the
appropriate legal structure for the proposed affiliation
is achievable and that the affiliation will pass state and
federal agency review for possible competitive effects.
Further, we believe the financial marketplace will view
the proposed heathcare system in a very positive light
in terms of future financing needs.
Harry Weis
Chief Executive Officer
Natividad Medical Center
Lew Bauman Ph.D.
County Administrative Officer
County of Monterey
Table of Contents
Overview
p. 2
Description of Proposed
Transaction
p. 3
Affiliation Objectives
p. 14
Approval Process
and Timelines
p. 24
Due Diligence Process
p. 26
Sources and Uses of Funds
for Affiliation
p. 29
Third Party Capital Sources
p. 30
Strategic Plan Development
p. 30
Contingencies, Caveats,
and Approvals
p. 34
Attachments
p. 35
Monterey County/Salinas Valley Memorial Healthcare System Affiliation Proposal
2
Description of Proposed Transaction
Unique Positive Local Opportunity
A unique opportunity exists for the creation of a new independent
Public Hospital Authority that will consolidate into a single Health
System Monterey County’s (County) Natividad Medical Center
Enterprise (NMC) and the designated hospital assets of the Salinas
Valley Memorial Healthcare System (SVMHS). This affiliation will
result in a high quality, primary and tertiary healthcare delivery
system for the region realizing the dual strengths of Salinas Valley
Memorial Hospital (SVMH) and its associated subsidiaries and joint
ventures outlined as part of the Offering Memorandum (OM), and
NMC, the “Designated Public Safety Net Hospital” within Monterey
County. This new Health System promises business synergies that
are not duplicated in any other affiliation and honors the legacy
and traditions of each local organization. Other profit driven nonlocal healthcare organizations under consideration for affiliation
with SVMHS cannot guarantee, over the long term, the same
degree of local control and commitment to innovation and optimal
healthcare at the lowest possible cost for our community.
Formation of Health System
New state legislation would form the Health System through
the creation of a single, independent government entity – a
Public Hospital Authority (for purposes of this proposal, “Health
System” and “Public Hospital Authority” are synonymous and
shall be referred to as the “Health System”). The governing body
of this new Health System will be separate and apart from both
Monterey County and SVMHS. A professional, skill-based Board
of Trustees would govern the Health System with appointees from
both SVMHS Board of Directors and the Monterey County Board
of Supervisors. The SVMHS Board would retain its non-hospital
real estate assets and would continue to collect existing property
tax revenue to support healthcare within its district boundaries.
The new legislation will provide that the Health System assume
and honor the existing Memorandum Of Understanding with
each entity’s respective labor units at the time of initial affiliation.
Monterey County would convey its NMC Hospital Enterprise to
the Health System but may negotiate agreements with the Health
System for defined County Health Department services provided
by or to the Health System. The legislation will set forth the powers
and obligations of the new Health System, which will be created
upon signature by the Governor but become operational only upon
successful execution, approval, and completion of the following
agreements and triggering actions by the County and SVMHS:
3
•
Agreement for the transfer of negotiated real, personal, and
intangible property interests from SVMHS and NMC to the
Health System, including negotiated lease with option to
purchase agreements between the County and the Health
System for NMC Campus facilities;
•
Agreement between the County and SVMHS transferring risk
management, workers compensation, retirement liabilities,
and other obligations of each party’s existing hospital
operations to the Health System;
•
Agreement regarding any necessary or appropriate interim
management;
•
Agreement between the Health System and County for FQHC
Look-Alike clinics and mental health operations;
•
Agreements and actions necessary for single hospital
licensure in California; and
•
Upon completion of above, appointment of the Health System
Board of Trustees by SVMHS and the County.
Features of the Health System
The new separate and distinct Health System will operate
separate and apart from Monterey County and SVMHS. Features
of the Health System are intended to include:
•
Being a “Best in Class” health care organization with high
quality and patient satisfaction and efficient, effective
operations;
•
Maintaining its role as a designated public safety net
healthcare system;
•
Being equipped to fully and directly compete with the private
sector in healthcare;
•
Having a professional skill-based Board of Trustees,
approved by the Board of Supervisors and the SVMHS Board
of Directors, whose sole function is to focus on hospital
governance with the goal of “Best Practice” governance;
•
Streamlined decision making;
•
Structurally having all operational functions reporting directly
to one Chief Executive Officer;
•
Being afforded private sector solutions to funding capital; and
•
The ability to enter into new business partnerships and
contracting arrangements that are pragmatic and
non-political implemented to strengthen the healthcare
delivery system and have increased philanthropic support as
a trusted community partner.
4
Health System Organizational Overview
Upon formation, the Health System will operate with 441
inpatient licensed beds, approximately 2000 hospital
FTE’s, and a combined medical staff of over 400
physicians representing a broad spectrum of specialties.
Health System Organizational Chart
HEALTH SYSTEM
100% Owned Subsidiaries
Salinas Valley
Memorial
Hospital
Natividad
Medical
Center
PMCCC
Consolidated Joint Ventures
Doctors
on Duty
Level III
NICU
Urgent
Care
Centers
Non-Controlled Joint Ventures
Salinas
Surgery
Center
Salinas
Valley
Imaging
Vantage
Surgery
Center
Central Coast
VNA &
Hospice
5
Hospital System Financial Overview
This proposed Transaction is an asset merger of two public
hospitals, not an outright purchase. Based on preliminary
information contained in the OM, prior to separating out assets
and liabilities remaining with the District and the County of
Monterey, the Hospital System would have more than $650 M
in Total Assets with $83 M in Cash, and less than $183 M in
liabilities and an estimated Net Worth of over $467 M.
The following balance sheet provides a rough estimate of the
combined assets and liabilities of the new entity. The combined
total includes an estimate for SVMHS and Natividad Medical
Center Hospital Enterprise. In reviewing the balance sheet it
should be noted:
•
SVMH December 31, 2011 information is based on the
financial data contained in the OM. In the OM the balance
sheet data is reported on a consolidated basis and includes
assets and liabilities that will be retained by SVMHS and
remain with the Hospital District;
•
NMC December 31, 2011 information is based on the interim
financial statements prepared by NMC, an Enterprise of the
County of Monterey. The Enterprise data reflects encumbered
assets of the County of Monterey and debt associated with
those assets. It is proposed that the Health System make
negotiated lease payments to the County for use of the
encumbered assets. The Hospital System would have the
option to purchase the debt encumbered assets. The options
which have yet to be determined would include: an option
premium, exercise price, an option term with an expiration
date, and other terms;
•
The financial statements for NMC and SVMH, do not include
estimates of unfunded pension liability and other post
retirement employee benefits. NMC is currently working with
actuaries to extract the amount of the County of Monterey’s
unfunded liability that pertains to employees of Natividad
Medical Center.
6
Estimated Combined Health System Ending Balances as of December 31, 2011 (000’s)
Natividad Medical
Center, an Enterprise
of the County
of Monterey
Salinas Valley
Memorial Healthcare
System
Combined Health
System
ASSETS ($)
Cash
74,147
8,915
83,062
Accounts Receivable Net
22,203
41,106
63,309
Other Current Assets
16,078
7,502
23,580
Total Current Assets
$112,428
$57,523
$169,951
26,188
26,188
117,626
307,991
425,617
Other Assets
7,307
16,836
24,143
Funds in Trust
4,737
Assets Whose Use is
Limited
Property, Plant and
Equipment
Total Assets
$242,098
4,737
$408,538
$650,636
26,499
44,531
71,030
Estimated Third Party
Payor Settlements
5,242
1,131
6,373
Capital Lease
9,190
6,602
15,792
LIABILITIES AND FUND BALANCES ($)
Accrued Payroll,
Payables and Other
Accrued Expense
Current and Long Term
Debt
69,247
Other Long Term Debt
Total Liabilities
110,178
Minority Interest in
Consolidated Affiliates
69,247
20,797
20,797
73,061
183,239
231
231
Net Assets
131,920
335,246
467,166
Total Net Assets
131,920
335,246
467,166
$242,098
$408,538
$650,636
Total Liabilities and
Fund Balance
7
The table listed below is a detailed schedule, from NMC’s 2011
annual financial audit, listing liabilities outstanding as of June 30,
2011. The debt is the responsibility of the County and is reflected
on the County’s Comprehensive Annual Financial Report (CAFR).
Currently NMC makes a lease payment to the County that is
equal to the full amount of the debt on encumbered hospital
property and equipment.
Liability Transactions (000’s)
Balance
June 30, 2011
Current Portion
LIABILITIES
Certificates of Participation
2007 Series D
$7,245
$260
2009 Series E
41,525
2,400
2010 Series E
17,845
65
Premiums
(discount)
Refunding gain
(loss)
1,798
(5,140)
Note Payable
13,571
2,905
Compensated
absences
7,228
6,505
$84,072
$12,135
TOTAL
Health System Facilities
The Health System hospital campus facilities are proposed to
include the SVMH campus, the NMC core campus with room
for growth and another approximately 19 contiguous acres as
an option for healthcare system growth subject to agreements
with the County (See Attachments 1 & 2). In addition are the joint
venture facilities that are 100% owned or partially controlled by
SVMHS.
8
Strengths of Health System
The unique synergies that exist with a new Health System include:
•
The combination of all public and private revenue stream
sources for healthcare that no other healthcare system can
offer, including the sharing of NMC’s designated public
safety net Medicare reimbursement with SVMH (providing an
estimated incremental $4 M per year or $40 M in additional
reimbursement over the next 10 years) and NMC’s designated
public safety net MediCal and related reimbursement with
SVMH (providing an estimated incremental $10 M per year or
$100 M in additional reimbursement over the next 10 years);
•
The preservation of SVMH at-risk MediCal reimbursements,
which would be eliminated if purchased by an outside
healthcare system;
•
Elimination of costly duplication of clinical services resulting
in the optimization of healthcare quality and business strength
in a regional business model;
•
Avoidance of the need to build more inpatient hospital beds
in the near term, when shortages exist at one campus and
excess beds exist at another campus, saving the payors/
residents of healthcare in the region more than $200 M in one
time avoidable NMC hospital construction costs;
•
Strong outpatient delivery platforms in each system with
greater opportunities for growth when consolidated;
•
Ability to employ physicians under the public hospital safety
net designation and expand new contracting opportunities
with area physician groups thereby maintaining and
strengthening the shared medical staffs during challenging
economic times and for implementation of healthcare reform
objectives;
•
Opportunities for future healthcare system facilities and
program growth over time to meet present and future
unmet healthcare needs of the residents of the region in
collaboration with other outpatient and inpatient providers,
keeping all of the positive net cash flow from these new
services within the community. In healthcare, “competition” is
inflationary, and collaboration among providers deflationary, a
highly desired alternative;
•
Efficiencies and economies of scale in eliminating redundant
overhead expense allocation and savings as a result of
combining two hospitals overhead department areas and
leadership positions providing an estimated savings of $9 M
per year or $90 M over the next 10 years;
•
Ability to keep business operational cash flow success local
vs. SVMH incurring management fees paid to an outside
healthcare system, indirectly increasing the long term cost
of capital estimated to total $7 M annually or $70 M over the
next 10 years;
9
•
Cost avoidance of new debt service issuance, which would
occur if SVMH is allocated annual debt service associated
with an outside healthcare system’s issuing debt to fund the
SVMH transaction. Estimated savings for every $100 M of
purchase price, at 7 ½% tax exempt interest, would be $10.2 M
annually or $102 M over the next 10 years;
•
MEDITECH clinical and business Information Technology
systems across both hospitals permit the integration of
multiple systems into a new distinct healthcare information
technology system, at a one time projected cost savings of
$20M or more;
•
Expansion of NMC teaching programs for physicians and
other healthcare professionals together on the SVMH
campus, with an estimated incremental benefit of $1.3 M
per year or $13 M over the next 10 years from Graduate and
Indirect Medical Education payments from Medicare; and
•
Affiliation between the region’s two public hospitals will draw
the support of the local business community and residents
of the county once fully informed about the unique synergy
value of a local partnership between SVMH and NMC vs. a
private sector affiliation options.
These affiliation synergies indicate there are one time savings or
increased revenues of approximately $200 M over the next 10
years and $554 M in reoccurring bottom line cumulative savings
or increased revenues over the next 10 years or an average of
$55.4 M per year for 10 years. NMC, in consultation with expert
counsel, believes regulatory agencies will look favorably upon
the affiliation of two local public healthcare entities. The rating
agencies will look favorably upon this affiliation improving the
investment grade rating of the Health System, which will result in
lower borrowing costs.
10
Estimated Benefit of Proposed
Health System Affiliation Model
Annual
New Incremental
Revenue
Incremental Medicare - Inclusion of
SVMH as Designated Public Hospital
$4,000,000
$40,000,000
1,300,000
13,000,000
10,000,000
100,000,000
MediCal outpatient revenue
supplemental payments - AB-915
Program
1,163,000
11,630,000
Managed Care Intergovernmental
Transfer Program
2,500,000
25,000,000
Annual overhead savings - NMC
detaching from the County and
combining two hospital overhead
departments and leadership
9,000,000
90,000,000
Annual Management Fees Paid to a
remote location loss of revenue to
Salinas area
7,000,000
70,000,000
Estimated allocated annual debt
service for acquisition financing net
of financing cost - Assumes $200M
at 7.5% for 18 years
20,428,000
204,280,000
$55,391,000
$553,910,000
Incremental Medicare - Teaching
hospital program expansion to
SVMH Campus
Incremental MediCal - Inclusion of
SVMH as Designated Public Hospital
Estimated Current
Revenue Loss if SVMH
is Purchased by Outside
Healthcare System
Expense Savings Before Operational
Improvements
Estimated Cost
Avoidance if SVMH is
Purchased by Outside
Healthcare System
10 Years
(Assumes SVMHS retains tax revenues)
TOTAL
One Time Cost Avoidance Benefit to Health System
Estimated cost avoidance of building short term hospital beds at NMC
$200,000,000
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Overview of NMC
Natividad Medical Center (NMC) is a 172-bed acute care hospital
owned and operated by Monterey County. As a successful
designated public safety net hospital providing health care to the
residents of Monterey County for over 125 years, NMC provides
health care access to all patients regardless of their ability to
pay. NMC offers inpatient, outpatient, emergency, diagnostic
and specialty medical care. With an annual operating budget of
$175M, NMC provides more than 34,000 patient days each year
and more than 44,000 emergency department visits per year.
NMC is ranked No. 1 in newborn deliveries in Monterey County.
The hospital has a medical staff of over 255 physicians. NMC
operates a large hospital-based specialty clinic in:
•
Bariatric Surgery
•
Orthopedics
•
Cardiology
•
Pediatrics
•
Colon and Rectal Surgery
•
Plastic Surgery
•
Gastroenterology
•
Podiatry
•
General Surgery
•
Urology
•
Nephrology
•
Vascular Surgery
•
Ob/Gyn
NMC has a primary care clinic and is the location of outpatient
primary care clinics operated by the Monterey County Health
Department.
NMC is the only teaching hospital on the Central Coast, through
its affiliation with the University of California, San Francisco
(UCSF). Recognized nationally and internationally as a model
program, NMC’s Family Medicine Residency Program provides
postgraduate training for physicians specializing in family
medicine. About 1/3 of the graduates remain on the Central Coast
to establish a practice.
NMC is fully accredited by The Joint Commission and is governed
by the Monterey County Board of Supervisors, under the
guidance of a Board of Trustees.
Over the past decade Monterey County was challenged in its
ability to operate NMC within budget with NMC experiencing
a financial loss of over $25 M in 2006. In 2006, the Monterey
County Board of Supervisors explored the potential for the
sale, lease, transfer, or restructuring of NMC. Through the
review of alternative cooperative scenarios, a unique public/
private partnership was formed among Salinas Valley Memorial
Healthcare System (SVMHS), a California local public healthcare
district, Community Hospital of the Monterey Peninsula (CHOMP),
a California nonprofit public benefit corporation, and NMC.
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In 2006, SVMHS and CHOMP entered in a cooperative
arrangement with Monterey County which included the transfer
of funds totaling $10M to NMC and the provision of healthcare
executives from each hospital to serve on the NMC Interim Board
of Trustees. Working closely with Wellspring/Huron Consulting
Group, Inc., retained by Monterey County to manage the NMC
turnaround, SVMHS and CHOMP representatives contributed
their considerable time and expertise in guiding the operational
improvement and revitalization of NMC as the regional public
safety net hospital.
Turnaround strategies deployed included:
•
Delegations of authority to separate purchasing, human
resources, and information technology from County to NMC
recognizing the uniqueness of hospital operations from other
County departments;
•
Development of a strategic plan focusing on high quality
health care, service excellence, and growth;
•
Implementation of initiatives improving revenue cycle, labor
productivity, clinical services redesign, and non-labor cost
savings;
•
Development and implementation of a permanent NMC Board
of Trustees;
•
Improved physician billing and accounts receivables
management;
•
Deployment of a physician recruitment and retention program;
•
Recruitment of new permanent executive management team;
•
Successful recruitment and retention of hospital staff through
the implementation of a revised compensation policy; and
•
Expansion of key clinical services enhancing NMC as a
valuable community resource for inpatient, outpatient,
diagnostic and specialty care.
Forecasted by Wellspring/Huron Consulting to lose $25 M in
Fiscal Year 2006, NMC’s financial performance improvement
resulted in a net profit of $10.5 M Fiscal Year 2008, a $35 M
turnaround in two years. Other financial results:
•
Increases in monthly cash from $5.2 M in Fiscal Year 2006 to
$9.3 M Fiscal Year 2009;
•
Reduction in accounts receivable days from 94 days (Fiscal
Year 2006) to 69 days (Fiscal Year 2008); and
•
Monterey County General Fund subsidy was reduced from
$21.5 M in Fiscal Year 2006 to $0 in Fiscal Year 2009 and in
all subsequent years.
Today NMC is a successful designated public safety net hospital.
The favorable sustained turnaround results allow the hospital
to move forward to achieve its goals as a desired resource for
13
healthcare services for Monterey County. NMC has not received
any County General Fund support since 2008 and further has
not received any local property or sales tax revenues. NMC has
a cumulative net income of approximately $64 M in just the last
4 fiscal years and its days of cash on hand have gone from 40 in
Fiscal Year 2007 to 165 at present.
NMC executive leadership experience and track record will be an
important asset in continuing the rapid operational recovery to
financial health of SVMHS, which is “priority one” over the next
three years. Financial recovery will facilitate procuring tax-exempt
borrowings to build upon the healthcare system.
Affiliation Objectives
Can ensure that SVMH will be a high quality,
full service, cost effective healthcare provider
for the residents of Salinas and Monterey
County and will preserve significant local
involvement in hospital governance
The new Health System will be established with a solid
commitment to maintaining the quality clinical reputation of
SVMH while building on the synergy of combining two quality
hospital programs. SVMH is recognized in the community for its
high quality service. NMC also brings a high quality organization
with a culture of patient safety. The goal is to grow Health System
to a Best in Class high quality healthcare organization for the
residents of Monterey County.
NMC has embarked on a quality journey which began with key
participation in the Institute for Healthcare Improvement (IHI)
Patient Safety Executive Development Program. A program was
refined and incorporated into the NMC Leadership Academy
curriculum. Upon affiliation, this academy, with SVMH’s guidance,
will be one of many vehicles which can drive the execution of
Health System’s quality vision throughout the combined delivery
system. As the federal Centers for Medicare and Medicaid (CMS)
moves toward healthcare reform, implementing quality-driven
cost containment measures and high quality performance is key
to maintaining current governmental revenues.
NMC highly values and respects any accreditation audit findings.
With these surveys, deficiencies are sometimes found which
serve as opportunities for improvement. NMC has undergone
three surveys recently. As NMC focuses its efforts on becoming
a model public safety net hospital, these audit results will
accelerate NMC’s quality improvement initiatives.
14
NMC completed a very successful survey conducted by
The Joint Commission in November 2011. Separately, CMS
randomly selects at least 10% of the hospitals surveyed for a
validation survey. NMC recently participated in such a survey.
CMS identified that the Hospital was out of compliance with
the Conditions of Participation for Quality Assessment and
Performance Improvement Program and Food and Dietetic
Services and specified standard level deficiencies. As a result of
the conditional-level deficiencies, CMS removed the Hospital’s
deemed status through the Joint Commission and initiated steps
to terminate the Hospital’s Medicare provider agreement, effective
April 25, 2012. In order to avoid termination, CMS afforded the
hospital the opportunity to submit a plan of correction and to
receive a resurvey to demonstrate compliance. The Hospital
submitted its plan of correction to CMS on February 6, 2012 and
is awaiting a resurvey to demonstrate compliance.
NMC, as a designated public safety net hospital, brings to the
new entity financial incentive opportunities under the five-year
California Section 1115 Waiver Program, effective November,
2010. NMC has begun to receive additional governmental funding
for developing quality initiatives and will receive additional funding
for meeting quality targets over the life of the five year waiver
program. The addition of SVMH into the newly created entity has
upside potential for increased quality incentive funding which can
be invested back into the Health System, insuring preparedness
for healthcare reform.
Wellspring/Huron Consulting, as part of the NMC turnaround,
designed a labor productivity system, with customized
departmental benchmarks, allowing NMC to closely monitor
productivity after project completion. NMC has continued to
utilize this system, recently validating and refining the original
benchmarks against internal and industry performance. NMC’s
process is to work collaboratively with labor partners who are a
critical component in the achievement of sustainable productivity
results. NMC’s performance on a departmental basis is in the
first or second quartile in most departments compared to other
California hospitals. NMC has set a goal for all departments
to achieve the top quartile performance. Expert consultants
have been engaged to assist managers in achieving this goal.
Controlling productivity since 2007 has allowed NMC to achieve
strong financial results, generating needed cash to embark on an
ambitious building renovation project. This productivity system
will be modified to include SVMH and will serve as the foundation
for achieving cost effective health care in the Health System.
NMC also closely monitors non-labor expenses to ensure costs
remain low allowing NMC to provide quality health care at an
affordable price. The benefit of these efforts will be increased with
the additional economies of scale realized by consolidating with
a second hospital and the combined use of a group purchasing
organization.
The local business community and residents value the quality
health care provided by SVMH and NMC. We believe that the
Health System, as a local business enterprise, will be embraced
and supported by the business community and residents over
private affiliation options. The Health System will establish a
communication plan to work with the residents and the business
15
community to establish key partnerships essential to growing
the Health System network into a high quality regional healthcare
system, responsive to the public and positioned to thrive under
healthcare reform.
The Health System will combine a tertiary care hospital with a
primary care hospital as the cornerstone of the system. Layered
on this cornerstone will be a diverse and qualified medical
staff, a robust network of outpatient services, complimentary
inpatient services, a physician teaching program associated
with the University of California, San Francisco, and dedicated
staff. A systemwide strategic plan will be developed after careful
analytical assessment is made of all current services. The plan will
identify opportunities for collaboration on additional new clinical
services which would benefit the residents and will keep all of the
positive net cash flow from these new services reinvested within
the community. In contrast, an affiliation with other non-profit
or for profit entities could result in management fees paid to a
distant outside healthcare system estimate to total $7 M annually
or $70 M over the next 10 years.
There has been a long collaborative history between the
healthcare providers serving Monterey County. NMC’s turnaround
performance was supported by the local community providers,
utilizing management of SVMHS and CHOMP as guiding
board members. SVMHS and CHOMP generously provided
financial assistance to fund the external consultants critical to
NMC’s dramatic turnaround in FY 2007. This collaboration was
recognized as the subject of a well-received national presentation
at the Healthcare Financial Management Association’s Annual
National Institute - June 2010. A Health System which combines
the two hospitals, clinics and physicians, will grow this foundation
into a solid network positioning Monterey County to achieve
success under healthcare reform.
NMC has benefited from the governance of a strong skillbased Board of Trustees and a transparent management style
of conducting hospital business in a public environment. This
leadership, with additional membership proposed by SVMHS, will
help to guide the Health System to work successfully with local
businesses, community action groups, labor partners and local
politicians to be responsive to community needs.
Has a strong cultural
compatibility with SVMH
SVMH and NMC, created with similar visions, have served
patients in the same geographic area since the mid-1950s.
These two institutions have a strong history of dedication to the
improvement of the health status of the residents through access
to affordable, high-quality healthcare services. Joining the two
hospitals into a more formal comprehensive Health System will
serve to:
•
Minimize duplication of clinical services;
16
•
Enhance case management between the two facilities to
improve patient care, and reduce length of inpatient stay;
•
Create a network of community providers who provide medical
homes for Health System patients;
•
Avoid or defer the need to build more inpatient hospital beds
at NMC over the near term;
•
Utilize technology to provide shared access to patient
treatment data throughout the network; and
•
Share rather than duplicate services;
•
Realize economies of scale allowing needed capital for new
and expansionary programs. In healthcare, “competition” is
inflationary, and collaboration amongst providers deflationary,
a highly desired alternative.
There are many quality improvements than can be quickly
implemented yielding immediate results. For example, currently
there are two separate hospital case management departments
coordinating patient care, transferring patients from one facility
to the other based on the clinical needs of the patient. SVMH,
a regional tertiary hospital, treats NMC patients with complex
medical needs requiring specialty services not provided at NMC,
such as cardiac and neurological services. In turn, NMC treats
SVMH patients needing psychiatric and rehabilitation services
not available at SVMH. One example of the synergy that exists is
the opportunity for the coordination of care between the hospitals
under a single case management system. Better coordination of
care would help reduce the cost of inpatient stay, increase net
patient revenue, and produce better health outcomes.
Local businesses in Monterey County have a long history of
generously participating in hospital governance and contributing
to the Foundations of the two hospitals. Combining both hospitals
into a Health System will allow the facilities to better serve the
business community by providing a strong local network of
hospitals and providers for employees and their dependents.
This network would contract directly with local businesses, where
possible, to provide health coverage custom tailored to meet their
particular needs. NMC has already begun to contract directly with
local businesses. An enhanced system with a tertiary hospital will
greatly expand this benefit to the local employers.
Will enhance SVMH’s ability to recruit and
retain high quality medical staff and to adapt
to evolving physician practice models
The Health System as a public safety net hospital in California
will have a stronger ability to recruit private practice physicians to
the community or to hire physicians. NMC has created a flexible
contracting model, working with leading healthcare law firms,
to structure agreements that benefit both the hospital and the
physician partner. Physicians are able to elect to be hired as an
17
employee or hired through a contractual arrangement. These
strategies have resulted in significant growth in NMC’s medical
staff membership with a 50% increase over the past four years.
89% of the medical staff is board certified and of this group 20%
are either double or triple board certified. The average age of the
medical staff is 49 years. NMC bills for physicians and is currently
in the process of selecting a computer system to enhance the
current physician billing capabilities. The two hospital medical
staffs working together and centralizing physician billing, where
applicable, will be an important component in developing an
Accountable Care Organization.
NMC administers a family medicine residency program in
affiliation with University of California, San Francisco. NMC has
also recently established a program with Touro University Medical
School in which third year medical students participate in a core
service rotation at NMC. These highly successful programs for
primary care physician training, resources sorely needed in our
County today, result in 30% of the residency program graduates
remaining in Monterey, San Benito and Santa Cruz Counties with
90% remaining in California.
NMC is currently expanding its teaching programs for physicians
and other healthcare professionals. Affiliation with SVMH as part
of a teaching facility would provide an incremental benefit of $1.3 M
per year or $13 M over the next 10 years from Medicare for
Graduate and Indirect Medical Education payments.
Will enhance SVMH’s access to capital to
fund needed medical technology, equipment,
healthcare information systems and a longterm capital plan for a new hospital facility
The new entity will be comprised of two hospitals located four
miles apart from each other. This proximity allows for the sharing
of inpatient facilities and medical equipment saving valuable
capital dollars for system expansion and new programs. Both
hospitals have capital plans contemplating significant investments
in equipment and facilities in the next few years.
At the beginning of the management phase of the affiliation a
master facility plan will be commenced to maximize the short
and long term facility needs of SVMH and NMC. NMC has short
term capacity issues which can be alleviated initially with reallocating services to SVMH during the planning phase. The
Health System can avoid the need to build more inpatient hospital
beds, especially at NMC when shortages exist at one campus
and excess beds exist at another campus, saving the payors/
residents of healthcare in the region more than $200 M dollars in
one time avoidable NMC hospital construction costs.
A combined Health System Master Facility Plan will allow for
strategic long term expenditures as funding opportunities are
identified. The Health System will be a public entity and will have
access to tax exempt debt as well as debt instruments that are
designed to assist public entities fund capital needs.
18
In the long-term plan maximum use can be made of NMC’s
campus plot which has room for growth and another 19
contiguous acres as an option for healthcare system growth
subject to agreements with the County.
NMC and SVMH use the same IT vendor, MEDITECH for clinical
and business computer systems. There is at least a onetime
cost avoidance of $20 M which would be needed to convert
to another vendor for clinical and business computer support
in a distant healthcare system. MEDITECH can be used as the
common platform to connect community MDs into one central
system allowing for the availability of patients data in all treatment
locations in the expanded network.
Can achieve cost efficiencies via
overhead savings, group purchasing
contracts, improved clinical efficiencies
and improved labor utilization
The unique combination of SVMH and NMC will have a greater
likelihood of rapid, stronger and more sustainable profitable
operations than an outside healthcare system because of the
already existing “designated public safety net” revenue cycle
programs of NMC which are unavailable via any other healthcare
system. On the expense side, efficiencies will be easier as well,
due to the close proximity of the two hospitals working together
in a very collaborative manner.
This new local Health System will be more successful in
optimal labor management results than an outside healthcare
system could achieve because of the unique local synergies
that only exist between NMC and SVMH in the areas of senior
management, departmental management, and line staff.
Non labor product costs can also be more easily streamlined and
optimized in contrast to an outside healthcare system as product
standardization occurs across the two local hospital campuses.
Service contracts will be standardized with improved terms.
Using the MEDITECH electronic health record as the platform,
in a standardized work flow manner, clinical service lines can
be optimized as these two campuses begin to work closely
together delivering improved sustainable levels of quality, patient
satisfaction and economic performance.
19
Will provide SVMH with contracting capability
and capital to successfully participate in risk
sharing vehicles (such as ACO’s for managing
the health care of patient groups)
The Health System brings to the affiliation an in-depth knowledge
of local market contracting opportunities and challenges.
Continuing on the improved contracting platform, NMC is working
currently with local businesses to establish direct contracting
arrangements for healthcare coverage of employees and their
dependents.
The Health System brings value added knowledge in contracting
for government and public programs. An analysis would be done
of the governmental programs that SVMH participates in to
ensure SVMH receives all available revenues.
NMC via its contracting techniques has maintained and
strengthened “the very challenging physician private practice
of medicine” during tough economic times with many area
physician groups and it has the ability to employ physicians
under its safety net designation. NMC has created a flexible
physician contracting model, working with leading healthcare law
firms that takes advantage of the ability to contract directly with
physicians or to employ them. This physician strategy allows for
optimal performance of the strategic goals of any private practice
physician groups.
The County of Monterey as part of its requirements under
California Welfare & Institutions Code Section 17000 operates the
Monterey County Medical Service Program for medically indigent
adults (MIA). NMC administers the program for the County
providing: eligibility screening, in-network services and case
managing and adjudicating claims for out of network providers.
In April, 2012, provided approval by the County Board of
Supervisors is obtained in March 2012, the County departments
of NMC, Health, and Social & Employment Services will create
a Low Income Health Plan (LIHP) named “ViaCare” in Monterey
County. The California Section 1115 Waiver allows for creation of
LIHPs in California Counties with the opportunity to leverage local
public funds to receive new federal matching funds and begin
implementing elements of healthcare reform prior to 2014. These
transition programs are allowed in the Federal Patient Protection
and Affordable Care Act. The LIHP is a Medicaid coverage
expansion program which will provide enriched physical medicine
benefits and new mental health inpatient and outpatient coverage.
The Via Care program will transition individuals currently without
insurance or enrolled in the Monterey County Medical Service
Program to Via Care with its enhanced services.
In establishing ViaCare the County would be contracting with a
third party administrator for member services, negotiating and
managing provider contracts, utilization management, claims
processing, quality assurance, pharmacy benefits management,
20
as well as other administrative functions. ViaCare would establish
a robust delivery network with each enrollee assigned to a
medical home in one of the network FQHC sites. Upon affiliation,
SVMH will continue to be a LIHP provider and retain its ability to
claim additional uncompensated care reimbursement as part of
the Health System.
Will bring improved accounting and decision
support tools to evaluate new and existing
service lines to achieve clinical and financial
efficiencies
The Health System brings the knowledge, best practice analytics
and management tools developed during the turnaround of NMC
to this new entity. Strategically using custom tools and reports,
NMC has restructured its operations to:
•
Maximize supplemental governmental payments;
•
Improve third party contracting;
•
Improve physician recruiting and contracting;
•
Implement a productivity system;
•
Improved non-labor cost savings;
•
Redesign clinical services;
•
Improve the cash flow to the hospital from public and private
reimbursement programs; and
•
Successfully recruit and retain hospital staff.
The Health System will use the NMC executive management
team along with key financial reimbursement consultants to work
with SVMH leadership to evaluate new and existing programs to
develop short and long term strategic plans. The Health System
brings the depth of financial analytic skills needed to evaluate
potential governmental revenue streams and new or existing
service lines.
NMC financial management has staff with extensive experience
in both governmental and non-governmental financial accounting
that is needed to coordinate the consolidation of financial
information into a single financial MEDITECH platform reporting
system.
NMC leadership has created a MEDITECH based data repository
system with dedicated programming staff that creates customized
decision support and productivity reports.
21
Will provide resources to improve employee
and union relations
NMC brings to the Health System a strong team of administrators
and managers who have developed excellent skills in working
with union leaders to improve patient care and employee
relations. NMC administration has regular meetings with union
staff where collaboratively the two groups openly discuss and
problem solve issues. The union leaders have been supportive of
the creation of a public hospital authority as a vehicle to position
NMC for success in the new healthcare reform environment.
NMC values its employees and strives to have excellent staff
relations. NMC contracts with an outside human relations
consultant firm to conduct semiannual employee satisfaction
surveys. After each survey, the results of the surveys are
tabulated, analyzed and an action plan developed to address
identified areas of improvement.
NMC has a series of employee recognition events such as:
luncheons, holiday events, celebrations, retirement and
recognition of national nursing and hospital week. NMC provides
health and wellness events, on-campus health fairs, and a
farmers market for employees and the community.
Will provide enhanced board, management,
medical staff, and employee continuing
education and career development
NMC’s skill based Board of Trustees is comprised of local wellrespected healthcare business leaders who value continuing
education and development. In each monthly meeting, time has
been set aside for education on critical healthcare issues. In
addition, NMC has periodic education sessions where national
speakers have been brought in to provide healthcare trend
information for the Board of Supervisors, Board of Trustees,
medical staff and hospital leadership. NMC videotapes these
events and provides access for all staff and the public on the
hospital website. As the Health System is established education
and outreach will be critical to ensure the Health System
strategic plan is crafted with strong knowledge and commitment
to community education regarding the changing healthcare
environment.
The Health System will utilize technology to educate and
communicate with the board. NMC currently uses a shared
Board network and provides individual computer access during
Board Meetings. The Health System will expand on this shared
access to ensure Board members, management, medical staff
and employees have access to information needed to do their
respective jobs well.
Medical staff education is critical in a teaching facility. Staff
physicians serve as professors for the Family Practice Residency
Program and need to be current on advances in medical care
22
treatment. The expansion of the residency program to SVMH
education will be a key factor in developing a Best in Class
residency program.
The Health System will review the current educational programs
in place at the two hospitals and select the best elements of each
program to develop a comprehensive staff education program
which will include:
•
Annual Staff Education Training
•
Leadership Training
•
Quality Education Training
•
Compliance Training
•
Customer Service Training
•
Computer System Training
•
Mandatory Staff Training
•
Human Resource Training
The combining of the two hospitals will provide many
opportunities for employees to grow into new and expanded
roles. Employees will have improved career paths in the Health
System as centralized administrative and business functions will
be within Monterey County keeping jobs as well as non labor
expenses as local as possible. The close proximity between the
two hospitals allows for efficiencies and economies of scale in
overhead department areas and leadership positions resulting in
an estimated savings of at least $2 Million per year.
Will maintain continuity of existing charity
care policies
The Health System, as a California designated public safety net
hospital, will continue the 125 year tradition of Natividad Medical
Center to serve all residents of Monterey County irrespective of
ability to pay for medically necessary services. NMC currently
complies with State law (AB 774) relative to charity care, self
pay, high cost medical discounts and debt collection policies.
Additionally SVMHS has a long history of generous charity
contributions to the community. The joining together of these two
great local hospitals will fully meet past and future charity care
policies envisioned at each hospital.
Natividad’s Medical Center currently has four discount programs.
The hospital offers:
•
Self Pay Discount – Applicants must be at or below 350% of
the Federal Poverty Limit with no third party coverage.
23
•
High Medical Cost Patients – Option A – Family income is
at or below 350% of the current Federal Poverty Limit and all
out of pocket medical expenses in the prior year exceed 10%
of Family Income
•
High Medical Cost Patients – Option B – If the patient
does not otherwise receive discount as a result of third part
coverage assets will be given the same consideration as the
MIA Program, and discount will vary based on assets, income
and billed charges.
•
Charity Care Policy – Patient is self pay or under insured
who are at or below 100% of Federal Poverty Limit and has
limited assets. Patients may be assessed a co-payment
based on income level and/or the nature of services received.
The affiliation of SVMH into the Health System will allow the new
entity to receive additional public safety net funding by leveraging
the charity care provided at SVMH into the California 1115 Waiver
claiming process.
Natividad Medical Center has developed a bi-lingual financial
counseling department that is highly skilled in screening
applicants for third party coverage, Medicaid, governmental
programs, Monterey County specific programs, and for charity
care. This financial counseling program will be expanded to
include SVMH at the start of Health System.
Approval Process and Timelines
Late May/June 2012
SVMHS selects the Monterey County proposal and signs an
initial letter of affiliation with the County for the development of
a new Health System that will consolidate NMC Enterprise and
SVMHS designated hospital assets into a single independent
governmental entity as a “Designated Public Safety Net Hospital”.
Monterey County/SVMHS Transition Team formed to develop
enabling legislative language for the creation of the Health
System and the execution, approval, and completion of transfer
agreements.
24
July 2012
SVMHS and County sign agreement for management services
subject to constraints of law, to include the following goals:
•
Implementation of shared executive management structure
across both hospitals;
•
Develop and implement executive, departmental and staff
level staffing plans to optimize quality and business strengths;
•
Implementation of additional operational improvements at
SVMH while keeping NMC financially strong;
•
Creation of Executive Council, the actual governance name to
be defined, by the two systems, constituted from the Boards
of NMC and SVMHS;
•
Development of the Health System strategic plan including
service line analyses, master site plans for each campus,
staffing plans, and operational improvement initiatives; and
•
Begin migration planning for a single fiscal, accounting and
reporting system based on same MEDITECH information
system.
November 2012
District election for voter confirmation of SVMHS’s Board of
Directors decision to form the Health System.
January 2013
Enabling legislation of the Health System becomes effective.
Selection of the Board of Trustees for the Health System will be
initiated by the Monterey County Board of Supervisors and by the
Board of Directors of the SVMHS.
Apply for Health System Tax ID.
Begin credentialing NMC and SVMH MD’s, a six month process.
July 2013
Move both hospitals under a single hospital license which is
recognized as being a designated safety net hospital by the State
Department of Health Care Services and the Centers for
Medicare and Medicaid Services (CMS) and under common
Medicare/Medicaid provider agreements.
25
“Obligated group” is created to facilitate tax exempt borrowing
options and for the Health System to aggressively pursue and
maintain an “investment rating” of single A or higher.
Following full affiliation, find and execute on all opportunities for
improving the business and clinical delivery model along with a
focus on growth regarding unmet health care needs by a strategic
collaboration with all providers across the region.
Due Diligence Process
County of Monterey Due Diligence Process
The County of Monterey will conduct a comprehensive due
diligence review of the proposed transaction prior to making a
final proposal. The County will establish a due diligence review
team comprised of County of Monterey staff and external
advisors, to perform a detailed due diligence review.
It is anticipated that the due diligence review will focus in the
following areas:
•
Hospital assets and liabilities;
•
Labor agreements;
•
Employee benefit and liabilities;
•
Financial performance review;
•
Government reimbursement, third party settlement
agreements and pending audit findings;
•
Debt and capital structure review;
•
Review of legal contracts, outstanding litigation, and
governance issues;
•
Utilization statistics review;
•
Review of all feasibility projections provided;
•
Review of SVMHS Joint Ventures; and
•
Other documents provided by SVMHS or their consultants.
The County of Monterey is retaining the services of Armanino
McKenna LLP, Certified Public Accountants & Consultants, a
firm specializing in healthcare, internal auditing and transaction
advisory support, to serve as financial transaction advisors
as well as provide financial due diligence services. Armanino
26
McKenna LLP will conduct financial due diligence, the scope
of which will be determined by the County of Monterey, in
accordance with applicable standards set forth by the American
Institute of Certified Public Accountants.
The County of Monterey’s internal legal review team, led by
County Counsel, will use the services of current external legal
advisors including Foley and Lardner LLP, Ropes & Gray LLP,
and Nixon Peabody LLP to complete a comprehensive legal due
diligence review.
Upon notification of selection as a finalist the County team will:
•
Perform a comprehensive review of all data made available
either in the Offering Memorandum or in an electronic data
room;
•
The County team, with its external advisors, will develop an
internal due diligence review checklist;
•
The due diligence checklist will be cross-referenced against
the information that has been made available to the team and
a list of additional requests for documents and information
needs will be prepared and provided to Cain Brothers in
writing;
•
The County team will coordinate its request through a single
individual who will work with Cain Brothers to obtain needed
information with the least disruption to SVMH operations;
•
It is anticipated that it will be necessary for one or more of the
due diligence team members to visit SVMH to verify financial
data or interview members of the management team. These
visits will be coordinated through Cain Brothers and every
effort will be made to minimize the amount of on-site review
relying on electronic data room data as much as possible;
•
During the review period it may be necessary for external
consultants to review auditor work papers; and
•
At the completion of the due diligence review a
representative(s) of the County team will meet with Cain
Brothers to clarify any outstanding items and issues prior to
the County finalizing the review.
The County realizes, if selected as a finalist, SVMHS will be
conducting a parallel due diligence process which the County will
support through the due diligence team. This team will facilitate
quick turnaround on SVMHS requests for documents and
information and interview scheduling.
27
County of Monterey
Due Diligence Review Team
Internal Team
Members
Department
Title
Role
Harry Weis
Chief Executive Officer
Co-lead County due
diligence review
Lew Bauman, PhD
County Administration
Chief Administrative Officer
Co-lead County due
diligence review
Charles McKee
County Counsel
County Counsel
Due diligence legal review
Les Girard
County Counsel
Assistant County Counsel
Stacy Saetta
County Counsel
Deputy County Counsel
Mike Miller
Auditor-Controller
Auditor-Controller
Due diligence financial
review
Mary Zeeb
Treasurer-Tax Collector
Treasurer-Tax Collector
review
Carol Adams
Assistant Administrator
Project lead
Daniel Leon
Chief Financial Officer
review
Dewayne Woods
County Administration
County Budget Director
review
Janine Ray-Bouyea
HR Administrator
Due diligence HR review
External Team
Members
Firm
Title
Role
Bill Brause, CPA
Armanino McKenna, LLP
Audit Partner, Healthcare
Practice Lead
AM engagement partner
John Dunican, CPA
Director, Transaction
Advisory Services
AM project lead
Liz Marek, CPA
Audit Senior Manager
AM on-site oversight
Robert Egnew
Independent Contractor
Nancy Arata
HFS Consultants
Manager
review
Jim Fenstermaker
eCareManage, Inc
President
Due diligence IT review
Diane Ung
Foley and Lardner, LLP
Partner
External legal advisor
Larry Gage
Ropes and Gray, LLP
Partner
Rick Jones
Nixon Peabody, LLP
Partner
Due diligence review
28
Sources and Uses of Funds for
Affiliation
The Health System will be comprised of contributed assets
and liabilities of SVMHS and the County of Monterey. For the
preliminary proposal, based on available information and prior to
any negotiations, it is not possible to prepare a sources and uses
of fund statement for the Health System.
Sources
Based on preliminary information the combined entity
would be established with an approximated cash balance of
$83 M. The NMC cash balance includes $14,200,000 which has
been transferred by the Board of Supervisors to a sub-fund of
the County’s Strategic Reserve Fund for future strategic needs of
NMC. The County proposal, prior to operational improvements
which are believed to be substantial, has estimated over the first
ten years of operation there will be additional cash to the Health
System of $243 M.
Estimated Incremental Cash Flows Prior to Operational Improvement
Annual
10 Year
Incremental Public Safety
Net (PSN) Medicare
Revenue
4,000,000
40,000,000
Incremental PSN MediCal
Revenue
10,000,000
100,000,000
Incremental Medicare
Teaching Program
1,300,000
13,000,000
Annual overhead
savings - NMC detaching
from the County and
combining two hospital
overhead departments
and leadership
9,000,000
90,000,000
Estimated Incremental
Cash Flows
24,300,000
243,000,000
Uses
The combined entity will retain all excess revenues over expenses
in the Health System to be used initially to achieve financial
stability of SVMH and solely for new program expansion and
improving capital infrastructure to provide quality healthcare
29
delivery to the residents of Monterey County. One of the first tasks
in the establishment of the Health System will be a combined
strategic plan with a detailed master facility plan. As mentioned
previously NMC has a short term need to build additional hospital
beds and SVMH needs to have a seismically sound replacement
facility by 2030 which will be key components of the joint master
plan.
In addition to building expansion and replacement, both NMC
and SVMH have identified many new programs that are critical
to helping the residents to achieve improved health status.
The incremental cash flows and excess cash from improved
operations will allow the Healthcare System to support expanded
services at the two facilities in parallel with master facility
upgrading and replacement.
One critical high priority need identified by NMC and SVMH is the
establishment of a trauma service for the region. As a combined
entity, the development of a trauma service can be implemented
far quicker as a combined entity working together rather than two
separate hospital efforts.
Third Party Capital Sources
The County of Monterey and SVMHS would each contribute
assets and liabilities to the Health System. If the County becomes
a finalist, the due diligence and negotiation phase can begin.
During this phase the capital contribution from the County
and SVMHS can be discussed, quantified and a third party
capital source schedule could be included in a second round
submission.
Strategic Plan Development
Development of the Health System
Strategic Plan
The Executive Council appointed upon execution of the Definitive
Agreement will oversee the development of the Health System
strategic plan following in depth review of the SVMHS and NMC
strategic plans to identify common mission, vision, goals, and
strategic initiatives. Elements of the Health System strategic plan
will include service line analyses, master facility plans for each
campus, staffing plans, physician recruitment, and operational
improvement initiatives. Provider and community stakeholders will
be engaged in plan development.
30
Overview of NMC Strategic Plan: Vision 2012
The NMC Strategic Plan: VISION 2012 was developed through
a planning process which included the formation of a strategic
planning steering committee consisting of many internal and
external stakeholders. Market data was collected, service trends
of NMC and other local health care providers were analyzed,
and interviews with key provider and community stakeholders
were conducted. At a planning retreat, the many ideas were
translated into a mission, vision, and the strategic direction,
critical keys to success categories and the strategic goals that
align with the keys to success. The NMC Strategic Plan: VISION
2012 was approved by the Board of Trustees and Board of
Supervisors. The NMC Strategic Plan: VISION 2012 is scheduled
to be revised in 2012 beginning a new three year cycle. On initial
review, the SVMHS mission and strategies outlined in the Offering
Memorandum are congruent with the key elements of NMC
Strategic Plan: VISION 2012.
Strategic Direction
Based on changing community demographics, increasing chronic
diseases reflecting health disparities by income and ethnicity, and
the enactment of comprehensive health care reform that stabilizes
and strengthens the local health care safety net, Natividad
Medical Center will be responsive by partnering with other health
care providers in the provision of integrated, comprehensive,
coordinated health care that aligns health and delivery system
responsibilities for all populations, extends across the continuum
of care, and effectively addresses the rapidly changing business
rules for the payment of healthcare services. Natividad Medical
Center will achieve unprecedented quality and growth targets
across key clinical service lines focusing on core clinical strengths
and utilizing available hospital capacity.
Mission
To continually improve the health status of the people of Monterey
County through access to affordable, high-quality healthcare
services.
31
Future State Vision
By 2012, NMC will be recognized:
•
Nationally and statewide as an evolving model public safety
net hospital
•
By the community as an accessible and desired resource
for primary care, general medical/surgical, emergency, and
women’s and children’s services
•
By both consumers and providers as a System associated
with best practices, stellar outcomes, and high patient and
caregiver satisfaction levels
Natividad Medical Center Strategic Plan: Vision 2012
KEYS TO SUCCESS
STRATEGIC GOALS
Delivery System
Realignment
To Partner with others in the provision of integrated,
comprehensive, coordinated health care
Quality
To excel in providing safe, reliable, quality care to
our patients
Service
To improve the patient experience:
Excellent results = Loyal patients
Growth
To expand the number of patients served through
the growth of targeted service lines
People
To create an environment of commitment:
Happy staff = Happy patients
Stewardship
To assure that resources are available to meet the
hospital’s mission over time
Technology
To develop an Electronic Health Record for the exchange of
patient data between NMC and all County health services
32
Highlights of NMC Strategic Initiatives
•
Creating a quality vision and culture of safety
•
Adopting a new performance improvement framework for
patient safety initiatives
•
Improving the safety of medication administration and
management
•
Implementing the Section 1115 Waiver Delivery System
Reform Incentive Pool five-year plan that defines future
quality and patient satisfaction goals
•
Elevating patient satisfaction/customer service as a top
priority
•
Rolling out Standards of Performance for all staff
•
Developing curriculum for leadership academy: management,
physicians, and staff
•
Creating an inviting and friendly health care facility
environment that promotes healing
•
Completing the facility and campus master plans
•
Aggressively pursuing physician recruitment initiatives in
targeted specialties
•
Developing new relationships with community provider(s)
across Monterey County for primary and specialty care
•
Implementing the Low Income Health Plan, Via Care, a
coverage expansion demonstration as part of the California
Section 1115 Waiver
•
Developing bariatric center of excellence
•
Assessing feasibility for Level II Trauma Center
•
Building out of on-site ambulatory care space
•
Achievement of electronic medical record “meaningful use”
•
Reinforcing IT network infrastructure
•
Implementing new clinic IT systems
•
Meeting profitability goals through the achievement of
business growth, improved management of productivity,
strengthened physician business functions, and bending of
the healthcare cost curve
•
Increasing days of cash on hand
•
Funding capital investment plans
33
Contingencies, Caveats,
and Approvals
Contingencies and Caveats
As part of the formation of the Health System the following
agreements would have to be reached:
•
Agreement for the transfer of negotiated real, personal, and
intangible property interests from SVMHS and NMC to the
Health System, including negotiated lease with option to
purchase agreements between the County and the Health
System for NMC Campus facilities;
•
Agreement between the County and SVMHS transferring risk
management, workers compensation, retirement liabilities,
and other obligations of each party’s existing hospital
operations to the Health System;
•
Agreement regarding any necessary or appropriate interim
management;
•
Agreement between the Health System and County for FQHC
look-alike clinics and mental health operations;
•
Agreements and actions necessary for single hospital
licensure in California; and
•
Upon completion of above, appointment of the Health
System, Board of Trustees by SVMHS and the County.
Approvals
To fully operate the Health System the following approvals would
need to occur:
•
The enactment and signature by the Governor of the Health
System enabling legislation;
•
Health System fully recognized as a designated safety net
hospital through enacted legislation;
•
State and federal regulatory approvals;
•
Approval by the SVMHS District voters of the affiliation of
SVMHS designated hospital assets into the newly created
Health System.
34
Attachments
Attachment 1: NMC Hospital Campus
Attachment 2: SVMH Campus
35
Attachment 1: NMC Hospital Campus
Natividad Medical Center Campus
EXISTING CAMPUS
31.37 Acres
POTENTIAL GROWTH AREA
18.53 Acres
0
200
400
FEET
36
Attachment 2: SVMH Campus
Salinas Valley Memorial Hospital Campus
EXISTING CAMPUS
0
100
200
FEET
37

Monterey County/ Salinas Valley Memorial Healthcare System

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