HFMA Capital Conference - Healthcare Financial Management

HFMA Capital Conference
March 26, 2015
Moorland Reserve Health Center
C
Center
ffor Advanced
Ad
dC
Care
Community Memorial Hospital
Our Vision
Froedtert & the Medical College
of Wisconsin will be the region’s
premier health system by
demonstrating superior value
through an academic-community
partnership and aligning health
y across the region.
g
care delivery
Town Hall Road Health Center
St. Joseph’s Hospital Kraemer Cancer Center
Froedtert Health partners with the Medical College of Wisconsin to form eastern
Wisconsin’s only academic medical center and associated regional health network.
Agenda
g
Executive Summary
Embrace health care delivery model of the future
Leadership team engaged in execution of strategy
Solid market position supports continued growth
Financial strength is a priority
Overview of Froedtert Health
St t i Initiatives
Strategic
I iti ti
Financial Performance
Capital Investments
Closing Remarks
2
Who Are We?
Nationally ranked integrated academic
health system
The only academic medical center in
eastern Wisconsin and only Level 1
Trauma center in southeastern
Wisconsin
US News & World Report’s top
ranked hospital in metropolitan
Milwaukee
Affiliated with the Medical College of
Wisconsin, the major teaching
affiliate for Froedtert Hospital
Partner exclusively with the Medical
College of Wisconsin for delivery of
healthcare under the brand
3
Shared Mission & Vision
Mission
Froedtert & the Medical College of Wisconsin advance the health of the communities we serve through exceptional care enhanced by innovation and discovery.
Vision
Froedtert & the Medical College of Wisconsin will be the region’s premier health system by demonstrating superior value through an academic‐community partnership and aligning health care delivery across the region.
4
Health Care Delivery
y Platform – Hospitals
p
Froedtert Hospital
Licensed Beds
Staffed Beds
655 Beds
516 Beds
Community Memorial
Hospital
Licensed Beds
Staffed Beds
237 Beds
202 Beds
St. Joseph’s Hospital
Licensed Beds
Staffed Beds
70 Beds
70 Beds
$113 4M
$113.4M
FY14 Net Patient Revenue
$1.122B
FY14 N
Nett P
Patient
ti t R
Revenue
$180M
FY14 N
Nett P
Patient
ti t R
Revenue
Discharges
Outpatient Visits
25,522
736,450
Discharges
Outpatient Visits
8,745
90,107
Discharges
Outpatient Visits
Total Medical Staff
Board Certified
828
754
Total Medical Staff
Board Certified
195
188
Total Medical Staff
Board Certified
3,572
78,909
65
54
Staffed by Medical College Physicians
ACADEMIC
COMMUNITY
5
Health
ea t Ca
Care
e Delivery
e e y Platform
at o
– Ambulatory
bu ato y
Froedtert & the Medical College of Wisconsin Community Physicians
Locations in Milwaukee,
Milwaukee Waukesha
and Washington counties
Health Centers
(includes primary
care)
25
FY14 Office Visits
686,501
Physician FTE
250+
FY 2014 Net
Patient Revenue
$169.2M
6
Affiliation with the Medical College of Wisconsin
– Froedtert Hospital is the major teaching affiliate of the Medical
College of Wisconsin (the “Medical College”)
• A majority of Froedtert Hospital’s medical staff is comprised of
M di l C
Medical
College
ll
ffaculty
lt members
b
(773 ffaculty)
lt )
• 326 full-time equivalent residents at Froedtert Hospital
• 413 medical students
– Close working affiliation between the two organizations
• Froedtert Hospital and the Medical College jointly operate and
own a network of clinical sites for primary care and outpatient
clinical initiatives
– Froedtert Hospital is utilized in the Medical College’s residency
programs in:
Anesthesiology
Dermatology
E d i l
Endocrinology
Geriatric Psychiatry
Infectious Disease
Medicine-Pediatrics
Neurosurgery
Obstetrics/Gynecology
Orthopedic Surgery
Pathology
Psychiatry
Urology
Vascular Surgery
Diagnostic Radiology
G t
Gastroenterology
t l
Geriatrics
Internal Medicine
Radiation Oncology
Neurology
Ophthalmology
Otolaryngology
Physical Medicine/Rehab
Pulmonary/Critical Care Med
Cardiology
Emergency Medicine
G
General
lS
Surgery
Hematology/Oncology
Medicine-Geriatrics
Nephrology
Nuclear Medicine
Oral/Maxillo Surgery
Palliative Care
Plastic Surgery
Rheumatology
7
Medical College Physicians
• Medical College Physicians (MCP) is the adult patient care component of the Medical College of Wisconsin’s clinical practice group.
• MCP is the largest multispecialty group practice in the state of MCP is the largest multispecialty group practice in the state of
Wisconsin and provides care to adults in all medical specialties and subspecialties. • They provide care at Froedtert Hospital, Clement J. Zablocki VA Medical Center, multiple off‐campus specialty clinics and other clinics and hospitals
clinics and hospitals. • Care provided by MCP health care providers at Froedtert Hospital and the hospital’s satellite locations is marketed under the joint “Froedtert & the Medical College of Wisconsin” brand.
Medical College Physicians
Clinical Departments
19
FY14 Office Visits
1.7M
Providers*
1,120
Net Patient Revenue
$310M
*Includes Physicians and Advanced Practice Providers
Clinical Departments • Anesthesiology • Emergency Medicine Emergency Medicine
• Radiology • Radiation Oncology • Pathology Medical Departments • Dermatology D
t l
• Family and Community Medicine • Medicine (Divisions include: Cardiology, Endocrinology, GI, Internal Medicine, Geriatrics, Hem/Onc, Infectious Disease, Nephrology, Pulmonary, Rheumatology) • Obstetrics and Gynecology • Physical Medicine and Rehabilitation • Psychiatry and Behavioral Medicine • Neurology Procedural Departments • Neurosurgery • Ophthalmology • Orthopaedic Surgery • Otolaryngology and Communication Sciences • Plastic Surgery • Surgery (Divisions include: CT Surgery, Colorectal, General, Oncology, p
,
,
)
Transplant, Trauma, Vascular) • Urology Service Lines • Cancer
• Heart and Vascular
Solid Organ Transplant
• Solid Organ Transplant
• Neurosciences
• Musculoskeletal
• Spine
8
Froedtert & the Medical College of Wisconsin Service Areas
The regional/tertiary service area includes the north
east counties of Wisconsin, the upper peninsula of
Michigan and the north east counties of Illinois. It is
divided into the following submarkets: North Central,
North East, Fox Valley and North East Illinois.
The secondary service area includes most of the
counties surrounding the primary service area. It is
divided into the following submarkets: Sheboygan,
Fond du Lac, Western Dodge Co., Jefferson, Walworth
and Kenosha.
The F&MCW primary service
area covers the area around the
Milwaukee Metropolitan area.
area It
includes the five-county metro
area as well as select zip codes
in an additional six counties.
9
Froedtert & the Medical College
g of Wisconsin
Health Delivery System
Numbers in green indicate number of Froedtert & MCW owned facilities at each point in the continuum of care
1 urgent care and 9 walk‐
in/weekend locations
Numbers in blue indicate number of affiliated facilities at each point in the continuum of care
2 (co‐located sites with the Wisconsin Athletic Club)
3
3
3
11
2
1
18
Hospice
25 Primary & Specialty care clinics
15 clinic locations offer radiology services
1 (partial ownership of Horizon Home Care & Hospice)
10
Strategic Initiatives
11
Primary
y Strategic
g Goals
PATIENT-CENTERED CARE & CLINICAL EFFECTIVENESS
 Physician/System alignment
 Focus on outcomes
THREE MILLION LIVES / GROWTH
 Lower cost, community-based access
points
 ACO strategy
POPULATION HEALTH
 Care coordination / integrated
health management
FINANCIAL STRENGTH
 Solid balance sheet; key strength
 Consistently strong operating
performance
WORKPLACE OF CHOICE
 Workforce engagement
 Pipeline planning
 Leadership development
12
The Cost Reduction Imperative
Value Based Cost Structure Initiative (VBCI) drives cost reductions.
Results below represent efforts launched over the last year.
Area
Low
Midpoint
$10,504,000
$13,099,000
$15,694,000
$17,920,214
Labor
11,726,000
14,387,000
17,048,000
12,751,884
Clinical Operations
17,000,000
22,250,000
27,500,000
22,250,000
6,694,000
7,172,000
7,650,000
7,172,000
Subtotal
45,924,000
56,908,000
67,892,000
60,094,098
Revenue Cycle
11,006,000
12,277,000
13,548,000
22,188,897
Physician Operations
11,422,000
13,630,500
15,839,000
3,000,000
6,700,000
8,250,000
9,800,000
600,000
$75,052,000
$91,065,500
$107,079,000
$85,882,995
Non-Labor
Clinical
Documentation
Improvement
Human Resources
Grand Total
High
Launched
13
The Shift from
Volume to Value
Local
Strategies
14
Moorland Reserve Health Center
Opened October 7, 2013
Specialties
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Audiology
Behavioral
Health
Cancer Center
Services
Cardiac Testing
Cardiology
Dermatology
EEG and EMG
Endocrinology
ENT
Eye
ye Institute
s ue
Gastroenterology
General Surgery
GI Lab
Infusion
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Internal Medicine
Laboratory
p
gy
Nephrology
Neurology
OB-GYN
Orthopedic
Surgery (clinic)
Ph t th
Phototherapy
PM&R
Pulmonary
Pulmonary Lab
Radiology
Rehabilitation
Services
Urgent Care
Urology
15
Orthopedic,
p
, Sports
p
& Spine
p
Center
Opened January 13, 2014
•
42,500
42
500 square feet of a 90,000
90 000 square
foot building shared with the Wisconsin
Athletic Club
•
Orthopedic Surgery Clinic
•
Physical Medicine and Rehabilitation
•
p
Care
Spine
•
Chiropractor Care
•
Occupational Therapy
•
Amenities:
–
–
–
–
Sport Medicine/Athletic Training Areas
Indoor Sport Simulation Room
Turf-like Field
Therapy pool
16
The Shift from
Volume to Value
Regional
Strategies
17
ACO Strategy
18
Integrated Health Network of Wisconsin
IHN members include:
Agnesian HealthCare
Columbia St.
St Mary
Mary’ss
Froedtert Health
Hospital Sisters Health System
Medical College of Wisconsin
Ministry Health Care
Wheaton Franciscan Healthcare
Added March 10th: SSM Health
•
•
•
•
•
42 hospitals
Over 500 clinic locations
Over 5,000 contracted providers
Additional specialty hospitals and
ancillary providers
Affiliated independent physicians
Wisconsin’s first multi-system, clinically
integrated accountable care network
and one of the largest in the United
States
19
Ministry
Health Care
Hospital Sisters
Health System
A
Agnesian
i
Health Care
SSM Health
- Froedtert Health
- The Medical College
of Wisconsin
- Columbia St. Mary’s
- Wheaton Franciscan
20
Integrated Health Network of Wisconsin
• To respond to new payment methods by creating an integrated
approach to care management
• Create a broad based regional
network of providers through
clinical integration and has
single-signature authority to
contract on a non-exclusive
b i with
basis
ith employers
l
and
d
other payers
• Maximize opportunities to
achieve scale, distributed
geographic presence, and
enhanced
h
d market
k t coverage
21
Health Plan Strategy
22
Network Health Plan
• Froedtert Health recently acquired 50% interest in 150,000 member
provider-owned
provider
owned health plan
• Furthers the strategy to extend reach and bring value to the community
– Builds on capabilities
p
of Integrated
g
Health Network of Wisconsin
– Allows growth into new markets without buying hard assets
– More control over financing and ability to deliver value to the
community
– Platform for more innovative care delivery pricing
• Realignment of Network Health tertiary cases to Froedtert Hospital
23
24
Financial Performance
25
Strong Financial Position
Solid Growth in Net Patient Service Revenue
Net Patient Service Revenue
$ Millions
2,000
YOY Growth:
10.4%
8.9%
5.9%
11.4%
5.6%
14.2%
1,814
1,750
1,588
1,500
1,426
1,309
55%
1,236
1,250
1,120
56%
53%
1,000
50%
53%
48%
750
500
250
0
FY10
Inpatient Services
FY11
Outpatient Services
FY12
FY13
FY14
FY15
YTD Dec
Annualized
26
Strong Financial Position
Consistently Strong Operating Margins
Operating Margin
%
8.0
7.7
7.0
6.0
6.0
5.6
5.1
2.0
5.0
4.2
4.0
3.3
4.0
3.0
2.0
1.0
0.0
FY10
Operating Margin
FY11
One Time Expense Credits
FY12
Budgeted Operating Margin
FY13
FY14
FY15
YTD Dec
27
Historical Financial Metrics
Historical Metrics
FY 2010 (1)
FY 2011 (1)
FY 2012
FY 2013
FY 2014
YTD 12/31/2014
YTD 12/31/2013
1,170.60
1,288.74
1,379.39
1,499.21
1,655.15
907.06
786.40
Net Operating Income ($ Millions)
49.54
42.74
82.89
84.39
83.74
72.66
30.38
O
Operating
ti Margin
M i
4 2%
4.2%
3 3%
3.3%
6 0%
6.0%
5 6%
5.6%
5 1%
5.1%
7 7%
7.7%
3 7%
3.7%
10.6%
9.0%
11.5%
11.1%
10.9%
13.6%
10.0%
Debt Service Coverage
3.9x
4.1x
5.0x
5.6x
6.4x
7.8x
5.2x
Debt to Cash Flow
3.7x
3.6x
2.8x
3.2x
2.7x
2.1x
3.4x
256 days
275 days
286 days
302 days
308 days
273 days
295 days
160%
182%
200%
190%
218%
211%
203%
4.0x
4.8x
5.3x
6.2x
7.2x
7.0x
6.9x
34.0%
31.6%
30.2%
30.7%
27.4%
26.7%
29.0%
Total Operating Revenue ($ Millions)
Operating Cashflow Margin
Cash on Hand
Cash to Debt
Cash to Demand Debt
Debt to Capitalization
Note:
1. Adjusted to treat provision for bad debt as a deduction from revenue.
28
Credit Profile Review
Operating Margin
Operating Cashflow Margin
((%))
(%)
8
7.7
7
14
13.6
12
11.1
10.6
6
10.9
20
2.0
5.6
10
9.0
5.1
2.0
5
8
4.2
4
33
3.3
6
3
9.5
4
4.0
2
1
2
0
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
YTD
12/31/2014
0
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
YTD
12/31/2014
One Time Expense Credit
Note
Notes
1. Based on audited and interim financial statements.
S&P “AA-” System Median
Fitch “AA-” Healthcare Median
29
Credit Profile Review
Cash on Hand
Cash to Debt
(Days)
(%)
375
300
286
300
302
308
275
250
273
218
256
212
200
200
190
182
225
160
150
150
100
75
50
0
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
YTD
12/31/2014
0
Notes
1. Based on audited and interim financial statements.
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
YTD
12/31/2014
S&P “AA-” System Median
Fitch “AA-” Healthcare Median
30
Credit Profile Review
Debt to Capitalization
MADS Coverage
(%)
(x)
40
9
35
7.8
8
34.0
31.6
30.2
30.7
7
64
6.4
30
27.4
26.7
6
5.6
25
5.0
5
20
4.1
39
3.9
4
15
3
10
2
5
1
0
0
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
YTD
12/31/2014
FY 2010
S&P “AA-” System Median
Notes
1. Based on audited and interim financial statements.
FY 2011
FY 2012
FY 2013
FY 2014
YTD
12/31/2014
Fit h “AA
Fitch
“AA-”” Healthcare
H lth
M
Median
di
31
Capital Investments
32
Capital
p
Spend
p
Aggregate capital spending ratio FY10 – FY19 = 168.8%
Aggregate capital spending ratio FY15 – FY19 = 176.5%
33
Thank You
Jeffrey R. Van De Kreeke, VP Finance
Froedtert Health
9200 W. Wisconsin Avenue
Milwaukee, WI 53226
414-777-0968
[email protected]
34
v3.1 (03-13-15)