Partnering and Collaborating to Drive Value and Innovation

Transcription

1 Partnering and Collaborating to Drive Value and Innovation Timothy J. Babineau, MD, President and CEO Mamie Wakefield, EVP and CFO

2 Main Title

3 Lifespan at a Glance 3

4 Our Priorities Patients We put patients at the center of everything we do. Providers We will ensure that our caregivers have the resources to maximize professional satisfaction, collaboration, efficiency and patient outcomes. People All Lifespan employees are members of the care delivery team each with a different contribution to make. Purpose We must be financially strong to meet our academic mission and fulfill our promise of Delivering Health With Care. 4

5 Lifespan at a Glance The largest health system in Rhode Island, formed in 1994, includes 4 affiliate hospitals (Rhode Island/Hasbro Children's, The Miriam, Newport and Bradley), with 1,155 combined licensed beds and a community based mental health provider, Gateway Healthcare. The state s largest private employer with nearly 14,000 employees. Provides health services to 57% of the Rhode Island market while serving a market of over 1.5 million people, including southeastern Massachusetts Major infrastructure investments in the timeframe and the $100 million investment in IT in will allow Lifespan to focus its current capital on programs, strategy and physician alignment 5

6 Lifespan at a Glance Established in 2012, Lifespan Physician Group, Inc. (LPG) is the largest multi-specialty physician practice in Rhode Island, with more than 733 employees--including 518 providers. It is a physician governed and physician led organization. It is comprised of both formerly employed Lifespan hospital clinicians and formerly independent, but now LPG affiliated clinicians/practices. There are approximately 58 practice locations including sites in Massachusetts. The goal of LPG is to strengthen the relationships between providers and the Lifespan health system to transform and coordinate patient care. 6

7 Lifespan at a Glance An anchor of a growing research enterprise (we receive $80 million in annual research grants) Major academic medical center, research institution and teaching hospitals for The Warren Alpert Medical School of Brown University Over 2,600 physicians on the medical staffs of its affiliated hospitals and 600 residents and fellows in affiliated hospitals 9 academic physician foundations 7

8 Principal Lines of Service Cardiovascular Institute Comprehensive Cancer Center Orthopedic Institute Norman Prince Neurosciences Institute Comprehensive Spine Center Minimally Invasive Urology Institute Women s Medicine Collaborative Hallett Center for Diabetes and Endocrinology Center for Bariatric Surgery Lifespan Laboratories Lifespan Medical Imaging 8

9 A History of Medical Innovation First surgical intensive care unit in United States First outpatient cardiac catheterization in United States Opened Southeastern New England s first Children s Hospital First in Southeastern New England to implant a pacemaker First in Southeastern New England to perform outpatient dialysis First on east coast to offer cardiac CT scans First in northeast to perform in utero fetal surgery 9

10 Selected Awards and Recognition The Comprehensive Cancer Center of Rhode Island, The Miriam, and Newport Hospitals earned a three-year accreditation with commendation from the American College of Surgeons Commission on Cancer. Rhode Island Hospital was designated a Comprehensive Stroke Center by the Joint Commission, meeting standards that exceed those of a primary stroke center. Rhode Island Hospital earned the Pulmonary Hypertension Association Center of Comprehensive Care accreditation for quality of services in the hospital s Pulmonary Hypertension Center, one of few hospitals in the nation to receive the accreditation. 10

11 Selected Awards and Recognition 2015 Rhode Island Hospital was named a Blue Distinction Center for spine surgery, complex and rare cancers, and knee and hip replacement by Blue Cross and Blue Shield of Rhode Island. Rhode Island Hospital was named to the Becker s Hospital Review list of 100 hospitals and health systems with great oncology programs. The Miriam Hospital earned its ninth consecutive stroke care award from the American Heart Association/American Stroke Association: the Get With the Guidelines Stroke Gold-Plus Quality Achievement Award. 11

12 Selected Awards and Recognition Both The Miriam and Newport hospitals are designated Magnet hospitals for excellence in nursing. The Miriam Hospital s Total Joint Center received the Joint Commission Gold Seal of Approval for total knee and total hip replacement programs. The Miriam Hospital earned accreditations from the American College of Surgeons and the American Society for Metabolic and Bariatric Surgery for safe, high-quality bariatric care. 12

13 Organizational Overview Governance In 2015, Lifespan completed restructuring its governance Began in 2009 when RIH and TMH consolidated their boards of trustees, creating mirror boards wherein the same individuals were fiduciaries of both institutions. In 2012, the concept of mirror boards was implemented systemwide. A single group of 25 individuals serves as the Board of Directors of Lifespan Corporation and also as the Boards of Trustees of the five principal health care provider affiliates. In 2015, further reduced to 18 directors/trustees and eliminated representational ex-officio positions. Corporate Structure and Obligated Groups unchanged. Promotes a single focus on strategy, common performance standards and organization-wide fiduciary obligations. 4 Physician leaders serve on the common Board. 13

14 Organizational Overview Leadership Timothy J. Babineau, MD President and Chief Executive Officer Lisa Abbott Senior Vice President, Human Resources Kenneth E. Arnold Senior Vice President and General Counsel Cathy Duquette, PhD, RN Executive Vice President, Nursing Affairs Crista Durand President, Newport Hospital 14

15 Organizational Overview Leadership John Murphy, MD Executive Vice President, Physician Affairs Cedric J. Priebe, MD Senior Vice President and Chief Information Officer Arthur Sampson President, The Miriam Hospital Margaret Van Bree, MHA, DrPH President, Rhode Island Hospital Mamie Wakefield Executive Vice President and Chief Financial Officer 15

16 Organizational Overview Community Benefit Lifespan spent approximately $168 million, at cost, on charity care and community benefit in FY 2015 including: Charity care ($28 million at cost) Medical education Research Subsidized health services Community health improvement services Unreimbursed Medicaid costs The Lifespan FY s reflect community benefits in excess of $196 million, at cost, due to differences in formulas required by the IRS. 16

17 Competitive Environment The Lifespan Service Area Carlisle Reading Leominster Salem Wakefield Marblehead Lahey Boxborough Acton Bedford Hubbardston Woburn Lev erett Lynn Petersham Lancaster Stoneham Shutesbury Concord Steward-St. Elizabeth's Princeton Melrose Lexington Sterling Bolton Nahant New Salem Stow Lincoln Malden MGH Maynard Barre Clinton Arlington Boston Ev erett Belmont Tufts-NEMC Pelham Rutland Berlin Hudson Sudbury Cambridge Amherst Winthrop Teaching Hardwick Holden Wayland Weston Oakham Boston MedCtr Boylston Hospitals Marlborough Newton Brookline New Braintree Northborough Brigham&Womens Paxton Framingham Wellesley Boston Ware Shrewsbury Natick Needham Hull BIDMC Belchertown Worcester North Brookfield Granby Westborough Ashland Quincy Spencer Children's Dedham Leicester Dov er Milton Hopkinton Sherborn Cohasset Westwood Hingham Warren East Brookfield Grafton Holliston Braintree Scituate Ludlow Palmer Auburn Medfield Stew ard-norw ood pee Brookfield Millbury Norwood Canton Millis Milford-Whitinsville Upton Medway Milford Norwell Brimfield Holbrook Wilbraham Charlton Oxford Sutton Northbridge Hopedale Av on Walpole Stoughton Abington Hanov er ngfield Norfolk Marshfield Mendon Franklin Sharon Monson Sturbridge Brockton Whitman Southbridge Uxbridge ast Longmeadow Wales Holland Bellingham Pembroke Dudley Webster W rentham Douglas Foxborough Hanson Blackstone Duxbury Prov i Easton Millville East Bridgewater Sturdy Plainville Mansfield West Bridgewater PrimeHealthcare-Landmark W oonsocket Halifax North Attleboro Norton Kingston Stew ard-morton Burrillville Bridgewater North Smithfield Cumberland Raynham Lincoln RI & the 19 MA Towns CareNew England-Memorial Attleboro Glocester Smithfield Southcoast-Charlton Central Falls Taunton Urban Core Region CharterCARE-Fatima Pawtucket Middleborough Carv er North Providence Plymouth Rehoboth Stew ard-st. Anne's Cranston/Warwick Cluster Lifespan-TMH Lakev ille Providence Dighton Berkley North Providence Cluster Johnston CharterCARE-RWMC Southcoast-St. Luke's East Providence City of Providence Lifespan-RIH Swansea Freetown Wareham Foster Scituate East Bay Region Cranston Rochester CareNew England-W&I Barrington Fall River W arwick Somerset Barrington Cluster W arren Marion Bourne Acushnet Sandwich Fall River Cluster Coventry W est W arwick Bristol Mattapoisett New Bedford Cluster New Bedford Barnstable Yarmo CareNew England-Kent Fairhav en Newport Cluster Dartmouth W est Greenwich East Greenwich W estport Tiverton Mashpee I95 Corridor Region Portsmouth Falmouth Exeter North Kingstown Attleboro Cluster Jamestown Cumberland Cluster Hopkinton Middletown Lifespan-Newport Little Compton East Providence Cluster Richmond Gosnold South Region South Kingstown Newport Oak Bluffs Coventry Cluster South County Narragansett West Tisbury Southern RI Cluster Charlestown Edgartown W esterly NorthWest - Rural Region Law rence+memorial-westerly Chilmark NorthWestern RI/MA Cluster Gay Head Woonsocket Cluster K:/MARI Market Analysis (2-2015)/MARI Map/Lifespan Service Area/Strategic Planning & Analysis - ST, 3/12/

18 Lifespan Strategic Partnerships Primary Care: Community Physician Partners, Inc. Coastal Medical, Inc. Specialists: Rhode Island Medical Group Community Specialist IPA (being developed) Hospital Systems: Dana Farber Cancer Institute Boston Children s Hospital Payors: BCBSRI & United Accountable Care Agreements Tufts Commercial Product (Lifespan Premier Choice) CMS BPCI Bundle Payment Program Covered Lives: Full Risk 24,000 Partial Risk 82,500 18

19 RI Market Dynamics Increasingly difficult operating environment Increased percent of governmental payers: Decreased commercial Continue constraints on Revenues OHIC Affordability Standards Payors and providers are accelerating the adoption of risk-based payment models and establishing accountable care models Payors Developing Tiered & Limited Network Products 19

20 Accountable Care Models are of Particular Interest Fee for Service Alternative Payment Models Bundled Case Payment Bundled Episode Payment Global Capitation Shift risk to providers Market is moving towards: accountability for quality and costs paying for outcomes steering patients to lower-cost settings and providers Though fee-for-service will not disappear 20

21 Capabilities Required for Clinical Integration Contracting Payer-specific strategy Uniform as much as possible Long term vs. Shortterm Duration of Contract Delegated Services Case Management Disease Management Claims Commitment to Provide Data Physician Attribution Methodology Prospective or Retrospective Quality scores IT Infrastructure/Technical Integration Data collection Normalization/ standardization Clinical and Financial Ambulatory and Acute Integration with existing systems Lifespan VBSO Care Delivery Model Agree upon guidelines Clinical governance Acute and ambulatory handoffs Integration of existing programs Roles and Responsibilities: Care coordinators, Quality Analysts, Physicians, Office Staff Organizational Structure & Planning Legal entity Financial structure New vs. existing Single or multiple Financial analysis and Planning Roles and responsibilities Communications Retraining Organizational incentive alignment Data Management & Analytics Roles and responsibilities Defined regular vs. ad hoc reporting Clinical and financial Regulatory vs. Operational Provider Alignment Value Proposition Which physicians Incentives Reporting Participation Agreement Payment distribution Organizational transformation Non-Compliance process 21

22 Where are We Headed? Position in the market to assure access to all patients Potential role in limited and tiered networks Additional and more sophisticated accountable care arrangements Accountable Care Organization (ACO) structure; Broader continuum of value-based care; Aligned incentives Evolved pay-for-performance and value-based arrangements Additional alternative payment models and pricing strategies 22

23 Lifespan & CPP: Accountable Care Organization Vision (ACO) CPP Lifespan ACO Network Suppliers: Affiliated by contract to the ACO Eligible for Incentive Payments based on Performance Community Specialists ACO Members: Corporate Partner Board Representation Entitled to defined share of savings Capital Contributor to corporate entity RIMG Post- Acute Providers 23

24 FINANCIAL OVERVIEW 24

25 FY 2015 Update & Highlights FY 2015 was a year of strategic investment, with lower resulting margins Implementation of Epic clinical information system-lifechart Facilitates ability to achieve population management and realize efficiencies Implementation expense Severe weather softened utilization and impacted performance Lifespan has responded with several actions to return to historic profitability Continue efforts to realize the $150 million in savings as part of the Lifespan Operational Restructuring Initiative (LORI) Two Labor contracts renewed successfully Ambulatory Care Centers and physician alignment continue to be strategic focus 25

26 FY 2015 Update & Highlights Rhode Island and Lifespan Fundamentals Remain Strong Rhode Island: Moody s: The stable outlook reflects the state's success in shoring up its finances through maintenance of adequate available reserves, narrow but sufficient liquidity, stabilizing demographic and economic trends S&P: Rhode Island s rating reflects good incomes, good geographic location and strong financial management Lifespan: Budget surplus in 4 of the last 5 years Unemployment rate down to 6.1% Lifespan s market share remains strong at 57% for the State - other hospitals in State continue to struggle - consolidation activity New leadership at Rhode Island Hospital and Newport Hospital Balance sheet metrics remains strong with consistent liquidity and low debt burden, $413 million in debt, largely fixed rate, no derivatives, no new debt planned, refunding in process with significant PV savings anticipated Epic/LifeChart installation successful 26

27 Lifespan s Market Share Percent Distribution of Discharges in RI* - Adult & Pediatric Lifespan cared for 57% of inpatients in FY2015, an increase from 51% in FY2008. FY2008 Total Discharges (1) Volume = 101,264 FY2015 Total Discharges (1) Volume = 88,876 SCounty 5% Westerly 3% SJHS 8% W & I 3% Westerly W & I SJHS 3% 1% 4% SCounty 5% RWMC 6% RWMC 6% Memorial 6% Lifespan 51% Memorial 4% Landmark 7% Lifespan 57% Landmark 6% Kent 13% Kent 12% Notes: RI market data is based on discharges from RI hospitals ONLY (including Imports) and does not include RI residents discharges from MA or CT hospitals (Exports) as a result the Percent shown reflects the percent of the volume among RI hospital not market share. 1. Also note this analysis excludes discharges from Veterans, Rehabilitation and Psychiatrics hospitals as well as Obstetric, Neonatal, Psychiatry and Rehabilitation Services. 2. Chart data totals may not add up to 100 due to rounding. 27

28 Consolidated Operating Performance Lifespan Income Statement Current investments in physician alignment, service line offering expansion and clinical information system are stressing financial performance but are strategic in nature and forecasted to yield positive financial results beginning in FY 2016 Fiscal Year Ended September 30 (000s) Unrestricted revenues and other support Net patient service revenue $1,421,435 1,464,711 1,520,887 1,619,390 1,687,528 Other revenue 173, , , , ,213 Total unrestricted revenues and other support 1,594,686 1,644,618 1,705,673 1,813,034 1,903,741 Operating expenses Compensation and benefits 987,295 1,001,375 1,070,777 1,114,089 1,172,281 Depreciation and amortization 53,935 57,345 60,395 66,051 72,887 Interest 20,470 19,992 19,782 20,072 18,910 Other 528, , , , ,236 Total operating expenses 1,589,755 1,626,717 1,724,991 1,807,972 1,936,314 Income from operations 4,931 17,901 (19,318) 5,062 (32,573) Total nonoperating gains (losses), net (14,124) 23,539 36,306 2,363 23,079 Excess (deficiency)of revenues over expenses $(9,193) 41,440 16,988 7,425 (9,494) 28

29 Capital Expenditures vs. Depreciation and Amortization FY 2016 capital budget $69 million CapEx vs. Depreciation and Amortization ($000s) 140, , , ,000 97, ,510 28,455 80,000 64,113 45,891 33,321 60,000 40,000 56,918 26,888 22,059 7,655 24,955 40,487 50,913 20,000 8,816 21,214 34,399 26,574 28,702 30, Routine Information Services Strategic Building Investments Depreciation & Amortization 29

30 Conservative Asset Allocation Relative to Peers and Strong Long Term Performance Average Return (AACR): 6.07% 5.11% Percentile Ranking: 16% NA Sharpe Ratio: Percentile Ranking: 14% NA Asset allocation is as of 9/30/2015 and performance is for the 15 years ended 9/30/

31 Summary of Ratio Trends Cash on Hand Days Cash to Debt (X) Debt to Capitalization (%) Debt to Cash Flow (x) Debt Service Coverage (x) Accounts Receivable Days

32 Operating Statistics Net Income/(Loss) (000s) 100,000 80,000 60,000 41,440 40,000 20,000 16,988 7,425 0 (20,000) (9,193) (9,494) EBITDA (000s) 170, , , ,000 97,165 93,548 82,303 80,000 65,212 50, Operating Margin (%) (0.5) (2.5) Excess Margin (%) (2.0)

33 Key Inpatient Volume Indicators Discharges have increased despite environmental challenge, resulting in an increase in market share. # of Inpatient Discharges 60,000 55,884 55,777 55,073 56,119 58,000 40,000 20, Adults Pediatric Patient Days 350, , , , , ,000 50,000 0 Adults 303, , , , , Pediatrics Average Length of Stay Percent Occupancy Adults Pediatrics Adults Pediatrics 33

34 Key Outpatient Volume Indicators Increase in clinic visits continues to be the cornerstone of physician alignment Adjusted Patient Days 700, , , , , , , , , , , Emergency Room Visits 260, , , , , , , , , , , Clinic Visits Ambulatory Surgeries 450, , , , , , , , , , , , , ,000 30,000 25,000 20,000 15,000 23,853 23,815 23,648 23,588 22,