Citigroup Non-Profit Investors Conference

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Trevor Derrick Warner
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1 Citigroup Non-Profit Investors Conference May 24, 2017

2 Maine Health Care Market Hospitals are increasingly consolidated into systems - 36 hospitals in the state all not-for-profit - 84% of state s beds now part of a delivery system (up from 64% in 2010) Two systems account for the majority of the hospital care delivered - EMHS: 26% of beds, 25% of admissions - MaineHealth: 37% of beds, 35% of admissions EMHS is the only system with a statewide hospital footprint 2

EMHS Maine s Only Statewide System 9 hospitals located across Maine 11,696 employees 724 employed physicians 39 primary care practice locations 5 retail pharmacies 5 air and ground emergency

3 EMHS Maine s Only Statewide System 9 hospitals located across Maine 11,696 employees 724 employed physicians 39 primary care practice locations 5 retail pharmacies 5 air and ground emergency transport 8 partnership and wholly-owned skilled, rehabilitative and long-term care locations with 609 beds 141,245 emergency room visits More than 100,000 covered lives 168,650 homecare visits Freestanding cancer center More than 1.4 million outpatient visits annually 3

4 EMHS Network Full Continuum of Care (12 month volumes, 10/15 9/16) Office/Clinic Visits 574,570 Urgent/Walk-in Visits 89,445 Outpatient Visits 1,442,288 SNF Pt Days 7,611 Inpatient Admissions 32,491 ED Visits 141,245 Home Health Nurses 168,650 homecare visits 106,102 telehealth visits Nursing Homes Pt Days 48,534 Palliative Care (new program) 4

5 Beacon Health EMHS Population Health Management Description Provider network delivering population health and care management services to health plans and employers Early participant in population health began in 2010 with $13 million ONC Beacon Community Grant One of 45 Next Generation ACOs in the country, taking both up and downside risk Objectives Diversify EMHS business model and help transition the organization from FFS dependence Create shared risk partnerships with payors and employers around quality outcomes and cost management Meet quality and cost targets through analytics, provider partnership, and leading edge care management Together We re Stronger 5 5

Health and Social Needs 750 Hospital Discharge Transition of Care 10,601 Diabetes Mgmt 1,596 COPD Mgmt 2,009

6 Beacon is Touching Many Lives Care Management & Transitional Care Coordinator Patient Touches Three Months (Dec 2016 Feb 2017) Health Literacy/Care Navigation 5,887 End of Life and Nursing Home Planning 813 Behavioral Health and Social Needs 750 Hospital Discharge Transition of Care 10,601 Diabetes Mgmt 1,596 COPD Mgmt 2,009 ER Discharge Transition of Care 3,976 CHF Management 4,345 Medication Management 662 Coordination of SNF Care 111 6

7 Impactful Maine Demographics RANK Most Rural US States STATE % RURAL POP 1 Maine 61.3% 2 Vermont 61.1% 3 West Virginia 51.3% 4 Mississippi 50.7% 5 Montana 44.1% 6 Arkansas 43.8% 7 South Dakota 43.4% 8 Kentucky 41.6% 9 Alabama 41.0% 10 North Dakota 40.1% Most Medicare Beneficiaries as % of Total Population RANK STATE % 1 Maine 23.1% 2 West Virginia 22.6% 3 Vermont 21.0% 4 Arkansas 20.0% 4 New Hampshire 20.0% 6 Alabama 19.9% 6 Florida 19.9% 8 Pennsylvania 19.8% 9 Kentucky 19.5% 10 Montana 19.5% 31 United States 16.9% RANK Oldest US States STATE MEDIAN AGE 1 Maine Vermont New Hampshire West Virginia Florida Pennsylvania Connecticut Montana Rhode Island Michigan 39.5 Source: US Census Bureau 7

8 EMHS Has an Experienced Management Team Michelle Hood President and CEO, EMHS Tim Dentry Senior Vice President, Chief Operating Officer Tony Filer Senior Vice President, System Chief Financial Officer Matt Weed Senior Vice President, Chief Strategy Officer Together We re Stronger 8 8

9 Single Obligated Group Centralized Treasury The EMHS Leadership and Governance Model Encourages Systemness EMHS System Operations: Line management relationship Close review of local performance by CEO/COO/CFO EMHS CFO is treasurer of each member org Governance: EMHS Board has reserved approval rights and initiatory powers EMHS Board elects member org Board members EMHS Member Organizations 9

10 System Strategies Build a Solid System Foundation

11 Simplification in Mission, Vision, Value, and Brand Promise We Are: A people-centered health organization We re Committed to: Delivering an excellent experience Improving care through innovation Caring for people with compassion Guiding families and individuals through the care experience Focusing on the needs of each person We Deliver: A healthcare experience that works for you Together We re Stronger 11 11

12 Continuous Improvement of Quality EMHS participates in Partnership for Patients an initiative supported by CMS designed to make hospital care safer, more reliable, and less costly. EMHS quality efforts are showing positive results. 12

EMHS Also Improving Customer Experience Starts at the board level: EMHS Quality Committee reviews survey trends Good and timely data, shared across the system: Press Ganey results from all

13 EMHS Also Improving Customer Experience Starts at the board level: EMHS Quality Committee reviews survey trends Good and timely data, shared across the system: Press Ganey results from all departments and facilities available to all Managing for continuous improvement - Entities with poor results receive significant coaching and assistance from home office experts - Customer satisfaction results also becoming included in monthly operations reviews 13

14 Support the Growth/Maturity of the Employed Medical Group Single, Systemwide Employed Medical Group 724 physicians, and 497 advanced practice clinicians, across the state Strategically focused on: - Consistent standards of practice - Customer experience - Master facility plan and clinic prototype - Documentation, coding, and revenue cycle - EMR selection, training, and optimization - Recruitment and retention Initial work shows strong promise and incremental investment is manageable (65% of physicians on EMHS medical staffs already employed) Together We re Stronger 14 14

15 EMHS Medical Group Medical Advisory Council 15

16 Build a Strong System: I.S. framework EMHS has been juggling seven different EMRs (difficult to manage, costly to maintain) EMHS will standardize around a single EMR solution, and has selected Cerner This choice will provide EMHS with a world class platform, a much quicker implementation, and lower capital cost than other alternatives evaluated Cerner will provide Maine-based staff and onsite leadership to ensure a smooth transition Together We re Stronger 16 16

17 Recruitment/Retention Issue: 30% of Maine s nursing workforce is between ages 55 and 64 EMHS Strategic Response: Create a centralized/specialized nurse recruitment team Increase number of new grad openings and created orientation programs Active recruitment in over-supplied states Partnerships with others in the community to fund CNA training Developing local and statewide partnership with colleges and universities Together We re Stronger 17 17

18 Financial and Operating Performance

19 Income Statement For the Six Month Period Ended March 25, 2017 Dollars in Thousands Year-To-Date % FY17 FY16 Growth Total Revenue 790, , % Compensation and Employee Benefits 474, , % Supplies and Other 274, , % Total Expenses (excluding Depreciation & Interest) 749, , % EBIDA 41,272 29, % Depreciation and Interest 33,863 35, % Net Operating Income/(Loss) 7,409 (6,485) % Other Gains and Losses 20,885 42, % Net Income/(loss) $28,294 $36, % 19

20 Key Performance Indicators For the Six Month Period Ended March 25, 2017 Description Year-To-Date % FY17 FY16 Growth Discharges 16,938 15, % Patient days 92,841 88, % Outpatient visits 724, , % ED visits 75,684 78, % OR cases inpatient 4,848 5, % OR cases - outpatient 12,259 12, % Average length of stay % Case mix index % Total FTEs 9,775 9, % FTE s per AOB % Operating Margin 0.94% -.86% 209.3% EBIDA Margin 5.22% 3.87% 34.9% 20

21 Balance Sheet As of March 25, 2017 Description March 2017 Dollars in Thousands September 2016 Change Current assets $395,910 $409,713 $(13,803) Property and equipment 702, ,938 16,208 Limited or restricted assets 582, ,698 (5,306) Other assets 50,749 50, Total assets $1,731,197 $1,733,614 $(2,417) Current liabilities $221,427 $234,467 $(13,040) Long-term debt 554, ,030 (1,906) Self-insurance and postemployment 190, ,230 (8,227) Other liabilities 34,312 35,446 (1,134) Total liabilities 999,866 1,024,173 (24,307) Unrestricted net assets 647, ,436 19,628 Restricted net assets 84,267 82,005 2,262 Total liabilities and net assets $1,731,197 $1,733,614 $(2,417) 21

22 Financial Ratios and Indicators As of March 25, 2017 Metric/Ratio March 2017 September 2016 Operating Margin 0.9% -2.2% Operating EBIDA Margin 5.2% 2.9% Total Margin 3.5% 0.7% Salaries as % of Exp 47.6% 46.6% Debt Position Debt Service Coverage LTD to Capitalization 46.1% 47.0% Debt Service as % of Rev 1.8% 1.7% Liquidity Cash to Long-Term Debt 80.1% 77.4% Days Cash on Hand Days in A/R Net Days in Accounts Payable

23 In Summary 1. EMHS is essential to the fabric of health and wellness in Maine 2. EMHS is in process of transforming the quality and cost of health care in Maine 3. EMHS investments toward systemness are beginning to pay dividends 23

Appendix B: Formulae Used for Calculation of Hospital Performance Measures

Appendix B: Formulae Used for Calculation of Hospital Performance Measures ADJUSTMENTS Adjustment Factor Case Mix Adjustment Wage Index Adjustment Gross Patient Revenue / Gross Inpatient Acute Care Revenue