Restoring Rural Health Care Services through Regional Hospital Partnerships Alisa Coleman, President & CEO Ferrell Hospital Kathy Bunting, PhD, RN, MSN, LHHA, President & CEO Fairfield Memorial Hospital Amy Susott, Director Business Development Deaconess Health System Alan P. Richman, President & CEO InnoVative Capital, LLC February 6, 2018
Carmi Clinic Project Overview White County Medial Center closed in 2005 The Community has spent almost $1M over the years trying bring the hospital back, unsuccessfully Current population: 14,655 Current medical services One ambulance operated by the county Seven primary care physicians Looming issue of retiring local physicians over the next 2-3 years About 45 minute drive to tertiary service providers Gap in care coordination and access to care City / County desires improved healthcare access to attract employers Three hospitals coming together to build a robust primary care clinic with extended hours that also includes lab and imaging services 2
White County Fairfield New Carmi Clinic Deaconess Ferrell 3
The Vision of Carmi Clinic 4
History of Collaboration Deaconess currently has a relationship with each of the hospitals Deaconess manages Ferrell Hospital and has 2 board seats Deaconess and Fairfield currently have an affiliation agreement that allows the organizations to work collaboratively together on clinical and education Fairfield and Ferrell currently collaborate together with Deaconess around a pain management program All three organizations share a similar culture and a preference for collaboration to improve healthcare in communities in need This is the key for the foundation to move this project forward 5
Principles of Collaboration Ferrell, Fairfield and Deaconess are community oriented, mission driven healthcare providers Local Control is important Local Healthcare is important Strategically align to better serve the community Due to limited need of primary care, need the support of multiple hospitals to provide the after hours and weekend coverage of support Enhanced specialist care by combining resources across multiple hospitals. Deliver high quality services at an improved price point by eliminating multiple brick and mortar projects. 6
Hospital Overview Ferrell Fairfield Deaconess 7
Ferrell Hospital At a Glance Ferrell Hospital is an independent critical access hospital located in southern Illinois Annual revenue is $20 million Annual operating margin averages around 5% (Was negative prior to Deaconess relationship) 2019 - $37 million renovation plan with the desire to grow market share 8
Ferrell Hospital: White County Strategy White County is medically underserved Ferrell began a family practice clinic with midlevel providers and a surgical specialty clinic in February 2017 and has applied for provider-based rural health clinic designation Ferrell Hospital recruited a primary care physician through the Deaconess residency program with local ties to the White County and Carmi community and will begin July 2018 White County is considered a secondary market for Ferrell Hospital Ferrell s critical access hospital designation makes placing a provider-based Rural Health Clinic in Carmi a win-win scenario 9
Fairfield Memorial Hospital Fairfield Memorial Hospital is a 25 bed Critical Access Hospital with a 30 bed Skilled Care Unit located in southern Illinois Annual net operating revenue is $29 million Annual operating margin averages 5% Offers numerous services, including a Rural Health Clinic, Behavioral Health, Home Health Services, 24-hour Emergency Care, Urgent Care, Surgical Services, Diagnostic Imaging (CT Scanning, Ultrasound, Digital Mammography, PET-CT, Nuclear Medicine, Bone Density, MRI, General X-ray Procedures), Cardiac Rehabilitation, 24-hour Laboratory Services, Diabetes Education, Sleep Studies, Physical Therapy, Occupational Therapy, Speech Language Pathology, Industrial Rehabilitation Respiratory Therapy, Outpatient Geriatric Psych, and Pain Management. 10
Fairfield Memorial Hospital: White County Strategy White County is important to Fairfield Memorial Hospital as it is a part of its primary market area. By opening a satellite clinic in Carmi, it will help to provide stability to that community by providing Family Medicine practitioners, Behavioral Health services, as well as, offering General Surgery and Orthopedic services closer to home. This clinic would be an extension of our already Physician Office Practice (Horizon Healthcare) that is currently staffed by 4 Family Medicine physicians, 3 mid-level providers, and 2 Behavioral Therapists. This clinic has been in operation since 2008 and will be adding two full time general surgeons and an orthopedic surgeon in the next three years. 11
Deaconess Health System Not-for-profit, locally-owned, operated, and governed 6 Hospitals 2 Management Agreements 5 Affiliate Hospitals Top performer in NGACO Market leader for regional healthcare $975 million dollars in net revenue, 10% operating margin 12
Deaconess Health System Key Strategic Initiatives STRATEGIES 2012-2018 *Develop and refine robust chronic conditions programs Explore and implement alignment with other organizations as a means toward increasing community value *Explore and implement economic and/or organizational alignment with regional communities hospitals and physicians. Develop infrastructures and systems by which to manage risk-based reimbursements Develop physician economic alignment models that will incentivize collaborative efforts to achieve DHS goals Undertake comprehensive operations restructuring to lower unit cost *Carmi Clinic STRATEGIC GOALS Community Value Financial Strength Superior Physician Hospital Relationships Exceptional Quality and Service MISSION/VISION 13
Joint Operating Model Between Deaconess, Ferrell, and Fairfield 14
Process and goal Goal: To develop a formal, long-term, affiliation which will benefit the Carmi community and the people of Southeastern Illinois. This will secure Carmi s healthcare future and provide expansion to both Fairfield and Ferrell Hospitals. Premises of Proposed Affiliation Model: Meets both parties respective mission objectives Strengthens all hospitals position as a sustainable community asset Permits Deaconess to devote its financial, clinical and human capital to this joint effort 15
Process Initially, Ferrell, Fairfield and Deaconess enter into: MOU to develop a Joint Operating Agreement and facility development Develop a joint venture entity to own the bricks and mortar. Joint Operating Agreement 6 board members (2 from each organization) that will work to oversee the Carmi operations and services provided. Shared economic model that will share the risk and rewards of the new venture. Long term vision and objectives The three partners have a vision to use this joint venture to expand services in the Illinois service area. EMS services Specialist recruitment and employment Purchasing organization Project Architectural and Blueprint pictures 16
Challenges Individual Hospital Approval process Local politics and consensus building Local partnerships / Walmart Determining source of financing for the project Upfront liquidity infusion Pre-financing cash contribution Operating on a single platform / EMR New Culture. Working with other health systems collaboratively 17
Financial Due Diligence Process Analyze project purpose and potential Review and refine proposed organizational structure Generate operational assumptions Produce a market analysis and physician needs assessment Develop initial internal financial forecast by utilizing industry benchmarks Complete a debt capacity and contributed capital / liquidity needs analysis Present funding requirements and financing scenarios 18
USDA Financing Process Complete an examination level financial forecast / feasibility study Finalize the level of contributed capital / liquidity required (including operating reserves) Develop public relations campaign with local representatives, businesses and residents. Undertake: Stakeholder and community education Consensus building Potential fundraising opportunities Meet with local and national USDA offices Confirm architectural and financing documents Obtain guidance on USDA financing breakdown (Direct vs Guaranteed) Depending on USDA loan composition meet with (and RFP) commercial banks, municipal underwriters and/or USDA Guarantee Lenders Structure and close construction loan, which may be in the form of the issuance of Municipal Notes Post construction loan closing - ongoing construction loan disbursement oversight Execute the USDA loan and construction loan refinancing 19
Questions Alisa Coleman Ferrell Hospital (270) 256-2126 acoleman@ferrellhosp.org Kathy Bunting Fairfield Hospital (618) 847-8333 kjbrnmsn@hotmail.com Amy Susott Deaconess Hospital (812) 450-1892 amy.susott@deaconess.com Alan P. Richman InnoVative Capital (610) 543-2490 arichman@innovativecapital.com