Minutes of the meeting of the Finance Committee of the Board of Directors of the Cook County Health and Hospitals System held Friday, October 20, 2017 at the hour of 8:30 A.M., at 1900 W. Polk Street, in the Second Floor Conference Room, Chicago, Illinois. I. Attendance/Call to Order Chairman Estrada called the meeting to order. Present: Chairman Ric Estrada and Directors Mary Driscoll, RN, MPH (Substitute Member); Robert G. Reiter, Jr.; and Mary B. Richardson-Lowry (3) Board Chairman M. Hill Hammock (ex officio) and Directors Ada Mary Gugenheim and Emilie N. Junge Absent: Director Hon. Jerry Butler (1) Additional attendees and/or presenters were: Ekerete Akpan Chief Financial Officer Douglas Elwell Deputy Chief Executive Officer, Finance and Strategy Charles Jones Director, Strategic Sourcing & Contract Management Jeff McCutchan Interim General Counsel Deborah Santana Secretary to the Board John Jay Shannon, MD Chief Executive Officer II. Public Speakers Chairman Estrada asked the Secretary to call upon the registered public speakers. The Secretary responded that there were none present. III. Action Items A. Minutes of the Finance Committee Meeting, September 15, 2017 Director Reiter, seconded by Director Driscoll, moved to accept the minutes of the Finance Committee Meeting of September 15, 2017. THE MOTION CARRIED UNANIMOUSLY. B. Contracts and Procurement Items (Attachment #1) Charles Jones, Chief Procurement Officer, provided an overview of the requests presented for the Committee s consideration. The Committee reviewed and discussed the requests. Page 1 of 47
III. Action Items B. Contracts and Procurement Items (continued) With regard to request number 14, Chairman Estrada requested information regarding the sole source methodology for the contract. Douglas Elwell, Deputy Chief Executive Officer of Finance and Strategy, stated that there were two (2) major factors that were considered when selecting the vendor, Habilitative Systems, Inc. (HSI). While this contract is running through HSI, it also includes a longtime provider in this community, Bobby Wright. There are other providers, but Bobby Wright was the last provider to offer similar services; they had to close, due to state grants drying up. They have experience in doing this, they are well known and are deeply rooted in the community. HIS and Bobby Wright are both part of the Behavioral Health Consortium, so they are known to CCHHS and are participating in the other initiatives. The other reason was strictly a timing issue. CCHHS received a $750,000 grant that is renewable if the money can be spent for care before April 30 th ; the vendor has a facility there that is nearly perfect for it, so they will be able to get into business faster than anyone else. The services provided under the contract will be monitored in a few areas, mainly looking at the number of people served and outcomes; the information will be reported to the State, and the State will then report the information to the federal government. In response to a question from Director Junge regarding whether the Committee will receive updates/reports on this in the future, Mr. Elwell responded in the affirmative. Chairman Estrada commented that there are two (2) other major initiatives on the West Side he would like for the administration to consider linking to them and the violence reduction work they are doing, to better integrate the services for that community. Director Reiter, seconded by Director Richardson-Lowry, moved the approval of request numbers 1 through 23, subject to completion of review by Contract Compliance, where appropriate. THE MOTION CARRIED UNANIMOUSLY. C. Any items listed under Section III IV. Report from Supply Chain Management (Attachment #2) 3 rd Quarter FY2017 Report of Purchases made under the authority of the Chief Executive Officer Report of emergency purchases Mr. Jones presented the 3 rd Quarter FY2017 Report of Purchases made under the authority of the Chief Executive Officer. There was no report of emergency purchases made. V. Report from the Chief Financial Officer (Attachment #3) Report Metrics Financials through August 2017 Ekerete Akpan, Chief Financial Officer, presented the information contained in his report, which included Financials through August 2017. The Committee reviewed and discussed the information. Page 2 of 47
V. Report from the Chief Financial Officer (continued) Mr. Elwell stated that, because the Sweetened Beverage Tax (SBT) was repealed, the County now faces a $200 million change in their revenues for FY2018. As a result, CCHHS administration was asked to go back to their originally submitted budget, to see what can be contributed to make up for the gap. County-wide, there is approximately a $200 million gap; CCHHS was asked by Finance Chairman John P. Daley for a reduction in its budget totaling $27 million. Mr. Elwell noted that making reductions to the budget is a bit more complicated for CCHHS, because some of the things that might be cut also produce revenue; it involves not only taking out the expense, but also adjusting for revenue that might be lost as a consequence. The County s allocation to CCHHS was projected to be $110 million for FY2018; this amount roughly approximates only the cost of Public Health and detainee health. Now CCHHS is being asked to cut deeper than that. Realistically this is going to affect personnel, and to achieve this target, the administration will have to look at closing certain operations. Dr. John Jay Shannon, Chief Executive Officer, commented that one of the biggest challenges is clarifying for Commissioners and the public the difference between the System s budget as a provider of health care, and the System s budget inclusive of a nested Medicaid health insurance plan that is large and complex, with restricted activity (the money that comes in for the plan goes out with the plan). Dr. Shannon stated that there will be an opportunity to discuss this in greater detail next Thursday at CCHHS departmental hearing before the County s Finance Committee. In response to the question of where the figure of $27 million came from, Dr. Shannon stated that, as he understands, it came from a projection by the County s Finance Department; they determined what portion of FY2018 projected SBT revenues would be accounted towards the System s budget, and this is the figure that Commissioner Daley used when communicating his request for budget reductions in that amount. Chairman Estrada noted that the Board, and in particular the Finance Committee members, will need specific talking points on this subject, so if they are asked by the administration to talk to others, they will all be on the same page. Board Chairman Hammock recommended that a list of frequently asked questions be assembled for that purpose. Director Reiter inquired whether the administration received a request from County Board President Toni Preckwinkle regarding the $27 million budget reduction. Mr. Elwell responded in the negative; he stated that staff have been working in concert with the County s administration and Finance Department, but the specific request came in writing from Finance Chairman Daley. Mr. Reiter stated that it is his understanding that President Preckwinkle had asked for a 10-11% cut across the board, but what Finance Chairman Daley is asking for is roughly 25% of what was projected as the County s allocation ($110 million) to the System. His concern relates to the education of everyone (Commissioners, public, media, labor partners, staff, etc.) around those numbers; everyone needs to understand that the System only receives $110 million from the County - cutting that figure will deeply affect the public health functions. Dr. Shannon commented that, given the circumstances, it is possible that, for the first time in recent memory, the budget may not be passed prior to December 1 st. If that is the case, then any reductions that are made will become proportionately more difficult to make, because there is a shorter period of time in which to close that gap. Page 3 of 47
VI. Adjourn As the agenda was exhausted, Chairman Estrada declared the meeting ADJOURNED. Respectfully submitted, Finance Committee of the Board of Directors of the Cook County Health and Hospitals System XXXXXXXXXXXXXXXXXXXXXX Ric Estrada, Chairman Attest: XXXXXXXXXXXXXXXXXXXXXX Deborah Santana, Secretary Follow-up / Requests: Request: Request for talking points and FAQ on the budget for Finance Committee Members and Directors (page 3) Page 4 of 47
Cook County Health and Hospitals System Finance Committee Meeting Minutes October 20, 2017 ATTACHMENT #1 Page 5 of 47
Request # Vendor/Entity Service or Product Fiscal impact not to exceed: Method of acquisition Total # of bidders/ RFP responses / GPO companies available Affiliate / System Begins on Page # Accept Grant Renewals 1 Illinois Department of Human Services Service - Supplemental Nutrition for Women, Infants and Children (WIC) Grant Renewal Amount: $2,433,375.00 n/a n/a CCDPH 5 2 Illinois Department of Human Services Service - case management for high-risk infants Grant Renewal Amount: $584,064.00 n/a n/a CCDPH 6 3 Illinois Department of Public Health Service - vector surveillance and control Grant Renewal Amount: $490,888.00 n/a n/a CCDPH 7 4 Illinois Department of Public Health Service - breast and cervical cancer prevention services Grant Renewal Amount: $259,513.00 n/a n/a CCDPH 8 5 Illinois Department of Human Services Service - Supplemental Nutrition for Women, Infants and Children (WIC) Grant Renewal Amount: $184,791.00 n/a n/a ACHN 9 6 Illinois Department of Public Health Service - Cities Readiness Initiative Program Grant Renewal Amount: $148,685.00 n/a n/a CCDPH 10 7 Public Health Institute of Metropolitan Chicago Service - HIV / AIDS prevention Grant Renewal Amount: $61,190.00 n/a n/a CCDPH 11 8 Illinois Department of Public Health Service - pre-school vision and hearing screening Grant Renewal Amount: $37,184.00 n/a n/a CCDPH 12 9 Illinois Department of Public Health Service - groundwater permit program Grant Renewal Amount: $20,200.00 n/a n/a CCDPH 13 Page 6 of 47
Request # Vendor/Entity Service or Product Fiscal impact not to exceed: Method of acquisition Total # of bidders/ RFP responses / GPO companies available Affiliate / System Begins on Page # Amend Contract 10 Johnson Controls, Inc. Service - energy conservation services, which include construction and installation services, and measurement and verification services for the installed energy conservation measures, chiller optimization, and maintenance and red bag waste management services on the Stroger Hospital Campus No new fiscal impact related to this amendment This request - amending / correcting to reflect contract terms and scope Original contract - competitive RFQ/RFP process in 2011 SHCC 14 Increase Contract 11 RCM Health Care Services Service - executive recruitment $250,000.00 This request - noncompetitive process leveraging existing contract Original contract - competitive RFP process in 2016/3 responses) System 15 Increase and Extend Contract 12 Maxim Healthcare Services, Inc. Execute Contracts Service - temporary staffing for Radiology, Laboratory, Cardiology and various departments $650,000.00 This request - noncompetitive process leveraging existing contract Original contract - competitive RFP process in 2014/15 responses) SHCC 16 13 The Nurse Agency $2,497,800.00 PNI Service - nursing agency $1,442,100.00 Advanced Care services $2,319,600.00 Cross Country Staffing $3,085,500.00 RFP 9 CHSCC, JTDC, PHCC, ACHN, SHCC 17 total: $9,345,000.00 Page 7 of 47
Request # Vendor/Entity Service or Product Fiscal impact not to exceed: Method of acquisition Total # of bidders/ RFP responses / GPO companies available Affiliate / System Begins on Page # Execute Contracts (continued) 14 15 Habilitative Systems Inc. (HSI) Service - Community Triage and Wellness Center (CTC) Fiscal Impact: $3,750,000.00 Grant-funded Amount: $750,000.00 Total Contract Amount: $4,500,000.00 Sole Source n/a System 18 A Safe Haven Foundation Service - snow removal $1,608,025.00 RFP 3 CCDPH, PHCC, SHCC 19 16 Medtronic USA Inc. 17 HOH Water Technology, Inc. Product - cardiothoracic surgery products $500,000.00 GPO 8 SHCC 20 Service - water treatment service $313,308.00 RFP 1 PHCC, SHCC, OFHC 21 18 ArXIUM Service - maintenance for proprietary equipment at Cermak pharmacy $309,251.28 Sole Source n/a CHSCC 22 19 Illinois Department of Public Health Service - newborn metabolic screening (PKU) $225,000.00 Sole Source n/a SHCC 23 20 Moises Contracting Service - snow removal $174,000.00 RFP 3 ACHN 24 Real Estate-Related Matter - Execute Extension of Lease Agreement 21 Illinois Medical District Commission For a parking lot located at the northeast corner of Hastings Street and South Leavitt Street, in Chicago, Illinois, for the purposes of parking for CCHHS staff See transmittal for fiscal impact n/a n/a System 25 Page 8 of 47
Request # Vendor/Entity Service or Product Fiscal impact not to exceed: Method of acquisition Total # of bidders/ RFP responses / GPO companies available Affiliate / System Begins on Page # Real Estate-Related Matter - Execute 6th Amendment to Lease Agreement 22 Eighteenth Street LLC, Michael Adams and Armando Gonzales For property located in the building known as the Cicero Health Center, at 5912 West Cermak Road, in Cicero, Illinois $175,212.89 n/a n/a ACHN, CCDPH 26 Real Estate-Related Matter - Execute Lease Agreement 23 Illinois Medical District (IMD) Commission For occupancy by CCHHS of a building located at 600 South Hoyne Avenue, in Chicago, Illinois $176,700.00 n/a n/a System 27 Page 9 of 47
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Cook County Health and Hospitals System Finance Committee Meeting Minutes October 20, 2017 ATTACHMENT #2 Page 33 of 47
Vendor Purchased Under the Authority of the Chief Executive Officer Contracts Under $150K - June, July, August 2017 Contract Number Product/Service Purpose Value Contract Term Anchor Mechanical, Inc. H17-25-0060 Services; Replacement of roof top condensing unit Original PO $41,243.00 12 months Cardiovascular Systems, Inc H16-73-0076 Supplies; Cardiology No PO Req $80,000.00 24 months CDW Government LLC H17-25-0077 Services; Absolute Software Maintenance Original PO $114,000.00 12 months Covidien Sales LLC dba Given Imaging H17-76-0061 Equipment & Supplies; Pill Cam Capital PO $36,376.00 12 months Covidien Sales llc, DBA Given Imaging H16-76-0137 Equipment; RFID System Capital PO $126,000.00 One-time purchase Dilon Technologies, Inc. H17-25-0075 Supplies; Sentinel Lymph Node Biopsy Mapping Capital PO $59,500.00 36 months HPSRX Enterprises, Inc. H17-25-0062 Supplies; OBGYN No PO Req $40,695.00 12 months Imperial Lighting Maintenance H17-72-0047 Services; Lighting maint. & replacement Original PO $34,400.00 11 months Mobile Instrument Service and Repair H17-25-0050 Services; Repair of surgery instruments Original PO $149,500.00 12 months Moises Contracting H17-72-0079 Services; Landscaping & Maintenance Original PO $37,900.00 36 months Mortara Instrument, Inc. H17-25-0067 Equipment; Stress System Cardiology Capital PO $89,359.30 One-time purchase Neal & Leroy, LLC H17-25-0081 Services; Legal Original PO $50,000.00 9 months Nixon Peabody LLP H17-25-0059 Services; Legal Original PO $149,000.00 12 months Quidel Corporation H17-25-0056 Supplies; Lab Original PO $77,813.34 7 months Ray O'Herron Company, Inc. H17-25-0092 Supplies; Public Safety Original PO $25,590.00 12 months Soft Computer Consultants, Inc. H17-25-0089 Equipment and Supply; Handheld for Pathology Capital PO $104,569.00 One-time purchase Zwell International H17-25-0064 Services; Consulting Original PO $25,000.00 5 months Page 34 of 47
Cook County Health and Hospitals System Finance Committee Meeting Minutes October 20, 2017 ATTACHMENT #3 Page 35 of 47
Cook County Health & Hospitals System Finance Committee Meeting October 2017 Ekerete Akpan CFO 1 Page 36 of 47
Financial Statements 2 Page 37 of 47
Income Statement for the Nine Months ending August 2017 (in thousands) Year-To-Date Actual-Aug Budget Variance Operating Revenue 1,044,763 1,110,000-5.9% Operating Expenses Salaries & Benefits 450,178 492,740 8.6% Overtime 32,438 26,629-21.8% Pension** 241,195 241,195 0.0% Supplies 49,547 41,841-18.4% Pharmaceutical Supplies 59,861 57,380-4.3% Purch. Svs., Rental, Oth. 160,379 188,542 14.9% External Claims Expense 464,030 378,270-22.7% Insurance Expense 16,774 18,623 9.9% Depreciation 20,047 20,153 0.5% Utilities 7,947 8,546 7.0% Total Operating Exp 1,502,396 1,473,918-1.9% Operating Margin (457,634) (363,918) -26% Operating Margin % -44% -33% -34% Non Operating Revenue 171,494 176,744-3% Net Income/(Loss) (286,140) (187,174) -53% **Year to Date (9 months) Pension Liability per GASB 3 Page 38 of 47
CountyCare Income Statement for Nine Months ending August 2017 (in Millions) Year to Date Year to Date Year to Date Actual Budget Variance Member Months 1,277,237 1,282,500 (5,263) Total Revenue 569.46 606.96 (37.49) Expens e Total Admin Expenses 25.74 30.39 4.64 CCHHS Clinical Expenses CCHHS Claims 38.55 119.13 80.58 CCHHS Pharmacy Claims 20.61 35.12 14.51 CCHHS Care Management 5.46 11.59 6.13 Total CCHHS Clinical Expenses 64.62 165.84 101.22 External Clinical Expenses External Claims 319.44 251.72 (67.72) External Pharmacy Claims 109.96 86.49 (23.47) External Care Management 15.55 22.86 7.31 External Dental Claims 11.40 9.82 (1.58) External Transportation Claims 5.15 6.41 1.26 External Optical Claims 2.53 0.96 (1.57) Total External Clinical Expenses 464.03 378.27 (85.76) Total Clinical Expenses 528.65 544.11 15.46 Total Expenses 554.39 574.49 20.10 Net Income Before Prior Period Revenue Rate Adjustment 15.07 32.46 (17.39) Medical Loss Ratio (MLR) 93% 91% -2% Prior Period Revenue Rate Adjustment (36.34) Net Income (21.27) 32.46 (53.73) Total CCHHS Impact 43.35 198.30 (154.95) 4 Page 39 of 47
Volumes / Stats 5 Page 40 of 47
30,000 25,000 20,000 15,000 10,000 5,000 - Primary Care Provider Visits month over month trend Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2016 Actual 2017 Actual 2017 Target Linear (2017 Actual) 6 Page 41 of 47
30,000 25,000 20,000 15,000 10,000 5,000 - Specialty Care Provider Visits month over month Trend Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2016 Actual 2017 Actual 2017 Target Linear (2017 Actual) 7 Page 42 of 47
2,500 Total Inpatient Dischargesmonth over month trend 2,000 1,500 1,000 500 - Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2016 Actual 2017 Actual 2017 Target Linear (2017 Actual) Finance Committee : October 2017 8 Page 43 of 47
Average LOSmonth over month trend 6.00 5.00 4.00 3.00 2.00 1.00 - Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2016 Actual 2017 Actual 2017 Target Linear (2017 Actual) Finance Committee : October 2017 9 Page 44 of 47
15,000 Total Emergency Room Visits - month over month trend 10,000 5,000 - Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2016 Actual 2017 Actual 2017 Target Linear (2017 Actual) Finance Committee : October 2017 10 Page 45 of 47
140 120 100 80 60 40 20 - Total Deliveriesmonth over month trend Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2016 Actual 2017 Actual 2017 Target Linear (2017 Actual) 11 Page 46 of 47
2,000 Total Surgical Cases month over month trend 1,500 1,000 500 - Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2016 Actual 2017 Actual 2017 Target Linear (2017 Actual) 12 Page 47 of 47