Data to Drive: Tools, Strategies, and Indicators to Manage Financial Performance 1

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1 Arizona Rural Hospital Flexibility Program Areas Indicators to Manage Financial Performance Howard J. Eng, M.S., Dr.P.H., R.Ph Arizona Rural Hospital Flexibility Program Center of Rural Health Mel and Enid Zuckerman College of Public Health August 3, 2012 Three Major Program Areas Financial and Operational Improvement CAH Quality Improvement Health System Development Flex Program Activities Trainings Technical Assistance Networks Meetings/Conferences Assessments Reports Special Requests Presentation Overview CAH Financial Profiles CAH Profitability Trend CAH Financial Distress Trend CAH Payer Type Discharge Percentages AHCCCS Supplement Trend Medicare Inpatient and Outpatient Mix Outpatient Revenue to Total Revenue CAH Bed Usage Trends (Acute and SNF) Financial Improvement Targets Discussion Financial Indicators Tracked (Benchmarking) Successful Financial Strategies (Sheps) CAH Financial Profiles Figure 1. Arizona CAHs Profitability Summary: Sheps Center CAH Financial Distress Model Distress Model Components Financial Performance Current Profitability Reinvestment Hospital Size Market Characteristics Competition Economic Status Market Size Financial Distress Equity Decline Unprofitability Closure Source: Arizona Department of Health Services: Hospital Cost Reports ( ) Indicators to Manage Financial Performance 1

2 Figure 2. Arizona CAH Financial Distress Summary: Figure 3. CAH Discharge Percentages by Payer Types Summary: Percent Source: Cecil G. Sheps Center CAH Financial Distress Reports ( ) Source: Arizona Department of Health Services Discharge Data File (2007 and 2010) Figure 4. CAHs AHCCCS Total, SAVE, and CAH Supplement Dollars: Figure 5. CAHs AHCCCS Total, SAVE, and CAH Supplement Dollars by Hospital: Dollars Dollars Hospital CAH Total : $14,917,500 CAH Total : $14,917,500 Inpatient Total: : $15,243,635 Inpatient Total: : $15,243,635 Source: AHCCCS Report Total Dollars: $30,161,135 Source: AHCCCS Report Total Dollars: $30,161,135 Figure 6. Medicare Inpatient Payer Mix Trend: Figure 7. Medicare Outpatient Payer Mix Trend: Medicare Inpatient Payer Mix (Percent) Medicare Outpatient Payer Mix (Percent) Indicators to Manage Financial Performance 2

3 Figure 8. Outpatient Revenue to Total Revenue Trend: Figure 9. Acute Bed Average Daily Census Trend: Outpatient Revenues to Total Revenue (Percent) Average Daily Census Acute Beds Figure 10. Average Daily Census swing-snf Beds Swing-SNF Beds Average Daily Census Trend: Financial Indicators Discussion Figure 11. Total Margin Trend: Figure 12. Cash Flow Margin Trend: Total Margin (Percent) Cash Flow Margin (Percent) Indicators to Manage Financial Performance 3

4 Figure 13. Net Days Revenue in Account Receivable Trend: Figure 14. Debt Service Coverage Trend: Days Revenue in Account Receivable (Days) Debt Service Coverage Figure 15. Current Ratio Trend: Figure 15. Days Cash on Hand Trend: Current Ratio Days Cash on Hand (Days) Figure 16. Salaries to Total Expenses Trend: Figure 17. FTEs per Adjusted Occupied Beds Trend: Salaries to Total Expenses (Percent) FTEs per Adjusted Occupied Beds Indicators to Manage Financial Performance 4

5 Sheps Center Successful Financial Strategies Reported Successful Financial Strategies Human Resource Strategies Reduced among of contract labor (85.1%) Reduced allied health personnel (70.7%) Held down wage and salary increases (70.4%) Revenue/Cost Strategies Joined purchasing organization/network (89.1%) Update Chargemaster (74.9%) Increased/improved revenue cycle activities (72.8%) Improved billing and coding training (71.2%) Capital Strategies Acquired/replaced diagnostic equipment (72.5%) Service Expansion Strategies Increase outpatient capacity (73.3%) Affiliated with a network/system (70.3%) 291 CAHs Source: Adoption and Perceived Effectiveness of Financial Improvement Strategies in Critical Access Hospital Article Questions? Kevin Driesen Yuko Konishi Stephen Delgado Acknowledgements Thank you! Indicators to Manage Financial Performance 5