Strategic financial planning – what it is and how to do it – was the most discussed item at the March 25 meeting of the Board of Governors of the Southern Humboldt Healthcare District.
Other key agenda items included reports on applications for grants, progress on the earthquake retrofit, and the 215 Committee’s inquiry into possible sponsorship of a medical marijuana clinic or dispensary.
Early in the meeting, under the agenda item labeled “correspondence,” Board Chair Nancy Wilson said the district has received several unsigned letters to which they cannot respond because the letters were anonymous.
”Some of them contain good ideas,” Wilson admitted, “but we can’t use them.” SHCHD’s policy is that letter writers must identify themselves or no action can be taken.
Board member Darryl Cherney said he wanted to go on record as being in favor of considering anonymous letters.
Nevertheless, Wilson urged all correspondents to identify themselves, and added, “If anyone at any time feels they may be subject to retribution, they should see me.”
Although the report from the 215 Committee was placed later on the agenda, Redway resident Fred Green addressed the board on this subject during the non-agenda comment period during the first part of the meeting.
Green warned the board that sponsoring medical marijuana services could jeopardize SHCHD’s ability to receive state and federal funds for any of its programs.
He went on to express his strong opposition to the district’s consideration of opening a clinic or dispensary, declaring that if SHCHD does so, he and his wife will not donate to the hospital as they have intended.
Cherney, who heads the 215 Committee, replied that the purpose of the committee is to find out if such services would bring new revenue to the district. If not, the committee will recommend against taking any action.
Administrator Harry Jasper reported that he has been working on the financial strategy with board treasurer Corinne Stromstad, who is also chairman of the finance committee, as well as Debbie Scaife, director of patient care services, and Debbie Gallagher, the district’s financial consultant.
Jasper said that the long-term strategy will come through the budget process. He presented a timeline indicating that the budget will be reviewed by the finance committee at the end of April. Following revisions, the budget should be presented to the full board for approval at their May 27 meeting.
Cherney requested that the budget include a full-time public relations position, as he feels good marketing will bring more patients and revenue into the district.
Board member Ed Smith objected to folding the financial strategy into the budget process. “What’s the dog and what’s the tail wagging the dog?” Smith asked, answering his own question by explaining that long-term financial strategy should guide the budget, and not the other way around.
Smith made the original request that Jasper develop a detailed financial strategy showing how the district can live within its operating and parcel tax revenues, while using non-recurring income only for specific projects. Throughout the meeting, at several points on the agenda, he emphasized this distinction between strategy and budget.
In response to Cherney’s suggestion, Smith urged that the district hire a public relations person who has other skills, such as grant writing or information technology, since PR is not a full-time job.
After discussing the relationship between budgeting and strategic financial planning, the board agreed to hold a “retreat” to discuss these issues and to begin developing a long-term financial action plan as well.
Consulting their calendars, the board settled on holding the retreat on Tuesday, April 20, from 2 to 4 p.m., at Stromstad’s home in Garberville. Since this is a full board meeting, it will be open to the public.
Jasper and director of operations Kent Scown reported on the earthquake retrofit project. Scown is currently working with an estimator on cost projections and with an architect on preparation of the bid packets.
The project should go out to bid in May. Also in May SHCHD will submit its loan application to the California Health Facilities Financing Authority.
The contract should be awarded by the end of June, and the first phase of the project should be completed by the end of 2010. The entire project must be completed by 2013.
Jasper reported on several grant applications still in progress.
First, he continues to work on a $10,000 strategic planning grant from the California State Rural Health Association, which can also provide funding for public relations and website design, as well as management training programs.
SHCHD is also waiting for the results of its December application for a $75,000 U.S. Department of Agriculture rural development grant to be used for a high tech learning center and computer upgrade to support a new appointment scheduling system that will in turn lead to online scheduling using electronic personal health records.
Additionally, Jasper submitted a request for $650,000 in federal appropriations to Congressman Mike Thompson (no relation to board member Mike Thompson) to enable the district to adopt an electronic medical records system.
Jasper’s request has been supported by a number of local and state agencies and organizations, including Redwoods Rural Health Center, Southern Humboldt Working Together, the Community Health Alliance, the California Center for Rural Policy, and Humboldt County Health Officer Ann Lindsay.
Finally, Jasper has applied for a grant from the U.S. Health Resources and Services Administration that will provide $300,000 over three years to develop and implement an ongoing program to assist patients with chronic diseases to self-manage their conditions.
Some of the board members said they would like to see some funding for equipment rather than programs. Jasper replied that grantors and funding agencies consider medical equipment items that should be purchased through operating funds.
A brief off-the-agenda discussion of donating equipment and supplies to the hospital followed. Wilson pointed out that SHCHD cannot accept donations of products, whether new or used, because it has no way of knowing how items were stored or handled.
Scown added that when the hospital does receive such items from well-meaning donors, they are in turn given to charities providing services in developing countries.
Cherney announced that the Jerold Phelps Foundation, the fundraising partner of SHCHD, will be holding the annual Hospital Ball on the evening of April 17 at the Mateel Community Center.
Swing band Magnolia will provide music for the 1940’s-themed event, along with several local bands, including one featuring board member Thompson.
Anyone interested in volunteering to help before, after, or at the event should call Cherney at 223-3788.
The Foundation is able to accept donations of furniture, televisions, and similar items for use in the hospital, Cherney added.
The finance committee reported that statistics for use of hospital and clinic services were down compared to January across the board. Additionally, all service categories came in under the expected numbers for February.
Jasper added that things are looking up in March. Inpatient days up to March 24 have already exceeded the entire month of February.
Looking at income for February, total patient revenue was 14% below budget, but expenses were 11% below budget.
The district is still waiting for $150,000 from the state in Medi-Cal cost report reimbursements that was expected earlier this month, Jasper said.
Gross accounts receivable were down compared to January, but collections were up, resulting in improved cash flow. Jasper reported that total outstanding accounts payable were the lowest ever at the end of February, due to more accurate billing and better collection of co-pays.
A committee made up of Jasper, Stromstad, Smith, and Gallagher are considering changes to the way co-pays and payments from self-pay patients are collected, with a goal of creating a system that is “fair and friendly to the community.”
The board also reviewed and approved the draft audit for fiscal year 2008-09. Jasper credited much of the improvement in the district’s overall financial picture to improved methods of reporting costs, resulting in both increased cost reimbursements from Medicare and Medi-Cal and in higher rates of reimbursement for services.
The board discussed methods of increasing revenue by increasing costs for services. Cherney asked why the district couldn’t simply raise prices across the board by a percentage that matched the percentage of shortfall in revenue.
Jasper replied that the hospital and clinic are like a restaurant in that not all items on the “menu” cost the same to produce, and the costs change in different ways. The costs of some services go up while others go down, at different rates.
Analyzing the increase or decrease in the cost of each service and then raising or lowering the charges as needed is preferable to an across-the-board change, Jasper concluded.
When the agenda reached the report on the 215 Committee, Cherney apologized that it had “kind of petered out” while he was traveling in Africa. He asked the board to authorize him to draft a letter requesting assistance from an attorney.
Specifically, Cherney would like the attorney’s opinion on the risk of losing federal and state funds if SHCHD establishes a medical marijuana clinic or dispensary.
”I think we need a bonafide legal position,” Cherney said. “I agree with Fred [Green] that we cannot justify any loss of revenue. My purpose is to bring in more income.”
He added that since some privately-owned dispensaries are apparently slated to open in both Redway and Garberville soon, SHCHD may be “behind the eight-ball” on this issue.
Claiming that “you can smear lipstick on a pig and it’s still a pig,” Green asked Cherney whether there was any moral component in his thinking.
”Yes,” Cherney replied, “but it’s different than yours.” He added that even if there are other facilities in Southern Humboldt, the district’s clinic or dispensary would be an “honest model of a dispensary,” because SHCHD is a government entity.
Wilson ended the discussion by pointing out that as the board-appointed chairman of the 215 committee, Cherney has the authority to write to the attorney, whose services would be free of charge.
Green asked the board to make a motion in spite of Wilson’s assertion, but no motion was made.
The last item on the open agenda, which was added by Wilson at the beginning of the meeting, concerned how to ensure that motions and actions requested by the board are followed up.
The general consensus was that a board member who initiates an item should take responsibility to see that requested actions are completed.
The board’s next regular business meeting is scheduled for April 27 at 1 p.m. in the Dimmick meeting room at the Garberville Hospital. Additionally, the board will hold a training session with Byrd Lochtie of the Humboldt Area Foundation on April 8 and a retreat to discuss the strategic action and financial plan on April 20. Since the full board will be present at these sessions, they are open to the public.