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Northfield Hospital Board Meeting - April 27, 2017

April 30, 2017 at 9:48 am
By Dave Emery

Opening

1. Board Chair, Charlie Mandile, called the meeting to order at 6:40 p.m. The Agenda was approved.

The Consent Agenda was approved.  The Consent Agenda included Minutes for the March Board Meeting; Minutes for the Quality Committee and for the Budget and Finance Committee meetings; and revisions to the Medical Staff Certification Policy.   

Reports

1. Annual Audit Report—Rob Schile, CliftonLarsonAllen.  Schile’s overview was that no adjustments were required to the financial statements and that "the numbers were squeaky clean.”  The financial ratio analysis performed by the auditors did not reveal any significant differences relative to comparable hospitals.  The auditor’s forecast for the healthcare industry was, a) no repeal of the ACA, b) growing pressure to scale back entitlements such as Social Security, Medicare, etc., c) the federal share of healthcare expenditures will shrink, d) states will be given more responsibility to manage and fund Medicaid expenditures, and e) increased market competition in healthcare and health insurance and greater use of incentives to guide healthcare decisions.  GASB 68 is an accounting standard that governs how NH&C accounts for its employee pension liability (PERA).  Schile predicted that GASB 68 will continue to impact financial statements and create problems for NH&C as the amounts can be large, vary significantly year to year, and won’t be known until late in the accounting cycle. 

2. Hospital Chief of Staff—Dr. Reister. Reister asked for approval of the applications for Medical Staff membership and privileges.  Motion approved.

3. Chief Medical Officer—Dr. Meland.  No report. 

Presentations/Discussions/Action Items

1. Replacement of Ambulance—Jerry Ehn.  The case for replacement was made at the March Board meeting, per Board operating procedures.  Ehn reviewed the need and the advantages of a new ambulance: increased safety for the patient and crew and lower operating costs.  The Board approved the expenditure of $203,550 to purchase a new ambulance.  It will take about 6 months for the ambulance to be in service.  The old ambulance will be retained for training and demonstrations.  The oldest ambulance in the fleet will be sold for salvage.  

2. Orthopedic Clinic Remodel—Jerry Ehn.  Again, the basic case for the project had been made at the March meeting.  Ehn brought architect’s drawing for the project that converts a variety of spaces into exam rooms. The drawings prompted a variety of questions from the Board, and Ehn indicated that the drawings were not final as new ideas were still flowing in.  The exam rooms will be used by orthopedic specialists from Summit Orthopedic.  Summit is moving an office from Faribault to Northfield now that it is affiliated with NH&C.  The cost, $241,000 was not included in the 2017 capital budget but the project will generate additional revenue to NH&C as orthopedic patients often require imaging, rehab services, and inpatient beds.  The project will be undertaken in phases, which means that it does not need to be put out to public bid. NH&C recently purchased a building in Faribault for an Ear, Nose, Throat (ENT) clinic at a cost of $180,372.    

3.  Vacuum Pump Replacement—Jerry Ehn.  Ehn presented the case for replacement of the 14 year-old vacuum pump that serves the hospital.  The pump is in need of repairs and at the end of its useful life.  A replacement will cost $140,000, and the cost was included in the 2017 capital budget.  The new pump will provide additional capacity and operate more quietly.  The project will be brought for a vote at the May Board meeting. 

Executive and Committee Reports

1. CEO Report—Steve Underdahl.  The focus groups related to long-term-care options are complete.  The Healthgrades organization recognized NH&C with an Outstanding Patient Experience award.  The financial results for April are likely to be disappointing as patient volume is down and the discounts are up.  There is a shortage of surgical technicians at the hospital.  NH&C is in discussion with Olmstead Medical Center to see if there are benefits from communication and cooperation.  NH&C has requested proposals on the handling of its employee benefit program as part of a periodic review process.   

Underdahl continued the discussion of GASB 68—PERA problems.  A meeting is scheduled with the auditing firm (CLA), other publicly owned hospitals in MN, legal counsel, etc. to explore potential ways to address the problems that the unfunded pension liabilities of PERA present to publicly owned hospitals.  Political entities such as cities and counties use different accounting practices than do publicly owned hospitals.  There is little public notice when a city such as Northfield adds millions of dollars to the liabilities on its balance sheet. But when it happens to NH&C it could lower its credit rating and increase its cost of borrowing. 

The affiliation with Minneapolis Heart Institute is going well and resulting in more inpatient admissions.  Some patients are upset that the Mayo cardiologists are no longer coming to Northfield.  Underdahl was asked if this change also applied to other Mayo specialists.  Underdahl responded that NH&C has been negotiating with Mayo for over a year on paying for medical specialty services.  Mayo asked for per diem payments--$X per day for each specialist.  NH&C said the proposal was not viable as the number of patients seen on many days is insufficient to cover the per diem cost.  Also, Mayo specialists typically see fewer patients per day.  NH&C hopes to retain those Mayo specialists who generate sufficient revenue to cover their per diem cost.  When that is not possible, NH&C will seek to affiliate with other specialty clinics, such as the Minneapolis Heart Institute.  Some Board members seemed surprised by the new arrangement and wondered if the topic had been adequately discussed with the Board.   

2.  Financial Report—Scott Edin. Net Patient Revenue and Operating Income for March were above budget, and Net Income of $663,000 was also above budget.   Year-to-date, Net Income is about $1 million above budget, but April is going to be a much slower month.  Home Health Services are being phased out.  

3. Governance and Planning Report—Virginia Kaczmarek. The 360 evaluation of the CEO has been completed, and the annual evaluation is well underway.  The process seems to be working smoother this year, but the committee would like more feedback from physicians.  The committee will meet again next month to consider salary and bonus recommendations for the Board, and the Board will meet in closed session in May to complete the CEO salary and bonus process. 

4. Budget and Finance Report—Charlie Kyte.  The committee heard an in-depth report from the auditor. 

Roundtable

Strategic Retreat on April 28th

The meeting adjourned at 8:30 p.m.

Next meeting:  May 25, 2017

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