1. Board Chair, James Schlichting called the meeting to order at 6:30 p.m. A quorum was present (4 of 7 members since there are 2 openings on the Board) The Agenda was approved.
2. CEO Evaluation Process: Walt Flynn from W.J. Flynn & Associates. Flynn was retained to help devise an evaluation process that was less onerous and stable over time. Flynn set 4 goals, standardization of the process, providing performance feedback to CEO, evaluating both day-to-day and strategic performance, and ensuring that the CEO is competent. The proposed process will start with a 360-degree evaluation by Board members, senior leadership, and a sample of physicians. A Board member suggested that more employees be included in the evaluation. The point was made that most employees do not interact on a professional basis with the CEO on a regular basis. Therefore the responses may reflect just an employee’s general feeling toward the CEO. The intent is that the CEO salary will be largely based on market conditions but bonuses will be based on merit. The proposal will come back to the Board at the January meeting.
1. Hospital Chief of Staff—Dr. Holt. Dr. Holt was presented with a plaque recognizing his service as chief of the Medical Staff. The structure of Medical Staff meetings is being evaluated.
2. A motion to approve the applications for Medical Staff membership was passed.
3. Chief Medical Officer—No report.
4. Family Health Clinic Medical Director—No report..
5. Allina Clinic Medical Director Report—No report.
6. Mayo Report—No report.
7. City Business Update—No report.
8. CFO Report—Scott Edin. November was a busy month, but the 4th quarter of 2016 has not been as super busy as previous 4th quarters in recent years. Net Income YTD is $4.79 million, much above budget. Inpatient admissions were up but average length of stay was down. Most service levels were above budget. Salary and benefits were down to 51.7% of Net Revenue. Cash-on-hand was up to 236 days.
Edin reported that changes in reimbursement by Medicare, BC/BS, and other payers for lab work done in the clinics is raising the out-of-pocket costs to patients. In this case, what is bad for patients, is good for NH&C, they receive higher reimbursement. In response, the hospital has cut the prices of some lab procedures by 30% to offset the increased charges to patients.
9. CEO Report—Steve Underdahl. Underdahl presented James Schlichting with a Leadership Award plaque recognizing his more than 9 years of service on the Hospital Board. Schlichting commented that the culture of serving others, established in the hospital by Ken Bank, has continued to this day, and helped make the institution strong. The dedication of the Ken Bank wall earlier in the week brought out a host of people who had known Ken or worked with him. Continuing that culture, Underdahl reported that an off-duty EMT from NH&C, resuscitated a pediatric cardiac arrest victim on I-35, and will be recognized by Scott County. Underdahl than reviewed the progress made during 2016 on a list of strategic initiatives. The objectives had either been achieved or were well underway.
10. Budget and Finance Committee Report—James Schlichting. The Board approved a list of depository and safekeeping entities (banks). The Board approved a donation pool: $70,000 for communities served by NH&C, $50,000 for the YMCA, and $113,072 for the Northfield Parks and Recreation program. The Board then approved a special motion to pay in FY 2016 the remaining $100,000 on NH&C’s pledge to the YMCA.
11. Quality Assurance Committee—Charlie Mandile. The committee is working to expand patient access to their medical information on the patient portal (MyHealth).
The consent agenda was passed. Items on the agenda included: Minutes for the November Board meeting and the Community Relations Committee meeting; Minutes for special meetings of the Governance and Planning Committee and the Budget and Finance Committee; the Medical Staff Peer Review Policy; and ratification of Medical Staff Officers.
1. Board Development Plan—Steve Underdahl. Underdahl summarized comments made by Board members on strengths and weaknesses of the existing Board, and 3 characteristics areas that the Board needs: business and finance experience and skills, representation of our broader community, and leadership skills and experience. A letter will be sent to the Mayor of Northfield listing the 3 identified areas of weakness. The Board will not send names of individual candidates to the Mayor unless requested.
2. Nominating Committee Process—James Schlichting. A proposal was made that the Governance Committee serve as the nominating committee for the Board. Extensive discussion followed stressing the need for transparency and opportunity for all Board members to serve in leadership positions. A consensus emerged that what was needed was some revision of the informal processes currently used by the Board, and more trust. The Governance Committee will serve as the default nominating committee.
3. Strategic Tactical Update—Jerry Ehn. a) Ortho bundles. Medicare is moving toward a mandatory bundled payment process for orthopedic procedures. For example, there would be a set payment for a hip replacement done at Northfield Hospital, and the financial risk would be borne by the hospital, not the physicians. NH&C is trying to build the partnerships and procedures required to function in such a payment environment. It is a challenge.
b) Obstetrics Facility Options. The additional space needs for obstetrics may prompt a major reorganization and expansion of facilities. Ehn proposed that the Women’s Health Center and Obstetrics move into the space now occupied by the Long Term Care Center (Dilley Unit). Additional space would be constructed to create a “true Women’s Health Center” with its own entrance and parking and direct access to hospital services. The needs of senior citizens would be addressed by a major expansion of facilities on the west side of the hospital. Phase 1 of the project would add enhanced care and memory care unnits; Phase 2, would add assisted living units, and Phase 3, would add alumni living units for St. Olaf College alumni. The potential development would be in partnership with Yanik—developer and owner; Benedictine Health Systems—operator of senior services; and St. Olaf College—owner of land and sponsor of alumni housing. Construction on Phase 1 could start as early as summer of 2017, with the remodeling and opening of the new Women’s Health Center completed in 2019. Other providers in the community will offer skilled nursing facilities (SNF).
4. Foundation Options—Laura Peterson. The Board considered a plan to establish a non-profit foundation to receive grants and bequests for the hospital as most hospitals do. The purpose and structure of a foundation were discussed—serve hospital needs or community needs? –- operated internally by the hospital or run through an existing community foundation? Staff favored an internally operated fund serving hospital needs. It was noted that the purpose of a foundation is to endow the facility and ensure its long-term viability. A Board member questioned the ability of staff to match the investment performance of a community foundation that has years of experience investing tens of millions of dollars . It was noted that the hospital has already received some bequests. The topic will be on the Feb. Board agenda.
5. Revision to Hospital Bylaws—James Schlichting and Laura Peterson. The series of revisions to the Bylaws proposed at the November Board meeting were approved.
6. Virtual Desktop Licenses—Scott Edin. Virtual desktop software (VD) allows users to virtually access their computers on just about any device as long as there is an internet connection. VD is half the cost of a traditional computer and much easier to install and maintain. NH&C had budgeted to add 100 licenses in both 2016 and 2017. The vendor offered to provide 400 additional licenses for the cost of 300 a saving of $115,171 if purchased in Dec. of 2016. The Board approved the purchase of the 400-license package.
7. 2017 Operating Budget—Scottt Edin. The Board approved an Operating Budget of $105 million in projected net revenue for 2017. (Net meaning after a deduction of $120 million for discounts to Medicare, Medicaid, BC/BS, etc.)
8. 2017 Capital Budget—Scott Edin. The Board approved a Capital Budget of $8.9 million for 2017.
9. Home Care/Hospice Care—Tammy Hayes. Hayes reported that Home Care received a 4-star rating in 2016, out of 5 stars, and that major improvements were underway. There were problems with a new electronic medical records package so government reports will show reporting deficiencies in 2016. These and other problems are being addressed. Under-staffing continues to be a problem. CEO Underdahl praised Hayes for her work in addressing the problems, and stated that an outside agency will be hired at a later date to assess the changes.
The meeting adjourned at 10:25 p.m.
Next meeting: January 27, 2017