- Chair, Charlie Mandile, called the meeting to order at 6:30 p.m. The Agenda was approved.
The Consent Agenda was approved. The Consent Agenda included Minutes for the January Board Meeting.
- Hospital Chief of Staff—Randy Reister. A motion to approve the applications for Medical Staff Membership was passed.
- Chief Medical Officer—Jeff Meland. Charlie Mandile will meet with the Medical Executive Committee regarding their interest in Board actions.
- Investment Advisor: Representatives from Cleary Gull Advisors were present to discuss their investment services and philosophy with the Board. The discussion started with an analysis of a survey completed by Board members earlier in the year. Board members exhibited a broad range of backgrounds regarding investment experience, risk tolerance, and concerns. Still, most Board members were comfortable with an expected return/risk level of 4 – 6% per year on the portfolio. Concerns were a) limiting risk so that the institution did not get into a financial bind and be forced to merge into a larger health care system; and b) not to invest the funds at the peak of the stock market. Backus, from CGA, explained the firm’s approach is to examine the financial assets of NH&C; the liabilities; and financial operations, and then choose a portfolio strategy on the “efficient frontier” of risks and rewards. Funds will be moved into equities (stocks) in 2 phases in 2018 up go 30% of the $55 million portfolio, planning to achieve an annual return of 4.5 to 4.9%. About 65% of the portfolio will be in bonds (fixed income) and 5% in “complementary” investments.
The Budget and Finance Committee proposed a few changes to the hospital’s Investment Policy. After much discussion, the Board decided to authorize CGA to begin investing funds immediately; to approve the Investment Policy Statement in its present form; and to bring policy changes proposed by the B&F Committee to the March Board meeting. Steve Underdahl thanked the B&F Committee for all the work they put into this project.
- Northfield Clinic Space Challenges—Jerry Ehn. The Northfield Medical Clinic is out of space. Options being considered are realigning provider schedules, increasing evening hours, shifting services to other clinics in the system, and opening the Express Care Clinic. An architect was retained to identify the types of space required to meet current and future needs. Space needs were estimated to be between 8500 to 14,000 sq. ft. and costs between $4.9 and $8.9 million. The new space would be located on the North side and adjacent to of the existing hospital-based clinic. More work will be done evaluating the various options and the issue will come back to the Board in March. If space were added, the financing would likely come from existing NH&C funds.
- 3-D Breast Tomosynthesis Mammogaphy—Vicki Stevens. 3-D mammography is becoming the standard of care for screening and diagnostic exams. The current 2-D mammography system is 12 years old. Replacement of the current system is in the 2018 capital budget at a cost of $425,000. A new 3-D would cost $356,000 if the purchase is made by March 31. 3-D screening is reimbursed at a higher rate so the new system will pay for itself in about 2 years. Several Board members were willing to give immediate approval for the purchase, but the Chair resisted, citing Board procedures. The project will come for approval at the March meeting. Board purchasing procedures will be a topic for a later date.
- Relocation of Cardiac Stress Tests—Jerry Ehn. Cardiac stress tests are currently colocated in an ER exam room. The proposal is to relocate medical imaging film generated by out-of-date technology from current office space to the basement, as the film is rarely consulted. The vacated space would then be used to provide Cardiac Stress Tests with its own room, and to add another ER office. The project is in the 2018 capital budget at $250,000. Estimated cost is $223,000. The project will come for approval at the March meeting.
- Board Committee Assignments—Charlie Mandile. Charlie announced that he had met individually with each of the Board members to determine their interests with regard to committee assignments. The Governance and Planning Committee will now also function as an Executive Committee for the Board. The Chairs of committees will serve on the G&P Committee as will the Chair and Vice Chair of the Board. The G&P Committee will consist of Charlie Kyte, CC Linstroth, Charlie Mandile, Steve O’Neill, and Steve Underdahl.
- Election of Officers—Charlie Mandile. Charlie brought a recommendation for Board officers in 2018: Charlie Mandile for Chair; Steve O’Neill for Vice Chair; Charlie Kyte for Secretary-Treasurer. The slate was approved by Board vote.
Executive and Committee Reports
- CEO Report—Steve Underdahl. a) Work began on a set of criteria for developing strategic relationships: “Do they help us do good? Do they help us succeed?” etc. The Board suggested adding another: “Do they help us do something new?” Work will continue. b) Planning is underway for the Strategic Retreat in the spring. c) Construction of the Express Care site is completed and staffing is underway. d) Work continues on the Electronic Health Records project. e) The Accountable Care Organization (ACO) is up and running. The formal kickoff has been rescheduled. f) The new risk management software is being tested. g) Work continues on finding a solution to the PERA problem—perhaps a two-tier retirement program could pass the state legislature. h) Two new hospitalists have been hired and a new OB/GYN is starting in May. i) Good news—CHIP program funding has been extended for 10 years and the Medicare Low Volume Adjustment funding has been extended for 5 years. The Medicare funding will add close to one million dollars of revenue for 2018. j) Bad news—the uninsured rate in MN rose from 4.3% in 2015 to 6.3% in 2017. Further declines are anticipated.
- Financial Report—Scott Edin. Business was better than expected in January, but NH&C still operated at a loss of $277,000. This was about half of the budgeted loss. Again, a larger share of patients were on Medicare and Medicaid, so the discounts were higher than budgeted: 56.9%, meaning that the hospital was paid less than 50 cents for each dollar of billed charges. The hospital is expected to about break even over the first half of 2018.
- Budget and Finance Committee—Charlie Kyte. The NH&C did not achieve the bonus threshold of a 3% operating margin in 2017, so there will not be a general employee bonus program this year. Bonuses for management personnel will be reduced, but a bonus pool of $242,000 was approved. Management bonuses will be based on individual performance assessments.
Meeting adjourned at 9:25 p.m.
Next meeting: March 29, 2018