- Chair, Charlie Mandile, called the meeting to order at 6:35 p.m. The Agenda was approved.
An item was removed from the Consent Agenda. The Consent Agenda was then passed. It included Minutes for a Community Relations Committee Meeting, Minutes for a Special Budget and Finance Committee Meeting, Ratification of Medical Staff Officers, Endoscopy Privileging Criteria, Medical Staff Manual Revisions, Revised Community Relations Committee Job Description, and Faribault Orthopedic Lease. The Minutes for The November Board Meeting were then passed with an addition.
Dr. Muench was recognized and thanked for her 9 years of service on the Hospital Board.
- Hospital Chief of Staff.The applications for Medical Staff Membership/Privileges were approved.
- Approval of 2019 Operating and Capital Budgets—Scott Edin. Edin presented the key financial assumptions behind the proposed operating budget: salary increases of 3.3%, drug inflation of 4.6%, medical supply inflation of 0.9%, “charges” of 2.9%. Revenues were projected based upon the trend over the past 3 years and planned changes in services provided. This yielded a 4.4% increase in projected revenues for 2019 over 2018 budget to $113.5 million. Expenses were projected to increase by 3.6% over the 2018 budget to $110.1 million. Net Operating Income for 2019 was projected at $3.4 million; a 3% operating margin.
- The Strategic Capital Budget totaled $6.5 million, including $1.25 million as a down payment on a new EHR system, clinic expansion of $2 million, $3 million for a Birth Center addition, and $.25 million for modifications of the Faribault Orthopedic Clinic. The Capital Budget for Operations was $4 million. The intent is to finance capital expenditures from cash. The Board approved both budgets.
- Approval of Annual Donation Pool—Scott Edin. The donation pool was increased to $75,000 from $70,000 in 2017. The criteria for project selection were changed to focus more on programs that would directly impact community health. Grants will be approved by the Board at a later meeting, and will include projects from the other Clinic communities: Lakeville, Farmington, and Lonsdale.
- EHR Recommendation—Vern Lougheed/Emily Nelson. Changing EHR systems is comparable to a building project in terms of cost and disruption. This recommendation follows about 3 years of study by NH&C. Nelson reviewed the factors prompting change, the options evaluated, and the history leading up the recommendation. At this time, the most interesting option appears to be the EPIC system offered through Sanford Medical. Both Allina and Mayo use EPIC that will facilitate data sharing with those systems. The cost of EPIC appears to be comparable to the cost of a Meditech system and provides more options going forward. The Administration was seeking Board permission to further investigate the EPIC system, the details of an arrangement with Sanford, and to begin contract negotiations with Sanford if this still appears to be the best option. The Board will receive monthly updates as the staff does due diligence on the project and a contract could be brought to the Board in the Spring. Given that timeline, the EPIC system could go live at NH&C in late 2020. A motion to recommend further pursuit of the EPIC system through Sanford Medical was passed by the Board.
- Approval of Purchase of Data and Services Protection—Vern Lougheed. Medical electronic systems are constantly under attack by malware and virus, mostly through Internet and email. A successful attack on the current system could disable it for up to 14 days. The average cost of a system breach is $5 to $6 million. The proposal is to replace the 3 storage systems currently in use with 2 new systems while retaining the current backup storage and software. The new system will support 7 years of growth at 20%/year and reduce recovery time to less than 2 days in the event of a major breach. The new data protection system will utilize artificial intelligence and behavioral tools to allow more timely detection of threats and provide a sophisticated system response. The purchase price is $650,895 plus $60,297 of annual expense. The Board approved the purchase, noting that they were “sufficiently scared” by Lougheeds presentation.
Executive and Committee Reports
- CEO Report—Steve Underdahl. Underdahl expressed his appreciation for the contributions of Dr. Muench to the work of the Board and to the hospital. Work and progress continues on a wide variety of projects: a) a Professional Services Agreement for the Orthopedic physicians joining NH&C; b) the Northfield City Council approved the expansion plans for the clinic and the Birthing facility; c) two retiring physicians have made contributions to the recently established Hospital Foundation; d) a 2nddraft of a statement on “Social Determinants of Health” is circulating for comments; e) the long term care facility is facing a chronic shortage of workers, due in part to a lack of affordable housing in Northfield. Is there some way that NH&C could partner with other organizations in the area to address the problem? f) the Administration is reviewing succession plans across hospital departments. Small facilities often have a problem in that some departments are only 1-person deep. g) If the ACA is eventually ruled to be unconstitutional, the hospital could face a wave of patients who wouldn’t be able to pay.
- Financial Report—Scott Edin. Financial results for November 2018 were disappointing. The end-of-year “surge” was less than anticipated and utilization of the self-funded employee health benefit plan was higher than anticipated. Net Operating Income was $110,000, but that was $74,000 under budget. Currently the Net Operating Income margin for the year is 2.2%: well below the goal of 3%. One explanation offered was that the end-of-year surge has been spread out over several months this year.
- Quality Committee Oral Report—Charlie Mandile.Omitted.
- Budget and Finance Oral Report—Charlie Kyte.The material was covered in the earlier Budget discussion.
Meeting adjourned at 9:15 p.m.
Next meeting: Jan. 31, 2019.