Opening
Acting Chair, Steve O’Neill, called the meeting to order at 6:30 p.m. The Agenda was approved.
The Consent Agenda was then passed. It included Minutes for the December Board Meeting and Minutes for a Quality Committee Meeting.
Jessica Peterson White was welcomed as a new Board Member. Rhonda Pownell and Charlie Kyte were thanked for their service on the Board.
Reports
- Hospital Chief of Staff—Dr. Tom Holt. Holt praised the hospital and medical staff for their performance during a week that presented several challenges. The applications for Medical Staff Membership/Privileges were approved. The Board requested a review of the process used by the Medical Staff to vet requests for privileges, at a future meeting.
- Chief Medical Officer—Dr. Jeff Meland.
- NH&C Report—Dr. Ben Flannery. Two new MDs have been hired; one for Lakeville and one for Northfield. The clinics are fully staffed at this time.
- City Report—Jessica Peterson White. The City is wrestling with the shortage of affordable housing.
Presentations/Discussions/Action Items
Energy Saving Project—Scott Norman. The Hospital engaged a consultant, Ameresco, to identify energy saving options.Ameresco presented options that included lighting upgrades, improving the building envelope, and automation upgrades. The estimated cost was about $1.6 million, with a guaranteed annual saving of $61,000. NH&C would need to pay $300,000 – $350,000 up front, and the remainder could be financed over 20 years. Norman explained that the State requires that energy-saving projects in public buildings pay for themselves in 20 years or less. The up-front payment cited above is necessary to allow this project to meet the 20-year requirement. Board members expressed reservations about the project given the relatively low returns. A Board member urged the Board to consider implementing the automation upgrades as a first step since it would generate data to guide future energy-saving expenditures. The CFO reminded the Board of their existing capital expenditures for 2019, and the fact that this project was not in the 2019 Capital Budget. Action may be taken at a future Board meeting.
Strategic Discussion
- Birth Center and Clinic Expansion—Scott Norman. A Request for Proposals (RFP) to design and build the proposed expansions was sent to 8 construction companies. Six companies visited the campus and submitted proposals. The Interview Team for NH&C reviewed the proposals; interviewed the firms, and selected RJM. The Administration requested Board permission to move to the next step: to negotiate a “design and build” agreement with RJM for the Clinic and Birth Center Expansions. The “design and build” agreement would come back to the Board and also to the City Council for approval. Upon completion of the “design and build” phase in May 2019, RJM put the project out for bid. Construction could start during the summer of 2019. A motion was passed, giving the Administration permission to proceed.
2. Brand Awareness Surveys for Clinics—Julie Nicolai-Sullivan. The many medical services offered by NH&C had no clear identity in 2014. Few people in the market area recognized the connections of the services to NH&C. The marketing dept. than put all of the services under the NH&C umbrella, dropped some existing service names, created a new logo, and added an up-to-date marketing look. A consultant, Consumer Research Corporation, was hired to evaluate the results. By 2018, brand awareness increased by 58 percentage points (from 33 to 91%) and usage in the previous 12 months increased by 25 percentage points (from 15 to 40%). The Board expressed their appreciation for the improvement.
Executive and Committee Reports
- CEO Report—Steve Underdahl. The day started with a burst water pipe in the Lonsdale facility. The damage was considerable and medical services will not be available at the facility for 1 to 2 weeks. Other services are still available at the facility. NH&C continues to evaluate “patient facing technology.” Studies indicate that Accountable Care Organizations (ACOs) need to include at least 100,000 covered lives to be effectively evaluated. NH&C will stay with their current (smaller) ACO for at least another year. The Hospital Foundation has received donations, but it still needs to complete its Board of Directors. The “rebasing” efforts for 2019 will focus on labor costs. A new set of staffing benchmarks for smaller hospitals has been obtained to guide the process. The NH&C Clinic in Farmington-Rosemount MN was recognized as “The Readers’ Choice” in a recent publication. Underdahl expressed his support for the 2% provider’s tax currently set to expire in MN. The tax funds Minnesota Care that covers many individuals and families that might otherwise be unable to afford health insurance. However, efforts in the state legislature to create Minnesota Care for All, would create a financial problem for hospitals as the level of reimbursement is too low.
- Financial Report—Scott Edin. The December financial results fell short of expectations, based on recent years where Dec. was the best month of the year. Net Operating Income was $148,000 but that was almost $800,000 under budget for the month. Operating Income for the year, 2018, was $2.3 million; this was 2.1% of Net Revenue, and short of the 3% target level. Publicly reported Operating Income will be slightly different due to adjustments necessitated by the public pension program, PERA. NH&C’s PERA liability declinedby $1.5 million, due to strong portfolio gains. By accounting rules, a reduction in a liability is a negative expense, which increases the operating income. In 2017, the PERA liability increasedby $3.5 million which reduced Operating Income for the year by that amount.
Roundtable
Meeting adjourned at 8:40 p.m.
Next meeting: Feb. 28, 2019.
Closed Session
The Board went into a closed session immediately following the open meeting.
