Northfield Hospital Board Meeting: September 2020

The September Board Meeting was a Webex Virtual meeting arranged by the hospitals IT staff. 

Opening

1. (I had difficultly logging into the meeting and so I joined late and missed the opening.)  

The Consent Agenda included Minutes from the August Board Meeting and Minutes from a Community Relations Meeting; Annual Review of the Quality and Performance Improvement Policy and Plan; Revisions to Medical Staff Certifications Policy; and Revision to Family Medicine Core Privileges. 

Reports

1. Hospital Chief of Staff Report—Tom Holt.  (I missed it.)

Strategic Discussion

(The bulk of the meeting was devoted to the presentation below, including questions from the Board members and Administrators.  The slides used in the presentation were not included in the meeting packet, so the description below is from notes and memory.  These are not the most reliable sources at my age.)

National Healthcare Landscape: State of the Union—David Willis, VP Delivery Services, Advisory Board (A consulting service).  

1. Many of the trends that were evident before the pandemic, such as consumerism, will continue, but health care is not going back to the old normal.  

            a) It is going to take a while for the population to be vaccinated.

            b) The public health problems in the US are going to get worse.

            c) The inequality in health and health care in the US is an issue.

            d) Many people are afraid to use the in-person health care system, such as the            emergency dept.

            e) Employer based health insurance will continue to decline.

            f) This has been a windfall year for the largest health insurers as patient volume has declined and profits/surpluses have increased.

            g) The largest insurers are likely to use these profits to put additional price pressure on the providers, such as NH&C, and to restructure the markets.            

            h) The public payers such as Medicare and Medicaid are facing financial challenges, which means they will exert pressure on providers to lower costs.

            i) The physician market is in play as new practice options arise.  Optimum    Healthcare now employs more physicians than any other entity in the US.  Optimum Healthcare will buy physician practices where the providers are willing to assume some of the risks.  Optimum will provide the operating platform; the physicians will need to keep the population healthy.  

The reorganization of health care will be driven by costs.  Payers, including Medicare, will continue pushing patients to the lowest cost providers such as surgicenters, as more and more procedures can be preformed on an outpatient basis.  Hospitals have historically been high cost locations.  Now they must start thinking about how to find or retain revenue sources in this new environment.  “Providers must play offense as well as defense.” The new environment will require that providers make decisions based on what is best for their entire system, rather than what is best for a piece of the system.  These will be hard decisions as there will be winners and losers in the system.  Health care systems must be “ready to prove their mission statements.”  Smaller systems such as NH&C should be more nimble than the giants, and should use that to their advantage.  

2. The health systems lost millions in the downturn. What will the recovery look like?  We know costs will go up.  

            a) The Medicare Trust Fund is seriously low and no action has been taken    recently to shore it up.  Possible actions include cutting benefits (unlikely), reducing payments to providers, raising the Medicare payroll taxes, and shifting the financing to the general US tax base.

            b) Medicare can reduce payments to providers by reduce the level of payment of each service, changing the payment structure, and shifting services to lower cost settings, e.g. away from hospitals. 

            c) The Affordable Care Act was a bet that only health systems could take on risk, but the market is shifting risk to physician practices as described in 1.i) above  since fixed costs for a physician office are small relative to a hospital.  

            d) ChenMed is an example of a Medicare Advantage Plan that specializes in             covering frail elderly, and doing so for less cost. 

            e) Some providers are dealing directly with large employers, bypassing the large       insurers.  This could reduce costs for employers and create a new or larger           revenue stream for the provider.   

Executive and Committee Reports

1. CEO Report—Steve Underdahl.  (Written report was in the meeting packets.) Covid testing continues for staff and residents in the long term care facility.  No cases currently.  The investigation of new electronic health record systems continues.  Currently attention is focused on the Meditech Expanse system.  The first stage of the LUMA customer facing technology system is operational. Service volumes continue to be uneven. It is not clear if the historical fourth quarter surge will occur this year.  Substantial cuts in the Medicaid program may occur due to the revenue shortfalls at the state level in MN.  New rooms in the Birth Center expansion project will be occupied in Oct.  The Nursery will be completed this winter.  Health care policy in the US may be in for major changes, based on the election, and the Supreme Court case seeking to strike down the Affordable Care Act.   

2. Financial Report—Scott Edin. Patient volumes were under budget across the system.  As a result, the Net Operating Loss was $67,000 for August.  However, Non Operating Revenues from investments and COVID related programs were close to $1 million in August, with the result that Net Income for August was $791,000, and $7.14 million year to date (YTD).  

3. Budget and Finance Committee—Fred Rogers.  A consultant has been retained to assist in converting NH&C from an annual budget incorporating 130 or more departments to a rolling budget that incorporates 15 to 20 larger groups.  The goal is to provide more timely financial information to decision makers.  

4.  Quality Committee—Charlie Mandile.  Deferred to Oct. meeting.

Announcements

CC Linstroth—we need to be concerned regarding the sustainability of our workforce.  Many of the people who work at the hospital or clinics cannot afford to live in Northfield due to the high prices for housing.  

Adjourned:  6:51 p.m. 

Next meeting:  Oct.  29, 2020.

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