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Arizona Rural Hospital Flexibility Program
Using Flex Monitoring Team (FMT)
Financial Indicator Reports to Support Arizona CAHs
National Conference of State Flex ProgramsJuly 11, 2012
Kevin Driesen, PhD & Howard Eng, DrPHArizona Rural Hospital Flexibility Program
Arizona-Flex
FMT Financial & Operational Indicators Total Margin
Profitability Cash Flow Margin Return on Equity Operating Margin
Current ratioLiquidity Days Cash on Hand
Net Days Revenue in A/R Equity Financing
Capital Structure Debt Service Coverage LT Debt to Capitalization
O/P Revenue to Total RevenueRevenue Patient Deductions
Medicare I/P Payer Mix Medicare O/P Payer Mix Medicare O/P Cost to Charge Medicare Revenue per Day
Utilization ADC Swing-SNF Beds ADC Acute Beds
ProfitabilityAbility to generate financial return required to replace assets, meet increases in service demands, and compensate investors
Liquidity Ability to meet cash obligations in timely manner
Capital Structure Extent of debt and equity financing
Revenue Amount and mix of different sources of revenue
Cost Amount and mix of different types of cost
Utilization Extent to which beds are fully occupied
What do the indicators mean?
Proposed Outpatient Expansion
Primary Diagnosis (Top 20)
$ Claim Total Charge Amount
Claim Payment
# Patients
# Claims
Avg. $ Charge / Pt.
Avg. $ Payment Due Provider
Avg. # Annual Visits / Pt.
Use in Arizona• Support hospital management
– Reports sent to 11/14 AZ-CAH, CFOs & CEOs– Useful for Board members– Peer, state, and national comparisons– Data limits
• Information is 2-years-old, limits utility for real-time management• Some missing and unlikely values
• Support AZ-Flex program development— Reports printed & sent— Webinar with Sheps Center Faculty— Contact distressed hospitals (2012)— Guidance for site visits— Identify distressed hospitals (3), target resources— Identify Arizona best practice hospitals— Track by year, distribute compendium at annual PI Summit
• Support state advocacy
Distress Model Predictions
• Three AZ-CAHs distressed– Within 6 months
• One hospital laid off 21 employees• One hospital CEO fired• One CAH-based LTC closed
Distress Model – Predictive Value
AZ-CAH Distressed
FMT Predicted No Yes
No 6 2
Yes 0 3
Distressed Hospital: Days in Accounts Receivable
Distressed Hospital: Days Cash-on-Hand
Benchmark to AZ-CAH Best Practice:Days in Accounts Receivable
63
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
10
20
30
40
50
60
70
80
90
100
Day
s in
AR
42
AZ-US Comparison: Total Margin, 2004-2009
2004 2005 2006 2007 2008 20090
1
2
3
4
5
6
7
8
1.92.6
3.6 3.6
2.4 1.9
6.7
3.9
7.4 7.4
5.9
0.5
U.S. Median CAH AZ Median CAH
Tota
l Mer
gin
(%)
Source: Cecil G. Sheps Center CAH Financial Indicators Reports
AZ-US Comparison: Days Cash on Hand
2004 2005 2006 2007 2008 20090
10
20
30
40
50
60
70
48.7
53 54.659.7
61 65.9
54.3
44.849.8
58.754.4
40.6
U.S. Median CAH AZ Median CAH
Day
s Cas
h on
Han
d (#
)
Source: Cecil G. Sheps Center CAH Financial Indicators Reports
AZ-Flex Program Evaluation:$ Margin & # Licensure Citations
-10 -8 -6 -4 -2 0 2 4 6 8 100
5
10
15
20
25
30
35
40
45
50
Total Margin
# Ci
tatio
ns
AZ-Flex Program Evaluation:CAH Negative Margin
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Negative Margin
Thank you!
Kevin Driesen, PhD & Howard Eng, DrPHArizona Rural Hospital Flexibility Program
[email protected] [email protected] (520) 626-5837 (520) 626-5840
Arizona Rural Hospital Flexibility Program
