Department Administrator Training

Grady Health System Update

October 1, 2009

Grady Overview

“You never change things by fighting existing reality. To change something, build a new model that makes the existing model obsolete”

R. Buckminster

Fuller

Grady Today

Founded in 1892 as a primarily indigent care hospital, Grady is now the largest public health system in the Southeast– 900 licensed beds– 30,324 annual hospital admissions-second only to

Northside in Atlanta– Over 800,000 annual outpatient visits

• 200,000 in Neighborhood Health Centers• 100,000 ER visits

– Primary provider of care to uninsured and under-insured in Fulton and DeKalb counties

Grady’s Importance to the Metro Atlanta Community and the State of Georgia

Only Level-One Trauma Center within a 100-mile radius and only one of four in Georgia– Others are located in Augusta, Savannah, and

Macon Georgia’s only poison control center One of two burn units in Georgia EMS provider for City of Atlanta Georgia Cancer Center of Excellence Premier Infectious Disease Center

– One of the nation’s 3 top AIDS centers Regional Perinatal Center and NICU 11 Neighborhood Health Clinics First Comprehensive Sickle Cell Center

Grady’s Importance to Emory University Important site for Emory’s medical education 52 of Emory’s 74 accredited residency programs

have services at Grady– Trauma surgery residency program located solely

at Grady 377 of 1090 residents at Grady at any time Primary training site for obstetrics, emergency

medicine, emergency pediatrics, infectious disease, trauma surgery, psychiatry

Patient population provides broad spectrum of clinical experience in almost all areas

25% of all Georgia physicians trained at Grady Positive effect on resident recruitment Important clinical research opportunities

Emory University’s Importance to Grady All physician services provided by Emory or Morehouse

faculty or residents

– Until 1994, Emory provided all medical staff to Grady (modified to include Morehouse in 1994)

– Emory’s 30 year contract with Grady ensures access to medical services until 2013

– MSM has five residency programs based at Grady, and is responsible for 25% of medicine, surgery, pediatrics, ob/gyn, and psychiatry patient volume provided

– Emory has 100% of all other specialty services and 75% of the shared services

Emory University’s Importance to Grady, continued 547 Emory faculty provide the clinical and

administrative services of 300 FTEs at Grady Relationship with Emory and Morehouse faculty

and residents provides access to top-tier physicians

Emory and Morehouse have continued to provide consistent and enhanced physician services despite inconsistent payments from Grady and prolonged payment cycles– To date, Emory and Morehouse suffer ongoing

deficits without imposing interest penalties on Grady

– As of Oct 1, 2009, Accounts Receivable for Emory is $37M

Grady’s Financial Position

Long history of operating losses, primarily driven by:– Poor payor mix

• 40% Indigent/no pay• 40% Medicaid, which does not cover all costs

of services for its patients • 17% Medicare-this low volume limits GME

reimbursement

Grady’s Financial Position, continued High reliance on funding from external sources, such as contributions

from Fulton and DeKalb Counties, DSH, UPL and patient care grants• Counties’ contributions for 2009 are $102M• 15 year high of $113M was reached in 1992; funding has been

flat or reduced every year since• Had funding increased since 1992 at an annual inflation rate of

3.0%, expected county contributions in 2006 would be $171M• In 1992, county contributions offset 33% of Grady total

expenses; today, the county contributions offset less than 15% of total cost

• Federal grants and matching payments have been delayed, pending agreement between the Federal government and the State of Georgia for distribution of those funds to disproportionate share hospitals

Grady’s Financial Position, continued With no margin, capital investment is challenging Currently, $25M of the $102M annual county

contribution goes to retire 1991 bonds issued for renovation and equipment– This debt continues until 2021– Grady is utilizing current capital to pay for

equipment that is now obsolete– Therefore, only $77M remains annually to

offset operating expenses There are no cash reserves

– Capital needs are approximately $100M _Woodruff Foundation and Marcus Family have

given 230 Million for capital

Fulton and DeKalb County Contributions as Compared to Grady’s Total Operating Expenses and Cost of Indigent Care (in millions)

23.9

22.5

22.0

22.0

22.8

21.5

22.4

21.4

21.1

21.5

83.5

82.0

78.6

72.8

73.6

75.3

75.8

75.

7

76.

8

83.1 10

5.0

103.

2

100.

0

95.2

95.0

98.0

97.8

97.7

99.3

107.

0665.6

629.0

589.7

520.2

470.0474.0

448.8416.2

396.9346.3

$0

$100

$200

$300

$400

$500

$600

$700

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003$0

$100

$200

$300

$400

$500

$600

$700

DeKalb Fulton Total Contributions Expenses Indigent Cost

Source: Grady Health System management

Key Issues for Grady

15% Atlanta population uninsured Increase in unfunded charity care Shortage of clinical professional staff and MD’s

leads to increased costs Increasing pharmacy and other supply costs Increase of DSH payments in 2006 of $9.1 M to

$80.9M, but not available until April 2007 County contributions unchanged since 1992

– $99.2M in 1995, $105.5M in 2000 Budgeted expenses $397M in 1995, $703M in 2006

Overview of Grady’s Financial Position as of July 1, 2006

Cash on hand - $1.7

Accounts receivable - $96.5– 94 days

Accounts payable - $113.2 – 115 days

Average monthly cash needs – $51.9

Average monthly cash income – $43.3

Line of credit used – $25.0

Note: Dollars presented in millions

Grady Has Significant Long Term Liabilities

Bonds $240M

Bank loan $25

Accounts payable $116

Total $381M

Additionally, Grady Also Has Significant Unfunded Capital Needs

I. T. $50M

Equipment $92

Facilities $25

Capital projects $75

Total $242M

School of Medicine

Office of Business and Finance

Interface with Grady

Agenda

.

Budget Preparation– Financial Data-Calendar years 2004 -2009

Billing and Invoicing Departmental Accounting for Grady-Related

Expenditures Faculty Time Record

Grady Budget Preparation

.

Four major components of the School of Medicine Departmental budget for services provided to Grady– Graduate Medical Education (GME)– Teaching, Supervision, Administrative,

Professional (TSAP), aka Professional Budget– Expense Budget

• Patient Care Grants• Direct Patient Care• ITCF• Internal Grady Funding

Graduate Medical Education

.

377.8 residents at Grady PGY 1 to PGY 10 Stipend Ranges (including fringe) from $49,308

and $65,196 Total 2009 Grady GME budget for 2009:

$21,215,468

TSAP-Teaching, Supervision, Administrative & Professional Budget

.

Includes all teaching activities, such as didactic instruction, grand rounds, hands-on patient care teaching activities (IP and/or OP)

Payment to cover cost of resident instruction, oversight and supervision

Budget based on prior year’s TSAP coverage, as documented in Faculty Time Record (FTR) System

Budget established based on flat rate per physician FTE Budget distributed to departments based on adjusted rate/MD

x physician FTEs– Adjusted rate per physician established by specialty,

based on AAMC salary guidelines per specialty– Formula and annual distribution approved by EMCF Board

TSAP budget ultimately influenced by Grady financial situation

Expense BudgetPatient Care Grants

.

Paid by Grady for faculty coverage where Grady is the facilitator of the grant

Budget submitted to grantor includes both professional and facility components– Budget prepared collectively by Grady and Emory

faculty– Agreed-upon rate per faculty-FTE specific to each

grant and faculty– Department sets payroll distribution related to GHS in

accordance with the reimbursement allowed in the budget

Externally sponsored grants and contracts of any kind where Emory faculty are the PI must be routed through the SOM then OSP as the official institutional signer

Expense Budget: Other

.

Contract for Coverage– Emergency Medicine-total cost of service less

estimated EMCF revenue Direct payments for supplemental patient care

services provided above and beyond those included in patient-care based teaching activities– Examples of items covered under this category

would be the hospitalists and various clinics such as general medicine and diabetes

– The funding for this budget comes from many sources including Indigent Care Trust Funds

– The reimbursement of salary is based on a specified FTE for service

Budget Cycle

.

Budget Preparation, Review, Approval– October-December– Meetings between SOM Deans office and

GHS Medical Affairs– Analysis of prior year expenses and projection

of true cost– Recommendations for new services

considered – Grady presents combined Schools budget to

Board of Trustees Budget Letter sent to Chairs in January

– Business & Finance implement new funding levels through monthly invoices

Amendments to Budget Mid-Cycle

.

Professional Service Requisition (PSR)– Standardized format for Grady to use when requesting

additional services– Must be signed by representatives of both organizations:

• Curtis Lewis, John Henry or Sergio Ferrell (Grady)• Bill Casarella or Bill Sexson (Emory)

Memorandum of Understanding (MOU)– Dean must approve all new services outside scope of services

included in current budget– Must state the purpose and expectation of the services

provided– Must state start and end dates– Must state exact salary and how it is to be reimbursed– Must be signed by Dean Lawley

The School of Medicine will not initiate any new invoices without proper documentation

Future of Grady Budget and Service

.

Grady Inventory of Services– Need to establish a comprehensive

understanding of the current mix of services– Budgets should be established based on

mutually agreed-upon scope of services

Grady Budget Summary Calendar Years 2004-2006

.

Category CY 2004 CY 2005 CY 2006

GMETSAPPatient Care GrantsDirect Patient Care

TOTAL

$19.99$13.15 $6.23$16.34

$55.71

$20.60$13.08 $6.27$17.47

$57.42

$21.22$16.78 $6.37$19.41

$63.78

Note: Dollars presented in millions

0

10

20

30

40

50

60

70

2004 2005 2006

Calendar Year

Do

llar

(in

mill

ion

s)

GME

Patient Care

Grants

TSAP

Grady Budget Summary Calendar Years 2004-2006

.

35.22%

30.09%

10.98%

35.64%

30.23%

10.84%

23.71%23.29%

34.40%

28.24%

10.16%

27.20%

Billing Process

.

Invoices sent out on approximately the 25th of each month– 1/12th of budgeted amount for TSAP– Grants, Expense based on salary booked on

labor distribution– Grady expense billed one month in arrear

Receivable booked in GAR (General Accounts Receivable) System– Department receives immediate “credit” for

Grady revenues– University carries the entire Grady accounts

receivable

Accounting for Grady-Related Expenditures

.

Each department has a separate account(s) on FAS for each type of Grady-related expense– TSAP accounts-Salary and benefits for resident teaching

activities assigned to these accounts. The salary expenses charged to these accounts must match the budgeted funding and should never show a deficit balance.

– Expenses accounts-Salary and benefits for grant and direct patient care activities. The salary expenses charged to these types of accounts in most cases are billed one month in arrear which means the account may have a deficit. However, the deficit should not exceed the current month salary expenses allowed per the budgeted funding.

– EMCF accounts-Salary, benefits and other non-salary expenses for other Grady-related activities are charged here.

Faculty Time Record (FTR) FTRs are used to provide the basis for TSAP coverage for the

following year’s budget It is a quarterly snapshot of how/where faculty are spending their

time– Type of Work Categories

• 1. Services to Individual Patients• 2. Non-teaching and Administration• 3. Housestaff Teaching/Supervise/Administration• 4. Medical Student Teaching/Supervise/Admin • 5. University Research at this site• 6. Non-reimbursable

– Categories 2 and 3 combined are used to capture TSAP activities

– Contract with Grady mandates routine reporting of faculty time

Faculty Time Record, continued

.

Locations– Emory University Hospital (EUH)– The Emory Clinic (TEC, formerly EC)– Grady Hospital (GMH)– Grady Neighborhood Health Centers (GSC)– Crawford Long (CWL)– Veteran’s Administration Medical Center

(VAMC)– Children’s Healthcare of Atlanta (CHOA,

formerly HEH)– Wesley Woods (WW, formerly WH)– Other

Faculty Time Record, continued

.

General Instructions for how to charge time– All regular full time and part time MD and PhD

required to submit– On-call time should not be submitted. Only the

actual time worked at the site should be charged– Vacation, CME during reporting weeks should be

reported accurately

– Exercise best judgment when reporting time between category 1 (direct patient care) and 3 (supervision of housestaff)

Faculty Time Record vs. Effort Certification

.

FTR– Snapshot of actual time for one week

every month

Effort Certification– Reflects the actual activity for which an

employee has been compensated which is certified twice a year

Faculty Time Record-2007 Reporting Calendar

.

FY 07 FTR SCHEDULE

Quarter Due Dates

1stDue Date for Faculty to submit data for Qtr 1: December 1, 2006

Due Date for Department Chairs & Division Directors to approve data for Qtr 1: December 8, 2006

2nd

Due Date for Faculty to submit data for Qtr 2: March 2, 2007

Due Date for Department Chairs & Division Directors to approve data for Qtr 2: March 9, 2007

3rdDue Date for Faculty to submit data for Qtr 3: June 1, 2007

Due Date for Department Chairs & Division Directors to approve data for Qtr 3: June 8, 2007

4thDue Date for Faculty to submit data for Qtr 4: September 7, 2007

Due Date for Department Chairs & Division Directors to approve data for Qtr 4: September 14, 2007

August 05-11, 2007

Time Period

November 05-11, 2006

February 4-10, 2007

May 06-12, 2007