Women & Infants Hospital Birth Center Renovation Certificate of Need Application February 3, 2017
A MEMBER OF
Certificate of Need Application Form Version 09.2016
Name of Applicant
Women & Infants Hospital of Rhode Island
Title of Application Women & Infants Hospital Birth Center Renovation Date of Submission February 3, 2017 __X_ Regular Review _____ Accelerated Review (provide letter from the state agency) _____ Expeditious Review (complete Appendix A) Type of review Tax Status of Applicant
__X__ Non-Profit
_____ For-Profit
Pursuant to Chapter 15, Title 23 of The General Laws of Rhode Island, 1956, as amended, and Rules and Regulations for Determination of Need for New Health Care Equipment and New Institutional Health Services (R23-15- CON). All questions concerning this application should be directed to the Office of Health Systems Development at (401) 222-2788.
Please have the appropriate individual attest to the following: "I hereby certify that the information contained in this application is complete, accurate and true."
________________________________________________ signed and dated by the President or Chief Executive Officer
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Table of Contents Question Number/Appendix
Page Number/Tab index
1....................................................................................................................................... 1 2....................................................................................................................................... 3 3....................................................................................................................................... 3 4....................................................................................................................................... 4 5....................................................................................................................................... 4 6....................................................................................................................................... 6 7A.................................................................................................................................... 6 7B .................................................................................................................................... 7 7C.................................................................................................................................... 7 7D.................................................................................................................................... 8 7E .................................................................................................................................... 9 7F .................................................................................................................................... 9 7G ................................................................................................................................. 10 7H ................................................................................................................................. 11 8A.................................................................................................................................. 11 8B .................................................................................................................................. 14 9..................................................................................................................................... 14 10A................................................................................................................................ 15 10B ................................................................................................................................ 16 10C................................................................................................................................ 16 11................................................................................................................................... 17 12................................................................................................................................... 17 13................................................................................................................................... 17 14................................................................................................................................... 17 15................................................................................................................................... 18 16................................................................................................................................... 18 17................................................................................................................................... 19 18................................................................................................................................... 20 19................................................................................................................................... 23 20A................................................................................................................................ 25 ii
20B ................................................................................................................................ 25 21................................................................................................................................... 26 22................................................................................................................................... 26 23................................................................................................................................... 26 24................................................................................................................................... 27 25................................................................................................................................... 28 26A................................................................................................................................ 29 26B ................................................................................................................................ 29 26C................................................................................................................................ 29 27................................................................................................................................... 30 28................................................................................................................................... 30 29A................................................................................................................................ 30 29B ................................................................................................................................ 31 29C................................................................................................................................ 31 29D................................................................................................................................ 31 29E ................................................................................................................................ 32 30................................................................................................................................... 32 31................................................................................................................................... 32 32................................................................................................................................... 34 33................................................................................................................................... 34 Appendix B .................................................................................................................. 37 Appendix D .................................................................................................................. 39 Appendix G .................................................................................................................. 44
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PROJECT DESCRIPTION AND CONTACT INFORMATION 1.)
Please provide below an Executive Summary of the proposal.
Women & Infants Hospital of Rhode Island (WIH), a Care New England (CNE) hospital, proposes to renovate its existing 20-bed birth center that opened 30 years ago in 1986. At the time this was a state-of-the-art design; however it no longer meets today’s architectural standards or patient and family expectations. This longstanding need was identified in our ten year Strategic Facilities Plan (20022012) and in 2013 we began to address the increasing need for a new facility. The work of the Culture of Care Work Group, convened by Care New England which includes community members as well as providers from WIH and Memorial Hospital of Rhode Island (MHRI), reinforced the need for a significant renovation to address the needs of our patients and their families. WIH is the 9th largest obstetrical service in the country, the largest in New England, and a national leader in maternal and perinatal health. WIH is a top performer across measures including elective deliveries before 39 weeks, readmission rates, vaginal birth after C-section (VBAC) rates and total cesarean delivery rate. WIH is a leader among the Council of Women’s and Infants’ Specialty Hospitals (CWISH), a member organization of 13 non-profit hospitals across the United States that are leaders in providing services to women and infants. Notably, WIH achieved BabyFriendly© designation in July of 2015, making WIH the second largest BabyFriendly© hospital in the country and Rhode Island the highest ranking state in the country in the percentage of babies born at Baby-Friendly© hospitals. The BabyFriendly© hospital initiative recognizes hospitals and birthing centers that offer an optimal level of care for infant feeding and mother/baby bonding. The renovation will make the facilities more patient and family-centered, take advantage of new technology, and create rooms universally designed to better accommodate the range of deliveries desired by patients and dictated by the patient’s condition including natural with no interventions, low risk, high risk, and bariatric deliveries. The birth center’s rooms will be used exclusively for labor, delivery and recovery. The renovation project will be constructed in phases over approximately an 18 month period. Although the renovation will not change capacity, it will expand the square footage of our current birth center, add private bathrooms, incorporate new equipment and furnishings, improve handicap accessibility and reconfigure support space. The expanded space will reflect our family-centered approach, and optimize privacy for mothers. The new space will also be designed to conceal clinical components to achieve a more relaxing 1
environment, and the larger rooms will better enable care of patients that continue to become more clinically complex. The proposed expansion of square footage will come from areas of the existing birth center on the second floor of the Main Building that are not used for direct patient care (e.g., storage rooms, on call rooms). These areas will be moved to the fourth floor of the main hospital building. In addition to working with experts in modern healthcare architecture, we will also rely on our expert clinical staff to inform our design, as well as patients and families. In the summer of 2016, a work group focused on the Culture of Care was developed to address issues and concerns brought forward from the community, providers and the Department of Health related to closing the Memorial Hospital obstetrics unit. This diverse group includes physicians, midwives, nurses, doulas, staff members as well as representatives from advocacy and community groups. The Culture of Care Work Group identified five key elements for ongoing work and many of these focus areas will help inform the development of the new birth center including continuity of care, cultural humility, low intervention practice, interprofessional collaboration and commitment to patient and family centered care. The proposed design of the new unit is driven by patient and family centered care and guided by principles identified by the Culture of Care Workgroup and facilitates the integration of these principles into the culture and operations of the new unit. Prior to moving patient care to the new unit, the leadership will spend a significant amount of time with staff, enhancing the patient care delivery model and better integrating the principles of cultural humility and sensitivity. Cultural humility is a philosophy and culture that we will weave or fully embed into the fabric of the unit. Cultural humility is a life-long attitude and approach to cultural competence. We continue to believe that healthcare professionals must be humble about their knowledge of patients’ beliefs and values, engage in self- reflection so that they are aware of their own assumptions and prejudices, and act to redress the imbalance of power inherent in physician-patient relationships. The centralized nursing station, as well as the increased size of each patient room, support both continuity of care and inter-professional collaboration by providing specific places for the team to gather for patient care planning. Additionally, the expanded size of the patient rooms better supports patient and family centered care by creating the opportunity for care planning and transitions of care to happen at the bedside, with simultaneous participation by the patient, the family, and the care team. In the new unit, all patient rooms will be equipped to support a continuum ranging from low intervention to high acuity care.
2
2) Capital Cost
$18.6 Million
From responses to Questions 10 and 11
Operating Cost
$853,000
For the first full year after implementation, from response to Question 18
Date of Proposal Implementation
October/ 2018
Month and year
3.)
Please provide the following information:
Information of the applicant: Name:
Women & Infants Hospital of Rhode Island
Telephone #:
401-274-1100
Address:
101 Dudley Street, Providence, RI
Zip Code:
02905
Information of the facility (if different from applicant): Name:
N/A
Telephone #:
Address:
Zip Code:
Information of the Chief Executive Officer: Name:
Mark Marcantano
Telephone #:
401-430-1104
Address:
101 Dudley Street, Providence, RI
Zip Code:
02905
E-Mail:
[email protected]
Fax #:
401-453-7666
Information for the person to contact regarding this proposal: Name:
Kellie Sullivan
Telephone #:
401-430-8116
Address:
45 Willard Avenue, Providence RI
Zip Code:
02905
E-Mail:
[email protected]
Fax #
401-453-7686
3
4.)
Select the category that best describes the facility named in Question 3. Freestanding ambulatory surgical center
Home Nursing Care Provider
Home Care Provider
X
Freestanding Emergency Care Facility
Hospital
Hospice Provider
Inpatient rehabilitation center (including drug/alcohol treatment centers)
Multi-practice physician ambulatory surgery center
Multi-practice podiatry ambulatory surgery center
Nursing facility
5.)
Please select each and every category that describes this proposal.
A. B. 1. 2. 3. 4. C.
Other (specify):
___ construction, development or establishment of a new healthcare facility; ___ a capital expenditure for: ___ health care equipment in excess of $2,451,805; _X_ construction or renovation of a health care facility in excess of $5,720,877; ___ an acquisition by or on behalf of a health care facility or HMO by lease or donation; ___ acquisition of an existing health care facility, if the services or the bed capacity of the facility will be changed; ___ any capital expenditure which results in an increase in bed capacity of a hospital and inpatient rehabilitation centers (including drug and/or alcohol abuse treatment centers); 4
D.
E. F. G. H.
___ any capital expenditure which results in an increase in bed capacity of a nursing facility in excess of 10 beds or 10% of facility’s licensed bed capacity, which ever is greater, and for which the related capital expenditures do not exceed $2,000,000 ___ the offering of a new health service with annualized costs in excess of $1,634,536; ___ predevelopment activities not part of a proposal, but which cost in excess of $5,720,877; ___ establishment of an additional inpatient premise of an existing inpatient health care facility; ___ tertiary or specialty care services: full body MRI, CT, cardiac catheterization, positron emission tomography, linear accelerators, open heart surgery, organ transplantation, and neonatal intensive care services. Or, expansion of an existing tertiary or specialty care service involving capital and/or operating expenses for additional equipment or facilities;
5
HEALTH PLANNING AND PUBLIC NEED 6.) Please discuss the relationship of this proposal to any state health plans that may have been formulated by the state agency, including the Health Care Planning and Accountability Advisory Council, and any state plans for categorically defined programs. In your response, please identify all such priorities and how the proposal supports these priorities. To the applicant’s knowledge there is no state Health Plan currently in effect for the state of Rhode Island that addresses the inpatient delivery of obstetric services. 7.) Please discuss the proposal and present the demonstration of the public need for this proposal. Description of the public need must include at least the following elements: A. Please identify the documented availability and accessibility problems, if any, of all existing facilities, equipments and services available in the state similar to the one proposed herein: Name of Facility/Service Provider*
List similar type of Service/Equip ment
Documented Availability Problems (Y/N)
Documented Accessibility Problems (Y/N)
Distance from Applicant (in miles)
Landmark Medical Center
OB Service
Unknown
Unknown
15.5
Kent Hospital (A Care New England Hospital)
OB Service
N
N
10.9
South County Hospital
OB Service
Unknown
Unknown
30.9
Newport Hospital
OB Service
Unknown
Unknown
33.2
*The hospitals listed above provide obstetric services, however, the applicant provides a unique capability and expertise to serve the needs of all pregnant women regardless of clinical complexity. WIH is entirely dedicated to women’s healthcare.
6
B. Please discuss the extent to which the proposed service or equipment, if implemented, will not result in any unnecessary duplication of similar existing services or equipment, including those identified in (A) above. This project will not result in any duplication of services. The birth center will have the same number of labor, delivery and recovery rooms (20) as it had before the construction. C. Please identify the cities and towns that comprise the primary and secondary service area of the facility. Identify the size of the population to be served by this proposal and (if applicable) the projected changes in the size of this population. As the area’s sole tertiary perinatal center, WIH has as its predominant obstetrics service area the entire State of Rhode Island as well as southeastern Massachusetts. The service area was defined as follows: Primary Service Area (PSA) - cities/towns with 100 or more obstetrical discharges at WIH or greater than 50% of its total obstetrical discharges at WIH: PSA towns include:
Secondary Service Area (SSA) - the balance of Rhode Island cities/towns along with Massachusetts cities with 50 or more obstetrical discharges at WIH and at least 10% of its obstetrical discharges at WIH or a city/town with 20% of its obstetrical discharges at WIH; SSA towns include: 7
In this geography there currently are 240,469 females aged 15-44. In the next 5 years, the female 15-44 population is projected to decline very slightly (-1.2%) to 237,671 (Source: Truven Analytics). D. Please identify the health needs of the population in (C) relative to this proposal. In the 30 years since the current birth center was designed at WIH, women’s expectations of their delivery experience have changed dramatically as childbirth is increasingly being seen as more of a normal life event in contrast to a medical condition that needs to be treated. Maternity interiors that better support extended families with adequate room for the laboring mother to utilize the entire room rather than just the bed are all expectations of our pregnant patients. The expansion of the square footage of our birth center will meet all of these needs. The WIH design will also take into account the needs of the bariatric obstetric patient. More than 78 million people in the U.S., or about one in three adults are obese according to the CDC. 2011 data from the Department of Health’s PRAMS (Pregnancy Risk Assessment Monitoring System) project also showed that 20% of women were considered obese immediately prior to pregnancy. This represents a steadily increasing trend since 2002. In 2013, the American Medical Association officially designated obesity as a disease. The birth center renovation will maintain patient dignity while incorporating additional equipment that will serve the bariatric obstetric patient. Our new birth center’s design will focus on our patients’ needs and will reflect modern labor and delivery trends as we bring our birth center in line with the expectation of pregnant mothers and up to current architectural codes. 8
E. Please identify utilization data for the past three years (if existing service) and as projected through the next three years, after implementation, for each separate area of service affected by this proposal. Please identify the units of service used. Actual (last 3 years)
FY 16
FY 15
FY 14
8,760 (24 hrs.*365 days)
8,760
8,760
Utilization (#)
3,404 days
3,303 days
3,173 days
Throughput Possible (#)*
5,475 days
5,475 days
5,475 days
62%
60%
60%
Hours of Operation
Utilization Rate (%)
* Maximum occupancy rate of 75% per American College of Obstetricians and Gynecologists (ACOG) Projected
FY 17
FY 18
F19
Hours of Operation
8,760
8,760
8,760
Utilization*
3,400 days
3,400 days
3,400 days
Throughput Possible
5,475 days
5,475 days
5,475 days
Utilization Rate (%)
62%
62%
62%
*Includes only LDR bed days- excludes utilization of antenatal and postpartum units (does not tie to total number of deliveries). F. Please identify what portion of the need for the services proposed in this project is not currently being satisfied, and what portion of that unmet need would be satisfied by approval and implementation of this proposal. Labor, delivery and recovery facility standards have evolved considerably over the 30 years since our birth center was built. If we do not upgrade our birth center to address current expectations of women and families for comfort in delivery, we will not be meeting the needs for a state-of-the-art facility for the 79 percent of Rhode Island women and the significant proportion of Southeastern Massachusetts women who choose to give birth at Women & Infants Hospital. The renovation will take advantage of new technology, make 9
the facilities more family-friendly and create rooms universally designed to better accommodate natural, low intervention, high risk and bariatric deliveries. G. Please identify and evaluate alternative proposals to satisfy the unmet need identified in (F) above, including developing a collaborative approach with existing providers of similar services. Proposed Option: Renovations within the existing birth center Pros: - The existing building services can be utilized. - The proximity to the C-section operating rooms would be maintained. - Existing department adjacencies and patient flow would be maintained. Cons: - The new design would be greatly influenced by surrounding departments and existing building conditions. - The renovations would have to be phased. The expansion of the suite would require the relocation of support spaces (locker rooms, on call rooms, offices, etc.). Alternative Option #1: Renovate and relocate the birth center to 4th floor Pros: - The existing building services can be utilized. - Current LDR operations would not be impacted while the new birth center is being built. Cons: - 4th floor operations would have to be relocated. - C-Section surgical space would not be adjacent to the new birth center - The number of C-Section rooms that could be built adjacent to the new suite would be insufficient to meet requirements. Alternative Option #2: Do not renovate existing birth center Pros: - None Cons: - Patient satisfaction and experience would deteriorate. - The existing labor, delivery and recovery facility is grandfathered into code acceptance; however, it would fall farther behind current code and Department of Health compliance regulations.
10
H. Please provide a justification for the instant proposal and the scope thereof as opposed to the alternative proposals identified in (G) above. This proposal represents a life-cycle replacement of the existing birth center in which renovation of the existing facility is the only feasible option with no viable collaborative alternatives. We chose to go with the option to renovate the existing birth center since it is the optimal choice in maintaining its close proximity to the C-Section operating rooms and the Carter Family Neonatal Intensive Care Unit (NICU).
HEALTH DISPARITIES AND CHARITY CARE 8.) The RI Department of Health defines health disparities as inequalities in health status, disease incidence, disease prevalence, morbidity, or mortality rates between populations as impacted by access to services, quality of services, and environmental triggers. Disparately affected populations may be described by race & ethnicity, age, disability status, level of education, gender, geographic location, income, or sexual orientation. A. Please describe all health disparities in the applicant's service area. Provide all appropriate documentation to substantiate your response including any assessments and data that describe the health disparities. The WIH primary and secondary service areas (PSA/SSA) cover the entire state of Rhode Island. There are numerous health disparities in the state, several of which pertain directly to maternal and child health and others of which impact the health and well-being of families, mothers, and children more indirectly. Maternal and child health is measured by a number of indicators, including low birth weight and preterm births. Low birth weight is defined as a birth weight of less than 5 pounds, 8 ounces. It is often a result of premature birth, fetal growth restrictions, or birth defects. A preterm birth is a birth that occurs earlier than the 37th week of pregnancy, and is the leading cause of infant death in Rhode Island. The percent of Rhode Island infants born during the 2007-2013 time period with low birth weight is lower than the national average and meets the Healthy People 2020 goal. The percent of Rhode Island infants born prematurely is also lower than the national average and meets the Healthy People 2020 goal. (Refer to graph below.) 11
However, despite Rhode Island’s favorable rates for preterm births and low birth weight during the 2007-2013 time period as compared to the national average and to Healthy People 2020 goals, there is disparity within the state by race and ethnicity. Black/African American and American Indian/Alaska Native mothers have the highest rates of low birth weight and preterm births in the state. Asian and Hispanic/Latina mothers also have high rates, when compared to white women.
12
Secondary source: WIH 2016 Community Health Needs Assessment, p.37 According to the Minority Health Facts 2015, published by the Rhode Island Department of Health, in addition to disparities in birth weight and preterm birth, there are racial and ethnic disparities in maternal and child health pertaining to the percentage of pregnant women with delayed prenatal care, the percentage of births to others with less than 12 years of education, the rate of births to teens ages 15 to 19, infant mortality, and the rate of children with incarcerated parents. (Refer to chart below.)
Source: Minority Health Facts 2015 (RIDOH) 13
According to Kids Count, the rates and percentages for these indicators are less favorable in Rhode Island’s core cities of Providence, Pawtucket, Central Falls, and Woonsocket than in the state as a whole. The core cities are where poverty rates are highest and home to the majority of racial and ethnic minority populations. Other areas of racial and ethnic health and socio-economic disparity include poverty and income, unemployment, education, overall health status, access to health care, asthma, diabetes, unintentional injuries, selected infectious diseases such as tuberculosis, and selected cancers such as prostate cancer. As indicated in all of Care New England’s 2016 community health needs assessments, we are committed to helping reduce morbidity and mortality and disparity with regard to diabetes, mental health and substance use, and maternal child health. As a Baby Friendly© designated hospital, WIH will help to reduce racebased health disparities. B. Discuss the impact of the proposal on reducing and/or eliminating health disparities in the applicant's service area. The birth center renovation project will not impact health disparities directly; however, WIH serves a disproportionate share of minority families and families in poverty. Therefore, if we fail to upgrade facilities and fail to keep up with evolving facility standards and patient expectations, then we risk over time negatively impacting the experience of care for patients, many of whom are impoverished and/or from minority populations. This would add to the general level of health care disparity that already exists. WIH is committed to continuing to provide care to all people regardless of their ability to pay. It is part of our mission as a designated safety net hospital. A renovated birth center will ensure that all Rhode Island’s mothers and infants in the state have access to the best health care and best facilities in the state. 9.) Please provide a copy of the applicant’s charity care policies and procedures and charity care application form. A copy of WIH’s charity care policies, procedures and application is included in attachment 1.
14
FINANCIAL ANALYSIS 10.) A) Please itemize the capital costs of this proposal. Present all amounts in thousands (e.g., $112,527=$113). If the proposal is going to be implemented in phases, identify capital costs by each phase. CAPITAL EXPENDITURES Amount Survey/Studies
Percent of Total $0
0%
$ 53
0.3%
Architect
$ 1,631
8.7%
Soft Construction Costs
$ 1,684
9.0%
Site Preparation
$0
0%
Demolition
$11
0%
Renovation
$ 12,901
69.2%
$0
0%
$ 1,846
9.9%
$ 14,758
79.2%
Furnishings
$ 530
2.8%
Movable Equipment
$ 796
4.3%
Fixed Equipment
$ 796
4.3%
$ 2,122
11.4%
Capitalized Interest
$0
0%
Bond Costs/Insurance
$0
0%
Debt Services Reserve1
$0
0%
$ 80
0.4%
$0
0%
$ 80
0.4%
Fees/Permits
New Construction Contingency "Hard" Construction Costs
"Equipment" Costs
Accounting/Legal Financing Fees "Financing" Costs
15
Land
$0
0%
Other (specify ________________)
$0
0%
"Other" Costs
$0
0%
$18,643
100%
TOTAL CAPITAL COSTS 1
Should not exceed the first full year’s annual debt payment.
B.) Please provide a detailed description of how the contingency cost in (A) above was determined. A preliminary schematic design has been completed. An industry standard 15% contingency is being carried for planning purposes. C.) Given the above projection of the total capital expenditure of the proposal, please provide an analysis of this proposed cost. This analysis must address the following considerations: i. The financial plan for acquiring the necessary funds for all capital and operating expenses and income associated with the full implementation of this proposal, for the period of 6 months prior to, during and for three (3) years after this proposal is fully implemented, assuming approval. Funding for capital costs will be through a combination of philanthropy and unrestricted cash reserves and future unrestricted income from operations. ii. The relationship of the cost of this proposal to the total value of your facility’s physical plant, equipment and health care services for capital and operating costs. Once complete, the Project will represent approximately 14.5% ($18,642,526/ $128,334,509) of the net value of property, plant and equipment at WIH. Operating costs for Labor and Delivery services, including the Project, will represent approximately 12.8% ($64,597,435/ $502,780,186) of total WIH operating costs. Excluding the Project, Labor and Delivery is estimated to represent 12.7% ($63,743,996 / $501,926,748) of total operating cost at WIH. iii. A forecast for inflation of the estimated total capital cost of the proposal for the time period between initial submission of the application and full implementation of the
16
proposal, assuming approval, including an assessment of how such inflation would impact the implementation of this proposal. Total capital cost of the proposal as submitted includes the impact of an expected annual inflation rate of 3% between the time of initial submission and full implementation of the proposal, assuming approval. 11.) Please indicate the financing mix for the capital cost of this proposal. NOTE: the Health Services Council’s policy requires a minimum 20% equity investment in CON projects (33% equity minimum for equipment-related proposals).
Source
Amount
Percent
Interest Rate
Terms (Yrs.)
List source(s) of funds (and amount if multiple sources) $ 8.6 million Philanthropy $10.0 million Operating Cash
Equity*
$ 18,643
100%
Debt**
$0
%
%
Lease**
$0
%
%
TOTAL
$18,643
100%
* Equity means non-debt funds contributed towards the capital cost of an acquisition or project which are free and clear of any repayment obligation or liens against assets, and that result in a like reduction in the portion of the capital cost that is required to be financed or mortgaged (R23-15-CON). ** If debt and/or lease financing is indicated, please complete Appendix F. 12.) Will a fundraising drive be conducted to help finance this approval? Yes_X_No___ 13.) Has a feasibility study been conducted of fundraising potential? Yes___ No_X_ ● If the response to Question 13 is ‘Yes’, please provide a copy of the feasibility study. 14.) Will the applicant apply for state and/or federal capital funding? Yes___ No _X_
If the response to Question 14 is ‘Yes’, please provide the source: ___________, amount: ________, and the expected date of receipt of those monies: _________.
17
15.) Please calculate the yearly amount of depreciation and amortization to be expensed. Depreciation/Amortization Schedule - Straight Line Method
Equipment Improvements Total Cost (-) Salvage Value (=) Amount Expensed (/) Average Life (Yrs.)
(=) Annual Depreciation
Fixed
$16,441
Movable Amortization
$796
$0
$0
$16,441
$796
$1,326 $0 $1,326
$80
Total $18,643
$0 $80
30
7
7
30
$548
$114
$189
$3
$0 $18,643
$ 854
*1* Must equal the total capital cost (Question 10 above) less the cost of land and less the cost of any assets to be acquired through lease financing *2* Must equal the incremental “depreciation/amortization” expense, column -5-, in Question 18 (below). 16.) For the first full operating year of the proposal (identified in Question 18 below), please identify the total number of FTEs (full time equivalents) and the associated payroll expense (including fringe benefits) required to staff this proposal. Please follow all instructions and present the payroll in thousands (e.g., $42,575=$43).
18
Existing Personnel
Additions/(Reductions)
# of Payroll FTEs W/Fringes
# of FTEs
Payroll W/Fringes
New Totals # of Payroll FTEs W/Fringes
Medical Director
$
0
$
$
Physicians
$
0
$
$
7.0
$985
0
$0
7.0
$985
194.7
$27,097
0
$0 194.7
$27,097
1.9
$217
0
$0
1.9
$217
37.0
$2,807
0
$0
37.0
$2,807
PTs
$
0
$0
$
OTs
$
0
$0
$
Speech Therapists
$
0
$0
$
$1,663
0
$0
Housekeeping
$
0
$0
$
Other: (specify)
$
0
$0
$
$32,769
0
$0 260.9
Administrator RNs LPNs Nursing Aides
Clerical
20.4
260.9
TOTAL
20.4
$1,663
$32,769
*1* Must equal the incremental “payroll w/fringes” expense in column -5-, Question 18 (below). INSTRUCTIONS: “FTEs” Full time equivalents, are the equivalent of one employee working full time (i.e., 2,080 hours per year) “Additions” are NEW hires; “Reductions” are staffing economies achieved through attrition, layoffs, etc. It does NOT report the reallocation of personnel to other departments. 17.)
Please describe the plan for the recruitment and training of personnel.
Our recruitment and training plans are not impacted by the renovation project as there will be no new hires associated with the proposal.
19
18.) Please complete the following pro-forma income statement for each unit of service. Present all dollar amounts in thousands (e.g., $112,527=$113). Be certain that the information is accurate and supported by other tables in this worksheet (i.e., “depreciation” from Question 15 above, “payroll” from Question 16 above). If this proposal involved more than two separate “units of service” (e.g., pt. days, CT scans, outpatient visits, etc.), insert additional units as required. PRO-FORMA P & L STATEMENT FOR LDR SUITE <-- FIRST FULL OPERATING YEAR 2019-->
Actual Previous Budgeted Incremental Year Current CON CON Difference 2016 Year 2017 Denied Approved *1* (1) (2) (3) (4) (5) REVENUES: Net Patient Revenue
$78,265
$80,978
$82,605
$82,605
$0
$0
$
$0
$0
$0
$78,265
$80,978
$82,605
$82,605
$0
$
$
$0
$0
$0
$25,299
$31,496
$32,769
$32,769
$0
$
$
$0
$0
$0
$925
$938
$957
$957
$0
$20
$20
$20
$20
$0
Utilities
$
$
$0
$0
$0
Insurance
$
$
$0
$0
$0
Interest
$
$
$0
$0
$0
$1,757
$1,757
$1,757
$2,610
$853
Leasehold Expenses
$
$
$0
$0
$0
Other:
$
$
$0
$0
$0
Minor Equipment
$35
$4
$4
$4
$0
Purchased Services
$70
$71
$72
$72
$0
Other: Total Revenue
EXPENSES: Payroll w/Fringes Bad Debt Supplies Office Expenses
Depreciation/Amortization
20
$29
$25
$26
$26
$0
Licenses
$1
$0
$0
$0
$0
Rent
$4
$1
$1
$1
$0
Indirect
$27,583
$27,583
$28,137
$28,137
$0
Total Expenses
$55,723
$61,896
$63,744
$64,597
$853
OPERATING PROFIT:
$22,542
$19,082
$18,861
$18,008
($853)
Food
PRO-FORMA P & L STATEMENT FOR WHOLE FACILITY <-- FIRST FULL OPERATING YEAR 2019-->
Actual Previous Budgeted Incremental Year Current CON CON Difference 2016 Year 2017 Denied Approved *1* (1) (2) (3) (4) (5) REVENUES: Net Patient Revenue Other: Total Revenue
EXPENSES: Payroll w/Fringes Bad Debt Supplies Office Expenses Utilities Insurance Interest Depreciation/Amortization Leasehold Expenses
$436,579 $434,050 $442,775 $442,775 $50,443
$40,106
$40,912
$0
$487,022 $474,156 $483,687 $483,687
$0
$
$
$40,912
$0
$0
$0
$0
$248,002 $227,036 $236,208 $236,208
$0
$
$
$0
$0
$0
$49,188
$50,718
$51,737
$51,737
$0
$829
$714
$729
$729
$0
$3,801
$4,021
$4,102
$4,102
$0
$12,508
$14,782
$15,079
$15,079
$0
$
$
$0
$0
$0
$12,714
$13,355
$13,355
$14,208
$853
$
$
$0
$0
$0
21
Other:
$
$
$0
$0
$0
$177
$192
$196
$196
$0
$35,878
$35,548
$36,262
$36,262
$0
Food
$877
$924
$942
$942
$0
Licenses
$109
$63
$64
$64
$0
$6,774
$6,874
$7,012
$7,012
$0
Indirect
$101,143
$96,255
$98,189
$98,189
$0
Total Expenses
$472,001 $450,482 $463,877 $464,730
$853
Minor Equipment Purchased Services
Rent
OPERATING PROFIT:
$15,021
$23,674
$19,810
$18,956
($853)
For each service to be affected by this proposal, please identify each service and provide: the utilization, average net revenue per unit of services and the average expense per unit of service. Service Type:
Routine Obstetrics (unit of service = deliveries)
Service (#s):
8,885
9,102
9,102
9,102
0
Net Revenue Per Unit *8*
$8,809
$8,897
$9,076
$9,076
$0
Expense Per Unit
$6,272
$6,800
$7,003
$7,102
$99
Service Type:
N/A
Service (#s): Net Revenue Per Unit *8* $
$
$
$
$
Expense Per Unit
$
$
$
$
$
INSTRUCTIONS: Present all dollar amounts (except unit revenue and expense) in thousands. *1* The Incremental Difference (column -5-) represents the actual revenue and expenses associated with this CON. It does not include any already incurred allocated or overhead expenses. It is column -4- less column –3-. 22
*2* Net Patient Revenue (column -5-) equals the different units of service times their respective unit reimbursement. *3* Payroll with fringe benefits (column -5-) equals that identified in Question 16 above. *4* Bad Debt is the same as that identified in column -4-. *5* Interest Expense equals the first full year’s interest paid on debt. *6* Depreciation equals a full year’s depreciation (Question 15 above), not the half year booked in the year of purchase. *7* Total Expense (column -5-) equals the operating expense of this proposal and is defined as the sum of the different units of service; *8* Net Revenue per unit (of service) is the actual average net reimbursement received from providing each unit of service; it is NOT the charge for that service. 19.) Please provide an analysis and description of the impact of the proposed new institutional health service or new health equipment, if approved, on the charges and anticipated reimbursements in any and all affected areas of the facility. Include in this analysis consideration of such impacts on individual units of service and on an aggregate basis by individual class of payer. Such description should include, at a minimum, the projected charge and reimbursement information requested above for the first full year after implementation, by payor source, and shall present alternate projections assuming (a) the proposal is not approved, and (b) the proposal is approved. If no additional (incremental) utilization is projected, please indicate this and complete this table reflecting the total utilization of the facility in the first full fiscal year. Projected First Full Operating Year: FY 2019 LDR Payer Mix only Implemented Payor Mix
Projected Utilization #
Medicare
%
Not Implemented
Total Revenue $
Projected Utilization #
%
Total Revenue $
Difference Projected Utilization #
%
Total Revenue $
81
0.9%
$859,967
81
0.9%
$859,967
0
$0
189
2.1%
$1,813,108
189
2.1%
$1,813,108
0
$0
53
0.6%
$707,040
53
0.6%
$707,040
0
$0
RIteCare
4,019
44.2%
$36,343,622
4,019 44.2%
$36,343,622
0
$0
Blue Cross/ Commercial/HMOs
4,619
50.7%
$41,691,917
4,619 50.7%
$41,691,917
0
$0
31
0.3%
$282,696
31
0.3%
$282,696
0
$0
4
0.0%
$35,268
4
0.0%
$35,268
0
$0
RI Medicaid Non-RI Medicaid
Self Pay Charity Care
23
Other: Champus
103
1.1%
$872,791
103
1.1%
$872,791
0
$0
2
0%
$18,478
2
0%
$18,478
0
$0
9,102 100.0%
$82,624,888
9,102 100.0%
$82,624,888
0
$0
Other: Mgd Medicare TOTAL
Projected First Full Operating Year: FY 2019 WIH Payer Mix – total facility Implemented
Not Implemented
Difference no incremental utilization projected w Project
Payor Mix
Projected Utilization
Total Revenue
Projected Utilization
Total Revenue
Projected Utilization
Total Revenue
Total Inpt and Outpt encounters
# Medicare
%
38,831
$
11.2% $28,077,525
#
%
38,831 11.2%
$
#
%
$
$28,077,525
0
$0
RI Medicaid
6,076
1.7%
$7,518,878
6,076
1.7%
$7,518,878
0
$0
Non-RI Medicaid
4,090
1.2% $16,505,633
4,090
1.2%
$16,505,633
0
$0
87,592
25.2% $88,095,181
87,592 25.2%
$88,095,181
0
$0
54.8% $301,930,981 190,187 54.8% $301,930,981
0
$0
RIteCare Blue Cross/ Commercial/HMOs Self Pay Charity Care Other: Champus Other: Mgd Medicare TOTAL*
190,187 5,636
1.6%
$1,120,218
5,636
1.6%
$1,120,218
0
$0
954
0.3%
$4,089
954
0.3%
$4,089
0
$0
2,407
0.7%
$2,172,760
2,407
0.7%
$2,172,760
0
$0
11,626
3.3%
$9,961,048
11,626
3.3%
$9,961,048
0
$0
347,399 100.0% $455,386,314 347,399 100.0% $455,386,314
0
$0
*Total Revenue is for Women and Infants Hospital only. Net revenue as presented in the Audited Financial Statements is for WIC and Affiliates, inclusive of the hospital and physician entities.
24
20.)
Please provide the following: A. Please provide audited financial statements for the most recent year available. Audited financial statements from FY16, the most current year available, are contained in attachment 2. B. Please discuss the impact of approval or denial of the proposal on the future viability of the (1) applicant and (2) providers of health services to a significant proportion of the population served or proposed to be served by the applicant. In 2015, there were 8,803 deliveries at WIH. This is 79% of the (11,207) total deliveries in the state. Thus, WIH is not only the applicant but also the provider of obstetric services to the most significant proportion of the population served and proposed to be served by it. As a premier hospital serving the vast majority of women and families in Rhode Island as well as many who live outside the state’s borders, the project is essential to the achievement of the mission of the hospital, which includes “improving the health and well-being of women and infants and providing our essential services regardless of ability to pay.” WIH is one of the nation’s leading specialty hospitals for women and newborns and is the major teaching affiliate of The Warren Alpert Medical School of Brown University for activities unique to women and newborns. Founded in 1884, WIH has a proud legacy as Rhode Island’s premier birthplace. Today it is the 9th largest obstetrical service in the country and the largest in New England. A specialty hospital with highly specialized staff, WIH is committed to providing the highest level of care to every patient regardless of their ability to pay and serves as the safety net hospital for our community, a tertiary care center for pregnant women, and home to Rhode Island’s only state-approved birthing center. WIH is able to support the care of pregnant patients along the continuum from low-risk, low intervention births through the highest acuity and complications with the consistent presence of a multidisciplinary expert team. Additionally, WIH has programs and services in place to support patients from diverse backgrounds and cares for people regardless of economic background, race, ethnicity, religion, age, gender identification and sexual orientation. A clinically and financially strong WIH is essential to ensuring access to high quality obstetrics care for all Rhode Island women and for those living in nearby states, including women in vulnerable situations, such as those on Medicaid or without 25
insurance. An upgraded birth center is crucial to this mission and to the hospital’s future financial position. Approval of the renovation project will enable WIH to continue providing and ensuring access to the high quality obstetrical care for which the hospital is known. 21.) Please identify the derivable operating efficiencies, if any, (i.e., economies of scale or substitution of capital for personnel) which may result in lower total or unit costs as a result of this proposal. As a basic construction/renovation project, this will neither provide economies of scale nor substitute capital for personnel. Accordingly, operating efficiencies that may result in lower total or unit costs are not anticipated solely as a result of this proposal. 22.) Please describe on a separate sheet of paper all energy considerations incorporated in this proposal. All projects performed within the CNE System are designed to be high-performance with a basis in LEED requirements, without pursuing LEED accreditation. Projects include energy efficient lighting, plumbing and HVAC systems and equipment. 23.) Please comment on the affordability of the proposal, specifically addressing the relative ability of the people of the state to pay for or incur the cost of the proposal, at the time, place and under the circumstances proposed. Additionally, please include in your discussion the consideration of the state’s economy. This proposal is affordable both from the perspective of the relative ability of the people of the state to pay for or incur the cost of the proposal and in consideration of the state’s economy. As outlined above, the capital cost of the proposal is being funded entirely by equity, through a combination of fund raising and the use of operating funds. Moreover, the sole increase in operating expense will be attributable to depreciation and amortization which are non-cash expenses that will not increase the cost of care delivered through the birth center. This necessary construction update project will also contribute positively to the local economy through the engagement of the construction trades. As noted in the most recent RI Current Economic Indicator (CEI) briefing promulgated by the Center for Economic Studies at Bryant University and the Rhode Island Public Expenditure Council (RIPEC), the state of the economy was down as of the end of the second quarter, in part because of a significant drop off in construction employment, a key factor. Accordingly, this proposal will have a positive impact on the economy 26
because of its boost to construction employment while providing a needed update to a thirty year old physical plant at little or no cost to the people of the state of Rhode Island. 24.) Please address how the proposal will support optimizing health system performance with regards to the following three dimensions: a. Improving the patient experience of care (including quality and satisfaction) The plan includes increasing the square footage of each patient room. Each room will also have an individual bathroom (not presently available) with a private shower. The design will also account for reduced noise levels in the patient care areas to be more conductive to the desired warm and welcoming atmosphere. The expanded space within the room and the unit itself will facilitate more capacity for patient ambulation in early labor to promote less interventional birth. This increased square footage will also provide more comfortable space for family and patient support personnel during labor. This additional space will accommodate our revised visitation policy which permits the patient to designate those persons who will be most supportive to them during the birth and immediately thereafter. The plan will also include an upgrade in the appointments of each labor room. These improvements will result in more discrete placement of necessary medical supplies and required technology in more aesthetic wall units and cabinetry. These design changes will provide a more inviting and home-like and less medicalized atmosphere with the equipment readily available when needed. When designing the rooms, provider, staff and patient and family input will be sought. b.
Improving the health of populations; and
The planning and construction will include a design focus to optimize our existing robust operational processes and internal and external communication. This design optimization will concentrate on improved response times and the facilitation of emergency interventions. The design will also enable our provider team to focus on low intervention births in all cases where this approach is safe and appropriate. The plan will also include dedicated labor rooms that will focus on the prenatal, intrapartum and immediate postpartum care for our sickest patients. These enhanced care areas will provide the necessary equipment and supplies for critically ill pregnant women. Medical literature supports better neonatal outcomes in low27
risk populations receiving their obstetrical care in higher volume institutions1. See attachment 3. In addition, the design focus on enhanced internal and external communication will ensure identification of all pertinent medical/obstetrical maternal conditions for each patient and contribute to optimal maternal and newborn outcomes. The development of the central team work space will form the hub for communication, education, and collaboration of multidisciplinary care for our patients. This area will also serve as the focal point for enhanced patient safety and quality with the ability to provide oversight to maternal and fetal/newborn care. c.
Reducing the per capita cost of health care
The design of the unit will focus on optimized outcomes, which is an ultimate driver of cost. Design will also focus on increased efficiencies and improved patient flow. These factors are also contributors to cost of care. The unit design will include a revised conceptual approach to labor induction which is now utilized in approximately 29% of patients. These patients historically have a longer length of stay and generate increased costs for care. There is also ongoing research investigating indications and outcomes related to labor induction that may further increase the labor induction rate. Notwithstanding these positive approaches to reducing the cost of care, we cannot predict a meaningful reduction in the per capita cost of health care attributable to this project alone. 25.) Please identify any planned actions of the applicant to reduce, limit, or contain health care costs and improve the efficiency with which health care services are delivered to the citizens of this state. Care New England leaders are focused on building a fully integrated, high performing health system to improve quality of care, enhance the patient’s experience, reduce costs and intelligently manage risk. Care New England has developed an accountable care organization (ACO) known as the Integra Community Care Network which is currently responsible for managing the care of over 130,000 covered lives under four payer arrangements. Care New England will also launch a Next Generation ACO through the Medicare shared savings program. 1
Snowden JM, Cheng YW, Kontgis C et al. The association between hospital obstetric volume and perinatal outcomes in California. Am J Obstet Gynecol 2012; 207:478.el-7.
28
Our investment in Integra and in population health management illustrates our commitment to improve care management and quality through integrated delivery of care and reducing costs. QUALITY, TRACK RECORD, CONTINUITY OF CARE, AND RELATIONSHIP TO THE HEALTH CARE SYSTEM 26.) A) If the applicant is an existing facility: Please identify and describe any outstanding cited health care facility licensure or certification deficiencies, citations or accreditation problems as may have been cited by appropriate authority. Please describe when and in what manner this licensure deficiency, citation or accreditation problem will be corrected. There are no outstanding citations or deficiencies at this time. B)
If the applicant is a proposed new health care facility:
Please describe the quality assurance programs and/or activities which will relate to this proposal including both inter and intra-facility programs and/or activities and patient health outcomes analysis whether mandated by state or federal government or voluntarily assumed. In the absence of such programs and/or activities, please provide a full explanation of the reasons for such absence. Not applicable. C)
If this proposal involves construction or renovation:
Please describe your facility’s plan for any temporary move of a facility or service necessitated by the proposed construction or renovation. Please describe your plans for ensuring, to the extent possible, continuation of services while the construction and renovation take place. Please include in this description your facility’s plan for ensuring that patients will be protected from the noise, dust, etc. of construction. The labor and delivery suite will be temporarily relocated from the second floor of the Main Building of 101 Dudley to the fourth floor of the South Pavilion in the Antenatal Care Unit (ACU). As needed, patients of the ACU will be temporarily relocated to the fourth floor of the Main Building. The cancer clinic on the fourth floor of the main building, referenced in Appendix D, will be moved back to its permanent location in the Bernard and Ina Wasserman Family Building at One 29
Blackstone Street, which will free up the space necessary to accommodate relocated ACU services. There will not be any disruptions to any services as a part of this phasing. 27.) Please discuss the impact of the proposal on the community to be served and the people of the neighborhoods close to the health care facility who are impacted by the proposal. WIH is committed to providing care to all people regardless of their ability to pay. The hospital has a long tradition of serving a disproportionate share of women and families living in poverty, including many who reside in Providence and neighborhoods near the hospital. A renovated and upgraded birth center that meets current facility standards and patient needs will ensure that mothers and infants continue to have access to the best health care and the best obstetrical facilities in the state for women and newborns, regardless of their economic status, racial and ethnic identity, or type of insurance. 28.) Please discuss the impact of the proposal on service linkages with other health care facilities/providers and on achieving continuity of patient care. There will be no impact on service linkages with other health care facilities or providers. We will continue to have the same linkages with all referring providers and facilities. 29.)
Please address the following:
A. How the applicant will ensure full and open communication with their patients' primary care providers for the purposes of coordination of care; Given the unique nature of obstetrical care, there is already a robust infrastructure in place to facilitate communication with the patient’s obstetrical provider. This includes ensured access to the patient’s medical records, a robust process for validation of pregnancy dating to ensure no elective deliveries take place before 39 weeks gestation and all earlier medically and obstetrically-indicated deliveries take place at the appropriate gestational age, and a system for the development of Special Needs Care Plans for patients with unique medical/obstetrical conditions or needs. The hospital also has a developed infrastructure for communication of pregnancy and delivery information to the non-obstetrical primary care provider for all patients. 30
B. Discuss the extent to which preventive services delivered in a primary care setting could prevent overuse of the proposed facility, medical equipment, or service and identify all such preventative services; Obstetrical care represents an advanced form of preventive care. In this context, overuse of labor, delivery and recovery services is not an issue. Rather, the goal is to assure that the intensity of services is appropriate to the needs of the patient. During the course of prenatal care pre-existing medical conditions and the potential for the development of other obstetrical or medical conditions are always accounted for. This historical process is focused on identification of conditions that may affect the mother or fetus at the earliest possible opportunity. This strategy is intended to improve care and result in selecting the best possible time for hospital admission and delivery. In high risk conditions this care is coordinated with the entire medical team including neonatology, medicine, anesthesia and advanced surgical services as necessary. The ultimate goal of this approach is to optimize maternal and newborn outcome by appropriate utilization of available services. C. Describe how the applicant will make investments, parallel to the proposal, to expand supportive primary care in the applicant’s service area. WIH has maintained a commitment to preventive health care through our Obstetrics and Gynecology Care Center and our outreach sites in East Greenwich, South Kingstown and Woonsocket. In addition, Care New England is committed to the continuation of all present outpatient primary care clinics, including primary care clinics in both family medicine and internal medicine, and continuation of preand post-natal clinical care in the Memorial Hospital service area. We do not have any current plans to expand supportive primary care in our service area beyond the offerings that are currently available. D. Describe how the applicant will use capitalization, collaboration and partnerships with community health centers and private primary care practices to reduce inappropriate Emergency Room use. By continuing to provide high quality inpatient obstetrics services and collaborating with providers involved in the treatment of the patient, we anticipate continued minimal inappropriate use of the Emergency Department. Through collaboration and integration with our community based obstetrics providers, care guidelines and protocols are developed to optimize both outpatient and inpatient care and minimize the use of the Emergency Department for routine care. 31
E. Identify unmet primary care needs in your service area, including “health professionals shortages”, if any (information available at Office of Primary Care and Rural Health at (http://www.health.ri.gov/programs/primarycareandruralhealth/). According to the Office of Primary Care and Rural Health, there are “health professionals shortages” in Central Falls, Middletown, Newport, Pawtucket, Providence and Woonsocket. There are primary care “health professionals shortages” in Central Falls, Pawtucket, Providence and Woonsocket. 30.) Please discuss the relationship of the services proposed to be provided to the existing health care system of the state. The services proposed are key to the provision of services to pregnant women across the State of Rhode Island and portions of Massachusetts. WIH serves pregnant women regardless of ability to pay and provides care ranging from the lowest to the highest acuity. We are responsible for 79% of all Rhode Island deliveries and act as a tertiary referral center for women and newborns. 31.) Please identify any state or federal licensure or certification citations and/or enforcement actions taken against the applicant and their affiliates within the past 3 years and the status or disposition of each.
32
AFFILIATE YEAR DATE Women & 2016 8/3/2016 Infants Hospital of Rhode Island
AGENCY ISSUE TYPE OUTCOME The Rhode Island RI DOH concluded a seven CMS Validation Full compliance with CoPs. Department of full days CMS Validation Survey Health (RI DOH) Survey - Medicare Conditions of Participation (CoPs)
Women & 2016 8/10/2016 RI DOH Infants Hospital of Rhode Island
Deficiencies at the Infusion Licensure Center based at Kent Hospital related to Pharmacy Policies and procedures relating to security and handling of hazardous drugs
Plan of remediation submitted and accepted. Corrective actions completed. Final Board of Pharmacy site survey scheduled for January 27, 2017.
Butler Hospital
2016 8/3/2016
RI DOH
Board of Pharmacy Licensure Complaint: Failure to provide adequate security over Schedule II medications
Complaint closed; no finding of unprofessional conduct; Letter of Concern received
Kent County Memorial Hospital
2015 Apr-15
RI DOH
RI DOH investigation of complaints
RI DOH Investigation
16 Complaints; 3 complaints substantiated; 4 deficiencies cited. Plan of correction submitted and accepted
Kent County Memorial Hospital
2015 Aug-15
RI DOH
RI DOH investigation of complaints
RI DOH Investigation
21 Complaints; none substantiated; 3 deficiencies. Plan of correction submitted and accepted
Kent County Memorial Hospital
2016 Jan-16
RI DOH
RI DOH investigation of complaints
RI DOH Investigation
21 Complaints; 6 substantiated; 5 deficiencies. Plan of correction submitted and accepted
Kent County Memorial Hospital
2016 3/29/2016 RI DOH
RI DOH concluded a seven CMS Validation Full compliance with CoPs. Kent full days CMS Validation Survey provided RI DOH with the signed Plan Survey - Medicare Conditions of Correction on 04/25/2016. of Participation (CoPs)
Memorial 2015 1/22/2015 RI DOH Hospital of Rhode Island
RI DOH concluded a site visit RI DOH to MHRI. Investigation
Significant compliance with RI Rules and Regulations for Licensing of Hospitals.Deficiency for Fire Safety in the OR. MHRI submitted Plan of Correction for Policy changes, staff reeducation, fire risk assessment protocol in OR on 3/17/15.
Memorial 2015 10/2/2015 RI DOH Hospital of Rhode Island
RI DOH concluded a five full CMS Validation days CMS Validation Survey - Survey Medicare Conditions of Participation (CoPs)
Significant compliance with CoPs. Exception of deficiency for Patient Rights: Care in Safe Setting and Maintenance of Physician Plant. MHRI submitted Plan of Correction for Policy changes, staff re-education, additional staff and security guards trained and hired for 1:1 observation on 11/19/15.
Memorial 2016 3/14/2016 RI DOH Hospital of Rhode Island
RI DOH concluded a six full CMS Validation days CMS Validation Survey - Survey Medicare Conditions of Participation (CoPs)
Full compliance with CoPs. DOH citation received for deficiencies for Medical Staff and Organization. MHRI Plan of Correction for ACLS requirements for certified midwives; Universal Protocol on 4/8/16.
The 2016 10/17/2016 RI DOH Providence Center
RI DOH Licensure Survey
10 Deficiencies cited; plan of correction in process
33
Licensure
32.) Please provide a list of pending or adjudicated citations, violations or charges against the applicant and their affiliates brought by any governmental agency or accrediting agency within the past 3 years and the status or disposition of each. AFFILIATE YEAR DATE AGENCY Care New 2012 9/16/2016 Office of England Civil Rights Health System
Women & 2012 Infants Hospital of Rhode Island Butler 2015 Hospital
SOURCE External
Massachuset ts Attorney General
8/25/2015 Office of Civil Rights
External
ISSUE Loss of Tapes containing Protected Health Information (PHI);
TYPE HIPAA Privacy & Security
Loss of Tapes containing Protected Health Information (PHI); Allegation of impermissible disclosure of PHI
HIPAA Privacy & Security HIPAA Privacy & Security
OUTCOME September 16, 2016 Settlement agreement signed with the OCR. Civil Money Penalty of $400,000 with two year Corrective Action Plan required by resolution settlement Consent Decree binding WIH
Investigation closed by OCR with no finding of impermissible disclosure. OCR recommended technical corrections to the Butler Policy on Patient Right to Place Restrictions. Policy being revised
33.) Please provide a list of any investigations by federal, state or municipal agencies against the applicant and their affiliates within the past 3 years and the status or disposition of each. AFFILIATE YEAR Women & 2015 Infants Hospital of Rhode Island
DATE AGENCY 12/22/2015 Occupational Safety & Health Adminstration (OSHA)
ISSUE TYPE OSHA complaint on NICU OSHA ceiling tiles Complaint
Resolved
Women & 2016 Infants Hospital of Rhode Island
2/29/2016
RI Department of Environmental Management
Letter of Noncompliance
RI DEM NonCompliance
Resolved
Women & 2016 Infants Hospital of Rhode Island Butler 2015 Hospital
3/7/2016
OSHA
OSHA complaint (2nd on similar issue) on NICU ceiling tiles
OSHA Complaint
Resolved
8/25/2015
Office of Civil Rights
Butler Hospital
2016
1/5/2016
Allegation under HIPAA of Regulatory impermissible disclosure of Protected Health Information DEM citation foremissions Regulatory from generator
Butler Hospial
2016
9/28/2016
RI Department Environmental Management RI Medicaid Fraud Subpoena for Medical Control Unit Records
34
Regulatory
OUTCOME
Investigation closed with no fines or penalties. Technical deficiency in policies corrected Civil Money Fine of $1,000 paid
Issue Pending with no resolution as of 12/23/16
AFFILIATE YEAR Kent County 2016 Memorial Hospital Memorial 2013 Hospital of Rhode Island
DATE 7/20/2016
Memorial 2014 Hospital of Rhode Island
1/25/2014
Memorial 2015 Hospital of Rhode Island
9/10/2015
Memorial 2015 Hospital of Rhode Island
12/18/2015 U.S. Department of Unfair Employment Justice Practice relating to Podiatry Residency Posting;
Memorial 2016 Hospital of Rhode Island
6/12/2016
RI Narragansett Bay Commission
Memorial 2016 Hospital of Rhode Island
8/31/2016
State of RI, DEM
Memorial 2016 Hospital of Rhode Island
The Providence Center
2015
The Providence Center
2016
AGENCY ISSUE Office of Inspector Compliance with Medicare General (OIG) 3-Day Payment Window for one patient Office of Inspector OIG Review for selected General (OIG) Drugs - Incorrect Billed Units for Infusion (J9170) 120 Units billed versus 6 Units (One Claim) U.S. Department of Routine audit for the Labor (DOL) Defined Benefit Pension Plan and Trust Office of Civil Rights
TYPE Billing Compliance
OUTCOME Requested information provided Pending
Regulatorybilling
Overpayment Refunded
RegulatoryERISA
DOL concluded the audit without further action.
Allegation of Disclosure of HIPAA Privacy Case closed without further action PHI & Security Civil Rights Violation
Accidental discharge of fuel into water system;
Settlement. Civil Money Penalty of $2,000 and two year resolution with corrective action plan
Civil money fine of $2,500 paid
Hazardous Waste Site Regulatory Reinspection follow up, compliant Inspection, Non Compliance Labeling Case #RID0698552580 12/20/2016 Dept. of Labor, OSHAAlleged Safety Hazards, OSHA ComplaintPending #11666161 response by 12/28/16 Flooring, roof leaks, cleanliness, electrical outlet damage OSHA Complaint #11666161 12/9/2015 RI HHS Medicaid Medicaid Billing Review Billing Repayment of $65, 446 for claims that Compliance did not meet standards or violated policy 11/14/2016 RI Commission on Allegation of discrimination Regulatory Human Rights
35
Case closed without further action
Select and complete the Appendixes applicable to this application: Appendix
Check off:
Accelerated review applications
A
B
X
Applications involving provision of services to inpatients
Nursing Home applications
C
D
Required for:
X
All applications
E
Applications with healthcare equipment costs in excess of $2,451,805 and any tertiary/specialty care equipment
F
Applications with debt or lease financing
G
X
All applications
36
Appendix B Provision of Health Services to Inpatients 1. Are there similar programmatic alternatives to the provision of institutional health services as proposed herein which are superior in terms of: a. Cost b. Efficiency c. Appropriateness
___ Yes _X_ No ___ Yes _X_ No ___ Yes _X_ No
2. For each No response in Question 1, discuss your finding that there are no programmatic alternatives superior to this proposal separately for each such finding. There are no superior programmatic alternatives from the perspective of cost, efficiency or appropriateness. The birth center is efficiently utilized and is projected to continue to be so in the foreseeable future. A renovated birth center is necessary as it has been 30 years since the current space was put into service. Alternate locations within the hospital were evaluated and rejected due to proximity to Csection operating rooms and the NICU. Every year this renovation project is delayed, the cost of construction will increase. 3. For each Yes response in Question 1, identify the superior programmatic alternative to this proposal, and explain why that superior alternative was rejected in favor of this proposal separately for each such finding.. Not applicable. 4. In the absence of proposed institutional health services proposed herein, will patients encounter serious problems in obtaining care of the type proposed in terms of: a. b. c.
Availability Accessibility Cost
_x_ Yes ___ No _x_ Yes ___ No _x_ Yes ___ No
5. For each Yes response in Question 4, please justify and provide supporting evidence separately for availability, accessibility and cost. Availability: To the best of WIH's knowledge, there is only one hospital, located in the southern part of the State, which provides birthing units with space and flexibility similar to the concept contemplated by this proposal. Given the location 37
and limited number of rooms (11), they would be insufficient in number to meet the needs of Rhode Island women. Unless this proposal is implemented, the majority of Rhode Island's birthing women will not have rooms, designed to their expectations for space, privacy, comfort and safety, available to them. Accessibility: As noted above, since rooms that meet current architectural standards and patient expectations are only available in limited numbers in the southern part of the state, most women do not have current or ready access to them. WIH is the only hospital in the state entirely dedicated to women’s healthcare and the hospital where 79% of deliveries occur annually. If this proposal is not implemented, the hospital's birth center will continue to fall behind current standards and will not be able to address the legitimate concerns of its patients and their families. This project is essential to maintain access for all women, regardless of socioeconomic status, to quality obstetrics care in a facility that is designed in accordance with modern architectural standards. Cost: As noted above, birthing units in sufficient quantity to meet the needs of most Rhode Island mothers-to-be are neither readily available nor accessible. This project of converting existing space through a combination of philanthropy, unrestricted cash reserves and future unrestricted income from operations will result in no additional operating cost beyond that which already exists. There is simply no new construction or renovation alternative that would make a sufficient number of appropriately designed birthing suites available to meet the existing and projected need for such space at less cost.
38
Appendix D All applications must be accompanied by responses to the questions posed herein. 1. Provide a description and schematic drawing of the contemplated construction or renovation or new use of an existing structure and complete the Change in Space Form. The project will consist of renovating and expanding the existing labor and delivery rooms. The project will maintain the existing number of delivery rooms today and concentrate on enlarging each delivery room and providing a private bathroom for each room. The Outpatient service referenced in the Change of Space form is a cancer clinic. The Clinic was temporarily relocated from One Blackstone Street where the Women’s Health Clinic and the Murray Family Infusion Center are currently located to allow for renovation of the clinic space. The clinic will be moved back to One Blackstone Street after the Blackstone renovation is completed. There will not be any impact on the outpatient services or staff. A schematic drawing of the proposed renovation to the labor and delivery suite is included in attachment 4. A schematic drawing of the existing labor and delivery suite is included in attachment 5. 2. Please provide a letter stating that a preliminary review by a Licensed architect indicates that the proposal is in full compliance with the current edition of the "Guidelines for Design and Construction of Hospital and Health Care Facilities" and identify the sections of the guidelines used for review. Please include the name of the consulting architect, and their RI Registration (license) number and RI Certification of Authorization number. See the certification in attachment 6. 3. Provide assurance and/or evidence of compliance with all applicable federal, state and municipal fire, safety, use, occupancy, or other health facility licensure requirements. WIH and the birth center are currently licensed facilities. The new suite will be designed to meet facility licensure requirements. Please see the attached certification. 39
4. Does the construction, renovation or use of space described herein corrects any fire and life safety, Joint Commission on Accreditation of Healthcare Organizations (JCAHO), U.S. Department of Health and Human Services (DHHS) or other code compliance problems: Yes____ No_X__ *The WIH birth center does not meet current building codes but is grandfathered. The implementation of this project would bring the project into full compliance with current regulations and negate the need for existing grandfathered compliance. ● If Yes, include specific reference to the code(s). For each code deficiency, provide a complete description of the deficiency and the corrective action being proposed, including considerations of alternatives such as seeking waivers, variances or equivalencies. 5. Describe all the alternatives to construction or renovation which were considered in planning this proposal and explain why these alternatives were rejected. Alternative Option #1: Renovate and relocate the birth center to the 4th floor Reasons for rejection: - 4th floor operations would have to be relocated. - C-Section surgical space would not be adjacent to the new LDR Suite. - The number of C-Section rooms that could be built adjacent to the new suite would be insufficient to meet requirements. Alternative Option #2: Do not renovate existing birth center Reasons for rejection: - Patient satisfaction and experience would deteriorate. - The birth center is grandfathered into code acceptance; however, it would fall farther behind current code and DOH compliance regulations and a later replacement would be more costly. 6. Attach evidence of site control, a fee simple, or such other estate or interest in the site including necessary easements and rights of way sufficient to assure use and possession for the purpose of the construction of the project. See attachment 7 for the ground lease.
40
7. approval.
If zoning approval is required, attach evidence of application for zoning
Not applicable. 8. If this proposal involves new construction or expansion of patient occupancy, attach evidence from the appropriate state and/or municipal authority of an approved plan for water supply and sewage disposal. This proposal will not add any occupancy to the current facility. The current water supplies and sewage lines are adequate. 9. Provide an estimated date of contract award for this construction project, assuming approval within a 120-day cycle. Estimated contract date: 7/17 10. Assuming this proposal is approved, provide an estimated date (month/year) that the service will be actually offered or a change in service will be implemented. If this service will be phased in, describe what will be done in each phase. Estimated completion date: 10/18 The work will occur in 4 phases to be determined / delineated as the project design is continued. Change in Space Form Instructions The purpose of this form is to identify the major effects of your proposal on the amount, configuration and use of space in your facility. Column 1 Column 1 is used to identifying discrete units of space within your facility, which will be affected by this proposal. Enter in Column 1 each discrete service (or type of bed) or department, which as a result of this proposal is: a.) to utilize newly constructed space b.) to utilize renovated or modernized space c.) to vacate space scheduled for demolition
41
In each of the Columns 3, 4, and 5, you are requested to disaggregate the construction, renovation and demolition components of this proposal by service or department. In each instance, it is essential that the total amount of space involved in new construction, renovation or demolition be totally allocated to these discrete services or departments listed in Column 1. Column 2 For each service or department listed in Column 1, enter in this column the total amount of space assigned to that service or department at all locations in your facility whether or not the locations are involved in this proposal. Column 3 For each service or department, please fill in the amount of space which that service or department is to occupy in proposed new construction. The figures in Column 3 should sum to the total amount of space of new construction in this proposal. Column 4 For each service or department, please fill in the amount of space, which that service or department is to occupy in space to be modernized or renovated. The figures in column 4 should sum to the total amount of space of renovation and modernization in this proposal. Column 5 For each service or department fill in the amount of currently occupied space which is proposed to be demolished. The figures in Column 5 should sum to the total amount of space of demolition specified in this proposal. Column 6 For each service or department entered in Column 1, enter in this column the total amount of space which will, upon completion of this project, be assigned to that service or department at all locations in your facility whether or not the locations are involved in this proposal. Column 7 Subtract from the amount of space shown in Column 6 the amount shown in Column 2. Show an increase or decrease in the amount of space.
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Change in Space Form Please identify and provide a definition for the method used for measuring the space (i.e. gross square footage, net square footage, etc.): All square footages indicated below are measured in Gross Square Feet (GSF). For the purpose of this proposal, GSF is defined as including all exterior walls, chases, vertical penetrations and circulation spaces.
1. Service or 2. Current 3. New 4. 5. Amount of 6. Proposed 7. Change Department Space Construction Renovation Space Currently Space [(6)-(2)] Name Amount Space Space Occupied to be Amount Amount Amount Demolished Labor and Delivery Suite
18,292
0
18,292
18,292
26,000
7,708
Outpatient Services
9,544
0
9,544
9,544
1,836
-7,708
TOTAL:
27,836
0
27,836
43
27,836
27,836
0
Appendix G Ownership Information All applications must be accompanied by responses to the questions posed herein. 1. List all officers, members of the board of directors, stockholders, and trustees of the licensee, applicant and/or ultimate parent entity. For each individual, provide their home and business address, principal occupation, position with respect to the licensee, applicant and/or ultimate parent entity, and amount, if any, of the percentage of stock, share of partnership, or other equity interest that they hold. WIH is a non-profit organization. No individuals hold a percentage of stock, share of partnership or other equity interest. Name, Home Address
Business Address
Occupation
Charles R. Reppucci 215 Sunnybrook Farm Road Narragansett, RI 02882
Hinckley Allen Snyder 50 Kennedy Plaza Providence, RI 02903
Business Executive Chairman and Director
Dennis D. Keefe 7A Shea Lane Foxborough, MA 02035
Care New England 45 Willard Avenue Providence, RI 02905
Business Executive President and Chief Executive Officer and Director
Douglas Jacobs 1141 North Main Road Jamestown, RI 02835
1141 North Main Road Jamestown, RI 02835
Retired Financial Executive
Treasurer and Director
Cynthia B. Patterson 33 Keene Street Providence, RI 02906
33 Keene Street Providence, RI 02906
Community Volunteer and Retired Development Executive
Secretary and Director
Physician
Director
Denise M. Arcand, M.D. 1079 Main Street 300 Hoover Street West Warwick, RI West Warwick, RI 02893 02893
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Board Position
Name, Home Address
Business Address
Occupation
Board Position
Lisa D. Boyle, M.D. 199 Angell Road Lincoln, RI 02985-4719
Center for OB/GYN, Inc. 297 Promenade Street Providence, RI 02908
Physician
Director
James A. Botvin 12 Bagy Wrinkle Cove Warren, RI 02885
12 Bagy Wrinkle Cove Warren, RI 02885
Retired Business Owner
Director
Mario V. Bueno 98 Fletcher Avenue Cranston, RI 02920
629 Broad Street Non-Profit Agency Director Central Falls, RI 02888 Director
Allen H. Cicchitelli 46 Seaview Avenue Jamestown, RI 02835
Northeast Ventures 1478 Atwood Avenue Johnston, RI 02919
Real Estate Executive, Ret. Business Owner
Sharon D. ConardWells 85 Majestic Avenue Warwick, RI 02888
Elmwood Housing Development Corporation 224 Dexter Street Providence, RI 02907
Non-Profit Agency Director Director
Esther Emard 667 Route 100, P.O. Box 6 Stockbridge, VT 05772
667 Route 100, P.O. Retired Box 6, Stockbridge, VT Healthcare 05772 Executive/Consult ant
Director
Robert G. Flanders, Jr. 45 Bow Street East Greenwich, RI 02818
Whelan, Corrente, Flanders, Kinder & Siket 100 Westminster Street, Ste. 710, Providence, RI 02903
Former RI Supreme Court Justice, Attorney
Director
Gary E. Furtado 15 Beth Avenue Warren, RI 02885
Navigant Credit Union 1005 Douglas Pike, Smithfield, RI 02917
Finance Executive
Director
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Director
Name, Home Address
Business Address
Occupation
Board Position
John R. Galvin 82 Jeffery Drive North Attleboro, MA 02760
AAA Northeast, 110 Royal Little Drive, Providence, RI 02904
Finance Executive
Director
Kent W. Gladding 10 Jay Court Cranston, RI 02921
Washington Trust Investors, 68 South Main Street, Providence, RI 02903
Finance/Investmen Director t Executive
Emily C. Harrison, M.D. 15 Oriole Street Rumford, RI 02916
21 Division Street Pawtucket, RI 02860
Physician
Director
William M. Kapos 401 Ocean Road Narragansett, RI 02882
Excellent Coffee, 29 East Avenue, Pawtucket, RI 02860
Business Executive/Owner
Director
Diane Lipscombe, Ph.D. Brown University, 185 6 Watson Avenue Meeting Street, Barrington, RI 02806Providence, RI 02912 4010
Professor & Research Director of the Brown Institute for Brain Science
Director
Louis John Marino, Jr., M.D. 83 State Street Bristol, RI 02809
Butler Hospital, 345 Blackstone Boulevard, Providence, RI 02906
Physician
Director
Joseph J. McGair 95 Sandy Lane Warwick, RI 02889
Petrarca & McGair, 797 Bald Hill Road, Warwick, RI 02886
Attorney
Director
Patrick J. Murray, Jr. 255 Boxwood Lane Bridgewater, MA 02324
Bristol County Savings Bank, 55 Broadway, Taunton, MA 02780
Finance Executive
Director
46
Name, Home Address
Business Address
Occupation
Board Position
George W. Shuster 44 Robin Vale Drive Harmony, RI 02857
Cranston Print Works, 1361 Cranston Street, Cranston, RI 02920
Business Executive Director
Maribeth Q. Williamson 450 Wakefield Street West Warwick, RI 02893
450 Wakefield Street, West Warwick, RI 02893
Insurance Executive
Director
2. For each individual listed in response to Question 1 above, list all (if any) other health care facilities or entities within or outside Rhode Island in which he or she is an officer, director, trustee, shareholder, partner, or in which he or she owns any equity or otherwise controlling interest. For each individual, please identify: A) the relationship to the facility and amount of interest held, B) the type of facility license held (e.g. nursing facility, etc.), C) the address of the facility, D) the state license #, E) Medicare provider #, and F) any professional accreditation (e.g. JACHO, CHAP, etc.). Name
Relationship/ Interest
Type of License
Address of Facility
Charles R. Reppucci
RI Blood Center (Vice-chair of Board of Directors)
Clinical Lab
405 Promenade St. Providence, RI 02908
Denise M. Arcand, M.D.
Practice Support Services Agreement with Dr. Arcand’s practice, which received payment of $443,000 from Affinity.
MD
1079 Main St. West Warwick, RI 02893
47
State License #
LCI00150
#10505
Medicare Provider #
Professional Accreditation
NPI 1699811059 NPI 107378683
CLIA #41D0670559 FDA #1786 AABB
#70089141
Doctor of Family Medicine
3. If any individual listed in response to Question 1 above, has any business relationship with the licensee, applicant and/or ultimate parent entity, including but not limited to: supply company, mortgage company, or other lending institution, insurance or professional services, please identify each such individual and the nature of each relationship. Name
Nature of Relationship
Charles R. Reppucci
Executive employee of Hinckley Allen & Snyder, which received payment of approximately $362,000 during FY15 for legal services provided.
Denise M. Arcand, M.D.
Lease between Kent Ancillary Services, LLC and Dr. Arcand’s practice, which received payment of $7,325 in FY15
Robert G. Flanders, Jr.
Former partner of Hinckely Allen Snyder, which received payment of approximately $362,000 during FY15 for legal services provided. Partner of Whelan, Corrente, Flanders, Kinder & Siket
William M. Kapos
President and director of Excellent Coffee Co., Inc., which provides goods/services to MHRI and received payment of approximately $14,000 in FY15
4. Have any individuals listed in response to Question 1 above been convicted of any state or federal criminal violation within the past 20 years? Yes___ No_X_. · If response is ‘Yes’, please identify each person involved, the date and nature of each offense and the legal outcome of each incident. 5. Please provide organization chart for the applicant, identifying all "parent" entities with direct or indirect ownership in or control of the applicant, all "sister" legal entities also owned or controlled by the parent(s), and all subsidiary entities owned by the applicant. Please provide a brief narrative clearly explaining the relationship of these entities, the percent ownership the principals have in each (if applicable), and the role of each and every legal entity that will have control over the applicant. Care New England Health System is the parent holding company that directly or indirectly controls each entity within the system. Care New England is the sole member of Women & Infants Corporation, which in turn is the sole voting 48
member of WIH. The boards of directors of Women & Infants Corporation and WIH are each composed of those individuals then-serving as directors on the board of directors of Care New England. The Hospital has a 100 percent ownership interest in Women & Infants Ancillary Services LLC, which provides phlebotomy and other services. The Hospital has a 100 percent ownership interest in Women & Infants Indemnity Ltd., an offshore insurer. The Hospital controls WIH Faculty Physicians, Inc., by virtue of the fact that all the directors of the entity are physicians employed by WIH or its affiliates. This entity is a Massachusetts not-for-profit corporation that provides medical services in Massachusetts. The Applicant is also the direct parent of Women & Infants Development Foundation, a non-profit fund raising entity. WIH has a 100 percent ownership interest in Women & Infants Health Care Alliance, LLC and is a 50 percent shareholder in Women & Infants Physician Hospital Organization, both of which are no longer active. The other shareholder in the inactive PHO is Perinatal and Gynecological Services, Inc. The two entities that directly or indirectly control the Applicant are Women & Infants Corporation and Care New England Health System.
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6. Please list all licensed healthcare facilities (in Rhode Island or elsewhere) owned, operated or controlled by any of the entities identified in response to Question 5 above (applicant and/or its principals). For each facility, please identify: A) the entity, applicant or principal involved, B) the type of facility license held (e.g. nursing facility, etc.), C) the address of the facility, D) the state license #, E) Medicare provider #, and F) any professional accreditation (e.g. JACHO, CHAP, etc.). Entity
Type of License
Address
Facility State License #
Medicare Provider #
Professional Accreditation
Women & Infants Hospital of Rhode Island
Hospital
101 Dudley Street Providence, RI 02905
HOS 00126
410010
The Joint Commission, United State Department of Justice Drug Enforcement Administration, The College of American Pathologists, Centers for Medicare and Medicaid Services Clinical Laboratory Improvement Amendments, American College of Radiology, US Department of Health and Human Services FDA
Butler Hospital
Hospital
345 Blackstone Boulevard Providence, RI 02906
HOS 00124
414000
The Joint Commission, Unified State Department of Justice Drug Enforcement Administration, U.S. Department of Health and Human Services (SAMHSA), Centers for Medicare and Medicaid Services Clinical Laboratory Improvement Amendments
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Entity
Type of License
Address
Facility State License #
Medicare Provider #
Professional Accreditation
Kent County Memorial Hospital
Hospital
455 Toll Gate Road Warwick, RI 02886
HOS 00125
41009
The Joint Commission, United State Department of Justice Drug Enforcement Administration, Rhode Island Radiation Control Agency, Centers for Medicare and Medicaid Services Clinical Laboratory Improvement Amendments, The College of American Pathologists, U.S. Department of Health & Human Services FDA, American College of Radiology, Intersocietal Accreditation Commission Nuclear / PET, CARF International, National Accreditation Program for Breast Centers, The Undersea and Hyperbaric Medical Society
Memorial Hospital of Rhode Island
Hospital
111 Brewster Street Pawtucket, RI 02960
HOS 00130
41001
The Joint Commission, United State Department of Justice Drug Enforcement Administration, Rhode Island Radiation Control Agency, Centers for Medicare and Medicaid Services Clinical Laboratory Improvement Amendments, The College of American Pathologists, American College of Radiology, CARF International
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Entity
Type of License
Address
Facility State License #
Medicare Provider #
Professional Accreditation
The Providence Center
Behavioral Healthcare Services
528 North Main Street Providence, RI 02904
BHDDH License # 631.0
69000389
CARF International
Kent County Visiting Nurse Association d/b/a VNA of Care New England
Home Nursing Care Provider
51 Health Lane Warwick, RI 02886
HNC02259
417006A
HSP01601
411505A
The Joint Commission, Center to Advance Palliative Care, National Association for Home Care, National Hospice and Palliative Care Organization, Ocean State Adult Immunization Coalition, Rhode Island Partnership for Home Care, Rhode Island Visitng Nurse Network Incorporated, United Way of Rhode Island, Visiting Nurse Association of America
HNC02393
None
Hospice Provider
HealthTouch, Inc.
Home Nursing Care Provider Nursing Service Agency
51 Health Lane Warwick, RI 02886
The Joint Commission
NPA00131
7. Have any of the facilities identified in Question 5 or 6 above had: A) federal conditions of participation out of compliance, B) decertification actions, or C) any actions towards revocation of any state license? Yes _ _ No _X_ · If response is ‘Yes’, please identify the facility involved, the nature of each incident, and the resolution of each incident.
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8. Have any of the facilities owned, operated or managed by the applicant and/or any of the entities identified in Question 5 or 6 above during the last 5-years had bankruptcies and/or were placed in receiverships? Yes___ No_X__ ·
If response is ‘Yes’, please identify the facility and its current status.
9. For applications involving establishment of a new entity or involving out of state entities, please provide the following documents: · · ·
Certificate and Articles of Incorporation and By-Laws (for corporations) Certificate of Partnership and Partnership Agreement (for partnerships) Certificate of Organization and Operating Agreement (for limited liability corporations
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Attachment 1 Charity Care Policy
____________________________________________________ FINANCIAL ASSISTANCE POLICY SUBJECT: Financial Assistance and IRS 501(r)
PREPARED BY:
PAGE: 1 of 7
APPROVED BY:
Michael H. Smith, Interim VP Revenue Cycle
EFFECTIVE DATE: October 1, 2016
POLICY NUMBER: CNE-
REPLACES: Finance 1
REPLACES:
Care New England Board of Directors
I.
Purpose. The purpose of this Financial Assistance Policy (FAP) is to ensure that Care New England (hereafter identified as CNE) is in compliance with the standards set by the State of Rhode Island and Federal Agencies for the Provision of Charity Care and section §501(r) of the Internal Revenue Code. Financial assistance is intended to ensure all patients receive essential emergency and other medically necessary healthcare services provided by CNE regardless of their ability to pay. To that end, CNE will assist individuals who do not otherwise have the ability to pay charges as determined under CNE’s qualification criteria and takes into account each individual’s ability to contribute to the cost of his or her care. CNE financial assistance is not intended to serve as a substitute for employer-sponsored, privately purchased, third party liability, state or federally funded assistance or insurance programs.
II.
Scope. This Policy applies to Care New England (CNE) and all Care New England hospitals, and the specified entities as defined below:
Butler Hospital Kent Hospital Memorial Hospital Women & Infants Hospital Butler Hospital Allied Medical Services, LLC Kent Ancillary Services, LLC MHRI Ancillary Services, LLC W&I Ancillary Services, LLC W&I Health Care Alliance, LLC Affinity Physicians, LLC
A listing of additional providers who elect to follow CNE’s Financial Assistance Plan as well as those providers who do not participate (Exhibit 1) is available on CNE’s website: www.carenewengland.org.
Page 1 of 7
III.
IV.
Policy. All patients will be provided treatment for all emergent and medically necessary healthcare services regardless of their ability to pay as outlined in the CNE Emergency Medical Treatment and Active Labor Act (EMTALA) Policy. Copies of this policy may be obtained, free of charge, by calling CNE’s Compliance Department at (401) 277-3660.
The decision to extend financial assistance will be based solely on the applicant’s financial status as indicated by pre-determined eligibility requirements and will be granted to all qualifying patients, regardless of race, color, religion, age, national origin, marital status or legally protected status. This policy will be uniformly applied to any patients having no insurance or inadequate health insurance.
Patients are eligible for financial assistance for emergent and all medically necessary healthcare services. Medically necessary healthcare services are defined as hospital services that are reasonably required to make a diagnosis, to correct, cure, alleviate, or prevent the worsening of conditions that endanger life or cause suffering or pain, or result in illness or infirmity, or threaten to cause or aggravate a handicap, or cause physical deformity or malfunction, and there is no other equally effective, more conservative, or substantially less costly course of treatment available or suitable for the person requesting the service.
Patients who qualify for CNE Charity Care are eligible for discounted or free prescription coverage. The prescription must be pursuant and related to care provided by a CNE 340B Covered Entity (Acute Care Hospitals within the Care New England System). When the elements of the 340B patient definition (as set forth by HRSA) are met, a 340B medication may be utilized.
Definitions. Capitalized terms not otherwise defined below but used in this Policy shall have the meanings assigned to them in this Policy.
Amounts Generally Billed (AGB): Pursuant to Internal Revenue Code (“IRC”) §501(r)(5), in the case of emergency or other medically necessary care, the amounts generally billed for emergency or other medically necessary care to individuals who have insurance covering such care. Amounts Generally Billed Percentage: A percentage of gross charges that a hospital facility uses to determine the AGB for any emergency or other medically necessary care it provides to an individual who is eligible for assistance under this FAP. Application Period: The time period in which an individual may apply for financial assistance. To satisfy the criteria outlined in IRC §501(r)(6), CNE allows individuals up to 240 days from the date the individual is provided with the first post-discharge billing statement to apply for financial assistance. Eligibility Criteria: The criteria set forth in this FAP (and supported by procedure) used to determine whether or not a patient qualifies for financial assistance. Emergency medical conditions: Defined within the meaning of section 1867 of the Social Security Act (42 U.S.C. 1395dd).
Page 2 of 7
V.
Extraordinary Collection Actions (“ECAs”): Includes any of the following actions taken by CNE against an individual related to obtaining payment of a bill for care covered under this FAP. ECAs include, but are not limited to, actions that require a legal or judicial process, reporting adverse information to consumer credit reporting agencies or credit bureaus, placing of a lien and/or foreclosing on real property, attaching or seizing a bank account or garnishment of wages, and deferring, denying or requiring payment prior to providing non-emergency medical care due to nonpayment of debt for previously provided care covered under the Policy. Family: Using the Census Bureau definition, a group of two or more people who reside together and who are related by birth, marriage, civil union or adoption. Family Income: Family Income is determined using the Census Bureau definition, which uses the following income when computing poverty guidelines: Income earnings, unemployment compensation, worker’s compensation, Social Security, Supplemental Security Income, public assistance, veterans’ payments, survivor benefits, pension or retirement income, interest, dividends, rents, royalties, income from estates, trusts, educational assistance, alimony, child support, assistance from outside the household, and other miscellaneous resources. FAP-eligible: Individuals who are eligible for full or partial financial assistance under this policy. Federal Poverty Level Guidelines: The federal poverty level guidelines (“FPL”) are established by the United States Department of Health and Human Services on an annual basis and are used within this FAP for determining financial eligibility. Financial Assistance: Free or discounted healthcare services offered to individuals who are unable to pay for all or a portion of their medical services. Gross Charges: The full established price for medical care that is consistently and uniformly charged to patients before applying any contractual allowances, discounts or deductions. Plain Language Summary (“PLS”): A written statement which notifies an individual that CNE offers financial assistance under this FAP and provides additional information in a clear, concise and easy to understand manner. Underinsured: An individual who has some level of insurance or third party coverage, but still has out-of-pocket healthcare costs that exceed their financial abilities. Underinsurance includes, but is not limited to, deductibles, coinsurance, co-payments, exhausted benefits and lifetime benefit limits. Uninsured: An individual who has no level of insurance or third party coverage, including Medicare, Medicaid, or any other government or commercial insurance program, to help pay for healthcare services. Non-covered services: Services that are not covered under the patient’s benefits / insurance plan and therefore will not be paid by the patient’s insurance plan.
Procedure.
Page 3 of 7
1. Patients having no health insurance or inadequate health insurance coverage are eligible to apply for the program. To be considered for financial assistance under the Financial Assistance Policy, the patient and/or legal representative must submit a complete Financial Assistance Application (including related documents/information) (Exhibit 2) and must cooperate with CNE by providing the information and documentation necessary to apply for other existing financial resources that may be available to pay for his or her health care, such as Medicare, Medicaid, RItecare, third party liability, etc. 2. CNE’s Financial Assistance Policy, Plain Language Summary (PLS), application form and required documents are available on CNE’s website: www.carenewengland.org. Additionally, individuals may, at no charge, request documents by mail, by calling (401) 921-7200, or in-person at any of the following CNE Hospital locations:
Butler Hospital: 345 Blackstone Boulevard, Providence RI 02906 Patient Financial Services Office, Sawyer Building, 1st Floor Office Hours: Monday-Friday 8:00AM – 4:30PM Telephone: (401) 455-6240 Kent Hospital: 455 Tollgate Road, Warwick, RI 02886 Business Office, 2nd Floor 8:00AM – 4:30PM Office Hours: Monday-Friday Telephone: (401) 921-7200 Memorial Hospital: 111 Brewster Street, Pawtucket, RI 02860 Business Office, 1st Floor 8:00AM – 4:30PM Office Hours: Monday-Friday Telephone: (401) 729-2111 Women & Infants Hospital: 101 Dudley Street, Providence RI 02905 Business Office, 1st Floor Office Hours: Monday-Friday 8:00AM – 4:30PM Telephone: (401) 274-1122, ext 41419
Additionally, CNE will publicize this FAP and the PLS in the entities we serve. Financial Assistance may be accessed as follows: Patients or their representatives may request financial assistance CNE employees may refer patients or their representatives Referring physicians may refer patients or their representative 3. Full financial assistance will be granted to patients whose gross family income is less than or equal to 200% of the Federal Poverty Levels (FPL), adjusted for family size, provided such patients are not eligible for other private or public health coverage and do not exceed the assets protection threshold. In cases where the patient/guarantor qualifies for Financial Assistance under the income criterion but does not meet the assets criterion, CNE will provide the highest discount offered under the sliding scale. The maximum liability to the patient/guarantor will be the actual assets less the applicable asset thresholds or the maximum cap
Page 4 of 7
limitations as defined by Rhode Island and Federal regulations, including IRS §501(r), whichever is less (please see item 6 below). 4. Patients with gross income between 201% and 300% of the FPL and who do not exceed the assets protection threshold are also eligible for financial assistance for a portion of the medical bill, based upon a sliding scale (Exhibit 3). The patient’s financial responsibility is subject to maximum cap limitations as defined by Rhode Island State and Federal Regulations including IRS §501(r) or as periodically set by CNE. The maximum liability charged to the patient/guarantor will not exceed the lesser of AGB, state law or whichever other criteria set by CNE. Information related to the limitations set by CNE as well as the sliding scale may be obtained free of charge by calling CNE Customer Service at (401) 921-7200. 5
CNE will follow established collection procedures to obtain payment from individuals with a financial obligation after application of the sliding fee schedule as outlined in the CNE Billing and Collections Policy. Uninsured patients will be notified of Financial Assistance at discharge. All patients, insured and uninsured, will also be notified of the FAP through the patient billing statement process for 120 days after the first post-discharge billing statement for care (“Notification Period”). Additionally, individuals may request Financial Assistance documents by mail, by calling (401) 921-7200, or in-person at any of the CNE Hospital locations (see item 2).
6
To be eligible for 100% financial assistance or partial financial assistance, the maximum liquid assets (excluding a primary residence and personal automobile) shall not exceed the thresholds as indicated on the Sliding Scale for individuals and family units and increased annually in accordance with the most current Consumer Price Index. In the event that these thresholds prevent an individual’s ability to qualify for Rhode Island’s Medical Assistance program(s) CNE will replace those thresholds with those utilized by Rhode Island’s Medical Assistance program(s). Rhode Island Medical Assistance thresholds can be found on line at: http://medicaid4you.com/eligibility-requirements. A family unit, using the Census Bureau definition, is a group of two or more people who reside together and who are related by birth, marriage, civil union or adoption. The amount or percent of the total charges collected on the private pay portion will be equal to or less than the Amount Generally Billed (AGB) (Exhibit 4) as defined: Pursuant to Internal Revenue Code (“IRC”) §501(r) (5), in the case of emergency or other medically necessary care, the amounts generally billed for emergency or other medically necessary care to individuals who have insurance covering such care. If an incomplete FAP application is received, CNE will provide the individual with written notice that describes the additional information or documentation required to make a FAP-eligible decision, along with the Plain Language
Page 5 of 7
Summary (PLS), and allow the individual 30 days to provide the information. CNE will also suspend any ECA’s to obtain payment for care during this time. Individuals will be provided a phone number to call with any questions regarding the additional information or documentation required. Exceptions that exceed the standard policy benefits must be approved by the Vice President of the Revenue Cycle or his/her designee. 7. The patient/guarantor may appeal a denial of eligibility for financial assistance by providing additional verification of income or family size within thirty (30) days of receipt of notification of denial. All appeals will be reviewed by the Vice President of the Revenue Cycle or her/his designee for final determination. By CNE definition, an appeal requires a review by a management level at least one grade higher than that of the original reviewer. A request for appeal must be processed within 30 days from receipt of an appeal request. Written notification of the appeal results must be provided to the patient/guarantor. 8. Amount Collected: The amount or percent of the total charges collected on the private pay portion will be not be greater than the Amount Generally Billed (AGB) as stipulated in the IRS §501(r)(5) regulation. 9. If a patient is uninsured and meets the criteria to qualify for an uninsured discount as defined in the CNE Credit Policy, the maximum liability charged to the patient/guarantor will not exceed the lesser of AGB, state law or whichever other criteria set by CNE. Discount Programs:
Community Benefit Discount: All uninsured patients receive a 30% discount for medically necessary services regardless of their ability to pay.
Advance Payment Discount: All uninsured patients are eligible to receive a 20% discount for payment of the expected liability prior to or on the date of service. This discount will apply to any additional unexpected liability provided that the patient remits payment in full within thirty (30) days of the final bill. In the event that the payment of the expected liability exceeded the 20% requirement, CNE will issue a refund to the patient no later than 30 days after the charges are finalized.
Prompt Payment Discount: All uninsured patients not already benefiting from the advance payment discount are eligible for a 10% discount on their balance, provided that the patient remits payment in full within thirty (30) days of the final bill.
10. CNE reserves the right to revoke financial assistance if it determines a patient has knowingly misrepresented their financial condition, the number of dependents or any other information necessary to determine financial status for purposes of this policy.
Page 6 of 7
11. The ‘Notice of Hospital Financial Aid’ will be available on CNE websites, patient bills and upon request. It will also be posted in Emergency Departments, main lobbies, offices and in admission/registration areas throughout CNE. 12. The Financial-Aid Criteria must be available in other languages in accordance with the applicable “Standards for Culturally and Linguistically Appropriate Services in Health Care” (Standards 4 & 7, based on Title VI of the Civil Rights Act of 1964). They must be approved by the Director and made available to all persons on request. CNE will make every effort to ensure that policies are clearly communicated to patients whose primary languages are languages other than those already provided. Translation services may be provided upon request.
APPROVED: [INSERT DATE]
Page 7 of 7
Care New England Financial Assistance Policy – Plain Language Summary
The Care New England Financial Assistance Policy/Program (FAP) exists to provide eligible patients, partially or fullydiscounted emergency or other medically necessary healthcare services provided by Care New England, which includes Butler Hospital, Women & Infants Hospital, Kent Hospital and Memorial Hospital, Butler Hospital Allied Medical Services, LLC, Kent Ancillary Services, LLC, Affinity Physicians, LLC, MHRI Ancillary Services, LLC, W&I Ancillary Services, LLC & W&I Health Care Alliances, LLC. Care New England and any substantially related entity are hereinafter referred to as Care New England. Patients seeking Financial Assistance must apply for the program, which is summarized herein. Eligible Services – Emergency or other medical necessary healthcare services provided by Care New England and billed by Care New England. The FAP only applies to services billed by Care New England. Other services which are separately billed by other providers, such as physicians or laboratories, are not eligible under the FAP. Eligible Patients – Patients receiving eligible services, who submit a complete Financial Assistance Application (including related documentation/information), and who are determined eligible for Financial Assistance by Care New England. How to Apply – FAP and related Application Form may be obtained/completed/submitted as follows:
Request documents by mail/or visiting In-person at any of the following CNE Hospital Facility locations: o Butler Hospital, Patient Financial Services, 345 Blackstone Blvd, Providence, RI 02906 o Women & Infants Hospital, Patient Financial Services, 101 Dudley St, Providence, RI 02905 o Kent Hospital, Patient Financial Services, 455 Tollgate Road, Warwick RI 02886 o Memorial Hospital, Patient Financial Services, 111 Brewster St, Pawtucket, RI 02860 Care New England’s Financial Assistance Policy is also available upon request by mail, or in person, at any of the CNE Hospital Facilities listed above. Request documents be mailed to you, by calling Care New England’s Patient Financial Services Office at 401-9217200. Download the documents from Care New England’s website: www.carenewengland.org. Mail completed applications or deliver in person (with all documentation/information specified in the application instructions) to any of the CNE Hospital Facilities listed above. Determination of Financial Assistance Eligibility – Generally, Eligible Persons are eligible for Financial Assistance, using a sliding scale, when their Family Income is at or below 300% of the Federal Government’s Federal Poverty Guidelines (FPG). Eligibility for Financial Assistance means that Eligible Persons will have their care covered fully or partially, and they will not be billed for more that the “Amounts Generally Billed” (AGB) to insured persons (AGB, as defined in IRS Section 501(r) by the Internal Revenue Service). Financial Assistance levels, based solely on Family Income and FPG, are: Family Income at 0 to 200% of FPG, Full Financial Assistance; $0 is billable to the patient. Family Income at 201-300% of FPG, Partial Financial Assistance; AGB is maximum billable to the patient.
Note: Other criteria beyond FPG are also considered (i.e. availability of cash or other assets that may be converted to cash, and excess monthly income relative to monthly household expenditures), which may result in exceptions to the preceding. If no Family Income is reported, information will be required as to how daily needs are met. Care New England reviews submitted applications which are complete, and determines Financial Assistance Eligibility in accordance with Care New England’s Financial Assistance Policy. Incomplete applications are not considered, but applicants are notified and given the opportunity to furnish the missing documentation/information. Care New England also translates the FAP, FAP application form and the plain language summary of its FAP in other languages wherein the primary language of the residents of the community served by Care New England represent 5 percent or 1,000; whichever is less; of the populations of individuals likely to be affected or encountered by Care New England. Translated versions are available upon request in person or at the address below; and on Care New England’s website. For help, assistance or questions please visit or call: Care New England’s Patient Financial Services Department at 401921-7200; Visiting In-person, come to any of the CNE Hospital Facility Locations listed above Monday through Friday from 8:00am-4pm.
REQUIREMENTS FOR FINANCIAL ASSISTANCE PROGRAM – UNDERINSURED
The following documentation, if applicable, must accompany an application for Care New England Financial Assistance. 1)
Tax return with supporting documentation for the most recent year filed.
2)
Income Records*(see detailed explanation below) a) Current pay stubs (minimum of 4 weeks) b) Disability award letter c) Social Security award letter (waived if direct deposit and bank statement is provided) d) Parent’s income (tax return) when person applying for financial assistant is a student
3)
Asset Records** (see detailed explanation below) a) Bank Statements including savings, checking, investment statements, annuities, CD’s, money market accounts, stocks, bonds, pensions and IRA’s b) Cash value of life insurance policies. c) Personal property (other than primary residence and motor vehicle for personal use)
4)
Medical Assistance and/or HealthSource RI approval/denial
5)
Copy of death certificate if applicable.
6)
Proof of student status if applicable.
7)
Letter of support if applicable.
8)
Expenses and Liabilities a) Most recent statement for mortgage/rent, property taxes, utilities, automobile payments/leases, credit cards, installment loans, auto/home insurance, medical expenses and other expenses.
*Income Records: Income means the actual or estimated total annual cash receipts before taxes from salaries, wages, selfemployment income, child care income, rental income, unemployment compensation, temporary disability insurance, child support, alimony, worker’s compensation, veteran’s benefits, social security payments, dividend and interest income, royalties, private and public pensions, and public assistance. Also included in income are strike benefits, net lottery and gambling winnings and one-time insurance payments or injury compensation received in the calendar year in which the financial aid is sought for the hospital services. **Asset Records: Assets means cash, cash-equivalent and other hard assets that can be converted into cash, including cash on hand, savings accounts, checking accounts, Certificates of Deposits (CDs), money market accounts, stocks (common and preferred), bonds, mutual funds, IRAs, 401(k)s, 403(b)s, 457s, cash-in value of life insurance policies, personal property. Motor vehicles other than for personal use, second homes and rental properties. Excluded from assets are primary resident and motor vehicle for personal use.
REQUIREMENTS FOR FINANCIAL ASSISTANCE PROGRAM - UNINSURED
The following documentation, if applicable, must accompany an application for Care New England Financial Assistance. 1)
Tax return with supporting documentation for the most recent year filed.
2)
Income Records*(see detailed explanation below) a) current pay stubs (minimum of 4 weeks) b) Disability award letter c) Social Security award letter (waived if direct deposit and bank statement is provided) d) Parent’s income (tax return) when person applying for financial assistant is a student
3)
Asset Records** (see detailed explanation below) a) Bank Statements including savings, checking, investment statements, annuities, CD’s, money market accounts, stocks, bonds, pensions and IRA’s b) Cash value of life insurance policies. c) Personal property (other than primary residence and motor vehicle for personal use)
4)
Medical Assistance and/or HealthSource RI approval/denial
5)
Copy of death certificate if applicable.
6)
Proof of student status if applicable.
7)
Letter of support if applicable. *Income Records: Income means the actual or estimated total annual cash receipts before taxes from salaries, wages, self-employment income, child care income, rental income, unemployment compensation, temporary disability insurance, child support, alimony, worker’s compensation, veteran’s benefits, social security payments, dividend and interest income, royalties, private and public pensions, and public assistance. Also included in income are strike benefits, net lottery and gambling winnings and one-time insurance payments or injury compensation received in the calendar year in which the financial aid is sought for the hospital services. **Asset Records: Assets means cash, cash-equivalent and other hard assets that can be converted into cash, including cash on hand, savings accounts, checking accounts, Certificates of Deposits (CDs), money market accounts, stocks (common and preferred), bonds, mutual funds, IRAs, 401(k)s, 403(b)s, 457s, cash-in value of life insurance policies, personal property. Motor vehicles other than for personal use, second homes and rental properties. Excluded from assets are primary resident and motor vehicle for personal use.
APPLICATION FOR HOSPITAL FINANCIAL AID-UNDERINSURED Any approval of this request is temporary and expires 12 months from date of approval
Hospital: r Butler r Kent r Memorial r Women & Infants
Date:
Patient:
Guarantor/Spouse:
MR#:
MR#:
Date of Birth:
Social Security # (if issued):
Social Security # (if issued):
Home Phone:
Home Phone:
Work Phone:
Work Phone:
Relation to Patient:
Home Address:
Address:
Occupation & Employer: Employer Address: Language: r English r Non-English Ethnicity: r Hispanic r Non-Hispanic r No Ethnicity Identified Race:
r American Indian/Alaska Native
r Black/Africian American
r Native Hawaiian/Pacific Islander r White
r Other or Multiple Races
r Asian
r No Race Identified
Please provide the following information for ALL members of the family unit, EXCEPT the Patient or Guarantor. Name & Relationship to Patient:
SS# (if issued):
Employer, Phone & Address:
Home Address:
Name & Relationship to Patient:
SS# (if issued):
Employer, Phone & Address:
Home Address:
Name & Relationship to Patient:
SS# (if issued):
Employer, Phone & Address:
Home Address:
Name & Relationship to Patient:
SS# (if issued)
Employer, Phone & Address:
Home Address: AMT
MONTHLY INCOME
AMT
ASSETS
Date of Birth:
MR#:
Date of Birth:
MR#:
Date of Birth:
MR#:
Date of Birth:
MR#:
AMT
MONTHLY EXPENSES/LIABILITIES
Patient’s Salary & Wages
Savings
Spouse’s Salary & Wages
Checking
Guarantor’s Salary & Wages
Certificates of Deposit (CDs)
Property Taxes if not included in mortgage payment
Self-Employment Income
Money Market Accounts
Utilities:
Child Care Income
Savings Bonds
Rental Income
Stocks
Unemployment Compensation
Bonds
Temporary Disability Insurance
Mutual Funds
Child Support
IRAs
Alimony
401(k)s
VA Benefits
403(b)s
Social Security Payments
457s
Dividend & Interest Income
Cash-In Value Life Insurance
Auto Insurance
Royalties
Personal Property
Homeowners Insurance
Pensions
2nd Home & Rental Property
Medical Expenses
Public Assistance
Additional Motor Vehicles
Groceries
Mortgage or Rent Payment Current Balance _______________
Gas/Electric/Oil _______ Cable/Internet _______ Phone _______
Auto Payments or Lease Payments Current Balance _______________ Credit Card Payments Current Balance _______________ Installment Loans Current Balance _______________
Other Expenses
Other MONTHLY INCOME: ANNUAL INCOME:
TOTAL:
TOTAL:
“I request the hospital to make a determination of eligilibility for financial aid. I understand that this information is confidential and subject to verification by the hospital. I also understand that if the information I provide is false, I may be denied financial aid and be liable for payment for the hospital services provided. I hereby attest that the information in this application is complete and correct to the best of my knowledge and that I understand the process and my responsibilities.” Patient’s Signature:
Date:
Hospital Representative’s Signature:
Date:
FOR INTERNAL PURPOSES ONLY Approved By:
Date:
Denied By:
Date:
Insurance Coverage:
Medical Assistance: r Yes
Services related to work injury or other type of accident: r Yes
r No
Comments: Family Size:
FPG Level:
DISCOUNT (%):
DISCOUNT ($):
Maximum Patient Responsibility:
%FPG:
r No
APPLICATION FOR HOSPITAL FINANCIAL AID
Any approval of this request is temporary and expires 12 months from date of approval Hospital: r Butler
r Kent
Date:
r Women & Infants
Patient:
Guarantor/Spouse:
MR#:
MR#:
Date of Birth:
Social Security # (if issued):
Social Security # (if issued):
Home Phone:
Home Phone:
Work Phone:
Work Phone:
Relation to Patient:
Home Address:
Address:
Occupation & Employer: Employer Address:
Language: r English
r Non-English
Ethnicity:
r Hispanic
r Non-Hispanic
Race:
r Asian
r American Indian/Alaska Native
r Black/Africian American
r White
r Other or Multiple Races
r No Race Identified
r No Ethnicity Identified r Native Hawaiian/Pacific Islander
Please provide the following information for ALL members of the family unit, EXCEPT the Patient or Guarantor. Name & Relationship to Patient: SS# (if issued): Date of Birth: MR#: Employer, Phone & Address: Home Address: Name & Relationship to Patient: SS# (if issued): Date of Birth: MR#: Employer, Phone & Address: Home Address: Name & Relationship to Patient: SS# (if issued): Date of Birth: MR#: Employer, Phone & Address: Home Address: Name & Relationship to Patient: SS# (if issued) Date of Birth: MR#: Employer, Phone & Address: Home Address: MONTHLY INCOME Patient’s Salary & Wages: Spouse’s Salary & Wages: Guarantor’s Salary & Wages: Self-Employment Income: Child Care Income: Rental Income: Unemployment Compensation: Temporary Disability Insurance: Child Support: Alimony: Workers’ Compensation: VA Benefits: Social Security Payments: Dividend & Interest Income: Royalties: Pensions: Public Assistance: Other: MONTHLY INCOME: ANNUAL INCOME:
ASSETS Savings: Checking: Certificates of Deposit (CDs): Money Market Accounts: Savings Bonds: Stocks: Bonds: Mutual Funds: IRAs: 401(k)s: 403(b)s: 457s: Cash-In Value Life Insurance: Personal Property: 2nd Home & Rental Property: 2nd Motor Vehicle: TOTAL:
“I request the hospital to make a determination of eligilibility for financial aid. I understand that this information is confidential and subject to verification by the hospital. I also understand that if the information I provide is false, I may be denied financial aid and be liable for payment for the hospital services provided. I hereby attest that the information in this application is complete and correct to the best of my knowledge and that I understand the process and my responsibilities.” Patient’s Signature:
Date:
Hospital Representative’s Signature:
Date:
FOR INTERNAL PURPOSES ONLY Approved By:
Date:
Denied By:
Date:
Insurance Coverage:
Medical Assistance: r Yes
Services related to work injury or other type of accident: r Yes
r No
Comments: Family Size:
FPG Level:
DISCOUNT (%):
DISCOUNT ($):
Maximum Patient Responsibility: 8317-50.02 (3-2007)
%FPG:
r No
Attachment 2 Audited Financial Statements
Care New England Health System and Affiliates Consolidated Financial Statements with Supplemental Consolidating Information September 30, 2016 and 2015
Care New England Health System and Affiliates Index September 30, 2016 and 2015 Page(s) Report of Independent Auditors ........................................................................................................... 1–2 Consolidated Financial Statements Balance Sheets ............................................................................................................................................ 3 Statements of Operations ............................................................................................................................ 4 Statements of Changes in Net Assets ......................................................................................................... 5 Statements of Cash Flows ........................................................................................................................... 6 Notes to Financial Statements ............................................................................................................... 7–53 Supplemental Consolidating Information 2016 Balance Sheet ............................................................................................................................. 54–55 2016 Statement of Operations and Changes in Net Assets ................................................................ 56–57 2015 Balance Sheet ............................................................................................................................. 58–59 2015 Statement of Operations and Changes in Net Assets ................................................................ 60–61
Report of Independent Auditors
To the Board of Directors Care New England Health System and Affiliates
We have audited the accompanying consolidated financial statements of Care New England Health System and Affiliates (“Care New England”), which comprise the consolidated balance sheets as of September 30, 2016 and 2015, and the related consolidated statements of operations, changes in net assets and cash flows for the years then ended. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to Care New England’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Care New England’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Boston, MA 02210 T: (617) 530 5000, F: (617) 530 5001, www.pwc.com/us
Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Care New England Health System and Affiliates as of September 30, 2016 and 2015, and the results of their operations, changes in net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The consolidating information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The supplemental consolidating information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental consolidating information is fairly stated, in all material respects, in relation to the consolidated financial statements taken as a whole. The supplemental consolidating information is presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position, results of operations, changes in net assets and cash flows of the individual Care New England affiliates and is not a required part of the consolidated financial statements. Accordingly, we do not express an opinion on the financial position, results of operations, changes in net assets and cash flows of the individual Care New England affiliates.
Boston, Massachusetts December 20, 2016
2
Care New England Health System and Affiliates Consolidated Balance Sheets Years Ended September 30, 2016 and 2015 2016 Assets Current Cash and cash equivalents Investments Patient accounts receivable, net of allowance for doubtful accounts of $43,311,099 in 2016 and $42,255,993 in 2015 Other receivables Pledges receivable, net Other current assets Current portion of assets whose use is limited
$
Total current assets Assets whose use is limited or restricted as to use Endowment funds Board-designated funds Trustee-held funds Deferred compensation funds Total assets limited as to use Less: Amounts required to meet current obligations
55,957,553 13,228,467
2015
$
48,803,805 27,163,691
114,394,717 17,106,281 750,139 19,248,916 1,195,891
139,822,039 21,404,988 1,022,395 16,763,651 446,827
221,881,964
255,427,396
60,985,452 130,135,058 161,366,754 1,956,897
50,819,449 120,450,884 163,469,410 1,912,022
354,444,161
336,651,765
(1,195,891)
Noncurrent assets limited as to use Goodwill Intangibles Property, plant and equipment, net Pledges receivable, net Insurance receivable Other assets Total assets Liabilities and Net Assets Current liabilities Notes payable Accounts payable and accrued expenses Current portion of estimated third-party payor settlements and advances Current portion of long-term debt and capital leases Self-insurance reserves Pension liability Other current liabilities
(446,827)
353,248,270
336,204,938
24,488,975 1,080,000 303,814,123 240,397 1,435,369 7,475,961
24,488,975 6,482,500 313,868,493 930,114 1,643,788 6,685,864
$
913,665,059
$
945,732,068
$
639,958 137,123,063
$
141,212,885
Total current liabilities Long-term liabilities Self-insurance reserves Long-term portion of estimated third-party payor settlements and advances Long-term debt and capital leases Pension liability Postretirement liability Other liabilities Total long-term liabilities Net assets Unrestricted Temporarily restricted Permanently restricted Total net assets
5,925,829 2,661,844 8,820,539 16,193,927 15,827,814
598,072 9,631,866 8,689,509 16,090,538 13,116,604
187,192,974
189,339,474
131,753,902 22,927,428 179,188,678 137,383,068 1,512,112 4,830,965
138,931,970 30,128,278 154,747,534 115,941,758 1,447,283 3,129,125
477,596,153
444,325,948
171,940,118 38,884,688 38,051,126
241,150,258 40,884,249 30,032,139
248,875,932
Total liabilities and net assets
$
913,665,059
312,066,646 $
945,732,068
The accompanying notes are an integral part of these consolidated financial statements. 3
Care New England Health System and Affiliates Consolidated Statements of Operations Years Ended September 30, 2016 and 2015
Revenues and gains Patient service revenue (net of contractual allowances) Provision for bad debts
2016
2015
$ 1,094,238,316 (36,676,625)
$ 1,061,792,820 (38,680,643)
Net patient service revenue less provision for bad debts
1,057,561,691
1,023,112,177
23,522,774 70,488,291 3,151,090
23,382,036 13,439,012 75,416,463 2,589,805
Total revenues and gains
1,154,723,846
1,137,939,493
Operating expenses Salaries and benefits Supplies and other expenses Research expenses Depreciation and amortization Insurance Licensure fee Interest Restructuring costs Loss on debt refinancing Loss on write-off of intangible assets
726,073,920 303,812,088 23,172,287 39,599,310 21,240,147 47,792,634 6,129,434 29,548,550 20,235,280 5,400,000
715,127,055 284,550,504 23,482,879 36,581,327 26,698,480 43,534,709 6,838,716 2,911,571 -
Total operating expenses
1,223,003,650
1,139,725,241
Research revenue Contribution revenue from acquisition Other revenue Net assets released from restrictions and used for operations
Loss from operations Nonoperating (losses)/gains Investment income and realized (losses)/gains on assets limited as to use Unrestricted gifts and bequests Change in net unrealized gains/(losses) on investments Other Net nonoperating gains/(losses) Deficiency of revenue and gains over expenses and losses Other changes in unrestricted net assets Pension and postretirement adjustments Net assets released from restrictions used for purchase of property, plant and equipment Transfer from deferred revenue Transfer to temporarily restricted Decrease in unrestricted net assets
$
(68,279,804)
(1,785,748)
(1,736,341) 1,724,653 17,542,646 (2,093,916)
7,077,581 1,033,483 (32,287,448) (1,873,179)
15,437,042
(26,049,563)
(52,842,762)
(27,835,311)
(22,814,764)
(40,968,090)
6,696,417 (249,031)
893,818 302,009 (781,570)
(69,210,140)
$
(68,389,144)
The accompanying notes are an integral part of these consolidated financial statements. 4
Care New England Health System and Affiliates Consolidated Statements of Changes in Net Assets Years Ended September 30, 2016 and 2015
Unrestricted net assets Deficiency of revenues and gains over expenses and losses Other changes in unrestricted net assets Pension and postretirement adjustments Net assets released from restrictions used for purchase of property, plant and equipment Transfer from deferred revenue Transfer to temporarily restricted Decrease in unrestricted net assets Temporarily restricted net assets Contributions Contribution of temporarily restricted net assets from acquisition Income from investments Net realized and unrealized gains/(losses) from investments Net assets released from restrictions Transfer to deferred revenue Transfer from unrestricted net assets Transfer to permanently restricted net assets (Decrease)/increase in temporarily restricted net assets Permanently restricted net assets Net realized and unrealized gains/(losses) from investments Contribution of permanently restricted net assets from acquisition Contributions Transfers from temporarily restricted net assets Increase/(decrease) in permanently restricted net assets Decrease in net assets Net assets Beginning of year End of year
2016
2015
$ (52,842,762)
$ (27,835,311)
(22,814,764)
(40,968,090)
6,696,417 (249,031)
893,818 302,009 (781,570)
(69,210,140)
(68,389,144)
4,998,565 364,926 2,657,633 (10,269,716) 249,031 -
4,704,247 3,795,867 530,596 (1,913,133) (3,311,841) (662,715) 781,570 (896,626)
(1,999,561)
3,027,965
1,002,130 7,016,857 -
(1,454,092) 100,000 33,832 896,626
8,018,987
(423,634)
(63,190,714)
(65,784,813)
312,066,646
377,851,459
$ 248,875,932
$ 312,066,646
The accompanying notes are an integral part of these consolidated financial statements. 5
Care New England Health System and Affiliates Consolidated Statements of Cash Flows Years Ended September 30, 2016 and 2015
Cash flows from operating activities Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities Change in beneficial interest in perpetual trusts Contribution revenue from acquisition, net of cash Loss on write-off of intangibles Loss on disposals of property, plant and equipment Pension and postretirement adjustments Depreciation and amortization Loss on extinguishment of debt Bond premium Provision for bad debt Income and realized losses/(gains) on assets limited as to use Net unrealized (gains)/losses on investments Restricted contributions and investment income Changes in Patient accounts receivable Investments - trading securities Other current and long-term assets Accounts payable and accrued expenses Estimated third-party payor settlements Other liabilities Net pension liability Self-insurance reserves
2016
2015
$ (63,190,714)
$ (65,784,813)
(1,002,130) 5,400,000 601,882 22,814,764 39,599,310 1,679,354 13,008,969 36,676,625 1,798,039 (19,436,655) (7,016,857)
(16,996,425) 3,917,102 40,968,090 36,581,327 38,680,643 (7,077,581) 32,287,448 (841,316)
(11,249,303) 13,935,224 2,887,303 (3,791,891) (1,873,093) 4,413,050 (1,205,236) (6,838,619)
(48,023,476) 15,163,757 (1,621,170) 19,090,245 (8,048,360) 883,040 (5,739,286) 2,530,656
27,210,022
35,969,881
(30,256,480) 4,236,031 (4,357,321) 705 (99,152,097) 100,121,737
(28,693,295) (3,285,969) 3,054,161 (197,814,633) 192,681,752
(29,407,425)
(34,057,984)
175,167,721 639,958 7,500,000 (161,358,658) (2,767,817) (9,346,910) (7,500,000)
105,385 7,500,000 (6,444,348) (7,500,000)
Net cash provided by operating activities Cash flows from investing activities Purchase of property, plant and equipment Bond proceeds used for purchase of property, plant and equipment Change in bond funds held by trustees Proceeds from the sale of property, plant and equipment Purchase of investments Proceeds from the sale of investments Net cash used in investing activities Cash flows from financing activities Proceeds from the issuance of debt and capital leases Proceeds from the issuance of notes payable Proceeds from the issuance of line of credit Debt repayments Payment of bond issuance costs Payments on long-term debt and capital leases Payments on line of credit Restricted contributions to be used for long-term investments and investment income
7,016,857
841,316
Net cash provided by/(used in) financing activities
9,351,151
(5,497,647)
Net increase/(decrease) in cash and cash equivalents
7,153,748
(3,585,750)
Cash and cash equivalents Beginning of year
48,803,805
End of year Supplemental cash flow information Cash paid for interest Purchases of property and equipment included in accounts payable and accrued expenses
52,389,555
$
55,957,553
$
48,803,805
$
6,209,324
$
5,670,261
$
2,083,773
$
2,381,704
The accompanying notes are an integral part of these consolidated financial statements. 6
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 1.
Description of Organization Corporate Structure Care New England Health System (“CNE”, “Care New England”, or the “Health System”), a Rhode Island not-for-profit corporation, was formed on November 7, 1995 as the holding company for the development of an integrated delivery network under the name Enterprise Health System. On January 29, 1996, the name was changed to Care New England Health System. Prior to September 3, 2013, the Health System consisted of Butler Hospital, Kent County Memorial Hospital, and Women & Infants Hospital of Rhode Island (collectively, the “Hospitals”), and the Kent County Visiting Nurse Association, d/b/a VNA of Care New England (the “Agency”). As of September 3, 2013, Southeastern Healthcare System, Inc. (“SHS”), a not-for-profit corporation located in Rhode Island and southeastern Massachusetts, became a subsidiary of the Health System. CNE became the parent organization and sole member as a result of this acquisition. On May 29, 2014, Integra Community Care Network, LLC, (“Integra”), an Accountable Care Organization (“ACO”), was legally established. Care New England is the sole corporate member. Integra was certified to participate in the Medicare shared savings program effective January 1, 2015. As of January 1, 2015, The Providence Center, Inc. (“the “Center” or “TPC”), a not-for-profit corporation located in Rhode Island, became a subsidiary of the Health System. CNE became the parent organization and sole member as a result of this acquisition. The accompanying consolidated financial statements include the accounts of Care New England and its affiliates, over which Care New England has corporate governance:
Butler Hospital (“Butler”) and its affiliates, Butler Hospital Foundation, Carriage House, LLC (“Carriage”), and Butler Hospital Allied Medical Services, LLC.
Kent County Memorial Hospital (“Kent”) and its affiliates, Kent Hospital Foundation, Kent Ancillary Services, LLC, Affinity Physicians, LLC d/b/a Care New England Medical Group, LLC (“CNEMG”), and Toll Gate Indemnity, Ltd. (“Toll Gate”).
Women & Infants Corporation (“WIC”) and its affiliates, Women & Infants Development Foundation, Women & Infants Hospital of Rhode Island (“WIH”), WIH Faculty Physicians, Inc., Women & Infants Ancillary Services, LLC, Women & Infants Health Care Alliance, LLC, and W&I Indemnity, Ltd. (“W&I Indemnity”).
Kent County Visiting Nurse Association, d/b/a VNA of Care New England, and its affiliates, Healthtouch, Inc. and VNA of Care New England Foundation (together, the “Agency”).
Integra Community Care Network, LLC.
SHS and its affiliates, Memorial Hospital of Rhode Island (“Memorial”), Primary Care Centers of New England, Inc. (“PCCNE”), Blackstone Health, Inc. (“BHI”), MHRI Ancillary Services, LLC, and The Memorial Hospital Foundation. Memorial is the sole corporate member of SHS Ventures, Inc. (“Ventures”).
7
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015
TPC and its affiliates, Grandview Realty Corporation (“Grandview Realty”), Grandview Second Corporation (“Grandview Second”), Nashua Street Corporation (“Nashua”), Wilson Street Apartments, Inc. (“Wilson”), Standard Realty, Inc. (“Standard”), TPC Social Ventures, Inc. (“TPC Social”), and Continuum Behavioral Health, Inc. (“Continuum”).
Intercompany accounts have been eliminated in consolidation. Mission and Nature of Business Care New England is dedicated to building an exemplary health care system. Care New England oversees the four Hospitals (Butler, Kent, WIH, Memorial), the Agency, the Center and other affiliated organizations. The mission of Butler Hospital is to provide treatment of psychiatric illness in an atmosphere of dignity and respect, and to contribute to knowledge through education and research, while continuously improving the ways Butler serves its patients and the community. Butler is a 143-bed, not-for-profit psychiatric teaching hospital, affiliated with The Warren Alpert Medical School of Brown University, providing services for the care of patients from Rhode Island and nearby Massachusetts. As a complement to its role in service and education, Butler actively supports research by members of its staff. Butler is accredited by The Joint Commission (“TJC”). The mission of Kent County Memorial Hospital is to continually improve the health and well-being of the people and communities it serves, offering its essential services without regard for the ability to pay. Kent is a 359-bed, not-for-profit general hospital providing a full range of services for the acute care of patients principally from Kent County, Rhode Island. Kent is affiliated with, and provides clinical training to, the students of the University of New England College of Osteopathic Medicine, and currently operates American Osteopathic Association approved residency programs in emergency medicine, family practice, internal medicine, and a fellowship program in hyperbaric medicine. Kent is accredited by TJC and the Commission on Accreditation of Rehabilitation Facilities. Toll Gate, a wholly owned subsidiary of Kent insures primary and excess hospital professional and general liability risks for Kent and its employees on an occurrence basis, as well as primary professional and general liability risks for the VNA and the Care New England Health System. Toll Gate insures Kent’s contractual liability (pursuant to certain Indemnification Agreements) arising from employed physicians’ professional liability on both a claims-made and occurrence basis. Toll Gate also insures Kent’s contractual liability (pursuant to certain Indemnification Agreements) arising from community physicians’ professional liability on both a claims-made and occurrence basis. The mission of Women & Infants Corporation is to support Women & Infants Hospital of Rhode Island and all other affiliated organizations. The mission of Women & Infants Hospital of Rhode Island is to improve the health and well-being of women and infants, and to provide essential services regardless of ability to pay. WIH is a 247-bed, not-for-profit regional center for women and infants’ care in Rhode Island and southern New England. Among other university affiliations, Women & Infants is the primary teaching affiliate of the Warren Alpert Medical School of Brown University in obstetrics, gynecology and newborn pediatrics along with related sub-specialty and internal medicine services. As a complement to its role in service and education, WIH actively supports research by members of its staff. WIH is accredited by TJC. W&I Indemnity is a wholly owned subsidiary of WIH. W&I Indemnity insures primary and excess hospital professional liability risks for WIH and its employees on an occurrence basis, and excess hospital professional liability risks for Butler. W&I Indemnity insures WIH’s contractual liability (pursuant to certain Indemnification Agreements) arising from employed physicians’ and residents’ medical malpractice liability on an occurrence basis. W&I Indemnity also insures WIH’s contractual liability (pursuant to certain Indemnification Agreements) arising from community physicians’ medical malpractice liability on both a claims-made and occurrence basis.
8
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The mission of Kent County Visiting Nurse Association, d/b/a VNA of Care New England, is to provide and administer a comprehensive, multidisciplinary, therapeutic, hospice, and public health nursing program. The Agency is a not-for-profit corporation, providing home care services to the residents of Rhode Island and nearby Massachusetts. Healthtouch, Inc. is a not-for-profit corporation providing private duty nursing and personal care services, primarily to residents of Rhode Island. The mission of Memorial Hospital is primary care and preventive medicine providing advanced diagnosis and treatment with a focus on teaching and research. Memorial is a 294-bed, acute care, not-for-profit community teaching and research hospital located in Pawtucket, RI, and is affiliated with Warren Alpert School of Medicine at Brown University. PCCNE provides staffing to Memorial. BHI receives and administers certain grant funds, and provides services to elderly and disabled residents in the local area. Integra, a partnership of CNE and its employed physicians, participating affiliated independent community physicians, Rhode Island Primary Care Physician Corporation and South County Health System, is a certified Medicare Accountable Care Organization which has been operational since 2014. The Providence Center, Inc. is the largest mental health center in Rhode Island, providing a continuum of counseling and supportive services to meet community mental health and substance use disorder needs since 1969. These services include, but are not limited to, preschool intervention for children with serious emotional disorders; treatment for the elderly; residential treatment for the chronically mentally ill and/or substance addicted; brief outpatient counseling for children and adults; and, treatment to individuals involved in the justice system. The following corporations - Grandview Realty, Grandview Second, Nashua, and Wilson own and operate rental apartments for individuals with mental illness. TPC Social provides Center clients with on-the-job training opportunities in supported employment environments. Continuum provides therapy and psychiatry services to youth and adults. The change in control of The Center was accounted for under the acquisition method. The consolidated statement of operations for the year ended September 30, 2015 reflects the activity of The Center from the date of acquisition to year end. No consideration was exchanged for the acquisition.
9
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The fair value of assets acquired, liabilities assumed and net assets of The Center at January 1, 2015 were as follows: January 1, 2015 Cash and cash equivalents Patient accounts receivable, net Other receivables Assets whose use is limited or restricted as to use Inventory Prepaid expenses Other assets Property, plant and equipment, net Intangibles Goodwill Total assets Accounts payable and accrued expenses Long-term debt and capital leases Other liabilities
$
338,454 5,370,275 992,811 980,080 20,092 620,165 375,437 16,733,779 1,090,000 143,611
$
26,664,704
$
2,664,931 6,368,968 295,926
Total liabilities
9,329,825
Unrestricted Temporarily restricted Permanently restricted Total net assets
13,439,012 3,795,867 100,000 17,334,879
Total liabilities and net assets
$
26,664,704
Intangible assets of $1,090,000 at September 30, 2015 are included in the consolidated balance sheets. Of this balance, $1,080,000 is attributable to trade name valuation with an indefinite useful life and $10,000 is attributable to below market leases with a useful life of one year. A summary of the financial results of The Center included in the consolidated statement of operations for the period January 1, 2015 through September 30, 2015 are as follows:
Total revenues and gains Total operating expenses
$ 34,851,139 35,411,592
Loss from operations
(560,453)
Net nonoperating gains
148,591
Deficiency of revenue and gains over expenses and losses
(411,862)
Net assets released from restrictions used for purchase of property, plant and equipment Transfers Increase in unrestricted net assets
10
49,299 500,000 $
137,437
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The changes in net assets of The Center included in the consolidated statement of changes in net assets for the period January 1, 2015 through September 30, 2015 are as follows: Unrestricted Net assets, January 1, 2015
$ 13,439,012
Deficiency of revenues over expenses Net assets released from restrictions used for purchase of property, plant and equipment Transfers Contributions Income from investments Net realized and unrealized gains from investments Net assets released from restrictions
$
3,795,867
(411,862)
Increase (decrease) in net assets Net assets, September 30, 2015
Temporarily Restricted
Permanently Restricted $
Total
100,000
-
$ 17,334,879
-
(411,862)
49,299 500,000 -
312,231 3,139 2,416 (318,852)
-
49,299 500,000 312,231 3,139 2,416 (318,852)
137,437
(1,066)
-
136,371
100,000
$ 17,471,250
$ 13,576,449
$
3,794,801
$
A summary of the unaudited pro forma financial results of CNE and The Center for the year ended September 30, 2015 as if the acquisition had occurred on October 1, 2014 are as follows:
CNE Total revenues and gains Total operating expenses
$ 1,090,239,252 1,104,903,559
Loss from operations
$
(14,664,307)
Other (losses)/gains Deficiency of revenue over expenses Other changes in unrestricted net assets Total decrease in unrestricted net assets
2.
2015 (Unaudited) The Center
$
45,400,571 46,639,316
Total $ 1,135,639,823 1,151,542,875
(1,238,745)
(15,903,052)
(26,198,154)
334,476
(25,863,678)
(40,862,461)
(904,269)
(41,766,730)
(41,103,132)
582,556
(40,520,576)
(81,965,593)
$
(321,713)
$
(82,287,306)
Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis and in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation. The assets of members of the consolidated group may not be available to meet the obligations of another member of the group. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates are made in the areas of the patient accounts receivable allowance for doubtful accounts and contractual allowances, accruals for settlements with third-party payors, incurred but not reported liabilities for medical, dental, workers’ compensation, and medical malpractice insurance, pension and other post retirement costs and valuation of investments. Actual results could differ from those estimates.
11
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Cash and Cash Equivalents Care New England considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents, excluding amounts whose use is limited by the Boards of Trustees (the “Boards”) designation or other arrangements under trust agreements. $9,557,553 and $12,140,631 at September 30, 2016 and 2015, respectively, of cash received with donorimposed restrictions, that is available for current use, is included in cash and cash equivalents. Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are classified as trading securities and are measured at fair value in the consolidated balance sheets. Investment income or loss (including realized and unrealized gains and losses on investments, other-than-temporary impairments in the value of securities, interest, and dividends) is included in the excess of revenues and gains over expenses unless the income or loss is restricted by donor or law. Butler, Kent, WIH, SHS and the Agency follow the practice of pooling resources of unrestricted and restricted assets for long-term investment purposes. The investment pool is operated on the market value method whereby each participating fund is assigned a number of units based on the percentage of the pool it owns at the time of entry. Income, gains, and losses of the pool are allocated to the funds based on their respective participation in the pool. Investments at net asset value (“NAV”) (nontraditional, not readily marketable holdings) include limited partnership interests and commingled funds. Investments at NAV generally are structured such that the Health System holds an interest in the respective fund. The Health System’s ownership structure does not provide for control over the related investees, and the Health System’s financial risk is limited to the carrying amount reported for each investee, in addition to any unfunded capital commitments. There was an outstanding unfunded commitment for investments at NAV of $4,883,844 and $10,709,793 at September 30, 2016 and September 30, 2015, respectively. Individual investment holdings within the investments at NAV include nonmarketable and markettraded debt and equity securities, and interests in other investments at NAV. The Health System may be exposed indirectly to securities lending, short sales of securities, and trading in futures and forward contracts, options, private equity holdings, and other derivative products. Investments at NAV often have liquidity restrictions under which the Health System’s capital may be divested only at specified times. Liquidity restrictions may apply to all or portions of a particular invested amount. Financial information used by the Health System to evaluate its investments at NAV is provided by the investment manager or general partner, and includes fair value valuations (quoted market prices and values determined through other means) of underlying securities and other financial instruments held by the investee, and estimates that require varying degrees of judgment. The financial statements of the investee companies are audited annually by independent auditors, although the timing for reporting the results of such audits does not always coincide with the Health System’s annual financial statement reporting. There is uncertainty in the valuation for investments at NAV arising from factors such as lack of active markets (primary and secondary), lack of transparency into underlying holdings, and time lags associated with reporting by investee companies. As a result, there is at least a reasonable possibility that estimates will change in the near term.
12
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Investments also include life insurance policies which are valued at the lesser of discounted value or cash surrender value. Income and realized net gains (losses) on investments of endowments and specific purpose funds are reported as follows:
Increases (decreases) in permanently restricted net assets if the terms of the gift require that they be added to the principal of permanently restricted net assets;
Increases (decreases) in temporarily restricted net assets if the terms of the gift impose restrictions on the use of the income or the income has not yet been appropriated; or
Increases (decreases) in the unrestricted net assets in all other cases.
At September 30, 2016 and 2015, $1,553,781 and $1,621,564, respectively, of funds received with donor-imposed restrictions, that are available for current use, are included in investments. Other Receivables Other receivables include federal and other grants receivable, indemnity programs’ premiums receivable and other miscellaneous receivables. Assets Whose Use is Limited or Restricted as to Use Assets whose use is limited primarily include endowment funds, assets held by trustees under indenture agreements and insurance programs, deferred compensation arrangements, a representative payee account maintained by the Center for clients receiving social security income, designated assets maintained by the Center and required by HUD for property maintenance, and designated assets set aside by one or more of the Boards, over which the Boards retain control and may, at their discretion, subsequently use for other purposes. Amounts required to meet current obligations have been reclassified to current assets. Inventories Inventories of drugs and supplies are stated at the lower of cost (first-in, first-out) or market. Inventories of $8,727,308 and $8,945,236 at September 30, 2016 and 2015, respectively, are included in other current assets in the consolidated balance sheets. Goodwill and Intangibles Care New England has goodwill and indefinite lived intangible assets that resulted from the previous acquisitions of SHS and TPC. Goodwill totaled $24,488,975 as of September 30, 2016 and 2015 and intangible assets were $1,080,000 and $6,482,500 at September 30, 2016 and 2015, respectively. The System performs an impairment assessment of goodwill annually at the reporting unit level (the consolidated System) by comparing the estimated fair value of the reporting unit to the carrying value of goodwill. There was no impairment charge on goodwill for the years ended September 30, 2016 and 2015. Additionally, indefinite-lived intangible assets are reviewed at least annually for impairment by comparing the estimated fair value of the intangible asset (using the relief from royalty method) to the carrying value. As a result of this analysis, in fiscal year 2016, the System recorded an impairment loss of $5,400,000 related to its SHS tradename associated with Memorial, as the fair value was less than the carrying value. This is recorded as a separate line on the Statement of Operations.
13
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Property and Equipment Property and equipment acquisitions are recorded at cost. Donated property and equipment is recorded at fair value at the date of receipt. Interest cost incurred on borrowed funds during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets. Depreciation is recorded using the straight-line method based on the estimated useful life of each class of depreciable asset, as recommended by the American Hospital Association as follows: 5 – 40 Years 3 – 20 Years
Buildings and improvements Fixed and moveable equipment
Gifts of long-lived assets, such as land, buildings, or equipment, are reported as unrestricted support, and are excluded from the excess of revenues over expenses unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used, and gifts of cash or other assets that must be used to acquire long-lived assets, are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, expirations of donor restrictions are reported when the donated or acquired long-lived assets are placed in service. Assets recorded under capital leases are amortized on the straight-line method over the shorter period of the lease term or the estimated useful life of the asset. Such amortization is included with depreciation and amortization expense in the consolidated statements of operations. Upon retirement or sale of assets, the cost of assets disposed of and the related accumulated depreciation are eliminated and the related gains or losses are recognized in other revenue in the consolidated statements of operations. Care New England evaluates the potential impairment of property, plant and equipment whenever events or changes in circumstances indicate that the carrying value of a group of assets may not be recoverable. Pledges Pledges, less an allowance for uncollectible amounts, are recorded as receivables in the year made. Pledges receivable over a period greater than one year are stated at net present value. Pledges are recorded as additions to the appropriate net asset classification. Deferred Financing Costs Expenses related to issuance of bonds are deferred and amortized on a straight-line basis, which approximates the effective interest rate method, over the period during which the bonds are expected to be outstanding. Self-Insurance Reserves The reserves for self-insured programs are estimated based on actuarial studies and the Hospitals’ and industry experience. The reserves include estimates of the ultimate cost for both reported claims and claims incurred but not yet reported. The Hospitals have established separate indemnification companies and trust funds for payment of certain self-insured claims including medical malpractice. CNE, Butler, Kent, WIC, Memorial, and the Agency are self-insured for losses arising from workers’ compensation claims. Loss reserves are estimated based on actuarial studies, and the Health
14
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 System’s and industry experience. The Center purchases a commercial insurance policy annually to insure workers’ compensation risks. For the employees of CNE, Butler, Kent, WIC, and the Agency, Care New England is self-insured for losses arising from health insurance claims. This program covers the health insurance claims for all CNE’s, Butler’s, Kent’s, WIC’s, and the Agency’s employees, with the exception of the unionized employees at WIH. Self-insured losses for both reported claims and claims incurred but not yet reported are estimated based on actuarial studies and the Health System’s actual experience. For the employees of CNE, Butler, Kent, WIC, SHS, and the Agency, Care New England is selfinsured for losses arising from dental insurance claims. This program covers the dental insurance claims for all CNE’s, Butler’s, Kent’s, WIC’s, SHS’, and the Agency’s employees. Self-insured losses for both reported claims and claims incurred but not yet reported are estimated based on actuarial studies and the Health System’s actual experience. The Center has entered into a self-insurance program for health insurance risks. This program covers health insurance claims for substantially all of the Center’s full-time employees. The Center limits it losses through the use of stop-loss policies from re-insurers. The provisions for health insurance losses are based on actuarial assumptions and actual claims experience. Temporarily and Permanently Restricted Net Assets Temporarily restricted net assets are those whose use has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained in perpetuity. Excess of Revenues Over Expenses The consolidated statements of operations and changes in net assets include excess of revenues and gains over expenses. Changes in unrestricted net assets, which are excluded from excess of revenues and gains over expenses, consistent with industry practice, include permanent transfers of assets to and from affiliates for other than goods and services, contributions of long-lived assets (including assets acquired using contributions which by donor restriction were to be used for the purposes of acquiring such assets), and changes in the pension and postretirement liability. Net Patient Service Revenue The Hospitals, the Agency, and the Center have individual agreements with many third-party payors that provide payments at amounts different from their established rates. Payment arrangements include prospectively determined rates per discharge, reimbursed costs, discounted charges, per-diem, and fee for service payments. Net patient service revenue is reported at estimated net realizable amounts from patients, third-party payors, and others for services rendered, and includes estimated retroactive revenue adjustments due to such things as future audits and reviews. Retroactive adjustments are considered in the recognition of revenue on an estimated basis in the period the related services are rendered, and such amounts are adjusted in future periods as adjustments become known, or as years are no longer subject to such adjustments. Research Revenue Research revenue includes revenue from federal, state, institutional and other sources for the purposes of funding research activities.
15
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Other Revenue Other revenue includes underwriting income, rental income, cafeteria sales, laboratory services provided to nonpatients, sales of home medical equipment, vendor rebates and discounts, various services provided to physicians and other organizations, federal grants including housing subsidies, and gains or losses upon the retirement or sale of assets. Charity Care The Health System provides care to patients who meet certain criteria under their charity care policies without charge or at amounts less than established rates. Because the Health System does not pursue collection of amounts determined to qualify as charity care, they are not reported as net patient revenue. Contributions and Donor-Restricted Gifts Unconditional promises to give cash and other assets are reported at fair value at the date the promise is received. Conditional promises to give and indications of intentions to give are reported at fair value at the date when the condition is satisfied. Gifts are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the consolidated statements of operations and changes in net assets as net assets released from restrictions. Unrestricted contributions are reported net of direct fundraising expenses in the consolidated statements of operations. Income Tax Status Care New England, Butler, Kent, WIH, the Agency, Women & Infants Faculty Physicians, Inc., Women & Infants Corporation, Women & Infants Development Foundation, Butler Hospital Foundation, Kent Hospital Foundation, The Memorial Hospital Foundation, SHS, Memorial, Ventures, BHI, the Center, Grandview Realty, Grandview Second, Nashua, Wilson, Standard, and TPC Social are not-for-profit corporations, and have been recognized as tax exempt on related income pursuant to Section 501(c)(3) of the Internal Revenue Code (the Code). Those organizations are, therefore, exempt from federal taxes on related income pursuant to Section 501(a) of the Code. W&I Indemnity, Ltd. and Toll Gate Indemnity, Ltd. are foreign corporations with no material tax liability. PCCNE and Continuum are organized as for-profit corporations and are, therefore, subject to tax. The provision for income taxes on the earnings of PCCNE and Continuum is immaterial to the consolidated financial statements. Other affiliates are single-member limited liability companies which are treated as part of their sole member for tax purposes. Recently Adopted Accounting Standards In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The ASU is effective for the Health System’s fiscal 2020; however, as permitted by the ASU, the Health System has chosen to early adopt the provision to eliminate the requirement to disclose the fair value of financial instruments measured at cost (such as the fair value of debt). The Health System is evaluating the remainder of the new guidance on the consolidated financial statements. The impact related to the early adoption of this provision of ASU 2016-01 was limited to the notes to the financial statements.
16
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 On October 1, 2014, the Health System early adopted new guidance about Fair Value Measurement and Disclosures for Investments (ASU 2015-07) in certain entities that calculate net asset value per share (or its equivalent). This guidance requires the Health System to show investments that use NAV as a practical expedient for valuation purposes, separately from other investments categorized in the fair value hierarchy described in Note 23. This disclosure change, which was applied retrospectively, can be seen in the investment leveling table shown in Note 23 for both years 2016 and 2015. In May 2014, the FASB issued ASU 2014-09 - Revenue from Contracts with Customers at the conclusion of a joint effort with the International Accounting Standards Board to create common revenue recognition guidance for U.S. GAAP and international accounting standards. This framework ensures that entities appropriately reflect the consideration to which they expect to be entitled in exchange for goods and services, by allocating transaction price to identified performance obligations, and recognizing that revenue as performance obligations are satisfied. Qualitative and quantitative disclosures will be required to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original standard was effective for fiscal years beginning after December 15, 2016; however, in July 2015, the FASB approved a one-year deferral of this standard, with a new effective date for fiscal years beginning after December 15, 2017 or fiscal year 2019 for Care New England. Care New England is evaluating the impact this will have on the consolidated financial statements. In April 2015, the FASB issued ASU 2015-03 - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs, which requires all costs incurred to issue debt to be presented in the statement of financial position as a direct deduction from the carrying value of the associated debt liability. Care New England is evaluating the impact this will have on the consolidated financial statements for the fiscal year ending September 30, 2017, the first year in which the standard is effective. In February 2016, the FASB issued ASU 2016-02, Leases, which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The guidance also expands the required quantitative and qualitative disclosures surrounding leases. The ASU is effective for fiscal years beginning after December 15, 2018, or fiscal year 2020 for Care New England. Early adoption is permitted. Care New England is evaluating the impact of the new guidance on the financial position, results of operations and cash flows. In August 2016, the FASB issued ASU 2016-14, Presentation of Financial Statements for Not-forProfit Entities, which makes targeted changes to the not-for-profit financial reporting model. The new ASU marks the completion of the first phase of a larger project aimed at improving not-forprofit financial reporting. Under the new ASU, net asset reporting will be streamlined and clarified. The existing three-category classification of net assets will be replaced with a simplified model that combines temporarily restricted and permanently restricted into a single category called “net assets with donor restrictions.” The guidance for classifying deficiencies in endowment funds and on accounting for the lapsing of restrictions on gifts to acquire property, plant, and equipment have also been simplified and clarified. New disclosures will highlight restrictions on the use of resources that make otherwise liquid assets unavailable for meeting near-term financial requirements. The ASU also imposes several new requirements related to reporting expenses, including providing information about expenses by their natural classification. The ASU is effective
17
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 for fiscal years beginning after December 15, 2017 or fiscal year 2019 for Care New England and early adoption is permitted. Care New England is evaluating the impact of the new guidance on the consolidated financial statements. Reclassifications Certain 2015 amounts have been reclassified to conform to the current year presentation. 3.
Uncompensated Care and Community Services The Health System maintains records to identify and monitor the level of charity care and community services it provides, including the amount of charges forgone for services and the estimated cost incurred to provide those services. The revenues forgone and estimated costs and expenses incurred to provide charity care for the years ended September 30 are as follows:
Revenues forgone, based on established rates Expenses and costs incurred
2016
2015
$ 17,310,593 7,895,339
$ 18,406,964 8,174,692
Of the Health System’s total expenses reported ($1,223,003,650 and $1,139,725,241 in 2016 and 2015, respectively), an estimated $7,895,339 and $8,174,692 arose during 2016 and 2015, respectively, from providing services to charity patients. The estimated costs of providing charity services are based on a calculation which applies a ratio of costs to charges to the gross uncompensated charges associated with providing care to patients who qualify for charity care. The ratio of cost to charges is calculated based on total expenses (less bad debt expense) divided by gross patient service revenue. The Health System did not receive significant contributions that were restricted for the care of indigent patients during 2016 and 2015. In addition to the above-mentioned medical care rendered, the Health System provides numerous other services free of charge to the community. These services include such things as transporting patients to the healthcare facilities, interpretation of medical information to various languages, volunteer services to other not-for-profit agencies, emergency and disaster relief services, various health, educational, research and teaching programs, healthcare screening services, therapeutic patient services, and provision of direct services to patients with multiple psychosocial needs. The amounts associated with these services are as follows:
Approximated revenues forgone, or cost of the services provided to the community
2016
2015
$ 46,672,696
$ 42,548,113
The Health System also provides services to other indigent patients under the Medicaid/Rite Care Program, which reimburses healthcare providers at amounts which are less than the cost of services provided to the recipients. In addition to the cost of charity care and other community service programs, the Health System provided $36,676,625 and $38,680,643 for uncollectible patient accounts during the years ended September 30, 2016 and 2015, respectively.
18
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 4.
Allowance for Doubtful Accounts Accounts receivable are reduced by an allowance for doubtful accounts. In evaluating the collectability of accounts receivable, the Health System analyzes its past history and identifies trends for each of its major payor sources of revenue to estimate the appropriate allowance for doubtful accounts and provision for bad debts. Management regularly reviews data about these major payor sources of revenue in evaluating the sufficiency of the allowance for doubtful accounts. For receivables associated with services provided to patients who have third-party coverage, the Health System analyzes contractually due amounts and provides an allowance for doubtful accounts and a provision for bad debts, if necessary (for example, for expected uncollectible deductibles and copayments on accounts for which the third-party payor has not yet paid, or for payors who are known to be having financial difficulties that make the realization of amounts due unlikely). For receivables associated with self-pay patients (which includes both patients without insurance and patients with deductible and copayment balances due for which third-party coverage exists for part of the bill), the Health System records a significant provision for bad debts in the period of service on the basis of its past experience, which indicates that many patients are unable or unwilling to pay a portion of their bill for which they are financially responsible. The difference between the standard rates (or the discounted rates if negotiated) and the amounts actually collected after all reasonable collection efforts have been exhausted is charged off against the allowance for doubtful accounts. The Health System’s allowance for doubtful accounts increased from 23.2% of net accounts receivable at September 30, 2015, to 27.5% of net accounts receivable at September 30, 2016. The Health System’s self-pay charity and bad debt write-offs decreased from $57,087,607 for fiscal year 2015 to $53,987,216 for fiscal year 2016. The decrease in write-offs was the result of expanded coverage under the Affordable Care Act. The Health System has not changed its charity care or uninsured discount policies during fiscal years 2015 or 2016. Accounts receivable, prior to adjustment for doubtful accounts, is summarized as follows at September 30, 2016 and 2015:
Receivables Patients Third-party payors
2016
2015
$ 28,454,659 129,251,157
$ 30,103,844 151,974,188
$ 157,705,816
$ 182,078,032
The allowance for doubtful accounts is summarized as follows at September 30, 2016 and 2015:
Allowance for doubtful accounts Patients Third-party payors
19
2016
2015
$ 23,591,125 19,719,974
$ 20,479,464 21,776,529
$ 43,311,099
$ 42,255,993
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Bad debt expense for non-patient accounts receivable is reflected in total operating expenses on the statements of operations. Patient related bad debt is reflected as a reduction in patient service revenues on the statements of operations. 5.
Pledges Receivable Unconditional promises to give are recorded at present value as current and long-term assets based on expected time of collection. Future expected collections of these pledges as of September 30 are as follows: 2016 Within one year One to five years
$
1,164,996 172,795
2015 $
1,337,791 Less: Allowance for uncollectibles
2,221,596
(347,255)
Pledges receivable, net
$
990,536
1,178,878 1,042,718 (269,087)
$
1,952,509
A review of pledges is periodically made with regard to collectability. As a result, the allowance for pledges that may not be collected is adjusted, and some pledges have been cancelled and are no longer recorded in the financial statements. The U.S. Treasury Bill rate adjusted for credit risk at the date of the pledge is used to discount pledges receivable upon receipt. The discount was calculated using rates ranging from 1.0% to .75% for the years ending September 30, 2016 and 2015, respectively.
20
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 6.
Summary of Investments Investments at September 30 are summarized as follows: 2016 Endowment and board designated funds Cash and cash equivalents Equity securities Mutual funds Investments at NAV Assets held under split - interest agreements Cash surrender value of life insurance
Trustee-held funds Cash and cash equivalents Fixed income securities Equity securities Mutual funds Investments at NAV
Other investments Cash and cash equivalents Fixed income securities Mutual funds
$
5,132,733 14,823,485 55,340,378 60,536,395 25,306,003 29,981,516
$
4,441,937 12,941,827 55,436,359 51,300,288 17,679,265 29,470,657
$ 191,120,510
$ 171,270,333
$ 24,411,650 9,258,229 25,608,612 54,844,991 47,243,272
$ 37,701,959 8,149,076 22,132,044 31,876,084 63,610,247
$ 161,366,754
$ 163,469,410
$
$
15,185,364
$ 15,185,364
The cash surrender value of life insurance is included in Board-designated funds.
21
2015
46,130 214,422 28,815,161
$ 29,075,713
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Investment income and gains (losses) for the years ended September 30 consisted of the following: 2016 Unrestricted investment return Interest and dividend income Net realized (losses) gains on sales of investments Net change in unrealized gains (losses)
Included in operating revenue Included in nonoperating revenue
Changes in temporarily restricted net assets Interest and dividend income Net realized (losses) gains on sales of investments Net change in unrealized gains (losses)
Changes in permanently restricted net assets Change in beneficial interest in perpetual trusts
22
$
1,963,625 (3,892,242) 17,542,646
2015
$
3,208,235 21,660,093 (32,287,448)
$ 15,614,029
$ (7,419,120)
$
$ 17,790,747 (25,209,867)
(192,276) 15,806,305
$ 15,614,029
$ (7,419,120)
$
$
$
364,926 (414,871) 3,072,504 3,022,559
$
1,002,130
$ (1,454,092)
$ 19,638,718
$ (10,255,749)
530,596 1,575,145 (3,488,278) $ (1,382,537)
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The cost and estimated fair value of securities classified as trading by the Health System, which excludes beneficial interest in perpetual trusts of $25,306,003 and $17,679,265, and excludes cash surrender value of life insurance of $29,981,516 and $29,470,657, and includes short-term investments of $13,228,467 and $27,163,691 as of September 30, 2016 and 2015, respectively, and long-term investments of $299,156,642 and $289,501,843 as of September 30, 2016 and 2015, respectively, is as follows:
Cost Endowment and board designated funds Cash and cash equivalents Equity securities Mutual funds Investments at NAV
Trustee-held funds Cash and cash equivalents Fixed income securities Equity securities Mutual funds Investments at NAV
Other investments Cash and cash equivalents Mutual funds
$
2016 Gross Unrealized Gains (Losses)
Estimated Fair Value
5,132,733 13,167,074 52,992,610 54,610,359
$
1,656,411 2,347,768 5,926,036
$
$ 125,902,776
$
9,930,215
$ 135,832,991
$
24,411,650 9,107,293 21,274,797 53,484,082 45,257,718
$
150,936 4,333,815 1,360,909 1,985,554
$
$ 153,535,540
$
7,831,214
$ 161,366,754
$
15,290,708
$
(105,344)
$
15,185,364
$
15,290,708
$
(105,344)
$
15,185,364
23
5,132,733 14,823,485 55,340,378 60,536,395
24,411,650 9,258,229 25,608,612 54,844,991 47,243,272
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015
Cost Endowment and board designated funds Cash and cash equivalents Equity securities Mutual funds Investments at NAV
Trustee-held funds Cash and cash equivalents Fixed income securities Equity securities Mutual funds Investments at NAV
Other investments Cash and cash equivalents Fixed income securities Mutual funds
$
2015 Gross Unrealized Gains (Losses)
Estimated Fair Value
4,441,937 12,201,136 60,196,624 51,420,263
$
740,691 (4,760,265) (119,975)
$
4,441,937 12,941,827 55,436,359 51,300,288
$ 128,259,960
$
(4,139,549)
$ 124,120,411
$
37,701,959 8,067,806 19,312,084 32,687,092 63,840,159
$
81,270 2,819,960 (811,008) (229,912)
$
$ 161,609,100
$
1,860,310
$ 163,469,410
$
46,130 202,464 29,195,499
$
11,958 (380,338)
$
46,130 214,422 28,815,161
$
29,444,093
$
(368,380)
$
29,075,713
37,701,959 8,149,076 22,132,044 31,876,084 63,610,247
The System reviews its investments to identify those for which fair value is below cost. The System then makes a determination as to whether the investment should be considered otherthan-temporarily impaired. The System recognized $2,168,926 and $269,369 in losses related to declines in value that were other-than-temporary in nature for the years ended September 30, 2016 and 2015, respectively. CNE, Butler, Kent, Memorial, WIC, Integra, and the Agency routinely invest their surplus operating funds in various overnight repurchase agreements, money market funds, and fixed income U.S. agency bonds, which are classified as cash and cash equivalents.
24
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 7.
Property, Plant and Equipment A summary of property, plant and equipment at September 30 follows: 2016 Land and land improvements Buildings and improvements Moveable equipment
$
Total property, plant and equipment Less: Accumulated depreciation and amortization Construction and projects in progress Property, plant and equipment, net
18,568,597 452,697,846 314,926,335
2015 $
17,934,854 438,827,178 297,800,488
786,192,778
754,562,520
(484,438,434)
(449,859,247)
301,754,344
304,703,273
2,059,779
9,165,220
$ 303,814,123
$ 313,868,493
Depreciation expense of property, plant and equipment amounted to $39,412,835 and $36,388,346 for the years ended September 30, 2016 and 2015, respectively. Care New England had property, plant and equipment disposals of $5,436,235 and $9,052,058 with accumulated depreciation of $4,833,648 and $2,000,136 for the years ended September 30, 2016 and 2015, respectively. During April 2015, Kent received a Certificate of Need approval from the Rhode Island Department of Health to provide primary and elective coronary angioplasty. The Certificate of Need also included the construction of a second cardiac catheterization laboratory to support the service. The project was funded through tax-exempt debt and equity. Total estimated cost of the project is approximately $4.5 million, including construction and equipment costs. Kent began performing elective angioplasty procedures in August 2015 and expects to perform emergency angioplasty procedures by December 2016 upon completion of the second cardiac catheterization laboratory and upgrade to equipment in the first laboratory. As of September 30, 2016, the Health System estimated the total cost of completion of construction and projects in progress to be approximately $13,800,000. The funding to complete these projects will come from philanthropic donations and operating cash. Butler owns approximately 110 acres of land, which was purchased with donated funds in the mid-19th century. This land has a book value of one dollar. In the late 1940s, Kent acquired 57 acres of land, which is recorded at the acquisition price of $90,165. Conditional asset retirement obligations are recorded at $1,874,736 and $1,814,193 as of September 30, 2016 and 2015, respectively. These obligations are recorded in other noncurrent liabilities in the consolidated balance sheets. There are no assets that are legally restricted for purposes of settling asset retirement obligations. During 2016 and 2015, there were no significant retirement obligations incurred or settled. Accretion expense of $103,749 and $117,767 was recorded during the years ended September 30, 2016 and 2015, respectively.
25
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 8.
Long-Term Debt and Capital Leases A summary of long-term debt at September 30 is as follows: 2016 Fixed rate $138,265,000 RIHEBC 2016 Series B Bonds, final maturity in 2036 Fixed rate $21,610,000 RIHEBC 2016 Series C Taxable Notes, final maturity in 2046 Variable rate $42,810,000 RIHEBC 2014 Series A Bonds, final maturity in 2043 Fixed rate $87,385,000 RIHEBC 2013 Series A Bonds, final maturity in 2033 Fixed rate $12,000,000 RIHEBC 2010 Series bonds, final maturity in 2031 Fixed rate $16,000,000 RIHEBC 2011 Series bonds, final maturity in 2031 Variable rate $2,725,000 RIHEBC 2013 Series bonds, final maturity in 2023 Term, $1,400,000 Bank RI note, final maturity in 2023 Term, $216,000 Bank RI note, final maturity in 2024 Term, $536,000 Washington Trust mortgage note, final maturity in 2016 Term, $480,000 Washington Trust mortgage note, final maturity in 2016 Term, $445,400 U.S. Dept of Housing and Urban Development (HUD) mortgage note, final maturity in 2023 Term, $200,000 Bank RI note, final maturity in 2019 Various vehicle loans payable, final maturity date in 2019 Term, $4,000,000 Time Insurance Company mortgage note, final maturity in 2027 Term, $1,600,000 Seavest Healthcare Properties, LLC note, final maturity in 2030 Capital lease obligations Total long-term debt and capital lease obligations Less: Current portion of long-term debt and capital lease obligations Long-term debt and capital lease obligations, excluding current portion
2015
$ 151,273,969
$
-
21,045,331
-
-
42,810,000
-
82,217,526
-
10,001,655
-
13,829,138
-
2,609,416 1,347,975 210,805 383,446 342,471
219,002 -
239,939 159,818 181,552
3,157,709
3,264,858
1,547,798 4,606,713
6,780,801
181,850,522
164,379,400
2,661,844
9,631,866
$ 179,188,678
$ 154,747,534
Rhode Island Health and Educational Building Corporation (RIHEBC) Bonds In 2016, the Health System issued RIHEBC 2016 Series B fixed rate bonds of $138,265,000 (excluding a premium of $13,008,969). The bonds have mandatory sinking fund redemptions ranging from $3,490,000 in 2018 to $11,140,000 in 2035. The bonds bear interest at a fixed rate of 5.0%. A debt service reserve fund of $11,916,000 and a cost of issuance fund of $1,040,517 are included in trustee-held funds in the consolidated balance sheet at September 30, 2016. CNE, Butler, Kent, VNA, SHS, Memorial, TPC, WIC, WIH, collectively, the Obligated Group, are jointly and severably liable for repayment. The Obligated Group is required to comply with certain debt covenants under the bond agreements, including a minimum debt service coverage ratio of 1.1 to 1, effective in fiscal 2018 and all subsequent fiscal years, and days cash on hand of 30, effective in fiscal 2017 and all subsequent fiscal years.
26
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The proceeds from the CNE 2016 Series B Bonds were used to (i) refund the outstanding CNE 2010 Bonds, and (ii) refund a portion of the outstanding CNE 2013 A Bonds, and (iii) refund a portion of the outstanding CNE 2014 A Bonds, and (iv) refund the outstanding CNE 2016 A Bonds, and (v) refund the outstanding TPC 2013 Bonds, and (vi) pay certain expenses related to the issuance of the 2016 Series B Bonds. In 2016, the Health System issued RIHEBC 2016 Series C fixed rate taxable notes of $21,610,000 (excluding a discount of $564,669). The notes have mandatory sinking fund redemptions ranging from $277,000 in 2017 to $1,411,000 in 2046. The notes bear interest at a fixed rate of 5.5%. A cost of issuance fund of $152,532 is included in trustee-held funds in the consolidated balance sheet at September 30, 2016. The Obligated Group is jointly and severably liable for repayment. The Obligated Group is required to comply with certain debt covenants under the bond agreements, including a minimum debt service coverage ratio of 1.1 to 1, effective in fiscal 2018 and all subsequent fiscal years, and days cash on hand of 30, effective in fiscal 2017 and all subsequent fiscal years. The proceeds from the CNE 2016 Series C Taxable Notes were used to (i) refund a portion of the outstanding CNE 2013 A Bonds, and (ii) refund a portion of the outstanding CNE 2014 A Bonds, and (iii) refund certain outstanding taxable indebtedness incurred by TPC, and (iv) pay certain expenses related to the issuance of the 2016 Series C Bonds. In 2016, the Health System issued RIHEBC 2016 Series A variable rate bonds of $14,156,000. The proceeds from the CNE 2016 Series A Bonds were used to (i) refund the outstanding CNE 2011 Bonds, and (ii) pay certain expenses related to the issuance of the 2016 Series A Bonds. The maturity of the CNE 2016 Series A bonds was not more than twelve months from the closing date of June 28, 2016. The Health System recorded a loss on debt refinancing of $889,074 resulting from this transaction. The CNE 2016 Series A bonds were retired on September 28, 2016. When the Series 2016 B Bonds and the Series 2016 C Taxable Notes were issued on September 28, 2016, the Series 2016 A Bonds, the Series 2014 A Bonds, the TPC Series 2013 Bonds, and certain outstanding indebtedness issued by TPC were retired. The CNE 2010 Bonds were defeased by depositing a portion of the proceeds of the CNE 2016 Series B bond proceeds in an account held by the trustee for the CNE 2010 Bonds to provide funds as and when necessary to pay the principal and interest on the CNE 2010 Bonds. The refunding trust has sufficient fixed income securities of $9,940,916, to meet the required payments of the outstanding balance, with the final payment in December 2030. The CNE Series 2013 A Bonds were defeased by depositing a portion of the proceeds of the CNE 2016 Series B and CNE 2016 Series C proceeds in an account held by the trustee for the CNE 2013 Series A Bonds to provide funds as and when necessary to pay the principal and interest on the CNE 2013 Series A Bonds. The refunding trust has sufficient fixed income securities of $94,605,003, to meet the required payments of the outstanding balance, with the final payment in September 2033. The Health System recorded a loss on debt refinancing of $19,346,206 resulting from these transactions. In 2014, the Health System issued RIHEBC 2013 Series A fixed rate bonds of $87,385,000. The bonds have mandatory sinking fund redemptions ranging from $2,915,000 in 2019 to $8,230,000 in 2033. The proceeds from the CNE 2013 Series A Bonds were used to (i) refund the outstanding CNE 2008 Series A Bonds, and (ii) refund the outstanding Memorial 2003 Series bonds and accrued interest, and (iii) establish a debt service reserve fund, and (iv) terminate the interest rate swap
27
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 agreement with Deutsche Bank, and (v) fund a portion of routine capital expenditures/ improvements, and (vi) pay certain expenses related to the issuance of the 2013 Series A Bonds. In 2014, the Health System issued RIHEBC 2014 Series A variable rate bonds of $42,810,000. The bonds had mandatory sinking fund redemptions ranging from $20,000 in 2029 to $5,150,000 in 2033 with final payment of $3,350,000 in 2042. The proceeds from the CNE 2014 Series A Bonds were used to (i) refund the outstanding CNE 2008 Series B Bonds, and (ii) terminate the interest rate swap agreement with Morgan Stanley, (iii) fund a portion of routine capital expenditures/improvements, and (iv) pay certain expenses related to the issuance of the 2014 Series A Bonds. The 2008 Series B Bonds were defeased by depositing the proceeds of the CNE Series 2014 bonds in an account held by the Trustee to provide funds as and when necessary to pay the principal and interest of the CNE 2008 Series B bonds. The CNE 2008 Series B Bonds were redeemed in full on June 2, 2014. In 2010, the Health System issued RIHEBC 2010 Series fixed rate bonds of $12,000,000. The bonds have mandatory sinking fund redemptions ranging from $490,006 in 2016 to $813,065 in 2030, with a final payment of $417,695 in 2031. These bonds were issued as Direct Purchase Tax Exempt Bank qualified bonds. The bonds bear a fixed interest rate of 3.65% through December, 2017 with 3 year optional tenders through December, 2030. The bonds bear interest on a per annum basis with semi-annual payments based on a 20 year amortization. The proceeds from the bonds were used by Kent to finance (i) the renovation, equipping and furnishing of existing hospital space to house a ten (10) bed short stay unit: (ii) the construction, equipping and furnishing of a 30,000 square foot ambulatory surgical center with a connection to Kent’s existing hospital building and (iii) cost of issuance. CNE, Butler, Kent, WIC and WIH were jointly and severable liable for repayment. In 2011, the Health System issued RIHEBC 2011 Series fixed rate bonds of $16,000,000. The bonds had mandatory sinking fund redemptions ranging from $997,117 in 2016 to $1,044,574 in 2031. These bonds were issued as unrated private placement tax exempt bonds. The bonds bore a fixed interest rate of 2.99% through July 31, 2018. The bonds bore interest on a per annum basis with semi-annual payments based on a 20 year amortization. The proceeds from the bonds were used to finance (i) the construction, equipping and furnishing of a 32,000 square foot addition of Butler’s existing hospital facility; (ii) refinancing of the Bank of Rhode Island mortgage held by WIC; (iii) refinancing of certain capital leases; (iv) purchase of capital equipment; (v) capitalized interest and (vi) cost of issuance. CNE, Butler, Kent, WIC and WIH were jointly and severable liable for repayment. In 2012, the Center issued RIHEBC 2012 Series variable rate bonds of $2,600,000. The proceeds from the bonds were used to finance (i) the renovation of a 72,000 square foot office building located in Providence, Rhode Island and (ii) cost of issuance. In 2013, the RIHEBC 2012 Series bonds were refinanced in the aggregate amount of $2,725,000 in variable rate bonds. These bonds, RIHEBC 2013 Series, were issued as direct placement tax-exempt bonds. The bonds bore interest at the Federal Home Loan Bank Amortizing rate (twenty years), plus 2.00% discounted to 65% of the all in rate. Interest and principal installments of $13,052 on November 1, 2013 to September 1, 2023 were due monthly, with a final balloon payment of $2,025,934 due on October 1, 2023.
28
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Bank Mortgage and Other Notes In 2005, the Health System entered into a $3,750,000 mortgage note with Bank of America due August 2005 through July 2015. Interest and principal installments of $33,837 on August 1, 2005 to $24,883 on June 1, 2015 were due monthly, with a final balloon payment of $1,890,885 made August 2015, at a fixed interest rate of 5.64%. In 2007, the Health System entered into a $4,000,000 mortgage note with Time Insurance Company due October 2007 through September 2027. Interest and principal installments of $25,261 are due monthly, with a final payment of $1,338,527 due September 2027, at a fixed interest rate of 5.79%. The note is collateralized by the real estate purchased. In 2013, the Center entered into a $1,400,000 mortgage note with Bank RI due October 1, 2013 through October 1, 2023. Interest and principal installments of $8,614 were due monthly, at a fixed interest rate of 5.52%. The note was collateralized by the real estate. The proceeds of the CNE 2016 Series C Taxable Notes were used to retire this mortgage. In 2015, Kent entered into a lease amendment with Seavest Healthcare Partners, LLC (“Seavest”). The 2015 amendment to the December 17, 2010 Tenant Space Lease agreement between the landlord, Seavest, and Kent for medical space located on Kent’s campus, includes a $1,600,000 note, due March 2016 through February 2030. Funds from this note were received by Kent in February and April 2016. Interest and principal installments of $13,582 are due monthly at an imputed interest rate of 5.46%. Scheduled principal repayments on long-term debt are as follows for the years ended September 30: 2017 2018 2019 2020 2021 Thereafter
$
503,974 4,046,041 4,253,011 5,982,945 6,283,907 143,729,631 164,799,509
Plus unamortized premium on bonds
13,008,969
Less unamortized discount on bonds
(564,669) $ 177,243,809
Care New England had available $15,000,000 from December 29, 2011 through March 31, 2016 through a line of credit with a financial institution. The line of credit was not renewed after March 31, 2016. There were no outstanding balances on the line of credit as of September 30, 2015. The Center had available $2,500,000 from October 1, 2013 through March 17, 2016 and $5,000,000 from March 18, 2016 through September 30, 2016 through a line of credit with a financial institution. $639,958 was outstanding on the line of credit as of September 30, 2016. There were no outstanding balances on the line of credit as of September 30, 2015. The Center is required to maintain a minimum debt service coverage ratio of 1.15 to 1.
29
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The Hospitals and the Center classify certain noncancelable leases as capital leases, and include the property under lease in their property and equipment. Amortization expense for these assets is included in depreciation and amortization expenses in the consolidated statements of operations and changes in net assets. Ownership of the leased property converts to the Hospitals or the Center, respectively, at the end of the lease term. Assets and related accumulated depreciation under the capital leases are included in property, plant and equipment (Note 7). Future minimum lease payments due under capital lease arrangements are as follows: 2017 2018 2019 2020 2021
$
Total minimum lease payments
4,748,650
Less: Amount representing interest
141,937
Capital lease obligations at September 30, 2016
9.
1,600,105 1,583,375 1,557,967 4,975 2,228
$
4,606,713
Temporarily and Permanently Restricted Net Assets Temporarily restricted net assets are available for the following purposes or periods at September 30: 2016 Healthcare services Healthcare research General purposes Indigent care Health education Plant replacement and expansion Other
$
Total temporarily restricted net assets
5,471,926 1,542,140 8,658,396 5,132,602 3,464,227 9,257,287 5,358,110
$ 38,884,688
2015 $
5,908,916 1,702,960 8,137,291 4,843,451 3,281,915 12,125,260 4,884,456
$ 40,884,249
Permanently restricted net assets at September 30 are restricted investments to be held in perpetuity.
Plant replacement and expansion Indigent care General purposes Research Healthcare services Health education Other Total permanently restricted net assets
30
2016
2015
$ 18,475,851 1,311,835 10,849,876 1,517,890 2,072,198 1,169,679 2,653,797
$ 17,679,257 1,311,835 4,019,732 1,273,435 2,042,372 1,054,150 2,651,358
$ 38,051,126
$ 30,032,139
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The Health System follows the requirements of the Rhode Island enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 as they relate to its permanently restricted endowments. The Health System’s endowments consist of numerous individual funds established for a variety of purposes. Its endowments consist solely of donor-restricted endowment funds. As required by U.S. generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. The Health System classifies restricted donor funds in accordance with the laws of the State of Rhode Island and generally accepted accounting principles. The Health System classifies as permanently restricted net assets (1) the original value of gifts donated to the permanent endowment, (2) the original value of subsequent gifts to the permanent endowment, and (3) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment funds that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure. The Health System considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the fund, (2) the purpose of the Health System and the donor-restricted endowment fund, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, and (6) the investment policies of the Health System. For the year ended September 30, 2016, the Health System had the following changes in the endowment net assets: Temporarily Restricted
Permanently Restricted
Total
$ 20,861,352
$ 12,350,886
$ 33,212,238
Investment return Investment income Net appreciation (realized and unrealized)
318,106 2,732,096
-
318,106 2,732,096
Total investment return
3,050,202
-
3,050,202
Endowment net assets at beginning of year
Contributions Transfer from unrestricted net assets Appropriation of endowment assets for expenditure Endowment net assets at end of year
(49,358) 304,489 (1,207,679) $ 22,959,006
31
258,517 $ 12,609,403
209,159 304,489 (1,207,679) $ 35,568,409
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 For the year ended September 30, 2015, the Health System had the following changes in the endowment net assets:
Endowment net assets at beginning of year Acquired endowment net assets
Temporarily Restricted
Permanently Restricted
Total
$ 24,028,457 31,070
$ 11,322,423 100,000
$ 35,350,880 131,070
Investment return Investment income Net appreciation (realized and unrealized)
523,128 (2,526,838)
-
523,128 (2,526,838)
Total investment return
(2,003,710)
-
(2,003,710)
68,786 (1,263,251)
31,837 896,626 -
100,623 896,626 (1,263,251)
Contributions Transfer to permanently restricted net assets Appropriation of endowment assets for expenditure Endowment net assets at end of year
$ 20,861,352
$ 12,350,886
$ 33,212,238
In addition to permanently restricted endowments, Kent, Memorial and WIH are income beneficiaries of various trusts. On September 30, 2016 and 2015, the market value of Kent’s and Memorial’s trust assets, which are recorded as permanently restricted net assets, totaled $18,475,859 and $17,679,265, respectively. In 2016, WIH recorded its share of trust assets as a contribution to permanently restricted net assets. On September 30, 2016, the market value of WIH’s trust assets totaled $6,830,144. On September 30, 2015, the market value of WIH’s trust assets, which were not included in WIH’s permanently restricted net assets at September 30, 2015, totaled $6,624,607. Distributions of income are made at the discretion of the trustees. It is the policy of the Health System that any appropriations from the appreciation in endowment funds are periodically requested of and approved by the Board of Trustees. The Board has responsibility for formulating investment policies. The investment policy is to invest in a conservative asset portfolio with minimal investment risk. Certain funds are included in a consolidated long term investment pool and invested in accordance with the investment strategy, authorized by the Board. From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the Health System to retain as a fund of perpetual duration. Deficiencies of this nature that are reported in unrestricted net assets are immaterial as of September 30, 2016 and 2015. These deficiencies resulted from unfavorable market fluctuations. The individual donor-restricted endowment funds with deficiencies will retain future income and appreciation to restore the required fair value of the assets.
32
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 During fiscal 2016 and 2015, net assets were released from donor restrictions by incurring expenses satisfying the following restricted purposes:
2016 Healthcare services Healthcare research Plant replacement and expansion Other Health education Indigent care
$
Total net assets released from restrictions
2015
1,683,783 197,996 6,654,039 1,279,119 205,037 249,742
$
1,034,448 321,977 893,818 1,189,013 222,318 230,050
$ 10,269,716
$
3,891,624
U.S. Department of Housing and Urban Development Wilson received funding from HUD of $1,152,335 for the renovation of Wilson Street apartments. The agreement states that repayment is not required provided that the property funded remains available only to qualified clients for a period of not less than 40 years, maturing in 2047. If at any time during the restricted use period Wilson is unable to meet the provisions of the agreement, at the option of the funding source, the entire amount of the above noted funding shall become due and payable upon default. Grandview Second received funding from HUD of $1,173,200 for the renovation of Grandview Second apartments. The agreement states that repayment is not required provided that the property funded remains available only to qualified clients for a period of not less than 40 years, maturing in 2035. If at any time during the restricted use period Grandview Second is unable to meet the provisions of the agreement, at the option of the funding source, the entire amount of the above noted funding shall become due and payable upon default. Nashua received funding from HUD of $834,200 for the renovation of Nashua Street apartments. The agreement states that repayment is not required provided that the property funded remains available only to qualified clients for a period of not less than 40 years, maturing in 2040. If at any time during the restricted use period Nashua is unable to meet the provisions of the agreement, at the option of the funding source, the entire amount of the above noted funding shall become due and payable upon default. State Bond Funds Wilson has two agreements with the State of Rhode Island whereby Wilson obtained bond funds in the amount of $818,738 for the renovation of the Wilson Street apartments. Under the terms of the agreements, if Wilson Street apartments should cease to be utilized as a facility to be rented by qualified clients before 2047 (40 years after the first rental unit to a client or two years from the date of the grant), the State of Rhode Island would be entitled to recover either the amount expended under the agreement or a prorated portion of the fair market value of the building, whichever is greater. Management intends to use the facility for the stated purpose and duration of the agreement.
33
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 10.
Retirement Plans The Health System has three separate Defined Benefit pension plans. One plan covers the employees of CNE, Butler, Kent and WIC, with the exception of the unionized employees of WIH (who are covered under a multiemployer union plan), and certain WIH-employed physicians. The second plan covers the employees of the Agency, and the third plan covers substantially all of the employees of Memorial. Care New England Pension Plan The Care New England Pension Plan (the “Plan”), established on October 1, 1998, is a defined benefit cash balance plan that covers all of the employees of CNE, and all of the employees of Butler, Kent and WIC, with the exception of the unionized employees and certain employed physicians at WIH. The benefits for the unionized employees at Butler are computed under a separate formula that was in effect when the Butler plan was a standalone noncontributory defined benefit plan. Butler, Kent and WIC incur and fund their respective pension plan expenses within the guidelines established by the Employee Retirement Income Security Act of 1974. The Care New England Board of Trustees voted, on September 23, 2010, to freeze the Plan effective December 31, 2010 for all employees with the exception of the Butler unionized employees. Effective December 31, 2010, compensation paid to a participant shall be disregarded for plan purposes, except for purposes related to determining benefits for the unionized employees at Butler. In addition, a participant’s cash balance account will only increase annually for interest credit. In connection with the Plan freeze, the Health System enhanced contributions to the Care New England 403(b) Match and Savings Plan. Included in cumulative changes in unrestricted net assets at September 30, 2016 that has not yet been recognized in net periodic pension cost is an actuarial loss of $99,991,247. Included in cumulative changes in unrestricted net assets at September 30, 2015 that has not yet been recognized in net periodic pension cost is an actuarial loss of $91,994,222. The actuarial loss included as cumulative changes in unrestricted net assets and expected to be recognized in net periodic pension cost during the fiscal year ended September 30, 2017 is $2,250,293. Net periodic pension cost includes the following components at September 30: 2016 Service cost Interest cost Expected return on plan assets Amortization of loss Net ` periodic pension expense/(income)
34
2015
$
2,591,371 9,375,254 (11,379,140) 2,038,064
$
2,514,262 9,223,909 (13,236,052) 1,381,414
$
2,625,549
$
(116,467)
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The assumptions used to determine net periodic benefit cost for the years ended September 30 are as follows: 2016 Discount rate Expected return on assets Rate of compensation increase
4.22 % 6.50 3.00
2015 4.17 % 6.75 3.00
The following table presents a reconciliation of the beginning and ending balances of the plan projected benefit obligations, fair value of plan assets, funded status, and accumulated other comprehensive income (AOCI) of the plan as of September 30: 2016
2015
Changes in benefit obligations Projected benefit obligations at beginning of year Service cost Interest cost Actuarial loss Benefits and expenses paid
$ 230,798,724 2,591,371 9,375,254 17,161,026 (13,834,922)
$ 229,225,651 2,514,262 9,223,909 3,484,951 (13,650,049)
Projected benefit obligations at end of year
$ 246,091,453
$ 230,798,724
Changes in plan assets Fair value of plan assets at beginning of year Actual return on plan assets Employer contributions Benefits and expenses paid
$ 181,970,833 18,505,077 2,500,000 (13,834,922)
$ 201,187,902 (9,317,020) 3,750,000 (13,650,049)
Fair value of plan assets at end of year
$ 189,140,988
$ 181,970,833
Funded status Total pension liability Accumulated benefit obligation
$ (56,950,465) 243,535,570
$ (48,827,891) 228,710,517
$ 91,994,222
$ 67,337,612
2,038,064
1,381,414
10,035,089
26,038,024
$ 99,991,247
$ 91,994,222
Amounts recognized in unrestricted net assets Unrestricted net assets at beginning of year Plus amounts amortized during the year Net loss Plus amounts occurring during the year Net loss Unrestricted net assets at end of year
The assumptions used to develop the projected benefit obligation as of September 30 are as follows:
2016 Discount rate Rate of compensation increase
3.43 % 3.00 %
35
2015 4.22 % 3.00 %
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Plan Assets The Plan’s investment objectives are to achieve long-term growth in excess of inflation, and to provide a rate of return that meets or exceeds the actuarial expected long-term rate of return on plan assets. In order to minimize risk, the Plan attempts to minimize the variability in yearly returns. The Plan diversifies its holdings among sectors, industries, and companies. No more than 6% of the Plan’s portfolio (measured on market value) may be held in an individual company’s stocks or bonds. To develop the expected long-term rate of return on plan assets assumption, the Health System considered the historical return and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. The Health System’s pension plan asset allocations (based on market value) at September 30, by asset category, are as follows: Target Allocation Asset category Investments at NAV Fixed income securities Equity securities
Actual 2016
Actual 2015
11 % 35 54
17 % 34 49
12 % 34 54
100 %
100 %
100 %
Refer to Note 23 for details on assets held by the Plan. Contributions The Health System contributed $2,500,000 and $3,750,000 to the Plan in 2016 and 2015, respectively. The Health System expects to contribute $5,000,000 to the Plan in 2017. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: Pension Benefits
Fiscal Year 2017 2018 2019 2020 2021 Years 2022–2026
$ 17,964,689 17,575,565 16,644,279 17,632,798 17,739,179 80,224,030
Care New England 403(b) Match and Savings Plan Effective January 1, 2009, the Pension Plan Protection legislation resulted in regulatory changes which discontinued the matching credits to the participants that were previously recorded in the CNE Pension Plan. As a result, CNE established the Care New England 403(b) Plan to account for future matching credits. The plan covers employees that meet certain eligibility requirements. Additionally, effective January 1, 2011, in connection with the freeze of the Care New England
36
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Pension Plan, the Health System also provides a nonelective contribution to participant accounts, as defined in the Plan document. Nonelective contributions are allocated to each eligible participant based on a percentage of salary, a combination of the recipients age and years of service, and are credited to each such participant as of the first day of the Plan year, as further described in the Plan document. The Health System recorded an expense of $16,519,860 and $16,412,827 for the nonelective contribution to participant accounts for the fiscal years that ended September 30, 2016 and 2015, respectively. In addition, the Health System recorded an expense of $4,650,277 and $4,470,337 for matching credits for fiscal years ended September 30, 2016 and 2015, respectively. The Health System will fund the 2016 expense in calendar year 2017 and funded the 2015 expense in calendar year 2016. Kent County Visiting Nurse Association Pension Plan The Agency has a noncontributory defined benefit pension plan covering all employees who have satisfied certain eligibility requirements that was frozen effective December 31, 2007, and replaced with a contributory retirement savings plan. Benefits under the defined benefit plan were based on years of service and employee’s compensation levels. Included in the charge to net assets at September 30, 2016 and 2015 is an unrecognized actuarial loss of $5,211,582 and $4,330,178, respectively. The actuarial loss expected to be recognized in net periodic pension cost during the fiscal year ended September 30, 2017 is $151,503. The Agency’s pension expense was $217,415 in 2016 and $182,333 in 2015. The assumptions used to determine net periodic benefit cost for the years ended September 30 are as follows: 2016 Discount rate Expected return on assets Rate of compensation increase
4.50 % 6.50 % N/A
2015 4.32 % 6.50 % N/A
The assumptions used to develop the projected benefit obligation as of September 30 are as follows:
2016 Discount rate Rate of compensation increase
3.67 % N/A
2015 4.50 % N/A
To develop the expected long-term rate of return on plan assets assumption, the Agency considered the historical return and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. Plan assets, valued at fair value, consist of 98% mutual funds and 2% cash and cash equivalents. The fair value of the Plan assets were $6,791,544 and $6,322,672 at September 30, 2016 and 2015, respectively.
37
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The funded status of the Agency’s defined benefit plan was a total pension liability of $4,357,838 and $3,590,301 as of September 30, 2016 and 2015, respectively. The Agency made required contributions to the Plan of $331,282 and $237,828 in 2016 and 2015, respectively. The Agency is expected to make $288,000 in contributions to the Plan during 2017. Benefit payments are expected to be paid as follows: Pension Benefits
Fiscal Year 2017 2018 2019 2020 2021 Years 2022–2026
$
409,971 507,652 540,516 555,103 575,903 3,067,276
Effective January 1, 2008, the Agency established a 403(b) Retirement Savings Plan that covers employees who have met certain eligibility requirements. Discretionary contributions to the plan are based on years of service and compensation levels. For the fiscal years that ended September 30, 2016 and 2015, respectively, the Agency recorded an expense of $452,002 and $391,850. Memorial Retirement Plan As part of the acquisition of SHS, CNE acquired the assets and assumed the liabilities for Memorial’s defined benefit pension plan (“the Memorial Plan”), which was frozen for non-union participants as of May 31, 2012 and union employees as of June 1, 2013 and was replaced by the Memorial 403(b) Match and Savings Plan. Benefits under the defined benefit plan were based on years of service and employees’ compensation during the last five years of covered employment. Memorial makes annual contributions to the Memorial Plan, which approximate the amount of net periodic pension cost. On December 31, 2014, the Memorial Plan was amended and participants became eligible participants in the Care New England 403(b) Match and Savings Plan effective January 1, 2015. Included in cumulative changes in unrestricted net assets at September 30, 2016 that has not yet been recognized in net periodic pension cost is an actuarial loss of $41,968,565. Included in cumulative changes in unrestricted net assets at September 30, 2015 that has not yet been recognized in net periodic pension cost is an actuarial loss of $28,162,363. The actuarial loss included as cumulative changes in unrestricted net assets and expected to be recognized in net periodic pension cost during the fiscal year ended September 30, 2017 is $895,511.
38
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Net periodic pension cost includes the following components at September 30: 2016 Service cost Interest cost Expected return on plan assets Amortization of loss Net periodic pension expense
2015
$
1,200,000 6,864,004 (5,465,548) 436,006
$
$
3,034,462
$
6,647,404 (5,909,928) 737,476
The assumptions used to determine net periodic benefit cost for the years ended September 30 are as follows: 2016 Discount rate Expected rate of return on plan assets Rate of compensation increase
4.51 % 6.00 % N/A
39
2015 4.43 % 6.00 % N/A
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The following tables represent a reconciliation of the beginning and ending balances of the plan projected benefit obligations, fair value of plan assets, funded status, and accumulated other comprehensive income (AOCI) of the plan as of September 30: 2016
2015
Changes in benefit obligations Projected benefit obligations at beginning of year Service cost Interest cost Actuarial loss Benefits and expenses paid
$ 155,405,973 1,200,000 6,864,004 19,117,056 (7,635,890)
$ 153,072,709 6,647,404 7,449,980 (11,764,120)
Projected benefit obligations at end of year
$ 174,951,143
$ 155,405,973
Changes in plan assets Fair value of plan assets at beginning of year Actual return on plan assets Employer contributions Benefits and expenses paid
$ 91,882,407 10,340,396 4,289,465 (7,635,890)
$ 99,583,256 (1,527,710) 5,250,000 (11,423,139)
Fair value of plan assets at end of year
$ 98,876,378
$ 91,882,407
Funded status Total pension liability Accumulated benefit obligation
$ (76,074,765) 174,951,143
$ (63,523,566) 155,405,973
$ 28,162,363
$ 13,274,745
Amounts recognized in unrestricted net assets Unrestricted net assets at beginning of year Less amounts amortized during the year Net loss Less amounts occurring during the year Net loss Unrestricted net assets at end of year
(436,006)
-
14,242,208
14,887,618
$ 41,968,565
$ 28,162,363
The assumptions used to develop the projected benefit obligations as of September 30, 2016 are as follows:
2016 Discount rate Rate of compensation increase
3.68 % N/A
2015 4.51 % N/A
Plan Assets The goals of the Memorial Plan are to provide a secure retirement benefit for plan participants and to manage plan assets for the exclusive benefit of the participants. The invested assets will be managed on a long-term total return basis and measured against established benchmarks for each asset class. Risk management is achieved by limiting the size of asset class and individual security positions to achieve adequate diversification. The Memorial Plan will maintain a funded level sufficient to ensure benefit security.
40
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The pension plan asset allocations (based on market value) at September 30, by asset category, are as follows:
Target Allocation Asset category Cash and cash equivalents Investments at NAV Fixed income securities Equity securities
Actual 2016
Actual 2015
0% 0 66 34
1% 0 66 33
1% 0 69 30
100 %
100 %
100 %
Refer to Note 23 for details on assets held by the Plan. Contributions Memorial contributed $4,289,465 to the Memorial Plan in 2016 and expects to contribute $7,000,000 to the Plan in 2017. Estimated Future Benefit Payments Benefit payments, are expected to be paid as follows: Fiscal year
Pension Benefits
2017 2018 2019 2020 2021 Years 2022–2023
$
7,054,206 7,471,011 7,857,197 8,329,757 8,674,437 47,885,366
WIH Union Plan WIH contributes to a multi-employer defined benefit pension plan under the terms of the collective bargaining agreements that cover its union-represented employees. The risks of participating in multiemployer plans are different from single-employer plans in the following aspects: a. Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. c.
If WIH chooses to stop participating in the plan, WIH may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
41
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 WIH’s participation in the plan for the annual period ended December 31, 2015, is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number (EIN) and the three-digit plan number. The most recent Pension Protection Act (PPA) zone status available in 2015 and 2014 is for the plan’s year-end at December 31, 2015, and December 31, 2014, respectively. The zone status is based on information that WIH received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (FIP) or rehabilitation plan (RP) is either pending or has been implemented. The last column lists the expiration date of the collectivebargaining agreements to which the plan is subject.
Pension Fund New England Health Care Employees Pension Fund
EIN/Pension Plan Number
22-3071963 - 001
Pension Protection Act Zone Status 2015 2014
Green
Green
FIP/RP Status Pending/ Implemented
No
Contributions of WIH 2015 2014
$ 8,760,480
$ 8,306,710
Surcharge Imposed
Expiration Date of CollectiveBargaining Agreement
No
11/30/2016
WIH was listed in the plan’s Form 5500 as providing more than 5 percent of the total contributions for the plan years ending December 31, 2015 and December 31, 2014. At the date the financial statements were issued, Form 5500 was not available for the plan year ending December 31, 2016. Payments to the plan for the years ended September 30, 2016 and 2015 were $9,129,758 and $8,644,537, respectively. The Center Retirement Benefit Plan The Center maintains a profit sharing retirement plan to which The Center may make discretionary contributions. The retirement plan covers all employees of the Center over the age of 21 who have worked for a minimum of 975 hours during the plan year. Participants are vested over a number of years of continuous service. Participants became 100% vested after six years unless the age of 65 is attained, upon which the participant also becomes 100% vested. The Center did not contribute to the retirement plan for the year ended September 30, 2016. 11.
Postretirement Plans Kent sponsors an unfunded noncontributory defined benefit postretirement plan that provides medical and dental benefits to certain salaried and nonsalaried employees. In 1996, Kent amended the plans to eliminate benefits for all employees, except for certain employees with at least 25 years of service at that date. Included in the charge to net assets that have not yet been recognized in net periodic postretirement benefit cost as of September 30, 2016 and 2015, respectively, is the unrecognized actuarial loss of $275,393 and $145,258. The unrecognized actuarial loss expected to be recognized in net periodic postretirement costs during the fiscal year ended September 30, 2017 is $12,233. The postretirement benefit cost for these plans was $55,294 in 2016 and $119,610 in 2015.
42
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 12.
Patient Service Revenue For the majority of the System’s revenue, the Hospitals, the Agency, and the Center have agreements with third-party payors that provide for payments to the Hospitals, the Agency, and the Center at amounts different from their established rates. At the time of rendering service to the patients, the Hospitals, the Agency, and the Center obtain assignment of benefits payable under the patient’s health insurance program, plan, or policy (e.g., Medicaid, Blue Cross, health maintenance organizations, commercial insurance, Medicare, and others). The following is a breakdown of gross patient service revenue by payor type for the years ended September 30:
2016 Medicare and Medicare Managed Care Medicaid and Medicaid Managed Care Blue Cross Managed care Self-pay Other third-party payors
2015
32 % 28 20 11 2 7
33 % 28 21 10 2 6
100 %
100 %
Laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation. As a result, there will always be a possibility that the recorded estimates of net revenue could change by a significant amount in the future. The Hospitals, the Agency, and the Center believe they are in compliance with all applicable laws and regulations. Cost reports filed annually with third-party payors are subject to audit prior to final settlement. Medicare Cost reports for the Hospitals and the Agency have been filed through 2015, and settled through 2015 for the Agency, 2014 for Butler, and 2013 for Kent, WIH, and Memorial. The filing of these cost reports and associated settlements require the use of estimates. Net patient service revenue was increased by approximately $4,500,000 and $6,000,000 in 2016 and 2015, respectively, to reflect the changes in the estimated settlements for certain prior years.
43
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The Health System recognizes patient service revenue associated with services provided to patients who have third-party payor coverage on the basis of contractual rates for the services rendered. For uninsured patients that do not qualify for charity care, the Health System recognizes revenue on the basis of its standard rates for services provided (or on the basis of discounted rates, if negotiated or provided by policy). On the basis of historical experience, a significant portion of the Health System’s uninsured patients will be unable or unwilling to pay for the services provided. Thus, the Health System records a significant provision for bad debts related to uninsured patients in the period the services are provided. Patient service revenue, net of contractual allowances and discounts (but before the provision for bad debts), for the years ended September 30, 2016 and 2015 is summarized as follows:
Patient service revenue (net of contractual allowances and discounts) Third-party payors Self-pay Total All Payors
13.
2016
2015
$ 1,073,363,882 20,874,434
$ 1,033,942,838 27,849,982
$ 1,094,238,316
$ 1,061,792,820
Disproportionate Share The government has long recognized the financial burdens which are borne by hospitals which serve an unusually large number, or “disproportionate share”, of low-income patients. Kent, WIH, and Memorial received payments under the disproportionate share program of $56,539,150 and $50,483,921 from the State of Rhode Island’s Medicaid program for the years ended September 30, 2016 and 2015, respectively. Kent, WIH, and Memorial also recorded disproportionate share payments of $2,122,763 and $1,949,220 from Medicare during 2016 and 2015, respectively. Additional payments of $10,219,631 and $12,366,948 were received during 2016 and 2015, respectively, from Medicare as part of new provisions under the Accountable Care Act to offset hospital costs for uncompensated care.
14.
Licensure Fees The State of Rhode Island assesses hospitals an annual licensure fee calculated as a percentage of the hospital’s net patient revenue. The Care New England hospitals were assessed $47,792,634 and $43,534,709 for the years ended September 30, 2016 and 2015, respectively.
15.
Restructuring Costs During 2015, the System engaged Huron Healthcare, a nationally recognized healthcare performance improvement consulting firm. Huron began its assessment of the System’s issues in June 2015. Following a 90-day assessment of CNE strategy and clinical and financial operations, Huron identified restructuring opportunities in multiple areas. Specific recommendations and action plans support the achievement of these targeted benefits. In August 2015, Huron Healthcare was further engaged to assist with the implementation of those recommendations. The work is organized through teams led by a CNE executives working in tandem with a lead consultant from Huron. Team participants include CNE leaders from across the System as appropriate by area of focus. Working in partnership with Huron, CNE has started, and will continue to, implement these improvements over the course of the next 15 months.
44
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 During fiscal years 2016 and 2015, respectively, the System incurred $29,548,550 and $2,911,571 in expenses relating to the System’s restructuring activities, all related to the costs associated with the retention of Huron Healthcare and severance costs. 16.
Concentration of Credit Risk As of September 30, 2016 and 2015, Care New England, the Hospitals, the Agency, and the Center had cash and cash equivalents in excess of Federal Depository Insurance limits at major financial institutions. These financial institutions have a strong credit rating, and management believes that credit risks related to these deposits are minimal. The Hospitals, the Agency, and the Center receive a significant portion of its payment for services rendered from a limited number of governmental and commercial third-party payors, including Medicare, Medicaid, and Blue Cross. The organization has not historically incurred any significant concentrated credit losses in the normal course of business. In addition, the organizations routinely grant credit to patients without requiring collateral or other security. The mix of receivables, net of contractual allowances, from patients and third-party payors at September 30, 2016 and 2015, was as follows:
2016 Medicare and Medicare Managed Care Medicaid and Medicaid Managed Care Blue Cross Managed care Self-pay Other third-party payors
2015
15 % 23 17 9 18 18
19 % 22 18 16 14 11
100 %
100 %
The Health System provides an allowance for doubtful accounts to address the risks of nonpayment of accounts receivable. 17.
Commitments and Contingencies Operating Leases Care New England, the Hospitals, the Agency, and the Center have entered into operating lease agreements with several vendors for the lease of certain equipment and office space. Future minimum lease payments under noncancelable operating leases as of September 30, 2016 are: 2017 2018 2019 2020 2021 Later years
$
Total minimum lease payments
9,819,098 8,751,483 7,372,326 6,500,794 6,381,562 42,474,259
$ 81,299,522
Total rent expense for operating leases for the years ended September 30, 2016 and 2015 amounted to $12,159,256 and $6,988,541, respectively.
45
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Butler has entered into several agreements with various parties, mostly non-profit organizations, to lease space on the Butler campus. Rental income in the amount of $2,559,257 and $2,690,521 for the fiscal years ending September 30, 2016 and 2015, respectively, is included in other operating revenues in the consolidated statements of operations. Litigation CNE, the Affiliates, the Agency and the Center have been individually named as codefendants in several complaints. It is the opinion of management that the liability, if any, to CNE, the Affiliates, the Agency, and the Center, in excess of insurance coverage will have no material adverse effect on the consolidated financial position of Care New England. Collective Bargaining Agreements At September 30, 2016, approximately 38% of the Health System’s employees were covered by collective bargaining agreements. The collective bargaining agreement covering 20% of Memorial’s employees expired on June 14, 2015 and is currently being negotiated. The collective bargaining agreement covering 65% WIH’s employees expired on November 30, 2016, and is subject to negotiation. All remaining bargaining agreements will be in effect through fiscal 2017. 18.
Professional and General Liability Claims Due to strategic and economic issues, as well as the potential for limited availability of commercial insurance policies, the Care New England entities have moved over time to covering the majority of their professional and general liability insurance to self-insured approaches. The adequacy of the coverage provided, reserves, and the funding levels are evaluated annually by independent actuaries who review the soundness of the programs and recommend future funding levels. Potential losses are estimated based on industry as well as entity experience, and a provision for these losses is recorded. Butler annually contributes to its self-insurance trust fund to provide for risks relating to its existing actuarially calculated primary level of professional and general liabilities, as well as the tail liability related to prior claims-made coverage. Butler’s professional liability coverage for claims in excess of its primary coverage limits is provided by W&I Indemnity. Kent Hospital established Toll Gate Indemnity in 2004, as an off-shore captive insurance entity to insure primary and excess hospital professional and general liability risks, as well as to supply indemnification coverage for certain eligible medical staff. As of July 1, 2014, Kent Hospital purchased commercial insurance coverage on a claims made basis for professional liability claims in excess of the professional liability coverage provided through Toll Gate Indemnity. WIH established W&I Indemnity in 1994, as an off-shore captive insurance entity to provide coverage for claims in excess of its underlying policy, as well as to insure the contractual liability arising from indemnification agreements with certain eligible medical staff. In addition, WIH has a self-insurance trust fund for risks relating to prior tail liabilities. As of October 1, 2011, the primary coverage for professional and general liabilities was moved under the off-shore captive. Effective July 1, 2004, professional liability insurance coverage for Memorial was provided on an occurrence basis. Such coverage was provided on a claims-made basis through June 30, 2004. The claims-made policies cover only claims made during the terms of the policies, and not those occurrences for which claims may be made after expiration of the policies. Memorial is self-insured with respect to incurred but not reported (IBNR) claims incurred prior to July 1, 2004. Memorial purchases annually commercial insurance policies to insure professional and general liability risks.
46
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The provisions for anticipated losses were based upon expected undiscounted values. Trust fund and captive assets are available for the payment of claims. The Agency purchases general and professional liability insurance from Toll Gate Indemnity. The Center purchases, annually, commercial insurance policies to insure professional and general liability risks. 19.
Other Self-Insurance Reserves Care New England has established a workers’ compensation trust fund to cover all past and future self-insured claims of workers’ compensation activity for CNE, Butler, Kent, WIC, Memorial, and the Agency. The reserve for workers’ compensation losses is based on an actuarial study and actual experience. At September 30, 2016 and 2015, the amounts accrued for estimated self-insurance costs have not been discounted. The Center purchases a commercial insurance policy annually to insure workers’ compensation risks. CNE, on behalf of itself, Butler, Kent, WIC, and the Agency, has entered into a self-insurance program for health insurance risks. This program covers the health claims for all of CNE’s, Butler’s, Kent’s, WIC’s, and the Agency’s employees, with the exception of the unionized employees at WIH. The provisions for health insurance losses are based on actuarial assumptions and actual claims experience. CNE, on behalf of itself, Butler, Kent, WIC, SHS, and the Agency, has entered into a self-insurance program for dental insurance risks. This program covers the dental insurance claims for all of CNE’s, Butler’s, Kent’s, WIC’s, SHS’ and the Agency’s employees. The provisions for dental insurance losses are based on actuarial assumptions and actual claims experience. The Center has entered into a self-insurance program for health insurance risks. This program covers health insurance claims for substantially all of the Center’s full-time employees. The Center limits it losses through the use of stop-loss policies from re-insurers. The provisions for health insurance losses are based on actuarial assumptions and actual claims experience.
20.
Affiliation With Rhode Island Hospital In 1981, RIH and WIH approved an agreement providing for the affiliation of the two Hospitals. The affiliation agreement provides for a program of shared medical services, thereby greatly increasing the scope of comprehensive acute-care services available to WIH in maternal, gynecological, and neonatal care. In accordance with the agreement, the Hospital relocated to the property of RIH.
21.
Affiliation With Accredited Medical Schools Butler, WIH, and Memorial are affiliated with the Warren Alpert Medical School of Brown University. The affiliation agreements provide that Butler, Memorial and WIH are the Major Affiliated Teaching Hospitals of the Medical School for psychiatry and behavioral, primary care medicine, and activities unique to women and newborns, respectively. Kent is affiliated with the University of New England College of Osteopathic Medicine.
47
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 22.
Functional Expenses CNE provides healthcare services to residents within their geographic service areas. Expenses related to providing these services for the years ended September 30 are as follows:
2016 Healthcare services General and administrative Other
$
963,511,889 204,307,931 55,183,830
$ 1,223,003,650 23.
2015 $
936,372,671 200,440,999 2,911,571
$ 1,139,725,241
Fair Value of Financial Instruments The Health System values it financial assets and liabilities at fair value in accordance with GAAP. GAAP defines fair value, establishes a framework for measuring fair value, and delineates the disclosures required about fair value measurements. Financial assets consist primarily of the endowment, Board designated funds, trustee-held funds, and other investments. Additionally, GAAP allows the Health System the use of estimates to fair value certain investments at the measurement date using NAV reported by the investment managers without further adjustment, provided that the Health System does not expect to sell the investments at a value other than the NAV. GAAP clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, this standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1
Valuations using quoted prices in active markets for identical assets or liabilities. Valuations of these products do not require a significant degree of judgment.
Level 2
Valuations using observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; broker or dealer quotations; or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities.
Level 3
Valuations using unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.
48
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The Health System’s ownership in investments at NAV consists of limited partnership interests and commingled funds. The value of certain investments at NAV represents the ownership interest in the NAV of the respective fund. The NAV of the securities held that do not have readily determinable fair values are determined by the investment manager or general partner and are based on appraisals or other estimates that require varying degrees of judgment. If no public market exists for the investment securities, the fair value is determined by the investment manager or general partner taking into consideration, among other things, the cost of the securities, prices of recent significant placements of securities of the same issuer, and subsequent developments concerning the companies to which the securities related. The Health System has performed due diligence around these investments to ensure NAV is an appropriate measure of fair value as of September 30. Financial instruments carried at fair value for the System’s nonpension plan assets as of September 30, 2016 are classified in the table below in one of the three categories described above: 2016
Level 1
Level 2
Level 3
Assets Endowment and board designated funds Cash and cash equivalents Equity securities Mutual funds Assets held under split-interest agreements Subtotal Investments at NAV (a) Total assets
$
5,132,733 14,823,485 55,340,378 25,306,003
$ 100,602,599
$
5,132,733 14,823,485 55,269,931 -
$
70,447 -
$
25,306,003
$ 75,226,149
$
70,447
$ 25,306,003
60,536,395 $ 161,138,994
Trustee-held funds Cash and cash equivalents Fixed income securities Equity securities Mutual funds
$ 24,411,650 9,258,229 25,608,612 54,844,991
$ 24,411,650 6,059,277 25,608,612 6,311,624
$
3,198,952 48,533,367
$
-
Subtotal
$ 114,123,482
$ 62,391,163
$ 51,732,319
$
-
-
Investments at NAV (a) Total assets
47,243,272 $ 161,366,754
Other investments Mutual funds
15,185,364
15,185,364
Subtotal
$ 15,185,364
$ 15,185,364
49
$
-
$
-
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Financial instruments carried at fair value for the System’s nonpension plan assets as of September 30, 2015 are classified in the table below in one of the three categories described above: 2015
Level 1
Level 2
Level 3
Assets Endowment and board designated funds Cash and cash equivalents Equity securities Mutual funds Assets held under split-interest agreements Subtotal
$
$ 90,499,388
Investments at NAV (a) Total assets
4,441,937 12,941,827 55,436,359 17,679,265
$
4,441,937 12,941,827 55,373,192 -
$
63,167 -
$
17,679,265
$ 72,756,956
$
63,167
$ 17,679,265
51,300,288 $ 141,799,676
Trustee-held funds Cash and cash equivalents Fixed income securities Equity securities Mutual funds
$ 37,701,959 8,149,076 22,132,044 55,213,464
$ 37,701,959 4,260,146 22,132,044 31,876,084
$
3,888,930 23,337,380
$
-
Subtotal
$ 123,196,543
$ 95,970,233
$ 27,226,310
$
-
$
46,130 214,422 28,815,161
$
-
$
-
$ 29,075,713
$
-
$
-
Investments at NAV (a) Total assets Other investments Cash and cash equivalents Fixed income securities Mutual funds Subtotal
40,272,867 $ 163,469,410
$
46,130 214,422 28,815,161
$ 29,075,713
(a) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The amounts reported in the financial instruments table exclude the values of life insurance policies valued at $29,981,516 as of September 30, 2016 and $29,470,657 as of September 30, 2015, which are valued at the lesser of discounted value or cash surrender value. All financial instruments are valued using a market approach involving identical or comparable assets.
50
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Financial instruments carried at fair value for assets invested in the CNE Defined Benefit Pension Plan as of September 30, 2016 are classified in the table below in one of the three categories described above: 2016 Assets Cash and cash equivalents Equity securities Mutual funds Subtotal
$
1,253,941 19,454,262 26,163,968
$
$ 46,872,171
Investments at NAV (b) Total assets
Level 1
Level 2
Level 3
1,253,941 19,454,262 26,163,968
$
-
$
-
$ 46,872,171
$
-
$
-
142,268,817 $ 189,140,988
Financial instruments carried at fair value for assets invested in the CNE Defined Benefit Pension Plan as of September 30, 2015 are classified in the table below in one of the three categories described above: 2015 Assets Cash and cash equivalents Equity securities Mutual funds Subtotal Investments at NAV (b) Total assets
$
Level 1
2,050,351 17,774,545 30,554,870
$
$ 50,379,766
Level 2
Level 3
2,050,351 17,774,545 30,554,870
$
-
$
-
$ 50,379,766
$
-
$
-
131,591,067 $ 181,970,833
(b) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented in Note 10 Retirement Plans. All financial instruments are valued using a market approach involving identical or comparable assets.
51
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Financial instruments carried at fair value for assets invested in Memorial’s Defined Benefit Pension Plan as of September 30, 2016 are classified in the table below in one of the three categories described above: 2016 Assets Cash and cash equivalents Equity securities Mutual funds Guaranteed annuity contracts
$
Level 1
1,476,309 19,728,643 12,543,765 65,127,661
$ 98,876,378
$
Level 2
Level 3
1,476,309 19,728,643 12,543,765 -
$
-
$
65,127,661
$ 33,748,717
$
-
$ 65,127,661
Financial instruments carried at fair value for assets invested in Memorial’s Defined Benefit Pension Plan as of September 30, 2015 are classified in the table below in one of the three categories described above: 2015 Assets Cash and cash equivalents Equity securities Mutual funds Guaranteed annuity contracts
$
Level 1
837,414 17,026,483 10,993,199 63,025,311
$ 91,882,407
$
Level 2
Level 3
837,414 16,898,899 10,993,199 -
$
-
$
127,584 63,025,311
$ 28,729,512
$
-
$ 63,152,895
All financial instruments are valued using a market approach involving identical or comparable assets. During the years ended September 30, 2016 and 2015, respectively, the changes in the fair value for the System’s financial instruments in the nonpension plan assets measured using significant unobservable inputs (Level 3) were comprised of the following:
Fair value at October 1
2016
2015
$ 17,679,265
$ 19,133,355
Total gains (losses) Contributions Dividends and interest income Net realized (losses) gains on investments Change in net unrealized appreciation on investments Transfers in and/or out of Level 3
6,624,607 314,640 (35,600) 1,764,894 (1,041,803)
Fair value at September 30
$ 25,306,003
52
118,620 143,370 (1,193,795) (522,285) $ 17,679,265
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 During the years ended September 30, 2016 and 2015, respectively, the changes in the fair value for the System’s financial instruments in Memorial’s Defined Benefit Pension Plan assets measured using significant unobservable inputs (Level 3) were comprised of the following:
Fair value at October 1
2016
2015
$ 63,152,895
$ 65,361,154
104 299
-
Total gains (losses) Dividends and interest income Net realized (losses) gains on investments Change in net unrealized appreciation on investments Transfers in and/or out of Level 3
2,102,349 (127,986)
Fair value at September 30
$ 65,127,661
(2,335,843) 127,584 $ 63,152,895
The Health System uses NAV to determine the fair value of its investments which do not have a readily determinable fair market value. The following tables summarize the key provisions for the Health System’s nonpension plan investments as of September 30, 2016 and September 30, 2015, respectively, which are valued at NAV. There was an outstanding unfunded commitment of $4,883,844 and $10,709,793 at September 30, 2016 and September 30, 2015, respectively. Commingled Funds Equity
Redemption Terms as of September 30, 2016 Endowment and board designated funds Daily, 0-1 day prior written notice Weekly, 5 days prior written notice Bi-Monthly, Monthly, 7-30 days prior written notice 3 years, 90 days prior written notice 6-12 years Total
Trustee-held funds Daily, 1 day prior written notice Monthly, 5-30 days prior written notice Total
$
Total
Trustee-held funds Daily, 1-5 days prior written notice Monthly, 5-6 days prior written notice Total
$
6,621,063 -
7,494,973 -
Commingled Funds Real Assets
$
-
Commingled Funds Multi Asset
-
$
Limited Partnership
10,595,510
7,632,391 -
$
-
Total
-
$
13,239,090 2,764,275 7,456,464
11,353,692 10,595,510 28,366,454 2,764,275 7,456,464
$
12,227,602
$
6,621,063
$
7,632,391
$
10,595,510
$
23,459,829
$
60,536,395
$
19,699,900
$
12,407,197 -
$
-
$
15,136,175
$
-
$
12,407,197 34,836,075
$
19,699,900
$
12,407,197
$
-
$
15,136,175
$
-
$
47,243,272
Commingled Funds Equity
Redemption Terms as of September 30, 2015 Endowment and board designated funds Daily, 0-1 day prior written notice Weekly, 5 days prior written notice Bi-Monthly, Monthly, 7-30 days prior written notice Quarterly, 90 days prior written notice 6-12 years
4,732,629 -
Commingled Funds Fixed Income
$
2,219,130 -
Commingled Funds Fixed Income
$
6,326,231 -
13,121,274 -
Commingled Funds Multi Asset
$
-
Commingled Funds Hedge Fund
9,703,329
$
-
Limited Partnerships
-
$
6,711,958 -
Total
-
$
8,804,708 4,413,658
8,545,361 9,703,329 21,925,982 6,711,958 4,413,658
$
15,340,404
$
6,326,231
$
9,703,329
$
6,711,958
$
13,218,366
$
51,300,288
$
1,261,320 10,253,796
$
13,125,820 -
$
15,631,931
$
-
$
-
$
14,387,140 25,885,727
$
11,515,116
$
13,125,820
$
15,631,931
$
-
$
-
$
40,272,867
53
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 The following is a description of the valuation methodologies used for assets and liabilities measured at fair value: Fixed Income Securities and Fixed Income Mutual Funds The estimated fair values of investments in fixed income securities and mutual funds are based on quoted prices and/or other market data for the same or comparable instruments and transactions in establishing the prices. The marketable fixed income securities and mutual funds classified as Level 1 were classified based on quoted prices of the actual instruments in active markets. The fixed income securities classified as Level 2 were classified as such due to the usage of observable market prices for similar securities that are traded in less active markets or when observable market prices for identical securities are not available. Marketable debt instruments are priced using: quoted market prices for similar instruments or pricing models, such as a discounted cash flow model, with all significant inputs corroborated with observable market data. These Level 2 securities primarily include corporate bonds, notes and other fixed income securities. Equity Securities and Equity Mutual Funds The fair values of investments in equity securities and mutual funds classified primarily as Level 1 are based on quoted market prices. Assets Held Under Split-Interest Agreements The estimated fair values of assets held under split-interest agreements are determined based upon information provided by the trustees and assessed for reasonableness by management. Such information is generally based on the pro rata interest in the net assets of the underlying investments. These assets consist primarily of cash equivalents and marketable securities. Guaranteed Annuity Contracts The estimated fair values of guaranteed annuity contracts are based on the book value of the contract adjusted by the market value adjustment provided by the insurance company to the contract holder. 24.
Subsequent Events In May 2016, Care New England Health System and Southcoast Health System, Inc. (“Southcoast”), a provider of health care services in southeastern Massachusetts, signed an affiliation agreement to form a new non-profit parent organization that would oversee both systems. Since that time, while conducting due diligence reviews and preparing regulatory filings, the parties came to recognize that their visions for the combined system could no longer be achieved. In October 2016, CNE and Southcoast Boards voted to terminate the agreement to affiliate. CNE and Southcoast parted on amicable terms and will continue their longstanding collegial relationship in the southeastern New England community. The CNE Board and senior leadership will be regrouping to assess the recent changes in the environment and to evaluate our strategic partnership goals for the future. Care New England and its affiliated hospitals are committed to demonstrating, in all of its activities, the reliability, honesty, trustworthiness, and high degree of integrity expected of a leading healthcare organization and participant in federal health care programs. Care New England maintains an active and effective corporate compliance program designed to prevent problems from occurring, and to identify and resolve problems that do occur (the “Compliance Program”). Substantive areas of emphasis under the Compliance Program include the federal Physician Self-Referral Law, 42 U.S.C. § 1395nn and the regulations promulgated thereunder at 42 C.F.R. § 411.350 et seq. (collectively known as the “Stark Law”). Consistent with the goals of the Compliance Program, in December 2015 Care New England conducted an audit of its compensation arrangements with physicians at Butler Hospital, Kent Hospital and Women and
54
Care New England Health System and Affiliates Notes to Consolidated Financial Statements September 30, 2016 and 2015 Infants Hospital. As a result of this audit, each of Butler Hospital, Kent Hospital and Women and Infants Hospital will make a voluntary disclosure of certain technical Stark Law violations to the Centers for Medicare and Medicaid Services via the Self-Referral Disclosure Protocol by December 31, 2016. Care New England does not anticipate that the settlement amounts related to such disclosures will materially impact its operations. Care New England Health System has assessed the impact of subsequent events through December 20, 2016, the date the audited consolidated financial statements were issued and has concluded that there were no such events other than noted above requiring adjustments to the audited consolidated financial statements or disclosure in the notes to the audited consolidated financial statements.
55
Supplemental Consolidating Information Basis of Presentation The following supplemental consolidating information includes the consolidating balance sheets and the consolidating statement of operations and changes in net assets of the individual consolidated subsidiaries of Care New England Health System as of and for the fiscal year ended September 30, 2016 together with comparative consolidating information as of and for the year ended September 30, 2015. All intercompany accounts and transactions between subsidiaries have been eliminated. The consolidating information presented is prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America consistent with the consolidated financial statements. The consolidating information is presented for purposes of additional analysis of the consolidated financial statements and is not required as part of the basic financial statements.
Care New England Health System and Affiliates Consolidating Balance Sheet September 30, 2016
Butler and Affiliates Assets Current assets Cash and cash equivalents Investments Patient accounts receivable Less: Allowance for doubtful accounts Net patient accounts receivable Other receivables Pledges receivable, net Other current assets Current portion of assets whose use is limited Due from affiliates–other Total current assets
Kent and Affiliates
WIC and Affiliates
Care New England
$ (9,058,756) $ 6,675,169 $ 66,589,193 $ 78,562,398 1,553,781 11,674,686 9,492,327 46,148,420 72,195,885 11,761 (3,880,752) (15,234,282) (14,921,600) -
Southeastern Healthcare System, Inc. and Affiliates
The Agency
$ (6,773,137) $ 4,278,014 (639,472)
The Center
Integra
(80,274,558) $ 16,023,748 (6,672,574)
Eliminations
(72,046) $ 309,290 $ 9,555,661 (1,962,419)
Total
-
$ 55,957,553 13,228,467 157,705,816 (43,311,099)
-
114,394,717
5,611,575
30,914,138
57,274,285
11,761
3,638,542
9,351,174
-
7,593,242
3,802,485 159,592 822,519 791,223
2,088,526 442,244 5,135,999 -
8,645,948 148,303 6,278,588 2,842 1,850,790
4,322 3,744,684 1,193,049 7,159,434
409,621 33,192 -
1,825,865 2,779,214 3,349,891
115,314 -
353,724 454,720 -
(139,524) (13,151,338)
17,106,281 750,139 19,248,916 1,195,891 -
(62,968,414)
43,268
8,710,976
(13,290,862)
221,881,964
2,128,638
46,809,857
140,789,949
102,350,334
Assets whose use is limited or restricted as to use Endowment funds Board-designated funds Trustee-held funds Deferred compensation funds
17,169,576 6,146,499 3,069,632 170,691
16,251,943 23,493,264 38,509,130 113,700
15,517,705 95,185,183 101,732,082 564,327
17,269,990 875,918
764,435 -
11,897,264 4,545,677 9,203 -
-
148,964 776,717 232,261
-
60,985,452 130,135,058 161,366,754 1,956,897
Total assets limited as to use
26,556,398
78,368,037
212,999,297
18,145,908
764,435
16,452,144
-
1,157,942
-
354,444,161
-
-
-
-
-
-
-
26,556,398
78,368,037
212,996,455
16,952,859
764,435
16,452,144
-
1,157,942
-
353,248,270
26,798,222 25,783 91,832 -
72,332,008 81,506 460,904
128,334,509 1,466
29,250,569 36,117 6,908,970
561,630 -
24,345,364 30,841,769 1,307,420 -
-
143,611 1,080,000 15,695,416 133,108 104,621
-
24,488,975 1,080,000 303,814,123 240,397 1,435,369 7,475,961
$ 55,600,873
$ 198,052,312
$ 482,122,379
$ 155,498,849
43,268
$ 27,025,674
Less: Amounts required to meet current obligations Noncurrent assets limited as to use Goodwill Intangibles Property, plant and equipment, net Pledges receivable, net Insurance receivable Other assets Total assets
(2,842)
(1,193,049)
54
(2,691,782)
$ (1,365,717) $
9,978,283
$
(1,195,891)
$ (13,290,862) $ 913,665,059
Care New England Health System and Affiliates Consolidating Balance Sheet September 30, 2016
Liabilities and Net Assets Current liabilities Notes payable Accounts payable and accrued expenses Current portion of estimated third-party payor settlements and advances Current portion of long-term debt and capital leases Current portion of long-term debt, due to parent Self-insurance reserves Pension liability Other current liabilities Due to affiliates Total current liabilities Long term liabilities Self-insurance reserves Long-term portion of estimated third-party payor settlements and advances Long-term debt and capital leases Pension liability Postretirement liability Other liabilities Due to parent, long-term debt Total long-term liabilities Net assets Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets
Butler and Affiliates
Kent and Affiliates
WIC and Affiliates
$
$
$
8,214,522
41,972,121
36,831,983
Care New England
$
30,635,399
Southeastern Healthcare System, Inc. and Affiliates
The Agency
$
2,097,805
$
14,437,802
The Center
Integra
$
770,448
$
Eliminations
639,958 2,396,666
$
Total
- $ 639,958 (233,683) 137,123,063
128,102 157,127 145,310 1,706,481 3,636,867 -
829,517 80,470 587,470 6,488,166 2,390,540 1,860,946
1,948,365 577,419 3,796,444 6,978,125 -
3,000,000 2,357,788 8,820,539 2,822,275 -
124,461 589,266 1,563,948
19,845 1,256,100 1,683,541 1,716,857
300,000 3,268,108
66,459 249,475 658,047
(1,310,199) (9,067,906)
5,925,829 2,661,844 8,820,539 16,193,927 15,827,814 -
13,988,409
54,209,230
50,132,336
47,636,001
4,375,480
19,114,145
4,338,556
4,010,605
(10,611,788)
187,192,974
2,573,306
36,192,110
83,504,649
8,103,095
-
1,380,742
-
-
2,178,247 3,079,461 12,632,752 1,039,099 297,127
1,245,134 1,467,328 24,644,174 1,512,112 1,093,405 1,201,250
14,334,662 12,787,658 580,044 1,180,697
174,373,899 6,885,881 910,661 -
287,349 4,357,838 -
4,882,036 76,074,765 975,495 -
-
267,990 232,261 -
(2,679,074)
22,927,428 179,188,678 137,383,068 1,512,112 4,830,965 -
21,799,992
67,355,513
112,387,710
190,273,536
4,645,187
83,313,038
-
500,251
(2,679,074)
477,596,153
438,560 15,883,421 3,490,491
59,291,525 4,328,060 12,867,984
296,271,713 12,248,544 11,082,076
(82,410,688) -
(10,379,332) (7,052) -
(105,279,326) 2,319,851 10,510,575
(10,386,384)
(92,448,900)
$ (1,365,717) $
9,978,283
19,812,472
76,487,569
319,602,333
$ 55,600,873
$ 198,052,312
$ 482,122,379
(82,410,688) $ 155,498,849
55
(4,295,288) -
18,302,954 4,111,864 100,000
(4,295,288) $
43,268
22,514,818 $
27,025,674
-
131,753,902
-
171,940,118 38,884,688 38,051,126
-
248,875,932
$ (13,290,862) $ 913,665,059
Care New England Health System and Affiliates Consolidating Statement of Operations Year Ended September 30, 2016
Butler and Affiliates Revenues and gains Patient service revenue (net of contractual allowances) Provision for bad debts
$
Kent and Affiliates
WIC and Affiliates
Care New England
77,772,633 $ 358,131,380 $ 461,766,578 $ (1,854,413) (15,760,200) (10,649,601)
171,907 -
Net patient service revenue less provision for bad debts
75,918,220
342,371,180
451,116,977
Research revenue Other revenue Net assets released from restrictions and used for operations
11,316,280 19,354,068 481,174
122,609 37,661,795 673,544
10,458,586 41,825,461 773,035
The Agency
$
Southeastern Healthcare System, Inc. and Affiliates
The Center
Integra
$
43,916,981 -
Eliminations
$
Total
21,691,173 $ (520,047)
130,787,664 $ (7,892,364)
-
-
$ 1,094,238,316 (36,676,625)
171,907
21,171,126
122,895,300
-
43,916,981
135,605,299 -
798,726 10,802
1,625,299 4,493,570 302,154
2,364,726 323,335
6,221,198 587,046
(177,836,552) -
1,057,561,691 23,522,774 70,488,291 3,151,090
Total revenues and gains
107,069,742
380,829,128
504,174,059
135,777,206
21,980,654
129,316,323
2,688,061
50,725,225
(177,836,552)
1,154,723,846
Operating expenses Salaries and benefits Supplies and other expenses Research expenses Depreciation and amortization Insurance Licensure fee Interest Restructuring costs Loss on debt refinancing Loss on write-off of intangible assets
69,359,540 23,572,606 11,175,520 3,938,151 2,062,242 727,780 450,008 42,286 -
194,102,393 144,827,557 121,396 9,240,369 7,977,288 16,246,546 1,240,488 316,524 89,711 -
256,780,818 174,280,326 10,255,036 12,727,210 8,163,739 23,469,195 2,003,228 19,102 -
75,877,966 54,439,899 6,692,763 154,681 1,308,669 26,812,663 20,084,181 -
17,418,105 4,575,474 167,441 636,953 486 394,215 -
70,399,238 67,156,652 1,620,335 5,685,042 1,617,560 8,076,893 566,559 1,575,140 5,400,000
3,379,601 2,327,377 50,960 -
38,554,440 10,531,044 1,148,334 716,248 282,224 -
201,819 (177,898,847) (139,524) -
726,073,920 303,812,088 23,172,287 39,599,310 21,240,147 47,792,634 6,129,434 29,548,550 20,235,280 5,400,000
Total operating expenses
111,328,133
374,162,272
487,698,654
185,370,822
23,192,674
162,097,419
5,757,938
51,232,290
(177,836,552)
1,223,003,650
6,666,856
16,475,405
(49,593,616)
(1,212,020)
(32,781,096)
(3,069,877)
(92,297) 499,514 285,051 -
(Loss) income from operations
(4,258,391)
Nonoperating gains (losses) Investment income on assets limited as to use Unrestricted gifts and bequests Change in net unrealized gains (losses) on investments Other Net nonoperating gains (losses) (Deficiency) excess of revenues and gains over expenses and losses
$
255,227 135,130 1,127,377 -
(442,821) 398,711 3,369,246 -
(1,479,466) 253,330 12,431,049 -
113,357 247,849 (2,024,438)
(12,423) 98,275 82,074 -
1,517,734
3,325,136
11,204,913
(1,663,232)
167,926
692,268
(1,044,094) $
(32,088,828) $
(2,740,657) $
9,991,992
$
27,680,318
$ (51,256,848) $
56
(507,065)
-
(68,279,804)
-
(77,918) 339,693 (69,478)
-
(1,736,341) 1,724,653 17,542,646 (2,093,916)
-
192,297
-
15,437,042
(3,069,877) $
(314,768) $
-
$
(52,842,762)
Care New England Health System and Affiliates Consolidating Statement of Changes in Net Assets Year Ended September 30, 2016
Butler and Affiliates Unrestricted net assets (Deficiency) excess of revenues and gains over expenses and losses Pension and postretirement adjustments Net assets released from restrictions used for purchase of property, plant and equipment Transfer from (to) temporarily restricted net assets Transfers (Decrease) increase in unrestricted net assets Temporarily restricted net assets Contributions Income from investments Net realized and unrealized gains (losses) from investments Net assets released from restrictions Transfer (to) from unrestricted net assets (Decrease) increase in temporarily restricted net assets Permanently restricted net assets Net realized and unrealized gains (losses) from investments Contributions Increase (decrease) in permanently restricted net assets (Decrease) increase in net assets Net assets at beginning of year Net assets at end of year
Kent and Affiliates
WIC and Affiliates
Care New England
Southeastern Healthcare System, Inc. and Affiliates
The Agency
The Center
Integra
$ (2,740,657) $ 9,991,992 $ 27,680,318 $ (51,256,848) $ (1,044,094) $ (32,088,828) $ (3,069,877) $ (2,510,187) (3,138,890) (1,627,710) (850,371) (881,404) (13,806,202) 2,334,493 -
2,514,686 -
1,480,243 -
(5,369,578)
(2,916,351)
9,367,788
27,532,851
(57,476,797)
585,307 156,821 1,294,531 (3,237,876) -
939,222 46,399 380,887 (3,188,230) -
2,403,898 80,991 698,026 (2,253,278) -
(1,201,217)
(1,821,722)
355,419 355,419 (3,762,149)
475,091 34,391
-
141,709 304,560 -
-
Eliminations
(314,768) $ -
Total
-
$ (52,842,762) (22,814,764)
225,286 (553,591) 5,369,578
-
6,696,417 (249,031) -
4,726,505
-
(69,210,140)
567,410 4,541 3,853 (812,332) 553,591
-
4,998,565 364,926 2,657,633 (10,269,716) 249,031
(1,925,498)
(45,448,761)
(3,069,877)
-
3,750 (10,802) -
175,643 76,174 280,336 (443,863) (304,560)
323,335 (323,335) -
929,637
-
(7,052)
(216,270)
-
317,063
-
(1,999,561)
205,537 6,627,047
-
321,502 -
-
-
-
1,002,130 7,016,857
509,482
6,832,584
8,055,548
35,295,072
23,574,621
68,432,021
284,307,261
$ 19,812,472
$ 76,487,569
$ 319,602,333
-
-
-
-
8,018,987
(57,476,797)
(1,932,550)
-
(45,343,529)
321,502
(3,069,877)
-
5,043,568
-
(63,190,714)
(24,933,891)
(8,453,834)
(47,105,371)
(1,225,411)
17,471,250
$ (82,410,688) $ (10,386,384) $ (92,448,900) $ (4,295,288) $ 22,514,818
57
$
-
312,066,646
-
$ 248,875,932
Care New England Health System and Affiliates Consolidating Balance Sheet September 30, 2015
Butler and Affiliates Assets Current assets Cash and cash equivalents Investments Patient accounts receivable Less: Allowance for doubtful accounts Net patient accounts receivable Other receivables Pledges receivable, net Other current assets Current portion of assets whose use is limited Due from affiliates–other Due from affiliates–debt Total current assets
$
Kent and Affiliates
WIC and Affiliates
Care New England
Southeastern Healthcare System, Inc. and Affiliates
The Agency
8,098,326 $ 18,004,986 $ 90,313,057 $ (15,028,462) $ (7,858,324) $ 1,621,564 25,542,127 9,683,721 51,886,900 76,243,383 76,282 6,007,180 (3,224,425) (15,741,533) (12,647,128) (311,092)
The Center
Integra
(46,651,151) $ 32,054,347 (8,963,723)
Eliminations
(121,924) $ 2,047,297 $ 6,126,219 (1,368,092)
-
$
48,803,805 27,163,691 182,078,032 (42,255,993)
6,459,296
36,145,367
63,596,255
76,282
5,696,088
23,090,624
-
4,758,127
4,245,065 135,067 584,993 173,093 -
2,857,146 656,701 5,189,448 194,499 813,246 -
11,616,152 230,627 5,677,515 2,842 164,507 -
300,717 2,437,273 249,486 259,151 119,431,068
257,616 50,643 -
1,871,152 2,190,025 -
-
832,158 633,754 -
(575,018) (1,409,997) (119,431,068)
21,404,988 1,022,395 16,763,651 446,827 -
8,271,336
(121,416,083)
255,427,396
19,695,840
65,482,957
171,600,955
133,267,642
15,968,996 5,498,595 2,814,511 226,719
15,490,950 21,778,283 30,790,997 369,239
8,263,487 88,040,307 113,451,348 540,423
15,617,033 611,434
696,477 -
10,960,725 4,437,222 36,421 -
-
135,291 759,100 164,207
-
50,819,449 120,450,884 163,469,410 1,912,022
Total assets limited as to use
24,508,821
68,429,469
210,295,565
16,228,467
696,477
15,434,368
-
1,058,598
-
336,651,765
-
-
-
-
-
Noncurrent assets limited as to use Goodwill Intangibles Property, plant and equipment, net Pledges receivable, net Insurance receivable Other assets Total assets
-
(194,499)
(2,842)
(249,486)
(19,499,350)
(121,924)
139,822,039
Assets whose use is limited or restricted as to use Endowment funds Board-designated funds Trustee-held funds Deferred compensation funds Less: Amounts required to meet current obligations
(1,853,977)
-
Total
(446,827)
24,508,821
68,234,970
210,292,723
15,978,981
696,477
15,434,368
-
1,058,598
-
336,204,938
29,717,391 250,787 47,651
69,810,907 420,471 697,306
138,899,561 77,849 52,978
31,622,090 1,049,250 5,707,018
467,132 -
24,345,364 5,400,000 27,050,897 594,538 -
-
143,611 1,082,500 16,300,515 181,007 180,911
-
24,488,975 6,482,500 313,868,493 930,114 1,643,788 6,685,864
$ 74,220,490
$ 204,646,611
$ 520,924,066
$ 187,624,981
58
$
(690,368) $
53,325,817
$
(121,924) $ 27,218,478
$ (121,416,083) $ 945,732,068
Care New England Health System and Affiliates Consolidating Balance Sheet September 30, 2015
Liabilities and Net Assets Current liabilities Accounts payable and accrued expenses Current portion of estimated third-party payor settlements and advances Current portion of long-term debt and capital leases Current portion of long-term debt, due to parent Self-insurance reserves Pension liability Other current liabilities Due to affiliates Total current liabilities Long term liabilities Self-insurance reserves Long-term portion of estimated third-party payor settlements and advances Long-term debt and capital leases Pension liability Postretirement liability Other liabilities Due to parent, long-term debt Total long-term liabilities Net assets Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets
Southeastern Healthcare System, Inc. and Affiliates
Butler and Affiliates
Kent and Affiliates
WIC and Affiliates
Care New England
$ 10,482,098
$ 35,870,109
$ 43,885,775
$ 29,957,913
598,072 150,909 1,233,503 1,664,548 2,969,106 -
2,385,639 6,513,053 2,209,473 -
2,566,872 3,601,017 4,925,359 -
8,507,425 8,689,509 2,844,814 249,486 -
560 137,879 621,745 547,422
616,456 1,329,227 1,587,575 135,820
150,000 716,860
973,532 403,860 -
(6,803,030) (1,400,102)
598,072 9,631,866 8,689,509 16,090,538 13,116,604 -
17,098,236
46,978,274
54,979,023
50,249,147
3,920,517
18,675,229
1,103,487
5,123,606
(8,788,045)
189,339,474
2,345,060
33,117,220
93,832,831
8,968,999
-
667,860
-
-
2,317,638 3,226,563 10,096,632 1,059,236 14,502,504
4,458,350 21,579,974 1,447,283 1,042,500 27,590,989
16,855,380 11,131,294 556,140 59,262,137
146,897,349 6,019,991 423,386 -
243,802 3,590,301 8,846
6,253,108 63,523,566 47,863 11,263,562
-
4,623,622 -
(112,628,038)
30,128,278 154,747,534 115,941,758 1,447,283 3,129,125 -
33,547,633
89,236,316
181,637,782
162,309,725
3,842,949
81,755,959
-
4,623,622
(112,628,038)
444,325,948
3,354,911 17,084,638 3,135,072
49,923,737 6,149,782 12,358,502
268,738,862 11,318,907 4,249,492
(24,933,891) -
(8,453,834) -
(59,830,565) 2,536,121 10,189,073
(8,453,834)
(47,105,371)
23,574,621
68,432,021
284,307,261
$ 74,220,490
$ 204,646,611
$ 520,924,066
The Agency
$
(24,933,891) $ 187,624,981
59
$
2,612,911
$
(690,368) $
15,006,151
53,325,817
The Center
Integra
$
$
236,627
$
Eliminations
3,746,214
(1,225,411) -
13,576,449 3,794,801 100,000
(1,225,411)
17,471,250
(121,924) $
27,218,478
$
Total
(584,913) $ 141,212,885
-
138,931,970
-
241,150,258 40,884,249 30,032,139
-
312,066,646
$ (121,416,083) $ 945,732,068
Care New England Health System and Affiliates Consolidating Statement of Operations Year Ended September 30, 2015
Butler and Affiliates Revenues and gains Patient service revenue (net of contractual allowances) Provision for bad debts
Kent and Affiliates
WIC and Affiliates
Care New England
$ 76,752,480 $ 346,697,713 $ 437,673,643 $ (2,360,585) (15,689,378) (8,111,427)
The Agency
Southeastern Healthcare System, Inc. and Affiliates
158,762 -
$ 23,119,797 $ (603,970)
The Center
Integra
146,730,167 $ (11,915,283)
-
$ 31,933,427 -
Eliminations
Total
$ (1,273,169) $ 1,061,792,820 (38,680,643)
Net patient service revenue less provision for bad debts
74,391,895
331,008,335
429,562,216
158,762
22,515,827
134,814,884
-
31,933,427
(1,273,169)
1,023,112,177
Research revenue Contribution revenue from acquisition Other revenue Net assets released from restrictions and used for operations
11,438,074 19,418,455 560,312
94,491 16,183,864 427,727
10,021,374 54,565,740 975,863
126,718,669 -
652,778 66,662
1,828,097 3,148,186 289,688
436,066 -
13,439,012 2,648,159 269,553
(148,355,454) -
23,382,036 13,439,012 75,416,463 2,589,805
105,808,736
347,714,417
495,125,193
126,877,431
23,235,267
140,080,855
436,066
48,290,151
(149,628,623)
1,137,939,493
71,842,098 21,080,558 11,567,179 4,103,616 2,448,271 801,733 -
178,854,018 126,025,120 92,096 9,365,128 6,682,986 15,973,092 1,408,313 -
255,006,218 162,665,586 9,975,999 13,847,895 14,906,996 21,552,806 2,281,430 -
74,387,375 48,055,187 3,227,297 268,558 1,559,475 2,911,571
18,402,217 4,891,580 136,244 238,382 527 -
88,496,500 63,882,124 1,847,605 5,077,797 1,835,977 6,008,811 572,430 -
923,630 698,327 39,520 -
27,578,189 6,396,060 823,350 399,185 214,808 -
(363,190) (149,144,038) (121,395) -
715,127,055 284,550,504 23,482,879 36,581,327 26,698,480 43,534,709 6,838,716 2,911,571
111,843,455
130,409,463
23,668,950
(149,628,623)
1,139,725,241
Total revenues and gains Operating expenses Salaries and benefits Supplies and other expenses Research expenses Depreciation and amortization Insurance Licensure fee Interest Restructuring costs Total operating expenses Income (loss) from operations Nonoperating gains (losses) Investment income on assets limited as to use Unrestricted gifts and bequests Change in net unrealized gains (losses) on investments Other Net nonoperating gains (losses) Excess (deficiency) of revenues and gains over expenses and losses
338,400,753
480,236,930
167,721,244
1,661,477
35,411,592
(6,034,719)
9,313,664
14,888,263
(3,532,032)
(433,683)
(27,640,389)
(1,225,411)
12,878,559
1,048,117 32,267 (934,531) -
1,116,142 (5,799,103) -
4,348,324 392,411 (24,268,258) -
267,015 112,632 (1,835,748)
(1,547) 55,923 (88,599) 5,094
285,229 376,067 (1,309,589) -
-
145,853
(4,682,961)
(19,527,523)
(1,456,101)
(29,129)
(648,293)
-
$ (5,888,866) $
4,630,703
$
(4,639,260) $ (4,988,133) $
60
(462,812) $
-
(1,785,748)
14,301 176,815 (42,525)
-
7,077,581 1,033,483 (32,287,448) (1,873,179)
148,591
-
(26,049,563)
(28,288,682) $ (1,225,411) $ 13,027,150
$
-
$
(27,835,311)
Care New England Health System and Affiliates Consolidating Statement of Changes in Net Assets Year Ended September 30, 2015
Butler and Affiliates Unrestricted net assets Excess (deficiency) of revenues and gains over expenses and losses Pension and postretirement adjustments Net assets released from restrictions used for purchase of property, plant and equipment Transfer from deferred revenue Transfer (to) from temporarily restricted net assets Transfers (Decrease) increase in unrestricted net assets Temporarily restricted net assets Contributions Contribution of temporarily restricted net assets from acquisition Income from investments Net realized and unrealized gains (losses) from investments Net assets released from restrictions Transfer to deferred revenue Transfer (to) from unrestricted net assets Transfer to permanently restricted net assets (Decrease) increase in temporarily restricted net assets
Kent and Affiliates
WIC and Affiliates
Care New England
Southeastern Healthcare System, Inc. and Affiliates
The Agency
The Center
Integra
Eliminations
$ (5,888,866) $ 4,630,703 $ (4,639,260) $ (4,988,133) $ (462,812) $ (28,288,682) $ (1,225,411) $ 13,027,150 (4,600,072) (11,201,158) (5,608,284) (3,246,565) (1,424,393) (14,887,618) 71,181 (10,417,757) 650,971
586,343 (5,984,112)
258,176 302,009 (377,751) -
(500,000)
(10,065,110)
(8,734,698)
(1,887,205)
(475,000) (43,651,300)
(1,225,411)
$
Total
-
$ (27,835,311) (40,968,090)
49,299 500,000
-
893,818 302,009 (781,570) -
13,576,449
-
(68,389,144)
731,762
2,790,052
-
-
219,231
-
312,231
275,445 (1,212,832) (968,312) (71,181) (695,687)
77,987 (350,466) (500,950) (200,939)
142,378 (656,810) (1,234,039) (662,715) 377,751 -
-
-
31,647 304,559 (289,688) 475,000 -
-
3,795,867 3,139 2,416 (318,852) -
-
4,704,247 3,795,867 530,596 (1,913,133) (3,311,841) (662,715) 781,570 (896,626)
(2,021,596)
(242,606)
756,617
-
-
740,749
-
3,794,801
-
3,027,965
(988,719) 33,832 200,939
-
-
-
(465,373) -
-
100,000 -
-
100,000 (1,454,092) 33,832 896,626
100,000
-
(423,634)
17,471,250
-
(65,784,813)
Permanently restricted net assets Contribution of permanently restricted net assets from acquisition Net realized and unrealized gains (losses) from investments Contributions Transfer from temporarily restricted net assets Increase (decrease) in permanently restricted net assets (Decrease) increase in net assets Net assets at beginning of year Net assets at end of year
695,687 695,687 (11,743,666)
(753,948) (6,980,666)
-
-
(9,308,493)
35,318,287
75,412,687
293,615,754
$ 23,574,621
$ 68,432,021
$ 284,307,261
-
(465,373)
(8,734,698)
(1,887,205)
(43,375,924)
(16,199,193)
(6,566,629)
(3,729,447)
(1,225,411) -
-
$ (24,933,891) $ (8,453,834) $ (47,105,371) $ (1,225,411) $ 17,471,250
61
$
-
377,851,459
-
$ 312,066,646
Attachment 3 American Journal of Obstetrics & Gynecology Study on Obstetric Volume and Outcomes
Research
www. AJOG.org
OBSTETRICS
The association between hospital obstetric volume and perinatal outcomes in California Jonathan M. Snowden, PhD; Yvonne W. Cheng, MD, PhD; Caitlin P. Kontgis, MS; Aaron B. Caughey, MD, PhD OBJECTIVE: We sought to analyze the association between hospital ob-
RESULTS: Prevalence of asphyxia increased with decreasing hospital
stetric volume and perinatal outcomes in California.
volume overall and among term, non-low-birthweight infants, from 9/10,000 live births at highest-volume hospitals to 18/10,000 live births at the lowest-volume hospitals (P ⬍ .001). Similar trends were observed in rural hospitals, with rates increasing from 7-34/10,000 live births in low-volume rural hospitals (P ⬍ .001).
STUDY DESIGN: This was a retrospective cohort study of births oc-
curring in California in 2006. Hospitals were divided into 4 obstetric volume categories. Unadjusted rates of neonatal mortality and birth asphyxia were calculated for each category, overall and among term deliveries with birthweight ⬎2500 g. Multivariable logistic regression was used to control for confounders. Deliveries in rural hospitals were analyzed separately using different volume categories.
CONCLUSION: These findings provide evidence for an inverse associa-
tion between hospital obstetric volume and birth asphyxia. Key words: asphyxia, health care systems, health facility size, neonatal mortality
Cite this article as: Snowden JM, Cheng YW, Kontgis C, et al. The association between hospital obstetric volume and perinatal outcomes in California. Am J Obstet Gynecol 2012;207:478.e1-7.
W
hile much evidence has documented the benefits of regionalization of high-risk obstetrics to high-volume hospitals with specialized care,1-3 there is not a similar consensus regarding the role
From the Department of Obstetrics and Gynecology, Oregon Health and Science University, Portland, OR (Drs Snowden and Caughey); the Department of Obstetrics, Gynecology, and Reproductive Medicine, University of California, San Francisco, San Francisco, CA (Dr Cheng); and the Center for Sustainability and the Global Environment, Department of Geography, University of Wisconsin–Madison, Madison, WI (Ms Kontgis). Received May 3, 2012; revised Sept. 10, 2012; accepted Sept. 26, 2012. Y.W.C. is supported by the University of California, San Francisco Women’s Reproductive Health Research Career Development Award, Eunice Kennedy Shriver National Institute of Child Health and Human Development, National Institutes of Health (K12 HD001262). The authors report no conflict of interest. Reprints not available from the authors. 0002-9378/free © 2012 Mosby, Inc. All rights reserved. http://dx.doi.org/10.1016/j.ajog.2012.09.029
For Editors’ Commentary, see Contents
478.e1
of regionalization and hospital volume in low-risk or general obstetric practice. Some studies have found that perinatal outcomes such as neonatal mortality and asphyxia are less prevalent in high-volume hospitals,4,5 while others have reported a lack of association or suggested that lowervolume settings may be better for some outcomes in low-risk pregnancies.6,7 Proposed mechanisms underlying the potential protective effect for high obstetric volume in lower-risk births are systems factors such as staffing, medical equipment, continuous presence of onsite anesthesia, availability of subspecialists, and readiness to handle fluctuations in patient flow.4,8 Among the studies of hospital obstetric volume on neonatal outcomes in lower-risk deliveries, most have been conducted outside the United States, mostly in Europe and Australia.4-6,9 Neonatal mortality is commonly analyzed as a marker of quality in obstetric/ perinatal care.10-12 Additionally, birth asphyxia and intrapartum fetal death are also frequently used as indicators of quality of obstetric care,9,11,13,14 and some suggest that these outcomes may be sensitive markers of quality of obstetric care.15,16
American Journal of Obstetrics & Gynecology DECEMBER 2012
The effects of hospital volume and regionalization of obstetric care are complicated by geographical and socioeconomic factors, including variations in patient mix and the urban/rural character of a given region.6,8 When evaluating the ability of different-sized maternity units to provide high-quality care, we often make the assumption that patients could conceivably be referred to an alternative hospital with maternity services. In rural and frontier regions, that assumption may not hold.8 In this paper, we analyze the role of obstetric volume in perinatal outcomes in California. We analyzed this association in the overall population of births, and in a lower-risk subpopulation of term births with birthweight ⬎2500 g, to assess the impact of volume without the factors of prematurity and growth restriction, which may drive rates of some adverse outcomes. We studied neonatal mortality and birth asphyxia as primary outcomes, and considered the potential confounding roles of patient mix, academic hospital affiliation, and hospital geography (rural vs nonrural). We hypothesized that lower-volume hospitals would be characterized by higher rates of asphyxia. Because the rural setting is highly correlated with obstetric volume
Obstetrics
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FIGURE 1
California hospitals by obstetric volume in 2006 (deliveries/year) 2400
3600
40
1200
Hospital geography
30 20 0
10
Frequency (# hospitals)
Non−rural Rural
0
2000
4000
6000
8000
Hospital obstetric volume (# deliveries in 2006) Histogram showing distribution of hospitals by volume; dashed lines indicate hospital volume category cutoffs. Snowden. Hospital volume and perinatal outcomes in California. Am J Obstet Gynecol 2012.
and mutually exclusive with academic affiliation in these data, we analyzed the role of obstetric volume in California’s rural hospitals separately, testing the hypothesis that the effect of obstetric volume on perinatal outcomes may differ between rural and nonrural locations.
M ATERIALS AND M ETHODS This study employed a retrospective cohort design, analyzing linked birth/infant death certificates with hospital discharge diagnoses for births occurring in California in 2006. Data linkage of California Patient Discharge Data, Vital Statistics Birth Certificate Data, and Vital Statistics Death Certificate Data was conducted by the state Office of Statewide Health Planning and Development (OSHPD) Healthcare Information Resource Center, under the California Health and Human Services Agency. The linked dataset includes health informa-
tion from maternal records for antepartum hospital admissions for the 9 months prior to delivery and postpartum admissions up to 1 year postdelivery. Also included are birth records and records for all infant admission and diagnoses in the first year of life. This linked dataset does not include information on outpatient visits. The record linkage number, a unique, encrypted alphanumeric code specific to each mother/baby pair, was employed to link records for mother and baby. The reporting of births and deaths in California is nearly 100% comprehensive, and California Health and Human Services Agency personnel code the data according to uniform specifications, perform rigorous quality checks, and review the birth cohort file before release. Human subjects approval was obtained from the institutional review board at Oregon Health and Science University; the Com-
Research
mittee on Human Research at the University of California, San Francisco; and the California OSHPD Committee for the Protection of Human Subjects. Because the linked data set did not contain potential patient privacy and identification information, informed consent was exempted. Births were linked to hospital of delivery in the dataset by a unique hospital code; births missing this code were excluded from analysis. Maternity hospitals were divided into 4 categories on the basis of obstetric volume, defined as the total number of deliveries occurring in the hospital during 2006. To minimize the incorporation of births at unintended locations such as emergency rooms or hospitals without designated labor and delivery units, hospitals with ⬍50 deliveries in 2006 were excluded from analysis. The category cutoffs were selected to divide the hospitals into strata of varying obstetric volume for analysis, while maintaining a sufficient number of hospitals in each group. The categories were labeled numerically, increasing with volume. The lowest-volume category (category 1) included hospitals with up to 1200 deliveries in 2006; these hospitals had a monthly average of ⱕ100 deliveries. The category cutoffs preceded at intervals of 1200 deliveries: category 2 included smaller-to-intermediate facilities with between 1200-2399 deliveries; category 3 hospitals had between 24003599 deliveries; and the high-volume category (4) was made up of hospitals with ⱖ3600 deliveries in 2006. Since prior research has demonstrated that obstetric practice differs between academic and community medical centers,17,18 and between rural and urban regions,19,20 we also stratified our analysis by teaching hospital status and geographic setting to explore institutionallevel factors that might be associated with obstetric volume and also affect obstetric care. Maternity hospitals were designated as teaching hospitals if they had an obstetrics-gynecology residency program or had obstetric rotations for obstetrics-gynecology residents. The geographic distinction of interest was rural/ nonrural, because gradations of urbanization/suburbanization within metropolitan
DECEMBER 2012 American Journal of Obstetrics & Gynecology
478.e2
Research
Obstetrics
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TABLE 1
Institutional characteristics of California hospitals with labor and delivery, by hospital volume Hospital volume category (deliveries/year) 1
2
3
4
Overall (n ⴝ 268 hospitals)
50-1199 (n ⴝ 98 hospitals)
1200-2399 (n ⴝ 84 hospitals)
2400-3599 (n ⴝ 55 hospitals)
>3600 (n ⴝ 31 hospitals)
Characteristic
n
%
n
%
n
%
n
%
n
Rural
57
21
48
49
6
7
3
5
0
26
10
2
2
6
7
9
16
9
% 0a
................................................................................................................................................................................................................................................................................................................................................................................ b a
Teaching hospitals
29
................................................................................................................................................................................................................................................................................................................................................................................ a
P ⬍ .001 on Fisher exact test; No overlap between rural hospitals and teaching hospitals. b
Snowden. Hospital volume and perinatal outcomes in California. Am J Obstet Gynecol 2012.
regions have less bearing on access to multiple maternity hospitals. Rural regions of the state are served by fewer labor and delivery units located in expansive and sparsely populated regions, so regionalization of births occurring in these hospitals is less feasible, and standards of volume likely differ in rural regions.21 There is no universally agreed-upon definition of “rural,”22 so we employed a system relying on multiple sources, designating maternity hospitals as rural if they met one of the following criteria: hospitals designated as rural by the California OSHPD,23 hospitals in towns with a California Association of Rural Health Clinics member clinic,24 and hospitals located in rural ZIP codes according to the Rural-Urban Commuting Area-2 codes 4-10.22,25 After preliminary analysis indicated that rural hospitals should be analyzed separately, we devised 3 obstetric volume categories for rural hospitals, dividing the hospitals approximately into tertiles by volume: 50-599 deliveries (category R1), 600-1699 deliveries (R2), and ⱖ1700 deliveries (R3). We examined the frequency of neonatal death (death in the first 28 days of life) and neonatal asphyxia among live births within obstetric volume categories, separately for rural and nonrural hospitals. Cases of neonatal asphyxia were identified using the International Classification of Diseases, Ninth Revision codes 768.5, 768.6, 768.7, and 768.9. In addition to overall rates of neonatal mortality and asphyxia, we calculated rates among the lower-risk population of births at fullterm gestation (37-42 weeks) that were not low birthweight (⬎2500 g), because 478.e3
low birthweight and preterm birth are strongly predictive of neonatal death and are not equally distributed among highand low-volume hospitals. To adjust for patient mix and hospital characteristics among the lower-risk subpopulation, we employed multivariable logistic regression to calculate the odds of asphyxia associated with medium- and lower-volume maternity units. Regression models were run stratified by rural geography. Individual characteristics analyzed to account for patient mix were race/ethnicity, education (binary, ⱖ12 years or ⬍12 years), and advanced maternal age (⬎35 years old). Teaching hospital status was controlled for in the nonrural analysis. Because of the nonindependence of outcomes within hospitals, the logistic regression accounted for clustering at the hospital level and calculated robust SE. All analyses excluded congenital anomalies as determined by diagnosis codes on the birth certificate and the infant’s medical record (International Classification of Diseases, Ninth Revision codes 740-759.9). Analyses were conducted using Stata (version 12; StataCorp, College Station, TX) and R (version 2.13.1; R Foundation for Statistical Computing, Vienna, Austria).
R ESULTS This study included a total of 268 hospitals performing at least 50 deliveries in 2006, for a total of 527,617 births. There were more hospitals in the lowest-volume category, category 1 (Figure 1). The intermediate-volume categories in-
American Journal of Obstetrics & Gynecology DECEMBER 2012
cluded fewer hospitals but more deliveries, while category 4 included a relatively small number of hospitals delivering up to 7900 babies in 2006. Institutional characteristics of the hospitals varied by hospital volume (Table 1). Rural geography was highly correlated with low volume; almost half of the lowest-volume hospitals were rural, while none of the highest-volume hospitals were rural. Conversely, the proportion of teaching hospitals increased across volume categories. There was no overlap between rural hospitals and teaching hospitals; for these methodological reasons and the aforementioned practical considerations, we present the remainder of the results stratified by geography, nonrural (ie, urban and suburban) vs rural. The urban coastal regions of California had no rural hospitals, while the northern and eastern extremes of the state had only rural hospitals, and the central regions were characterized by a mixture of the two (Figure 2). Demographic and clinical characteristics of the patient populations differed by hospital obstetric volume and by geography (Table 2). For the nonrural hospitals, prevalence of preterm birth and low birthweight increased with increasing hospital volume. Category 3 and 4 hospitals had a patient mix comprising fewer white patients, as compared to hospitals with lower volume. In rural hospitals, middleand higher-volume hospitals had a majority of Hispanic patients with lower educational attainment as compared to patients at the smallest rural hospitals, which had a majority of white patients.
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FIGURE 2
Presence and geography of maternity hospitals in California in 2006, by county
Oregon
Nevada
Arizona
No hospital with obstetric volume > 50 in 2006 All hospitals are rural Some hospitals are rural No hospitals are rural
Map demonstrating geographic distribution of maternity hospitals in California counties. Snowden. Hospital volume and perinatal outcomes in California. Am J Obstet Gynecol 2012.
Table 3 presents unadjusted prevalence of asphyxia and neonatal death per 10,000 nonanomalous live births, for all births and restricted to term births with birthweight ⬎2500 g. Asphyxia decreased with increasing hospital volume among all births, from a high of 20/ 10,000 live births in category 1 to 11/ 10,000 in category 4 (P ⬍ .001). When restricting to the lower-risk subpopula-
tion, the trend was in the same direction and the differences remained significant, decreasing from 18/10,000 live births at lower-volume hospitals to 9/10,000 in category 4 hospitals. There appeared to be an increased rate of neonatal death (P ⬍ .05) in medium- and higher-volume hospitals as compared to category 1, but the difference was not apparent when restricting to term births with
Research
birthweight ⬎2500 g, where the risk was universally low (2-3/10,000 live births, P ⫽ .376). Similar trends were observed among deliveries at rural hospitals. Asphyxia rates steeply decreased across categories of increasing rural hospital volume (40/ 10,000 live births in category R1 hospitals to 8/10,000 in R3 hospitals, P ⬍ .001); the decrease attenuated only slightly when restricting to term deliveries with birthweight ⬎2500 g. There appeared to be a nonsignificant increase in neonatal mortality with increased rural hospital volume, but this trend was not evident when restricting to term, nonlow-birthweight births. To control for potential confounding, the association between hospital volume and asphyxia was assessed using multivariable logistic regression, restricting to the lower-risk subpopulation and adjusting for maternal race/ethnicity, education, advanced maternal age, teaching hospital (in the nonrural model), and intrahospital clustering (Table 4). With the highest-volume category as the reference (categories 4 and R3), there were significantly elevated odds of neonatal asphyxia among births at lower-volume hospitals, in both the rural and nonrural analysis. Odds of asphyxia were approximately doubled at category 1 nonrural hospitals (adjusted odds ratio [aOR], 2.10; 95% confidence interval [CI], 1.18 –3.74) and category 2 hospitals (aOR, 1.92; 95% CI, 1.04 –3.56). The adjusted odds of asphyxia in category 3 hospitals did not differ from the odds in the highest-volume category (Table 4). The smallest rural hospitals, category R1, also had elevated odds of asphyxia (aOR, 3.69; 95% CI, 1.90 –7.18), while the aOR was not significantly different between the middle and upper rural volume categories.
C OMMENT In this large cohort of live births in California, we observed an increased prevalence of birth asphyxia in lower-volume hospitals in rural and nonrural settings. This finding was observed both overall and among term deliveries with birthweight ⬎2500 g. Furthermore, the asso-
DECEMBER 2012 American Journal of Obstetrics & Gynecology
478.e4
Research
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TABLE 2
Demographic and clinical profile of California births in 2006 by hospital obstetric volume Nonrural
Rural Hospital volume (deliveries/year)
Demographic
Overall (N ⴝ 488,622 births; n ⴝ 211 hospitals)
LBW
7.3
PTB
11.1
Singleton birth
96.7
Nulliparous
39.5
Advanced maternal age
18.2
Prior cesarean
Education ⱖ12 y
1 50-1199 (N ⴝ 36,038; n ⴝ 50) 5.6
2 1200-2399 (N ⴝ 139,548; n ⴝ 78)
Hospital volume (deliveries/year) 3 2400-3599 (N ⴝ 155,883; n ⴝ 52)
4 >3600 (N ⴝ 157,153; n ⴝ 31)
Overall (N ⴝ 38,995 births; n ⴝ 57 hospitals)
6.6
7.4
8.2
5.3
8.7
9.9
11.5
12.4
97.9
97.2
96.6
96.2
38.4
39.9
39.2
18.9
18.1
17.2
15.0
14.9
14.3
47.4
47.0
45.9
R1 50-599 (N ⴝ 11,818; n ⴝ 36)
R2 600-1699 (N ⴝ 14,941; n ⴝ 16)
R3 >1700 (N ⴝ 12,236; n ⴝ 5)
5.0
5.3
5.6
10.2
9.0
10.0
11.7
98.1
98.1
97.8
98.4
39.7
35.7
39.5
34.5
33.5
19.2
10.4
11.1
10.5
9.7
14.8
15.7
15.1
12.4
17.4
14.9
48.4
48.0
30.6
37.5
31.8
22.6
................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................
Race/ethnicity
.......................................................................................................................................................................................................................................................................................................................................................................
White
32.9
39.1
35.2
31.9
30.3
39.4
63.0
31.5
26.3
.......................................................................................................................................................................................................................................................................................................................................................................
Black
5.5
4.8
4.6
5.9
6.2
2.6
2.6
1.9
3.6
Hispanic
46.5
42.2
46.9
46.3
47.4
51.9
25.5
62.0
64.9
Asian American
12.4
10.9
10.6
13.2
13.5
2.5
2.9
1.8
3.0
2.7
3.0
2.7
2.7
2.6
3.6
6.0
2.8
2.2
....................................................................................................................................................................................................................................................................................................................................................................... ....................................................................................................................................................................................................................................................................................................................................................................... .......................................................................................................................................................................................................................................................................................................................................................................
Other
................................................................................................................................................................................................................................................................................................................................................................................
LBW, low birthweight; PTB, preterm birth. All numbers in table are percentages. Snowden. Hospital volume and perinatal outcomes in California. Am J Obstet Gynecol 2012.
ciation remained statistically significant after multivariable regression adjustment for both small rural and nonrural hospitals. These associations adjusted for factors at the patient and hospital level, so it is less likely that they are biased due to hospital or patient differences between volume categories. Our study findings corroborate the work of a German group that found an inverse association between hospital obstetric volume and adverse neonatal outcomes among low-risk births,4,9 extending this association to a US population. Further, after stratifying rural hospitals and analyzing these births separately, we observed that a similar association exists in the small hospitals that serve the rural populations of California. This distinction between rural and nonrural hospitals is important to take into account when considering the policy implications of these results.8 These findings might argue against the safety of low-volume labor and delivery units in urban settings with multiple highobstetric-volume hospitals nearby. If it would be logistically feasible for the women served by these hospitals to be re478.e5
ferred to nearby higher-volume hospitals, then it might be advisable to concentrate low-risk maternity services in urban, highobstetric-density areas. However, given the increasing scarcity of obstetrical care in rural regions of the West,20,21,26 the finding of increased risk at lower rural hospital volume will likely need different policy approaches to achieve improvement. The sparse population of the regions served by these hospitals, the distance between the hospitals with labor and delivery units, and the fact that patients traveling to rural hospitals often already have higher travel times than their nonrural counterparts all lead to the conclusion that centralization of obstetric care in such settings is likely not feasible.27 Instead, efforts should focus on equipping these hospitals with the staff, training, and other resources needed to provide high-quality obstetric care in the absence of high patient volume and the beneficial factors that flow from it. Although overall neonatal death rates were elevated in the medium- and highvolume hospitals, when this analysis was restricted to a lower-risk subpopulation,
American Journal of Obstetrics & Gynecology DECEMBER 2012
neonatal death rates dropped considerably and this association was no longer statistically different by hospital volume. These findings corroborate the observation that variations in perinatal mortality are largely driven by case mix of highrisk pregnancies complicated by factors including intrauterine growth restriction and preterm birth, and that birth asphyxia may be a more sensitive measure of quality of obstetric care.15 The limitations of this study should be taken into account when interpreting these findings. Analysis of linked birth certificate/hospital discharge data precluded detailed chart review that would have increased validity of outcome ascertainment. When analyzing observational data, it is challenging to eliminate the possibility of uncontrolled confounding and determine whether observed associations are causal. However, for a question such as this, where randomization of hospital volume is not feasible, observational data may be the best option available. We acknowledge that differences in case mix between the volume categories, if not adjusted for, could bias
Obstetrics
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TABLE 3
Prevalence of asphyxia and neonatal death by hospital volume, among nonanomalous live births Hospital volume category (deliveries/year) Variable
1
2
3
4
Nonrural (50-1199) (1200-2399) (2400-3599) (ⱖ3600) ..................................................................................................................................................................................................................................... Asphyxia (per 10,000) ............................................................................................................................................................................................................................ All births 20 19 12 11a ............................................................................................................................................................................................................................ a .....................................................................................................................................................................................................................................
Excluding PTB, LBW
18
17
10
9
Neonatal death (per 10,000) ............................................................................................................................................................................................................................ All births 12 20 21 23b ............................................................................................................................................................................................................................ Excluding PTB, LBW
2
3
2
R1
R2
R3
3
..................................................................................................................................................
..............................................................................................................................................................................................................................................
Rural (50-599) (600-1699) (ⱖ1700) ..................................................................................................................................................................................................................................... Asphyxia (per 10,000) ............................................................................................................................................................................................................................ All births 40 15 8a ............................................................................................................................................................................................................................ a .....................................................................................................................................................................................................................................
Excluding PTB, LBW
34
11
7
Neonatal death (per 10,000) ............................................................................................................................................................................................................................ All births 17 22 30 ............................................................................................................................................................................................................................ Excluding PTB, LBW
5
3
6
..............................................................................................................................................................................................................................................
Stratified by nonrural/rural hospitals. LBW, low birthweight; PTB, preterm birth. a
P ⬍ .001 for 2 test; b P ⬍ .05 for 2 test.
Snowden. Hospital volume and perinatal outcomes in California. Am J Obstet Gynecol 2012.
results. In this case, high-volume referral hospitals are likely to have more highrisk patient populations, so residual confounding would likely attenuate rather than amplify the present findings. The
cutoffs we used to categorize obstetric volume divided hospitals into categories by size and maintained an adequate number of independent units (ie, hospitals) in each category, however the spe-
TABLE 4
Results of multivariable logistic regression of asphyxia, restricted to term births with birthweight >2500 g Variable
aORa (95% CI)
P valueb
Hospital volume category, deliveries/year
.....................................................................................................................................................................................................................................
1
2.10 (1.18–3.74)
.012
2
1.92 (1.04–3.56)
.038
3
1.07 (0.64–1.81)
.791
4
Ref.
..................................................................................................................................................................................................................................... ..................................................................................................................................................................................................................................... .....................................................................................................................................................................................................................................
Ref.
..............................................................................................................................................................................................................................................
Rural hospital volume category, deliveries/year
..................................................................................................................................................................................................................................... c
R1
3.69 (1.90–7.18)
⬍ .001
R2
1.53 (0.87–2.69)
.138
R3
Ref.
..................................................................................................................................................................................................................................... c .....................................................................................................................................................................................................................................
Ref.
..............................................................................................................................................................................................................................................
aOR, adjusted odds ratio; CI, confidence interval; Ref., reference. a
Regression adjusted for maternal race/ethnicity, education, advanced maternal age, and teaching hospital; b Robust SE correcting for clustering by hospital; c Regression adjusted for maternal race/ethnicity, education, and advanced maternal age.
Snowden. Hospital volume and perinatal outcomes in California. Am J Obstet Gynecol 2012.
Research
cific cut-points chosen were arbitrary. The analysis of data from California may limit the valid inference of study findings to other settings (or other US states). Still, California is a large and diverse state with substantial geographical variation; its births account for approximately one eighth of all US births annually and mirror the heterogeneous population in the United States. We do not propose that hospital volume causes adverse outcomes per se. Rather, hospital volume is assumed to be an indicator of systems factors that may drive the outcomes. Future work is needed to examine these specific factors to determine the mechanism of how volume can be associated with perinatal outcomes, and thus enable solutions to improve maternal and child health care. Another potential way to improve health care delivery would be to identify factors that predict adverse perinatal outcomes less severe than mortality, and to refer these pregnancies to higher-volume facilities. Unfortunately, we found the differences persisted even in a lower-risk population and obstetric emergencies such as placental abruption or cord prolapse can occur in any obstetric patient. Ultimately, a policy of regionalization for low-risk obstetrics must balance safety, convenience, access, and patient satisfaction to ensure an optimal match between patient population and institutional capacity for a given region. This study found evidence of a protective effect for increased hospital volume on birth asphyxia in California. If further work confirms the apparent higher risk conferred by delivery of lower-risk pregnancies in a setting of low obstetric volume, providers and patients should consider how to improve outcomes for these lower-risk births. Solutions may differ based on the geographic setting of the hospital and the patients served. f REFERENCES 1. Phibbs CS, Bronstein JM, Buxton E, Phibbs RH. The effects of patient volume and level of care at the hospital of birth on neonatal mortality. JAMA 1996;276:1054-9. 2. Cifuentes J, Bronstein J, Phibbs CS, Phibbs RH, Schmitt SK, Carlo WA. Mortality in low birth
DECEMBER 2012 American Journal of Obstetrics & Gynecology
478.e6
Research
Obstetrics
weight infants according to level of neonatal care at hospital of birth. Pediatrics 2002;109: 745-51. 3. Lasswell SM, Barfield WD, Rochat RW, Blackmon L. Perinatal regionalization for very low-birth-weight and very preterm infants: a meta-analysis. JAMA 2010;304:992-1000. 4. Heller G, Richardson DK, Schnell R, Misselwitz B, Kunzel W, Schmidt S. Are we regionalized enough? Early-neonatal deaths in low-risk births by the size of delivery units in Hesse, Germany 1990 –1999. Int J Epidemiol 2002;31: 1061-8. 5. Moster D, Lie RT, Markestad T. Relation between size of delivery unit and neonatal death in low risk deliveries: population-based study. Arch Dis Child Fetal Neonatal Ed 1999;80: F221-5. 6. Tracy SK, Sullivan E, Dahlen H, Black D, Wang YA, Tracy MB. Does size matter? A population-based study of birth in lower volume maternity hospitals for low risk women. BJOG 2006;113:86-96. 7. Hemminki E, Heino A, Gissler M. Should births be centralized in higher level hospitals? Experiences from regionalized health care in Finland. BJOG 2011;118:1186-95. 8. Phibbs CS. Commentary: does patient volume matter for low-risk deliveries? Int J Epidemiol 2002;31:1069-70. 9. Heller G, Misselwitz B, Schmidt S. Early neonatal mortality, asphyxia related deaths, and timing of low risk births in Hesse, Germany, 1990-8: observational study. BMJ 2000;321: 274-5.
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www.AJOG.org 10. Gould JB, Qin C, Marks AR, Chavez G. Neonatal mortality in weekend vs weekday births. JAMA 2003;289:2958-62. 11. Gould JB, Qin C, Chavez G. Time of birth and the risk of neonatal death. Obstet Gynecol 2005;106:352-8. 12. Arias Y, Taylor DS, Marcin JP. Association between evening admissions and higher mortality rates in the pediatric intensive care unit. Pediatrics 2004;113:e530-4. 13. Luo ZC, Karlberg J. Timing of birth and infant and early neonatal mortality in Sweden 1973-95: longitudinal birth register study. BMJ 2001;323:1327-30. 14. Wu YW, Pham TN, Danielsen B, Towner D, Smith L, Johnston SC. Nighttime delivery and risk of neonatal encephalopathy. Am J Obstet Gynecol 2011;204:37.e1– 6. 15. Field DJ, Smith H, Mason E, Milner AD. Is perinatal mortality still a good indicator of perinatal care? Paediatr Perinat Epidemiol 1988;2: 213-9. 16. Stewart JH, Andrews J, Cartlidge PH. Numbers of deaths related to intrapartum asphyxia and timing of birth in all Wales perinatal survey, 1993-5. BMJ 1998;316:657-60. 17. Nicholson WK, Witter F, Powe NR. Effect of hospital setting and volume on clinical outcomes in women with gestational and type 2 diabetes mellitus. J Womens Health (Larchmt) 2009;18:1567-76. 18. Garcia FA, Miller HB, Huggins GR, Gordon TA. Effect of academic affiliation and obstetric volume on clinical outcome and cost of childbirth. Obstet Gynecol 2001;97:567-76.
American Journal of Obstetrics & Gynecology DECEMBER 2012
19. Hart LG, Dobie SA, Baldwin LM, Pirani MJ, Fordyce M, Rosenblatt RA. Rural and urban differences in physician resource use for low-risk obstetrics. Health Serv Res 1996;31:429-52. 20. Nesbitt TS, Connell FA, Hart LG, Rosenblatt RA. Access to obstetric care in rural areas: effect on birth outcomes. Am J Public Health 1990;80:814-8. 21. Hughes S, Zweifler JA, Garza A, Stanich MA. Trends in rural and urban deliveries and vaginal births: California 1998-2002. J Rural Health 2008;24:416-22. 22. Hart LG, Larson EH, Lishner DM. Rural definitions for health policy and research. Am J Public Health 2005;95:1149-55. 23. OSHPD. California rural hospitals, 2008. Available at: http://www.oshpd.ca.gov/RHPC/ pdf/Ruralhospital/0507HospitalMapWithNames. pdf. Accessed Dec. 9, 2011. 24. California Association of Rural Health Clinics. Clinic locations, 2011. Available at: http:// www.carhc.org/files/CARHC_MbrClinicsPublic_ Contact_Info_2011.pdf. Accessed Dec. 9, 2011. 25. WWAMI Rural Health Research Center. California rural-urban commuting area (RUCA) codes. Seattle, WA: University of Washington Department of Family Medicine; 2006. 26. Nesbitt TS, Larson EH, Rosenblatt RA, Hart LG. Access to maternity care in rural Washington: its effect on neonatal outcomes and resource use. Am J Public Health 1997;87:85-90. 27. Grzybowski S, Stoll K, Kornelsen J. Distance matters: a population-based study examining access to maternity services for rural women. BMC Health Serv Res 2011;11:147.
Attachment 4 Schematic Drawing of Proposed LDR Suite
Support Space
LDR 11
LDR 12
s t a f f f l o w
LDR 6
20 Labor Delivery Recover Rooms Second Floor Care New England 0
4
8
16
Providence, RI
e4h
morrisswitzer ENVIRONMENTS FOR HEALTH ARCHITECTURE
Attachment 5 Schematic Drawing of Existing LDR Suite
C-SECTION RECOVERY
STOR
MIDWIFERY GRIEVING ANES ON-CALL RM STAFF
TOIL
LDR STAFF LOUNGE
TOIL BREAST PUMP
ONCALL
STAFF TOIL
LDR LKR RM
OB/GYN ON-CALL LOUNGE STORAGE
OFFICE SOIL
TOIL
ONCALL
TOIL
JC
TOIL
ELEC
LDR STORAGE
ADMIN/ EDUCATOR
ONCALL
TOIL/SH
ANES STAFF LOUNGE
ONCALL
SOIL
ONCALL
T
ELEC LDR MGR
OFFICE
LDR 20
LDR 19 T
T/ TUB
ABC
LDR 3
LDR 5
T
RESUS RM
LDR 7
T
LDR 9
RESUS RM
RESUS LDR 13 RM LDR 15
LDR 11
T
T
NS/ WK AREA T
ABC FAMILY RM
Support Core T
LDR 4
Support Core
T
T
T
T
LDR 6 RESUS LDR 8
LDR 10 RESUS LDR 12
LDR 14 RESUS LDR 16
RM
RM
STOR TOIL
RM
EXISTING PLAN Care New England 0
4
8
16
Providence, RI
e4h
morrisswitzer ENVIRONMENTS FOR HEALTH ARCHITECTURE
Attachment 6 Architect Certification
December 7, 2016 Raymond Rusin, Chief of Division of Facilities Regulations Department of Health Cannon Building Three Capitol Hill Providence, RI 02908-5097 RE:
Women & Infants, A member of Care New England LDR Renovation Project CON 101 Dudley Street Providence, RI 02905
In accordance with Appendix D of the department of health requirements for the certificate of need document, Women & Infants notifies the department of health that a preliminary review of the proposed plans has been done by a licensed architect. I Dan Morris, RI License registration 3764, Partner with e4h Architects, certify that the proposed plan is in full compliance with the AIA guidelines for design and construction with Part 2 Hospitals, Division 2.2 Specific requirements for General Hospitals, Section 2.2-2.11 Obstetrical Unit.
Please contact us with any questions (802-878-8841) Sincerely yours,
Dan Morris, AIA RI License#37
Attachment 7 Women & Infants Hospital and Rhode Island Hospital Ground Lease
