Sublette County Rural Health Care District Forecasted Financial Statements June 30, 2018 through 2022
Sublette County Rural Health Care District Forecasted Financial Statements Contents Independent Accountant’s Report ............................................................................................. 1 Forecasted Financial Statements Forecasted Balance Sheets ................................................................................................................. 2 Forecasted Statements of Revenues, Expenses and Changes in Net Position .................................... 4 Forecasted Statements of Cash Flows ................................................................................................ 5 Basis of Assumptions............................................................................................................ 7 Summary of Significant Accounting Policies ...................................................................... 7 General Description of the District ..................................................................................... 11 Description of the Planned Project..................................................................................... 12 Description of the Financing Plan ...................................................................................... 13 Assessment of Demand (Market Analysis) ........................................................................ 14 Identification and Description of Geographical Service Area .......................................................... 15 Demographic and Socioeconomic Characteristics ........................................................................... 18 Competition and Market Share ......................................................................................................... 23 Medical Staff Composition............................................................................................................... 24 Evaluation of Physician Support ...................................................................................................... 25 Historical and Forecasted Utilization ............................................................................................... 26 Revenue from Patient Services........................................................................................... 27 Payer Mix .............................................................................................................................. 30 Net Patient Revenues........................................................................................................... 31 Provisions for Doubtful Accounts and Charity Care ........................................................ 31 Other Operating Revenue .................................................................................................... 32 Employee Compensation and Related Expenses ............................................................. 32 Other Operating Expenses .................................................................................................. 34 Depreciation and Amortization Expense ........................................................................... 35 Interest Paid .......................................................................................................................... 36 Non-Operating Revenue ...................................................................................................... 36
Sublette County Rural Health Care District Forecasted Financial Statements Current Assets and Liabilities and Changes in Working Capital .................................... 37 Debt Service Reserve........................................................................................................... 37 Medical Malpractice Coverage and Claims ........................................................................ 37 Pension Plan ......................................................................................................................... 37 Long-Term Debt.................................................................................................................... 39 Risks and Uncertainties....................................................................................................... 39 Debt Service Coverage ........................................................................................................ 40 Sensitivity Analyses............................................................................................................. 40 Independent Accountant’s Report on Supplementary Information ................................ 44 Historical Balance Sheets ................................................................................................................. 45 Historical Statements of Revenues, Expenses and Changes in Net Position.................................... 47 Exhibit I ................................................................................................................................. 48 Historical Balance Sheets - June 30, 2013 and 2014 ........................................................................ 48 Historical Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2013 and 2014........................................................................................... 50 Exhibit II – Schedule of Ratios ............................................................................................ 51 Exhibit III – Schedule of Primary Service Area Population .............................................. 52 Exhibit IV – Schedule of Primary Service Area Population by Age and Sex .................. 53 Exhibit V – Schedule of Primary Service Area Inpatient Market Share by Service Line....................................................................................................................... 54 Exhibit VI – Schedule of Primary Service Area Outpatient Market Share by Service Line....................................................................................................................... 55 Exhibit VII – Schedule of Capital Expenditures ................................................................. 56 Exhibit VIII – Schedule of Net Patient Service Revenue by Payer ................................... 57 Exhibit IX – Schedule of Full-Time Equivalent Employees .............................................. 58 Exhibit X – Schedule of Supplies and Other Expense ...................................................... 59 Exhibit XI – Schedule of Purchased Services ................................................................... 60 Exhibit XII – Summary of Insurance Coverage .................................................................. 61
Sublette County Rural Health Care District Forecasted Financial Statements Exhibit XIII – Schedule of Comparable Wyoming CAH Facility Ratios ........................... 62 Exhibit XIV – Schedule of Competitor Services ................................................................ 64
Independent Accountant’s Report Board of Trustees Sublette County Rural Health Care District Pinedale, Wyoming We have prepared a financial feasibility study of Sublette County Rural Health Care District (the “District”). The District plans to construct and operate a new critical access hospital facility. The study was undertaken to evaluate during each of the five years ending June 30, 2018 through 2022, the ability of the District to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed $28,300,000 borrowing, at an assumed annual interest rate of 3.50 percent. The proposed project consists of constructing a new facility of approximately 52,000 square feet. The District’s administration anticipates that construction is to begin in July 2018 and be completed in February 2020. The estimated total cost of the project is approximately $28,300,000, including approximately $17,000,000 in new construction, $1,000,000 in land, $1,841,000 in professional costs, $3,685,000 in equipment, $1,645,000 in capitalized interest payments, $988,000 in debt issuance costs, $441,000 to establish a debt service reserve fund and $1,700,000 in other costs. It is assumed that a loan of $28,300,000 would be the primary source of funds for the project, of which 80% will be direct loan and 20% will be a guaranteed loan under the United States Department of Agriculture (USDA) – Rural Development Community Facilities Program. Responsibility for payment of debt service on the loans is solely that of the District. Other necessary funds to finance the project are assumed to be provided from the District’s existing funds. Our procedures included analysis of the following:
Project history, objectives, timing and financing.
The future demand for the District’s services, including consideration of the following: o o o o
Economic and demographic characteristics of the District’s defined service area. Locations, capacities and competitive information pertaining to other existing hospitals currently providing services in the service area. Physician support for the District and its programs. Historical utilization levels of District operations.
Construction and equipment costs, debt service requirements and estimated financing costs.
Staffing patterns and other operating considerations.
Third-party reimbursement policy and history.
Revenue/expense/volume relationships.
Property tax revenues.
Board of Trustees Sublette County Rural Health Care District Page 2 We also participated in gathering other information, assisted management in identifying and formulating its assumptions and assembled the accompanying financial forecast based on those assumptions. The accompanying financial forecast for the annual periods ending June 30, 2018 through 2022 is based on assumptions that were provided by, or reviewed with, and approved by the District’s management. The financial forecast includes the following: Balance sheets Statements of revenues, expenses and changes in net position Statements of cash flows We have examined the financial forecast. The District’s management is responsible for the forecast. Our responsibility is to express an opinion on the forecast based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (“AICPA”) and, accordingly, included such procedures as we considered necessary to evaluate both the assumptions used by management and the preparation and presentation of the forecast. We believe that our examination provides a reasonable basis for our opinion. Legislation and regulations at all levels of government have affected and may continue to affect revenues and expenses of the District. The financial forecast is based on legislation and regulations currently in effect. If future legislation or regulations related to District operations are enacted, such legislation or regulations could have a material effect on future operations. The interest rate, principal payments, project costs and other financing assumptions are described in the section entitled “Assumptions and Notes to Forecasted Financial Information.” If actual interest rates, principal payments and funding requirements are different from those assumed, the amount of the borrowing and debt service requirements would need to be adjusted accordingly from those indicated in the forecast. If such interest rates, principal payments, project costs and funding requirements are lower than those assumed, such adjustments would not adversely affect the forecast. Our conclusions are presented below: In our opinion, the accompanying financial forecast is presented in conformity with guidelines for presentation of a financial forecast established by the AICPA. In our opinion, the underlying assumptions provide a reasonable basis for management’s forecast, including management’s assertion that the hospital facility is needed. However, there will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. The accompanying financial forecast indicates that sufficient funds could be generated to meet the District’s operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed $28,300,000 borrowing, during the forecast periods. However, the achievement of any financial forecast is dependent on future events, the occurrence of which cannot be assured.
Board of Trustees Sublette County Rural Health Care District Page 3 We have no responsibility to update this report for events and circumstances occurring after the date of this report.
Kansas City, Missouri February 1, 2018
Sublette County Rural Health Care District Forecasted Balance Sheets
Assets and Deferred Outflows of Resources Current Assets Cash and cash equivalents Investments Patient accounts receivable, net of allowance Inventories Prepaid expenses and other Total current assets Noncurrent Cash and Investments Internally designated for capital improvements Held for debt service Project fund
Capital Assets, Net Other Assets Deferred Outflow of Resources - Pension Total assets and deferred outflows of resources
2018
2019
2020
2021
2022
$ 4,032,814 6,746,230
$ 4,123,486 4,903,069
$ 4,358,350 2,615,250
$ 5,608,271 482,737
$ 5,854,567 1,345,101
282,050 144,174 104,706
304,202 152,997 108,678
328,236 162,437 112,841
1,447,877 290,914 137,350
1,505,947 322,704 146,092
11,309,974
9,592,432
7,577,114
7,967,149
9,174,411
600,000 -
440,528 10,345,474
475,610 -
580,856 -
686,102 -
600,000
10,786,002
475,610
580,856
686,102
1,726,221
18,867,178
28,853,453
28,726,795
27,522,289
126,687
130,488
134,403
138,435
142,588
1,872,936
1,872,936
1,872,936
1,872,936
1,872,936
$ 15,635,818
$ 41,249,036
$ 38,913,516
$ 39,286,171
$ 39,398,326
See Assumptions and Notes to Forecasted Financial Information
2
Sublette County Rural Health Care District Forecasted Balance Sheets
Liabilities, Deferred Inflows of Resources and Net Position 2018 Current Liabilities Current maturities of long-term debt Accounts payable Accrued expenses Total current liabilities Long-term Debt Net Pension Liability Other Long-term Liabilities Total liabilities Deferred Inflows of Resources - Pension Net Position Invested in capital assets, net of related debt Restricted-expendable for Debt service Unrestricted Total net position Total liabilities, deferred inflows of resources and net position
$
2019
125,136 345,670
$
79,908 130,311 353,442
2020 $
327,941 135,784 373,573
2021 $
341,694 172,603 480,709
2022 $
356,082 184,633 501,820
470,806
563,661
837,298
995,006
1,042,535
-
28,220,092
27,892,151
27,550,457
27,194,375
6,690,758
6,690,758
6,690,758
6,690,758
6,690,758
343,012
343,012
343,012
343,012
343,012
7,504,576
35,817,523
35,763,219
35,579,233
35,270,680
1,672,152
1,672,152
1,672,152
1,672,152
1,672,152
1,726,221
912,652
633,361
834,644
-
4,732,869
440,528 2,406,181
475,610 369,174
580,856 619,286
686,102 1,769,392
6,459,090
3,759,361
1,478,145
2,034,786
2,455,494
$ 15,635,818
$ 41,249,036
$ 38,913,516
$ 39,286,171
$ 39,398,326
See Assumptions and Notes to Forecasted Financial Information
3
Sublette County Rural Health Care District Forecasted Statements of Revenues, Expenses and Changes in Net Position Years Ending June 30, 2018 through 2022
2018 Operating Revenues Net patient service revenue before provision for uncollectible accounts Provision for uncollectible accounts Net patient service revenue Other Total operating revenues Operating Expenses Salaries and wages Employee benefits Supplies Professional fees Purchased services Insurance Education, dues and subscriptions Travel Rental Repairs and maintenance Utilities Depreciation and amortization Other Total operating expenses Operating Loss Nonoperating Revenues (Expenses) Tax revenues Investment income Interest expense Non-capital grants and gifts Project financing fees Total nonoperating revenues Increase (Decrease) in Net Position Net Position, Beginning of Year Net Position, End of Year
2019
2020
2021
2022
$ 3,327,197 $ 3,589,617 $ 3,874,369 $ 10,437,904 $ 10,876,458 (385,819) (417,227) (451,339) (829,264) (882,446) 2,941,378 3,172,390 3,423,030 9,608,640 9,994,012 72,655 77,814 83,351 91,321 102,488 3,014,033
3,250,204
3,506,381
9,699,961
10,096,500
4,675,611 1,908,703 375,881 88,375 585,454 114,721 88,291 18,381 132,925 44,837 378,119 278,694 86,100
4,722,367 1,975,512 398,886 91,026 604,908 118,533 91,224 18,944 135,584 46,906 396,524 265,027 88,683
4,769,592 2,044,899 423,497 93,757 625,322 122,533 94,303 19,532 138,296 49,103 416,098 639,199 91,343
5,612,993 2,399,197 758,455 96,570 732,997 127,565 98,174 20,254 141,061 52,077 492,857 1,426,658 94,083
5,824,201 2,539,812 841,335 99,467 767,175 133,940 103,081 21,151 143,883 56,071 529,541 1,484,506 96,905
8,776,092
8,954,124
9,527,474
12,052,941
12,641,068
(5,762,059)
(5,703,920)
(6,021,093)
(2,352,980)
(2,544,568)
3,898,714 49,154 3,762 -
3,937,701 50,629 3,875 (988,014)
3,977,078 52,148 (293,340) 3,991 -
4,016,849 53,712 (1,165,051) 4,111 -
4,057,017 55,323 (1,151,298) 4,234 -
3,951,630
3,004,191
3,739,877
2,909,621
2,965,276
(1,810,429)
(2,699,729)
(2,281,216)
556,641
420,708
8,269,519
6,459,090
3,759,361
1,478,145
2,034,786
$ 6,459,090
$ 3,759,361
$ 1,478,145
$ 2,034,786
$ 2,455,494
See Assumptions and Notes to Forecasted Financial Information
4
Sublette County Rural Health Care District Forecasted Statements of Cash Flows Years Ending June 30, 2018 through 2022
2018 Operating Activities Receipts from and on behalf of patients Payments to suppliers and contractors Payments to employees Other receipts, net Net cash used in operating activities Noncapital Financing Activities Property taxes Noncapital grants and gifts Net cash provided by noncapital financing activities Capital and Related Financing Activities Proceeds from issuance of debt Principal paid on long-term debt Interest paid on long-term debt Purchase of capital assets Transfers to (from) project fund Funding of debt service reserve fund Payment of financing fees Net cash used in capital and related financing activities Investing Activities Interest income Net change in investments Other Net cash provided by (used in) investing activities Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year
2019
2020
2021
2022
$ 2,929,665 $ 3,150,238 $ 3,398,996 $ 8,488,999 $ 9,935,942 (1,921,342) (1,998,838) (2,081,914) (2,730,260) (2,821,051) (6,635,105) (6,690,107) (6,794,360) (7,905,054) (8,342,902) 72,655 77,814 83,351 91,321 102,488 (5,554,127)
(5,460,893)
(5,393,927)
(2,054,994)
(1,125,523)
3,898,714 3,762
3,937,701 3,875
3,977,078 3,991
4,016,849 4,111
4,057,017 4,234
3,902,476
3,941,576
3,981,069
4,020,960
4,061,251
(280,000) -
28,300,000 (17,405,984) (10,345,474) (440,528) (988,014)
(79,908) (293,340) (10,625,474) 10,345,474 (35,082) -
(327,941) (1,165,051) (1,300,000) (105,246) -
(341,694) (1,151,298) (280,000) (105,246) -
(280,000)
(880,000)
(688,330)
(2,898,238)
(1,878,238)
49,154 2,657,081 (3,690)
50,629 1,843,161 (3,801)
52,148 2,287,819 (3,915)
53,712 2,132,513 (4,032)
55,323 (862,364) (4,153)
2,702,545
1,889,989
2,336,052
2,182,193
(811,194)
234,864
1,249,921
246,296
770,894
(509,328)
3,861,920
4,632,814
4,123,486
4,358,350
5,608,271
$ 4,632,814
$ 4,123,486
$ 4,358,350
$ 5,608,271
$ 5,854,567
See Assumptions and Notes to Forecasted Financial Information
5
Sublette County Rural Health Care District Forecasted Statements of Cash Flows (Continued) Years Ending June 30, 2018 through 2022
Reconciliation of Cash and Cash Equivalents to the Balance Sheets Cash and cash equivalents Noncurrent cash Total cash and cash equivalents
Reconciliation of Operating Loss to Net Cash Used in Operating Activities Operating loss Items not requiring cash Depreciation and amortization Provision for uncollectible accounts Changes in operating assets and liabilities Patient accounts receivable Inventories Prepaid expenses and other Accounts payable and accrued expenses Net cash used in operating activities
2018
2019
2020
2021
2022
$ 4,032,814 600,000
$ 4,123,486 -
$ 4,358,350 -
$ 5,608,271 -
$ 5,854,567 -
$ 4,632,814
$ 4,123,486
$ 4,358,350
$ 5,608,271
$ 5,854,567
$ (5,762,059) $ (5,703,920) $ (6,021,093) $ (2,352,980) $ (2,544,568) 278,694 385,819
265,027 417,227
639,199 451,339
1,426,658 829,264
(397,532) (8,984) 25,885
(439,379) (8,823) (3,972)
(475,373) (9,440) (4,163)
(1,948,905) (128,477) (24,509)
(75,950)
12,947
25,604
1,484,506 882,446 (940,516) (31,790) (8,742)
143,955
33,141
$ (5,554,127) $ (5,460,893) $ (5,393,927) $ (2,054,994) $ (1,125,523)
See Assumptions and Notes to Forecasted Financial Information
6
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Basis of Assumptions The underlying assumptions described herein are based on historical data, management’s assumptions and other related currently available information. Sublette County Rural Health Care District (the District) plans to construct and operate a new critical access hospital (CAH) facility during the forecast period. Prior to the construction of the CAH, the forecast includes the clinic operations for the District. The accompanying financial forecast has been prepared in connection with the District’s planned construction of a new hospital facility, and to assist in assessing the ability of the District to meet the cash requirements of operations, debt service and other financial needs during the period of this financial forecast, assuming the District obtains the financing for the proposed project. The accompanying financial statement forecast represents, to the best of management’s knowledge and belief, the District’s expected financial position, changes in net position and cash flows during the forecast period. Accordingly, the forecast reflects management’s judgment as of February 1, 2018, the date of this forecast, of the expected conditions and its expected course of action. The assumptions disclosed herein are those management believes are significant to the forecast and are not all inclusive. Variances between the forecasted and actual results can be expected as events and circumstances frequently do not occur as expected and those variances may be material. Management does not intend to update the financial statement forecast. The financial statement forecast has been prepared in conjunction with the proposed financing of $28,300,000. Legislation and regulations at all levels of government affect, and may continue to affect, revenue and expenses of the District. This financial forecast is based on legislation and regulations currently in effect and those management believes will be enacted based on the current legislative status. If future legislation or regulations related to the District are enacted or forecasted regulation changes do not occur, the outcome of such legislation or regulations could have a material effect on future operations. This financial forecast has been prepared in accordance with the accounting principles generally accepted in the United States of America that are expected to be used in the financial statement presentations covering the period of the financial forecast. Unless otherwise stated, all dates used herein refer to the District’s fiscal year, which ends on June 30.
Summary of Significant Accounting Policies The significant accounting policies used in this forecast are based on those historically used by the District, and those expected to be used in the future. Nature of Operations and Reporting Entity The District is a special purpose type of governmental entity whose intent is to provide the residents of the District with the highest quality of health care services that can be provided within the means and resources available. The District provides ambulance service for Sublette County, Wyoming (the County) and operates a clinic in Pinedale, Wyoming and a clinic in Marbleton, Wyoming within the County. 7
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 All operations of the District are controlled by a five member Board of Trustees, elected in Countywide elections, and are responsible for all of the District’s activities. The forecasted financial statements include all of the District’s operations controlled by the Board of Trustees. As discussed in the Basis of Assumptions, it is the intent of the District to construct and operate a new CAH during the forecast period. Based on the criteria for determining the reporting entity (separate legal entity and fiscal or financial dependency on other governments), the District is considered to be an independent reporting entity and has no component units. The District receives funding from local and state resources and must comply with the requirements of these funding entities. Basis of Accounting and Presentation The financial statements of the District have been prepared on the accrual basis of accounting using the economic resources measurement focus. Revenues, expenses, gains, losses, assets, liabilities and deferred inflows and outflows of resources from exchange and exchange-like transactions are recognized when the exchange transaction takes place, while those from government-mandated nonexchange transactions (principally taxes) are recognized when all applicable eligibility requirements are met. Operating revenues and expenses include exchange transactions and program-specific, government-mandated nonexchange transactions. Government-mandated nonexchange transactions that are not program specific such as taxes, investment income and interest on capital assets-related debt are included in nonoperating revenues and expenses. The District first applies restricted net position when an expense or outlay is incurred for purposes for which both restricted and unrestricted net position is available. Use of Estimates The preparation of 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, deferred outflows of resources, liabilities, deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Property Tax Revenues The District operates under Wyoming statutes as a health care district and is entitled to receive a portion of the property taxes levied by Sublette County. As a rural health district, Wyoming statutes permit the District to assess property taxes of two mills on the property within Sublette County, which is not subject to reauthorization by Sublette County’s voters. These proceeds are not restricted to specific uses by the District. Taxes are levied on or about August 1 and payable in two installments by November 15 and May 15. Property tax revenues are recognized when levied, and property taxes uncollected at year end are recorded as property tax receivable. Property tax receivable is included within prepaid expenses and other on the forecasted balance sheets.
8
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Investments and Investment Return Investments in common collective funds are carried at cost, which approximated fair value. All debt securities are carried at fair value. Investment return includes dividend, interest and other investment income; realized and unrealized gains and losses on investments carried at fair value; and realized gains and losses on other investments. Investment return is reflected in the statements of revenues, expenses and changes in net position as nonoperating revenue. Patient Accounts Receivable The District reports patient accounts receivable for services rendered at net realizable amounts from third-party payers, patients and others. The District provides an allowance for doubtful accounts based upon a review of outstanding receivables, historical collection information and existing economic conditions. Supplies All supply inventories are stated at cost, which is generally determined on a first-in, first-out method. Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair value at the date of donation if acquired by gift. Depreciation is computed using the straight-line method over the estimated useful life of each asset. Assets under capital lease obligations are depreciated over the shorter of the lease term or their respective estimated useful lives. The following estimated useful lives are being used by the District: Land improvements Buildings Equipment
7 – 40 years 40 years 3 – 10 years
Compensated Absences The District currently allows employees who work at least 24 hours per week to accumulate paid annual leave (PAL). Upon termination, the District will buy back up to 48 hours of accumulated paid annual leave at the employee’s current base rate. Expense and the related liability are recognized as PAL benefits are earned whether the employee is expected to realize the benefit as time off or in cash. Compensated absences liabilities are computed using the regular pay and termination pay rates in effect at the balance sheet date plus an additional amount for compensation-related payments such as social security and Medicare taxes computed using rates in effect at that date. Employees who leave the District with less than two weeks notice will not be paid for any unused paid annual leave.
9
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Deferred Outflows of Resources Deferred outflows of resources represent a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense) until that time. Deferred outflows of resources consist of unrecognized items not yet charged to pension expense and contributions from the employer after the measurement date but before the end of the employer’s reporting period. Deferred Inflows of Resources Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. Deferred inflows of resources consist of property taxes levied against members of the tax district as well as the unamortized portion of the net difference between projected and actual earnings on pension plan investments, changes in assumptions, changes in proportion and other differences between expected and actual experience. Cost-Sharing Defined Benefit Pension Plan The District participates in a cost-sharing multiple-employer defined benefit pension plan, the Wyoming Retirement System (WRS). For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of WRS and additions to/deductions from WRS’ fiduciary net position have been determined on the same basis as they are reported by WRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Net Position Net position of the District is classified in three components. Net investment in capital assets consist of capital assets net of accumulated depreciation and reduced by the outstanding balances of borrowings used to finance the purchase or construction of those assets. Restricted expendable net position are noncapital assets that must be used for a particular purpose as specified by creditors, grantors or donors external to the District, including amounts deposited with trustees as required by bond indentures, reduced by the outstanding balances of any related borrowings. Unrestricted net position is the remaining net position that does not meet the definition of net investment in capital assets or restricted net position. Net Patient Service Revenue The District has agreements with third-party payers that provide for payments to the District at amounts different from their established rates. Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payers and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payers. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined.
10
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Income Tax Status As a Healthcare District (a political subdivision of Sublette County and the State of Wyoming), the District is generally exempt from federal and state income taxes under Section 115 of the Internal Revenue Code and similar provision of state law. Risk Management The District is exposed to various risks of loss from torts: theft of, damage to and destruction of assets: business interruption; errors and omissions; employee injuries and illnesses; natural disasters; medical malpractice; and employee health, dental and accident benefits. Commercial insurance coverage is purchased for claims arising from such matters. Settled claims have not exceeded this commercial coverage in any of the three preceding years. The District purchases medical malpractice insurance under a claims-made policy. Under such policy, only claims made and reported to the insurer are covered during the policy term, regardless of when the incident giving rise to the claim occurred.
General Description of the District The District is located in Sublette County, Wyoming and operates clinics in Pinedale, Wyoming and in Marbleton, Wyoming. The District also provides ambulance service for Sublette County. The clinics provide health care to the Sublette County population. Pinedale and Marbleton are approximately 77 and 91 miles southeast of Jackson, Wyoming, respectively. The District is governed by a five member Board of Trustees. The current members of the Board of Trustees are as follows: Name
Scott Scherbel Laura Clark Charles Bacheller Wendy Boman John Godfrey
Position
Chairman Vice-Chairman Member Member Treasurer
Served Since
November 2010 November 2010 November 2014 November 2016 November 2017
Occupation
Surveyor Retired Rancher Drilling Technician Retired
Source: Management
11
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 The principal members of the executive and administrative staff of the District are listed below: Name
Amanda Key Lorraine Gatzke William Kluck David Kappenman, MD Brendan Fitzsimmons, MD
Position
Date Hired
Practice Manager Director of Finance EMS Operational Director PMC Medical Director MBPC Medical Director
6/12/2006 11/8/2006 8/22/2005 1/8/2007 8/29/2016
Source: Management
Amanda Key is the District’s Practice Manager. She is responsible for the day-to-day operations of the Pinedale Medical Clinic and the Marbleton-Big Piney Medical Clinic and works collaboratively with the Medical Directors and the Director of Finance. She promotes delivery of healthcare services through community involvement, works closely with regional affiliates and acts as the Compliance Officer. Amanda began with the District in 2006 and gained experience in a leadership position as Site Coordinator of the Pinedale Medical Clinic starting in 2008. She received a Bachelor of Arts degree from the University of Wisconsin-Milwaukee. Lorraine Gatzke is the Director of Finance for the District. Lorraine received her B.S. in Business Administration with an accounting emphasis from the University of Maine. She has 31 years of experience as an accountant working within public education, governmental entities and private practices. Her healthcare career started as a Hospital Corpsman in the United States Navy. Lorraine is responsible for planning, organizing and directing all financial aspects of the District, including development and administration of accounting and finance policies, insurance, internal controls, budgeting, auditing, payroll, benefits and claims processing. She is also responsible for management of construction projects. She works collaboratively with the Practice Manager and Medical Directors of the District.
Description of the Planned Project The District currently operates in the physician clinic setting, in addition to providing the ambulance service, and is currently being paid for services it provides based upon a physician fee schedule. There currently is not a hospital located in Sublette County. Due to this reason and the declining profitability of the District in recent years from the reduction in the mill levy as a result of recent downturns in the oil and gas industry in the region, the District began to consider options to better serve the population of Sublette County and ultimately decided to move forward with the construction and operation of a new CAH facility. The project consists of construction, equipping and furnishing of an approximately 52,000 squarefoot full service CAH with 10 total acute care beds. The District plans to continue providing services at the clinics in Pinedale and Marbleton once the CAH is operational and the clinics are certified as rural health clinics with the Centers for Medicare and Medicaid Services. Services at the new CAH are expected to include general acute care services, swing-bed services, lab services, emergency department, radiology, general surgery and physical therapy. In addition, providerbased services expected to be provided in Marbleton may include lab services, emergency 12
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 department and radiology. Employed staff and medical staff are expected to increase with the operation of the CAH during the forecast period. In the years leading up to the completion of the CAH in the forecast period, the two clinics will continue to provide services in a manner generally consistent with historical operations. The CAH is planned to open on July 1, 2020. At that point, certain services will be provided in the hospital setting versus the clinic setting (for example, certain lab, radiology and emergency services). The construction of the CAH is intended to permit the District to improve and expand the current scope of health care services available to the District’s service area and to increase the probability the District will provide such service to a growing number of patients. Management of the District believes a CAH facility will assist in accomplishing these goals for three reasons: 1) the District cannot provide additional service lines in the current clinical setting, 2) a new CAH will assist in the recruitment and retention of new physicians and staff and 3) a new CAH is expected to assist the District in capturing additional market share. The concept to construct a CAH in Sublette County is supported by management of Saint John’s Medical Center (SJMC), an acute care hospital located in Jackson, Wyoming (see further discussion of SJMC within the “Competitor Summary” on page 18). In 2015, the District and SJMC entered into an affiliation agreement to enhance the quality and breadth of care provided in the region, to achieve certain efficiencies and to improve patient access of unique services provided by SJMC for residents of Sublette County. Management of SJMC has been supportive throughout the District’s planning process of the CAH project. Preliminary project costs have already begun to be paid. This forecast assumes the project related financing will close during 2018. Construction is expected to last 18 months, with completion of construction expected in February 2020. Management of the District anticipates that the hospital will open in February 2020 and that CAH designation will be obtained by July 2020.
Description of the Financing Plan The financing plan consists of $28,300,000, of which 80 percent will be a direct loan and 20 percent will be a guaranteed loan through the United States Department of Agriculture (USDA) – Rural Development Community Facilities Program. The District will obtain a loan for 20 percent of the project costs from an approved USDA guaranteed lender. The forecast assumes the funds are to be drawn down immediately through a bond anticipation note with a lender for the duration of the 18-month construction period. Obtaining the forecasted financing is a sensitive assumption in this forecast. For purposes of the forecast, it has been assumed that the direct loan will carry a fixed interest rate of 3.50 percent during its 40-year term and the guaranteed loan will carry a fixed interest rate of 6.75 percent during its 30-year term.
13
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 The following estimated sources and uses of funds for the proposed project were prepared by the District: Sources and Uses of Funds
Sources USDA loan Total Sources
$ 28,300,000 $ 28,300,000
Uses Construction and site Land Equipment Design, engineering and development costs Contingency Financing fees Interest capitalized during construction Debt service reserve fund Total Uses
$ 17,000,000 1,000,000 3,684,500 1,841,300 1,700,000 988,014 1,645,658 440,528 $ 28,300,000
Source: Management
Assessment of Demand (Market Analysis) An assessment of the expected future demand for the District’s services was conducted by management for the purpose of providing a basis for the financial forecast. The assessment of District utilization included the following: • • • • •
Identification of the geographical service area from which the District will derive its patients and its market share within that area Analysis of published historical and projected economic and demographic data trends in the service area Analysis of the competition in the primary service area Analysis of market share and use rates of the primary service area Analysis of historical and forecasted utilization
A patient’s choice of hospital is discretionary. Several variables will impact the success of the District. A list of some, but not all, of those variables includes: • • • • • •
Availability of services Proximity of the facility to family and friends Aesthetic qualities of the site Accessibility Changes in laws or regulation Referrals by area doctors
The market analysis is designed to highlight, within the given parameters, management’s basis for estimating future demand for its services. Management has based its assumed utilization rates for the District on historical experience and the expected future demand for the District in the primary service area. 14
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Identification and Description of Geographical Service Area The new hospital will be located at 1200 Bloomfield Avenue near U.S. Highway 191 in Pinedale, Wyoming. Pinedale is located approximately 77 miles southeast of Jackson, Wyoming on HWY 191.
15
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Management determined the District’s primary service area to consist of the six zip codes in Sublette County, which include the following cities: Bondurant (82922), Boulder (82923), Cora (82925), Pinedale (82941), Big Piney (83113) and Daniel (83115). The map below outlines the District’s primary service area.
16
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 The following table and map outline the major competing facilities surrounding the District. The information below was utilized to analyze the service area of the District. The competing facilities were determined by analyzing facilities that experienced the largest volume of inpatient volumes from the District’s primary service area. The red bars within the map represents the PSA acute market share for each facility listed in the table for 2016.
Saint John's Medical Center Eastern Idaho Regional Medical Center University of Utah Health Care Memorial Hospital of Sweetwater County Salt Lake Regional Medical Center
Miles Facility From Type Pinedale
PSA Acute Bed Annual Market Annual Net Size Discharges Share* Revenue (000's)
Acute Acute Acute Acute Acute
48 237 513 58 119
77 157 237 102 240
1,904 10,210 29,623 2,049 3,131
36.3% 19.5% 10.7% 5.0% 1.9%
$
155,921 992,304 2,990,243 146,987 264,644
Source: Management, www.costreportdata.com *Based upon 2016 Medicare acute care services provided in the PSA
17
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Competitor Summary SJMC is located in Jackson, Wyoming, and was the first hospital built in the area in 1916. The current facility was built in 1991 and was subsequently improved with a new birth center, laboratory and intensive care unit. In addition to the services provided through the full-service hospital and specialty physician practices, SJMC also provides services through the long-term care Living Center. The Living Center provides long-term residential care, memory care, short-term rehabilitation and hospice services. SJMC is currently in the planning process to build a replacement Living Center. Eastern Idaho Regional Medical Center (EIRMC) is the largest medical facility serving southeast Idaho, western Wyoming, Yellowstone National Park and parts of Montana. EIRMC opened its doors in 1986, preceding several other hospital facilities in Idaho Falls. In June 2017, EIRMC opened a new fully integrated surgical robotics suite, the first of its kind in the state. In 2015, EIRMC completed a renovation project of their 50,000 square foot Behavioral Health Center. University of Utah Health Care includes four hospitals as well as 12 community clinics throughout the Salt Lake City area. Information on recent projects was unavailable on its website. Memorial Hospital of Sweetwater County is a non-profit, acute care facility located in Rock Springs, Wyoming. The hospital first opened in 1948 when ownership was transferred to Sweetwater County. In July 2014, the hospital completed construction of an 80,000 square foot building that houses the medical office, physician’s clinic and the Sweetwater Regional Cancer Center. In spring of 2017, the hospital opened a 15,000 square foot family medicine and occupational medicine office building. In 2016, Aspen Mountain Medical Center opened in Rock Springs, Wyoming. The medical center is approximately 51,000 square feet, with 16 patient rooms and four surgical suites. Salt Lake Regional Medical Center is part of Steward Health Care, which operates 36 community hospitals across 10 different states. Information on recent projects was unavailable on its website. Demographic and Socioeconomic Characteristics The District is an important employer in its county. The major employers in the county are from the oil and gas industry. The health care sector is important to the county’s economy, as it employs several of its residents, who purchase a large amount of goods and services from businesses located in Sublette County. The CAH project is expected to create a large number of construction jobs during the construction period. Management expects the opening of a new CAH, in an area that currently does not have a hospital facility, to attract new industrial firms, businesses and retirees to the area. Population As of the 2010 census, the city of Pinedale had a total population of 2,030, while the Sublette County population was 10,247. The following table outlines the population changes for the city of Pinedale, Sublette County, the State of Wyoming and the United States.
18
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 2000
2010
2017
2022
Pinedale Annual change
785
2,030 10.0%
2,138 0.7%
2,138 0.0%
Sublette County Annual change
5,920
10,247 5.6%
9,740 -0.7%
9,534 -0.4%
Wyoming Annual change
493,785
563,626 1.3%
590,731 0.7%
610,249 0.7%
United States Annual change
281,421,942
308,745,538 0.9%
325,139,271 0.7%
337,393,057 0.7%
Source: U.S. Bureau of the Census
The characteristics of the population are factors in determining the health care services that a community requires. The following is an analysis of the age distribution of the population for the primary service area.
Primary Service Area Population 2017 Zip Code
0-17
18-44
45-64
65+
Total
82922-Bondurant 82923-Boulder 82925-Cora 82941-Pinedale 83113-Big Piney 83115-Daniel
49 115 56 1,286 607 117
75 160 77 1,845 959 188
81 115 77 1,553 784 216
42 53 43 780 355 107
247 443 253 5,464 2,705 628
Total Service Area
2,230
3,304
2,826
1,380
9,740
Source: U.S. Bureau of the Census Estimates
Primary Service Area Population 2017 Zip Code
82922-Bondurant 82923-Boulder 82925-Cora 82941-Pinedale 83113-Big Piney 83115-Daniel Total
0-17
18-44
45-64
65+
Total
19.8% 26.0% 22.1% 23.5% 22.4% 18.6%
30.4% 36.0% 30.5% 33.8% 35.5% 30.0%
32.8% 26.0% 30.4% 28.4% 29.0% 34.4%
17.0% 12.0% 17.0% 14.3% 13.1% 17.0%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
22.9%
33.9%
29.0%
14.2% 100.0%
Source: U.S. Bureau of the Census Estimates
19
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Population Wyoming
Primary Service Area Ages
0-17 18-44 45-64 65+ Total
2010
2017
2022
2010
2017
United States 2022
24.0% 23.5% 23.2% 35.7% 35.8% 35.2% 27.9% 25.6% 23.9% 12.4% 15.1% 17.7% 100.0% 100.0% 100.0%
23.6% 22.9% 21.8% 35.3% 33.9% 33.2% 30.5% 29.0% 28.0% 10.6% 14.2% 17.0% 100.0% 100.0% 100.0%
2010
2017
2022
24.0% 22.8% 22.2% 36.5% 35.8% 35.1% 26.5% 26.0% 25.1% 13.0% 15.4% 17.6% 100.0% 100.0% 100.0%
Source: U.S. Bureau of the Census Estimates
Household Income The median household income in 2017 is higher locally as compared to the State of Wyoming and the U.S. Median household income for cities of Pinedale and Marbleton, Sublette County, the State of Wyoming and U.S. data is as follows:
2017 Median Income $100,000 $75,000
$81,600 $56,700
$62,600
$88,000 $73,800
$50,000 $25,000 $-
Source: Housing and Urban Development, obtained from www2.fdic.gov
20
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Unemployment The following charts summarize non-seasonally adjusted unemployment rates for Sublette County, the State of Wyoming and the United States. The first chart displays the unemployment rate for the most recent 12 quarters, beginning with the fourth quarter of 2014 and ending with the third quarter of 2017. The second chart displays the unemployment rate for the last 20 years. The unemployment rate for Sublette County has been up and down over the past 20 years, experiencing a low of 1.5 percent in 2007 before peaking at 6.4 percent in 2016. The unemployment rate for Sublette County has been consistently lower than the State of Wyoming and the United States over the past 20 years until recently. Unemployment Rates, Sublette County 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% United States Wyoming Sublette County
14Q4 5.5% 3.9% 4.1%
15Q1 5.8% 4.5% 5.7%
15Q2 5.3% 4.2% 5.2%
15Q3 5.2% 3.9% 4.6%
15Q4 4.8% 4.4% 5.3%
16Q1 5.2% 6.0% 7.7%
United States
16Q2 4.8% 5.7% 7.0%
16Q3 5.0% 4.7% 5.4%
Wyoming
16Q4 4.5% 4.7% 5.2%
17Q1 4.9% 5.2% 5.8%
17Q2 4.2% 4.1% 4.4%
17Q3 4.4% 3.6% 3.5%
Sublette County
Source: Housing and Urban Development, obtained from www2.fdic.gov
Unemployment Rates, Sublette County 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
1997 1998 1999 United States 4.9% 4.5% 4.2% Wyoming 4.8% 4.7% 4.6% Sublette County 2.8% 3.2% 3.6%
2000 4.0% 3.9% 3.0%
2001 4.7% 3.8% 2.6%
2002 5.8% 4.0% 2.9%
2003 6.0% 4.3% 3.0%
United States
2004 5.5% 3.8% 2.4%
2005 5.1% 3.6% 2.1%
2006 4.6% 3.2% 1.8%
2007 4.6% 2.8% 1.5%
Wyoming
2008 5.8% 3.1% 1.6%
2009 9.3% 6.3% 4.4%
2010 9.6% 6.4% 5.9%
2011 8.9% 5.8% 4.6%
2012 8.1% 5.3% 4.9%
2013 7.4% 4.7% 4.7%
2014 6.2% 4.2% 4.3%
2015 5.3% 4.2% 5.2%
2016 4.9% 5.3% 6.4%
Sublette County
Source: Housing and Urban Development, obtained from www2.fdic.gov
21
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Major Employers According to management, major employers in the service area include: Number of Employees
Employer
272 235 185 160 140 130 72 70 57
Sublette County Sublette County School District #1 ExxonMobil Ultra Resources Jonah Energy Sublette County School District #9 Sublette County Rural Health Care District Enterprise Products EOG Resources Source: Management
According to the Bureau of Labor Statistics, the largest industries in Sublette County include: Industry
Natural resources and mining Education and health services Trade, transportation and utilities Construction Public administration Leisure and hospitality Professional and business services Financial activities Other services Manufacturing Information Total employment
Private
Number of Employees Government Total
843 182 577 434 339 216 117 72 31 17 2,828
461 13 376 20 870
843 643 590 434 376 339 216 117 92 31 17 3,698
Source: Bureau of Labor Statistics
22
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Competition and Market Share In order to define existing services and develop future plans that may affect the operations of the District, the study included an analysis of other hospitals currently serving residents who live in the service area. Market share is calculated as the percentage of discharges from facilities that come from area residents divided by the size of the market or the total number of discharges from the entire service area population. The following tables detail historical inpatient Medicare market share by hospital for patients whose home address is located in the primary service area.
Inpatient Discharges Facility
2012
78 37 26 15 5 1 77 239
Saint John's Medical Center Eastern Idaho Regional Medical Center University of Utah Health Care Memorial Hospital of Sweetwater County Intermountain Medical Center Salt Lake Regional Medical Center Portneuf Medical Center Other Total PSA
2013
82 22 14 11 12 7 3 58 209
2014
2015
2016
89 36 36 11 5 4 3 50 234
85 47 22 8 14 6 2 51 235
95 51 28 13 5 70 262
Source: Truven Health Analytics, Hospital Service Area File
Inpatient Market Share Facility
2012
Saint John's Medical Center Eastern Idaho Regional Medical Center University of Utah Health Care Memorial Hospital of Sweetwater County Intermountain Medical Center Salt Lake Regional Medical Center Portneuf Medical Center Other Total PSA
32.6% 15.5% 10.9% 6.3% 0.0% 2.1% 0.4% 32.2% 100.0%
2013
39.2% 10.5% 6.7% 5.3% 5.7% 3.3% 1.4% 27.9% 100.0%
2014
36.2% 20.0% 9.4% 3.4% 6.0% 2.6% 0.9% 21.5% 100.0%
2015
38.0% 15.4% 15.4% 4.7% 2.1% 1.7% 1.3% 21.4% 100.0%
2016
36.3% 19.5% 10.7% 5.0% 0.0% 1.9% 0.0% 26.6% 100.0%
Source: Truven Health Analytics, Hospital Service Area File
23
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Medical Staff Composition During the historical period of 2015, 2016 and 2017, the District’s medical staff was comprised of the following members:
Hiring Ending Medical Age Date Physician Name Specialty Date 49 Jan-07 Family Practice David Kappenman, MD Emergency Services 46 Sep-11 Sep-17 Stephen Wallace, MD Family Practice Rebecca Stroklund, DO 37 Jun-13 Aug-16 Family Practice Carolyn Albtritton, MD 51 Oct-12 Jun-17 Keri Hull, FNP Family Practice 34 Oct-15 Traci Voss, PA-C Family Practice 55 Mar-16 May-16 W. David Burnett, MD General Practice 67 Apr-09 Mar-17 Brian Barton, PA-C Family Practice 36 May-17 Michelle Chavez, FNP Family Practice 52 Jan-16 Oct-16 Brendan Fitzsimmons, MD Family Practice 60 Aug-16 Jason Ray, PA-C General Practice 39 Sep-16 Kurt Frauenpreis, MD Family Practice 56 Jun-13 Jul-15 Shannon Evans, DO Family Practice 38 Aug-11 Apr-16 Deborah Brackett, MD Family Practice 54 Apr-13 Apr-16 Locums (contracted) Leslie Hagenstein, Family Practice 63 Jun-06 Julie Mueller, PA-C General Practice 47 Jan-12 Charlotte KearneyMason, DFNP Family Practice 54 Jan-12 Lance Peterson, MD Family Practice 51 Nov-16 Total Locums
Clinic Outpatient Visit Totals 2015
2016
2017
1,837 1,664 2,198 1,391 997 2,577 1,783 1,611
2,200 1,848 2,464 1,820 982 128 1,102 682 103 1,239 1,121
2,009 246 189 1,740 1,927 421 315 347 1,830 1,597 -
1,158 15,216
1,297 14,986
1,712 12,333
Source: Management
As shown by the schedule above, there is a slight reduction in the number of providers during the historical period because the District no longer offers after hours emergency services in the Marbleton clinic. Management intends to consider employing family practice physicians with the implementation of acute patient care in the hospital setting, and as the health care market demands. The District expects the new CAH facility will help its recruitment efforts of new physicians.
24
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Evaluation of Physician Support In order to evaluate the medical staff’s attitudes and perspectives regarding the project, a survey of all currently employed physicians was performed. Key findings from the survey include the following: •
All six respondents to the survey were supportive of the project and all six respondents expect their practice to grow as a result of the project.
•
General comments from the respondents include the expectation that the construction of the facility will provide for better availability and convenience of care. Further, the respondents believe that the CAH in the community will provide sustainable health care for generations to come. Without a CAH, it is believed that a sustainable health care system will not be sustainable for future generations. Are you supportive of the proposed Critical Access Hospital project?
Very much so
Do you expect your practice with the District to grow as a result of the proposed project?
6
Somewhat
-
Indifferent
-
Yes
No Not at all
6
-
-
Do you expect the populati on in the surrounding communities to travel to the new facility if they have historically gone elsewhere?
What percentage of patients do you believe will utilize the new facility rather than seek care elsewhere? Less than 75%
Yes
No
5
1
-
Greater than 75%
4
Greater than 90%
1
Substantially all
1
25
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Historical and Forecasted Utilization Management has estimated acute and swing-bed volumes based upon historical averages of similar sized facilities that will be comparable to the anticipated CAH project for the District. Further, management has estimated swing-bed volumes with consideration of the Sublette Center, a skilled nursing facility that is located in Pinedale which offers Medicare Part A bed service. The District does not intend to use swing-bed as a substitution for the value a skilled nursing facility provides. Management anticipates the majority of the CAH swing-bed volumes will be drawn from the competitors outside of Sublette County that residents are currently using rather than from the Sublette Center. While management anticipates the hospital will open in February 2020, CAH designation is expected to be obtained by July 2020. Therefore, management has estimated acute and swing-bed volumes to begin in the first year of CAH operations (2021). These volumes were ramped up over the forecast period following the first year of CAH operations. The increase in acute and swingbed volumes was also increased based upon inpatient market share that is currently being captured by other facilities within the primary service area. Management expects clinic visits to increase 5 percent annually during the forecast period leading up to CAH operations and then increase 10 percent thereafter. Lastly, ambulance runs are expected to increase 3 percent annually during the forecast period. Volume forecasts for clinic visits and ambulance runs through 2020 are based primarily on population projections and economic factors. These were then adjusted for operation of the CAH beginning in 2021. Volume forecasts for acute and swing-bed services beginning in 2021 are based upon the averages of similar sized facilities, utilization trends and market share analysis. Patient volumes are a particularly sensitive assumption in this forecast. The District’s historical and forecasted inpatient and outpatient volumes are as follows:
Inpatient Volumes Acute Patient Days
Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
Clinic Volumes
Swing-bed Patient Days
Pinedale
Marbleton
-
-
7,991 7,997 6,691
6,262 6,124 4,447
400 547
50 61
7,026 7,378 7,746 8,521 9,372
4,669 4,903 5,148 5,663 6,229
Source: Management
26
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Outpatient Volumes Ambulance (Runs)
Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
Laboratory Radiology
Emergency Department
Physical Therapy
General Surgery
800 923 1,062
-
-
-
-
-
1,115 1,171 1,230 1,353 1,488
37,000 40,700
4,685 5,146
341 345
1,000 1,500
180 252
Source: Management
Revenue from Patient Services The average charges for patient services throughout the forecast period are based on management’s intention of maintaining charges sufficient to cover the costs of operations and debt service associated with the project and to maintain the financial position of the District. Gross revenue from services to patients were forecasted based on estimated utilization levels applied to the charge structure for routine and ancillary inpatient services expected to be in effect once the CAH is operational in 2021. Management estimated charges for these inpatient services by comparing average historical charges for facilities in the area and adjusting for inflation to the year the CAH is operational in 2021. This forecast assumes planned increases in charges of 3 percent annually for the clinic and ambulance services provided in the years leading up to CAH. This forecast also includes a number of assumptions about third-party commercial payer rates. These are sensitive assumptions in this forecast. As discussed on the previous page, the District plans to offer acute and swing-bed services at the new CAH. Also, the District plans to expand several outpatient services, including physical therapy, radiology, laboratory, ortho and general surgery. It is anticipated that the District will apply for and obtain CAH designation by July 2020 and will begin operating as a CAH under the Medicare program, whereby reimbursement is based on actual costs for both inpatient and outpatient services.
27
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 The following schedule indicates the historical and forecasted gross revenue for the District in the current clinical setting prior to the completion of the project and the District obtaining CAH designation on July 1, 2020. Forecast changes in gross revenue per clinic visit and per ambulance run reflect inflationary increases of 3 percent. Clinic Setting - Pre CAH Marbleton Clinic
Pinedale Clinic Revenue
Actual 2015 2016 2017 Forecast 2018 2019 2020
% Per Visit Change
$1,796,481 $ 1,710,173 2,865,768 3,099,489 3,351,959 3,625,210
225 214 -4.9% 428 100.3% 441 454 468
Revenue
$ 1,083,766 $ 1,025,606 1,123,983 1,215,430 1,314,345 1,421,461
3.0% 3.0% 3.0%
Ambulance
% Per Visit Change
173 167 253
-3.2% 50.9%
260 268 276
3.0% 3.0% 3.0%
Revenue
% Per Run Change
$ 479,439 $ 599 496 -17.3% 457,467 1,035 108.8% 1,099,067 1,189,517 1,286,227 1,392,531
1,067 1,098 1,132
3.0% 3.0% 3.0%
Source: Management
The following schedule indicates the forecasted gross revenue for the District after completing the CAH project with operations of the hospital beginning on July 1, 2020. Forecast changes in gross revenue per patient day reflect inflationary increases and changes from payer mix trends: CAH Pinedale Clinic Revenue
Forecast 2018 2019 2020 2021 2022
$
Marbleton Clinic
% Per Visit Change
- $ 1,976,939 2,174,401
-
232 232
0.0%
Revenue
$
1,313,759 1,445,135
Ambulance
% Per Visit Change
$
232 232
0.0%
Revenue
$
1,408,287 1,597,779
% Per Run Change
$
1,041 1,074
3.2%
Source: Management
28
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Outpatient
Revenue
Forecast 2018 2019 2020 2021 2022
$
Total Outpatient
Per % Equivalent Change Day
- $ 7,593,035 7,906,228
2,804 3,169
Revenue
-
$
% Change
-
6.8%
12,292,020 13,123,543
13.0%
Source: Management
Acute Revenue
Forecast 2018 2019 2020 2021 2022
$
-
1,083,083 1,365,072
% Per Day Change
$
2,708 2,495
Total Inpatient
Swing-Bed
-7.9%
Revenue
$
133,864 168,717
% Per Day Change
$
2,677 2,775
3.6%
Revenue
$
-
1,216,947 1,533,789
% Per Day Change
$
2,704 2,523
-6.7%
Source: Management
29
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Payer Mix The following tables summarize the District’s forecasted inpatient and outpatient payer mix, which is a particularly sensitive assumption in this forecast. Management assumed an increase in the Medicare payer mix across all services during the forecast period based on the increase in the percentage of the population in the PSA age 65 and older. Management estimated a higher Medicare inpatient payer mix based upon historical information from other similar facilities in the area and based upon historical demographic information.
Acute Payer Mix Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
Swing-Bed Payer Mix
Medicare
Medicaid
Other
Medicare
Medicaid
Other
-
-
-
-
-
-
64.4% 64.4%
5.0% 5.0%
30.6% 30.6%
100.0% 100.0%
-
-
Source: Management
Clinic Payer Mix Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
Ambulance Payer Mix
Medicare
Medicaid
Other
Medicare
Medicaid
Other
30.1% 30.1% 30.1%
5.6% 5.6% 5.6%
64.3% 64.3% 64.3%
30.1% 30.1% 30.1%
5.6% 5.6% 5.6%
64.3% 64.3% 64.3%
30.1% 30.1% 30.1% 35.5% 35.5%
5.6% 5.6% 5.6% 5.6% 5.6%
64.3% 64.3% 64.3% 58.9% 58.9%
30.1% 30.1% 30.1% 35.5% 35.5%
5.6% 5.6% 5.6% 5.6% 5.6%
64.3% 64.3% 64.3% 58.9% 58.9%
Source: Management
30
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Net Patient Revenues The District has agreements with third-party payers that provide for payments to the District at amounts different from its established rates. These payment arrangements include: Medicare. Physician services are currently reimbursed on a fee schedule. Beginning July 1, 2020, management anticipates receiving CAH designation and will be licensed to operate a hospital. Under CAH rules, most inpatient acute care services and outpatient services and defined capital costs related to Medicare program beneficiaries are paid on a cost reimbursement methodology. The District will be reimbursed for certain services at a tentative rate with final settlement determined after submission of an annual cost report by the District and audits thereof by the Medicare Administrative Contractor. Estimated settlements have been reflected in the accompanying financial statements. Medicaid. Physician services are currently reimbursed on a fee schedule. Beginning July 1, 2020, management anticipates that inpatient and outpatient services rendered to Medicaid program beneficiaries will be reimbursed based upon a prospective payment methodology. The District will be reimbursed at tentative rates with final settlements determined after submission of annual cost reports by the District and reviews thereof by the Medicaid fiscal intermediary. Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation and change. As a result, it is reasonably possible that recorded estimates will change materially in the near term. The District has also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations and preferred provider organizations. The basis for payment to the District under these agreements includes prospectively determined rates per discharge, discounts from established charges and prospectively determined daily rates.
Provisions for Doubtful Accounts and Charity Care The District’s historical and forecasted provisions for doubtful accounts and charity care as a percentage of gross patient service revenue are shown in the table below. The historical provisions for doubtful accounts for 2015 and 2016 were presented by management in net patient service revenue. Therefore these are shown as 0 percent in the historical table below. Management does not make a distinction between the classification of the provision for doubtful accounts and charity care within the statements of revenues, expenses and changes in net positions. Provision for doubtful accounts and charity care is forecasted to remain consistent as a percentage of gross patient revenue throughout the forecast period.
31
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Provision for Doubtful Accounts and Charity Care
Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
0.0% 0.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
Source: Management
Other Operating Revenue Historical other operating revenue consists of non-patient related radiology revenue, rent, electronic health record (EHR) revenue, gain on sale of assets and other miscellaneous items. Management has estimated that the non-patient related radiology related revenue will not continue into the forecast period, and no estimates are made for the sale of any equipment or for the receipt of any EHR incentive payments in the forecast period. Historical and forecasted other operating revenue is detailed in the following table: Misc. Radiology
Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
$
-
Rent
$
99,908 -
Gain on Sale
53,610 $ 60,229 51,759 55,443 59,380 63,605 69,687 78,209
EHR
11,062 -
$
Other
Total Other Revenues
51,005 $ 51,392 279,680 64,273 -
$ 167,069 339,909 215,940
17,212 18,434 19,746 21,634 24,279
72,655 77,814 83,351 91,321 102,488
-
Source: Management
Employee Compensation and Related Expenses Staffing at the District is based on historical trends and management’s experience, giving effect to the level of services forecasted to be offered at the CAH. Physician full-time equivalents (“FTEs”) are expected to remain consistent in the forecast period. Non-physician FTEs are expected to remain flat in the years leading up to the CAH opening in 2021 and expected to increase based 32
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 upon the new services offered in the hospital setting. Staffing levels are considered to be a particularly sensitive assumption in this forecast. Salary and wage rates of the District were forecasted to increase 1 percent annually, consistent with historical trends. The following table shows the forecasted FTEs. Physician FTEs
NonPhysician FTEs
6.7 8.2 9.0
58.4 61.7 53.0
65.2 69.9 62.0
6.0 6.0 6.0 6.0 6.0
53.0 53.0 53.0 67.4 67.4
59.0 59.0 59.0 73.4 73.4
Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
Total FTEs
Average Salary and Wages Per FTE
$
FTEs Per Adjusted Occupied Bed
101,122 87,792 76,648
-
79,301 80,094 80,895 83,677 84,514
5.4 4.6
Source: Management
The cost of employees’ fringe benefits is based on scheduled payroll taxes and expected trends in other benefit costs. These benefits include group life, health, accident and hospitalization insurance, as well as retirement costs. The District is partially self-insured for health insurance and participates in a group plan with Sublette County and Sublette County School District #1. The cost of health insurance includes both administrative fees and actual claims and is recorded within employee benefits expense. Actual health insurance claims paid by the District have fluctuated during the historical period, increasing the most during 2016. The District contributes to the Wyoming Retirement System, a statewide cost-sharing, multiple-employer defined benefit pension plan. Refer to the Pension Plan footnote for further discussion on the assumptions utilized for retirement costs. Management expects payroll taxes to remain a consistent percentage of salaries.
33
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 The expected increases in employee benefits are illustrated in the following table:
Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
Health Insurance
Payroll Taxes
Other Employee Benefits
Total Employee Benefits
$ 986,270 1,112,843 751,962
$ 415,425 405,515 305,607
$ 736,774 1,105,397 855,444
$ 2,138,469 2,623,755 1,913,013
32.4% 42.7% 40.3%
744,175 773,942 804,900 945,085 1,004,583
317,942 321,121 324,332 378,969 392,400
846,586 880,449 915,667 1,075,143 1,142,829
1,908,703 1,975,512 2,044,899 2,399,197 2,539,812
40.8% 41.8% 42.9% 42.7% 43.6%
Percent of Salaries
Source: Management
Other Operating Expenses Non-labor operating expenses are based on clinical cost estimates applied to forecasted service volume in the years leading up to the CAH operations, and are expected to grow with volume and consistent with overall inflation. For new service lines provided in the hospital setting beginning in 2021, additional cost estimates have been incorporated into the forecast based upon forecasted service volumes for these new service lines. Medical supplies, purchased services, insurance, education, dues and subscriptions, travel, rental, repairs and maintenance are expected to increase 3 percent annually, which is a sensitive assumption in this forecast. The District rents the ambulance barns in both Pinedale and Marbleton, as well as the clinic buildings in both Pinedale and Marbleton, from Sublette County for $100,000 per year. The lease agreement is set to expire on July 1, 2018. Management anticipates that a lease arrangement will continue to exist for operation of the clinics and $100,000 has been included in rental expense in each year of the forecast period. In June 2017, the Governmental Accounting Standards Board issued a new lease standard that will require substantially all operating leases to be recognized as an asset for the right to use the leased item and a corresponding lease liability be recorded on the balance sheet. The standard will be effective for the District in 2021. No modification has been made to the forecasted financial statements because the full implementation of the standard has not been finalized. Variable expenses (assumed to be approximately 40 percent of the total) are expected to increase as a result of inflation and volume, while fixed expenses (assumed to be approximately 60 percent of the total) are expected to increase as a result of inflation only.
34
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Non-labor operating expenses have been forecasted as follows:
Supplies
Actual 2015 2016 2017 Forecast 2018 2019 2020 2021 2022
Purchased Services
Insurance
Education, Dues and Subscriptions
$ 483,974 $ 647,437 $ 106,630 $ 118,989 444,086 573,949 354,292 111,079 566,866 375,881 398,886 423,497 758,455 841,335
585,454 604,908 625,322 732,997 767,175
114,721 118,533 122,533 127,565 133,940
85,426 $ 92,445 85,487 88,291 91,224 94,303 98,174 103,081
Travel
Rental
Repairs and Maintenance Utilities
26,280 $ 124,709 $ 19,420 126,955 17,842 130,319 18,381 18,944 19,532 20,254 21,151
132,925 135,584 138,296 141,061 143,883
49,862 $ 335,281 77,901 331,252 42,883 360,752 44,837 46,906 49,103 52,077 56,071
378,119 396,524 416,098 492,857 529,541
Source: Management
Depreciation and Amortization Expense Estimated provisions for depreciation and amortization during the forecast period were computed based on the straight-line method for the District’s proposed buildings and equipment. Depreciation expense is forecasted using the estimated useful lives for assets consistent with American Hospital Association estimated useful lives. Forecasted building additions are depreciated over an average of 25 years and equipment additions are depreciated over an average of seven years. Capital expenditures included in the financial statement forecast are estimated as follows. These expenditures were forecasted using historical trends, giving consideration to the new equipment and facilities as a result of the project. Management has estimated approximately $1,300,000 of non-project capital expenditures in 2021 for electronic medical record software and equipment. Management has also estimated approximately $600,000 of non-project capital expenditures in 2019 for leasehold improvements at the Marbleton clinic. This is included in internally designated for capital improvements in 2018 of the forecasted balance sheets.
35
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Capital Expenditures Project
Forecast 2018 2019 2020 2021 2022 Total
Non-Project
$
16,525,984 10,345,474 $ 26,871,458
$
$
280,000 880,000 280,000 1,300,000 280,000 3,020,000
Total
$
280,000 17,405,984 10,625,474 1,300,000 280,000 $ 29,891,458
Source: Management
Interest Paid Interest paid during the forecast period is forecasted as follows. Project Interest Expense
Forecast 2018 2019 2020 2021 2022 Total
$
$
Project Capitalized Interest
- $ 293,340 1,165,051 1,151,298 2,609,689 $
Total Interest Costs
- $ 990,504 655,154 1,645,658 $
990,504 948,494 1,165,051 1,151,298 4,255,347
Source: Management
Non-Operating Revenue Forecasted non-operating revenue consists of the following: •
Property taxes were based on property tax assessments in 2017. Wyoming statute permits the District to assess property taxes of two mills on the property within Sublette County. Management incorporated tax revenue based upon the two mills assessed for 2018 and assumed the tax revenue for the District would increase at 1 percent annually during the forecast period, which is a sensitive assumption in the forecast.
•
Investment income was based on the cash and investment balances at an estimated interest rate of 3 percent.
•
Noncapital grants and gifts were assumed to increase 3 percent annually.
36
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Current Assets and Liabilities and Changes in Working Capital Working capital requirements were forecasted for all years based on management’s experience as follows: Cash - days cash operating expense Accounts receivable - days of net patient service revenue Supplies - days of supplies expense
175.0 35 55 140.0
Prepaid expenses - days of nonsalary cash expense Accounts payable - days of nonsalary cash expense Accrued expenses - days cash operating expense
10.0 25.0 15.0
Source: Management
Debt Service Reserve The debt service reserve fund will be funded at closing with an amount approximately equal to one year’s debt service related to the guaranteed portion of the USDA loan. In addition, the debt service reserve fund will be funded over a 10-year period following the completion of the project equal to one year’s debt service related to the direct loan portion of the USDA loan.
Medical Malpractice Coverage and Claims The District purchases medical malpractice insurance under a claims-made policy with a fixed premium which provides $1,000,000 of coverage for each medical incident and $3,000,000 of aggregate coverage for each policy year. The policy only covers claims made and reported to the insurer during the policy term, regardless of when the incident giving rise to the claim occurred. Management has assessed that this coverage will be sufficient as a CAH. Accounting principles generally accepted in the United States of America require a health care provider to accrue the expense of its share of malpractice claim costs, if any, for any reported and unreported incidents of potential improper professional service occurring during the year by estimating the probable ultimate costs of the incidents. Based upon the District’s claims experience, no such accrual has been made. It is reasonably possible that this estimate could change materially in the near term.
Pension Plan Plan Description The District participates in the Wyoming Retirement System (WRS), a statewide cost-sharing multiple-employer public employee retirement system administered by the State of Wyoming Retirement System Board. Substantially all of the District’s full-time employees are eligible to participate. WRS issues a publicly available financial report which includes the audited financial statements and required supplementary information for WRS.
37
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022
Contributions Plan members are required to contribute a percentage of their annual covered salary and the District is required to contribute a percentage of their annual covered payroll. The District’s historical contribution rate was 8.37 percent as of December 31, 2016, the most recent date available. The employer contribution is actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Management has assumed the contribution rate will remain consistent during the forecast period. Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions The District records its proportionate share of the net pension liability on the balance sheet. The net pension liability was measured as of the December 31 measurement date prior to the District’s June 30 year-end and the total pension liability used to calculate the net pension liability was determined by actuarial valuations as of the prior December 31, rolled forward to June 30. The District’s proportion of the net pension liability was based on the ratio of each employer’s actual contribution to total employer contributions of the group for the respective measurement periods. The District’s proportion was 0.2767 percent as of December 31, 2016, the most recent date available. Management has assumed this proportion to remain consistent during the forecast period. During the historical period, the District recorded deferred outflows of resources related to differences between expected and actual experience, differences between projected and actual earnings on investments, changes in proportion and for the District’s contributions subsequent to the measurement date. Deferred inflows of resources were recorded for the differences between expected and actual experience, the net difference between project and actual earnings on pension plan investments, changes in assumption and changes in proportions. Management assumed these balances would be consistent during the forecast period and any changes to these amounts would be insignificant. During the historical period, the amount of actuarially determined contributions and pension expense recorded by the District have been comparable. The following table shows historical pension expense compared to the actuarially determined pension contributions: Pension Expense District Per GASB Contributions Difference
Actual 2015 2016 2017
$ 494,614 $ 961,709 770,220
504,112 $ 965,741 753,602
(9,498) (4,032) 16,618
Source: Management
38
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Therefore, management has assumed that any changes to the actuarially determined contributions flowing through deferred outflows of resources and deferred inflows of resources on the balance sheet to be insignificant. Contributions and pension expense were assumed to be equivalent and forecasted at 3 percent during the forecast period as follows: District Contributions Difference
Forecast 2018 2019 2020 2021 2022
$
776,210 799,496 823,481 848,186 873,631
Source: Management
Long-Term Debt The District had no long-term debt as of June 30, 2017. Management has assumed that the only long-term debt in the forecast period relates to the project. Future debt service requirements of the District were forecasted as follows: Years Ending June 30,
2018 2019 2020 2021 2022 Thereafter
Total
Principal
Interest
- $ - $ 373,248 293,340 79,908 1,165,051 327,941 1,492,992 341,694 1,151,298 1,492,992 51,955,154 27,550,457 24,404,697 $ 55,314,386 $ 28,300,000 $ 27,014,386 $
Source: Management
Risks and Uncertainties Litigation In the normal course of business, the District is, from time to time, subject to allegations that may or do result in litigation. Some of these allegations are in areas not covered by commercial insurance; for example, allegations regarding employment practices or performance of contracts. The District evaluates such allegations by conducting investigations to determine the validity of each potential claim. Based upon the advice of legal counsel, management records an estimate of the amount of ultimate expected loss, if any, for each. Events could occur that would cause the estimate of ultimate loss to differ materially in the near term. 39
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Debt Service Coverage Debt service coverage after completion of the project is forecasted in the following table.
Change in net position Depreciation and amortization Interest Income available for debt service
$
Debt service
2021
2022
556,641 $ 1,426,658 1,165,051 3,148,350
420,708 1,484,506 1,151,298 3,056,512
1,492,992
1,492,992
2.11
2.05
Debt service coverage ratio Source: Management
Sensitivity Analyses Management has assumed acute days will be at 400 in 2021 and increasing to 547 in 2022 during the forecast period. If inpatient utilization was 10 percent less during each year of the forecast and other factors such as staffing levels did not change, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service Debt service Debt service coverage ratio
$
2021
2022
420,110 $ 1,426,658 1,165,051 3,011,819
276,952 1,484,506 1,151,298 2,912,756
1,492,992
1,492,992
2.02
1.95
Source: Management
40
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Management has assumed outpatient volumes will increase from the first year of CAH operations in 2021 to 2022. If outpatient utilization was 10 percent less during each year of the forecast and other factors such as staffing levels did not change, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service
$
Debt service Debt service coverage ratio
2021
2022
34,675 $ 1,426,658 1,165,051 2,626,384
(115,833) 1,484,506 1,151,298 2,519,971
1,492,992
1,492,992
1.76
1.69
Source: Management
If Medicare reimbursement rates were reduced by 1 percent each year of the forecast, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service
$
Debt service
2021
2022
554,343 $ 1,426,658 1,165,051 3,146,052
418,789 1,484,506 1,151,298 3,054,593
1,492,992
1,492,992
2.11
2.05
Debt service coverage ratio Source: Management
If Medicare reimbursement rates were reduced by 2 percent each year of the forecast, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service Debt service Debt service coverage ratio
$
2021
2022
552,045 $ 1,426,658 1,165,051 3,143,754
416,870 1,484,506 1,151,298 3,052,674
1,492,992
1,492,992
2.11
2.04
Source: Management
41
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 If Medicare reimbursement rates were reduced by 3 percent each year of the forecast, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service
$
Debt service
2021
2022
549,747 $ 1,426,658 1,165,051 3,141,456
414,951 1,484,506 1,151,298 3,050,755
1,492,992
1,492,992
2.10
2.04
Debt service coverage ratio Source: Management
Management has assumed charges will increase 3.0 percent annually during the forecast period leading up to the CAH operations in 2021. If charges only increased 2.0 percent annually leading up to the CAH operations in 2021, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service
$
Debt service
2021
2022
477,899 $ 1,426,658 1,165,051 3,069,608
309,795 1,484,506 1,151,298 2,945,599
1,492,992
1,492,992
2.06
1.97
Debt service coverage ratio Source: Management
Management assumed salary and wage inflation per FTE would be 1.0 percent throughout the forecast period. If inflation on salaries and wages was 2.0 percent instead, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service Debt service Debt service coverage ratio
$
2021
2022
348,481 $ 1,426,658 1,165,051 2,940,190
154,799 1,484,506 1,151,298 2,790,603
1,492,992
1,492,992
1.97
1.87
Source: Management
42
Sublette County Rural Health Care District Assumptions and Notes to Forecasted Financial Information June 30, 2018 through 2022 Management assumed non-labor operating expenses would increase 2.0 percent annually throughout the forecast period. If inflation on non-labor operating expenses was 1.0 percent higher than forecasted in each forecast year, the debt service coverage would be:
Change in net position Depreciation and amortization Interest Income available for debt service Debt service Debt service coverage ratio
$
2021
2022
477,391 $ 1,426,658 1,165,051 3,069,100
314,369 1,484,506 1,151,298 2,950,173
1,492,992
1,492,992
2.06
1.98
Source: Management
43
Independent Accountant’s Report on Supplementary Information Board of Trustees Sublette County Rural Health Care District Pinedale, Wyoming Our examination was conducted for the purpose of forming an opinion on the basic forecasted financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the forecasted financial statements. Such information is required to be presented in accordance with Guidelines for Preparation of Financial Feasibility Studies – Healthcare Type Facilities issued by the U.S. Department of Agriculture – Rural Development. The historical information as of and for the years ended June 30, 2015 through 2017 was extracted from the District’s financial statements for those years. We have obtained historical financial statements audited by Leo Riley & Co., CPA’s, who expressed an unmodified opinion during each year. The statements of cash flows have been omitted from the audited financial statements, as permitted within fund financial statements. Those audited financial statements should be read in conjunction with this examined forecast. The audited financial statements include statements of activities that present a comparison between direct and program revenues for each function of the District’s government function. The historical financial statements of revenues, expenses and changes in net position included in the accompanying supplementary information have been presented by classification of the District’s revenues and expenses. The accompanying prospective information has been subjected to the procedures applied in the examination of the basic forecasted financial statements, and in our opinion, is presented in conformity with the guidelines for presentation of a forecast established by the American Institute of Certified Public Accountants in relation to the basic prospective financial statements taken as a whole. Other Information The other information has not been subjected to the procedures applied in the examination of the basic forecasted financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
Kansas City, Missouri February 1, 2018
44
Sublette County Rural Health Care District Historical Balance Sheets June 30, 2015 through 2017
Assets 2015
2016
2017
$ 11,566,710 1,478,826
$ 4,112,560 9,477,349
$ 3,861,920 9,403,311
335,987 187,468 81,620
368,722 138,472 121,709
270,337 135,190 130,591
13,650,611
14,218,812
13,801,349
2,086,013
1,865,825
1,724,915
Other Assets
435,000
390,000
122,997
Deferred Outflows of Resources - Pension
984,765
2,449,461
1,872,936
$ 17,156,389
$ 18,924,098
$ 17,522,197
Current Assets Cash Investments Patient accounts receivable, net of allowance Inventories Prepaid expenses and other Total current assets Capital Assets, Net
Total Assets
45
Sublette County Rural Health Care District Historical Balance Sheets (Continued) June 30, 2015 through 2017
Liabilities and Net Position 2015 Current Liabilities Current maturities of long-term debt Accounts payable Accrued expenses Other current liabilities Total current liabilities
$
6,241 46,919 635,853 96,424
2016 $
111,744 302,769 98,900
2017 $
150,295 396,461 -
785,437
513,413
546,756
1,735
2,476
-
6,185,362
8,016,170
6,690,758
596,413
366,692
343,012
7,568,947
8,898,751
7,580,526
Deferred Inflows of Resources - Pension
297,822
481,783
1,672,152
Net Position Invested in capital assets, net of related debt Unrestricted
2,078,037 7,211,583
1,863,349 7,680,215
1,724,915 6,544,604
9,289,620
9,543,564
8,269,519
$ 17,156,389
$ 18,924,098
$ 17,522,197
Long-term Debt Net Pension Liability Other Long-term Liabilities Total liabilities
Total net position Total liabilities, deferred inflows of resources and net position
46
Sublette County Rural Health Care District Historical Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2015 through 2017
2015
2016
2017
$ 3,320,306 3,320,306 167,069
$ 3,149,032 3,149,032 339,909
$ 3,131,810 (356,687) 2,775,123 215,940
3,487,375
3,488,941
2,991,063
Expenses and Losses Salaries and wages Employee benefits Supplies Professional fees Purchased services Insurance Education, dues and subscriptions Travel Rental Repairs and maintenance Utilities Depreciation and amortization Other
6,590,113 2,138,469 483,974 61,365 647,437 106,630 85,426 26,280 124,709 49,862 335,281 495,994 38,044
6,137,555 2,623,755 444,086 81,045 573,949 118,989 92,445 19,420 126,955 77,901 331,252 365,892 63,984
4,749,120 1,913,013 354,292 85,801 566,866 111,079 85,487 17,842 130,319 42,883 360,752 295,110 83,592
Total expenses
11,183,584
11,057,228
8,796,156
(7,696,209)
(7,568,287)
(5,805,093)
6,928,434 72,040 58,920
7,730,056 89,675 2,500
4,479,674 47,722 3,652
7,059,394
7,822,231
4,531,048
Operating Revenues Net patient service revenue before provision for uncollectible accounts Provision for uncollectible accounts Net patient service revenue Other Total operating revenues
Operating Loss Nonoperating Revenues Tax revenues Investment income Non-capital grants and gifts
Total nonoperating revenues Excess (Deficiency) of Revenues Over Expenses
(636,815)
253,944
(1,274,045)
Increase (Decrease) in Net Position
(636,815)
253,944
(1,274,045)
Net Position, Beginning of Year Net Position, End of Year
9,926,435
9,289,620
9,543,564
$ 9,289,620
$ 9,543,564
$ 8,269,519
47
Other Information
Sublette County Rural Health Care District Exhibit I – Historical Balance Sheets June 30, 2013 and 2014
Assets 2013
2014
$ 12,627,562 1,253,103 646,557 211,461 89,093
$ 11,862,930 1,509,263 384,515 188,966 81,571
14,827,776
14,027,245
2,972,130
2,371,271
Other Assets
510,000
473,674
Total Assets
$ 18,309,906
$ 16,872,190
Current Assets Cash Investments Patient accounts receivable, net of allowance Inventories Prepaid expenses and other Total current assets Capital Assets, Net
48
Sublette County Rural Health Care District Exhibit I – Historical Balance Sheets (Continued) June 30, 2013 and 2014
Liabilities and Net Position 2013 Current Liabilities Current maturities of long-term debt Accounts payable Accrued expenses Total current liabilities Long-term Debt Other Long-term Liabilities Total liabilities Net Position Invested in capital assets, net of related debt Unrestricted Total net position Total liabilities and net position
$
5,320 70,177 409,733
2014 $
5,781 73,103 500,970
485,230
579,854
13,656
7,695
235,897
269,449
734,783
856,998
2,953,153 14,621,970
2,357,796 13,657,396
17,575,123
16,015,192
$ 18,309,906
$ 16,872,190
Note: The District adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions during 2015. The Balance Sheets above as provided by management have not been restated for the impact of GASB Statement No. 68.
49
Sublette County Rural Health Care District Exhibit I – Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2013 and 2014 2013
2014
$ 3,205,390 67,443
$ 2,982,007 82,753
3,272,833
3,064,760
Expenses and Losses Salaries and wages Employee benefits Supplies Professional fees Purchased services Insurance Education, dues and subscriptions Travel Rental Repairs and maintenance Utilities Depreciation and amortization Other
7,565,396 2,316,853 461,528 71,136 621,840 130,449 102,655 44,080 127,024 83,861 243,391 582,869 269,364
6,716,287 1,877,416 444,737 50,883 617,783 84,652 93,415 21,778 126,652 35,302 347,255 584,841 41,929
Total expenses
12,620,446
11,042,930
(9,347,613)
(7,978,170)
8,497,205 9,124 4,975
6,212,364 65,627 34,302
8,511,304
6,312,293
Operating Revenues Net patient service revenue Other Total operating revenues
Operating Loss Nonoperating Revenues Tax revenues Investment income Non-capital grants and gifts
Total nonoperating revenues Deficiency of Revenues Over Expenses Before Capital Grants and Contributions Capital Grants and Contributions Decrease in Net Position Net Position, Beginning of Year Net Position, End of Year
(836,309) (836,309)
(1,665,877) 105,946 (1,559,931)
18,411,432
17,575,123
$ 17,575,123
$ 16,015,192
Note: The District adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions during 2015. The Statements of Revenues, Expenses and Changes in Net Position above as provided by management have not been restated for the impact of GASB Statement No. 68. 50
Sublette County Rural Health Care District Exhibit II – Schedule of Ratios Years Ending June 30, 2015 through 2022
2015
Historical 2016
2017
Profitability Ratios Total margin -18.3% 7.3% -42.6% Free operating cash flow to revenues -206.5% -206.4% -184.2% Return on equity -6.9% 2.7% -15.4% Operating margin -220.7% -216.9% -194.1% Liquidity Ratios Current ratio 17.38 27.69 25.24 Days cash on hand 395.0 140.4 165.8 Days in patient accounts receivable 36.9 42.7 35.6 Capital Structure Ratios Equity financing 54.1% 50.4% 47.2% Debt service coverage N/A N/A N/A Long-term debt to capitalization 0.0% 0.0% 0.0% Revenue Ratios Outpatient revenues to total revenues 100.0% 100.0% 100.0% Inpatient revenues to total revenues Cost Ratios Salaries to NPSR 198.5% 194.9% 171.1% Average age of plant 8.1 11.4 13.1 FTEs per adjusted occupied bed Average salary per FTE $ 101,122 $ 87,792 $ 76,648 Utilization Ratios Acute average daily census Swing-bed (SNF) average daily census -
Forecasted 2020 2021
2022
CAH Median* Wyoming U.S.
2018
2019
-60.1% -181.9% -28.0% -191.2%
-83.1% -167.3% -71.8% -175.5%
-65.1% -153.5% -154.3% -171.7%
5.7% -9.5% 27.4% -24.3%
4.2% -10.5% 17.1% -25.2%
4.9% 3.7% 4.6% -0.9%
3.1% 8.1% 6.0% 1.8%
24.02 199.0 35.0
17.02 173.2 35.0
9.05 179.0 35.0
8.01 192.6 55.0
8.80 191.5 55.0
3.71 98.7 56.8
2.35 76.3 52.5
41.3% N/A 0.0%
9.1% N/A 88.2%
3.8% N/A 95.0%
5.2% 2.11 93.1%
6.2% 2.05 91.7%
65.7% 8.14 22.0%
57.8% 2.89 27.7%
100.0% -
100.0% -
100.0% -
55.7% 44.3%
57.7% 42.3%
66.8% N/A
76.4% N/A
159.0% 148.9% 139.3% 58.4% 58.3% 14.9 16.7 7.9 4.5 5.4 5.4 4.6 $ 79,301 $ 80,094 $ 80,895 $ 76,503 $ 79,381 -
-
-
1.1 0.1
1.5 0.2
$
53.4% 44.7% 11.1 10.2 9.9 5.5 62,062 $ 54,306 3.2 1.3
2.9 1.5
* Obtained from the March 2017 CAH Financial Indicators Report: Summary of Indicator Medians by State (Copyright 2017, Flex Monitoring Team). "Wyoming" Represents Wyoming Critical Access Hospital ("CAH") median (consisting of 16 CAH's). "U.S." represents United States CAH median (consisting of 1,293 CAH's).
51
Sublette County Rural Health Care District Exhibit III – Schedule of Primary Service Area Population Years Ending June 30, 2015 through 2022 Historical 2015
2016
Forecasted 2017
2018
2019
2020
2021
2022
82922-Bondurant 82923-Boulder 82925-Cora 82941-Pinedale 83113-Big Piney 83115-Daniel
258 439 264 5,464 2,782 687
253 441 257 5,465 2,742 656
247 443 253 5,464 2,705 628
245 444 252 5,457 2,684 616
243 445 251 5,450 2,663 604
241 446 250 5,443 2,642 592
239 447 249 5,436 2,621 580
235 446 250 5,431 2,602 570
Total Service Area
9,894
9,814
9,740
9,698
9,656
9,614
9,572
9,534
Source: Calculated using U.S. Bureau of the Census 2010 Actual data, 2017 Estimates and 2022 Projections
52
Sublette County Rural Health Care District Exhibit IV – Schedule of Primary Service Area Population by Age and Sex 2017 Primary Service Area Population 2017 - Male Zip Code
82922-Bondurant 82923-Boulder 82925-Cora 82941-Pinedale 83113-Big Piney 83115-Daniel Total Service Area Zip Code
82922-Bondurant 82923-Boulder 82925-Cora 82941-Pinedale 83113-Big Piney 83115-Daniel Total Service Area
0-17
18-44
45-64
Primary Service Area Population 2017 - Female 65+
Total
Zip Code
25 61 32 669 338 59
40 85 41 984 520 100
43 63 38 837 442 123
21 27 20 393 203 55
129 236 131 2,883 1,503 337
82922-Bondurant 82923-Boulder 82925-Cora 82941-Pinedale 83113-Big Piney 83115-Daniel
1,184
1,770
1,546
719
5,219
Total Service Area
0-17
18-44
45-64
19.4% 25.8% 24.4% 23.2% 22.5% 17.5%
31.0% 36.1% 31.3% 34.2% 34.6% 29.7%
33.3% 26.7% 29.0% 29.0% 29.4% 36.5%
22.7%
33.9%
29.6%
Source: U.S. Bureau of the Census Estimates
65+
Total
16.3% 11.4% 15.3% 13.6% 13.5% 16.3%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
13.8% 100.0%
Zip Code
82922-Bondurant 82923-Boulder 82925-Cora 82941-Pinedale 83113-Big Piney 83115-Daniel Total Service Area
0-17
18-44
45-64
65+
Total
24 54 24 617 269 58
35 75 36 861 439 88
38 52 39 716 342 93
21 26 23 387 152 52
118 207 122 2,581 1,202 291
1,046
1,534
1,280
661
4,521
0-17
18-44
45-64
20.3% 26.1% 19.7% 23.9% 22.4% 19.9%
29.7% 36.2% 29.4% 33.4% 36.5% 30.2%
32.2% 25.1% 32.0% 27.7% 28.5% 32.0%
23.1%
33.9%
28.3%
65+
Total
17.8% 12.6% 18.9% 15.0% 12.6% 17.9%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
14.6% 100.0%
Source: U.S. Bureau of the Census Estimates
53
Sublette County Rural Health Care District Exhibit V – Schedule of Primary Service Area Inpatient Market Share by Service Line Years Ending June 30, 2018 through 2022
Cardiac services Ear, nose and throat General medicine General surgery Gynecology Neonatology Neurology Neurosurgery Obstetrics Oncology/hematology Ophthalmology Orthopedics Other trauma Rehabilitation Spine Thoracic surgery Urology Vascular services Other Total
2018 114 11 399 78 12 124 46 8 112 32 1 71 9 12 26 6 16 21 2 1,100
Total Market Volumes* 2019 2020 2021 113 111 109 11 11 11 405 412 419 79 79 80 11 11 11 127 129 131 47 47 48 9 9 9 113 114 115 33 33 33 1 1 1 71 72 73 9 9 9 13 13 13 26 26 26 7 7 7 16 16 16 20 20 20 2 2 2 1,113 1,122 1,133
2022 111 11 427 81 11 133 49 9 117 35 3 75 11 15 28 9 18 22 4 1,183
Total Market Share Percentage 2018 2019 2020 2021 2022 10.4% 10.2% 9.9% 9.6% 9.4% 1.0% 1.0% 1.0% 1.0% 0.9% 36.3% 36.4% 36.7% 37.0% 36.1% 7.1% 7.1% 7.0% 7.1% 6.8% 1.1% 1.0% 1.0% 1.0% 0.9% 11.3% 11.4% 11.5% 11.6% 11.2% 4.2% 4.2% 4.2% 4.2% 4.1% 0.7% 0.8% 0.8% 0.8% 0.8% 10.2% 10.2% 10.2% 10.2% 9.9% 2.9% 3.0% 2.9% 2.9% 3.0% 0.1% 0.1% 0.1% 0.1% 0.3% 6.5% 6.4% 6.4% 6.4% 6.3% 0.8% 0.8% 0.8% 0.8% 0.9% 1.1% 1.2% 1.2% 1.1% 1.3% 2.4% 2.3% 2.3% 2.3% 2.4% 0.5% 0.6% 0.6% 0.6% 0.8% 1.5% 1.4% 1.4% 1.4% 1.5% 1.9% 1.8% 1.8% 1.8% 1.9% 0.2% 0.2% 0.2% 0.2% 0.3% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: Advisory Board Data and Analytics: Market Estimator *Represents an estimate of acute days by service line
54
Sublette County Rural Health Care District Exhibit VI – Schedule of Primary Service Area Outpatient Market Share by Service Line Years Ending June 30, 2018 through 2022
Cardiology Cosmetic procedures Dermatology Endocrinology Ear, nose and throat Evaluation and management Gastroenterology General surgery Gynecology Lab Miscellaneous services Nephrology Neurology Neurosurgery Obstetrics Oncology Ophthalmology Orthopedics Pain management Physical therapy Podiatry Psychiatry Pulmonology Radiology Spine Thoracic surgery Trauma Urology Vascular Total
2018 2,841 223 1,714 25 973 29,981 838 236 317 11,442 5,809 258 469 26 128 63 2,502 1,200 306 7,342 420 3,808 819 8,587 39 8 319 484 372 81,549
Total Market Volumes 2019 2020 2021 2,911 2,980 3,050 232 240 249 1,788 1,861 1,934 26 28 29 1,007 1,042 1,077 30,665 31,349 32,033 872 905 938 242 249 255 318 320 322 11,866 12,291 12,715 6,029 6,248 6,468 265 273 281 491 512 533 27 27 28 131 135 138 65 66 67 2,642 2,781 2,920 1,249 1,297 1,346 319 333 346 7,584 7,825 8,067 445 471 496 3,896 3,983 4,070 859 900 941 8,703 8,820 8,937 40 42 43 9 9 10 329 340 350 510 536 562 388 403 419 83,908 86,266 88,624
2022 3,121 252 1,997 30 1,106 32,564 959 260 324 13,108 6,632 287 546 28 145 68 3,024 1,373 354 8,152 524 4,140 967 9,080 44 10 359 583 434 90,471
Total Market Share Percentage 2018 2019 2020 2021 2022 3.5% 3.5% 3.5% 3.4% 3.4% 0.3% 0.3% 0.3% 0.3% 0.3% 2.1% 2.1% 2.2% 2.2% 2.2% 0.0% 0.0% 0.0% 0.0% 0.0% 1.2% 1.2% 1.2% 1.2% 1.2% 36.8% 36.5% 36.3% 36.1% 36.0% 1.0% 1.0% 1.0% 1.1% 1.1% 0.3% 0.3% 0.3% 0.3% 0.3% 0.4% 0.4% 0.4% 0.4% 0.4% 14.0% 14.1% 14.2% 14.3% 14.5% 7.1% 7.2% 7.2% 7.3% 7.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.6% 0.6% 0.6% 0.6% 0.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 3.1% 3.1% 3.2% 3.3% 3.3% 1.5% 1.5% 1.5% 1.5% 1.5% 0.4% 0.4% 0.4% 0.4% 0.4% 9.0% 9.0% 9.1% 9.1% 9.0% 0.5% 0.5% 0.5% 0.6% 0.6% 4.7% 4.6% 4.6% 4.6% 4.6% 1.0% 1.0% 1.0% 1.1% 1.1% 10.5% 10.4% 10.2% 10.1% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.4% 0.4% 0.4% 0.4% 0.4% 0.6% 0.6% 0.6% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: Advisory Board Data and Analytics: Market Estimator
55
Sublette County Rural Health Care District Exhibit VII – Schedule of Capital Expenditures Years Ending June 30, 2015 through 2022
Capital equipment Construction and renovation Land and land improvements Total capital expenditures
Historical
Forecasted
2015 2016 2017 $ 214,451 $ 174,170 $ 295,110 -
2018 2019 2020 2021 2022 $ 280,000 $ 2,490,700 $ 1,753,800 $ 1,300,000 $ 280,000 - 13,915,284 8,871,674 1,000,000 -
$
$
214,451 $
174,170 $
295,110
280,000 $ 17,405,984 $ 10,625,474 $ 1,300,000 $
280,000
Source: Management
56
Sublette County Rural Health Care District Exhibit VIII – Schedule of Net Patient Service Revenue by Payer Years Ending June 30, 2015 through 2022 Historical 2015 Inpatient M edicare M edicaid Other Outpatient M edicare M edicaid Other
$
Forecasted
2016 -
$
2017 -
$
2018 -
$
2019 -
$
2020 -
$
2021
2022
-
$ 1,019,736 26,557 319,019 1,365,312
$ 1,064,157 33,490 339,916 1,437,564
883,281 148,328 2,288,696 3,320,306
837,718 140,677 2,170,637 3,149,032
831,364 139,610 2,154,172 3,125,146
899,888 151,749 2,275,560 3,327,197
972,703 164,807 2,452,107 3,589,617
1,052,392 178,052 2,643,925 3,874,369
4,198,164 268,247 4,606,181 9,072,592
4,269,121 286,556 4,883,218 9,438,895
883,281 148,328 2,288,696 3,320,306
837,718 140,677 2,170,637 3,149,032
831,364 139,610 2,154,172 3,125,146
899,888 151,749 2,275,560 3,327,197
972,703 164,807 2,452,107 3,589,617
1,052,392 178,052 2,643,925 3,874,369
5,217,900 294,804 4,925,200 10,437,904
5,333,278 320,046 5,223,134 10,876,458
EHR reimbursement Provision for uncollectible accounts $ 3,320,306 Net patient service revenue
$ 3,149,032
Total M edicare M edicaid Other
Percentages M edicare M edicaid Other
26.6% 4.5% 68.9% 100.0%
26.6% 4.5% 68.9% 100.0%
6,664 (356,687) $ 2,775,123 26.6% 4.5% 68.9% 100.0%
(385,819) (417,227) (451,339) (829,264) (882,446) $ 2,941,378 $ 3,172,390 $ 3,423,030 $ 9,608,640 $ 9,994,012 27.0% 4.6% 68.4% 100.0%
27.1% 4.6% 68.3% 100.0%
27.2% 4.6% 68.2% 100.0%
50.0% 2.8% 47.2% 100.0%
49.0% 2.9% 48.1% 100.0%
Source: Management
57
Sublette County Rural Health Care District Exhibit IX – Schedule of Full-Time Equivalent Employees Years Ended June 30, 2015 through 2017 Historical 2015 Administration Physicians Maintenance Medical records Nursing Radiology Laboratory Ambulance Other
8.0 6.7 5.5 4.5 9.6 3.6 6.6 18.1 2.6 65.2
2016 11.3 8.2 6.0 5.0 9.0 4.0 7.1 18.2 1.1 69.9
Forecasted 2017 9.0 9.0 5.0 5.2 8.1 3.0 5.6 17.0 62.0
2018 9.0 6.0 5.0 5.2 8.1 3.0 5.6 17.0 59.0
2019 9.0 6.0 5.0 5.2 8.1 3.0 5.6 17.0 59.0
2020 9.0 6.0 5.0 5.2 8.1 3.0 5.6 17.0 59.0
2021 10.0 6.0 6.0 5.2 19.5 3.0 5.6 18.0 73.4
2022 10.0 6.0 6.0 5.2 19.5 3.0 5.6 18.0 73.4
Source: Management
58
Sublette County Rural Health Care District Exhibit X – Schedule of Supplies and Other Expense Years Ending June 30, 2015 through 2022
Drugs and medical Office Housekeeping Minor equipment Other
Historical
Forecasted
2015 2016 2017 $ 410,502 $ 382,846 $ 309,107 22,651 20,862 19,112 20,364 18,123 11,759 28,329 20,299 12,441 2,128 1,956 1,873 $ 483,974 $ 444,086 $ 354,292
2018 2019 2020 2021 2022 $ 327,943 $ 348,014 $ 369,486 $ 661,725 $ 734,035 20,277 21,518 22,846 40,916 45,387 12,476 13,240 14,057 25,175 27,926 13,199 14,007 14,871 26,633 29,543 1,986 2,107 2,237 4,006 4,444 $ 375,881 $ 398,886 $ 423,497 $ 758,455 $ 841,335
Source: Management
59
Sublette County Rural Health Care District Exhibit XI – Schedule of Purchased Services Years Ending June 30, 2015 through 2022
Contract labor Service agreements Postage and freight Other
Historical
Forecasted
2015 2016 2017 $ 241,983 $ 246,071 $ 220,422 390,679 320,582 326,434 14,775 7,296 7,410 12,600 $ 647,437 $ 573,949 $ 566,866
2018 2019 2020 2021 2022 $ 227,650 $ 235,215 $ 243,153 $ 285,022 $ 298,312 337,138 348,341 360,097 422,103 441,785 7,653 7,907 8,174 9,581 10,028 13,013 13,445 13,898 16,291 17,050 $ 585,454 $ 604,908 $ 625,322 $ 732,997 $ 767,175
Source: Management
60
Sublette County Rural Health Care District Exhibit XII – Summary of Insurance Coverage As of June 30, 2017 Any Claims in Excess of Insured
Insurable Risk
Name of Carrier
Period of Coverage
Limit of Coverage
Deductible
General liability
Endurance American Specialty
11/30/17 - 11/30/18
$1,000,000 Occurrence $2,000,000 Aggregate
None
None
Umbrella liability
Scottsdale Insurance Company
11/30/17 - 11/30/18
$3,000,000 Occurrence
None
None
General liability (Ambulance)
Volunteer Firemen's Insurance Service Inc.
1/19/17 - 1/19/18
$1,000,000 Occurrence $3,000,000 Aggregate
None
None
Automobile liability (Ambulance) Volunteer Firemen's Insurance Service Inc.
1/19/17 - 1/19/18
$1,000,000 Occurrence
None
None
Umbrella liability (Ambulance)
Volunteer Firemen's Insurance Service Inc.
1/19/17 - 1/19/18
$1,000,000 Occurrence $1,000,000 Aggregate
None
None
Malpractice liability
The Doctor's Company
7/1/17 - 7/1/18
$1,000,000 Occurrence $3,000,000 Aggregate
None
None
Worker compensation
Wyoming Department of Workforce Services
7/1/17 - 7/1/18
N/A
N/A
None
Employee health
Blue Cross Blue Shield of Wyoming
1/1/17 - 1/1/18
N/A
N/A
None
Source: Management
61
Sublette County Rural Health Care District Exhibit XIII – Schedule of Comparable Wyoming CAH Facility Ratios Years Ended June 30, 2014 through 2016 District*
Comparable Median
Comparable Facility 1
Comparable Facility 2
Comparable Facility 3
Comparable Facility 4
Net patient service revenue 2014 2015 2016 2021
$
2,982,007 9,608,640
$
11,738,732 13,328,657 14,245,971
$
18,022,964 19,424,268 20,056,985
$
13,052,265 15,039,564 16,600,970
$
4,848,798 4,942,962 5,748,503
$
10,425,199 11,617,750 11,890,972
2014 2015 2016 2021
$
3,040,453 13,508,967
$
15,417,902 16,963,672 18,082,209
$
23,572,215 26,461,280 26,657,245
$
17,736,950 20,200,910 22,210,145
$
7,687,384 7,547,720 7,969,155
$
13,098,853 13,726,433 13,954,273
Gross patient service revenue
Total full-time equivalent employees 2014 2015 2016 2021
72.0 73.4
146.9 144.5 146.6
181.8 184.2 195.8
172.8 178.2 182.9
61.8 60.6 62.1
120.9 110.7 110.4
Gross revenue per FTE 2014 2015 2016 2021 Salaries, wages and employee benefits as a percentage of net patient service revenue 2014 2015 2016 2021
$
184,121 83.39%
$
116,338 124,210 127,411
123.45% 113.57% 111.29%
$
136,413 148,492 145,748
110.14% 112.11% 106.88%
$
97,558 109,686 113,456
120.38% 106.73% 103.30%
$
124,331 124,468 128,390
138.89% 132.39% 126.55%
$
108,345 123,952 126,432
126.52% 115.03% 115.70%
Source: Provided by www.costreportdata.com, as obtained from the federal Centers for Medicare and Medicaid Services. *Represents first year of CAH operations for the District, which is shown for comparison purposes to other facilities.
62
Sublette County Rural Health Care District Exhibit XIII – Schedule of Comparable Wyoming CAH Facility Ratios (Continued) Years Ended June 30, 2014 through 2016
District*
Comparable Median
Comparable Facility 1
Comparable Facility 2
Comparable Facility 3
Comparable Facility 4
Acute patient days 2014 2015 2016 2021
400
366 412 498
1,172 1,054 1,039
444 569 704
287 254 264
288 194 292
2014 2015 2016 2021
125
141 161 186
335 301 299
150 204 266
97 98 98
131 118 106
2014 2015 2016 2021
3.2
3.0 2.7 2.7
3.5 3.5 3.5
3.0 2.8 2.6
3.0 2.6 2.7
2.2 1.6 2.8
2014 2015 2016 2021
1.10
1.0 1.1 1.4
3.2 2.9 2.8
1.2 1.6 1.9
0.8 0.7 0.7
0.8 0.5 0.8
Acute discharges
Acute average length of stay
Acute average daily census
Source: Provided by www.costreportdata.com, as obtained from the federal Centers for Medicare and Medicaid Services. *Represents first year of CAH operations for the District, which is shown for comparison purposes to other facilities.
63
Sublette County Rural Health Care District Exhibit XIV – Schedule of Competitor Services
Service
Acute renal dialysis Alcohol and/or drug Anatomical laboratory Anesthesia Audiology Blood bank Burn care unit Cardio-thoracic surgery Certified trauma center Chemotherapy Clinical laboratory CT scanner Dental Diagnostic radiology Dietary Emergency Home health Hospice ICU - cardiac (non-surgical) ICU - medical/surgical Inpatient rehabilitation Inpatient surgical
Sublette Rural Health Saint John's Care Medical District* Center
X X
X X X X
X X X X X
X X X X X X X X X X X X
Eastern Idaho Med Center
Mem orial Univ. of Utah Hospital of Sw eetw ater Health Co. Center
X X X X
X X X X
X
X
Interm ountain Medical Center
Salt Lake Regional Med Center
Portneuf Medical Center
X X
X X X X
X X
X X
X
X
X
X
X X
X X X X
X
X X
X
X
X
X
X
X
X
X X X X
X X X X
X X X X
X X X
X X X
X X X X
X X X X
X X X X
X X X X
X X X X X X X
X
X
X X
Source: www.hospital-data.com, www.tetonhospital.org *Represents first year of CAH operations for the District, which is shown for comparison purposes to other facilities.
64
Sublette County Rural Health Care District Exhibit XIV – Schedule of Competitor Services (Continued)
Service
Long-term care (swing-beds) M agnetic resonance imaging M ental health Neonatal nursery Neurosurgical Nuclear medicine Nursing Obstetric Occupational therapy Operating room Optometric Organ bank Organ transplant Orthopedic surgery Outpatient rehabilitation Outpatient Outpatient surgery unit Pediatric Pharmacy Physical therapy Podiatry Postoperative recovery room Psychiatric Reconstructive surgery Respiratory care Social Speech pathology Therapeutic radiology Urgent care center
Sublette Rural Health Saint John's Medical Care Center District*
X X
Eastern Idaho Med Center
Mem orial Univ. of Utah Hospital of Sw eetw ater Health Co. Center
Interm ountain Medical Center
X X X X X
Salt Lake Regional Med Center
Portneuf Medical Center
X
X
X
X
X
X
X
X
X
X
X
X
X X X X
X X X X X X
X X X
X X X X X X
X X X
X X X
X X X X X
X X X X X
X X
X X
X X
X X
X X
X
X X
X X
X
X X X X
X X X
X X X X
X X X X
X X X
X
X
X X
X
X X X X
X X X X X X X X X X X X X X
X X X X X X X X
X X X
X
X X X X X
Source: www.hospital-data.com, www.tetonhospital.org *Represents first year of CAH operations for the District, which is shown for comparison purposes to other facilities.
65
