volume 46 issue 5 summer 2013 our new leaders · cirius group, inc. deloitte & touche llp...

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Volume 46 Issue 5 Summer 2013

OUR NEW LEADERS

PresidentDAVID EVANGELISTA

President-ElectWENDY LEO, FHFMA

Vice PresidentMEREDITH SIMONETTI, FHFMA

TreasurerDAVID WOODS

SecretaryJOSEPH GUARRACINO

Immediate Past PresidentPALMIRA M. CATALIOTTI,

FHFMA, CPA

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PAST PRESIDENT2011-2012 John I. Costa2010-2011 Edmund P. Schmidt, III, FHFMA2009-2010 Cynthia A. Strain, FHFMA2008-2009 Mary Kinsella, FHFMA2007-2008 Gordon Sanit, CPA, FHFMA2006-2007 Elizabeth Carnevale 2005-2006 Jane C. Florek, CPA 2004-2005 John M. Scanlan, FHFMA

EX-OFFICIOAll Past Presidents of the

Metropolitan New York Chapter, HFMADaniel Sisto,

President, Healthcare Association of New York StateKenneth E. Raske,

President, Greater New York Hospital AssociationKevin W. Dahill,

President & CEO, Nassau-Suffolk Hospital Council

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Chapter Officers and Board of Directors

Metro NY HFMA Newscast Schedule

Electronic Publication Date 10/23/13

Article Deadline for Receipt by Editor 9/19/13

OFFICERS 2013-2014President David EvangelistaPresident-Elect Wendy Leo, FHFMAVice President Meredith Simonetti, FHFMATreasurer David WoodsSecretary Joseph J. GuarracinoImmediate Past President Palmira M. Cataliotti, FHFMA, CPA

BOARD OF DIRECTORSClass of 2014

Martin Abschutz, CPA, CGMA Donna M. SkuraPaulette DiNapoli Robin ZieglerJames Petty, FHFMA

Class of 2015Ann M. Amato, CPA, MBA Diane McCarthy, CPA, CHFPMario DiFiglia Maryann J. ReganJason Gottleib

Newscast Committee

EDITORS:Marty Abschutz, CPA, CGMA, Editor

James G. Fouassier, JD, Esq., Assistant Editor

COMMITTEE MEMBERS:Kiran Batheja, FHFMAJoel DziengielewskiPaulette DiNapoli

James G. Fouassier, EsquireWilliam C. Hammond, CHFP

Phil HoltzmanMary Kinsella, FHFMAMichael Lamothe

Wendy Leo, FHFMAMike McGrath, FHFMA

Andrew NatkinEdmund P. Schmidt, III, FHFMA

Ken SheridanJohn Scanlan, FHFMACynthia Strain, FHFMAStephanie Welsher

President’s MessageDavid Evangelista, FHFMA .....................................................................................................Page 5

Editor’s MessageMarty Abschutz, CPA, CGMA...................................................................................................Page 7

Calendar of Events ...............................................................................................................Page 8

New MembersRobin Ziegler ..........................................................................................................................Page 9

Committee Listings 2013-2014 ........................................................................................Page 10

Spring Academy: Superstorm Sandy PanelDiane McCarthy, CPA, FHFMA ..............................................................................................Page 12

HFMA Annual National Institute Photos...........................................................................Page 13

Smart Moves - How Hospitals Manage Risk When BorrowingNick Gesue & Kass Matt .......................................................................................................Page 14

HFMA Metro NY Annual Business Meeting Photos ....................................................Page 16, 20

Outlook Tools - Email Folder ManagementGerard J. Walsh ....................................................................................................................Page 17

Pitfalls In Direct Contracting With “Carve-Out” CompaniesJames G. Fouassier, Esq.......................................................................................................Page 21

HFMA’s Metro NY Spring Academy, Managed Care Presentation ReviewJames G. Fouassier, Esq.......................................................................................................Page 23

Region 2: The Regional FrontBruce K. Liebel, FHFMA, Regional Executive 2013-14 .........................................................Page 24

HFMA’s Metro NY Spring Academy Photos .................................................................Page 26, 28

Spotlight On A Newly Certified MemberDiane McCarthy, CPA, FHFMA ............................................................................................. Page 27

The Value of Certification ..................................................................................................Page 29

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“Whatever It Takes…”

I am honored you selected me as the 2013-2014 President of the Metropolitan New York Chapter of the Healthcare FinancialManagement Association. I am enthusiastically approaching this upcoming year as the challenges facing the healthcareindustry are unprecedented; they will require leadership from all of us. Together with a great team of Past Presidents,Officers, Board Members and dedicated volunteers, we will continue to build on the outstanding achievements our Chapterhas accomplished.

This year’s National HFMA Theme is “Whatever it Takes”. Many of us have heard HFMA Chair Steve Rose state that “makingthe changes necessary to move forward in this environment is going to require massive amounts of time, energy, andcreativity on the part of everyone. However, I’m firmly convinced that if we remain committed to doing whatever it takes,we will meet our goals and achieve astonishing results.” I promise you that the Metropolitan New York Chapter will embracethis “whatever it takes” attitude, and help you face the challenges ahead.

I am truly fortunate to have such a hardworking and dedicated team around me. Many of the Chapter leaders attended theLeadership Training Conference in April or the Mini Leadership Training in May, as well as participated in our ChapterStrategic Planning meeting in June. These experienced and dedicated volunteers are focused on providing qualityeducational programs to our members that address the multitude of challenges we face. The successful Metropolitan NewYork Chapter “Academies” will continue during the 2013-2014-chapter year.

Our Education year was jumpstarted with the Spring Academy which was held on June 13th at the LaGuardia Marriott. Themorning began with a keynote address from Jim Tallon, President of the United Hospital Fund, followed by presentationson the impact of Superstorm Sandy on metropolitan New York providers. I am so proud that our Chapter could address thisdevastating storm and have representation from some of the hardest hit providers in our area. The remainder of the daywas reminiscent of our previous Academy format, including several breakout sessions on Revenue Cycle, Finance, ManagedCare, Corporate Compliance, Health Information Management, Medical Group Management and Continuing Care.

The Fall Academy will be held on October 30, 2013 at the Uniondale Marriott. It is our goal to address the transition toICD-10 at this event. As you can see, the General Education Committee has been hard at work. A complete calendar ofour Educational events is listed on our Chapter’s website, www.hfmametrony.org.

The Joseph A. Levy Annual Institute Committee is already in the process of developing the program for this year’ssymposium, which will be held on March 13-14, 2014, at the LaGuardia Marriott. The Annual Institute has continued tosignificantly grow in recent years and now attracts attendees from around the region and the nation. This is an event thatyou will not want to miss.

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Even though education is our primary focus, our Chapter will continue to offer a number ofoutstanding social events. These events promote networking and camaraderie. This year’s golfouting will be held on September 23, 2013 at the North Hempstead Country Club. Make sure youreserve your spot early; this event usually sells out quickly. In addition, the Chapter plans tooffer a Long Island Ducks game, Day at the Belmont Racetrack (my personal favorite event),Family Bowling Day and many other fun events throughout the year.

Once again your Chapter Leadership is challenging all members to become certified. This year offers a new set ofchallenges; our Chapter’s success depends on its number of certified members. The Chapter will reimburse the cost of theexam, pass or fail, for the first twenty (20) members who take the exam. Please contact me directly or anyone on thecertification committee for details.

Newscast, our Chapter’s award winning on-line newsletter publication, will be published on a quarterly basis. The Newscastcommittee will continue to provide outstanding technical articles, news about our Chapter and of course photographs fromall of our events. The committee will welcome articles from you on educational or personal noteworthy topics. This yearwe hope to add a new feature which will spotlight those newly certified members.

In late October or early November, National HFMA will issue a survey to measure your satisfaction with our Chapter. Ourgoal is to receive only extremely satisfied responses from you. We have set up a task force to address and correct anyissues that are brought to our attention. If you have any questions or concerns that need to be addressed in order for youto respond extremely satisfied, please contact me directly at [email protected] or 718 206-6930.

As your President, I am here to make sure that your membership needs are being met. If there is anything that I can do toimprove your enjoyment of the HFMA experience, please let me know at [email protected]. If you would like to increaseyour involvement in the Chapter by participating on a committee please let me know or contact the committee chair…wewelcome you! A list of the committee chairs are placed on our website, www.hfmametrony.org and elsewhere in thenewsletter.

I look forward to a successful year and the opportunity to serve you.

David A. EvangelistaPresident

www.hfmametrony.org

By Marty Abschutz

Is Another Chapter Year Really Coming to An End?

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We just finished a crazy heat wave, as I write this. Our thoughts turn to ways to stay comfortable or look forward to a well-deserved vacation or think about the great vacation we took earlier. There is an additional thought we might consider,getting involved in HFMA.

I have been a member for more than 30 years. I was involved in the Task Force Committee when I first joined HFMA.Generally, the Committee’s charge was to take on assignments from the Board or National HFMA that didn’t fit withinanother committee’s charge. I had some fun times working with Jeff Blumengold, who chaired the Task Force.

For whatever reason, I became an inactive member of HFMA for many years. Sure, I attended many of the excellenteducation programs through the years, but I was not doing anything to help our chapter be better. Nearly five years ago, Idecided that since I like to write, I’d answer Cindy Strain’s call for volunteers and see if our Chapter leadership would allowme to join the Newscast Committee.

Not only did they allow me to join, Chapter Leaders and fellow committee members were very welcoming. I was given theopportunity to take responsibility. Two years later, I was asked to be the Editor of Newscast. I related all of the above to letyou know that when David Evangelista writes to let him know if you would like to volunteer, he is quite sincere. It’s nevertoo late or too early in your HFMA membership to get involved. I sincerely recommend it.

Congratulations to all of the 2013 – 2014 Metro NY Chapter’s newly elected Officers and Directors. The Officers andDirectors listed on page three were elected at our Annual Business Meeting on May 1, 2013 at Leonard's of Great Neck. Asis tradition, I also welcome my fellow volunteer Committee Chairs, Co-Chairs, Vice Chairs and Committee members toanother great year.

Special thanks to James Fouassier for agreeing to continue to take time from his busy schedule to Co-Chair Newscast.Also, thanks to the many Committee members who solicit, write and/or edit articles and content. The =Social Network sub-committee also desrves special thanks for helping to keep out tradition of communicating information to you by Whatever(means) It Takes.

While we will try to continue the excellence you have come to expect, we are always looking for new ideas, your feedbackand other ways to improve. You can reach me at [email protected] or (718) 549-0970, extension 109.

2013-2014 IMPORTANT DATES

August 22, 2013 Breast Cancer - Villa Monaco, West IslipKnowledge is Power Luncheon

September 16, 2013 Mid-Year Reimbursement Update LaGuardia Marriott

September 23, 2013 Annual Chapter Golf Classic North Hempstead Country Club

A selection of FREE Webinars (Check www.hfma.org for more):

July 31, 2013 2012 Medicaid Cost Reports (RHCF4/RHCF2)

August 27, 2013 Strategies to Increase and Accelerate Patient Payment at the Point of Care

September 12, 2013 Predicting the Unpredictable: Using Analytics to Match Staffing to Patient Demand

October 17, 2013 Control High-Cost Supplies from Value Analysis to Point-of-Use

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The Metropolitan New York Chapter of HFMA Proudly Welcomes the Following New Members!

By Robin Ziegler, Membership Committee Chair

MetroNY HFMA is pleased to welcome the following new members to our Chapter. We ask our current membership to rollout the red carpet to these new members and help them see for themselves the benefits of HFMA membership. Encouragethem to attend seminars and other Chapter events. We ask these new members to consider joining a Committee to not onlyhelp the Chapter accomplish its work, but to expand their networks of top notch personal and professional relationships.See the list of MetroNY HFMA Committee Chairs, along with their contact information, listed in this eNewsletter.

APRIL 2013

Tatsiana ShparagaNYU Langone Medical Center

Jacob OlinsMoney2

Michael Fung CRCRNYU Langone Medical Center

Wanda LealPeconic Bay Medical Center

Letifia StapletonNYU Langone Medical Center

Anthony VisicaroNYU Langone Medical Center

Shawn ShelleyNYU Langone Medical Center

Christopher KernsNYU Langone Medical Center

Dennis J MouyiosAllscripts

Neiky HenriquezNYU Langone Medical Center

Oleksiy KirichekNYU Langone Medical Center

Pratibha KotaNYU Langone Medical Center

Max M BellmanAvadyne Health

Peter ManousNYU Langone Medical Center

Miguel Jimenez

Adam AlprenMBI Associates Incorporated

Beatriz ViolaMiller & Milone, P.C.

Kevin KolbCollection Bureau of Hudson Valley

Dana NentinDeutsche Bank

Jay B. SilvermanRuskin, Moscou, Evans Attorneys

Kim WhitesideCHS

Kaitlin J Leden

Stalyn O. Noboa

Kaitlyn BarnesHuron Consulting Group

Carrie Miller

Nicole C Guijarro-ScorzaPAGNY

Nancy KorolAllscripts

June FelixMoney2

MAY 2013

Charles PenaJamaica Hospital Medical Center

Raj SharmaPriceWaterhouseCoopers,LLP

John M Hutter MBS, MSStony Brook Medicine

Valerie GreyHANYS

Johna B FidanzaBNY Mellon

Patrick L O’MalleyVee Technologies

Berenice DiazUrban Health Plan

Noreen MillerHealth Management Systems, Inc

Greg Rhodes

Adam FarrellNYUMC

Maria RomeoStaten Island University

JUNE 2013

Tina MartinezMontefiore Medical Center

Gregory CraiggMemorial Sloan Kettering CancerCenter

Eric MayerMediTract

Nacibeth VillelaNYU Langone Meddial Center

Chris EverettNYU Langone Medical Center

Gary ScrivaniNorth Shore-LIJ Health Systems

John M Gagliardi, IIIKeyBanc Capital Markets

Nicholas Christiano, Jr.Tatum

Dan BaldiniOberon Asset Management

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Advisory CouncilPalmira Cataliotti

[email protected] (516) 663-2311

John [email protected] (516) 240-8147

Ed Schmidt [email protected](516) 572-4834

Cindy Strain [email protected] (516) 796-3700

55th AnnualInstitute

Maryann Regan [email protected]

(516-576-5601

Jason [email protected](212) 297-4549Christina Milone

[email protected](516) 509-0277

Bob [email protected](516) 616-0200 ext. 201

Emily [email protected]

(614) 263-1043

Jim Argutto [email protected](631) 761-1028

Cathy [email protected]

(516) 745-0161


(516) 745-0161

Annie Lemoine [email protected] (516) 326-0808 x3312

AuditingJohn Scanlan


Gordon Sanit [email protected](516) 918-7065

Al [email protected](914) 365-3508

Joe [email protected](718) 250-6755

BylawsJoe [email protected](718) 250-6755

Fred [email protected](516) 393-2250

David Evangelista [email protected] (718) 206-6930

CentralRegistration

Robin Ziegler [email protected](516) 338-1100 x314

Diane Masi [email protected]

(516) 551-5839

Palmira Cataliotti [email protected]

(516) 663-2311

CertificationCoaching

Jim Petty [email protected] (516) 876-6022

John Scanlan [email protected]

(718) 283-3911

Kiran Batheja [email protected]

(718) 604-5578

Art Cusack [email protected] (516) 546-4198

Certified MembersKiran Batheja


Michael McGrath [email protected]

(516) 656-5374

CommunityOutreach

Josephine Vaglio [email protected]

(516) 248-2422


Continuing CareSteven Stella


Corp. Compliance/Internal Audit

Ann Amato [email protected] (516) 632-3405

Lauri [email protected](516) 616-0200 ext 216

CPE’sJohn Scanlan


DCMS/BalancedScorecard


(516) 551-5839



Wendy [email protected]

(516) 454-0700

Exec. Comm.& Planning


Wendy [email protected]

(516) 454-0700

Finance/Reimbursement/Audit

Mario [email protected]

(516) 876-1386

Kwok Chang [email protected] (212) 979-4324

Rachele [email protected](646) 227-3156

Sean [email protected]

(516)

Founders AwardsPaulette DiNapoli


General Education

Donna Skura [email protected](516) 572-4498

Diane [email protected](631)391-7748/

HIM/URAnnie Lemoine

[email protected] (516) 326-0808 x3312

Stacey Levitt [email protected]

(646) 732-5052

Co-Chair: Diane [email protected]

(516) 551-5839

Co-Chair:Jason [email protected](212) 297-4549

Committee Name Chair Co-Chair Vice Chair 1 Vice Chair 2

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HistorianMichael McGrath


Paul Cheng, [email protected](347) 581-7573

Legal AffairsFred Miller


Christina [email protected]

(516) 509-0277 Peter Egan

Link CommitteeRich Nagy

[email protected](631)444-4175

Jason [email protected] 297-4549

Managed CareRich Nagy


James [email protected]

(631) 638-4012

Patrick [email protected]

(212) 430-6620

MSPKiran Batheja


Michael McGrath [email protected] (516) 656-5374

MembershipMarketing



(516) 551-5839

Medical Grp Mgmt.

Josephine Vaglio [email protected]

(516) 766-0521

Diane [email protected](631) 391-7748

Heather [email protected](631) 454-4081

Art Cusack [email protected] (212) 226-8866

MISJohn Mertz

[email protected]

Annie Lemoine [email protected] (516) 326-0808 x3312

Ann Amato [email protected] (516) 632-3408

NewscastMarty Abschutz

[email protected](732) 906-8700 ext 109

James [email protected]

(631) 638-4012

NominatingPalmira Cataliotti


Patient FinancialServices

Paulette DiNapoli [email protected]

(516) 576-5638


(516) 745-0161

Patrick [email protected]

(212) 430-6620

PPDDPalmira Cataliotti



Webmaster andPersonnelPlacement

Mary Long Kinsella [email protected] (212) 297-5445


Public Relations &Communications

Region 2

Emily [email protected]

(614) 263-1043

Michael [email protected]

(646) 227-2396Phil Holtzman

Region 2CollaboratonCommittee


Kiran Batheja [email protected]

(718) 604-5578


Meredith Simonetti [email protected]

(631) 465-6877

Diane [email protected](516) 630-3911


(516) 551-5839

Gordon Sanit [email protected](516) 918-7065

Ryan AwardPalmira Cataliotti


John [email protected] (516) 632-3170David Woods


Committee Name Chair Co-Chair Vice Chair 1 Vice Chair 2

Social EventsKiran Batheja



SponsorshipMichael McGrath



Yerger AwardDana Keefer


Spring Academy: Superstorm Sandy Panel

By: Diane McCarthy, CPA, FHFMA

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Above is a picture of a colleague’s Long Island property – it’s the “calm” before Superstorm Sandy hit on October 29, 2012.

We all have our personal memories of our struggles, both during and after that day.Thousands of homes were damaged and destroyed; more than one million people and countless businesses were withoutpower – or gas – in the days and weeks that followed.In the dual role of victims and health care professionals, we were faced with the unprecedented challenges of providinguninterrupted health care – and shelter – to our communities, even as we faced our own personal losses. This was an eventthat tested every last one of our disaster plans, support systems and our personal strength.

On June 13th, the Metropolitan NY Chapter held the Spring Academy at the LaGuardia Marriott. Although the afternoon wasdedicated to the usual sessions covering topics such as ICD-10’s, and insurance exchanges; the morning was packed withgeneral sessions which spoke to the lessons learned in the wake of the storm.

For example, John Miller, CEO of American Red Cross, spoke about his organization’s mission to provide aid and assistanceto victims of the storm.

Next, KPMG presented information on their experience with the process of filing claims – and advice on preparing for thenext disaster. As we all know, many hospitals suffered millions of dollars in damage to their structure, not to mention lostrevenue suffered by facilities that had to evacuate, or close.

Insurance companies have been very slow to pay. We learned the best techniques for tracking and reporting extra expensesincurred so our claims can be filed and processed timely, with a minimum of disallowances.

Lastly, a panel of representatives from some of the hardest hit hospitals, as well as FEMA’s Tom Long shared their storieswith us. We heard powerful stories about difficulties suffered by hospitals from Suffolk County to New York City. We alsoheard about many employees, facing those personal losses, put patient service above their personal trials. We learnedwhat plans worked – and what didn’t.

Although each of these sessions had a different focus, one underlying lesson and piece of advice was made clear –communication and preparation are essential ingredients in our ability to survive – and thrive – after the storm.

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Photos selected by Marty Abschutz

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This is especially true today for health care organizations. Hospital leaders have to deal with managing a multitude of risks, such as clinical outcomes, reimbursement cuts, regulatory requirements, competing hospitals and more. While the importance of managing clinical risks is well understood, the 2008 fi nancial collapse and recession demonstrated to many health care executives the signifi cance of how the structure of capital debt can contribute to a hospital’s overall risk as well. (For example, the credit crunch made it extremely diffi cult and expensive to obtain or renew letters of credit, leaving hospitals with fewer options to enhance variable rate debt.) To address this, hospital leadership must identify and mitigate risks associated with their hospital’s debt, investments and balance sheet. While these are interconnected with total fi nancial risk, and should be considered as part of an organization’s total debt management policy, let us focus on how a hospital can manage its risk exposure by choosing the appropriate debt structure to fi nance capital projects or refi nance existing debt.

Mitigating Debt RisksWhen considering the options, a hospital’s top priority is to balance both the upfront and ongoing capital costs with the nonfi nancial terms and covenants of a debt structure. This bal-ance is key to managing its current exposure to risks associ-ated with short and/or long term debt. The debt structure used to achieve this balance will depend on a variety of factors for a hospital, including credit worthiness, geographic location, current capital structure, fi nancial capacity to take on risk and the capital market’s “appetite” for health care transactions.

A hospital’s fi nancing team must assess all of the above as well as take into consideration the project (renovation, re-placement, acquisition) and objectives when evaluating struc-tured debt products. The best option will be the one that fi ts the hospital’s needs while achieving the lowest possible cost of capital within acceptable risk parameters.

Let’s take a look at how three hospitals, using different debt structures, obtained the capital they needed and managed their debt risks.

Kennedy Health System Voorhees, N.J. Public Offering of Tax-Exempt, Fixed-Rate Revenue Bonds

Kennedy Health System operates three campuses in New Jersey: Cherry Hill, Stratford and Washington Township. In recent years, Kennedy had funded its strategic capital proj-ects through operating cash instead of debt. Although this ap-proach allowed the health system to minimize debt, it com-promised its overall fi nancial profi le by reducing its liquidity position. As a result, Moody’s lowered the health system’s A2 rating to A3 in November of 2011.

In the meantime, Kennedy Health System had plans to make signifi cant capital improvements at all three campuses and decided to refi nance its existing debt and fi nance future capi-tal projects to leverage its balance sheet. Kennedy’s leader-ship chose to proceed with a public offering of tax-exempt, fi xed-rate bonds to fund about $20 million in new projects and refi nance about $46 million in existing indebtedness. The health system was able to take advantage of the strong, resurg-ing health-care market for rated credits to issue tax-exempt, fi xed-rate bonds in order to refund Series 1997 A and Series 2001 bonds and fi nance its new capital projects. As a result, the health system was able to generate more than 15% in debt service savings, which equates to $8.8 million in net present-value savings. In addition to the low cost of capital, the bonds were sold without a mortgage or debt-service-reserve fund required, thus ensuring maximum fl exibility for the organiza-tion going forward.

By choosing tax-exempt, fi xed-rate bonds, Kennedy elimi-nated interest rate and remarketing risks. Additionally, the structure avoided renewal risk or bank risk. Amenable cov-enants and the lack of a mortgage or debt service reserve fund requirement also increased organizational fl exibility for future strategic considerations.

Cameron Memorial Community Hospital Angola, Ind.USDA Community Facilities Program Direct and Guaranteed Loans, Bond Anticipation Notes, Bank Construction Loan and Equity

The leadership team of Cameron Memorial Community Hos-pital, a 25-bed critical access hospital in Angola, Ind., decided to modernize its aging facility in order to provide the effi cient delivery of medical care necessary to remain competitive. After thoroughly reviewing an array of fi nancing options, Cameron was able to obtain a commitment from the USDA

HOSPITALS

How Hospitals Manage Risk When Borrowing Smart Moves

In an uncertain world, managing fi nancial risk is essential for any business.

www.hfmametrony.org

Community Facilities Program for a $37 million direct loan at a fi xed-interest rate as well as a commit-ment for $10 million of guaranteed loan funds.

While the USDA commitments squared away the permanent fi -nancing, the hospital still needed to secure the construction fi nanc-ing. The relatively large project cost and associated construction risk proved problematic for several banks, despite the promise of the USDA takeout. Therefore, Camer-on’s leadership committed to an in-novative funding solution: the sale of $37 million of tax-exempt bond anticipation notes (BANs) for a three-year term. The BANs were secured by the anticipated proceeds of the permanent USDA direct loan and received a “MIG 2” rating by Moody’s Investor Services (the second highest short-term debt rating available), resulting in a cost of capital near 2%. The rest of the $53 million project fi nancing came from $6 million in hospital equity and a $10 million construction loan from the community bank that was serving as the USDA Community Facilities guaranteed lender. The bank’s construction loan will be paid off by the USDA Community Facilities guaranteed loan after construction is completed. The guaranteed loan will have a market-based interest rate and a 25-year term and amortization. In total, Cameron obtained funding at a low cost of capital, with a blended interest rate below 3% for the con-struction period and below 4% for the 40-year life of the post-construction, permanent debt.

In reviewing the hospital’s overall capital structure risk, let’s examine the debt offering’s component parts. For the $37-million USDA direct loan, there was no interest rate risk since it was fi xed rate, no refi nance or renewal risk as the term equals the amortization and no bank risk. For the guaranteed $10-million loan, $9 million was guaranteed and $1 million was not guaranteed, so there are different risks to take into consideration. For the $9-million piece, the hospital has the option to fi x the interest rate at any time essentially nullify-ing interest rate risk. The $1-million piece is variable rate, so there is interest rate risk involved. There was no refi nance risk as the term equals the amortization and no bank risk because the loan is provided directly by the bank (no bank credit en-hancement). All in all, while Cameron’s debt structure is rela-tively complex, the only capital structure risk to the hospital is minimal interest rate risk (on only $1 million of a $47 million offering), which hospital leadership deemed acceptable.

Fulton County Health Center Wauseon, Ohio Privately Placed, Tax-Exempt, Variable-Rate Bonds

Fulton County Health Center (FCHC) is not your typical critical access hospital. Founded in 1973 in Northwest Ohio, FCHC has grown to include the main 25-bed hospital, which includes several specialty units, such as a cancer center, cardi-ac catheterization lab and sleep center, several medical clinics

Kass Matt is a senior vice president with Lancaster Pollard. He is regional manager for the Eastern Great Lakes Region and is based out of the fi rm’s Columbus offi ce. He may be reached at [email protected].

Nick Gesue is a senior vice president and chief credit offi cer with Lancaster Pollard in Columbus. He may be reached at [email protected].

and a 71-bed senior living facility. FCHC, in good fi nancial standing, faced an expiring bank letter of credit (LOC) that enhanced a 2005 bond issue. The hospital had an outstanding swap with a signifi cant negative mark to market value, which was not tied to the LOC-backed bonds.

After reviewing all available op-tions, FCHC selected a multimod-al, privately placed sale of $28.75 million in bonds with a regional bank. This option addressed the upcoming LOC expiration and al-lowed the swap to stay in place to

maintain an effective interest rate hedge. Additionally, the variable-rate, tax-exempt direct purchase structure removed the bank credit risk and the renewal risk with a fi ve-year term instead of the typical one- to three-year LOC extension period. While the variable rate bonds and the separate swap exposes the hospital to some interest rate risk, it was deemed acceptable in light of the short term and the current low interest rate environment. However, FHCA has the fl exibility to refi nance the bonds should interest rates rise.Maintaining Good Financial HealthAs you can see, managing risks associated with a hospital’s capital structure is essential to the organization’s overall fi nan-cial health. A hospital’s choice of debt structure, which should balance the cost of capital with the available terms and cov-enants, is an important risk management tool. In the process of choosing the best structure, it’s important for hospital leaders to know their balance sheet’s strengths and weaknesses, un-derstand how rating agencies and investors measure various risk components and determine their organization’s tolerance for risk. The capital strategies highlighted above show the importance of being able to access debt with optimum effi ciency with the lowest possible risk exposure. Therefore, it is imperative to assemble a knowledgeable and experienced fi nancial team, consisting of internal and external experts, to navigate the ever-changing capital markets and to determine the best possible debt structure to ensure this priority.

Types of Risk• Hospital Credit Risk: When a decline in a hospital’s

credit rating may result in an increase in the bank fees and variable-rate funding cost.

• Interest Rate Risk: When interest rates will increase, making the cost of variable-rate debt higher in the future.

• Bank/Credit Provider Risk: When a decline in the bank’s credit rating might lead to an increase in the variable interest rate on the bonds.

• Renewal Risk: When a letter of credit might not be renewed at its scheduled expiration date.

• Refi nancing Risk: When term is shorter than amortization.

• Remarketing/Put Risk: When investors “put” or sell their positions back to the borrower for payment at par.

• Mark to Market Risk: When fair market value or mark to market value declines (e.g., if interest rates fall).

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OUTLOOK TOOLS – EMAIL FOLDER MANAGEMENT

By Gerard J. Walsh

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This presentation is the third in a series of how to prioritize and process tasks, or emails. The first two werecovered in prior Newscast editions (i.e., the Fall 2012 – “The Org Smorg” and Winter 2013 – “Using Outlook toPrioritize”).1 It is helpful to review these presentations as the content referenced herein may require furtherelucidation.

Using your Information Manager (e.g., Microsoft Outlook) can accomplish efficient review of multiple not actedupon emails.

NOTE: If an email is received and it can be answered within two minutes or a reasonable timedetermined by your individual standard, it should not be put on a list or moved to a folder. It should beacted upon! Systems to handle lists are for items that require further examination but in a prioritizedmanner.

If you have followed the methodology outlined in the prior articles, you have the following structure:• Five added In Box folders named for a prioritized Level of Importance. The Level of Importancerange is from highest to lowest importance. A sample hierarchy is:1.Urgent, 2. Pressing, 3. Routine, 4. Assign, 5. Holding2

• Under each Level of Importance folder are subfolders. Each subfolder is named for an Action orStatus. For example, you may have determined that an Appointment and emails from your Boss are anUrgent Level of Importance. Therefore, two folders named Appointment and Boss would appear underthe Main folder called Urgent.

• Furthermore, you have determined that emails from your Boss are more Urgent than possibleAppointments. The Boss folder would be ranked 1, the Appointment folder would be ranked 2.

NOTE: The rank or Level of Importance you assign to the main folders and subfolders is used whennaming the folders. The number precedes the name. In this fashion, the folders will sort in the orderyou wish to review the folders.

Figure 1. illustrates how this folder structure looks in Outlook. With this structure, we simply start with emailsdeposited in the Urgent folder (i.e., the highest Level of Importance) and begin with the Boss subfolder (i.e.,the highest ranking Action or Status in the Urgent folder). We are now ready to employ new techniques thathelp us to process emails more efficiently. Four techniques3 of folder management we will explore are:

1. How to move messages into the correct folder2. Quick access to your most important folders3. How to customize message sorting for individual folders4. Searching folders

1To read them go to the main page of the Chapter web site (i.e., http://www.hfmametrony.org/) and select “Newscast” on the maintoolbar.2For a description of the Level of Importance, follow link in footnote 1. above3Lothar; Holger Woeltje (2011-09-22). Effective Time Management: Using Microsoft® Outlook® to Organize Your Work and PersonalLife:OReilly Media

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Figure 1. Outlook In Box Folder Structure

1. How to move messages into the correct folder• In your In Box (or any other folder), click the message you want to move.• Drag the message onto the target folder and release the mouse button to drop the message into the folder• If you want to copy (not move) the message, right-click it and select the corresponding command in theshortcut menu after dragging.

• You can also press and hold Shift or Ctrl while clicking to select several messages simultaneously, and thenmove/copy them in one go by right-clicking and dragging the selection.

• If you want to move an entire folder within your folder structure (not just messages), simply click the folderand drag it into another folder.

2. Quick access to your most important folders• Use your Favorites folder to access your most frequently used folders quickly, without having to click throughseveral folder levels each time.

• Simply drag a folder or subfolder into the Favorites section. Because you can’t see the parent folder levels inyour Favorites section, it makes sense to add some form of identification to the folder names, either in frontof or behind the name. Just like all other folders, your Favorites folder can be opened by clicking it, or it canserve as a target for moving messages with the drag-and-drop method.

3. How to customize message sorting for individual folders• Within the folders, you can sort and group the messages according to different criteria; for example, you cansort one folder by subject and another by sender, while all remaining folders are sorted by date. Click acolumn header to sort the items according to your chosen criterion. Clicking the column header again revertsthe sort order.

4. Searching folders• With the help of search folders, you can search all folders for email messages that have certain criteria. Forexample, you can see all messages that are flagged for processing in one view—even though they are locatedin different folders. You can also refine your search—for instance, to display only messages from a certainsender that also have a red category or flag.

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NOTE: A prerequisite to doing meaningful searches is to understand that each message or task can beassigned criteria such as user defined categories or flagging. How that is done is not covered here.

• How to create your own search folders � In the folder list (to the left of the navigation pane), right-click Search Folders (below the last folderin your mailbox in Outlook 2007, but sorted alphabetically with the other folders in Outlook 2010)and then select New Search Folder in the shortcut menu.

� In the New Search Folder dialog box, in the Select a search folder list, select one of the predefinedsearch criteria. For example, select Categorized email (under Organize messages) or Messagesflagged for follow-up.

� In the Search mail in list, you can select the personal or public folder you want to search. Close theNew Search Folder dialog box by clicking OK to set up the new search folder. The folder will then befilled with the appropriate messages.

� Now you can open your search folder like any other email folder by clicking it. If you don’t see it inthe folder list, you need to expand the search folder list. Click the small triangle or the plus sign nextto Search Folders in the navigation pane. (To later close the list, click the minus-sign or click thetriangle again.)

� You can customize and rename your newly created search folder with the commands in the shortcutmenu and add it to your Favorites

• The search folder itself does not contain any messages, just links to them—you always see the messages thatmatch the criteria in all searched folders. But.. if you open a message that is located in a folder and performa processing step such as mark it as completed, the message is removed from the search folder. However, itremains in the original folder, but it now has the Completed status. If you had deleted the message in thesearch folder, it would also have been removed from the original folder. Therefore, even when working fromthe search folder, you are always working with the original message.

SUMMARY / TIPSv Process emails in a designated block of time and if feasible act upon them as they are reviewed.v Maintain a prioritized set of folders that is used to collect emails that require a larger investment in time.v Use folder favorites, sorting and search tools to enhance the processing of emails.

I can be reached at [email protected]

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Pitfalls In Direct Contracting With “Carve-Out” Companies

By: James G. Fouassier, JD

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In past articles I have had occasion to touch on the issue of providers contracting directly with “carve-out” companies,whether it is to administer a specific plan product or to cover a subset of the plan’s membership. As a practical matter aprovider may not be able to prevent a plan with which it participates from carving out services.1 This does not mean,however, that the plan gets out from under its contractually agreed responsibilities (particularly rates). When a plan carvesout a service, duty or obligation in a provider network agreement to some third party company what it is doing, legally, isassigning the duty to perform that part of the network agreement to the carve-out company. That company is a strangerto the agreement between the provider and the plan. The network agreement remains in effect regardless of the assignment;although the plan has passed off the duty or obligation to the carve-out the plan still remains legally bound to the providerfor the performance of that duty or obligation.

That changes if the provider agrees to look solely to the carve-out company (which can happen if the provider affirmativelyconsents to the assignment), or if the provider enters into a contract directly with the carve-out.2 In these cases the termsof the assignment or carve-out contract will supersede any in the original network agreement that vary or conflict, and theprovider effectively will be bound by a “new” deal.

If this happens then the provider has to look to the carve-out and not the plan for the proper performance of the duties andobligations that the plan carved out. If the claim is paid “short”; if different standards of case management and utilizationreview are applied; if authorization and certification rules are tightened; the beef may be with the carve-out, not the plan.

Just how serious this can be is illustrated by a recent court case in Texas. As I mentioned in the past when discussing out-of-state cases, although they are not controlling in New York, when the issues are close enough a New York court very wellmay be convinced of the logic and rationale of the sister state court’s decision and apply it here. This is especially true whenthe decision comes from a state’s highest court.

The Supreme Court of Texas recently decided the case of Christus Health v Aetna. The provider participated with Aetna.Later Aetna “delegated” the administration of its NYLCare65 Plan to a third party administrator. A physician-owned affiliateof the TPA then was formed to provide the actual “primary care and specialist” services for the NYLCare enrollees. Then(and here’s the important part) the TPA directly contracted with the provider to secure hospital services for the NYLCareenrollees. Aetna was not a party to that contract. When the carve-out experienced money problems and failed to payclaims within the time required by the Texas “prompt payment” law the provider sued Aetna. Why ? Besides the obviousanswer that a direct action against a financially troubled insolvent carve-out would not yield any money, since Aetna carvedout the work to the TPA on a capitated basis Aetna ultimately should be responsible, right ? Wrong.

In Texas the “prompt payment” law says that an HMO must pay a provider “the total amount of the claim in accordancewith the contract between the physician or provider and the health maintenance organization, . . . .” Since there wasno contract “between” the hospital and Aetna for the services that were being paid late Aetna could not be held liableunder the “prompt payment” law. Maybe Aetna could be held liable for breach of contract under the assignment rationaleI discussed above and maybe not, depending on the language of the agreement between the hospital and the TPA affiliate.What the provider cannot do is hold Aetna to the prompt payment standards of the law because the clear language of thatlaw contemplates payments required by a direct agreement.

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Here in New York the “prompt payment” law is similar: Insurance law section 3224-a, entitled, “Standards for prompt, fairand equitable settlement of claims for health care and payments for health care services” recites in pertinent part that:

In the processing of all health care claims submitted under contracts or agreements issued or entered into[with a variety of payors subject to New York law such payors]shall adhere to the following standards: . . . . “

I submit that if the issue came up in New York the courts would apply the same reasoning in interpreting the language ofthe statute. If there is no direct contract between the provider and the organization responsible for paying the claim, the“prompt payment” law does not apply.3

The Texas court’s parting shot is important for all of us to keep in mind:The modern healthcare-insurance and-reimbursement system (like the healthcare-delivery system generally) isdizzyingly complex—the product of innumerable legislative judgments about access, cost, and quality that courtsare ill-suited to second-guess. Through the risk-shifting mechanism of capitation, a delegated-network system ofmanaged care gives entrepreneurial providers greater control over their practices, including medical decisionmaking, and greater bargaining leverage with HMOs, but as seen here, it also introduces a host of risks attendantto patient care. Such risk-shifting, including the specter of insolvency, is inherent in the nature ofdelegation agreements.

Endnotes

1. Most network agreements expressly reserve the right of the plan to carve out. Even if they do not, it is unlikely that anyplan will agree to a clause requiring the consent of the provider to assign any part of the agreement to third parties.

2. Assuming no regulatory prohibitions, some plans are not offering coverage for certain clinical services like behavioralhealth. Instead they “affiliate” with a specialty plan. The plans then will require that their provider network participantscontract directly with those specialty carveouts as a condition to network participation. Alternatively, many providersappreciate that because the absence of such specialty coverage will be a disincentive to utilization by plan members,participation with the carve-out is necessary.

3. As an aside, it is questionable whether a provider in New York even is allowed to sue a payor for violating promptpayment laws. The laws and regulations establish regulatory remedies to be applied by state agencies like the InsuranceDepartment (presumably after investigations based on provider complaints). Courts routinely hold that where laws imbuethe state (as opposed to private parties) with regulatory authority then private parties are precluded from suing directlyfor their own damages.

James Fouassier, Esq is the Associate Administrator of Managed Care for Stony Brook University Hospital. Hisopinions and comments are his own and may not reflect those of Stony Brook University Hospital, the StateUniversity of New York or the State of New York. He may be reached at [email protected] contained in this article constitutes legal advice and the same shall not be relied upon to any extentwhatsoever as legal advice. Legal advice only may be obtained from legal counsel engaged for that purposepursuant to express agreement.

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Photos by Marty Abschutz

At our Spring Academy the Managed Care Committee was pleased to host a perennial favorite and strong Chapter supporter,Kathleen Shure, the Senior Vice President of the Greater New York Hospital Association, who gave a fabulous presentationon the Health Exchange Implementation and a brief update on new managed care legislation. Kathy’s comprehensiveslideshow and insightful comments covered important exchange topics such as the coverage mandated for different sizedemployer groups; the possible tax incentives and penalty disincentives related to decisions as to whether to provide employeecoverage; the different kinds of exchange products; and graphs detailing premium and cost-sharing subsidies for individualschoosing to buy on the exchange. Kathy also explored the important issue of whether and to what extent exchange productswill be impacted by any decision in New York State to move individuals under 200% of the FPL into a new Basic Health Planand take advantage of significant federal incentives available after 2015. On the legislative front, Kathy outlined changesin plan notification penalties and arbitrary down coding that will become effective on July 1, and also spent time discussingpossible initiatives in the area of Out of Network claims and payments, particularly for emergency services. All in all anoutstanding presentation and we thank Kathy for all the work that obviously went into such a fine program.

Managed Care Presentation

Reviewed By: James G. Fouassier, JD

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THE REGIONAL FRONTBy: Bruce K. Liebel, FHFMA, Regional Executive 2013-14

This is the start of my second year writing “The Regional Front” for the WNY Chapter’s newsletter, andthe second article shared with the other chapters in the Region. I hope you find it informative andinteresting to read. Feel free to contact me at [email protected] for any regional topics you wouldlike discussed.

A few noteworthy items to share:

ANI:I was honored to be present at the Awards Dinner at the Annual National Institute (ANI) in Orlando last month. It wasgratifying to see each of our Past Presidents or Chapter Representatives walk across the stage as they announced theawards they achieved, and was topped only by seeing all 7 Chapters on-stage together to receive the two Yerger Awards won,for the Mini-LTC and the Fall Region 2 Conference. Our Region has a history of winning these awards, both which are acollaborative effort, not only to help meet the education hours required of the chapters, but more importantly, to meet thetraining and education needs of our individual members.

FALL PRESIDENTS MEETING:Next month, the chapter presidents and president-elects will hold their annual meeting as a region. Known as the FallPresident’s Meeting (FPM), it is a Davis Chapter Management System chapter requirement, and needs to be held betweenAugust 15th and September 30th. The FPM is important in that it 1) provides a forum for idea sharing, problem solving, andcollaboration among chapters, and 2) gives chapter leaders an understanding of HFMA strategic initiatives and providesand opportunity to give feedback to HFMA via the Regional Executive. Some items that are considered for the FPM are:• The Regional Executive Council sets the agenda for the FPM based on HFMA strategy and input from chapter leaders.• Presidents and presidents-elect should represent the opinions and needs of their chapter as a whole rather than personalopinions and needs.

• Regional best practice sharing occurs during Fall Presidents Meetings to give chapters an opportunity to exchange ideas,review successful practices, recognize achievements, and identify opportunities for improvement.

Along with the chapter leaders, the Regional Executive (RE), and our Regional Executive-Elect (RE-E), Teresa Figueroafrom the Puerto Rico chapter, also in attendance will be our Region 2 Treasurer, John Cousins, National HFMARepresentative, Jinna Davis, and National HFMA Board Member, Becky Speight. This year’s meeting will be held at the HotelEl Convento, in Old San Juan, Puerto Rico.

REGION 2 CONFERENCE:Our largest event held as a Region is the Annual Region 2 Conference. The 2013 Conference, which will be held October9 – 11, 2013, at the Turning Stone Resort & Casino in Verona, N.Y., is well under way in the planning, thanks to the dedicatedgroup of coordinators working with Teresa and myself, as follows:• Chris Etsler (Rochester) • Christine Blidy (WNY) • Cindy Strain (Metro NY) • Karen Richards (Northeastern NY) • Raphael Rodriguez (Puerto Rico) • Scott Rau (Central NY) • Will Scheuermann (Hudson Valley).

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This year’s theme is “Healthcare 2013 – Accept the Challenge”. The team has completed the program, and we’re proud toannounce that we have secured National HFMA President, Joe Fifer, to open the conference, followed by the 2013-14National HFMA Chairman, Steve Rose. We have 3 Keynote Speakers over the course of the conference, including:• Dr. Jonathan Niloff, for a session on Risk Contracts and the use of DataAnalytics• National Health Care Policy Expert, David Merritt, discussing the Health Reform Law • Inspirational Speaker, Lauren Manning, talking on “Unmeasured Strength: Making Every Day Count”, after surviving the9/11 attack. (Note: Lauren will be available for a book signing).

To help meet the education needs of our members, we are also offering three breakout sessions, along with a generalMedicaid Update Session from John W. Gahan, Jr. This results in a wider variety of sessions, with breakouts covering thefollowing topics:• Accounting • ACO’s • Insurance Exchanges • ICD-10 • Revenue Cycle Best Practices • Merger Readiness• Legal & Compliance Update • Denial Management • The New Medicare DSH• Beacon Project: Transforming our Healthcare Delivery System • Prepayment Audits / RAC / Observation

The conference is also a great networking opportunity for members of Region 2. We start the conference Wednesdayevening, with the network reception that includes great food and drinks, and we’ve added Comedian Rob Lederman for ashow at evening’s end. Thursday is our night of music. We’re changing things up by having a DJ this year, along with anassortment of munchies. Other changes to this year’s conference includes having a “Sponsor Booklet”, detailing suchinformation as our valued sponsors, the location of the sponsor booths, the full conference agenda, and other informationvital for all attendees.

If you haven’t attended the Region 2 Conference before, please make every effort to attend this year, and join those who findit rewarding, educational and fun!

HFMA Region 2 Annual ConferenceOCTOBER 9 – 11, 2013

Turning Stone Resort & Casino

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We would like to congratulate Anup Satheesababu, CPA, CGMA, of Jamaica HospitalMedical Center (JHMC) on passing the CHFP exam.

Formerly an auditor with Ernst and Young, Anup lives in West Hempstead, NY, andstarted working at Jamaica Hospital Medical Center in August 2009.

A licensed CPA in NYS as well as CGMA and CHFP, he is part of the financial reportingteam at JHMC . He joined HFMA in January 2013, and this year he joined the FinanceCommittee.

I am happy to be working with Anup as part of the Medisys Health Network, andespecially as an active member of the HFMA Metropolitan NY Chapter. The CHFPexam as we all know is a difficult one – and kudos to Anup for adding to this to hislist of accomplishments.

Once again – please join me in congratulating Anup - and we look forward to hearingmore from him.

Spotlight on a Newly Certified Member

By Diane McCarthy

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The Value of Certification

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Many healthcare organizations in today’s challenging economy recognize their workforce as their most valuable asset.As such, these organizations tend to hold workforce development as a primary business strategy.

Investment in developing the talents, knowledge and skill sets of staffs are critical to the organization’s success. HFMA’sHealthcare Financial Pulse research identified this dynamic and noted that successful organizations today commit to the“bread and butter” of financial management, i.e. technically strong and comprehensive financial management.

Likewise, many individual financial managers today recognize the importance of assuming personal responsibility fortheir careers’ success. More than ever before, individuals understand the importance of acquiring and maintainingcomprehensive skill sets to ensure their ability to provide the financial management demanded today. These individualsfrequently seek out relevant professional development opportunities.

The larger business environment resulting from these forces is a heightened interest in workforce development initiativesincluding certifications and credentialing. Credentialing programs have exploded across the past couple of decades andinclude:

• professional associations offering certifications• community colleges offering curriculum-based certificates• corporate sponsored in-house credentials for employees• technology companies providing proprietary credentials to customers

HFMA certification provides a fundamental business service to our industry, namely HFMA certification offers:• Assessment of job-related competency• The opportunity for an individual to demonstrate skills and knowledge • Independent verification of the skills and knowledge• Confirmation that an individual is current in the practice field

The value of HFMA certification can be seen in several reported “value-adds”:• Increased departmental cooperation• Heightened self-confidence among participants• Increased performance against selected metrics• Verification of staff knowledge and skills• Assistance in structuring career paths

HFMA is committed to being the indispensable resource that defines, realizes and advances healthcare financialmanagement practice. As such, HFMA provides professional certifications to achieve this purpose in today’s businessenvironment. This makes HFMA Certification a smart workforce investment strategy.

For more information on HFMA Certification, visit http://www.hfma.org/certification/.

volume 46 issue 5 summer 2013 our new leaders · cirius group, inc. deloitte & touche llp...

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