chair and so at this point we'll ask Kim to swear you in and before she does that if you could introduce each person that is going to be testifying today Brian. Sure good to see you all. The people that you're swearing in today will be myself Brian Nall president and CEO of North Country Hospital and also our CFO Tracy Paul. Would you both please raise your right hand? Do you swear the evidence you are about to give shall be the truth the whole truth and nothing but the truth to help you God. I do. Thank you. And whenever you're ready Brian you can begin. Okay let me see if I can get the share thing to work here. I got it to work too well. Tracy why don't you do it on your end it's not coming up on my tray. Okay let's see if I can do it now. There you go. All right. All right. Okay all right well again I'm glad to be here virtually with you all. I hope you and your families are doing well. Obviously life in all of our state has been uniquely different this year but we are settled into the new norm and as we present our budget look forward to your insight and your questions. Next slide Tracy. So Tracy now be present go ahead Tracy. Next slide. So just a reminder of our service area. Press that a couple more times Tracy. I think there's a couple other things there. Our service area here at the north north north end of this state service area of 30,000. We have 45 minutes to the closest Kirklaxis hospital and it's two hours to the nearest tertiary hospital that being UBM and Dartmouth-Hitchcock. And on the next slide slide five we show just the reminder of our organizational institutional structure. So we are representing the hospital here today North Country Hospital and Health Center but other components of our business we do have North Country Health Services Inc. Which was previously operating doing businesses during the Green Nursing Home which was closed effective May 1st of this year. We'll talk a little about that later. And then we also venture with North Eastern Vermont Regional Hospital and VRH in our LLC and we have services that are sleep services and pulmonary services currently. And so that's a quick overview on the organization and we're going to get the budget presentation and kind of pass it off to Tracy on slide six. Good morning. I'd like to apologize for Gifford and to the board for my little too quick on the slide. I guess there's such a thing as being too prepared and I guess that's what I was trying to do. But to start the presentation I'd like to start this by talking about how we the assumption to use when we were completing the budget basically we went back and based our budget on our year-to-date actual which we considered our normal and from there we budgeted by exception. Basically we knew what our service line adjustments would be FTE changes, inflations and etc. So we took the year-to-date February and worked from that as our base. We assume that the COVID impact on our budget would be minimal because we continue to operate now in the COVID environment. So as you can see on our screen right now on slide six we have the income statement up there. What I'm going to do when the slides to follow is to go over the different pieces of the income statement. So on slide seven we're requesting a fee increase on gross revenues of 3.6. That is made up of a 4.25 fee increase on the hospital side and a zero increase on the medical group side. That's less of a fee increase that we requested last year and about the same that we did for 2019. Our net patient revenue is actually going down by about one percent from budget to budget. We based our gross revenues on our year-to-date February and some of our revenues were down at that point. We also have seen a small decrease in our net percentage. On slide eight talking about other operating revenue, a familiar story to all of you, 340B is the major component. It actually makes up 64% of our other operating revenue here. Our non-operating revenue, the story to that basically is we changed investment companies January 1st of this 2020 and when we did that if you look at our projected you see a big $9 million number and that was because of the fact that we had to realize those gains from switching the investment companies. Slide nine shows the total operating expenses in a bar chart and you can see our operating expenses actually have only gone up 0.2% from 20 budget to 2021 budget. Some of the things in our operating budget that drives it are compensation and benefits. We put a modest 2% raise into this budget and a 4% inflation factor on our benefits. Our locals and travelers are basically the dollar amount budget to budget are flat. The COVID related costs that are in this budget are minimal and they circle around supply testing costs and securing our campus with screeners and the furlough of staff will be talked about in an upcoming slide. Another kind of cut of some of the biggest part of our operating expenses the slide shows you that if we take our compensation our benefits and our locums and we add them all together that you're going to see that for the budget 2021 that they make up 65% of our total expenses for North Country Hospital. And these two slides break down locum just locum expenses themselves which are about 3% which are a little bit higher than last year budget but they are less than what we're running right now. And the other slide on the bottom actually shows you how much physician salaries make up of our total salary budget. So they make up about 30% of our salary budget. So and at North Country Hospital in our market we employ nearly 100% of the physicians. So and when it looks when you're looking at our wages compared to other industries that has to be a factor in there as well but the advantage of that is that when it comes to one care and those types of ACO value-based programs we're all in all together. And this has been something in our community that's been a part the physicians being part of our community for or our organization has been that way for quite some time. There just hasn't been the appetite in our community for any private practices and any new hires that we have they're looking for employed and not setting up private practice. Okay so moving on to our operating margin. This graph shows you what our journey has been in this fiscal year starting in October until June with COVID right smack dab in the middle basically. This graph shows with us with the cares relief money added in to help make up for the net revenue we lost. You can see I think like much many other hospitals March the blue line represents actual the green line represents budget and you can see what happened in March but from March we've been going steadily upward. Pre-COVID our revenues were down about 1.4 percent. March they were under 20 April 50 May 22 but then June and July our revenues are actually over budget slightly between two and four percent. That combined with expense decreases that we have done during that timeframe has made a favorable bottom line during that timeframe. The next graph is another cut on this and this basically shows what would happen without any of the CARES Act funds that we got to help replace the net revenues. So again you see the big dip the dip lasts much longer couple months longer and then we come back up and meet budget and then exceed budget because of the way our revenues recovered. So for the operating margin you today June actually we have 1.9 million which is a 3% operating margin. The budget for you today June was 2%. Last year's budget was 1.6 and we are asking for 2021 budget to basically have the same amount of operating margin of 1.5 million dollars as we did for budget 2020. This is the balance sheet. Basically the biggest change in the balance sheet of course is the cash. We have a large amount of cash in the 2020 projected 2021 budget is back down to what we would call a normal level cash about 2 million dollars and our cash on hand is 228 days. This is just another look at our cash flow balances and showing how they go from 2019. The increase for projected year today and then the 2021 budget. Again we are requesting a 3.6 rate increase and the charge increase effect on payers is as follows. For Medicare inpatient Medicare is reimbursed by a patient day. So an increase in charge does not result in any net revenue. Outpatient is reimbursed based on percent of charge. So it does result in net revenue but it is all subject to our cost report at the end of the day. Medicaid increase in charge for Medicaid does not result in net revenue for either inpatient or outpatient. Inpatient is per day. Outpatient is by a fee schedule. Commercial for the most case and mostly on the outpatient side it does percentage they pay by percent of charge. So the percent of charge does result an increase net to our bottom line. The effect of bad debt the effect to bad debt and free care from a fee increase basically we use a calculation of a percentage of gross revenue averaging it over a couple of years to determine what our percentage of bad debt and free care would be. So I'm going to talk through the service line adjustments as it relates to the current year and future year. So neurology was a service line that the hospital has been supporting a full time physician for quite some time and with the obstacles in front of us with COVID and during that time this was a service line that that needed to that we decided to make a change on and we we effectively closed the service line and made that announcement in April. We are looking at returning and this service line wasn't profitable so it was it was really a fiscal stewardship action and we weren't seeing a high volume enough to support we believe the full time practice. So what we're doing right now is looking at in the future possibly in 2021 a return to part time maybe two to four days a month I'm sorry two two days a month to maybe one day a week but we couldn't continue to support it under the full time so that's what's going on with neurology. With cardiology we did a service service line assessment of what our population can support across all services and cardiology was one that we were under we were we were not providing enough care in our community our community can support upwards of or close to two cardiologists and before we would just have one part time cardiologists so we've invested that and that's built in the budget for FY 20 it's already active and sorry FY 21 but it's already active in FY 21 20 sorry but the increase is to full time to fit that need and it's been received very well we're currently four weeks out scheduling and we bring in another cardiologist both cardiologists are they come from Dartmouth Hitchcock they're employed by Dartmouth but they work for North Country Hospital so we bring another cardiologist in one or two days a month to help catch that up so the cardiology program is received and doing well. Ophthalmology services we lost our one and only solo provider in the community he was independent he left the community to to become an educator and part-time ophthalmologist in New Hampshire so we're working at exploring ways to try to attract that talent so we've lost and it's built in our FY 21 budget we've lost the ophthalmology surgeries in our OR and there's a possible opportunity to explore a solution through our LLC that we're we're dialoguing with NBRH neither community employees ophthalmologists but maybe that would be something that we would need to do to attract that talent. Slide 20 just giving some perspective of how we've navigated through COVID so pre-COVID as a reminder and Tracy mentioned we were we were doing well going into to the COVID cycle so February year today our operating margin was better than budget about a 1.9 percent budget or 1.9 percent actual compared to a 1 percent budget and then COVID in the months of March on the next slide March through May we experienced a 20 to 50 loss over those months 50 loss would have been in May or sorry April and then May we started to return back to normal so close to a 25 to 20 percent loss in May we were using at our high point about 80 percent of our encounters were telehealth visits through our practices so we flipped our model from in percent to the majority telehealth that coincidentally has changed and I'll I'll talk about that I think in another slide coming up our low point what our staff was furloughing of up to 200 staff 25 staff also worked from home when they when they had jobs that were allowed into work from home and then we also did a physician and leaders voluntary wage decrease and that was received very well the physicians was a voluntary the leaders was mandatory and that went in effect and during those months slide 22 shows again March through May so we started we also stood up COVID testing at our cost for two counties Orleans and Essex counties and we also what like most hospitals had to put staffing in for entry screeners and the control to access into our buildings we activated in March our daily incident command and that's been active and continues active to this day it was offered seven days a week and we turned that down still continue to act you know daily huddles down activity on our campus and our communities and through this time we we had already announced the closure of Derby Green and it was a little tense there for us because we were winding this down as there was an outbreak in another nursing home and in our state and so we were concerned that we weren't going to be able to wind this down in time and have to operate it when we had at that time roughly five to seven patients still left to transition to their new homes but we were able to accomplish that and actually close that that campus by April 1st so it's about a month early than than we had expected and and then we've kept that that structure in place for possible surge just this last over these last couple weeks we've been talked to the local nursing homes about possible use of this space for quarantine so using that as an opportunity to use it for the greater good for that service line if they see the need but we're also mindful of it being used for other purposes in the case of surge and the state has also contacted us about use of it and planning planning for use of it in case of us so we still have 23 beds set up in that space and and have them readily available in the case of need slide 23 shows how we've navigated through the months of June and July so we returned the majority of those furloughed staff we're we're about 150 returned of the of the 200 our talent medicine visits oh and and on that the furloughed most of those people that are still furloughed are modified hours so they might be working 32 hours a week rather than 40 hours a week and and so on our telehealth side remember I said that we were about 80 percent telehealth visits we're under 10 percent of our visits now our telemedicine visits what we've learned through this time has been that people desire to be seen in person which I think is good when we think about the competitive products upcoming in our industry with the use of telehealth with you know the apples and the googles and the amazons of the world wanting to stand up the telehealth products I think there's a place for it but genuinely in our community what we're learning is that people still want that in person encounter and find extreme value in that so that's that's good to know we have we've been able to because of our return to norm we've also been able to discontinue the voluntary wage decrease we have hired permanent staff for screeners and we're also getting thermo scans that will be putting in place that should arrive in the next few weeks to use across our campus and our medical office buildings and then we continue to really look at forward of how are we going to operate in the fall and into the spring much like we operate today so on slide 24 August and beyond and we we're working out you know we continue to focus on generating healthy margins and making sure we stabilize that so that we can we can move the organization forward beyond COVID and be thinking about what are we going to do beyond COVID and so one of the big projects that we had started on for FY 20 was our campus infrastructure and our need for continuing to invest in that infrastructure and so we had a campus development plan finished up this last year and we were working looking forward to what projects that that we would as a hospital on the board that we would want to put forward as future investments in the near future so so by generating the healthy margins and looking at re-investing in the organization we want to put some some more effort into that coming up this this year recruiting and retaining workforce was a was a challenge before as a challenge can you know moving beyond COVID we work hard to pay market rates we're still we struggle to keep up with that we want to decrease our dependency on contract labor you saw that's three to four percent of our expense and our salaries we do we are a host site for for the Vermont Technical College we have a full slate of students I think it's 18 that started last week we also sponsor $50,000 in scholarships for for not only our staff but other students that are pursuing a career in healthcare in fact this weekend we will have our annual golf scholarship and that all the funds for the golf scholarship end up funding this this this program every year and we still have board members we still have if you want we still have slots available if you want to come in for golf another thing that what I like to call when we're when we're talking about August and beyond is really the focus on adaptive active management and we've really been in that mindset from the beginning but through this COVID but you know we have daily safety hurdles to assess what's going on we have we have challenges that we work through with workforce which includes in this in this current cycle what what housing needs that we might need to supply do we have sick family members that will impact our employees coming to work we have the Canadian border that we work through but we have staff across the border daily to get to and from work and then on the stewardship side we we look at and monitoring our cash flow our our use and supply of PPE our equipment and resources and also how our service lines are doing and and looking at the impacts and their volume so so when we look at the FY 20 budget and we look at the FY 21 budget the budget is what our approximation is and our best our best estimate of what the year may look like but obviously FY 20 the budget went out the window in mid-march so adaptive active management is really the style that we work on of how are we managing the finances that are in front of us and not not looking wholeheartedly just at the budget so plenty of uncertainty with COVID impacts in the fall we have been having huddles with the school superintendents and and and their leaders to assess what impacts in that that may have but we'll continue to work on adapting and active management so I'm going to pass it now to Tracy for slide 25 about the capital investment okay so our capital budget we requested in 2020 was $3.6 million and we're asking for the same amount of $3.6 million for 2021 this capital budget is funded out of our operating cash and one of the projects that we had slated for this year was lab renovation and with the current climate it didn't make the current environment didn't make sense to impact that space but we we have roughly $2 million project that we expect to to put it forward in the next 12 months or so to to to to reinvest in that that space we're meeting with our architects also over the next week to talk about what what learnings do we have from COVID on our campus plan to see what we would do differently and so we'll be looking at that lab space as well the lab renovation is going to be at the same location so there's a lot of planning of how we would continue to how do we continue to function while we renovate the existing lab so there's a lot that has to be accounted for and so we put that on pause given that lab is very important with the COVID testing right now so that's really high level our perspective our FY21 budget and we'll turn it over to you for questions and comments great thank you very much we are going to begin the questions today with board members Tom did you see homes or Pellum I'm thinking it was it's your turn but I could be wrong no you're not so Brian thank you for the golfing fundraiser invitation but I'm afraid that rate review when hospital budget seasons has totally destroyed my golf game I will be coming up to embarrass myself okay okay my my first question is on the in the narrative and on the um that tab which we call the revenue replacement of funds that the federal money you you note that there's a six point six million seven hundred and eighty nine thousand dollars in non-refundable revenues um and there's there's two pieces of that one is six point five nine million and the other is a hundred ninety four thousand on the income statement the COVID-19 stimulus entry is of that is four million three hundred and twenty eight thousand and so I'm just wondering where the remainder of you know two almost two point five million is is booked on your income statement um or I mean I I see can see that you're not operating budget is you know um very high but that's because of the liquidation of and changes of your investment manager um but I I'm just wondering where in in 2020 or 2021 is the balance of your non-refundable COVID revenues the the balance of the non-refunded COVID revenues are on our balance sheet in a reserve the amount of money the four million dollars that we have brought to our bottom line on our income statement is money that we can justify as net revenue loss um we've been in contact with our auditors and you know nobody knows for sure but there is going to be an audit at some point so we wanted to be to conservative and make sure that any of the money we received we have the justification for that money so we're being conservative and it's in our reserves on our balance sheet and has not dropped to our bottom line in case we have to pay it back at some point okay that's helpful thank you um hey tom I would also say that um with that those funds we still have ongoing expenses that we that Tracy has um that she's tracking um so we for example standing up a um COVID testing site we have to bring that indoors so we're we're going to be I'm incurring some costs over the next several months of having a modular unit on site for that so some of those funds will be used to fund that so that there would be no additional costs or impact on the bottom line on the income statement as well okay thank you um the uh the next area is um bad debt and free care um looking at kind of how you're trending in that arena on a combined basis in your 2020 budget you were uh I'm looking for deductions at a 6.3 million dollar level and as we move into 2020 projected you were down to 5.3 million dollars and for 2021 budget you're at 4.8 million dollars so that's definitely a fairly strong downward trend in the commitment or the budgeting for free care and bad debt and I'm wondering you know what might be driving that trend um yeah okay so like I said in my presentation we do it as a percent of gross revenue so for budget it was three percent of the gross revenue the total combined and we're at 2.38 um the reason why I think that's going down is we have a very active navigator um system up here um we have I think it's four navigators that are working full time to get people to uh apply to Medicaid um and I I believe that is part of the reason why that's going down because we are getting them coverage okay that makes sense um on the provider tax uh you budgeted um in uh for 2020 you budgeted at the six percent rate um but then with the you know decline of 2020 projected revenues that rate is now up to 6.6 percent effectively and I'm just wondering if you can provide a little added insight into you know where you expect that to land um as far as the projections of the numbers you're looking at obviously we we left them the same based on the actual and for budget 21 uh we added a small one percent increase um I really don't I am not sure where that will land for projected 20 yep okay and uh my next question has to do with kind of the reconciliation of of the NPR on the income statement and the NPR on the payer mix table uh those are off by um quite a bit uh for each of the years and I'm just for example for 2021 B on the income statement you're at 82.7 million uh but on the um on the payer mix table you're at 86.6 million and so I'm just wondering if if you can at some point reconcile those so that they they they line up because it's hard to talk about payer mix issues I will the difference between those are the bad debt and the free care so I can add the bad debt and the free care into those to make them reconcile but that is that is the difference okay that's helpful here and finally um I noticed that in terms of your uh and just forgetting we're putting a side moment the fact that the the payer mix table doesn't quite line up you're booking um a 2.6 million dollar budget to budget decrease in 2021 Medicaid revenues and um if you could talk a little bit about that and if the announcement the re the recent diva announcement you know that they will not be allowing any rate increases other than those that are federally mandated in 2021 does that have a does that change your uh your approach to the 2021 Medicaid expectations um that's a great question um I haven't actually thought about that question quite yet so I don't have an answer but I would be glad to get back to you on that okay um and with that I'll pass you along to uh the uh next the the next questioner thank you tom next is uh board member use for moraine thanks uh first thanks for everything you've been doing during the pandemic um I know it's been a really challenging time um it's just a couple things on the the money that you received uh just I didn't hear you talk about the payroll protection plan and did you apply for that or get money there and so how are you handling it yeah no we didn't because we have too many employees so we didn't qualify for the payroll protection plan okay that's fine and I think you did mention that you weren't looking for any of the state money in the 275 million in this round but have you applied for any FEMA dollars as well or no we have not applied for FEMA dollars early on in the covid crisis I got on to a couple different webinars um and it didn't seem like any of the FEMA money we had one inpatient covid patient here in north country and that we wouldn't benefit from um much of anything from FEMA yeah and we we moraine we've been um and Tracy has been in um continuous contact with our auditors to also evaluate what the opportunities are when we surface them or they surface them and and do that cost reward analysis um but we apply we try to you know we we try to be mindful of applying for some things that we believe we can receive and we also have applied and speaking of employees we have applied for the employee hazard pay on behalf of the employees so that application was received and we're waiting for hopefully good news about that for our staff as well and you mentioned that you were um conservative on on some of the reserves that you're carrying I think for the covid and how you're balancing that through so I guess if you project to the end of the year are you still holding some of the covid money on the balance sheet that will offset expenses that may end up you know dropping to the bottom line as well because then you may be able to offset expenses you already had in there and I guess how is that reflected in your current forecast I'll start and then I'll let Tracy clean up so when we say conservative really what we're doing um is being mindful of making sure what comes on to the income statement is defensible um and auditable and so when Tracy is talking about you know corresponding with our our auditors it's to make sure that we're fitting the criteria within the guidelines that they believe we should be following on the grant dollars received so so we didn't want to book something that could be for for for in our institution or even for a board that would that would look like it's money that that could be taken back so I think we have until the end of the calendar year and we don't know what the follow will bring so we're we're being mindful and and like I shared we we do have it ongoing at covid expenses that we're lining up those dollars for we expect to use the rest of it it's just a matter of you know being careful and not not attributing it to something that's not covid related so how much do you have left on the balance sheet that you didn't pull through to pay it out Tracy go ahead okay we have about two million dollars and so basically as far as how it would affect the project projection excuse me in the budget that you're looking at it basically would just be an offset because we would draw down if we had $300 worth of expenses that were covid related we would draw our reserves by $300,000 but we'd also have $300,000 on the expense side so the net would be zero okay um and then in your commercial rate request you didn't put any requests for a covid piece but you did talk about in some of your expenses having some ongoing covid screeners and things like that you know continuing on in 2021 and and that was you know one of the things we would have looked at for for using you know that commercial increase with the thought that possibly in 2022 or in the future those would go away right you know if we needed to hire some additional staff um if things proceeded along vaccine whatever you know sometime in 21 then in 22 you might not need that so can you talk about what expenses you have in 2022 and sorry 2021 that relate to covid and why you didn't use the commercial part of your commercial ask for that piece okay so basically the the expenses are very minimal we hire two screeners for the doors um and with that plus benefits is probably 50 or 60 thousand dollars and then we have um uh 20 30 thousand dollars in for extra supply costs for covid um and what we talked about before also is that we also have this two million dollars you know there too that we can use so now the screener position um you know is funded by that for at least a period of time so we didn't think the amount was large enough to you know to fold that into an additional rate increase for the commercials okay and then just trying to bridge your npr from and you know kind of what we've been doing with a lot of the hospital's ways going back to 20 budget you know 20 projection is a little bit off the map and before your 20 budget you were projecting uh gross revenue to move from 197 to um 202.7 so you know up about three million dollars um and then for your npr fpp it's going down from 83.6 to 82.7 and bad debt and free care are actually lower projected in 21 budget than 20 so and i know there's a little bit of a payer mix but you know trying to understand why that's but gross to net is all evaporating when you're actually picking up money in the bad debt and free care as well okay let's see if i can answer this in parts um so on the gross revenue side as i mentioned before we budgeted our gross revenue based on where we were in february and at february we're all we're off budget by about two percent so we took that and then we also took out um i think it's almost a million dollars for the ophthalmology or our cases and made the other service line adjustments for neurology and such and added on some for cardiology so when we when we finished doing all those adjustments um that pushed our gross revenues down um our net revenue percentage overall um so when i look at it i look at it overall with all the contractual allowances and the free cat care and the bad debt to make sure you know all the buckets come up to about what they would be running um and so that percentage uh dropped by about one percent over the last year again we used year to date actual um so it went from like 40 percent to 41 percent um and so i think that would explain the different numbers but without you know putting them on paper but those those are the different factors that weighed into the to the changes does that answer your question you also would have had an increase in gross related to commercial you know your ass and right so some of that should be retained it just seems like when you're growing you know three million on the top line as well as um your bad debt and free care are projected to be 1.4 million dollars lower in 21 budget than the 20 budget so you know that's a four and a half million increase and i get you're putting in these adjustments but to not have any of that drop to npr seems conservative we get we get about for every percent of rate increase that we do we get about 525 thousand dollars so if that helps um when you're thinking about it that's that's how it comes out with our payer mix um and with the payer effects that i explained earlier you know as far as how much we actually net out on when we increase our charges we may want to follow up on this just just try and you know the gross increase and not having any of a drop to end to net when you did have a rate increase and you are projecting favorability and the bad debt free care and not not seeing a huge shift so absolutely one other thing just on you talked a little bit about the non-operating revenue of the 9.6 million and i think you talked that you know you moved to a different investment company but i guess just how do you typically handle gains every year that you would get because usually what we see in the non-operating revenue for most of the hospitals are our adjustments between what their portfolio size was um not all taken necessarily just when you move to a different you know to a different firm so you know i guess just want to talk about that 9 million change because it just seems a little bit out of line to what you'd have to look on the p&l um and not having accounted for any of that earlier um so basically um on the profit loss statement that we submit to the state it shows basically one piece of the puzzle it shows the 9 million but it doesn't show the other piece of the puzzle for when it moves from one investment company to the other so once 9 million something and once 8 million something and that nets out basically to be what our actual gain was for the year does that make sense yeah i would have thought normally you would have booked the actual gain for the year i thought here so to have to book the 9 million it seems like you would have already booked that over the years that you earned that it was all yeah it's all related to unrealized so the unrealized gain lost through say 15 years um you know it's accumulates but this is really an accounting thing it's an accounting um entry and so the auditors require uh our gap requires that when you change investment firms the new investment firms devalues the portfolio at what it is at the market rate at that point there was no you know there was no cash out there was no you know big infusion and cash to the hospital it just we hit it in january um and then the market you know took a dive in and march so that that whole bottom section of our you know and that that's related to total total margin just looks all over the place okay but and it's just something we'll have to track yeah kind of the staff's keeping track of that because when you go back and look historically i was looking say wow there's this huge yeah and the reason and the reason sorry the reason for the change also is um the board had that's the city is evaluating our investment advisor and did we want to make a change so it was very purposeful in evaluating that and in the end the concluded we wanted to switch to the new to the new investment advisor which resulted in several hundred thousand dollars a year and savings to the plan because we were incurring those costs so so the new advisor we're we're pretty pleased with the setup with that so right okay um and just talking about costs and and cost savings i mean do you have any cost saving plans that you can talk about as you look for the future of things you're working on strategically to whether it's supply management um anything in that area well that really gets back into that adaptive active management so um you know on the slide deck showing the operating gains and losses in that that period of time through those months um we furloughed staff up to 200 which is close to 30 30 percent of our workforce we adapted very quickly and and so that's that's really that's it's active management is we don't have we don't have a set of future forecasting operating expense improvements that we are already actively working on day-to-day um there's not derby green would be the last example of something that was more of a long-term strategic strategic okay and um just one last question on cash um you're showing your end your 21 budget with about two million dollars of cash and your 20 budget had about 3.3 million and with all the covid money you've received etc it just just seems like maybe you would end up a little bit stronger in cash um you know when we're through this which which isn't a bad thing you know it's it's it's kind of worked out how the federal you know the money that you receive for covid was really offsetting you know some of these expenses but um do you think there's any conservatism in that number in your 21 budget cash um maybe a little I don't think a lot I mean a majority of the cash balance we have now is the Medicare accelerated payments in a blue cross blue shield loan and you know the balance of that two million dollars that we have that we're going to spend so over the course of the year um you know that's all going to basically go away so we may end up a little a little better but I don't think substantially and and we um we're monitoring the cash um every week and Tracy does a monthly cash projection um and so if we take all the covid dollars out we believe that we're um you know and based on a one and a half percent operating margin um it's it's pretty flat um okay blood is down from you know 2019 you had 2.7 2020 you had 3.3 is your budget and 21 budget is 2.1 so it's it's down quite a bit but your board designated assets are increasing so there's you know things going down there so there's just more of a caution that it seems like you're you know lowering your cash um yet you're not really seeing that in your days cash on hand projection per se you're actually showing that stronger than um where you're 20 a little bit better than 2019 and so okay just just a point to look at that number that's all I have thank you thank you thank you Maureen now we'll turn to board member Holmes Jessica great um thank you and a lot of actually now my questions have been answered um but and I would be remiss if I didn't also thank you for your efforts for preparing for the pandemic and ensuring you know the safety of your community the safety of your frontline workers it's truly appreciated we're trying to thank all the hospitals because we really mean it um and so thank you I can only imagine how difficult it would be to be a hospital leader in this you know particular year so thank you um the one thing I'm trying to understand with every hospital is medical inflation assumptions and I noted in your narrative that you talked about salaries and fringes increased by six percent reflecting raises and inflation benefits and that spit out to me as other hospitals are growing you know the assumption on their compensation has been zero to three percent so can you talk a little bit about the six percent that's mentioned in the narrative um and then in general can you talk about assumptions you're making about supply inflation pharmaceutical inflation and overall weighted expense inflation that you have um yeah sure um so the salaries we put a two percent increase on the salaries just on the top of what our base salaries were and we increased our benefits by four percent based on feedback from our um different insurance companies and such so that's what we built in the budget for that um our medical supplies and basic supplies we put an increase of three percent on there um so and you know overall I'm not sure what the overall weighted inflation number would be but um I can calculate that and give it to you that would be great if you could follow up with that that would be fantastic okay so the six percent is really two percent on the just the base yeah and four percent okay that makes sense to me then I thought it was a six percent growth overall yeah okay fantastic makes sense uh the second question is just a little bit maybe this is a little bit digging into a little more marine was going but the charge with the three point six percent charge can you just maybe translate that into an effective commercial rate versus the charge is there a differential so some hospitals will say this is a change in charge but because we have discounts on charge with our payers we have an effective commercial rate that's less than our change in charge um I don't know the answer to that question um yeah I'm trying to yeah I mean we have a net percentage that we get paid overall by our commercials is that what you're looking at and then what that rate would be on the the charge by how much that your your what is your effective commercial rate it may not be the same as your change in charge because of how payers may your contracts might be right you're paid a discount on charge right so if you increase your charge by three point six percent but you're only paid a discount on that based on the average discount across commercial payers your effective commercial rate will not be the full amount okay maybe I'm not explaining this very well but this is I don't understand what you're you're asking you know so if you look just all at all the commercial payers we have different commercial payers a certain portion of those are paying a percent of charge right some of those might be and they and then they have an inflation of so much that they allow for a year so some of our payers may be already capped and some may not I I expect most of them aren't but that inflation um it's a matter what's the mix of a commercial currency of of that and if you want to get back to us on that that's okay too so you don't have to maybe I could add to what to your question what they had on here which is on your backup chart when you asked for 3.6 percent you had 4.3 for hospital inpatient 4.3 out 4.3 for professional then you had zero for primary and specialty so is your commercial ask really 4.3 across everything or does it average to 3.6 because you're not asking for it and then that's what we're trying to find out oh yeah I can answer that question so it's uh 4.25 which rounds up to point 4.3 on all the hospital charges on the commercial hospital charges and zero percent increase on the physician practices and specialty charges which averages out to the 3.6 percentage okay that's a good question but it's still not my question I'm trying no that's okay but if you know and I'm having to follow up with you afterwards if I already need some feedback from some place if everybody are others hearing this as well yeah I think we were all just muted which probably solved it so you have to unmute yourself just so you're aware if you're on the phone you have to hit star six to unmute yourself when Kevin asked for public comment but I'm sorry to interrupt you all please keep going so Jess you have to unmute yourself Jess if you can't unmute maybe you have to call back in do you want to switch to me Kevin and then we'll go back to Jess yeah that'd be great thank you Rob yeah um sorry for the technical difficulties um so uh I had one question related to your reimbursement assumptions for Medicare um did you make any assumptions about reimbursement changes in Medicare increases or flat and did you make any assumptions related to sequestration being removed for the remainder of this year and Tracy you are on mute now so he must unmute better yes yes good okay um so our Medicare reimbursement percentage I would say is basically flat um and like I said we don't capture any more net revenue on our inpatient revenues and no I did not make any assumptions or changes in budget 21 based on secret sequestration great and do you have any sense of what that impact of sequestration is it seems like it's fairly low yeah based on other hospitals responses I would agree it was low I I don't have an idea right off the top of my head though okay um in terms of um you your slide 12 talked about your locums as a percentage could you talk more generally about contracted labor and what you're seeing in terms of travelers both pre-covid during and after I'll I'll start Tracy so um during COVID so pre-covid we had um just um I can't speak to the number because I just don't remember but we had um more travelers than we wanted we wanted to be zero so one is still too many but um but we we actually rolled down to zero trap use of zero travelers through that that several months you know some had to be able to get them off contract sooner but some they were nearing the end of the contract and we just didn't renew the majority of them are um were RNs in our ED and our med search um and we also had I think one in OR um and then we had another one in um radiology uh attack yeah and uh and so then through that period we actually hired uh two to three contract labor employees permanently they switched over to employment so we're able to gain new talent that way um fingers crossed that that will be long term um but uh but the situation we played that out to our advantage in that short term um and then since then with our ramp up and our return to volume we have had to return back to travelers so I think we're at five to seven now um I can't get it exactly because it keeps changing it's back to the areas that we had before the struggles we just talked about um two ED RNs this morning um a one for ICU two for ICU um and uh um another one or two at RNs but uh so that's going back up um and we we going back to market pay and supply and demand um we don't have a magic wand to make it go away so yeah and you you you did speak about the VTC program uh participation do you typically are you able to attract new staff from that program yeah and this is the first year we've been able to return to doing the RN program so we're excited about that uh and and we do you know we have some existing staff that that are in the program so we are they're already they're already employed it's just stepping to a higher level of service um but yeah we retain a good portion of those um they don't all come here some of them go to the other area hospitals but it helps the more we the more we produce the better it helps float everybody up great um and I was interested in your comments around telehealth because it's uh mostly not what we've been seeing in other places and I was curious if you could attribute what might be different about your population whether it's the connectivity that's challenging uh for video or you know that you are I think an older area of the state what are your thoughts on that so when you say we were experiencing something different than the other states was it we were utilizing it more or I would say probably 80 percent during covid is higher than other places and 10 percent is much lower than other places post covid so on both sides yeah I think I think um um rather than what we experienced was just by flipping it really quick um and people wanting to continue to see their their docs and our docs didn't go home we didn't modify our hours for for our clinics they stayed open so there was just um uh I don't know some positive energy of finding ways to connect with our patients and then in some cases we um we were able to call patient our uh we had very low no-show ratings because if someone forgot we would call them so yeah and do a telehealth visit and then the people that couldn't do video obviously that would be a challenge um for some people but then we'd flip it right to a phone and so it was still a telehealth visit um so I I've just our physicians and staff are really engaged in making that work um and then and um I people just um wanted to have that connection with their their provider um and then um flipping it back when we started open open back up in in May um it was a learning experience for us because we just we didn't know what was going to happen but what we learned about our community is they as much as they did the telehealth visits they were eager to flip back to in person and we were here we welcomed them and we set up uh it told it told us that they felt safe um a survey that I was um with one of our consultants that I just received uh two weeks ago said that um 31 percent of patients um responded to survey which is only it was it was a national survey that that 30 30 percent responded that they're not comfortable going to their physician this year so we're above average there because we we are experiencing that um another 30 percent by the way do not have primary care physicians um another 30 percent of the patients responded that they would prefer a telehealth visit over an office absent and of any mention of COVID so um that's interesting because we're seeing that they're wanting to flip it back so those I thought that was interesting and timely to get that information of what help how it's working in other areas of the country thank you um and then could you speak a little bit about your plans for one care participation in 2021 have you budgeted dues and risk and if so what how much yeah so we are participating in all the same products that we were in FY 20 and it's been budgeted um and the risk the risk um the risk is going down through the the payers that were in so like the blue cross went from six percent down to was it zero tracing zero to the um the uh blue cross went from to two percent for one and one percent for the other one yeah and medicaid went from four to two percent so and uh you can follow up with us but we are trying to populate our normal chart which has the ACO dues by hospital as well as any risk reserves that you've budgeted so I think we gave people till September 1st but we do need that information sure thing yeah thank you uh that's it for me great thank you Robin and sound check Jess are you with us am I I don't know can you hear me you are okay for some reason when I get muted by Abigail I can't unmute myself so I don't know what it's a problem with but I am back on um I actually just had one more question um and this is a little bit of asking you for a little bit more context onto the deep dive you did with service lines I can only imagine how challenging a process that would be it might be met with resistance takes a lot of courage to close services in a community closing derby green closing neuro you know understanding that you struggle with the balance to keep services local especially in the remote area that you are with you know the long longer distance to tertiary care center or even another critical access hospital so I'm just wondering have give us a little bit of context on how you make those decisions what weight do you put on financials what weight do you put on preserving access what weight do you put on enough volume to ensure quality how do you do that and is that a process that's continuing are you feeling as if you've completed that process for now so um so what we do and what we've done for the last number of years is we we work with our um auditors we've we've said too much about our auditors in this this presentation but um I think the point is when I say that we we we also seek outside um professional assistance is what I'm getting at but but we have a product that we um asked them to do for us um that shows what our contribution margins are by service line um it's not perfect there is no perfect system it's not a true um cost accounting methodology but we look at um what our contribution margins are by service line um so when you're looking at um for example I prefer to think of our physician practices are an investment um because they they typically will not show I can't think of any practice that shows a profit um but they're an investment um and that investment is rewarded on the hospital side so so we pair those together and see okay how do the two tie together to support and um as you can imagine it's really hard because you know um to cross reference that because a um service line will will provide lab imaging inpatient you know all those types of things even ED visits so um so we we take that in the consideration so and then we looked at the we look at the trending year after year after year and see what's the trending um and in this case Neuro had been on our our sites of it was it was um not a perfect you know it wasn't penciling out um and um low volume of patients compared to you know to others um and uh and there's a need for it but we wanted to we're grappled with okay how much need is there so we pair it with another product of what our what our geography our demographics can support from that product that we look at and um and so it's it's and and looking at those together we we already had an idea that that might be a service line that that we can no longer support so so when it came to the point that we were and dire straits and wanting to make sure we were meeting payroll and i'm serving the immediate needs that was a service line that we decided to let go at that point derby greens similar similar story but that was a longer conversation and took a lot more um you know assessment did i did i answer your question yeah and really helpful it's helpful to hear that you have the ability to compute contribution margins by service line and not sure all hospitals have that or so we've heard so it's helpful to know that that is a possibility um i guess i'm also just wondering are there ever situations where the contribution margin may be positive for a service line but the volumes are so slow that you would worry about quality so it's it's helping your bottom line it's helping keep the lights on it's doing all the things that you need for your finances but given you know the mostly insurgical procedures in areas where we know there's a volume and quality relationship how does that factor in and i also recognize access is an issue so you you know there isn't a hospital nearby so that has to factor in as well to that quality volume conversation so i'm just wondering how you balance all three yeah um and first before i answer that this contribution margin is not perfect so so you know other hospitals probably have other ways of looking at it that's just the way we look at it then it's a very short list of what's a positive contribution margin so but you know i guess some service lines that you may gravitate to would be like ob ob itself isn't isn't a positive service line but ob gyn is it's the it's the full case so we're able to have obstetrician gyn's here that can support both ends of that service line and so that's what makes it work and and that's a that's an area where we have the quality because we have consistent providers that have been here for a number of years and we have a you know certified nurse midlife that has you know it's a small pool of people you're talking three people that do all the deliveries and so you they're sharing that you know 200 to 250 verse a year which is a small number but it's at least it's just a small group of people that are providing service and if it wasn't for us then where would they go we had a we had a delivery in the ed just a week ago two weeks ago that we we knew nothing about the patient that came in and and delivered within 10 to 15 20 minutes so so quality there's that quality aspect of yeah you you know what's this magic number to reach a skill set and it's different for a new provider compared to a you know existing provider but in that case if you didn't have the service and some of that all hands on deck right you you might get the service anyway you might have to perform the service anyway in a non ideal setting well thank you i appreciate that answer that's all i had kevin okay thank you jess so at this point i'm going to turn the questioning over to the health care advocate mike fisher you surprised me kevin i no questions for you huh you know it was uh very fortunate that my questions were asked by other board members so it made it easy um i think just one or two questions or comments or questions ask you to think about um i um we did not do a deeper dive on bad debt and free care this year but i was interested in the discussion about your reducing uh reduced numbers of uncompensated care your projections of that and that discussion that maybe that has to do with an increase in navigator activity um and just to to say what we think we understand from other hospitals when we've looked at this is that and you know a robust financial counseling results in both um you know uh uh better third party payment people signing up when they need to be signed up uh babies born to Medicaid moms getting signed up fast uh complicated pay payment issues like motor vehicle accidents or or the like um but also results in a um a change in the ratio of bad debt to free care and um i'm not i'm not seeing that in your numbers and um in other words again when you're when when we're doing good outreach and really making sure people know what's available to them we find people who might be in the bad debt category uh had we not reached out to them and let them know about it i have any comment about that or whether you think there's opportunities in that or maybe i'll just leave with i wonder if there are opportunities there that could be focused on all right i will definitely look into that with my my patient financial people thanks um and then lastly i've been asking about race and i wanted to give you an opportunity to talk a little bit about the challenges in front of us of really addressing uh um racial disparities and uh institutional racism and whether you've contemplated steps or whether uh what what you think the work is that needs to be done in a little hospital like yours um just invite you to think out loud about it with us yeah um so uh i i personally believe in um and i believe our institution um um gravitates this already is just honoring the the rights of every the human rights of everyone um obviously the in our part of the state or um region where we're not as diverse but i can tell you coming from most recently the midwest um i feel like this our organization culturally um is a lot more diverse than it may appear um whether it's race or sexual orientation or you know um those types of things so um so so you know i i i are culturally it's just going back to honoring the human rights of everyone we do have um and this wasn't related to the recent events but we have some sensitivity training that we're um that we're bringing in um around a particularly um uh an issue um not an issue but something that we're pretty proactive about um and uh and so we have a a consultant um with a very personal experience that will be coming in and um sharing and um helping to relate of how people can relate to one another um um um when um when i don't want to get in the details because i don't want to but uh but anyway we have some sensitivity training coming on for specific purpose and um and then um we also are incorporating what we uh learn about this um topic and others work incorporating into our uh our annual Elsevier um learning or it's our online learning that we require so we have already courses that we require all staff to to take every year um and uh it's you know a hundred percent um like a hundred percent of the staff have to take these so we're incorporating those and more of those into our um online and uh learning so okay thank you i think maybe i'll just part with the statement i think we we all uh need to keep this issue front and center and and ask ourselves uh in a challenging way yeah what we need to do to um to change some of the patterns that that we know exist in all and i'm going to including myself in all of our organizations so thank you yeah i mean and i would i would also add that um we have already been onboarding international nurses internet it's really nurses because of the need but um that's bringing in a new opportunity for um diversity and hearing and relating to people of different experiences and backgrounds beliefs so that's gone very well good thank you thank you mike at this point we're going to open it up for public comment on the north country budget would any member of the public wish to offer comment and again if you're on the phone please hit star six is there any public comment hearing none um i want to thank uh brian and tracy for the presentation and um i see that um joe wooden are you listening in right now is anybody from coply listening right now well not hearing back from anybody i guess what we will do is we will stick to the schedule and start this afternoon's hearing at 145 so board you have an extended lunch period and uh again thank you north country and uh we'll be back at 145 thank you thank you