2011-2012 Santa Clara County Civil Grand Jury Report Change Starts at the Top in Santa Clara Valley Medical Center

Conclusions 8

• CL1 Page 11
  The new SCVMC management team is making good strides to address historically poor financial management by creating cost center manager responsibility, targeted to deliver break-even or better financial performance.
• CL2 Page 11
  SCVMC has historically operated below capacity, which directly contributed to its chronically poor financial performance, resulting in County bailout from the General Fund. Increasing productivity is critical to SCVMC’s financial performance.
• CL3 Page 11
  The performance indicators imposed by the HCRA—improved patient experience, improved capacity and access, measure and control cost—are precisely the measures that should have been in place years ago and, if implemented, can lead to significantly improved SCVMC performance.
• CL4 Page 12
  The Audit pointed out that SCVMC keeps a separate set of books from the County’s SAP system, and the two do not match. This makes it difficult to obtain accurate financial information.
• CL5 Page 12
  SCVMC financial data is not transparent to the public due to the confusing way parts of SCVMC finances are broken up and tracked in the County’s CAFR.
• CL6 Page 12
  The new EpicCare system offers benefits in streamlining records, patient access to records, and accounting performance (accounts payable/accounts receivable systems).
• CL7 Page 12
  SCVMC has best-in-class care facilities that would be attractive to new patients, but SCVMC does little to advertise its services and specialties to attract new patients.
• CL8 Page 10
  SCVMC is a critical county resource, but this $1.2 billion operation has historically demonstrated a chronic loss of revenue, requiring bailout from the County’s General Fund. While it is reasonable to expect the County to fund SCVMC to some degree, sound financial management—including budgeting and measuring performance against budgets—has been lacking. Further, until recently, the BOS has not demonstrated the political will to hold SCVMC leadership accountable for poor performance. The Grand Jury found that recent changes in management staff and the implementation of new policies focused on increasing productivity—and redressing the revenue problem—are a marked and welcomed change of course for SCVMC. Under the leadership of the Office of the County Executive, the following changes are noteworthy by addressing chronic problems head-on: (cid:131) Hiring a new SCVMC CEO with policies and systems underway to hold physicians accountable for meeting productivity goals and to hold managers accountable for meeting performance goals (cid:131) Hiring a new SCVHHS CFO with policies and systems underway to correct the financial planning and reporting systems and to train line managers in financial performance management (cid:131) Establishing problem-solving teams to correct revenue cycle flaws to increase successful revenue receipts (cid:131) Putting teams in place to develop the performance measurement systems needed to continue to receive Federal funding (cid:131) Implementing EpicCare, an electronic record-keeping system that will improve the patient experience and streamline recordkeeping for physicians. This work is beginning to pay off. The SCVMC CEO reports that physician appointments have increased an average of 1.5 per four-hour session, from 6.5 to 8.0 for Medicine and from 6.5 to 10.0 for Pediatrics & Obstetrics. Overall, throughput is increasing. January showed a 25% daily increase in patients seen, increasing, on the average, from 2700 to 3500 per day throughout the hospital and clinics combined. While it is too early to tell whether these gains will hold, SCVMC seems poised to achieve their new goals of break-even in FY 2013. 10 Findings and Recommendations Finding 1 The new SCVMC management team is making good strides to address historically poor financial management by creating cost center manager responsibility, targeted to deliver break-even or better financial performance. Recommendation 1A The County should require that SCVMC stays within the budget to avoid future unplanned subsidies from the General Fund. Recommendation 1B The County should require that hospital leadership runs SCVMC as a business and require leadership to make appropriate financial decisions using the data the hospital systems generate. Finding 2 SCVMC has historically operated below capacity, which directly contributed to its chronically poor financial performance, resulting in County bailout from the General Fund. Increasing productivity is critical to SCVMC’s financial performance. Recommendation 2 The County should implement systems to increase productivity in reaching break-even financial performance. Finding 3 The performance indicators imposed by the HCRA—improved patient experience, improved capacity and access, measure and control cost—are precisely the measures that should have been in place years ago and, if implemented, can lead to significantly improved SCVMC performance. Recommendation 3 Regardless of how HCRA may be affected by the United States Supreme Court decision, the County should adopt performance measurements consistent with the HCRA indicators because they can lead to improved SCVMC performance. 11 Finding 4 The Audit pointed out that SCVMC keeps a separate set of books from the County’s SAP system, and the two do not match. This makes it difficult to obtain accurate financial information. Recommendation 4 The County should develop and implement an interface between the SCVMC and County systems to ensure data consistency, in accordance with generally accepted accounting principles. Finding 5 SCVMC financial data is not transparent to the public due to the confusing way parts of SCVMC finances are broken up and tracked in the County’s CAFR. Recommendation 5 The County should require an SCVMC consolidated financial statement reported as part of the CAFR. Finding 6 The new EpicCare system offers benefits in streamlining records, patient access to records, and accounting performance (accounts payable/accounts receivable systems). Recommendation 6 The County should give SCVMC’s implementation of EpicCare top priority to meet the scheduled May 2013 date. Finding 7 SCVMC has best-in-class care facilities that would be attractive to new patients, but SCVMC does little to advertise its services and specialties to attract new patients. Recommendation 7 The County should establish a marketing function directed at increasing public awareness of the services SCVMC offers. 12 Appendix A: List of Documents Reviewed BOS Joint meeting, October 28, 2011, at the San Jose City Council Chambers. Agenda Item 3b, County of Santa Clara Budget Update, Supp. Info. 1 - Item 3 City County Intro Memo (Miscellaneous) . BOS Board meeting, December 6, 2011, in the Board Of Supervisors' Chambers. Agenda item 27, Supp Info 1A, Memorandum of Agreement (Agreements and Amendments) Santa Clara County, Fiscal Year 2012 Final Budget Management Audit of Santa Clara Valley Health and Hospital System Administration and Support Services, April 6, 2011 Santa Clara County, Master Salary Ordinance Memo from Gallegos, Sylvia M., Deputy County Executive/Acting Director, SCVHHS, to Santa Clara County Health and Hospital Committee, Dated April 14, 2010 Memo from Smith, Jeffrey V., County Executive, to the Board of Supervisors, Subject: Recommendations Relating to Activities of the Center for Leadership and Transformation, Dated January 11, 2011 Memo from Pillari, George and Finucane, Mark (Alvarez & Marsal Healthcare Industry Group, LLC), to the County Health and Hospital Committee, Subject: A&M Project Report, Dated October 25, 2011 Santa Clara County Health and Hospital Committee, Dated April 14, 2010 13 Appendix B: Center for Leadership and Transformation (CLT)12 At the March 2, 2010 Board of Supervisors (BOS) meeting, the BOS approved the County Executive’s recommendation to contract with Rapid Transformation, LLC, in the amount of $196,000, for period beginning March 1, 2010 to June 30, 2010 (Agenda Item #11g). These activities have been completed. As part of the FY 2011 Approved Budget, the Board approved an expenditure of $600,000 for FY 2011 for a combination of executive management training, mid-level manager training, Rapid Transformation efforts, and website development. During the FY 2011 Budget Hearings, the Board approved funding to continue the organizational transformation efforts begun under the auspices of the Center for Leadership and Transformation. Rapid Transformation, LLC, headed by Dr. Behnam Tabrizi is conducting these efforts with the participation of County staff. $100,000 will be used to provide continued outreach with the County organization, including professional filming of key training sessions so they can be experienced by a wider County employee audience. The $270,000 being requested for CLT activities will be offset by revenues that are anticipated due to current CLT efforts to maximize revenues at Santa Clara Valley Medical Center. In addition to the active CLT project action teams, the SCVHHS Administration and staff have demonstrated organizational leadership and commitment to applying transformation principles to multiple aspects of the healthcare system, including assigning a cross-boundary team to examine the Medi- Cal waiver programs and other ongoing departmental efforts. 12 Memo from Jeffrey V. Smith, County Executive, to the Board of Supervisors, subject: Recommendations Relating to Activities of the Center for Leadership and Transformation, dated January 11, 2011. 14 This report was PASSED and ADOPTED with a concurrence of at least 12 grand jurors on this 3rd day of May, 2012. Kathryn G. Janoff Foreperson Alfred P. Bicho Foreperson pro tem James T. Messano Secretary 15

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