Natividad Medical Center Receives Approval in Principle To Move To Become A Public Hospital Authority

July 29, 2011

SALINAS, CA (July 29, 2011) The Board of Supervisors approved in principle for Natividad Medical Center (NMC) to move forward to establish a Public Hospital Authority to take effect following the passage of enabling legislation and approval of a future County Ordinance. This will enable the hospital to pursue reconfiguring its governance, management, business model and services to more effectively transition into a more streamlined integrated health care system offering an array of primary, specialty and acute health care services.

NMC CEO Harry Weis said NMC needs to have a “best in class” governance, business model and service array to have a high probability of long term success as a designated public safety net hospital absent any future County General Fund subsidies. While maintaining its historic public safety net role, becoming a Public Authority will enable NMC to more easily contract, partner or develop all of the healthcare delivery components required as a result of local market forces, state and federal healthcare reform. As a Public Authority, NMC can develop or more easily participate in cost effective health care plans for both individuals and businesses.

As a Public Authority, NMC will have the ability to be a key player, collaborating more fully in the community to reshape the delivery of health care in Monterey County. As an authority, NMC will:

· Evolve from a County department to a Best in Class health care organization with high quality and patient satisfaction and efficient, effective operations;

· Maintain its role as a designated public safety net hospital, the preferred provider for the low income population which is the fastest growing health care consumer population in Monterey County;

· Maintain salary and benefit structures similar to pre authority implementation;

· Be better equipped to fully and directly compete with the private sector in healthcare;

· Maintain a skill based Board of Trustees, approved by the Board of Supervisors, whose sole function is to focus on hospital governance;

· Have control over revenues and expenditures vested with the Board of Trustees;

· Structurally have all operational functions reporting directly to the CEO;

· Enter into new business partnerships and contracting arrangements that are pragmatic and non-political implemented to strengthen the NMC healthcare delivery system;

· Have increased philanthropic support as a trusted community partner; and

· Not require General Fund support.

· A minimum of $132M in capital improvements to upgrade the existing facility and equipment and to fund new lines of business between now and 2020;

· As an authority, NMC’s cash position improves by over $70M over a ten year period as compared to continuing as a department within the County of Monterey through more timely decision making, operational flexibility, and improved performance based Medicare and MediCal reimbursement; and

As health care evolves over the next several years, the implementation of a NMC Authority with a projected implementation date no later than June 30, 2012 will ensure NMC’s continued ability to meet its obligations as the safety net hospital to the residents of Monterey County.

About Natividad Medical Center

Natividad Medical Center is a Monterey County owned and operated 172 bed acute care hospital providing health care services to the people of the county for more than 125 years. Natividad Medical Center offers inpatient, outpatient, emergency, diagnostic and specialty medical care. NMC provides more than 33,000 patient days each year and more than 42,000 emergency department visits per year. NMC is ranked #1 in newborn deliveries in Monterey County. Natividad is the only teaching hospital on the Central Coast, through its affiliation with the University of California, San Francisco (UCSF). With a medical staff of more than 250 physicians, Natividad’s mission is to continually improve the health status of the people of Monterey County through access to affordable, high-quality health care services. Natividad is based in Salinas, California. For more information, please call 831-755-4111 or visit www.natividad.com.

With or without federal health care reform, the health care market place is changing at an unprecedented rate. The recent changes in how Medicare proposes to reimburse hospitals for acute care services will markedly change how hospitals deliver care. Medicare is scheduled to move to paying hospitals a “bundled rate” for a specific inpatient stay. Bundle payments include the reimbursement for all hospital costs as well as all physician costs in a single payment including all outpatient medical care up to 30 days after a hospital stay. This will be mean that hospitals, physicians and other healthcare providers will need to work much more closely with each other in the future.

In addition, Medicare has developed a series of quality indicators which hospitals must improve upon each year in order to avoid any payment penalties from Medicare. Quality measures including hospital re-admission rates, rate of hospital acquired infections, and other quality measures will be utilized to determine whether a hospital will avoid any payment penalties for services delivered. Other major health insurance plans are very likely to follow Medicare’s lead in restructuring their reimbursement systems and establishing new quality indicators for acute hospital care. With the change in reimbursement structures for acute care services, hospitals will have to shift from a “volume based” business model to a “quality based” business model in order to insure the maximum rate of reimbursement.

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Natividad Medical Center Receives Approval in Principle To Move To Become A Public Hospital Authority

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