COUNTY OF SAN MATEO

Inter-Departmental Correspondence

San Mateo Medical Center

DATE:

January 21, 2003

BOARD MEETING DATE:

February 4, 2003

TO:

Honorable Board of Supervisors

FROM:

Margaret Taylor, Director, Health Services

Nancy J. Steiger, Chief Executive Officer, San Mateo Medical Center

SUBJECT:

Geriatric Assessment Center

Recommendation

Adopt a resolution approving Phase 1 of the Geriatric Assessment Center and approve an Amendment to the Master Salary Ordinance adding a Clinic Services Manager, Physician and Administrative Assistant.

Background

In 2000, the Lewin Group studied the best use of the long-term care beds at San Mateo Medical Center (SMMC). The study considered the suitability of facilities for handling Mental Health and Aging and Adult Services conservatorship cases, how to reduce administrative days and payment denials at SMMC, and how to improve financial performance and mitigate net county costs. Lewin examined the availability of bed space at the hospital, the expected increase in the County's older adult population with Medicare and/or Medi-Cal health insurance, and the need for older adult services. One of the principal recommendations of the study was the development of a geriatric assessment center.

In addition, over the past three budget cycles, your Board has requested report-backs on service capacity for older adults in this county. These reports conclude that a shortage of skilled nursing capacity, coupled with an increasing demand for skilled nursing services and a growing older population, suggest that the County should develop programs that permit older adults to live independently as long as possible. Such approaches will address the County Vision 2010 commitments to housing for all people, incomes, and generations; basic health and safety for all; and access to healthcare and preventive care.

In 2001, JM Watt Consulting, under contract with Aging and Adult Services, completed a design and financial analysis for a geriatric assessment center program. This program has two major objectives: (1) to create services to meet the unique and increasing needs of aging adults in San Mateo County, with particular focus on those at-risk for losing independence; and (2) to build upon existing SMMC, Mental Health, and Aging and Adult services resources to generate a positive financial contribution. The SMMC Board of Directors reviewed the geriatric assessment concept again in 2002, and another outside consultant reconfirmed the financial analysis.

Discussion

One of the major issues discussed at the SMMC Board of Directors retreat held in June 2002 was the need to increase inpatient volume at SMMC. Currently, Medical Center occupancy is only at 57% of licensed capacity and 60 beds that were once used for long-term care services remain empty. Given current State and Federal financial turmoil, volume increases -- especially increases in insured patient populations-- remain one of the few ways for the hospital to generate additional revenue and cover the high fixed costs associated with operating an inpatient facility.

The Geriatric Assessment Program is designed to generate increased inpatient volume for SMMC, for a patient population that is by definition insured. It is also designed to take full advantage of health care financing trends by offering outpatient services for a population generally covered by the Medi-Cal Federally Qualified Health Center (FQHC) program. Currently, the Medical Center only serves 25% of this population in the County.

While the State and Federal budgets are highly uncertain at this time, the anticipated revenue sources associated with the Geriatric Assessment Program are likely to remain viable. Medicare inpatient revenues have been conservatively projected, to allow for a decrease in federal Medicare reimbursement levels. The FQHC program and its current reimbursement levels are protected in federal legislation that would require a change in federal law to modify. Because this program is closely associated with community health centers, which have received large funding increases and full support from the current federal administration as well as from both political parties in the past two years, it is unlikely that funding reductions affecting community health centers will occur. The Governor's current midyear budget reductions specifically exclude FQHC's from the proposed 10% Medi-Cal provider reductions, since the State is unable to reduce FQHC reimbursement without a change in federal law.

The Geriatric Assessment Center will meet a growing community need as well as address the Medical Center's financial challenges by offering clinical and supportive services designed to meet the unique requirements of this population. There are currently no comprehensive service approaches to older San Mateo County residents who have exhibited a marked change in functional or mental status. The Center will address the needs of these individuals and their families, as well as serve older people with chronic or complex health issues that tax their current primary care providers. The Center also offers a distinctive multidisciplinary approach based on the unique capabilities of Health Services and SMMC, where mental health care, older adult social services, and patient care medical expertise exist under "one roof." Finally, the Center will provide SMMC with additional appropriate admissions; improve net income based on the Medicare/Medi-Cal insurance payor mix; decrease inpatient average length of stay and administrative days; and decrease emergency room visits by providing more outpatient services and home and community-based support.

Fiscal Impact

Anticipated start-up capital and operating expenses for FY 2002-03 are $668,400, of which $600,000 will be needed for minor facility renovation and capital equipment. The remainder of these funds will cover the operating expenses including salaries and benefits for the remainder of the year. We anticipate a short recruitment period for the Clinic Manager and Administrative Assistant and a longer period for the Physician. These expenses will be funded using the Medical Center's available surplus cash. The Geriatric Assessment Center's program will be phased over two years to minimize costs and to enable the 39^th Clinic to rebuild it's outpatient volume. Over the course of five years, the average net return to the Medical Center is projected to be 7.6% or approximately $1.8 million dollars. The fifth year of operation is projected to net 15.5% or $1.1 million.