Transcript Roswell Park Cancer Institute Corporation Section 203 Budget Filing Fiscal Year 2015 – 2016 PROPOSED.

Roswell Park Cancer Institute Corporation
Section 203 Budget Filing
Fiscal Year 2015 – 2016
PROPOSED
1
203.6 a
Public Authority Relationship with Unit of Government
Roswell Park Cancer Institute
The Institute was founded in 1898 and became a State Institute in 1911. In 1971, it was one of the first three institutions certified as a
comprehensive cancer center by the National Cancer Institute. As such, it is committed to combat cancer through basic research, clinical
research and treatment, and professional and public education. Presently, there are 41 such centers designated in the United States.
The Institute is a 133 licensed bed facility and an ambulatory care center containing 15 multidisciplinary care centers with a staff of over
3,200 members, including clinical staff physicians, residents, fellows, and research staff. The primary physical plant covers several city
blocks in downtown Buffalo.
The operation of the Institute transferred from the New York State Department of Health to the RPCI Corporation on January 1, 1999. In
order to meet the demands of the changing health care marketplace and to promote the strengths and capabilities of the Institute, Chapter
5 of the Laws of 1997 added a new Title 4 to Article 10-c of the Public Authorities Law authorizing the RPCI Corporation. This legislative
authorization was intended to change the Institute’s governance structure to afford it market and managerial flexibility. Among the special
powers granted by the legislation to the Corporation were the powers to contract with the State to operate, manage, superintend and
control the Institute, and to establish, collect, and adjust fees, rental and other charges in connection with the operation of the Institute.
Pursuant to subdivision 2 of Section 403 of the Public Health Law, added by such chapter, the Department, acting on behalf of the State,
entered into an Operating Agreement with RPCI Corporation pursuant to which operating responsibility for the Institute was transferred to
RPCI Corporation effective January 1, 1999, and giving RPCI Corporation substantial independence in operating the Institute, including
the power to establish operating budgets, to establish and implement strategic business plans, to create subsidiary and affiliated entities,
to enter into affiliations and alliances with other health care providers and to establish, collect and adjust fees, rentals and other charges in
connection with the operation of the Institute.
Revenues generated by the Corporation as a result of operating the Institute are considered to be revenues of the State for the purpose of
its bond payment, and are required to be deposited into the Roswell Park Cancer Institute Debt Service Account of the Health Income
Fund for payment of debt service on the Bonds. The Department retains responsibility for paying debt service on the Bonds. After
allowing for accumulation of a debt service reserve for the Institute, the remaining revenues are transferred to the Roswell Park Cancer
Institute Income Account of the Health Income Fund. After allowing for a balance for refunds these revenues are, in turn, transferred to
RPCI Corporation.
RPCI Corporation’s responsibility is to ensure the fiscal and programmatic integrity of the facility. To achieve this objective, the
Corporation has updated the strategic plan for the Institute which includes major programmatic and scientific, as well as, fiscal goals.
Some of the key goals include the recruitment of top-tier clinical and scientific talent; developing a methodology to monitor the
effectiveness of programs and faculty; enhancing financial viability through revenue and expense controls; building a strong and profitable
biotechnology transfer program in collaboration with peer facilities; emphasis on clinical and translation research, as well as developing
and implementing new clinical trials and establishing a cancer disease management and clinical outcomes program.
2
The Institute is a formally designated unit of the Graduate School of the University of New York at Buffalo and has numerous affiliation
agreements with other educational institutions and hospitals. Training provided by the Institute under these agreements includes medical,
nursing and medical research.
203.6 b
The RPCIC Budget Process Timeline
Submit
“Condensed
Revenues,
Expenditures &
Changes in
Current Net
Assets”
to ABO
Volumes, Grants
+ Inflation
Aug
Sept
Oct
Requests received for:
- New Initiatives
- Operating Infrastructure
- Capital spending
3
Nov
Board
approves
Budget
Update December
ABO Submission
Dec
Input completed for:
-Operating Budgets
- New Initiatives
- Capital spending
Jan
Feb
Mar
CEO
approves
Proposed Budget/
Budget Posting
per ABO
Guidelines
Apr
Submit
Section 203
materials to
the state
203.6 b
Capital Allocations will be completed using the
Following Team structure
4
Facilities
Committee
IT Committee
Clinical
Committee
Scientific
Committee
Administrative
Chief Institute
Operations Officer
General Counsel
President / CEO
Chief Clinical
Operations Officer
President / CEO
V.P. of Finance and
C.F.O.
VP for Facilities
Management
Vice President
Information
Technology
Budget Assumptions - FY16
Revenue Assumptions:
Base Volumes
Admits +8.4%
IP Days +2.2%
OP Visits +4.6%
Rate Assumptions
Payor increases per contracts
Governmental payor increases per regulations
Sources of Revenues:,
Include Private and Governmental Contracts, Grants and
Donations, and Funding from New York State
Staffing:
At current levels, adjusted for:
Productivity Standards, New Initiatives, Strategic Research
Initiatives and Infrastructure
Future Collective Bargaining Costs:
Bargaining Unit increases for FY2016 included Step and COLA
consistent with current CBA
Inflation:
> Salaries - Steps and COLA factored in per CBA above
> Fringe Benefits - increase consistent with salaries
> Pharmacy (inflation & new drugs) +5.7%
> Medical Supplies, Blood Products, Office Supplies, Purchased Services +2.4%
Programmatic Goals:
> Continue Implementation of Strategic Research Initiatives
> Continue Strategic Recruiting Efforts
> Evaluate Collaborative Opportunities
> Continue Implementation of Strategic Transformation Plan
> ICD10 Implementation
5
> OmniSeq (Personalized Medicine) Project
203.6 c
Challenges and Obstacles – External Forces
203.6 d
External forces that challenge our ability to successfully implement Roswell’s vision
for the future:
6

Current Economic Climate

Outcome of final 2016 NYS Budget

NYS support requested and timing of when funds will be received

Recruitment - Increasing costs and competition

NIH Funding
•
Decreases in overall funding while competition for funds increases
•
Conclusion of American Recovery and Reinvestment Act (ARRA) funding
•
Ongoing Impact of Sequestration

Managed Care
•
Increasing role of National players for commercial and Medicare Advantage plans
•
Increasing premium trends are moderating, causing payors to negotiate more aggressively to
keep medical expenses at current or moderately higher costs
•
Implementation of Insurance Exchanges are leading payors to seek minimal increases on small
group and Insurance Exchange product offerings
•
Increasing use of utilization management and prior authorization tools by payors will provide
administrative challenges for ensuring reimbursement for services provided is received
•
Increasing use of limited networks and ACO’s may result in less access to Roswell for prospective
patients

Federal Deficit impairs Medicare program spending
•
Ongoing Impact of Sequestration

Physical capacity to meet demand for clinical services

Ability to invest in accordance with RPCI Strategic Plan

Unknown Impacts of Healthcare Reform
203.6 e
203.6 g
CONDENSED BUDGETED REVENUES, EXPENDITURES AND
CHANGES IN CURRENT NET ASSETS
REVENUE & FUNDING SOURCES
Operating Revenues
Charges for Services
Rental & Financing income
Other Operating revenues
Last Year
(Actual)
FY 2014
Current Year
(Estimated)
FY2015
Proposed
Budget
FY2016
Proposed
FY2017
Proposed
FY2018
Proposed
FY2019
$
440,312 $
462,542 $
486,699 $
524,609 $
550,169 $
573,686 $
598,978
$
10,240 $
9,816 $
10,880 $
11,073 $
11,202 $
11,334 $
11,466
$
$
860 $
102,600 $
1,657 $
102,600 $
718 $
102,600 $
1,026 $
87,100 $
1,469 $
102,600 $
1,971 $
102,600 $
2,453
102,600
Proceeds from the issuance of debt
Total Revenues and Funding Sources
$
554,011 $
576,615 $
600,896 $
623,807 $
665,441 $
689,591 $
715,498
EXPENDITURES
Operating expenditures
Salaries and Wages
Other Employee Benefits
Professional Services and Contracts
Supplies and Materials
Other operating expenditures
$
$
$
$
$
194,000
72,941
67,664
126,113
18,410
209,754
77,704
82,995
123,783
14,193
205,620
72,227
75,784
141,663
10,856
226,214
80,872
99,531
168,052
11,714
229,772
84,880
87,328
180,402
12,265
238,290
89,382
87,273
190,864
12,460
$
$
$
$
$
249,574
94,857
87,012
202,531
12,945
Non-operating Revenues
Investment earnings
State subsidies/grants
Federal subsidies/grants
Municipal subsidies/grants
Public authority subsidies
Other Non-Operating Revenue
Non-operating expenditures
Payment of principal on bonds and financing arrangements $
Interest and other fiscal charges on debt
$
Subsidies to other public authorities
Capital asset outlay (including CSC)
$
Miscellaneous
$
7
Current Year
(Budget)
FY2015
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
12,239 $
8,788 $
12,858 $
8,196 $
12,858 $
8,372 $
13,279 $
7,706 $
13,055 $
7,457 $
13,726 $
6,875 $
15,689
6,278
41,315 $
- $
62,193 $
- $
58,822 $
- $
56,901 $
- $
40,192 $
- $
32,416 $
- $
39,866
-
Total Expenditures
$
541,469 $
591,675 $
586,203 $
664,270 $
655,351 $
671,285 $
708,752
CAPITAL CONTRIBUTIONS
$
12,129 $
19,060 $
18,233 $
9,807 $
4,080 $
900 $
-
"Excess (deficiency) of revenues and capital contributions
over expenditures"
$
24,671 $
4,000 $
32,926 $
(30,656) $
14,170 $
19,206 $
6,746
ROSWELL PARK CANCER INSTITUTE CORPORATION
Cash Flow Projections (in millions)
203.5 h
Budget
2015
Excess (Deficiency) of revenues and capital contributions over expenditures
$
Funding of Academic Development
NewCo Working Capital
BDF Funds used to cover unfunded liabilities
Working Capital/Other Changes of AWUIL
$
$
$
$
Annual Unrestricted Cash Impact
8
Projected
2015
4.0 $
(3.1)
7.1
8.0
$
$
$
$
Budgeted
2016
32.9 $
(1.4)
(0.3)
(28.2)
8.6
11.7
$
$
$
$
Budgeted
2017
(30.7) $
(2.0)
(2.8)
53.0
2.3
19.8
$
$
$
$
Budgeted
2018
Budgeted
2019
14.2 $
19.2 $
(2.1)
(4.7)
(5.8)
(2.1)
(9.0)
(1.9)
1.7
$
$
$
$
6.2
$
$
$
$
6.7
(2.1)
(4.6)
7.7
7.7
203.5 d
Roswell Park Cancer Institute Corporation (PBC)
Projected Operating Revenues - Net Patient Service Revenues
($ In Thousands)
FY15
Projected
FY17
Budget
FY18
Budget
FY19
Budget
Volume Statistics
Admits
Days
ALOS
Visits
4,521
38,567
8.53
199,637
4,901
39,427
8.04
208,876
4,986
40,043
8.03
212,016
5,073
40,667
8.02
215,120
5,161
41,306
8.00
218,279
Direct Patient Service Revenue
RPCI IP Revenue
RPCI OP Revenue
Other
RPCI Total
181,335
227,523
13,588
422,447
192,329
251,714
29,288
473,331
202,656
271,579
23,969
498,204
210,552
284,447
24,511
519,510
218,790
299,570
25,064
543,424
16,448
31,625
48,073
17,556
34,115
51,671
18,210
35,477
53,687
18,785
36,680
55,465
19,388
37,939
57,328
Total Direct Patient Service Revenue
470,520
525,002
551,891
574,975
600,752
Other RPCI Patient Service Revenue
Other CPP Patient Service Revenue
Total Other Patient Service Revenue
19,894
1,055
20,949
3,719
1,055
4,774
2,736
1,055
3,791
3,439
1,055
4,494
3,236
1,055
4,291
491,469
529,776
555,682
579,469
605,043
5,558
745
6,303
5,939
801
6,740
6,253
832
7,085
6,495
860
7,355
6,749
889
7,638
485,166
523,036
548,597
572,114
597,406
1,533
1,572
1,572
1,572
1,572
486,699
524,609
550,169
573,686
598,978
CPP IP Revenue
CPP OP Revenue
Other
CPP Total
Total Net Patient Service Revenue
RPCI Provision for Bad Debts
CPP Provision for Bad Debts
Total Provision for Bad Debts
Total Net Patient Service Revenue
Net of Provision for Bad Debt
Grants and Contracts
Total Charges for Services
9
FY16
Budget
203.5 d
Roswell Park Cancer Institute Corporation (PBC)
Projected Operating Revenues - Other Revenue
In Thousands
FY15
Projected
Other Operating Revenues:
Cafeteria
Parking Ramp/Surface
Aids/Prison Hotline Revenue
Rebates
Shared Services Reimbursements
Rental Income
CPP Physician Salary Support
Other
Total Other Operating Revenues
10
1,662
2,321
270
1,750
1,200
120
1,870
1,686
10,880
FY16
Budget
1,663
2,279
270
1,750
1,275
120
1,875
1,840
11,073
FY17
Budget
1,680
2,302
273
1,768
1,288
121
1,913
1,859
11,202
FY18
Budget
1,697
2,325
275
1,785
1,301
122
1,951
1,877
11,334
FY19
Budget
1,714
2,348
278
1,803
1,314
124
1,990
1,896
11,466
203.5 e
203.5 f
Roswell Park Cancer Institute Corporation (PBC)
Detail of Salaries and Fringe and Non Personnel Service Operating Expense
In Thousands
FY15
Projected
Salaries
Salaries and Wage Costs
Furlough/Severance Expense/Payments
Overtime Payments
Premium Payments
TOTAL Personnel Service Expense
Fringe
NYS Pension Expense & TIAA CREF
Health Insurance: Active
Health Insurance: GASB Payments
Other Fringe
TOTAL Fringe Expense
FY16
Budget
FY17
Budget
FY18
Budget
FY19
Budget
200,055
656
2,853
2,056
205,620
220,482
1,491
2,012
2,230
226,214
225,013
306
2,112
2,341
229,772
233,614
2,218
2,458
238,290
244,664
2,329
2,581
249,574
27,847
19,258
6,498
18,625
72,227
27,806
22,108
7,368
23,590
80,872
28,675
23,656
8,371
24,178
84,880
29,546
25,193
9,535
25,107
89,382
30,444
26,705
10,857
26,852
94,857
117,649
50,404
111,245
279,298
128,211
52,192
99,593
279,995
136,951
53,913
99,733
290,596
146,413
56,118
99,956
302,488
Note: The fringe expense includes the cash payment for the retiree's
health insurance, but does not include the GASB 45 accrual
Non Personnel Service Operating Expense
Pharmaceuticals
Medical, Blood, Other Supplies
Contracted Services / All Other
TOTAL Non Personnel Service Expense
11
96,067
45,596
86,640
228,303
203.6 f
Roswell Park Cancer Institute Corporation (PBC)
Reconciliation FY15 Budget to FY15 Projected
Modified Accrual Basis
in Millions
1
Excess (Deficiency) Revenues over Expenses (FY15 Budget)
$
4.0
2
Clinical Margin
$
4.7
3
Increased Vacancy Rate
$
6.7
4
Settlement Revenue
$
9.5
5
Other Operating Revenue
$
0.8
6
Utilities
$
0.6
7
Malpractice
$
2.7
8
Timing of Capital Investments (including CSC)
$
3.4
9
All Other
$
0.5
Excess (Deficiency) Revenues over Expenses (FY15 Projected)
$
32.9
10
12
203.6 h
Roswell Park Cancer Institute Corporation (PBC)
FY 2016 Budgeted # of FTE's and # of Employees
Functional Classification
Clinical / Clinical Research / Academic
Scientific / Academic
Administrative and Other
Total All Functional Areas
Total #
Employees
1,867.0
154.5
502.0
2,523.5
Sources of Funding:
The Source of funding for the projected workforce is:
Patient service Revenues - Government and Private Payors
Grants and Contracts
Donations
New York State Funding
13
Total #
Full Time
1,580.0
143.5
462.0
2,185.5
Total #
FTE's
1,688.6
146.8
474.3
2,309.7
203.6 i
Roswell Park Cancer Institute (PBC)
FY 2016 New Revenue-Enhancement and
Cost-Reduction Initiatives
As part of the Institute’s long range strategic plan, investments are
being made in clinical operations. These investments are critical to
meeting the projected demand for oncology services and increasing
revenue in RPCI’s clinical operations, which are used to support
research and academic missions at the Institute.
Major Gap Closing Components:
$$ in millions
Clinical Margin Improvement
Transformation Savings
14
3.8
4.7
203.6 j
Roswell Park Cancer Institute (PBC)
FY 2015 – FY2019 Material Non-Recurring Resource
•
15
The Institute is projecting non-recurring capital contribution revenues of
approximately $18.2 million, $9.8 million, $4.1 million, $0.9 million and $0.0 million
in fiscal years 2015 – 2019 respectively. These contributions are expected to assist
in funding the continued growth at Roswell Park.
203.6 k
Roswell Park Cancer Institute (PBC)
FY 2016 – Material Shift in Resources Between Years
•
16
Capital projects can span multiple years. The entire project is
approved prior to initiation, and due to the magnitude of certain
projects there can be an approved balance to carry forward to
the next fiscal year. Carry over balances are determined and
approved by executive leadership after the start of the new
fiscal year.
203.6 l
ROSWELL PARK CANCER INSTITUTE CORPORATION
Borrowed Debt Outstanding projected
in Millions
Borrowed Debt Outstanding
PBC revenues are
pledged to repayment
of the follow ing DASNY
indebtedness issued
through New York State
Department of Health
1
2
3
4
5
6
DASNY Debt issuance 12/4/03
DASNY Debt issuance 4/7/04
DASNY Debt issuance 4/7/04
DASNY Debt issuance 5/24/05
DASNY Debt issuance 7/13/2011
Capital lease obligations
Debt outstanding at March 31st year end
$
Proposed
Budget
Projection
Projection
Projection
FY2016
FY2017
FY2018
FY2019
174.0 $
161.0 $
147.2 $
131.5
in 000's
Bonds
Scheduled Debt Service Payment
For the Year ending March 31
2015
2016
2017
2018-2022
2023-2027
Thereafter
*All debt is issued. There is currently no proposed debt.
17
Principal
$
$
$
$
$
$
$
12,858
13,279
13,055
81,744
74,679
195,615
Capital Leases
Interest
$
$
$
$
$
$
$
9,458
8,806
8,139
29,275
7,190
62,868
Principal
$
$
$
$
$
$
$
(5)
(1)
4
99
267
4,168
4,532
Interest
$
$
$
$
$
$
$
154
154
154
765
734
1,804
3,765
203.6 l (cont’d)
ROSWELL PARK CANCER INSTITUTE CORPORATION
Purpose of Debt Issuances
PBC revenues are pledged to repayment of the following DASNY indebtedness issued through New York State
Department of Health:
18
1
On December 4, 2003, DASNY issued debt in the amount of $41,910,000 (RPCIC allocated 85%). Under the
terms of the issuance, interest ranges from 2.0% to 5.25% per annum with interest and principal payments due
through 2024. The bond proceeds were used solely to defease a portion of the outstanding 1994, 1995 and
1996 bond series.
2
On April 7, 2004, DASNY issued debt in the amount of $77,245,000 (RPCIC allocated 95.15%). Under the
terms of issuance interest ranges from 2.0% to 5.0% per annum with interest and principal payments due
through 2024. The bond proceeds were used solely to defease a portion of the outstanding 1994, 1995 and
1996 bond series.
3
On April 7, 2004, DASNY issued debt in the amount of $78,870,000 (RPCIC allocated 95.51%). Under the
terms of issuance interest ranges from 2.0% to 5.0% per annum with interest and principal payments due
through 2023. The bond proceeds were used solely to defease a portion of the outstanding 1994, 1995 and
1996 bond series.
4
On May 24, 2005, DASNY issued debt in the amount of $51,465,000 (RPCI allocated 95.51%). Under the
terms of issuance interest ranges from 3.0% to 5.25% per annum with interest and principal payments due
through 2026. The bond proceeds were used solely to defease a portion of the outstanding 1996 bond series.
5
On July 13, 2011, DASNY issued debt in the amount of $48,180,000 (RPCI allocated 74.85%). Under the terms
of issuance interest ranges from 2.0% to 5.0% per annum with interest and principal payments due through
2025. The bond proceeds were used solely to defease a portion of the outstanding 1998 bond series.
6
On June 1, 2012, RPCIC entered into a capital lease obligation to rent 226 parking spaces for a 35 year period.
Under terms of the agreement, the cost of capital is estimated at 3.4% per annum with interest and principal
payments due through 2047.
203.6 l (cont’d)
ROSWELL PARK CANCER INSTITUTE CORPORATION
Debt Service/Pledged Revenues
Ryan/Vanessa update
and Debt limited levels
Debt Service
Debt Service as a percentage of Pledged Revenues*
1
2
3
4
5
DASNY Debt
DASNY Debt
DASNY Debt
DASNY Debt
DASNY Debt
Total
issuance 12/4/03
issuance 4/7/04
issuance 4/7/04
issuance 5/24/05
issuance 7/13/11
$
$
$
$
$
$
FY 2016
1,356
10,147
3,337
2,500
4,745
22,085
Pledged
$
$
$
$
$
Debt Service
Percent of
Revenues
Pledged Revenues
458,000
0.3%
458,000
2.2%
458,000
0.7%
458,000
0.5%
458,000
1.0%
4.8%
*Pledged revenues are defined in accordance w ith RPCI bond documents
RPCI is authorized to incur additional indebtedness beyond its current levels. Should the amount of its requested
indebtedness exceed 15% of amounts transferred from the Health Income Fund to RPCI in the previous year, prior
written approval of the NYS Division of Budget is required. RPCI has not assumed that additional indebtedness of this
magnitude will occur in its FY2015 budget. NOTE: RPCI has secured a line of credit with M&T bank to cover
operational cash flow needs should NYS be late in paying its quarterly support payments to the Institute. Interest costs
related to accessing the line of credit have not been included in the FY 2015 budget as we are assuming NYS support
payments will occur in a timely manner.
19
203.6 m
FY2016 Capital Budget Summary
In Thousands (000's)
Budget
2016
Projects funded with Operating Cash:
Total Facilities Capital
$
14,778
Clinical, Scientific & Administrative Equipment
$
12,404
Information Technology
$
6,816
Strategic Initiatives
$
6,000
NewCo - OmniSeq (Personalized Medicine)
$
4,758
$
44,756
Clinical Science Center
$
12,145
Total Capital Expenditures
$
56,901
Subtotal
Projects funded with Support from Outside Sources:
Note:
None of the projects is expected to have a material impact on the operating budget.
IT projects include ongoing maintenance costs which are not material to the operating budget.
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Sec 203.9 CERTIFICATION
By check ing this box, I certify that the OSC Budget Request (Part 203) submission is complete and to the
best of my k nowledge and belief after reasonable inquiry, the information provided in this submission is
accurate and correct. This information has been presented to and accepted by the authority's Board.
Chief Operating Officer
Roswell Park Cancer Institute Corporation
Presented to The Roswell Park Cancer Institute Corporation's Board of Directors
on March 3, 2015
Approved by the Board of Directors on March 3, 2015
21