Becker's Hospital Review

17 CFO / FINANCE Mission Health CEO Calls BCBS 'Unethical, Bullying Foe' in Internal Email to Senior Leadership By Morgan Haefner T he CEO of Asheville, N.C.-based Mission Health System called Blue Cross and Blue Shield of North Carolina "the most unethical, bullying foe that I have ever faced" in an email to senior employees ob- tained by The Citizen-Times. Mission Health's contract with Durham- based BCBSNC expired Oct. 5 follow- ing a monthslong feud. Mission Health President and CEO Ronald Paulus, MD, wrote in an Oct. 4 email to roughly 60 senior employees, "When leaders from across North Carolina and beyond called to 'warn me about what Blue Cross would do,' I listened carefully but was skeptical." The approximately 600-word private email accused BCBS of lying to its clients. Dr. Paulus wrote, "I didn't think that was possible from a multibillion dollar company, but alas it was and it is." The Citizen-Times obtained the letter the night before the contract expired. Dr. Paulus said the email was not in- tended for the public or BCBS. He told the publication the email "was a message to core team members that had been through the equivalent of a battle and who I felt needed for me to be clear of my support for them, my willingness to stand with them and my willingness to sacrifice or be sacrificed for them." On Oct. 12, BCBSNC requested Mis- sion Health retract the "defamatory and inflammatory" comments present- ed in Dr. Paulus' email. The payer told The Citizen-Times the message "deep- ens our concerns and dampens our hope" for a new deal. The expired contract left roughly 260,000 BCBSNC policyholders to face out-of-network rates for Mission Health services. In mid-November, Mission Health and BCBSNC agreed to return to negoatiations The parties were in talks at the time this article went to print. n Dignity Health's Operating Loss Widens to $66.8M With Loss of State Provider-Fee Revenue By Ayla Ellison D ignity Health, a 39-hospital system based in San Francisco, saw its operat- ing loss widen in fiscal year 2017 even as it booked higher revenue and held expenses in check. However, like many systems, it bene- fited from higher investment income. Dignity recorded revenues of $12.9 billion for the year, which ended June 30, compared with revenues of $12.6 billion for fiscal 2016, according to released bondholder documents. Dignity and other California healthcare pro- viders have struggled with loss of funds from the state's provider-fee program, which is de- signed to help hospitals and health systems treat a larger number of indigent patients. e program levies a tax on hospitals, and the state then pools funds to receive federal matches for Medicaid dollars, which are distributed back to hospitals based on the number of indigent patients they treat. In November 2016, California's participation in the provider-fee program was made perma- nent with the passage of Proposition 52, which hobbles state lawmakers' ability to change or end the program. However, CMS has not ap- proved the first iteration of the program un- der the permanent legislation, which covers the period from Jan. 1, 2017, to Dec. 31, 2019. Accordingly, Dignity did not include pro- vider-fee program payments for the first six months of this year in its financial statements for fiscal year 2017. Although Dignity held its expenses in check, the loss of provider-fee revenue caused the system's operating loss to widen from $63.4 million in fiscal 2016 to $66.8 million in the most recent fiscal year. However, had a full 12 months of provider-fee funds been approved and recorded, Dignity said it would have end- ed the fiscal year with operating income of $149.4 million. In line with Dignity's core mission of offering affordable, quality care to all, the system pro- vided $2.6 billion in charity care, community health programs and other community sup- port programs in fiscal year 2017, up from $2.2 billion the year prior. Dignity Health Se- nior Executive Vice President and CFO Daniel Morissette told Becker's Hospital Review he's proud of the many ways Dignity is able to sup- port its patient population. "We're proud of the fact that we continue to play a huge role in expanding access to care, and that we continue to find ways to deliver cost-effective, high-quality care," he says. "We are proud we've been able to continue to invest in our communities and the people we serve." To navigate the headwinds Dignity is facing, the system has a multiyear operational im- provement plan in place focused on adopting more efficient ways of delivery high-quality patient care. e system made progress with some of those initiatives in the most recent fiscal year, and Mr. Morissette says Dignity aims to make more improvements in the year ahead. "We continue to make operational improve- ments to strengthen our organization, and we're doing that through finding ways to grow revenue as well as through cost efficiencies … and through innovation," he says. "We're going to continue to focus on adjusting our revenue and cost structure to meet the changing de- mands in healthcare." Aer accounting for investment gains of $555.5 million, Dignity's net surplus was $383.6 million in fiscal year 2017, compared to a net loss of $237.8 million in the year prior. With the full year of provider-fee payments, the system said its net income would have jumped to $599.8 million. n

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