X
UWHCA Board of Directors
(Joint Meeting With UWMF Board of Directors)
April 21, 2016, 1:30 - 4:30 PM, Harting-Mullins Conference Room, 4201 HSLC
1:30 PM IIII. . Resolution of Gratitude for Service of Dr. Jeffrey GrossmanResolution of Gratitude for Service of Dr. Jeffrey GrossmanDr. Robert Golden
Approval
Attachment - Minutes from February 25, 2016Joint Meeting With UWMF Board of Directors
Attachment - Medical Staff Membership and Clinical Privileges 03 2016
1:30 PM IIIIII. . Consent AgendaConsent AgendaDr. Robert Golden
Approval
Attachment - UW Health Support for UWSMPH
IVIV. . UW Health Support to UWSMPHUW Health Support to UWSMPHMr. David Ward
Presentation /Approval
Attachment - UW Health MTI Integration Plan
Resolution - UWHCA MTI
VV. . Joint Obligated Group Consolidation: MTI IntegrationJoint Obligated Group Consolidation: MTI IntegrationMr. Robert O'Keefe
Approval
1:30 PM II. . Call to Order of Board MeetingCall to Order of Board MeetingDr. Robert Golden
Resolution - Resolution of Gratitude Honoring Jeffrey Grossman, MD
Resolution - UWMF Department of Surgery Transfer Request to UWF
Resolutions - Approving Amendments to Integration and AAA Agreement
Resolution - UWHCA for UWMF Reserved Powers MTI
VIVI. . CEO ReportCEO ReportDr. Jeffrey Grossman
Report
VIIVII. . The Cost of CareThe Cost of CareDr. Jonathan Jaffery
Presentation/Discussion
VIIIVIII. . Closed SessionClosed Session Motion to enter into closed session pursuant to Section 19.85(e), WisconsinStatutes, for the discussion of strategic, financial and other proprietarymatters which for competitive reasons require a closed session, includingbut not limited to review of confidential terms of payer contracts andupdates to a proposed partnership between Unity Insurance Company andGundersen Health Plan; pursuant to Section 146.38, Wisconsin Statutes,for the review of the services of health care providers; and pursuant toSection 19.85(1)(g), Wisconsin Statutes, to confer with legal counselregarding strategy with respect to each of these matters.
UWHCA and UWMF Board of Directors - April 21, 2016 *Joint Meeting*UWHCA and UWMF Board of Directors - April 21, 2016 *Joint Meeting*
AgendaAgenda
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IXIX. . ACTION: Endorsem*nt of Partnership Capital ContributionACTION: Endorsem*nt of Partnership Capital ContributionDr. Robert Golden
Approval
XIXI. . FYI AttachmentFYI Attachment
Informational
Resolution - Contribution to UHC (Unity/Gundersen)
4:30 PM XX. . AdjournAdjourn
FYI Attachment - UW Health Consolidated Financial Report
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Attachment
Resolution of Gratitude
April 21, 2016
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RESOLUTIONS OF
THE BOARD OF DIRECTORS OF
UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY
Honoring Service of Jeffrey E. Grossman as
Interim Chief Executive Officer
April 21, 2016
WHEREAS, Jeffrey E. Grossman, M.D. has provided thoughtful leadership as Interim
Chief Executive Officer to the University of Wisconsin Hospitals and Clinics Authority
(“Authority” or “UW Health”) during one of the most significant times in the history of the
Authority;
WHEREAS, prior to his work as CEO of the Authority, Dr. Grossman served in several
other roles for UW Health, including Vice President for Medical Affairs, Physician-in-Chief, Chair
of the Department of Medicine, and Medical Director of the Trauma and Life Support Center.
WHEREAS, while acting as the chief executive officer of the University of Wisconsin
Medical Foundation, Inc. (“UWMF”), Dr. Grossman planned, negotiated and helped make “One
UW Health” a reality through integrating the Authority and UWMF, a key step in his career-long
efforts to foster the evolution of the traditional Department-based academic health center practice
model at the University of Wisconsin School of Medicine and Public Health toward a more
integrated physician-led health system model at UW Health with roots in the community as well as in
academia.
WHEREAS, upon being named the first CEO of the single UW Health enterprise,
Dr. Grossman began the post-Integration work of significantly streamlining the governance and
operations of the UW Health entities, positioning the UW Health academic medical center to
more effectively respond to changes in the rapidly evolving health care marketplace.
WHEREAS, as CEO of the Authority after the Integration, Dr. Grossman demonstrated
commitment to the idea that the successful academic health center of the future will play a central
role in translating knowledge into improved healthcare organization, policy, delivery, and population
health, and that UW Health will serve as a model for its peers and obtain national recognition for
innovative care.
WHEREAS, through his tenacity and creativity, Dr. Grossman is continuing to redefine
the relationship between UW Health and the University of Wisconsin School of Medicine and
Public Health, leading efforts to restructure the financial support among the components of the
academic medical center to ensure each component’s financial health and to better support the
shared missions of the Authority and the Medical School.
WHEREAS, in addition to his focus on successful implementation of the Integration,
Dr. Grossman counseled UW Health management as it strengthened and cemented UW Health’s
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regional presence, both within Madison and through a variety of other strategic affiliations and
ventures.
WHEREAS, Dr. Grossman will be forever remembered and recognized as an honored
and trusted friend of UW Health, having served UW Health as its first post-integration CEO and
historically in many and varied ways in true fulfillment of the UW Health mission, vision, and
values:
NOW THEREFORE BE IT RESOLVED that the Board of Directors of the University
of Wisconsin Hospitals and Clinics Authority hereby recognize and honor the distinguished
service and exemplary leadership of Dr. Grossman while Interim Chief Executive Officer, as
well as the many other roles he has held within the organization, and expresses its gratitude for
his unflagging efforts to make “One UW Health” a reality for the benefit of our patients, our
community, and our many dedicated physicians and staff.
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Attachment
Open Session Minutes
February 25, 2016
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UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY Minutes of Board of Directors Meeting
Open Session
February 25, 2016, 1:30 PM UWHCA & UWMF Joint Board, HSLC Rm. 4201
BOARD MEMBERS PRESENT: Dean Robert Golden (Chair), David Ward (Vice Chair), Chancellor Rebecca Blank,
Dr. Thomas Grist, Regent Tim Higgins, Andrew Hitt, John Litscher, Dean Katharyn May, Regent Janice Mueller, Senator Luther Olsen, Regent Drew Petersen, Lisa Reardon, Pablo Sanchez, Gary Wolter
BOARD MEMBERS EXCUSED: Michael Heifetz, Rep. Dale Kooyenga BOARD EXECUTIVE COMMITTEE (UWMF Rep - Guests) PRESENT: Dr. Jeff Grossman, Dr. Jon Matsumura UWMF BOARD PRESENT:
Jennifer Alexander, Ronald Anderson, Bob Flannery, Dr. Ben Graf, Dr. Nizar Jarjour, Dr. Craig Kent, Dr. Steve Nakada, Dr. William Schwab, Frederick Wenzel, Dr. Terri Young
STAFF: Elizabeth Bolt, Mike Dallman, Dr. Jonathan Jaffery, Steven Means, Patti Meyer,
Dr. Pete Newcomer, Bob O’Keefe, Jay Robaidek, Ron Sliwinski, Tina Whitehorse, Kelly Wilson
GUEST: Attorney Hamang Patel, Tim Stumm, Juli Aulik, Lauren Fiedler 1. Call to Order
Chair Robert Golden called the open session of the Joint Board of Directors meeting to order at 1:30 p.m. Roll call was taken and a quorum was present.
2. ACTION: Approval of UWHCA Consent Agenda
A motion was made and seconded to move approval of the items on the consent agenda, including: UWHCA December 9, 2015 and UWHCA February 9, 2016 Open Minutes; Medical Staff Membership and Clinical Privileges; Resolution approving revision to the UW Health Compliance Code of Conduct [Resolution 16-017]; Resolution approving the transfer of UWMF Department of Surgery reserve funds to the UW Foundation [Resolution 16-018]; revisions to UW Health Patient Safety and Quality Committee Charter, formerly PIRMS; UWHCA amended and restated Bylaws [Resolution 16-019]. The motion passed unanimously.
3. GME Annual Report
Dr. Susan Goelzer presented the GME Annual Report. She stated the Accreditation Council of the Graduate Medical Education (ACGME) requires an annual report to the Medical Staff and UWHCA Board. The report covers activities between July 1, 2014 and June 30, 2015. Dr. Goelzer reported UWHC sponsors 63 ACGME Accredited Residency and Fellowship Programs with more than 600 trainees. Over the past decade the number of trainees in our programs has grown by 20%. Dr. Goelzer was pleased to report that the institution and all of our programs have full accreditation without significant citation. The Aggregate Institutional Overall Evaluation is 4.7/5.0, with reference to a national mean of 4.5.
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4. UW Health Financial Report
Mr. Bob O’Keefe presented the UW Health Consolidated Financial Report. He reminded the board the financial report is now for the entire enterprise, which includes UWMF, SAHS, and majority owned ventures. Mr. O’Keefe reported preliminary January 31, 2016 YTD operating margin is 7.1% versus 4.8% budgeted and 5.2% prior year. He stated UWHCA’s growth is attributable to Unity and Regional Development efforts. SwedishAmerican margin is down due to Rockford Surgical Associates being acquired by a competitor. Unity is expected to operate at breakeven. All other wholly owned joint ventures showed an operating margin of 16.2% versus budgeted 11.5%.
Mr. Robert Flannery reviewed Selected Hospital Volume Statistics and UWMF Primary Care Volumes through January 31, 2016, reporting primary care visits are flat with greater use of alternative resources including e-Visits and MyChart.
Mr. O’Keefe and Mr. Flannery reported from the perspective of the investor community, UW Health appears disjointed with the bonds issued in the market under UWHCA, UWMF and SAHS. Mr. O’Keefe reviewed the current UW Health borrowing structures and proposed a (simplified) UW Health MTI Integration Plan (combined obligated group) as a prelude to seeking approval at the next meeting. Both noted SwedishAmerican may or may not be part of the consolidation. Mr. O’Keefe and Mr. Flannery reviewed benefits and implications of entering the bond market as an integrated system. Draft resolutions were included in the board meeting book for reference.
5. Proposed AAA
Chair Golden reported this topic was added on short notice. After consideration, it is deferred until the Council of Chairs, Council of Faculty and UW Health Finance Committee can discuss.
6. CEO Report
Dr. Jeff Grossman noted that having the UWHCA and UWMF boards meet together provides efficiencies for UW Health. He further noted that the UWMF Board will meet 8 times per year, down from 11, and those meetings will be held the same week as the UWHCA Board to provide consistency on topics affecting UW Health. Dr. Grossman would like to see the two boards work together as much as possible.
Dr. Grossman provided a brief UW Health CEO Report. He referenced the State of Wisconsin Self Insurance model, reporting the Wisconsin Government Insurance Board (GIB) approved moving forward with an RFP to gather additional information. Dr. Grossman reviewed the proposed implements timeline which reflects the RFP results to be presented to the GIB in November 2016.
Dr. Grossman reported a change to the UWHCA Audit Committee. Ms. Lisa Reardon resigned as Chair and Mr. Fritz Wenzel has accepted that role. Mr. Wenzel also serves as Chair of the UWMF Audit Committee. It is anticipated the UWHC and UWMF Audit Committees will combine into one UW Health Audit Committee.
Dr. Grossman reported an update to the UW Health Values to include Diversity.
7. Closed Session
Having no other matters for the open session, Chair Golden proposed to take the meeting into closed session through a motion to enter into closed session pursuant to Section 19.85(e), Wisconsin Statutes, for the discussion of financial and strategic matters which for competitive reasons require a closed session; pursuant to Section 19.85(1)(g), Wisconsin Statutes, to confer
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with legal counsel regarding those matters; and pursuant to Section 146.38, Wisconsin Statutes, for the review of the services of health providers. The motion passed with an unanimous roll call vote.
7. ACTION: Endorsem*nt of Further Partnership Discussions
After returning to Open Session, a motion was made by John Litscher endorsing moving forward with strategic partnership discussions as discussed in closed session and development of a non-binding Letter of Intent, which motion was seconded by Senator Luther Olsen, and passed unanimously. [Resolution 16-020] 8. Adjournment
A motion was made and seconded to adjourn the meeting. The meeting was adjourned in Open Session at 4:40 p.m.
Respectfully Submitted, Kelly Wilson
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Attachment
Medical Staff Membership
and
Clinical Privileges March 2016
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Resolution
UWMF Department of Surgery Transfer Request to UWF
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RESOLUTION OF
THE BOARD OF DIRECTORS OF
UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY
Authorizing UWMF to Transfer Department of Surgery Reserves to
UWF Endowed Chair of Education in Plastic Reconstructive Surgery
WHEREAS, the Department of Surgery of the University of Wisconsin (“UW”) School
of Medicine and Public Health requested in a letter dated March 9, 2016 (attached) that the UW
Medical Foundation (“UWMF”) transfer UWMF Department of Surgery reserve funds to the
University of Wisconsin Foundation (UW Foundation) Endowed Chair of Education in Plastic
Reconstructive Surgery (the Transaction”), as part of the Dr. Mike Bentz retention package, and
WHEREAS, the Board of Directors of the Foundation unanimously approved the
Transaction on April 21, 2016, and the Board of Directors of the University of Wisconsin
Hospitals and Clinics Authority (“Authority Board”) desires to approve the Transaction pursuant
to Section 4.3.2(a) of the Integration Agreement between the parties;
NOW, THEREFORE, BE IT RESOLVED, that the Transaction is hereby authorized
and approved, and UWMF is authorized and empowered to take all other actions necessary or
appropriate to effectuate the Transaction.
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Attachment
UW Health Support For UWSMPH
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UW Health Support
for UW SMPH
1
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Proposed UWSMPH Funding Update for FY2016
• Goals
– Consolidate historical support to
UWSMPH
– Facilitate intent of integration agreement
to make past UWMF reserves reliably
available to UWSMPH
– Trade off “below the line” up-side for
“above the line” reliability for UWSMPH
2
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Proposed UWSMPH Funding Update for FY2016
Category Current Proposed
Annual
support
MSDF/UWMF support 1
UWHCA support
Library
Health Innovations
Total
$33,440,280
5,100,000
200,000
200,000
$38,940,280
To be aggregated as UW Health Support, and increased 2%/year
The amount will be adjusted every 3 years in line with growth or contraction of revenue
ICTR2 Annual funding $2,600,000 Continues as long as grant does (with bridge provision)
Earn-out on $90 million UWMF funds
Proposed annual transfer of up to $9M, subject to:
•UW Health earnings threshold3 - Likely to be achieved
•UW Health days cash on hand threshold4 - Likely to fail
Convert to $13M/year – no contingency
AAA Academic Portion
Annual payments the past three years of $20.8M, $7.3M and $14.4M, respectively, for Academic portion
Academic portion of AAA is eliminated
Department and Project portions of AAA stay intact until new funds flow model is in place
3
Notes:
1 Medical School Development Fund
2 Institute for Clinical and Translational Research
3 Transfers of $3M for each threshold of 3.0%, 3.5%, 4.0%
4 180 DCOH (currently 173)
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Other AAA Components
• Two other elements of AAA, keyed to UWHC
margin, continue until replaced by new Funds
Flow Model:
– Special Projects Fund: for investments in areas that
advance both the clinical and academic missions.
Examples – precision medicine, health services
research
– Department Fund: allocated to academic departments
based on meeting predetermined metrics such as
quality, safety, patient experience
4
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Attachment
Resolutions – Approving Amendments to Integration and AAA Agreement
April 21, 2016
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RESOLUTIONS OF THE BOARDS OF DIRECTORS OF
UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY AND THE UNIVERSITY OF WISCONSIN MEDICAL FOUNDATION
Approving First Amendment to the Integration Agreement, and of the Authority approving Second Amendment to the Academic Affiliation Agreement
April 21, 2016
WHEREAS, the University of Wisconsin Hospitals and Clinics Authority (the “Authority”) and the University of Wisconsin Medical Foundation, Inc. (the “Foundation”) closed a transaction under which the Authority became the sole corporate member of the Foundation pursuant to an Integration Agreement between the Parties dated June 25, 2015 (the “Integration Agreement”);
WHEREAS, Section 11.10 of the Integration Agreement requires that any amendment or modification to the Integration Agreement be approved in writing by both the Authority and the Foundation, and that the Board of Regents must also approve any amendment materially affecting the Board of Regents’ rights or obligations under certain sections of the Integration Agreement, including Section 4.3;
WHEREAS, the Authority and the Foundation, in cooperation with the University of Wisconsin School of Medicine and Public Health (the “Medical School”), share a mutual commitment to the mission of clinical care, teaching, research, and public service (the “Mission”), and in addition to the Integration Agreement, the Authority has made additional commitments to the Medical School in that certain Academic Affiliation Agreement between the parties in February 2013, as amended in October 2013 (the “AAA”).
WHEREAS, the Authority, the Foundation and the Medical School (collectively “the Parties”) have determined that it is in the best interest of the Parties to enter into amendments to the Integration Agreement and the AAA (the “Amendments”), to enhance the ability of the Parties to carry out their shared Mission; and
WHEREAS, the Board of Directors of the Authority (the “Authority Board”) and of the Foundation (the “Foundation Board”) wish to authorize written approval of the Integration Agreement consistent with the terms in Exhibit 1 attached hereto;
WHEREAS, the Authority wishes to authorize approval of the Second Amendment to the AAA consistent with the terms in Exhibit 2 attached hereto:
NOW, THEREFORE, BE IT RESOLVED, that the Authority Board and the Foundation Board, through such officers as the UW Health Chief Executive Officer may designate (each, an “Authorized Officer”), is hereby delegated the authority to authorize execution and delivery of the Amendments to the Integration Agreement and AAA consistent with the terms in Exhibits 1 and 2, attached hereto.
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FIRST AMENDMENT TO INTEGRATION AGREEMENT
THIS FIRST AMENDMENT TO INTEGRATION AGREEMENT (this “Amendment”) is made and entered into as of July 1, 2015, by and between UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY, a public body corporate and politic created by 1995 Wisconsin Act 27, as amended (the “Authority”), and UNIVERSITY OF WISCONSIN MEDICAL FOUNDATION, INC., a non-profit, non-stock corporation organized under the laws of the State of Wisconsin (the “Foundation”). (The Authority and the Foundation shall each be referred to herein as a “Party” and collectively as the “Parties”).
RECITALS
WHEREAS, the Authority and the Foundation are parties to that certain Integration Agreement dated June 25, 2015 (the “Agreement”), memorializing the terms and conditions of the Parties’ clinical, operational, and financial integration, as well as certain of the Parties’ support of the teaching and research missions shared with University of Wisconsin School of Medicine and Public Health (the “Medical School”); and
WHEREAS, the Parties desire to amend the Agreement to address certain matters regarding the flow of funds from the Authority and the Foundation to the Medical School in support of the shared teaching and research missions that have arisen since the Effective Date of the Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows:
1. Defined Terms. All capitalized terms that are not otherwise defined in thisAmendment shall have the meaning given to such terms in the Agreement.
2. Amendments. The following provisions of the Agreement shall be amended asfollows:
a. Section 4.3.3(a) is amended in its entirety and replaced with following:
“New Fixed Annual Support.
(i) Subject to Sections 4.3.3(a)(ii)–(iv), following the Closing, the Enterprise shallprovide to the Medical School annual fixed academic support funding set initiallyat Thirteen Million Dollars ($13,000,000) per year, and increased annually by twopercent (2%). Subject to Section 4.3.3(a)(ii), the Enterprise shall pay to theMedical School such annual fixed amount in four (4) equal installments on thefirst day of each quarter of the Enterprise’s fiscal year (“Annual SupportPayments”).
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(ii) If, following the Closing, an “Event of Default” occurs with respect to theAuthority (as such term is used in the then-current bond indentures or similaragreements entered into by the Authority), or if making any particular AnnualSupport Payment would reasonably be expected to result in the occurrence of an“Event of Default” with respect to the Authority, then the Enterprise and theMedical School shall renegotiate in good faith the terms and conditions of theAnnual Support Payments pursuant to the three-party dispute resolution processset forth in Article XXII of the Affiliation Agreement; provided, however, that thereferences to the Authority Board Chair in such “second step” shall be replacedwith references to the Authority Board.
(iii) Until such time as the Enterprise and the Medical School have mutually-agreedupon any revisions to the terms and conditions of the Annual Support Payments,the Enterprise and the Medical School shall negotiate promptly and in good faithwith respect to continued funding of the Annual Support Payments during theresolution period, with the goal of minimizing, to the extent possible, any unduehardship to either the Enterprise or the Medical School. The final decision withrespect to continued funding of the Annual Support Payments during theresolution period shall be made by the Authority Board or its ExecutiveCommittee.
(iv) The Enterprise’s obligation to make the Annual Support Payments under thisSection 4.3.3(a) shall continue for a period of ten (10) years following the Closingand will thereafter automatically renew for successive one (1) year terms unlessthe Dean and Authority CEO mutually agree to renegotiate the Annual SupportPayments pursuant to the resolution process set forth in Section 4.3.3(a)(ii)above.”
b. The title of Section 4.3.3(b) is amended in its entirety and replaced with“Regents Agreement, the Medical School Development Fund / UW Health Support, Library Funding, and Health Innovation Program”.
c. Section 4.3.3(b)(iii) is amended in its entirety and replaced with following:
“(1) Subject to Section 4.3.3(b)(iii)(2)–(3), following the Closing, amounts paid historically as MSDF, Dean’s Support, Library Funding, and HIP, as such amounts have been previously classified and paid prior to July 1, 2015 by the Authority and Foundation, shall be aggregated and paid by the Enterprise to the University of Wisconsin Foundation as UW Health Support. The University of Wisconsin Foundation shall be the depository for UW Health Support Payments for the benefit of the Medical School. Such aggregate UW Health Support amount shall be set initially at Thirty Eight Million Nine Hundred Forty Thousand Two Hundred Eighty Dollars ($38,940,280) for Fiscal Year 2016, and shall increase annually by two percent (2%) for the subsequent two
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fiscal years (Fiscal Years 2017 and 2018). Subject to 4.3.3(b)(iii)(2)–(3), the Enterprise shall pay such UW Health Support amount in four (4) equal installments on the first day of each quarter of the Enterprise’s fiscal year. The Dean and the Authority CEO shall evaluate and adjust such UW Health Support, with Authority Board approval, prior to the commencement of Fiscal Year 2019 and every three (3) years thereafter, consistent with the spirit of the Shared Mission and this Integration Agreement.
(2) If, following the Closing, an “Event of Default” occurs with respect to theAuthority (as such term is used in the then-current bond indentures or similar agreementsentered into by the Authority), or if making any particular UW Health Support paymentdescribed in this Section 4.3.3(b)(iii) would reasonably be expected to result in theoccurrence of an “Event of Default” with respect to the Authority, then the Enterprise andthe Medical School shall renegotiate in good faith the terms and conditions of the UWHealth Support payments pursuant to the three-party dispute resolution process set forthin Article XXII of the Affiliation Agreement; provided, however, that the references tothe Authority Board Chair in such “second step” shall be replaced with references to theAuthority Board.
(3) Until such time as the Enterprise and the Medical School have mutually-agreedupon any revisions to the terms and conditions of the UW Health Support Payments, theEnterprise and the Medical School shall negotiate promptly and in good faith with respectto continued funding of the UW Health Support Payments during the resolution period,with the goal of minimizing, to the extent possible, any undue hardship to either theEnterprise or the Medical School. The final decision with respect to continued funding ofthe UW Health Support Payments during the resolution period shall be made by theAuthority Board or its Executive Committee.”
d. Section 4.3.3(b)(iv) is amended by deleting the second and third sentencesthereof.
e. Section 4.3.3(b)(vi) is deleted in its entirety.
f. Section 4.3.3(d) is amended in its entirety and replaced with following:
“Academic Advancement Agreement. The Parties agree that the Academic Advancement Agreement between the Authority and Board of Regents, dated February 28, 2013, as amended (the “Academic Advancement Agreement”) shall be further amended effective July 1, 2015 in the form attached hereto as Exhibit I.”
g. Exhibit I is added to the Agreement in the form of Attachment 1 attachedhereto.
h. Section 4.3.3 is amended by adding the following new subsection (g) atthe end thereof:
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“Institute for Clinical and Translational Research. The Enterprise shall pay Two Million Six Hundred Thousand Dollars ($2,600,000) per year to the Medical School for the Institute for Clinical and Translational Research, so long as that certain Clinical and Translational Science Award is in full force and effect (the “CTSA Grant”). Notwithstanding the foregoing, if the CTSA Grant is discontinued, and the Authority CEO deems the discontinuance to be temporary, he/she may authorize a temporary continuation of the funding, subject to annual reevaluation.”
3. Effect on the Agreement; General Provisions. Except as set forth in thisAmendment, the terms and provisions of the Agreement are hereby ratified and declared to be in full force and effect. Except as otherwise expressly set forth herein, this Amendment shall be governed by the provisions of the Agreement including with respect to choice of law, disputes, and successors and assigns. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Other than the references to the Agreement contained in the Recitals to this Amendment, each reference to the Agreement and any agreement contemplated thereby or executed in connection therewith, whether or not accompanied by reference to this Amendment, shall be deemed a reference to the Agreement as amended by this Amendment.
[Signatures on following page.]
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Parties, acting through their duly authorized representatives, have executed this Amendment as of the day and year first set forth above.
UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY
By: ___________________________________ Alan Kaplan, M.D. Chief Executive Officer
UNIVERSITY OF WISCONSIN MEDICAL FOUNDATION, INC.
By: ___________________________________
___________________________________
___________________________________
Acknowledged and accepted pursuant to Section 11.10 of the Agreement:
BOARD OF REGENTS OF THE UNIVERSITY OF WISCONSIN SYSTEM
By: ___________________________________
___________________________________
___________________________________
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ATTACHMENT 1
EXHIBIT I
SECOND AMENDMENT TO ANNUAL ACADEMIC ADVANCEMENT AGREEMENT
See attached.
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SECOND AMENDMENT TO ANNUAL ACADEMIC ADVANCEMENT AGREEMENT
THIS SECOND AMENDMENT TO ANNUAL ACADEMIC ADVANCEMENT AGREEMENT (this “Second Amendment”) is made and entered into as of July 1, 2015, by and between UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY, a public body corporate and politic created by 1995 Wisconsin Act 27, as amended (the “Authority”), and the BOARD OF REGENTS OF THE UNIVERSITY OF WISCONSIN SYSTEM on behalf of the University of Wisconsin-Madison Health Sciences Schools (the “University”). (The Authority and the University shall each be referred to herein as a “Party” and collectively as the “Parties”).
RECITALS
WHEREAS, the Authority and the University are parties to that certain Annual Academic Advancement Agreement dated February 28, 2013, as amended (the “AAA Agreement”), memorializing the terms and conditions of certain of the Authority’s support of the teaching and research missions shared with the University of Wisconsin School of Medicine and Public Health (the “Medical School”); and
WHEREAS, the Parties desire to amend the AAA Agreement to address certain matters regarding the flow of funds from the Authority to the Medical School in support of the shared teaching and research missions that have arisen since the effective date of the AAA Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows:
1. Defined Terms. All capitalized terms that are not otherwise defined in thisSecond Amendment shall have the meaning given to such terms in the AAA Agreement.
2. Relationship to First Amendment. This Second Amendment supersedes in itsentirety that certain first Amendment to the AAA Agreement entered by the Parties on or around October 11, 2013 and effective for the 2014 fiscal year.
3. Amendments. The following provisions of the AAA Agreement shall beamended as follows:
a. Section II.2 is amended to provide for an allocation of earnings of theAuthority in excess of 5%, subject to days of cash on hand parameters specified in Section II.1, as follows:
• Authority’s operating margin between 5% and 6% shall be distributed as follows:− 25% will go to the Clinical Department Fund specified in the AAA Agreement− 25% will go to the Special Projects Fund specified in the AAA Agreement
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− 50% will be retained by the Authority
• Authority’s operating margin between 6% and 7% shall be distributed as follows:− 25% will go to the Clinical Department Fund specified in the AAA Agreement − 9.375% will go to the Special Projects Fund specified in the AAA Agreement − 65.625% will be retained by the Authority
• Authority’s operating margin in excess of 7% shall be distributed as follows:− 12.5% will go to the Clinical Department Fund specified in the AAA Agreement − 12.5% will go to the Special Projects Fund specified in the AAA Agreement − 75% will be retained by the Authority.
b. Section II.2.A is deleted in its entirety.
4. Effect on the AAA Agreement; General Provisions. Except as set forth in thisSecond Amendment, the terms and provisions of the AAA Agreement are hereby ratified and declared to be in full force and effect. Except as otherwise expressly set forth herein, this Second Amendment shall be governed by the provisions of the AAA Agreement including with respect to choice of law, disputes, and successors and assigns. This Second Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Other than the references to the AAA Agreement contained in the Recitals to this Second Amendment, each reference to the AAA Agreement and any agreement contemplated thereby or executed in connection therewith, whether or not accompanied by reference to this Second Amendment, shall be deemed a reference to the AAA Agreement as amended by this Second Amendment.
[Signatures on following page.]
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Parties, acting through their duly authorized representatives, have executed this Second Amendment as of the day and year first set forth above.
David Ward Date Rebecca Blank Date Vice Chair, Authority Board Chancellor, UW Madison
Alan Kaplan, M.D. Date Robert Golden, M.D. Date Chief Executive Officer, Authority Dean, UWHC School of Medicine and Public
Health
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Attachment
UW Health MTI Integration
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Affiliation Agreement
UW Hospitals and Clinics Authority
UW Medical Foundation
SwedishAmerican
• Current documents prohibit “note substitution”
• Debt can be called in 2022. • UWHCA can issue debt on
behalf of SAHS currently and loan proceeds to them
Unity Health Insurance
No debt.
Majority- Owned Joint
Ventures
No debt.
Non-Consolidated
Joint Ventures
No debt.
Integrated on July 1, 2015
Debt and MTI to be integrated effective July 1, 2016
1
UW Health Enterprise and Debt/MTI Structure
Page 35 of 60
Resolution
UWHCA MTI April 21, 2016
Page 36 of 60
________________________________________________________________
RESOLUTION
OF THE BOARD OF DIRECTORS OF
UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY
________________________________________________________________
Approved April 21, 2016
WHEREAS, the University of Wisconsin Hospitals and Clinics Authority (the
“Authority”) was created by 1995 Wisconsin Act 27 and exists under the authority of and
pursuant to the provisions of Chapter 233 of the Wisconsin Statutes, as amended (the “Act”), and
other applicable statutes of the State of Wisconsin; and
WHEREAS, the Authority was organized to operate and maintain the University of
Wisconsin Hospitals and Clinics and other health-related facilities in connection therewith; and
WHEREAS, the Authority has previously completed integration/affiliation transactions
with University of Wisconsin Medical Foundation, Inc. (“UWMF”) whereby the Authority
became the sole corporate member of UWMF and with SwedishAmerican Health System
Corporation (“SAHSC”) whereby the Authority and UWMF are now the corporate members of
the sole member of SAHSC; and
WHEREAS, the Authority has previously entered into a Master Indenture of Trust dated
as of April 1, 1997, as amended to date, with U.S. Bank National Association, as master trustee
(the “Authority Master Indenture”) under which the Authority has pledged certain revenues and
agreed to certain covenants for the benefit of all bonds issued under the Authority Master
Indenture; and
WHEREAS, UWMF has previously entered into a Master Trust Indenture dated as of
May 1, 2000, as amended to date, with U.S. Bank National Association, as master trustee (the
“UWMF Master Indenture”) under which UWMF has pledged certain revenues and agreed to
certain covenants for the benefit of the holders of master notes issued under the UWMF Master
Indenture; and
WHEREAS, SwedishAmerican Hospital (“SAH”) and SwedishAmerican Foundation
(“SAF”), affiliates of SAHSC, have previously entered into a Master Trust Indenture dated as of
October 15, 1993, as amended to date, with BNY Mellon Trust Company National Association,
as current master trustee (the “SAHS Master Indenture”) under which SAH and SAF have
pledged certain of their revenues and agreed to certain covenants for the benefit of the holders of
master notes issued under the SAHS Master Indenture; and
WHEREAS, in order to further the desired goal of integration among the Authority,
UWMF, SAH and SAF and to move toward a singular financial credit for accessing capital and
the capital markets, it is in the best interest of the Authority to enter into a new master trust
indenture with UWMF as one obligated group (“New MTI”); and
Page 37 of 60
WHEREAS, the Authority and UWMF will each be jointly and severally liable for all
obligations issued under the New MTI; and
WHEREAS, the New MTI would contain a pledge of revenues and covenants similar to
what is currently contained in the Authority Master Indenture, but may also contain certain
financial and operational covenants that reflect current market and credit considerations, such
covenants to be in effect when eligible under the terms of the documents; and
WHEREAS, no new debt would be issued in connection with the creation of the New
MTI, all bonds of the Authority would remain outstanding under the existing Authority Master
Indenture and obligations of the new obligated group would be issued under the New MTI to
secure such bonds thereby providing the credit of the obligated group and the terms and
covenants of the New MTI as the security for the existing outstanding bonds of the Authority;
and
WHEREAS, all bonds and other indebtedness of UWMF currently outstanding and
secured by a master note issued under the UWMF Master Indenture will remain outstanding but
a replacement obligation of the new obligated group would be issued under the New MTI to
secure such debt (and upon substitution of all existing master notes, the UWMF Master
Indenture would be cancelled) thereby providing the credit of the obligated group and the terms
and covenants of the New MTI as the security for the existing outstanding debt of UWMF; and
WHEREAS, all bonds and other indebtedness of SAH and SAF currently outstanding and
secured by a master note issued under the SAHS Master Indenture will remain outstanding under
the SAHS Master Indenture, however, as applicable and appropriate under the New MTI and
SAHS Master Indenture, the health system may be presented as a whole to the financial markets
(without currently creating any liability or guaranty of debt) as the organizations continue to
move toward financial and credit integration; and
WHEREAS, management of the Authority has determined the formation of an obligated
group and entry into the New MTI would be in the best interest of the Authority and further the
desired goal toward integration into a singular financial credit structure;
WHEREAS, the Finance Committee of this Board of Directors has determined it is in the
best interest of the Authority to proceed with this plan for the obligated group structure and the
entry into the new MTI and now desires the approval of the Board of Directors.
NOW, THEREFORE, THIS BOARD OF DIRECTORS RESOLVES AS FOLLOWS:
1. That the Board of Directors hereby approves the plan for the obligated group
structure and the Authority’s entry into the New MTI.
2. That the Board of Directors hereby authorizes management of the Authority to
carry out the plan in the best interest of the Authority, to prepare the New MTI, to negotiate with
and obtain consent from exiting bondholders and other lenders as necessary, to discuss and
present the plan documents to the rating agencies and make disclosures to the capital markets as
appropriate and necessary.
Page 38 of 60
3. That each of the President and Chief Executive Officer, the Chief Financial
Officer or the Chief Legal Officer of the Authority (each an “Authorized Officer”), each acting
singly, is hereby authorized to exercise any discretion as may be necessary to execute and deliver
on behalf of the Authority the new MTI and any supplemental master indenture(s) creating the
obligations to secure the existing outstanding bonds under the Authority MTI, to execute and
deliver one or more consent documents as may be necessary to complete the transaction, to
execute and delivery any amendments to credit agreements or other finance documents currently
secured by the Authority Master Indenture, to execute and deliver one or more contracts (or
amendments to contracts) with respect to continuing disclosure obligations and any other
agreements evidencing the Authority’s obligations in relation to its outstanding bonds, and any
other documents, certificates or instruments necessary to the transaction described herein, all in
such form and upon such terms as such Authorized Officer shall approve, such approval to be
conclusively evidenced by the execution and delivery of said agreements by any Authorized
Officer.
4. That all Authorized Officers of the Authority acting singly are hereby authorized
to execute and deliver on behalf of the Authority such other related agreements, certificates and
documents and take such other further action as may be necessary or desirable to carry out the
transactions authorized by these resolutions.
5. That all acts authorized by each of the foregoing resolutions taken heretofore by
any Authorized Officer are hereby ratified as the authorized act of the Authority.
6. That all prior resolutions of the Finance Committee or the Executive Committee
of the Board of Directors or any parts thereof in conflict with any or all of the foregoing
resolutions are hereby repealed to the extent of such conflict.
This is a true copy of the Resolution adopted by the Board of Directors of the University
of Wisconsin Hospitals and Clinics Authority on April 21, 2016.
Page 39 of 60
Resolution
UWHCA for UWMF
Reserved Powers MTI April 21, 2016
Page 40 of 60
________________________________________________________________
RESOLUTION
OF THE BOARD OF DIRECTORS OF
UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY
(as sole corporate member of University of Wisconsin Medical Foundation, Inc.)
________________________________________________________________
Approved April 21, 2016
WHEREAS, the University of Wisconsin Medical Foundation, Inc. (“UWMF”) is a
nonstock nonprofit corporation organized under the laws of the State of Wisconsin; and
WHEREAS, the University of Wisconsin Hospitals and Clinics Authority (the
“Authority”) is the sole corporate member of UWMF; and
WHEREAS, this Board of Directors has reserved powers with respect to certain actions
to be taken by UWMF; and
WHEREAS, UWMF has previously entered into a Master Trust Indenture dated as of
May 1, 2000, as amended to date, with U.S. Bank National Association, as master trustee (the
“UWMF Master Indenture”) under which UWMF has pledged certain revenues and agreed to
certain covenants for the benefit of the holders of master notes issued under the UWMF Master
Indenture; and
WHEREAS, the Authority has previously entered into a Master Indenture of Trust dated
as of April 1, 1997, as amended to date, with U.S. Bank National Association, as master trustee
(the “Authority Master Indenture”) under which the Authority has pledged certain revenues and
agreed to certain covenants for the benefit of all bonds issued under the Authority Master
Indenture; and
WHEREAS, in order to further the desired goal of integration among the Authority and
UWMF, to avoid limitations imposed by operating under different master trust indentures, and to
create a singular financial credit for accessing capital and the capital markets, it is in the best
interest of UWMF to enter into a new master trust indenture with the Authority as one obligated
group (“New MTI”); and
WHEREAS, UWMF and the Authority will each be jointly and severally liable for all
obligations issued under the New MTI; and
WHEREAS, the New MTI would contain a pledge of revenues and covenants similar to
what is currently contained in the Authority Master Indenture; and
WHEREAS, no new debt would be issued in connection with the creation of the New
MTI; and
WHEREAS, all bonds and other indebtedness of UWMF currently outstanding and
secured by a master note issued under the UWMF Master Indenture will remain outstanding but
Page 41 of 60
a replacement obligation of the new obligated group would be issued under the New MTI to
secure such debt (and upon substitution of all existing master notes, the UWMF Master
Indenture would be cancelled) thereby providing the credit of the obligated group and the terms
and covenants of the New MTI as the security for the existing outstanding debt of UWMF; and
WHEREAS, all bonds of the Authority would remain outstanding under the existing
Authority Master Indenture and obligations of the new obligated group would be issued under
the New MTI to secure such bonds thereby providing the credit of the obligated group and the
terms and covenants of the New MTI as the security for the existing outstanding bonds of the
Authority; and
WHEREAS, management of UWMF and management of the Authority have determined
the formation of an obligated group and entry into the New MTI would be in the best interest of
UWMF and further the desired goal toward integration into a singular financial credit structure;
WHEREAS, the Board of Directors of UWMF and the Finance Committee of this Board
of Directors have determined it is in the best interest of UWMF to proceed with this plan of
financial credit integration and obligated group structure and the entry into the new MTI and
now desires the approval of this Board of Directors.
NOW, THEREFORE, THIS BOARD OF DIRECTORS RESOLVES AS FOLLOWS:
1. That the Board of Directors of the Authority, as the sole corporate member of
UWMF, hereby approves the plan for the obligated group structure and UWMF’s entry into the
New MTI.
2. That the Board of Directors hereby authorizes management of UWMF to carry
out the plan in the best interest of the UWMF, to prepare the New MTI, to negotiate with and
obtain consent from exiting bondholders and other lenders as necessary, to discuss and present
the plan documents to the rating agencies and make disclosures to the capital markets as
appropriate and necessary.
3. That each of the President and Chief Administrative Officer of UWMF (each an
“Authorized Officer”), each acting singly, is hereby authorized to exercise any discretion as may
be necessary to execute and deliver on behalf of UWMF the new MTI and any supplemental
master indenture(s) creating the obligations to secure the existing outstanding debt of UWMF, to
execute and deliver one or more consent documents as may be necessary to complete the
transaction, to execute and delivery any amendments to credit agreements or other finance
documents currently secured by UWMF Master Indenture, to execute and deliver one or more
contracts (or amendments to contracts) with respect to continuing disclosure obligations and any
other agreements evidencing UWMF’s obligations in relation to its outstanding bonds, and any
other documents, certificates or instruments necessary to the transaction described herein, all in
such form and upon such terms as such Authorized Officer shall approve, such approval to be
conclusively evidenced by the execution and delivery of said agreements by any Authorized
Officer.
4. That all Authorized Officers of UWMF acting singly are hereby authorized to
execute and deliver on behalf of UWMF such other related agreements, certificates and
Page 42 of 60
documents and take such other further action as may be necessary or desirable to carry out the
transactions authorized by these resolutions.
5. That all acts authorized by each of the foregoing resolutions taken heretofore by
any Authorized Officer are hereby ratified as the authorized act of UWMF.
6. That all prior resolutions of the Finance Committee or the Executive Committee
of the Board of Directors or any parts thereof in conflict with any or all of the foregoing
resolutions are hereby repealed to the extent of such conflict.
7. That the foregoing resolutions are conditioned upon, and are only effective upon,
the approval by the Board of Directors of the Authority, as sole corporate member of UWMF.
This is a true copy of the Resolution adopted by the Board of Directors of the University
of Wisconsin Hospitals and Clinics Authority on April 21, 2016.
Page 43 of 60
Resolution
Approve Contributions to UHC
April 21, 2016
Page 44 of 60
MEETING OF THE COMBINED BOARD OF DIRECTORS
OF UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY
AND UNIVERSITY OF WISCONSIN MEDICAL FOUNDATION, INC.
APRIL 21, 2016
AGENDA
I. Approve Contributions to UHC
WHEREAS, University Health Care, Inc. (“UHC”) seeks to make capital contributions to Unity Health Plans Insurance Corporation (“Unity”), SPWI TPA, Inc. (d/b/a Quartz) (“Quartz”) and Gundersen Health Plan, Inc. (“GHP”) in the aggregate amount of $21,075,000, with $10,275,000 of such amount made on or before May 2, 2016;
WHEREAS, the Authority and UWMF seek to make $21,075,000 in aggregate capital contributions to UHC to enable UHC to make the capital contributions to Unity, Quartz and GHP described above;
WHEREAS, the Authority seeks to contribute $12,645,000 to UHC (representing 60% of the aggregate contributions to UHC) and UWMF seeks to contribute $8,430,000 to UHC (representing 40% of the aggregate contributions to UHC) (together, the “Contributions”);
WHEREAS, The Finance Committee of the Authority recommends making the Contributions, as described above.
NOW, THEREFORE, BE IT RESOLVED, that the Authority, through such officers as the Chief Executive Officer may designate (each, an “Authorized Officer”), hereby is delegated the authority to (a) cause the Contributions by the Authority and UWMF to be made to UHC, and (b) take all actions, through an Authorized Officer, deemed necessary or appropriate in its discretion to otherwise consummate the making of the Contributions
Page 45 of 60
FYI Attachment
UW Health Consolidated Financial Report
Page 46 of 60
UW Health Financial Reports
UWHC Authority
Board of Directors Meeting
FY16
Consolidated Financial Review Year to Date Final February 29, 2016
Page 47 of 60
UW Health Financial Structure
Affiliation Agreement
University of Wisconsin Hospitals and Clinics Authority
University of Wisconsin Medical Foundation
Regional Division, Inc.1
Swedish American Health System
Unity Health Insurance
UHC, Inc.2
Equity-Based Joint Ventures
Consolidated Ventures
Majority-Owned Ventures
Non-Consolidated Joint Ventures
University Hospital American Family Childrens Hospital
The American Center Ambulatory Clinics
InnTowner, LLC
Faculty Practice Plan 17 Clinical Departments
Ambulatory Clinics
Swedish American Hospital Belvidere Hospital
Swedish American Foundation Other Entities
Unity Health Plan Quartz TPA
Madison Surgery Center Wisconsin Dialysis
Chartwell Enterprises Generations
UW Health ACO
UWH Rehabilitation Hospital Madison United Linen
Madison Environmental Transformations Surgery Center
Wisconsin Sleep Madison Medical Center
1 Includes minority investments in UW Cancer Center Johnson Creek and AboutHealth
2 Includes Health Professionals of Wisconsin and eCare of Wisconsin
These entities were integrated on July 1, 2015.
Page 48 of 60
UW Health YTD Operating Margin February 29, 2016 Final
* $90 million transfer to UWSMPH reclassified for this report to non operating expense
** Combined HC/MF without eliminations, which ties to the Incentive Plan metric
7.4%
1.6%
5.5%
-0.8%
0.9%
16.6%
4.3% 4.9%
-1.7%
2.7%
1.1%
3.1%
10.0%
3.0%
5.7%
2.2%
4.5%
1.4%
3.5%
13.9%
4.5%
UWHCA UWMF Combined HC/MF ** UHC/Unity RDI/SAHS All other Total*
Actual Budget Prior Year
Page 49 of 60
Selected Hospital Volume Statistics – YTD Feb 29, 2016
Swedish
American
Madison
Hospitals
(UWHC, TAC, and
AFCH)
4 Page 50 of 60
UWMF wRVU’s through February 29, 2016
Work Relative Value Units (wRVUs) are a measure developed by CMS as part of the Medicare reimbursem*nt formula for physician
services. wRVUs reflect the time, skill, training and intensity to provide a given service. For example, a surgical code will typically have
a higher value (and corresponding payment) than a routine appointment code. wRVUs are also used by UW Health and other practice
plans to measure provider productivity (volume). When payors determine payments based on RVU’s, they typically include two
additional RVU components to reflect the practice expense costs (technical) and malpractice insurance costs.
497 477
2,343 2,405
500
1,000
1,500
2,000
2,500
3,000
wRVUs FY15 wRVUs FY16
Tho
usa
nd
s
Primary Care Specialty Care
Specialty care wRVUs grew 2.6% and
primary care wRVUs declined 4.0% YTD Variance
5 Page 51 of 60
UWMF Primary Care Volumes YTD through February 29, 2016
Clinic visits year over year are up by 2.0% while non-face-to-face encounters are up by 6.2%.
Clinical FTE are down by 1% while number of active panels are up by 3%.
Note: Clinic visits are defined as any arrived or completed appointment at a scheduling department with the specialty of Fam Med, GIM, or
Peds. This includes nurse only visits. Volumes also exclude Augusta, Eau Claire, Fox Valley & Non-Wingra ACHC. Non-face-to-face
encounters include MyChart, Telephone, and Refill encounters logged in Health Link. Clinical FTE are for MD faculty only.
Data source: Ambulatory Encounters dashboard and Panel Report.
Page 52 of 60
93,500 96,200
115,700
142,000
162,064 176,257 181,403
2010 2011 2012 2013 2014 2015 Feb 2016
Unity Health Plans Membership
7
2010-2013 are rounded
Page 53 of 60
Unity Health Plans Membership (Dane vs. Non-Dane)
8 Page 54 of 60
Summary of Enterprise-Wide February 29, 2016 YTD Operating Results
Volume Margin
9
Actual YTD
February 2016
Operating Revenue 2,219.0$
Operating Expenses:
Salaries and fringe benefits 1,001.2 Medical materials and supplies 350.5 Other expenses 771.7
Total Operating Expenses 2,123.4
Income from Operations 95.6
Nonoperating Income * (146.2)
Net Income (50.6)$ *Includes Income Tax (Expense) & $90M commitment to
SMPH from Integration Agreement
4.3%
3.0%
4.5%
Actual Budget Prior Year
Page 55 of 60
Enterprise-Wide Feb. 29, 2016 YTD Performance Ratios
10
Favorable
Direction FY 16
S&P "A+"
Rated
Moodys
"Aa3" Rated
Operating Margin 4.3% 2.9% 3.7%
Total Margin -2.3% 5.1% 7.4%
Total Margin less $90M SMPH contribution 1.9% 5.1% 7.4%
Days Cash on Hand * 168.3 190.6 267
Days Cash on Hand excluding Unity * 220.5 190.6 267
Days in Accounts Receivable ** 40 46 48
Long Term Debt to Capitalization 25.5% 33.7% 29.6%
Operating Cash Flow 8.2% 10.1% 10.0%
Cash-to-Debt 219.5% 153.4% 199.1%
* excludes provision for bad debt and retiree health insurance
** average for 4 months
Industry Comparisons
Healthcare System
Page 56 of 60
UW Health at The American Center YTD Results
February 29, 2016
11
Actual Budget Variance
Operating Revenue (net) 60,002,818 67,921,494 (7,918,676)
Operating Expenses:
Salaries & benefits 27,999,606 34,345,938 6,346,333
Professional fees 2,371,959 3,470,406 1,098,447
Purchased services 2,341,397 3,737,061 1,395,664
Medical supplies & drugs 13,588,001 12,293,873 (1,294,128)
Depreciation 5,286,486 7,005,231 1,718,745
Interest 4,096,251 4,186,158 89,907
Other 2,906,485 3,044,072 137,587
Total operating expenses 58,590,184 68,082,738 9,492,554
Operating Income (Loss) 1,412,634 (161,244) 1,573,878
Page 57 of 60
UW Health Non-Operating Revenue
Year-to-Date February 29, 2016 (Amount in $$ Thousands)
12
Actual
5,081
563
(43,197)
1,422
(110,573)
520
(146,184)
Other, net *
Earned Investment Income
Equity in earnings of joint ventures
Unrealized gain (loss) on investments
Non-capital grants and contributions
Contributions to UWSMPH
Total revenues (expenses)
* Includes Income Tax (Expense)
Page 58 of 60
UW Health Consolidating Balance Sheet
YTD February 29, 2016
13
UWHCA UWMF RDI/SAHS UHC/Unity Other Eliminations
UW Health
Consolidated
Cash & Investments
Unrestricted 812,971,723 271,214,978 230,597,402 81,784,037 18,421,559 - 1,414,989,699
Restricted by Trustee & Donors 15,978,902 - 20,859,616 - - - 36,838,518
Accounts Receivable 219,342,520 66,523,931 71,402,902 - 9,069,892 (372,781) 365,966,464
Property, Plant & Equipment, Net 754,027,422 59,734,142 333,508,330 10,423,003 5,974,045 - 1,163,666,942
Other Assets & Deferred Outflows of Resources 275,703,148 256,904,898 47,661,974 145,922,197 5,010,110 (314,252,972) 416,949,355
Total Assets & Deferred Outflows of Resources 2,078,023,716$ 654,377,949$ 704,030,224$ 238,129,237$ 38,475,606$ (314,625,753)$ 3,398,410,978$
Current Liabilities 288,066,347 186,033,051 105,116,085 166,992,688 5,849,984 (39,121,776) 712,936,378
Long-term Debt & Deferred Inflows of Resources 538,704,165 39,745,000 148,882,177 - 427,505 - 727,758,846
Net Position
Unrestricted 1,098,359,902 428,599,898 440,186,374 71,136,549 32,198,117 (275,503,977) 1,794,976,864
Restricted 152,893,302 - 9,845,588 - - 162,738,890
Total Liabilities, Deferred Inflows of Resources
& Net Position 2,078,023,716$ 654,377,949$ 704,030,224$ 238,129,237$ 38,475,606$ (314,625,753)$ 3,398,410,978$
Page 59 of 60
UW Health Consolidating Income Statement
YTD February 29, 2016
*Includes $90M commitment to SMPH from Integration Agreement
14
UWHCA UWMF RDI/SAHS UHC/Unity Other Eliminations
UW Health
Consolidated
Net Patient Service Revenue (net of provision for
bad debts) 1,063,925,204 447,067,088 299,886,698 - 43,384,059 (234,213,612) 1,620,049,437
Premium Revenue - - - 554,004,172 - (19,668,622) 534,335,550
Other Revenues 17,433,882 71,637,769 23,634,180 15,209,164 3,062,508 (66,374,324) 64,603,179
Total Revenue 1,081,359,086 518,704,857 323,520,878 569,213,336 46,446,567 (320,256,558) 2,218,988,166
Operating Expenses:
Salaries & Benefits 480,271,940 334,180,987 160,178,682 24,488,523 15,584,405 (13,481,318) 1,001,223,219
Supplies, Drugs and Other Expenses 463,485,829 170,928,264 133,876,844 33,046,204 22,244,570 (74,434,441) 749,147,269
Interest 11,044,795 635,476 2,236,270 3,676 338 - 13,920,555
Depreciation 46,674,986 4,890,338 17,850,627 2,139,257 898,723 - 72,453,932
Health Care Expenses - - 6,619,195 514,085,085 - (234,050,986) 286,653,294
Total Operating Expenses 1,001,477,551 510,635,065 320,761,618 573,762,745 38,728,036 (321,966,745) 2,123,398,270
Operating Income 79,881,536 8,069,792 2,759,260 (4,549,409) 7,718,531 1,710,187 95,589,896
Total Non-operating Revenue and Income Tax
Expense * (39,768,173) (101,272,401) (5,320,609) (605,686) 9,207 772,827 (146,184,835)
Net Income 40,113,363 (93,202,609) (2,561,349) (5,155,095) 7,727,738 2,483,014 (50,594,938)
Page 60 of 60
