Incoming hospital CEO Cathy Mayer will begin her tenure with a solid capital plan endorsed by the board of directors. “The budget for fiscal year 2011 is a better performance than any year I’ve looked at in our history,” said Tim Noakes, chief financial officer.
Carl Gerlach presented the plan last week in his final appearance at a board meeting as the hospital CEO.
Gerlach called the plan a dynamic framework within which the hospital can meet the capital requirements to sustain itself and grow while offering quality healthcare. The key outlay categories are buildings, systems, equipment, business investments and cash reserves.
“We need $64 million for the high priority stuff,” Gerlach said. “We have known sources which total $51 million at the low end, and at the mid-range an estimated $58 million. So we’ve got a gap.” However, “We can do better than the $58 million. We really can.”
Gerlach said there is a solid basis for optimism. “We’re seeing a response to our financial crisis, we’ve seen recruiting success. It’s like watching something catch fire. The proof is in execution.”
One critical means of sustainability is affiliating with other medical groups. Gerlach said that the partnerships with of Prima Medical Group has already proven its value in the recruitment of new doctors, while a new alliance with Marin General Hospital could add $9.8 million to SVH’s bottom line.
Gerlach said business success “is a function of opportunities, clear targets, performance monitoring and adjustment. And the ability to keep adjusting, keep adjusting.”
Designed to work in synch with hospital’s updated business plan, which sets the goals, targets, and rationale for investments, the Capital Plan organizes and prioritizes future capital requirements and allocates future funding sources.
Gerlach emphasized that to carry out the Capital Plan successfully would take discipline and focus, but that by balancing priorities with funding availability, the necessary capital improvements can be made over the next five years.
As part of the roll out, Gerlach reviewed current and potential funding opportunities. “Right now, you can’t afford all the listed investments with all the identified sources,” he told members of the finance committee. “But we clearly can get the highest priorities, because I think there are some other financing sources that will come on in the next six months.”
Board reception of the Plan was unanimous acceptance.
“It’s an excellent piece of work,” said Board member David Chambers. “You’ve given us a moving picture of what the hospital can become. It’s a financing approach, as opposed to an accounting approach.”
