Application Frequently Asked Questions
1) What is the Tennessee Rural Hospital Transformation Act?
- The act (House Bill 2326), sponsored by Senator Bo Watson and Representative Kelly Keisling, was created to help struggling rural hospitals develop plans to ensure their financial viability and ability to continue to provide necessary healthcare services. Legislators required the Tennessee Department of Economic and Community Development (TNECD) to establish and manage a rural hospital transformation program tasked with assessing viability, identify new delivery models, develop strategic partnerships, and implement necessary operational changes. Additionally, the act “requires TNECD to identify contractors to provide consultations to “target hospitals” for the creation of transformation plans. A transformation plan is a strategic plan developed by contractors in close collaboration with target hospitals and community stakeholders to provide recommendations and actionable steps for preserving healthcare services” (RHEA Review, Tennessee General Assembly to support state’s rural hospitals, March 3, 2018).
For additional information, please visit the 110th Tennessee General Assembly Public Chapter 1055.
2) What information can be expected to be included in a transformation plan for our hospital if selected for the full assessment process?
- Focused strategies to transition the hospital into a sustainable business model
- Recommendations for funding transition costs with federal, state, existing hospital or community resources, and other possible sources
- Service line recommendations to ensure appropriate and viable care is provided in the hospital that best serve the interests of the community
- Strategic partnership and/or alliance recommendations
- Recommendations for coordination with surrounding healthcare provider community including safety-net providers and tertiary hospitals
3) What is the purpose of this application
- This application will serve to inform the TNECD of the total hospital organizations who wish to participate in the program as well as help prioritize hospitals for further assessment and transformation plan development
4) When will I receive information on my application status and program inclusion?
- The TNECD will accept applications until 5:00p CT September 13th, 2019 at which point all applicants’ responses will be thoroughly analyzed and vetted to triage facilities by risk level and community economic impact to inform prioritization and/or inclusion in the first or future rounds of transformation plan development
5) What level of organizational access will be expected to be given to contractors who are tasked with designing a transformation plan for our facility?
- Consultant teams will need a high degree of access to hospital leadership and other additional information upon request to ensure transition plans are properly tailored to each individual hospital and their individualized issues. To be eligible for the program, hospitals must make their teams and facilities available for all scheduled on-site visits during the program. On-site visits will include, but are not limited to:
o Interviews and access to communication with the C-suite and other key leadership
o Site tour and operational walk-throughs
o Review of organizational key performance indicators, monitoring tools, and other dashboards
o Additional interviews with clinical personnel as needed
o Specified additional data upon request
o Failure to make teams and facilities available will result in disqualification from the program.
6) How do I begin the application?
- To begin your application, your hospital will confirm its participation and sign an Intent to Submit and accompanying Disclaimers. Once you have completed this section, you will receive a confirmation email containing the link the application. Click on this link to begin the application.
7) Does the application have to be complete in one sitting or can I save and resume the application?
- The application can save your application and resume to page you last on by clicking ‘Save and Resume’ located at the bottom of the application page. Once you have selected this option, you will receive an email with the link that will direct you to the page you previously on to resume completing the application.
Note: If you save your progress more than once, the accompanying email will contain a new link each time. Please select the link from the most recent email to resume back to the page you previously were on.
8) What are the immediate next steps following the acceptance of our application?
- Once an application is accepted, the TNECD and consultant teams will review applicants and triage them into prioritization groups. Your hospital will be notified of its status with the program and triage group accordingly, and additional data requests may be made at that time. Following additional analytics and review of all collected information, on-site visit requests will be scheduled with selected hospitals and the transformation plan creation process will begin.
- Hospital Service Area (HSA)
o Collection of patient origin counties or zip codes that account for 75% - 85% of total patients
- Primary Service Area (PSA)
o Collection of patient origin counties or zip codes included in the HSA definition which account for 50% - 60% of total patient volumes
- Secondary Service Area (SSA)
o Collection of patient origin counties or zip codes included in the HSA definition which account for roughly 25% of total patient volumes
- C-Suite Executives
o The executive suite of the organization, or all top-level managers with a “C” title
§ ex: CEO, CFO, CTO, CIO, etc
- Full-Time Equivalent (FTE)
o Translating measure of a part-time employee’s workload, typically a physician’s clinical time, into their equivalent value as a full-time employee
§ Formula: Total annual clinical hours for physician / 2,080 working hours total annual
- Electronic Health Record (EHR) & Electronic Medical Record (EMR)
o EHR: system that electronically houses patient health information on individualized documents that can be accessed by physicians, and is shared among multiple facilities and agencies
o EMR: Digital version of traditional patient medical records and represents the medical record within a single facility
Facility, Quality and Operational Definitions
- Average Daily Census (ADC)
o Number of patients physically present in a healthcare facility over a period of time (year)
o Formula: Total Inpatient days / 365
- Average Length of Stay
o The time in days the average person stays in a hospital for inpatient services
- Hospital Readmission Rate
o The proportion of discharged patients that are once again admitted to the discharging hospital within a specified period of time (typically 30 days), expressed as a %
- Hospital Mortality Rate
o The number of patient deaths that occur within a facility for every 1000 admissions
- Hospital Infection Rate
o The total number of hospital acquired infections for a particular facility over the total discharges during a given period
- Faculty Turnover Rate
o The percentage of employees who leave an organization during a given period
§ Annual rate: (# of employees who left / average # of employees in the year)*100
Financial Statement Data and Financial Definitions
- Bond Covenants
o Legally binding terms of agreement between a bond issuer and a bondholder. They are designed to protect interests and come in the form of Restrictive covenants that forbid the issuer from undertaking certain activities, or Affirmative covenants that require the issuer to meet certain requirements
- Capital Investment Requirements
o Capital needs (in dollars) the hospital requires in the short-term (3-5 years) for projects including facility updates, technology requirements, and other improvements
- Agency Expense
o Expenses related to outside organizations providing members of their workforce to the hospital
- Traveler Expense
o Expenses related to labor (nurse or physician) located outside of the service area or county who provide services in the hospital
- Days Cash on Hand
o The number of days of operating expenses that an organization could pay with its currently available cash
§ Formula: [ (Unrestricted Cash) / (Total Operating Expense - Depreciation Expense) ] / 365
- Days in Net Accounts Receivable
o Average amount of time, in days, it takes a hospital or provider practice to collect payments due after a patient is discharged
§ Formula: (Accounts receivable balance / Net charges)*365
- Return on assets
o Indicator of how profitable a company or hospital is relative to its total assets, or how efficiently a hospital is leveraging assets to generate profit
§ Formula: Net income / Total assets
- Debt Service Coverage Ratio
o Measurement of cash or cash flow available to pay down current debt obligations for a hospital
§ Formula: ( Net Income + Depreciation Expense + Interest Expense) / (Interest + Principle Payments)
- Long-term Debt to Capitalization
o Measure of a hospital’s financial position that demonstrates their financial leverage
§ Formula: (Long Term Debt) / (Long Term Debt + Stakeholder's Equity)
o Note: For not-for-profit organizations substitute unrestricted net assets for stockholders’ equity.
- Equity Financing
o In for profit hospitals, equity financing refers to the funds raised through the sale of shares or ownership in the organization
- Cost per Discharge
o The costs incurred by the hospital directly related to the provision of a unit of inpatient services
§ Formula: Total costs related to inpatient care / total discharges
- Cost per Encounter
o The costs incurred by the hospital directly related to the provision of a unit of outpatient services
§ Formula: Total costs related to outpatient care / total outpatient encounters
- Claims Denial Rate
o Represents the percentage of claims filed by the hospital that are denied by respective payors. Indicates a health cash flow
§ Formula: Total dollar value of denied claims / Total dollar value of filed claims
- Total Charity Care
o The total dollar amount of charity care provided by a hospital during a given period, typically a calendar or fiscal year
Qualitative Interview Scheduling
- What is the purpose: This section of the application is to schedule a follow-up applicant interview with the Rural Hospital Transformation Program team.
- How should I select times and dates: Each chosen option should coincide with a time and date where both the Hospital CEO and a representative of the Board are available for a phone call. Times and dates can only be selected ONCE per applicant, so each option should be different as to ensure all applicants receive an interview. Please rank your availability in order of first preference through fifth. Meetings times are not confirmed until you receive email confirmation from the Rural Hospital Transformation Program confirming the time for your discussion.