Forward to 2020 and Beyond" Citi Not-for-Profit Health Care - - PowerPoint PPT Presentation

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Forward to 2020 and Beyond" Citi Not-for-Profit Health Care - - PowerPoint PPT Presentation

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"20/20 Vision: Looking Back on the Last 20 Years, and Looking Forward to 2020 and Beyond" Citi Not-for-Profit Health Care Investor Conference 2019 Michael J. Dowling President and CEO Mark J. Solazzo Executive Vice President, COO

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"20/20 Vision: Looking Back on the Last 20 Years, and Looking Forward to 2020 and Beyond"

Citi Not-for-Profit Health Care Investor Conference 2019

May 23, 2019

Michael J. Dowling

President and CEO

Mark J. Solazzo

Executive Vice President, COO

Michele L. Cusack

Senior Vice President, CFO

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Disclaimer

The following presentation contains information which is forward-looking within the meaning of federal securities law. These forward‐looking statements are based on the current plans and expectations of Northwell management. The achievement of certain results or other expectations contained in such forward- looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed

  • r implied by such forward-looking statements.

Northwell expressly disclaims any obligation or undertaking to issue any updates or revisions to those forward-looking statements if or when their expectations change,

  • r events, conditions or circumstances on which such statements are based occur.

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The Northwell Perspective

  • A proud history of achievement; innovation and growth.

− Consistency of strategy and purpose − Stability of performance

  • A recognition of how much has changed.

− Role of the hospital − Creation of a distributed network − New programs; new business

  • A progressive culture.

− Collaborative and team-based − Optimistic, integrated and adaptive

  • An understanding of the responsibility and obligation of leadership.

− An agent of continuous change and practical disruption − Responsibility to the community at large

  • A commitment to the promotion and advancement of overall health.

− More than the delivery of excellent medical care − Long-term view; multi-year perspective

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1907

Establishes first Physical Therapy Department in the United States

Northwell: A History of Firsts

1938

Performs first angio- cardiography in the United States

1967

Opens first cardiac catheterization unit in New York Metro area

1993

Opens the Center for Emergency Medical Services — the largest hospital-based emergency services

  • peration in the

East

2002

Launches the health care industry’s largest “corporate university” — the Center for Learning and Innovation (CLI) and the Patient Safety Institute (PSI), featuring the region’s first simulation lab —

  • ne of the largest

in the United States

2011

Welcomes inaugural class of 40 students to New York State’s first new allopathic medical school in 40 years

2018

Named one of Time magazine’s top innovators for its development of “The Fin,” an amphibious prosthetic leg

2015

Teams with Yale- New Haven Health to launch SkyHealth, the region’s first hospital-based helicopter emergency medical service

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Over

* Includes affiliates * *

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Northwell Health Major Components

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Feinstein Innovations Are Making Headlines

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Culture dedicated to innovative learning and training

Center for Learning and Innovation Graduate School of Nursing & Physician’s Assistants Zucker School of Medicine

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Disrupting the Status Quo

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NORTHWELL HEALTH’S COMMITMENT TO VETERANS

To celebrate Northwell’s dedication and leadership position in serving the needs of Veterans, Northwell Health is collaborating with the United States Navy and is creating a music based event closing the annual New York Fleet Week on May 25th at Rockefeller Center and Radio City Music Hall.

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Operating Performance

Mark J. Solazzo

Executive Vice President & Chief Operating Officer

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Current Operations Growth Diversification

Key Focus Areas

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Current Operations Growth Diversification

Key Focus Areas

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Mission Centric and Focus on the Core

Northwell Health continues to enhance the product through improvements across its domains

Mission

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Maintaining the Focus: Quality & Safety

  • AHA Quest for Quality Prize was awarded in 2018-

Northwell is the first and only health system in the country to receive this award

  • HANYS Pinnacle Award for Quality and Patient

Safety awarded in 2018

  • Based on the most recent STS report, Northwell

Health cardiac surgery programs at Lenox Hill Hospital, Southside Hospital and North Shore University Hospital received Three-Star ratings (highest quality rating given) in several categories

  • Northwell Health performs more robotic procedures

than any other health care provider on the East Coast, with more than 17 da Vinci robotic surgery systems in use.

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77.1 79 78.6 77.7 78.5 79.1 79.4 79.6 79.8 79.5 79.6 79.4 78.7 79.5 79.6 79.7 80.7 80.7

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 2018 2019

77.7 79.6 78.5 78.6 77.8 79.1 78.8 79.3 79.9 78.9 79.8 79.5 79.3 80.4 79.8 79.9 80.7 81.4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 2018 2019

Maintaining the Focus: Patient Experience

Top Box % Linear Trend

Inpatient: HCAHPS ‘Communication with Doctors’ – Top Box % Inpatient: HCAHPS ‘Communication with Nurses’ – Top Box % Inpatient: ‘Quality of Food’ – Top Box % Inpatient: HCAHPS ‘Recommend the Hospital’ – Top Box %

70.8 72.5 72.8 72.3 71.5 72.2 72.4 73.4 72.4 72.3 72.3 72.1 71.1 73.1 72.4 72.4 72.6

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019

30.8 31.0 30.9 29.9 31.1 31.7 28.1 29.5 31.3 31.6 30.9 31.8 32.7 34.4 33.9 35.2 36.4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019

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Cumulative Beds Created Through Efficiency

Enhanced Effectiveness: Operating Efficiency

53 120 227 280 339 402 436 469 506 571 612 660 700 740

  • 100

200 300 400 500 600 700 800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Projected

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Maintaining the Focus: Workforce Engagement

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Achieving the Quadruple Aim through “What If…”

A focus on improving team member well-being will drive the triple aim of achieving an improved patient experience, a better quality of care and a reduction in cost

  • Enhancing the

quality of care including a greater focus on individuals and families

  • Reducing

unnecessary cost while maintaining a high level of care

  • Making patients

the priority and developing a better patient experience

  • Improve Clinician

well-being and staff engagement to prevent burnout

Provider Patient Quality Cost

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Current Operations Growth Diversification

Key Focus Areas

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$ $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Budget

Revenue (Dollars in Millions)

Total Operating Revenue $9.3B $10.0B $11.5B $12.1B $8.5B $7.4B $7.0B $6.6B

41% 42%

$1.7B $2.5B $2.6B $2.8B $2.9B $3.1B $3.4B $3.6B $3.8B $3.9B $4.2B $4.4B $4.8B $5.5B $6.2B

Note: Excludes Health Insurance companies

Total Operating Revenue

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Northwell Health Network – 2013

22 7 Two

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Northwell Health Network – Current

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Hospitals & Post Acute Services

Ambulatory Surgery Centers………………………………………… Urgent Care Centers………………………………………………….. Ambulatory Practices………………………………………….... Employed Physicians……………………………………….. Voluntary Premium IPA……………………………….. Credentialed Voluntary Physicians…………..

13,600 2,446 4,226 636 51 15

2018 Ambulatory Referral Funnel

The referral funnel has caused many of our Hospitals to be at or above full capacity

702 Ambulatory Locations

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Absorbing the Growth from Continued Expansion has Resulted in Increased Market Share & Increased Acute Care Occupancy

Note: LIJ added 50 beds in 2017, Southside added 9 beds in 2018

106% (max) 118% (max) 127% (max) 117% (max)

90% (avg) 105% (avg) 99% (avg) 97% (avg) 88% (avg) 105% (avg) 103% (avg) 97% (avg) 91% (avg) 104% (avg) 100% (avg) 96% (avg)

0% 20% 40% 60% 80% 100% 120% 140%

LIJ NSUH Southside SIUH

2016 2017 2018 106% 118% 127% 117% 90% (avg) 105% (avg) 99% (avg) 97% (avg) 88% (avg) 105% (avg) 103% (avg) 97% (avg) 91% (avg) 104% (avg) 100% (avg) 96% (avg)

0% 20% 40% 60% 80% 100% 120% 140%

LIJ NSUH Southside SIUH

2016 2017 2018

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Patient Centric View

Building the Continuum of Care Around the Patient

The Digital Patient Experience Telehealth

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Telehealth Services enable the highest quality of specialist care in both inpatient and

  • utpatient settings

Northwell Health Telehealth

An interdisciplinary team from across the enterprise Interconnecting our systems to provide a digitally-powered, patient-centric experience

eICU Telestroke eSNF eHospitalist Pediatric Critical Care Consultation Neuro Critical Care Consultation Trauma Consultation Telepsychiatry Pediatric ED

Telehealth Center

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Current Operations Growth Diversification

Key Focus Areas

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Thinking differently… …redefining the “H”

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Continuing Shift to Ambulatory Settings

1997 2019 2005

Note: Excludes Health Insurance companies

51% 49% 70% 30%

Inpatient Revenue Outpatient & Other Operating Revenue

73% 27%

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Ambulatory Surgery Dialysis Urgent Care Anesthesia

Oyster Bay Floral Park Home Training Huntington on Broadway Port Washington Julia & Israel Waldbaum (NSUH) Crossways Park Long Island City Anchor Home Smithtown Selden East Islip

  • 13 Surgery Centers
  • 3 Radiation Medicine sites
  • 62,000 surgical procedures

annually

  • 51 Urgent Care Centers
  • Family & Pediatrics specialty centers
  • 550,000 visits annually
  • 1+ Million patients seen

since inception

  • 11 centers operational & in-

development

  • 20 centers expected by 2020
  • 150,000 treatments annually
  • Serving 30 Locations
  • 130 providers performing over

120,000 surgical procedures annually

Clinical Joint Ventures

Leveraging investments & partnership expertise to enter new markets & expand clinical capabilities

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Size and scale provides opportunity to create shared services, robust shared services provides

  • pportunity to sell services

Business and Service Capabilities

  • Revenue cycle
  • Financial Analytics
  • Accounts payable
  • Credentialing
  • Procurement (GPO)
  • Supply Chain
  • Human resources
  • Education and training
  • Patient scheduling
  • Insurance verification
  • HR Service Center
  • Information Services

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Continue to Diversify

Partnering in novel technologies and business models that improve patient care and advance Northwell’s growth

Diversification of Services Joint Ventures Provider Groups Investments Academics Technology Health Systems Research Digital

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Financial & Operating Performance

Michele L. Cusack

Chief Financial Officer

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$ $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Budget

Revenue (Dollars in Millions)

Total Operating Revenue $9.3B $10.0B $11.5B $12.1B $8.5B $7.4B $7.0B $6.6B

41% 42%

$1.7B $2.5B $2.6B $2.8B $2.9B $3.1B $3.4B $3.6B $3.8B $3.9B $4.2B $4.4B $4.8B $5.5B $6.2B

Note: Excludes Health Insurance companies

Total Operating Revenue

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27.7% 27.9% 28.2% 28.3% 28.7% 29.4% 29.5% 29.9%

25.0% 26.0% 27.0% 28.0% 29.0% 30.0% 31.0% 32.0% 33.0%

  • 200,000

400,000 600,000 800,000 1,000,000 2011 2012 2013 2014 2015 2016 2017 2018 *

Market Share % Number of Discharges

Primary Service Area

Northwell Health Total Market Northwell Market Share

Growing Share of Competitive Marketplace

Source: PARCSver2019.01ad/ja. *2018 annualized on 9 months. SIUH data based on internal data Market includes Staten Island, Manhattan, Queens, Nassau, Suffolk and Westchester counties Includes all Current Northwell Hospitals in all years

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Vertical Integration Yields Significant Diversification of Revenue Streams

494297.4 72249

Inpatient Revenue 51% Outpatient Revenue 27% Physician Revenue 16% Clinical JVs & Other Revenue 6%

Budget 2019

Inpatient Revenue 63% Outpatient Revenue 23% Physician Revenue 9% Other Revenue 5%

2010

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$(253) $(315) $(357) $(392) $(477)

  • $600
  • $500
  • $400
  • $300
  • $200
  • $100

$0

2015 2016 2017 2018 2019 Budget

Bottom Line Impact (Millions) ACA Impacts Medicare Medicaid Commercial

Bottom Line Pressures: Annual Financial Impacts

Five year cumulative financial impacts related to commercial payer behavior, government cuts, and ACA total $1.8 billion

(Dollars in millions)

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6.9% 6.7% 5.0% 6.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2015 2016 2017 2018

EBIDA Margin

94% 91% 87% 91% 0% 20% 40% 60% 80% 100% 2015 2016 2017 2018

Cash to Debt

3.6 3.4 2.6 3.3 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2015 2016 2017 2018

Debt Service Coverage Ratio

45% 47% 49% 48% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 2015 2016 2017 2018

Debt to Capitalization

Key Financial Ratios

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Steady Liquidity Despite Significant Capital & Strategic Investments

137% 145% 150% 180% 174% 161% 113 105 105 105 102 103

  • 20

40 60 80 100 120 0% 50% 100% 150% 200% 250% 2014 2015 2016 2017 2018 2019 Budget Capex / Depreciation Days Cash on Hand

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$0.2B $0.2B $0.2B $0.3B $0.3B $0.4B $0.5B $0.6B $0.7B $0.7B $0.8B $0.8B $1.1B $1.5B $1.6B $1.8B $2.0B $2.2B $2.4B $2.7B $3.0B $3.1B $3.2B

  • 0.50

1.00 1.50 2.00 2.50 3.00 3.50

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Budget

Cash & Investments (Dollars in Billions)

Growth in Cash & Investments

Total Unrestricted Cash and Investments Northwell has added $3B in cash and investments to the balance sheet aligned with the System growth and fiscal discipline

A

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Cash 6% Fixed Income 42% Equities 34% Hedge Funds

  • f Funds

13% Risk- parity 5% Fixed Rate Debt, 94% Variable Rate

Debt

6%

2018 General Funds Debt Structure

Investment Portfolio and Debt Structure

Notes: Investment Allocation and Debt structure at 12/31/18. Assets exclude some smaller pools as well as Phelps, Peconic, Mather, LI Home and CareConnect Insurance Company. General Funds exclude cash held outside of the investment portfolio to fund operations. Risk Parity uses a variety of liquid global stocks, global bonds, currencies and commodities to balance the risks of different growth and inflation environments Risk Parity was exited at 12/31/18 with proceeds allocated to equity and fixed income in January 2019.

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Stable Operating Performance & Growth in Net Assets

Stable operating results and growth of the organization have contributed to the overall increase in the net worth of the System

$0.6B $2.8B $3.2B $3.6B $4.0B $4.0B $4.6B

  • 10%
  • 8%
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 1997 2014 2015 2016 2017 2018 2019 Budget

Operating Margin Percentage Total Net Assets (Dollars in Billions) Net Assets Operating Margin

||||||||||||||||||

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At Northwell Health We Are…

 Committed to navigating headwinds and environmental conditions

 Focused on enhancing the core operations  Striving to maintain our market competitive advantage  Investing in innovation, excellence, and diversifying our revenue streams  Consistent in our strategic approach, with tactical agility  Dedicated to preserving the organization's foundation and looking to a strong future

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