HFMA WEBINAR. Sponsored By: Transforming Capital Management and Planning Outcomes into Operational Budgets and Forecasts

Transcription

1 HFMA WEBINAR Sponsored By: Transforming Capital Management and Planning Outcomes into Operational Budgets and Forecasts Date: Thursday, April 23, 2015 Time: 2:00 3:30 p.m. Central (12:00 1:30 pm Pacific/1:00 2:30 pm Mountain/3:00 4:30 pm Eastern) Follow this link (or paste it into a browser) to connect: Please log in 10 minutes early and test your computer connection: Enter platform where it says guest type in your full name first and last name only it is very important especially if you need CPE credit so that your attendance is accounted for You will Not be using your telephone, but will hear the audio via your computer speaker Online live seminars are broadcast over the web via Adobe Connect. You'll need a computer with a browser, Adobe Flash Player 11.2, and Internet connection. Test your connection to Adobe Connect: Login issues to check first: Are you connected to the Internet? Disable popup blocker software. Clear the browser's cache. Try connecting from another computer. Are you accessing the correct URL? Audio Issues: Close all Microsoft Applications, especially Outlook and Messenger. Having Outlook open absorbs almost 50% of the bandwidth which may cause intermittent audio interruptions. If you have questions regarding registration or connection please call HFMA Member Services at ( , ext 2). CPE Information: To receive CPE Credits for this webinar you must participate in online polling during the webinar and complete the online program evaluation within 2 working days. After 2 working days online programs will be inactive and you will not receive CPE Credit. The URL below will take you to our on-line evaluation form. You will need to enter your HFMA I.D. # (found in your confirmation ) You will also need to enter this Meeting Code: 15AT19 URL: You may also connect directly from the last slide of the live webinar Your comments are very important and enable us to bring you the highest quality Programs! To review your CPE information, please visit the HFMA web site at log into your member profile, and retrieve all CPE information (by date) within your "CPE Center.

2 Sponsored by: Transforming Capital Management and Planning Outcomes into Operational Budgets and Forecasts Thursday April 23, 2015 (12:00 1:30 pm Pacific/1:00 2:30 pm Mountain/2:00 3:30 p.m. Central/3:00 4:30 pm Eastern) Baylor Scott & White Health Rachal Reel, Director of Financial Planning and Analysis Nathan Smith, Manager of Capital Planning Jess Block, Vice President at Kaufman Hall

3 Our Speakers Rachal Reel Director of Financial Planning & Analysis Nathan Smith Manager of Capital Planning Jess Block Vice President, Kaufman Hall 2

4 Learning Objectives Identify best practices for capital management and monitoring Improve the efficiency in your organization s capital planning process Implement a workflow that reduces approval times Avoid common capital planning mistakes 3

5 Agenda Common capital planning processes Baylor Scott and White Health Q&A Background Capital management lean process improvement Integrating Scott and White 4

6 Common capital planning processes 5

7 Enabling an Integrated Financial Planning Model CAPITAL MANAGEMENT Retrospective review Capital management Capital spending Approval to spend Board Approval STRATEGIC PLANNING Strategy Formulation Long-range Financial Planning Short-Term Profitability Targets CAPITAL ALLOCATION Capital constraint/ available capital Capital requests Review and evaluation Allocation and recommendation OPERATING BUDGET Operating Budget Development Review CAPITAL BUDGET Capital Budget Integration Finalization Coordinated Operating & Capital Budget 6

8 Common Process Challenges Capital Process Needs & Capacity Assessment New requests lack consistency, not comprehensive Executives often lack visibility into project spend & status Tracking of Project Status & Spend Improve Capital Planning and Tracking Initiating New Requests Proper sign-offs are missing (Legal, IT, etc) Consolidate, Evaluate & Approve Review and Signoff Areas where technology can streamline the capital planning & tracking process. Sometimes the first submissions win 7

9 Proper Reviews & Sign-off OBJECTIVE: Ensure new requests have been routed to appropriate stakeholders for review and sign-off. Alerts & Notifications New request APPROACH: Tools to automate the workflow review process. IT BioMed Legal Conditional rules should direct to proper individuals/groups. Result ensures requests are complete, consistent and ready for Capital Committee evaluation. Capital Contac t Consolidated Reporting Approval Committee 8

10 Baylor Scott and White Health - Background 9

11 Baylor Health System merged with Scott & White in October Creates the largest not-for profit system in Texas Assets $9.0B Revenues (annualized) $6.8B Hospitals 43 Patient Care Sites 500 Licensed Beds 5,410 Affiliated Physicians. 6,000 Employee FTE s 36,600 Covered Lives 318,000 (SW Health Plan & BSWH Quality Alliance) Baylor system footprint Scott & White system footprint Scott & White Health Plan footprint 10

12 Baylor Scott & White s Capital Management Lean Process Improvement 11

13 Executive Summary Background: User concerns/uncertainty about processes/delays in capital through the system Current State: Identification of 14 areas to improve Analysis of Current State: Average cycle time is 72 days Future State: Consolidation of 8 stages/elimination of 6 stages Reduce avg cycle time from 72 to 50 days Technology Enhancements allow the creation of future state Implementation plan: 6-9 months 12

14 Lean Work Plan and Deliverables Define Analyze Improve Sustain Close Identify customers and CTQs Map current state Identify wastes & causal factors Determine Data to collect Collect data on current state Map future state Design Solutions Test/Refine solutions Implement solutions Develop control plan Turn over to operations Celebrate!!! Determine follow up Lean initiatives needed 13

15 Project Mission AIM Statement Refine Baylor s processes related to the Kaufman Hall Capital Management tool. The goals are to maximize use of the tool, ensure all touch points are identified and documented, and improve cycle time, reporting and user satisfaction. Criteria for Success: Users effectively use the tool and are satisfied using the system Effective and timely process alignment with stakeholders Reporting is accurate, timely, and transparent End-users are trained and understand how the process and tool works 14

16 Project Scope Out of Scope In Scope Threshold Capital Planning (Sept-Nov) Capital Allocation Non-Threshold Capital Budgeting (March-May) Capital Allocation Threshold and Non-Threshold Budgeted Capital Transferred from Capital Allocation to Capital Management (June) Threshold and Non-Threshold Capital Projects review, approval, requisition, procurement, & reporting (Throughout the Year) Capital Management Capital Planning, Allocation, & Budgeting Capital Approval and Reporting 15

17 Cross Functional Project Team Executive Sponsor/Project Champion Team Leader/Process Owner Lean Project Leader/Master Black Belt Other department members: BIS Procurement Contracting Capital Mgmt Admin Financial Services/Accounting Hospital Financial Analysts Hospital Financial Officer CBRE Bio Med/Imaging Support Physician Network 16

18 Stakeholders System Executives Entity Leadership Entity Finance Financial Officers Financial Analysts Department Directors/Managers Supply Chain Management Procurement Contracting Financial Services Treasury Functional Reviewers of Capital Biomed Imaging BIS Facility Support CBRE Foundation Capital Management (CM) Administrators (SFPA) 1300 CM users 17

19 High Level Process Map 18

20 Baylor Health Care Capital Management Process Process recurring prior to new fiscal year Current State Capital Project Request December 11, 2012 Budgeted Capital is approved prior to new fiscal year (June) Budgeted Non-Threshold & Threshold Capital projects are transferred from Capital Allocation to Capital Management by CM Admin Capital Budgeted Workbooks are created in CM by CM Admin A Budgeted Capital is sent by Entity FO to CM Admin requesting capital workbook to be initiated CM Admin reviews workbook for completeness (Approvers, Reviewers, and Dollars) Is the capital workbook complete and accurate? Yes CM Admin advances capital workbook to project owner at entity; CM auto s owner Go to Project Review Page 2 Capital Request & Approval Process Entity Mgmt or Dept Leader determines capital need Entity Mgmt or Dept. Leader notifies Entity FO of capital need Is the project budgeted or unbudgeted capital? ( is sent by CM admin to FA/FO to complete Capital Request Form) No Unbudgeted Capital Capital Request Form is completed by FA/FO (See Appendix A for Capital Request Form) 1. Capital vs. Operating not clearly identified Entity FA/FO determine how the capital request will be financed: 1. Operations 2. Foundation 3. Lease 4. Other 2. Manual Build Workbook Process 3. Too much reliance on CM Admin References Does the entity have sufficient capital to fund project? Yes Entity FA/FO provide justification for why this project is urgent/strategic/ emergency Entity FA/FO prepares appropriate documentation depending on type of project (Quote, Pro Forma, CBRE Estimate etc.) Capital Request Form is ed to CM Admin by FA/ FO CM Admin inputs data into Dimensions CM Admin inputs data into Process Control CM Admin builds capital workbook CM Admin transfers funds to request capital workbook A Appendix A: Capital Request Form Appendix B: Document Checklist (What documents are needed for the different projects) Appendix C: What projects go through the different funding levels Appendix D: Approval Matrix No Contact SFPA VP for system contingency funds Yes Has the use of system capital been approved? No System capital was not approved, end of process 4. Length of time it takes to access and update process control management/ownership 19 Page 1

21 Baylor Health Care Capital Management Process Current State - Procurement December 11, 2012 LT = 8.6 Days LT = 0.8 Days LT = 2.0 Days LT = 4.4 Days LT = 1.7 Days LT = 2.2 Days LT = 2.3 Days LT = 3.3 Days LT = 1.5 Days LT = 1.6 Days LT = 16.2 Days LT =.8 LT = 6.2 Days LT = 20.8 Days PT = 45 Minutes PT = 15 Minutes PT = 15 Minutes PT = 1 Hour PT = 2 Hours PT = 30 Minutes PT = 20 Minutes PT = 20 Minutes PT = 15 Minutes PT = 10 Minutes PT = 7 Days PT = 15 Minutes PT = 20 Minutes PT = 2 Hours From Page 3 System Approval Entity CBRE Entity Director of BIS Facility Representative CM Admin Supply Chain Supply Chain Project Manager Engineering BioMed Support Imaging Support Directors Supply Chain Supply Chain Foundation FO Supply Chain Requestor Req Review Purchasing Contracting Buyer CBRE Facility Support BIS Contracting Supervisor BioMed Imaging Supervisor Administrator SCMVP Foundation Buyer Review Go to Page Creation of Requisition not standardized across entities 7. Functional Reviewers at the end of processes 8. Lack of Standardization for Functional Review 9. Sequentional Approval and Requisition Process 11. High number of Reworks- Buyer Review/Requestor/ Owner From Page 3 Non-CBRE Creates requisition (Per Vendor) Ensures request matches quote and does not exceed budget Confirms appropriate procurement stages are assigned Completes due diligence Reviews workbook (if applicable) Reviews workbook (if applicable) Reviews workbook (if applicable) Confirms project meets BIS standards Confirms assigned contractor is correct Completes legal due diligence negotiates with 3 rd party Reviews workbook (if applicable) Reviews workbook (if applicable) Final Review and issues PO From Page 3 CBRE Advance Main workbook CBRE Equipment CBRE BIS Workbook CBRE is broken into Main, Equip, and BIS workbooks. Verify request matches Estimate Confirms appropriate procurement stages are assigned Confirms appropriate procurement stages are assigned Completes due diligence Completes due diligence CBRE notified by that workbook has been approved. Needs to advance Reviews workbook (if applicable) Reviews workbook (if applicable) Reviews workbook (if applicable) Confirms project meets BIS standards Confirms assigned contractor is correct Confirms assigned contractor is correct Completes legal due diligence negotiates with 3rd party Completes legal due diligence negotiates with 3rd party Reviews workbook (if applicable) Reviews workbook (if applicable) Final Review and issues PO Final Review and issues PO Go to Page 5 From Page 3 BIS Creates requisition Ensures request matches quote and does not exceed budget Confirms appropriate procurement stages are assigned Completes due diligence Confirms project meets BIS standards Confirms assigned contractor is correct Completes legal due diligence negotiates with 3rd party Reviews workbook (if applicable) Final Review and issues PO From Page 3 THVG Creates requisition (Per Vendor) Ensures request matches quote and does not exceed budget From Page 3 HTPN Information Systems All Other Ensures request matches quote and does not exceed budget Completes due diligence 20 Page 4

22 Current State Opportunities for Improvement (Kaizen s) 1. Capital vs. Operating not clearly identified early in process 2. Length of time to gather data and manually build workbook 3. Too much reliance on CM administrator 4. Extended length of time it takes to access and update process control ownership/mgmt 5. Expected Documentation per project type not clearly identified 6. Inaccurate and incomplete quote that doesn t considers all costs 7. Functional Reviewers (BIS, Biomed, Imaging Support, Facility Director) at the back end of the process 8. Lack of standardization for Functional Review 9. Sequential approval and requisition system that causes delays 10. Creation of the Requisition not standardized across entities 11. High Number of Rework s and Errors 12. Technology Limitations 13. Actual Invoice Data Feed not accurate 14. Capital Reporting ineffective and not utilized 21

23 Lean Work Plan and Deliverables Define Analyze Improve Sustain Close Identify customers and CTQs Map current state Identify wastes & causal factors Determine data to collect Collect & Analyze data on current state Map Future State Design solutions Test/Refine solutions Implement solutions Develop control plan Turn over to operations Celebrate!!! Determine follow up Lean initiatives needed 22

24 Data Analysis 23

25 Data Summary Create a Days in Stage Report FY2012 Completed Capital Projects =391 Lead Time calculated from CM Average Cycle Time = 72 Days Median Cycle Time = 53 Days Minimum Cycle Time = 2 Days Maximum Cycle Time = 355 Days Number of Times the Capital Project was returned or reworked Total # of Unique Reworks=146 37% of All Capital Projects (391) Reworked Total # of Multiple Project Rework = % of All Project Rework from Owner, Requestor, and Buyer Review 24

26 Lean Work Plan and Deliverables Define Analyze Improve Sustain Close Identify customers and CTQs Map current state Identify wastes & causal factors Determine data to collect Map Future State Design Collect & Solutions Analyze data Test/Refine on current solutions state Implement solutions Develop control plan Turn over to operations Celebrate!!! Determine follow up Lean initiatives needed 25

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29 Identified Solutions Capital Project Request Page 1 Improvement Opportunities 1. Capital vs. Operating not clearly identified 2. Length of time to gather data and manually build workbook Solutions Ask questions early in the process to identify capital on Capital Request Form Clearly/visibly state capital policy on all documentation Online Capital Request Form that automatically integrates with CM to create workbook and transfer funds 3. Too much reliance on CM administrator 4. Extended length of time it takes to access and update process control ownership /management Creation of online capital request form Standardized functional reviews and documents needed Dashboard for What s in queue, What s coming, What s approved CM Patch enhancement will expedite capital ownership process updates for all entity users

30 Identified Solutions Capital Project Review Page 2 Improvement Opportunities 5. Expected Documentation per project type not clearly identified/inaccurate and up-todate quote 6. Inaccurate and incomplete quote that doesn t consider all costs Solutions Creation of the process flow map Creation of a separate document that describes what needs to be attached by project type Publish document checklist and process flow chart 7. Functional Reviews at the end of the process-not able to provide input at beginning of process 8. Sequential approval and review process causes delays Move functional reviews to the beginning of process-approves will be able to see comments Technological enhancements to CM tool allowing for parallel processing (functional reviews at the same time)

31 Identified Solutions Capital Procurement Page 4 Improvement Opportunities 9. Creation of Requisition not Standard across entities Solutions Identify an individual per entity to create requisitions Provide ongoing training program 10. High number of Re-works Publish document checklist by capital project Eliminate Owner Stage Identify an individual per entity to create requisitions Functional Reviews early in process

32 Other Identified Solutions User Friendliness Updated and simplified user guide Quick tips guide Ongoing Training program standardized for new users Updates to Forms/Templates Capital Request Form- Online and Standardized for Users Capital Workbook Template-Additional Justification/information on face of workbook Creation of a Document checklist 31

33 Future State - Estimated Time Savings Stages Eliminated Average of Days in Stage Owner 4.3 SCM Preview 0.6 CBRE PM 2.0 Director 2.0 CBRE 1.7 Facility Support 1.4 Total 12.0 Stages Consolidated Average of Days in Stage Facility Support 2.2 DeptVP 1.9 Purchasing Sup 2.0 BioMed 2.3 Imaging 3.3 BIS 1.5 Contracting Sup 1.6 Foundation 6.2 Total 21.0 Average Cycle Time = 72 Days Estimated Net 30% reduction Estimated Future Cycle Time = 50 Days Stages Added in FY2013 Average of Days in Stage Treasury 2.0 Regional President 2.0 Finance Review 2.0 Total

34 Stakeholders Who Benefit System Executives Now see functional review comments Entity Leadership Now see functional review comments Entity Finance Minimizes rework with standard capital request form own and manage the capital for their entity Enhanced Reporting Capabilities Department Directors/Managers Supply Chain Management Speeds opening and saving process control Standardized Capital Request form and reviewer stage to minimize rework Financial Services Enhanced Reporting Treasury Only Leases shown Functional Reviewers of Capital Able to comment/review capital items for Baylor standard before approval Ensures capital request has considered all costs Foundation Review early in the process with Functional Review Capital Management (CM) Administrators (SFPA) Time savings with automation and standardization All Users Enhanced Reporting Visible Capital Process Map Consistency of Process Dashboard-Visibility of Capital Projects More satisfied end user 33

35 Lean Work Plan and Deliverables Define Analyze Improve Sustain Close Identify customers and CTQs Map current state Identify wastes & causal factors Determine Map Future data to State collect Design Collect & Solutions Analyze Test/Refine data on solutions current state Implement solutions Develop control plan Turn over to operations Celebrate!!! Determine follow up Lean initiatives needed 34

36 Implementation Timeline Implementation Plan- 6 to 9 Months Jan- Mar April- June July- Sept CM Patch: Expedite Saving in CM Revise Specs for Actual Capital Data Spend Ability to Transfer Funds from multiple workbooks Identify One Person per Entity to create requisition Work with Vendor on Technology Enhancements Work with Vendor on Technology Enhancements Technological Enhancement Available in June Identify ways to automatically reconcile data feed to GL Create Ongoing Training Program Upgrade CM Tool with New Technology that allows for Parallel Processing Roll-out new Capital Process with new Documentation 35

37 Integrating Scott and White 36

38 Implementation of capital management process Previously used paper form for approval/requisition Required training all users in division in new process Improvements Electronic tracking Ensured all proper approvals Adjustments Longer processing time for most requests Gaining understanding of new process 37

39 Current Capital Processes Capital Planning Before Fiscal Year Entities prepare pro-forma analyses in KH Capital Allocation for Threshold projects (>$1M) Results are summarized in custom Capital Asset Request Form Each entity provided Non-Threshold allocation to cover needs < $1M. Capital Management During Fiscal Year Phase 1: Capital Project Request Phase 2: Functional Review Phase 3: Capital Project Approval Phase 4: Capital Requisition Capital Monitoring After Fiscal Year 2 years after completion, compare performance of large projects to original projections 38

40 Post-Redesign Projects Property Lease process Incorporate approval of property lease terms with approval of associated capital Presents entire project to executives in consolidated format, so they don t have to approve the same project twice in two processes Emergency request process Expedite approval of emergency items 3 priority levels of emergency 39

41 Questions? 40

42 Thanks to our speakers Rachal Reel Director of Financial Planning and Analysis, Baylor Scott & White Health Nathan Smith Manager of Capital Planning, Baylor Scott & White Health Jess Block Vice President, Kaufman Hall Resources Healthcare Finance resources - Kaufman Hall healthcare solutions

43 To Complete the Program Evaluation The URL below will take you to HFMA on-line evaluation form. You will need to enter your member I.D. # (can be found in your confirmation when you registered) Enter this Meeting Code: 15AT19 URL: Your comments are very important and enables us to bring you the highest quality programs! 42