CEO REPORT Board of Directors Meeting November 29, 2012 1. USDA meeting on November 13th a.

Status of project Jim Bachrach and Deborah Huckeba, Weems Board of Directors (BOD), and Pinki Jackel (by phone) and Noah Lockley, Jr., County Board of Commissioners (BOCC) met with Mary Gavin, USDA, Steve Lanier and myself to reinitiate the application process. b. Outcome The USDA would not make a recommendation on the loanable amount, but instead has recommended that Weems engage a CPA to determine the debt load that the hospital can carry. Based upon this determination, a work group of board members, staff, and other stakeholders at some time in the future will participate in updating the scope of work consistent with the loanable amount. This strategy makes the most sense from a financial standpoint and is what I call backing into the project and is one that I have utilized on various projects. c. CPA engagement Based on discussions with BOD and I have contacted BDK to provide Weems with a proposal. This vendor was chosen due to their previous involvement in providing the feasibility study for Weems. Hopefully, this will arrive by the time of the board meeting. 2. Weems West OP Clinic a. Progress activity continues in preparation for the December 4th opening. A wide variety of staff are involved in the planning and preparation activities. b. Reimbursement Discussion with TMH indicate that Weems will only receive 85% of what a physician could bill due to our use of Susan Hardin, ARNP. Additionally, WMH will not be able to bill the facility fee since the location is inside the hospital. As volumes ramp up and an off campus site is secured, WMH will be able to bill for this component. c. Bulletin boards have been secured to advertise the East Clinic and the West Clinic. Heather is in the process of securing a third billboard to be located in Eastpoint which will advertise the clinics and the hospital. See attachment A. d. We have been advised by TMH to be cautious about the use of the term Urgent Care as we are licensed for Primary Care instead. I am recommending the use of Quick Care instead as will be noted in Attachment A. With the dash between the terms, it can both serve to tell people that the clinic is an alternative to the ER as well as a description of the quality of our service. This seems to be more defensible than Urgent Care and is in use in various markets. 3. Blue Manta Contract a. Notice of intent to renegotiate has been provided to Blue Manta which is due for renewal on February 28, 2013. The reason for this is to re-evaluate the scope of work being performed by Blue Manta as well as the cost effectiveness of the engagement. b. I have met with Charles Edwards from Blue Manta and discussed my rationale for this and the necessity on my part to assure Weems Memorial Hospital is getting a market competitive price for the services provided. As part of this and other recent discussions, it appears that Blue Manta is providing a much wider scope of services than merely IT services. This is of assistance to WMH especially in light of recent efforts related to Financial Services. I have however asked that Blue Manta provide me regularly with a log of activities being performed in order to help evaluate their contract.

4. Computer system a. RFP has been published and bids are due to be opened December 4th at BOC meeting. b. After this, there will be a period of due diligence to evaluate the bids. This evaluation will involve a wide variety of stakeholders including physicians, nurses, business office staff, board members and potentially external parties. 5. Swing Beds a. Over the last couple of weeks, we have had between 2-4 skilled care patients at one time. This coming week, Dr. Chumney will begin his review of TMH patients qualifying for transfer to WMH for skilled care. Over the next several weeks, I will also be speaking with representatives from Capital Regional Medical Center, Sacred Heart Medical Center and Gulf Coast Medical Center. On December 3rd, I will be meeting with Dr. Perkins from Madison Hospital where they have developed a robust Swing Bed program with his help. This meeting is being set up my Mary OBryant at TMH. It may also be in our best interest to proceed with hiring a part time Swing Bed Coordinator to facilitate receipt of patients from the other organizations just mentioned. This program has the single greatest potential to drive WMHs financial success of any service. b. With the expansion of the Swing Bed program, we will be faced with the challenge of where to provide therapeutic services. We may need to consider the use of the conference room for this and finding an alternate site for our Board Meetings. c. Recently it was brought up that our Physical Therapy vendor was not responding in a timely basis. Becky and Paula have spoken with the vendor and no further instances of this have occurred but it will be essential to closely monitor their performance. 6. PT Other We have had a request to consider the provision of PT at our location in Carrabelle. This may be a discussion that we can have with Tom Brocato. I hope to meet with him soon to discuss possible collaborative efforts. 7. Ambulance repairs Over the last several months, several of our ambulances have broken down and required repairs. This has at times left WMH without a backup ambulance. We will need to monitor this closely to see if we need to implement a replacement plan. Tim Andrews and I spoke of the potential of buying a low mileage used ambulance. He will investigate this and update me in the near future. 8. Signing up with Medicare vendors a. As most of you may be aware, Florida is being divided in regions which will have two Medicare health plans each. It is my understanding that one of these will be an HMO plan and the other is a PPO. b. I have signed a contract with Humana to accept them as our Medicaid HMO provider. Ultimately the state will select the final plans and signing with a particular plan does not obligate us to them currently, but instead is used by the company to demonstrate market share to the state when making a selection. c. This week I will be meeting with Prestige to consider them for the PPO option and will be including Dr. Charbonneau in the discussions.

9. Townhall meetings a. Several weeks ago, I had a series of townhall meetings with staff in regards to proposed policy changes. This was well received by staff despite the fact there was significant concern about the policies. I was pleased to see staff turnout for these meetings and be involved in the decision making. b. To me this was a demonstration of our commitment to transparency and staff involvement and is something that will continue in the future. The policies are being presented to the board for approval this month after taking staff concerns into account and revising the policies. I think it is important that people involved in policies or other decisions have the chance for input. This type of process has been well supported by the Admin Team also. 10. Audit of billing companies and their performance a. This past month, a lot of time has been spent with various leaders and staff looking at the performance of our billing companies. From this, it has become apparent that a lot of opportunity exists for improvement. b. Opportunity - It is our hope to meet with the hospitals billing company, ARx, the first week in December to discuss their performance and how we can drive our success. In regards to Weems East, Steve will be working with the billing person to improve timeliness of billing and improve collections. Tim Andrews our EMS Director will be setting up a meeting with the ambulance billing company to likewise initiate discussion and action plans to improve EMS billing and collections. Overall, for each 1% increase in collections we will gain $80,000 in cash even without any growth in services. c. The Rural Flex Program through Hometown Health is working with Weems to provide auditing services of these billing companies and to clean up our Account Receivables. They are also seeking a grant to help fund this. 11. Cash vs. Net Profit At the end of last year, the hospital showed a net profit of $1.1 million which sounds very good. Unfortunately, our net increase in current assets was only about $290,000. Of this, the increase in cash was only $67,000. 12. PEO This past month we indicate our anticipation of moving to a new PEO. After notifying our current vendor, Fortune Business Solutions of our intent to terminate the contract we receive a counter proposal from them which represented an even better saving to WMH than the alternate company offered. As a result, we are staying with Fortune Business Solutions. Ginny and Steve did a very good job on making this possible. 13. Status of DON a. In our last months meeting, we discussed filling the empty chief clinician with a DON rather than a CNO. I have spoken with TMH about this and they are willing to do whatever we want from a contract standpoint and still provide access to training and support. I bring this up as we need a board consensus to direct TMH on the matter. b. Very few applications have been received despite increasing the number of places the job opening is posted. Most likely, we will close out the applications at soon and determine how to proceed.

14. Point of Service vendors a. Steve, the Admissions staff and IT have been evaluating two vendors for point of service products which would increase our up front collection of cash. Geri Forbes in Perry, FL has increased Doctors Memorials upfront collections by three-fold after implementing the nTeligent product for about $5.00 per admission. We continue in our review of the products and vendors to determine an ROI. 15. BP/Amoco claim a. While attending a rural hospital conference this past week, I sat in on a presentation related to the Deepwater Horizon spill and claims that can be made due to a recent settlement by BP/Amoco. It appears that an Economic Damage claim may be possible as relates to a decrease in Hospital Sales tax revenues, the loss of service line revenues, and an increase in bad debt. I have not collected and evaluated the historical data related to this yet, but based upon the impact on the local economy in general would anticipate finding the basis for a claim. b. It is my understanding, though I have not validated it, that Sacred Heart Hospital in St. Joe has been awarded $200,000 from a spill claim. c. I would like the boards permission to speak with the county attorney to determine if any merit exists for further action. 16. HB711 a. We have discussed previously the directive of HB711 (currently law number unknown but the bill was signed into law). In this, the board of public hospitals must determine whether or not the hospital should be sold or lease rather than stay as a public hospital. This must be initiated by the end of December 2012. At the same conference noted above, I attended a session on HB711. Several hospitals of our size have paid between $30,000-$75,000 for a vendor to perform this evaluation. Options do however exist as the only part that must be outsourced is the business valuation. The rest can be performed using existing sources if desire and available. b. We have received one proposal of $30,000 but I have solicited other proposals to see what the range of prices might be. I anticipate a proposal by the board meeting that will provide tiered pricing from the vendor doing the business valuation only to them doing the entire project. This will give us options to consider. The vendor is CRI which has previously done our financial audits and thus has a good feel for us already. This should lend itself to better pricing. I will provide more information at the meeting. 17. Provider meetings Since our last meeting, I have met with Dr. Head, Pediatrician from Sacred Heart; Sheila Allen, ARNP from North Florida Health Center; Dr. Shezad Sanaullah; and Dr. Helen Nitsios. I tried to meet with Dr. Stephen Miniat and Mr. Tom Brocato, PT. 18. Free Equipment I received a call from a nearby clinic that wishes to donate its dexascan and x-ray equipment to a hospital. The only costs would be that of removal and installation. I have committed to the dexascan and asked our Radiology Director to evaluate it and make a recommendation. 19. Sunshine Law Education Please remember to turn in your attestations of education.

Attachment A

Governing Board of Directors 2012

October 25, 2012
Members Present: Staff Present: Guests Present: Tammi Hardy, Chair; Jim Bachrach, Vice-Chair; Duffie Harrison, Secretary; Pat Conrad MD, Robert Davis, Deborah Huckeba Craig Gibson, Plant Operations Director; Becky Gibson, Nurse Manager; Steve Lanier, Controller; Ginny Griner, HR/ Med Staff Coordinator; Heather Guidry, Administrative Assistant, Ray Brownsworth, CEO Erica Ceska, RD; Rachel Chesnut, Foundation President; Alan Pfeifer, Concerned Citizens of Franklin County; Carl Mahler, TMH Liaison; Comm. Pinki Jackel DISCUSSION The meeting was called to order at 09:08 am. BOD minutes from September 27, 2012 were presented and reviewed. ACTION Motion made by Huckeba to approve minutes as presented, second by Davis. Motion carried unanimously.

TOPIC Call to Order/ Approval of Minutes

County Report

Comm. Jackel present by phone. Restore Act A Restore Act Council has been established by the BOCC. Comm. Jackel requested a representative from WMH to sit on the council. o Recommendation made to appoint Bachrach as representative to the Restore Act Council. o Recommendation made to appoint an internal committee to consist of Bachrach, Brownsworth, Hardy, and Davis.

Restore Act Motion made by Harrison to appoint Bachrach as the Restore Act Council hospital representative, second by Davis. Motion carried unanimously. Motion made by Bachrach to accept internal committee appointments, second by Harrison. Motion carried unanimously.

Page 1 of 7

Governing Board of Directors 2012

October 25, 2012
Loan Repayment Comm. Jackel is working with Erin Griffith from the county finance department to finalize information regarding the hospitals proposed debt to the county. Comm. Jackel stated the loans are related to DaSee. Per Comm. Jackel, preliminary information is as follows: o There were four transfers approved from the countys General and Road Paving fund between January 2006 and April 2006. The first two transfers were $100,000 each; the subsequent two transfers were $500,000 each. o On 12/29/2005, there was a transfer authorized from the county General funds for $81,000 for hospital payroll. In February 2006, there was a $469,000 transferred from the General funds to the hospital. o Total amount owed equals approximately $1.8 million. o OTTED loans are separate from the hospitals debt to the county. Comm. Jackel recommended the raw information be reviewed by Lanier, Griffith and herself before final presentation to the BOD. Davis requested the debt be booked on the hospitals budget for accountability purposes. Hardy requested time to research the debt and proposed repayment before the hospital board enters any commitment.

TMH Report

Introduction was made for Carl Mahler, the new hospital liaison with TMH. Mahler is the Administrator for TMH Behavioral Health Center. Mahler reviewed recommendations to improve the hospitals

Page 2 of 7

Governing Board of Directors 2012

October 25, 2012
Swingbed Program. Recommendations included the following: o Physician collaboration with the TMH case management department o Collaboration with Ann Smith, CRMC CNO o TMH electronic health record training and access for Brownsworth Brownsworth will be attending TMH Executive Team meetings on the first Monday of every month.

CEO Report

Swingbed Program Improvement of the hospital Swingbed Program is a top priority. Brownsworth has met internally as well as with TMH executives to improve Swingbed program. USDA Update A public meeting has been set with a representative of the USDA on November 13th at 12:30pm. The meeting time will be posted appropriately. Outpatient Clinic An outpatient clinic for Apalachicola will be opened the first week of December. Initially the clinic will be located internally to the hospital. The days will be Tuesday, Wednesday, and Thursday with the hours of 8:30 am to 4:00 pm. It will be staffed by Susan Hardin, ARNP and the Weems East staff. The hours, days, and providers will be expanded as needed. Billboards will be a source of advertising for the clinics and the hospital. Due to potential ED billing changes associated with opening Page 3 of 7

Governing Board of Directors 2012

October 25, 2012
an internal clinic, Conrad recommended Brownsworth and Lanier speak to Linda Bell and Paul Hart, MD of Southland. Brownsworth will be working with TMH and FSU School of Medicine to potentially recruit primary care physicians to area.

Marketing Services will be promoted through various venues to include billboards, mail advertisements, radio, television, community events, and the regular BOCC meetings. Comm. Jackel requested WMH participate at the next Food Fair. o Griner stated the hospital has the ability to assist people in signing up for Medicaid services. Comm. Jackel requested this service be promoted to schools. Increased promotion of available specialties services was requested. GI Program Two upper endoscopy scopes are unusable. One needs replacement; the other scope may be repairable. Lanier stated that TMH felt the price of $14,700 was fair. A demonstration has been set for a day with Dr. Stockwell is here. A loaner scope will be provided until repair or purchase is made. Electronic Health Record RFP will be published for Electronic Health Record by November 1, 2012.

Page 4 of 7

Governing Board of Directors 2012

October 25, 2012
Chief Clinical Position The advertisement for Chief Nursing Officer will be revised to Director of Nursing. This position change will provide a more direct clinical role. Patient Satisfaction September Patient Satisfaction survey results presented for individual review. Risk Management Risk Management and Regulatory Board Report 3rd Quarter Summary presented. The BOD had no questions. Policies presented for approval: o Advance Directives o Reporting of Occurrences Internal Risk Manager designated to Becky Gibson, RN, Interim Nurse Manager. BOD By-Law Revision A revision to the by-laws has been made removing the CEO from the Board of Directors. Financial Update September 2012 and Year-to-Date Income Statement reviewed in detail. o Total year-to-date income after subsidies is $1,131,978.00. o Davis questioned the need to reallocate clinic funds in regards to salaries. Expenses are allocated to separate departments to track department costs appropriately. September 2012 Financial Summary reviewed in detail. Risk Management Motion made by Huckeba to accept policies as presented, second by Davis. Motion carried unanimously.

Page 5 of 7

Governing Board of Directors 2012

October 25, 2012
o Total of bank balances to date is $1,535,270.49 o Total of accounts payable is down $52,000 from last month o Total of accounts receivables is down $323,000 from last month. Percent of AR collected for the year is 44%. o The clinic accounts receivable process was discussed. Lanier has recommended changing the billing from an internal process to ARx. Brownsworth recommended the development of a strategy to increase clinic collections and a formal action plan be brought back to the board. o Lanier will research why the accounts receivable amounts differ on the financial summary and the balance sheet. Old Business House Bill 711 House Bill 711 has been signed into law by the governor. This law requires the hospital have an assessment made to determine viability. Brownsworth is receiving proposals at this time and anticipates bringing proposals to the board for review in November. The assessment process must be initiated before the end of 2012. Sunshine Law Education on the FL Sunshine Law has been provided to each board member for individual review. Members are to return their signed attestation form to Guidry after review.

Page 6 of 7

Governing Board of Directors 2012

October 25, 2012
Board Terms Initially board expiration dates were in November and were staggered by year to avoid multiple terms ending at the same time. New board member terms will be adjusted to the position they replaced. Officer positions will expire in November. These positions will be discussed at the next regular meeting. New Business Dietary Contract Presentation made by Janet S. McKee, Owner of Nutritious Lifestyles, Inc. The meeting was adjourned at 11:49 am.

Adjournment

Page 7 of 7

George E. Weems Memorial Hospital Oct 2012 and Year-to-Date Income Statement for Fiscal Year 2013 (Oct 1, 2012 to Oct 31, 2012)
October 2012
Operating Revenues (amount billed to patient) Inpatient Revenue (billed not collected) $ Outpatient Revenue (billed not collected) $ Emergency Dept Revenue (billed not collected) $ Total Amount Billed to Patient Less Insurance Adjustments Bad Debt and Charity Write-Offs LIP & DSH Allocations Total Collected Operating Expenses Salaries and Wages Employee Benefits Professional Fees Purchased Services Clinical Supplies Non-Clinical Supplies Repairs & Maintenance Utilities Insurance Interest Expense Training & Development Marketing Other (fuel, travel, rent, misc items) Depreciation Total Operating Expenses Net Income or (Loss) from Operations Non-Operating Revenues & Expenses County EMS Subsidy Weems East Clinic Subsidy Sales Tax Capital Sales Tax Receipts Interest Income Grant Income Miscellaneous Income Total Non-Operating Revenues & Expenses Total Net Income or (Loss) from Operations
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ (429,635.67) $ (42,974.71) $ (186,990.01) $ $ 342,316.32 $ 45,396.54 $ (56,653.65) $ $ (596.05) $ (529,264.03) (186,990.01) 387,116.81 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ (429,635.67) $ (186,990.01) $ $ 342,316.32 $ (42,974.71) $ 45,396.54 $ (56,653.65) $ $ (596.05) $ (529,264.03) (186,990.01) 387,116.81 $

October 1, 2011 to October 31, 2012 (1 month)

Total
174,477.00 481,458.35 447,435.50 1,103,370.85 $ $ $ $

Hospital
174,477.00 $ 337,029.50 $ 447,435.50 $ 958,942.00 $

Clinic
88,371.25 $ 88,371.25

Ambulance
$ 56,057.60 $ $ $

Hospital
174,477.00 $ 337,029.50 $ 447,435.50 $ 958,942.00 $

Clinic
88,371.25 $ 88,371.25

Ambulance
$ 56,057.60 $ $ $

Total
174,477.00 481,458.35 447,435.50 1,103,370.85

Hospital
185,142.44 $ 34,681.82 $ 79,412.92 $ 38,448.38 $ 29,361.07 $ 12,874.67 $ 14,305.01 $ 11,560.66 $ 5,901.00 $ 883.29 $ 147.99 $ 2,746.98 $ 8,400.30 $ 23,075.69 $ 446,942.22 $

Clinic
39,444.31 $ 5,484.67 $ 817.17 $ 1,059.30 $ 1,522.75 $ 3,633.39 $ 443.53 $ 2,032.46 $ $ $ 481.88 $ 39.00 $ 3,365.40 $ $ 58,323.86 $

Ambulance
51,693.70 $ 9,634.50 $ 5,089.14 $ 2,000.00 $ 259.35 $ 546.58 $ 927.59 $ 1,413.67 $ $ $ $ $ $

Total
276,280.45 49,800.99 85,319.23 41,507.68 31,143.17 17,054.64 15,676.13 15,006.79 5,901.00 883.29 629.87 2,785.98 17,179.43 23,075.69 582,244.34 (195,127.53) 42,132.67 68,207.84 217.27 5,384.05 758.65 116,700.48 (78,427.05)

Hospital
185,142.44 $ 34,681.82 $ 79,412.92 $ 38,448.38 $ 29,361.07 $ 12,874.67 $ 14,305.01 $ 11,560.66 $ 5,901.00 $ 883.29 $ 147.99 $ 2,746.98 $ 8,400.30 $ 23,075.69 $ 446,942.22 $ (104,625.90) $ $ $ $

Clinic
39,444.31 $ 5,484.67 $ 817.17 $ 1,059.30 $ 1,522.75 $ 3,633.39 $ 443.53 $ 2,032.46 $ $ $ 481.88 $ 39.00 $ 3,365.40 $ $ 58,323.86 $ (12,927.32) $ 10,000.00 $ $ $ $ $ $ $

Ambulance
51,693.70 $ 9,634.50 $ 5,089.14 $ 2,000.00 $ 259.35 $ 546.58 $ 927.59 $ 1,413.67 $ $ $ $ $ $

Total
276,280.45 49,800.99 85,319.23 41,507.68 31,143.17 17,054.64 15,676.13 15,006.79 5,901.00 883.29 629.87 2,785.98 17,179.43 23,075.69 582,244.34 (195,127.53) 42,132.67 68,207.84 217.27 5,384.05 758.65 116,700.48 (78,427.05)

5,413.73 $ 76,978.26 $ (77,574.31) $ 42,132.67 $ $ $ $ $ $ $

5,413.73 $ 76,978.26 $ (77,574.31) $ 42,132.67 $ $ $ $ $ $ $

(104,625.90) $ (12,927.32) $ $ $ $ 10,000.00 $ $ $ $ $ $ $

42,132.67 $

42,132.67 $

58,207.84 $ 217.27 $ 5,384.05 $ 758.65 $ 64,567.81 $ (40,058.09) $

10,000.00 $

58,207.84 $ 217.27 $ 5,384.05 $ 758.65 $ 64,567.81 $ (40,058.09) $

10,000.00 $

(2,927.32) $

(35,441.64) $

(2,927.32) $

(35,441.64) $

George E. Weems Memorial Hospital Oct 2012 and Year-to-Date Income Statement for Fiscal Year 2013 (Oct 1, 2012 to Oct 31, 2012)