DCHS Consolidated

Revised Monthly Cash Flow Budget -- July 2015

$ in thousands

Jul-15
Beginning Liquid Cash

Aug-15

Projected
Sep-15
Oct-15

Nov-15

6 Month
Total

Dec-15

$103,426

$63,499

$55,000

$55,000

$55,000

$55,000

$103,426

$74,265
9,650
211
$84,125
6,550
$90,676

$79,111
9,650
211
$88,972
6,550
$95,522

$74,457
9,650
211
$84,317
6,442
$90,759

$67,781
12,050
211
$80,041
6,550
$86,592

$67,562
9,650
211
$77,422
6,442
$83,864

$71,498
9,650
211
$81,359
6,550
$87,909

$434,674
60,299
1,264
$496,236
39,086
$535,322

($55,859)
(1,300)
(14,911)
(3,900)
(189)
(40,437)
(1,181)
(361)
(689)
0
(4,138)
(1,485)
($124,450)

($46,574)
(6,163)
(14,189)
(247)
(189)
(40,437)
(464)
(115)
(295)
0
(4,138)
(1,485)
($114,295)

($46,574)
(1,300)
(14,189)
(28)
(189)
(40,437)
(464)
(356)
(126)
0
(4,138)
(1,448)
($109,248)

($56,538)
(1,300)
(14,964)
(3,900)
(189)
(40,437)
(464)
(454)
(92)
0
(2,398)
(1,618)
($122,354)

($46,531)
(1,300)
(14,186)
(447)
(189)
(40,437)
(879)
(652)
(22)
(2,400)
(2,398)
(1,467)
($110,909)

($48,210)
(1,300)
(14,334)
(777)
(189)
(40,437)
(976)
(401)
(22)
0
(2,398)
(1,434)
($110,480)

($300,288)
(12,663)
(86,774)
(9,299)
(1,131)
(242,623)
(4,428)
(2,339)
(1,246)
(2,400)
(19,607)
(8,938)
($691,736)

($33,774)

($18,773)

($18,489)

($35,762)

($27,044)

($22,571)

($156,414)

Supplemental Receipts:
SFMC Supplemental Payments
Provider Fee (net)
SVMC ED Opening
Net Inflows / (Outflows)

($2,973)
(3,545)
365
($6,153)

$0
0
365
$365

$0
0
365
$365

$0
33,754
365
$34,119

$7,579
0
365
$7,943

$7,363
12,541
365
$20,269

$11,969
42,750
2,188
$56,907

New Series 2014 Draws

Cumulative Series 2014 Draws

$0
$45,643

$9,910
$55,553

$18,125
$73,678

$1,643
$75,321

$19,101
$94,422

$2,302
$96,724

$51,081
$96,724

Net Cash Flow (Including New Draws)

($39,927)

($8,499)

$0

$0

$0

$0

($48,426)

Ending Liquid Cash

$63,499

$55,000

$55,000

$55,000

$55,000

$55,000

$55,000

Cash Inflows:
Patient Revenue
Other Operating Revenue
Non-Operating Revenue
Total Cash Inflows (Excl. Medical Fdn)
Medical Foundation Revenue
Total Cash Inflows
Cash Outflows:
Payroll
Pension
Other Benefits
Insurance
Property Taxes
Other AP
Risk Pool Settlements
Working Capital
Severance / PTO Cash Out
Sales Tax on Asset Sale
Debt Service
Capital
Total Cash Outflows
Adjusted Net Cash Flow

Daughters of Charity Health System

Cash Flow Assumptions (July 2015 December 2015)
Transactional Assumptions
Series 2014 bonds remain outstanding throughout the projection period
Maximum draw amount on Series 2014 bonds increased to $125M
No bankruptcy filing
No sale or wind down of the Medical Foundation
No projected asset sales
Performance Improvement Assumptions
Reduction in Force (RIF) began in May 2015
o Total annualized salary and benefit savings of $11.9 million
Certain service line closures are included in the cash flows
Other performance improvement initiatives that are currently in development but not yet
included in the forecast are:
o Reduction in ALOS
o Documentation and coding
o Renegotiation / termination of payer contracts
o Renegotiation of medical fee contracts
o Supply reductions
o Labor contract renewal
Supplemental Cash Receipts
$43M total provider fee from July 2015 to June 2016 ($15M FFS and $28M HMO)
$12M of total St. Francis supplemental payments (DSH and Trauma)
o Includes at $2.9M cash outflow in July 2015 to reconcile a one-time overpayment of SB
855 funds
No additional Measure A funding for Seton assumed
Volume and Revenue
Net collection rates consistent with recent historical experience
2% IP and OP volume declines phased in over 4 months from July through October 2015
$12k monthly impact of SNF cuts began in May 2015 (included in Net Patient Revenue)
SVMC premiums based on 6 month historical average to capture recent increases
SFMC premiums based on March 2015 actual results to capture recent increases
Salaries, Wages and Benefits
Incorporated the impact of actual payroll cycles (certain months have three payroll periods
instead of two)
Updated salaries with more refined source data that excludes non-productive accruals
RPHE payments updated based on trustees latest funding report
Church Plan payments estimated at $1.3M per month based on recent actual cash contributions

Other Operating Assumptions

Medical Foundation operations continue at current levels, with losses of approximately $2.6
million per month
St. Vincent ED opened in April 2015; monthly contribution margin lowered to $365k
13 month historical average used for most operating expense line items, unless otherwise noted
Transaction related professional fees of $2M per month
Working Capital
Incorporated A/R increases in months with holidays; 1 day A/R increase in July with recovery in
the subsequent month
A/R increases beginning in October 2015 with return to normal levels by May 2016, driven by
ICD-10 implementation. Estimated monthly impacts as follows:
o October 2015: Increase $7.5M
o November 2015: Increase $5M
o December 2015: Increase $3.7M
AP days kept relatively flat at current levels
Capital Expenditures
Ongoing routine capital of $1.3M per month (approximately 25% of depreciation); minimal
capital for only patient safety related requirements and other critical items
No seismic capital spending for St. Vincent or OConnor
Seismic capital spending at SMC ranging from $137k to $320k per month; initiation of design
planning is required in order to meet the compliance deadline of July 1, 2019