A lot of pressure on the old man this morning. I think Chip mentioned my name. I know Gina mentioned my name. I'm gonna do my best. After following compliance, I do have to let you know I am wired. So uh everybody be just be aware of that. Um I think I said last year 40 years sounded like an awful lot of time, and I guess it is. Uh but you know what? That's where I get my reward is working with with you all. And I know that my colleagues are in the same boat that I am. That's our reward, is getting to work with you and appreciate all that you do for your communities. Whether you're a CEO, a CFO, a physician, or a board member, or one of us who's helping and working with you in partnership. Thank you for what you do for your communities. Um we're going to start out at a high level just talking about what it means to have financial responsibility as a board member for oversight and stewardship. And what you'll find is when you've done this for a while as a board member in finance, you've been doing stewardship and oversight over all these years. It's just maybe you didn't put them into those words. But stewardship for me in finance is you're looking forward. Where do you want to go? And in oversight, it's where were you and where are you now, the monitoring piece. So we're gonna kind of put that in perspective a little bit later as we go. But we're gonna ratchet down a little bit, we're gonna talk at a high level, and then we're gonna dig just a little bit deeper and then get down into the weeds just a little bit. I am a CPA, and so I do like the numbers, but it goes beyond the numbers, and so we're gonna talk about that. So, first of all, let's just talk about what financial oversight and stewardship actually means. There's three main objectives when you're talking about that. The first objective is to establish strategic direction for a financial plan, and this needs to be stakeholder-driven, and those stakeholders need to be board members, medical staff, but also some community members. So we need to make sure that we know our purpose and our mission for our hospital, and then put a strategic plan together so that we can be in alignment with the initiatives we want to take on. And so, how do you establish a financial plan? It may sound difficult, but it's not. Uh it's where are we going to go? And financially, we use budgets and we use forecasts to help determine what those are. We need to set the tone from the top. If you're a board member, you need to be an example. You need to let the rest of the hospital organization and the community know that you're out there, you're working on their behalf, and you want to do the best you can for that organization. You cannot have any personal agendas, you need to put that organization first. And then also you need to create and approve financial policies and set goals for your organization. We'll talk a little bit about what some of those policies may be a bit later. The second objective is to ensure the financial health of the organization to continue providing quality care to your community. And how do you do that? Well, you need to protect the assets of the organization. And let me tell you, your key asset for your organization are your people. And I'm not just talking about your hospital staff, they are key, and I'm not just talking about your nurses, they are key. I'm talking about the board, I'm talking about the rest of your community, because they're your patients. I'm talking about the staff, the medical staff, and your leadership. And you all need to be in alignment to help protect that most important asset, and that is your people. But you also have to protect your hard assets, whether it's cash, accounts receivable, inventory, facilities. And how can you do that? Well, you do that by audits, but you also have to have insurance on those, and you need to make sure those facilities and other assets are secure. But remember, the key to your success, it's your organization or your people. So make sure you're protecting your people. And it's okay to create earnings. I'm going to show a slide here in a minute that's going to talk about what it means to be a you know a nonprofit entity. That doesn't mean you can't create earnings because you need to create earnings to make debt payments. And you need to understand what those debt payments are and those debt covenants are for. I'm going to talk briefly now about two types of defaults. You can have actual payment defaults where you did not make payments on your principal and interest, and that's not good. Sometimes you can work through that. But that then there's also another default called a technical default, where you actually paid your payments, but maybe you had a couple of debt covenants that you didn't meet. And what I mean by debt covenants, as a board member, you need to know what those are, and they're in your documents. It may be a level of cash, days cash on hand that you have to maintain, or it may be a debt service coverage ratio. And those are some uh you know words that you can find in your uh member uh board member uh workbook, and they're gonna define what those are and tell you how you can compute those things. But it's important to know those things, and so if you find yourself in technical default, you can work through that with your bond holders, and usually it may cost you a bit of a fine. I've had a hospital years ago that had to go through some of that. Maybe your hospital has too. But you also need to build cash reserves, and yes, it's okay to do that. You probably have heard this before. If you haven't, you're gonna hear it as a board member. Cash is king, cash was king yesterday, it was king today, and it'll be king tomorrow. Anyone who has been in a family and had to take care of the accounting for your family, the checkbook, whether that was a mother or a father, it doesn't matter, a wife or a husband, if you were in business and if you're in health care, cash is king. You've got to make sure you've got cash to pay the bills and invest in the future of your hospital. So the third objective is to ensure regulatory compliance and risk assessment and mitigation. How do we do that? You need to hire an independent auditor. That's up to the board to do that. That's not just up to your leadership. Now they can give you recommendations on that, but it's up to the board to hire that independent auditor because the auditors and the board have to have some line of communication. Whether it's good communication for the positive things that's been going on, there could be a time when there's some negative things that's gone on. And they need to have that direct line of communication with the board. And we'll talk a little bit more about that later as well. It's up to the board to establish and approve financial policies. That could be the investment policy, and that would be for any excess cash that maybe you've accumulated over the years. And Chip has mentioned this before. I don't know if he mentioned it this morning, but in other presentations or in some of the slides you may have seen. The prudent person rule. As a board member, when you're looking at investing your excess cash, you need to be prudent about that. You need to balance the risk versus the reward. If you're a government entity, you may need to think about are there some other guidelines surrounding this? In fact, I've got a hospital that we kind of got into an issue with that. We worked through it, and we're going to come out on the right end of that. But you need to make sure you understand if you're a governmental entity, what are you allowed to invest in and how much and how long? Your financial collections policy, you need to establish that. How much can you actually afford for charity care? Okay? How strict do you want to be? Because you may get some folks in your community that come up to you as a board member and ask you questions about that. Why don't we have a bigger discount? What kind of charity care do we have at our hospital? Some of that is being determined by the government now as well. Self-insured folks who don't have insurance, so they're you know liable for their own bills, they are able to get a discount similar to what your insurance companies do. Now, they've got to pay the balance on that, and a lot of times you're not going to get that financially as a hospital. But some of that is being directed by the government that we have to have some sort of a policy in that regard. You want to make sure you have spending limit policies for your CEOs and your CFOs. They need to be given some authority to spend when it's necessary. That may not be something that's budgeted. But put those limits in place so as a board you feel comfortable with what they are. And then finally, a contractual allowance policy. That determines at what level there again your administration may or may not be able to do things. There are certain things that ovation, we think the board should absolutely make the decisions on. And those should be physician contracts. Now you can set limits and work within those limits, and that's fine as long as the board sets the limits. But also any leases, especially on land or buildings or uh real estate transactions, we think the board should should approve those and make sure they're the ones that's in front of that. And then also we recommend having your local legal counsel or whoever you may use to review those policies and make sure that they uh they're in line with with the with the rules and regulations. So let's talk now about some tips for how you can, as a board member, meet the responsibility of financial oversight and stewardship. I'd say the first one, and I would put it at the top of my list, is to make sure you set a positive tone for the culture of your hospital. Be a role model. Uh make sure you don't have a personal agenda, put your organization first, and then work well with your hospital leaders. Uh be respectful but hold them accountable, but also collaborate and don't derail. In other words, don't bring surprises to the finance committee or don't bring surprises to the board meeting. You should know what you're going to talk about at the board meeting ahead of time. There's going to be a few things come up, but don't intentionally bring things like that. And I'm going to take a moment now. Chip mentioned that we were having these mirror moments, and the other folks have given you a mirror moment. And I've been doing what I do now really since about 2003. And some in the room will remember Tom Woodward. And I was fortunate enough that he hired me to be an AVP at that time back in 2003. And I'd go to a few board meetings and I'd I'd notice a board member too, and I'm sure none of those are in this room now, and none of you would do this, but there might be a board member here and there who would always ask several questions in a row. And all they were really trying to do was stump the stars. And the stars being your CEO or your CFO or maybe your chief nursing officer or a regional person like me, and they would just start a series of questions until they could get to the point where we couldn't answer their question. And it may or may not be pertinent to the subject matter that we were discussing. That didn't matter to that board member. He just wanted to come up with an aha. But I got to tell you another one that I had that was really disturbing to me. And it was during a renewal process we were having with a committee, and one of the board members started asking the questions of the CEO, because the CFO wasn't there at the time, and said, Do you utilize this company called Total Construction? CEO said, Yeah, we do. Said, have you ever met the folks from Total Construction? Well, yeah, we met them when they come on site to do work. And do you send your money and your checks to this address? And he gave the address, and the CEO said, Well, I'm not sure what the address is, but you know, certainly. Said, have you ever visited their facility? And the CEO says, No, I can't say that I've been on site there. And the board member literally says, Aha. I Google mapped the address that we've been sending our checks to, and it's a barn out in the middle of a farm here in this particular county. And we're just kind of awestruck because we knew they were a legitimate company. But fortunately, one of the other board members who sat on the committee looked over at this board member and said, I don't know what you're talking about. I know the owner of that company, I've met that company, and I've met the folks who come on site to work. And this board member tactfully, professionally, said, I think at this point you just need to stop because he'd gone down a rabbit hole he shouldn't have gone. So that's just another way that you could have this stump the stars. Please be constructive with your questions. I'm not at all suggesting at any time that you shouldn't ask questions if you have questions, but let's make sure they're constructive. And if one of your colleagues, uh other board members, gets to going down that line, don't feel like you can't say anything. You have a you have uh an obligation really to make sure, especially your board chair at certain times, to make sure that your folks are being held accountable as well. So just keep that in mind as as you uh go down. And uh if you find yourself in that position, make sure you take care of that and and make sure that folks do stay in line. Uh you'll notice on here I've got a uh one thing that says do ask questions, but do stay in your board member lane appropriately. That's kind of what I'm talking about here. Let the operational folks take care of operations, board members take care of the strategic piece of that. Come to meetings prepared. Don't just let your finance committee run everything, okay? Uh if you're on the finance committee, you probably get pulled into more things than other folks do. But if you're not in the finance committee, uh make sure that as a board, you're going to approve their actions at the full board. So be careful of uh falling into the just letting your finance committee do everything for you. The second tip I'd say is to establish a proper governance system. What am I talking about here? We encourage all of our hospitals to at least have a finance committee. You might need an audit committee if you're larger, and that audit committee would help with some of that communication between your independent auditors and the hospital. But one thing to think about on all of your committees, but especially your finance committee, if you're holding a finance committee separately, whether it's before the board meeting the day of or a day or two or three before, if you're just going to back to the board meeting and rehashing all of that same information, really, how effective is that finance committee? But as a board member, what you need to think about is you need to trust your committees, especially your finance committee, that they're doing the right thing, that they're bringing the right information back to the board meeting. Let them do the dirty work, if you will, and the detailed work with administration and anybody else who's bringing information to the finance committee and trust them to do their work. I would say the same with your Building and Grounds Committee, any personnel committee you may have, or any other committee like that. Utilize experienced and knowledgeable resources on your board to put them on the proper committees, but rotate those folks through. Let them get some information over their years of service to the hospital and to your community. Think about succession as well. Eric is going to talk about that later on this afternoon. Succession not just for leadership but also for board members, and succession on different committees. Because your folks have a lot of talent on that board or they wouldn't be on the board. They've got different skill sets. So utilize those to the best of your ability. But as a board member, make sure you do get involved and participate and help in making certain decisions and letting your, you know, let them know how you feel about things. Because if you just sit there and don't participate, you can't complain later, if you will. So the third tip I'd have is to define financial strategy and guide sustainability. Develop and approve a long-range strategic plan that's aligned with your mission. That's stewardship, looking forward. And then you also need to monitor the progress with budgets and guide directions based on that overall strategic plan. That's oversight, looking back and looking at where we are now. So, what are we talking about in the oversight, especially? We're talking about understanding the cost to operate and generate revenues to pay the bills. In other words, what's your total spend management? What do you spend on capital? What do you spend on supplies? What do you spend on other types of things? As a board member, you should know, at least at a high level, what those what those things are. How's your revenue cycle management? And revenue cycle being billing and collecting, the key part there being make sure you collect what you're due so that you can pay your bills. Labor and supply cost. That's going to be over 50% of your total cost at all of our hospitals. And so you need to make sure there's some focus on that. Make sure that you're holding administration and the rest of the hospital accountable to the FTEs and the productivity and the cost of that labor supply. You need to plan for capital needs. You need to monitor your cash flows, your day's cash on hand, and your fixed asset investments. You need to establish operating reserves and policies for their use. These excess funds, do you need to designate some of those for capital? Do you need to restrict some of those for capital? And maybe you were fortunate enough to have a community member donate funds to your hospital, and maybe they restricted that. So as a board member, you should know if there are restrictions on certain amounts of cash, and your leadership can certainly take care of that, and your accounting department would know what that is. And it gets handed down from generation to generation, CFO to CFO throughout board members to board members. Does the budget need to be revised to match any new initiatives or any new trends that you've seen as a board member? Keep in mind when you put a budget together, it's only a guide. Maybe it's only in government where here you're given a dollar, now you have to spend that dollar. In healthcare, it doesn't work that way. We can only estimate what we think those reimbursables are going to be. We can only estimate what we think those costs are going to be. Healthcare is very complicated. Things come up daily. And as a board member, if you're new, you're going to hear that quite often. If you're a board member who's been on the board for quite a while, you've already heard that quite often. So just get used to that and be able to deal with it. If you find that your strategy has changed, you may have to update that budget and revise that budget. There's nothing wrong with that, but just keep in mind it's only a guide. Tip number four, get the right information. I'm going to talk specifically now to the CEOs and the CFO in the room first. Don't be afraid to give the board the good, the bad, or the ugly. I know we're kind of in Clint Eastwood territory out here in California, but don't be afraid to do that. Your board deserves that information so that they can make informed decisions, okay? So don't feel like, oh gosh, we lost a lot of money this month. How what am I going to do about that? Don't be afraid to give them that information. Okay? And CEOs, if that information has to be given by your CFO and you're being pushed a little bit to make sure there's ways to improve that, it's up to the CEOs to make sure that that does get pushed. And board, hold them accountable for that, but support them in their efforts when they have to make improvements. Know where we are now balance sheet, income statement, and cash flows. You should see that from your CFO at least monthly in your finance. Packets, and we're going to go over those a little bit in some detail later as well. Know your trends, your key metrics that's been selected by the board that demonstrates what you think your goals are. Tough decisions may be needed by the board to sustain financial viability. You can't be all things to all people sometimes, but make sure you're taking care of your core services for your community. Number five, and Gina and Christine talked about this earlier: quality, safety, experience of care, and final financial results are connected. If you have good, high quality care, that's going to drive a bottom line for your hospital. If you have good finances, you can help then invest back into your people and back in to drive quality up. So it's a two-way street there, and that's really important to know. The key point here is to make sure you're investing as much time in quality as you are in finance. I know a lot of times there are hospitals because of how significant and how important cash is and being able to pay the bills, we get pulled into finance. We talk about finance 80% of the time. That's important, but so is quality. If you don't take care of the quality side, you're going to lose your patients, and you cannot afford that. You cannot afford to lose your physicians if you don't provide quality at your hospital. So invest in quality and safety. Gina mentioned that I was going to say something about making sure in quality you get paid for that. You do. There's some programs out there, whether it's through insurance companies, accountable care organizations, or the government. There's also some penalties that you can avoid if you're you're meeting those measurements. So that's another way to increase that bottom line. Let's talk a little bit about budgets. Budgets are how you put together your strategic financial plan based on that overriding plan. There's an operational budget, and those are consisted primarily of a service-demand budget, service line analysis, what service lines are profitable or not, where are you going to invest your money? Your physicians and providers on staff. Do you have new physicians coming in? And if so, how are you going to pay for that? Or do you have physicians that are leaving and how's that going to affect your volumes? And then we talked a little bit about your workforce labor. That's a very key cost to your organization. Make sure you're looking at FTEs and productivity and compensation levels for your folks. The second part of that budget is going to be a capital budget. Those are one-time expenditures that you're going to have for equipment andor land and or buildings. Have your CFO make sure they're doing some ROI on that, return on investment or payback. In other words, how long is it going to take to get revenues into the hospital to help pay for that piece of equipment, whether it's two years, three years, five years, whatever it might be. And then how are you going to pay for it? Are you going to use cash or are you going to incur debt? That's always the question that you should be asking your CFO when you come up with capital items, especially the higher dollar items. How are we going to pay for it? Financial statements and metrics that matter. You're going to have cash flow statements, you're going to have a balance sheet, you're going to have an income statement. I don't have time right now to go into what each one of those are. Probably most of you in the room know what they are, but you're going to see those on a monthly basis. Quickly here. There's two types of accounting: there's cash accounting and there's accrual accounting. Hospitals are required under generally accepted accounting principles to use accrual accounting. That means you're going to record revenue for what you've earned, not necessarily what you received, and you're going to record expenses for what you owe, not necessarily what you paid. Okay? That's why you see receivables, and that's why you see prepaid expenses on your balance sheet, those on the asset side. And on the liability side, you see the crude expenses and you see accounts payable. Metrics that matter. As a board, you want to make sure that you are uh you adapt and align these metrics that you think are important to your hospital, but it's also in line with what your strategic plan and what your strategic financial plan are. Okay? You have to make sure you're going to remain financially viable for your community. You may have to adapt and align as things change, and Jenny's going to talk a little bit more about that this afternoon. But these KPIs are key performance indicators. Make sure they're tied to your strategic plan and your business plan. There's several definitions, there's several examples of what these might be in your appendix. I think you should probably download this. This presentation kind of stands on its own. It's a little wordier than some. I did that on purpose so that you could simply do that. So, where can you get some education, you know, to help support you in your financial responsibility as a board member? CFO, you know, look at that information you get for him. I call that on-the-job training. It sometimes takes months, if not years, to figure out how finance works in a hospital. Trust me, I was a CFO at a hospital and I came out of eight years of being a CPA for a CPA firm. And it's not easy, especially for critical access hospitals, okay, where you're paid based on cost, not necessarily revenue. Your independent auditors reports, look at look at your audit reports, especially your footnotes. It goes beyond the numbers. It can give you some comparisons year to year, but it talks about the policies you actually have in your hospital. Read those. Get educated with those. Ovation health care, we have what we call our operating principles. We think those are best practices for our hospitals to follow. And we have found by experience and by proof that if our hospitals follow those operating principles, they're going to be making better financial decisions, better operational decisions. And if you're not familiar with what those are, you don't need to know all of them as a board member, but your hospital CEO and CFO have access to those, and we hold them accountable for that if we're managing that hospital. Board leadership conference, like you're attending today. Our monthly board leadership webinar series, the second Tuesday of the month. I think it's noon central time every second Tuesday. Those are important. A lot of folks put a lot of work into those. As a board member, if you can view those live, great. If not, they're recorded. You can go back in and look those over. They give you a lot of good education. The Learning Institute, it's always open, it's online. The board certification program. And then I added a new one this year called Google It or go on the internet. You can find information on all of this stuff on the internet. Just make sure you pay attention to whether it's good quality or not. If it follows what I gave you, it's probably alright. Key takeaways, similar to the other groups. Make sure you're establishing clear and realistic goals for your strategic financial plan and the performance of your organization. Work with management to create budgets that reflect the board's goals and your path to success. And as a board, make sure you're supporting that CEO and CFO. They need that as well. Review and monitor your financial performance regularly, and you compare those actual results to what your budgeted or expected results were. Establish financial policies and prove them for management use. You're responsible for that. And then finally, what we talked about, set that tone for a caring culture. Educate yourself, engage, and be part of a team. There's also a checklist in the back of that your trustee handbook that you have at your desk. I do encourage you to download the presentation and use that as a reference. Thank you.