Pricewaterhouse Coopers summary of information, April 25, 2001

Mr. Francis A. Smith
Executive Director
Financial Responsibility and Management Assistance Authority
One Judiciary Square
441 4th Street, Room 570
Washington, DC 20001

At your request, this report contains an executive summary of certain information gathered and prepared by Pricewaterhouse Coopers ("PwC") on behalf of the Financial Responsibility and Management Assistance Authority ("Authority") in your evaluation of the proposed plan to provide healthcare to the uninsured population of the District of Columbia currently being served by DC General. Hospital and its related PBC clinics. Our review of the plan, referred to as the DC Healthcare Alliance (the "Program"), included review of the proposed contractor, Greater Southeast Community Hospital ("Greater Southeast" or "Contractor"), and two key subcontractors (collectively referred to as the "Subcontractors"), including D.C. Chartered Health Plan ("Chattered") and Unity Health Care ("Unity").

More specifically, we have prepared in Exhibit 1 a summary of critical issues and related recommendations that require the Authority's consideration to effectively safeguard the interests of the District of Columbia and preserve the overall intent of the Program. The summary also includes our understanding of the Authority's intended action in response to our recommendations.

It is important to note that the nature of our services, and this report, is consultative only. We have not examined, reviewed, nor performed any other type of attest service with respect to the information contained in this report. Accordingly, we are unable to and do not express any opinion or other from of assurance regarding this information within the meaning of the rules of the American Institute of Certified Accountants.

We make no representation regarding the sufficiency of our work either for purposes for which this report has been requested or for any other purpose. The sufficiency of the work we performed is solely the responsibility of the District of Columbia Financial Responsibility and Management Assistance Authority, as are any decisions with respect to the proposed Program and Agreements. Had we been requested to perform additional work, additional matters might have come to our attention that would have been reported to you.

The sole purpose of this report is to assist the Authority in its evaluation of the proposed Program and related Agreements. This report may be used only in its entirety for the intended purpose and is not to be cited without proper attribution.

Critical Issues	Recommendations	Authority Actions
Definition of the required Program equity contributed by Greater Southeast Community Hospital	Redefine the cash equity requirement to stipulate reinvestment in property and equipment at Greater Southeast Community Hospital.	Recommendation implemented
The Health Services Account has the potential to accumulate large balances.	To enhance protection of District assets, establish an escrow relationship for Health Services funds, including bonding requirements and complete investment policies	Recommendation to be implemented
The proper functioning of the Program requires seamless coordination between the Contractor and Subcontractors, including full agreement on roles and responsibilities.	The Authority should review and approve all subcontracts and require their execution simultaneous to signing of the Agreement with the Contractor.	Recommendation to be implemented.
Detailed transition implementation planning is critical to the success of the Program.	Require the Contractor and Subcontractor to submit detailed transition implementation plans at the operational level. Such plans should identify interdependencies, both among and between the required Contractor and Subcontractor activities.	Recommendation to be implemented.
Key components of the program must be resolved and properly communicated to the uninsured population to ensure ongoing access to care, including plans for trauma services, pharmacy, and transportation.	Consider a public education campaign complete with common questions and answers. Also, require implementation plans, complete with examples and transition timelines, for these key Program components.	Recommendations to be implemented.
While the proposed Program design contains incentives for management of inpatient costs by the Contractor, additional care management incentives for Chartered, as the administrative services provider, would be appropriate.	Consider Program design modifications, either through the Agreement with the Contractor or by way of the subcontracts, that align the incentives for care management on the part of Chartered with those of the Contractor.	Recommendation implemented
Numerous elements of the Agreement require strict monitoring and reporting.	The contractor and subcontractors should agree to stringent monitoring requirements by the Authority and its advisors, and cooperate fully in allowing free and open access to transition and implementation plans, including execution thereof, to ensure a smooth transition and achievement of the goals and objectives of the Program.	Recommendations to be implemented
The financial reconciliation process is complex and will require significant ongoing attention, particularly in the first year of the Program.	Create specific examples that will illustrate the reconciliation calculation(s) and engage appropriate individuals from the Department of Health who will have ongoing responsibility for review of the reconciliation process. Consider hiring an independent third party to apply agreed upon procedures to the reconciliation process to enhance controls.	Recommendation to be implemented
Unity requires adequate funding to operate the PBC clinics so as to maintain patient care levels and fiscal stability. Careful consideration should be given to protecting the patient volume and related reimbursement of the PBC clinics in the Program design.	To enhance the financial stability of Unity during the transition or start-up phase, consider minimizing the risk to Unity by directing the revenue earned for clinic visits to the proposed Unity-run PBC clinics exclusively.	Recommendation to be implemented
The proposed Program administrative fee is at the low end of the expected range, and varies with volume whereas much of the anticipated administrative cost is fixed.	Consider a fixed administrative fee or a guarantee of the lesser of a fixed administrative fee or actual costs thereby maximizing the probability for success in the critical area of Program administration.	Recommendation implemented
The proper design, and accounting controls, surrounding the fund flows of the Program is absolutely essential to the long-term financial visibility of the Program, as well as to the proper measurement of Program success and the need for ongoing Program redesign or enhancement.	We recommend that detailed funds flows policies and procedures be established immediately. Such policies and procedures should be agreed to by all parties involved and include: Description of overall funds flows design, including roles and responsibilities of each entity involved Information to be captured for Program measurement and consideration in ongoing Program redesign or enhancement Detailed accounting policies and procedures for each entity involved in the program Detailed description of internal control features built into the process Investment policies and guidelines Dispute resolution procedures	Recommendation to be implemented

Pricewaterhouse Coopers
“Executive Summary of Certain Information”
About Contract with Greater Southeast Community Hospital
April 25, 2001

PRICEWATERHOUSE COOPERS

Pricewaterhouse Coopers “Executive Summary of Certain Information” About Contract with Greater Southeast Community Hospital April 25, 2001

PRICEWATERHOUSE COOPERS

Pricewaterhouse Coopers
“Executive Summary of Certain Information”
About Contract with Greater Southeast Community Hospital
April 25, 2001