2014-2015 Annual Report
DEAR VALUED COLLEAGUES:
Finance is at the heart of today's healthcare transformation, and finance professionals are uniquely qualified to guide our industiy in the shift toward a more value-focused future. To that end, HFMA is committed to ensuring that we-as an organization and as individuals-are prepared and positioned to lead the change.
Tremendous progress was achieved during FY15. Over the past year, HFMA has:
* Pursued the goals of the Triple Aim and promoted collaboration among the three stakeholder groups-physicians, hospitals, and health plans-who will play a major role in achieving it
* Conducted research related to the emerging value-based payment and care deliveiy environment
* Published two new
* Introduced products and services, such as the newly revamped Certified Healthcare Financial Professional program, designed to provide members with the knowledge and resources needed to lead change in their organizations and communities
* Continued to promote price transparency and the importance of clear, respectful patient financial communications
Thank you to all of our HFMA leaders and members for your dedication and enthusiastic support of these initiatives. It has been a truly transformational year. Working together, HFMA and its members are leading the change and making a real difference for people. With your continued support and involvement, I am confident we will continue to Go Beyond in the months and years ahead.
Best regards,
HFMA 2014-2015 BOARD OF DIRECTORS
HFMA is guided by the experience and vision of a dedicated Board of Directors. The 3014-15 HFMA Board of Directors are:
BACK ROW, LEFT TO RIGHT:
MIDDLE ROW, LEFT TO RIGHT:
FRONT ROW, LEFT TO RIGHT:
Maiy Mirabelli, FHFMA
Both the critical role of finance and HFMA's successful leadership were demonstrated bp HFMA's membership count of 40,670 members in FYip, accompanied bp a strong retention rate of 86 percent. In FYig, HFMA demonstrated leadership bp taking innovative approaches to outreach bepond our traditional membership, driving value bp expanding the bodp of research in this arena, building on the foundational consumerism work completed in previous pears, realigning professional certification with the contemporarp business environment, and making our voice heard in the national dialog on health care.
REACHING OUT TO THE THREE CIRCLES_
HFMA's strategic goal of promoting collaboration among the three key healthcare stakeholder groups-physicians, hospitals, and health plans-was reflected in activities throughout the association, including affinity groups, educational programs, publications, online resources, and recognition programs.
AFFINITY GROUPS
HFMA added a total of six new affinity groups, two of which met face to face for the first time at ANI: The 2015
Members of these groups contributed to comment letters that were subsequently submitted to the
Other opportunities for cross pollination among the affinity groups and HFMA's thought leadership and Policies and Perspectives work are being explored.
EDUCATION
HFMA has partnered with the
The workshops have been well received. "After attending the Health Care Finance for Nurse Executives program, I have a greater understanding of our revenue cycle, how we need to be involved in business planning, and how working collaboratively with our finance partners leads to better outcomes for the organizations and the patients we serve," said participant
In addition, HFMA and the
Also noteworthy: HFMA has expanded the scope of its webinars to include physician-related topics such as Reshaping the Physician Fee Schedule to Integrate Engagement and Payment and Minimizing ICD-io's Impact on a Physician Practice's Revenue Cycle.
PUBLICATIONS
In spring 3015, HFMA published a 38-page e-book, Elevating Physician Practice Performance, which offers solutions for promoting practice-hospital integration, key metrics for monitoring performance and developing meaningful targets, tips for managing payer contracts, methods to measure productivity, and strategies for preventing staff burnout.
ONLINE RESOURCES
Web pages tailored to physician leaders and physician practice managers (hfma.org/ physician) and health plans (hfma.org/healthplan) were launched, offering a curated collection of information designed to help these groups navigate challenges and opportunities in the new era of health care.
RECOGNITION
After extending the MAP Award for High Performance in Revenue Cycle to physician practices, HFMA announced four physician practices as winners in
DRIVING VALUE_
Two new
Strategies for Reconfiguring Cost Structure examines efforts to reduce costs while funding the investments in technology, clinical services, and innovation that are needed to engage in risk-based contracting and population health management and to prepare for disruptions in the competitive landscape. The report is accompanied by an online toolkit that provides examples of how costs are being reconfigured, lessons learned by organizations that have engaged in significant cost reconfiguration activities, and other resources.
Strategies for Physician Engagement and Alignment addresses the critical role of physicians in the transition to value-based payment and care deliveiy structures, focusing on alignment and employment options, compensation and incentives, financial support and sustainability of the physician enterprise, physician leadership and governance structures, and population management capabilities. The online toolkit that accompanies this report offers resources for assessing the best alignment options for a particular organization and market, structuring compensation for employed physicians, and building a clinically integrated network.
In addition, marking the five -year anniversary of the
BUILDING ON OUR CONSUMERISM WORK_
Building on the Healthcare Dollars & Sense® initiative, HFMA developed a training program designed to improve financial communications between providers and patients. The program was launched on
In the first nine months after the program launched, it was made available to nearly 2,000 learners. HFMA also signed a reseller agreement with
In addition, HFMA published a revised edition of Understanding Healthcare Prices: A Consumer Guide, which incorporates guidance for consumers on accessing information about healthcare quality. The guide has been downloaded by hundreds of individuals and organizations in all sectors of health care, and was included in a consumer fact sheet compiled by the
Our consumerism message was conveyed through other channels as well, including a chapter on price transparency authored by HFMA President and CEO
Government policymakers are also drawing on HFMA's consumerism work. Specifically, the final 5oi(r) regulations issued by the
REALIGNING CERTIFICATION WITH THE CONTEMPORARY ENVIRONMENT_
HFMA has realigned the Certified Healthcare Financial Professional (CHFP) program to better reflect the contemporary healthcare business environment and the new competencies and skills needed to address evolving healthcare payment and delivery models. The redesigned CHFP program includes two online learning modules-the Business of Health Care and Operational Excellence-that highlight the shift from volume to value in care delivery and feature coursework on the intersection among financial data, clinical decision-making, and health plan activities. It is geared toward financial and clinical professionals, including both experienced leaders and those who are new to the field. The certification exam is self-administered online through HFMA, eliminating the need to travel to a testing center.
MAKING OUR VOICE HEARD_
Healthcare-related issues continue to draw the attention of legislators, policymakers, and the public. HFMA contributed a realistic, unbiased, and expert perspective to the policymaking process and the public dialog on a wide range of healthcare issues.
HFMA voiced concerns and recommended a number of changes to proposed regulations in FY15:
* FY15 Hospital Inpatient Prospective Payment Systems proposed rule. HFMA submitted a comment letter to CMS expressing significant concerns related to disproportionate share hospitals, healthcare-acquired conditions, value-based payment, short stays, and other issues. (
* 2015 Hospital Outpatient Prospective Payment System proposed rule. HFMA voiced concerns on key payment policy issues. (
* Proposed Medicare Shared Savings Program (MSSP) rule. HFMA commended CMS for its efforts to modify the MSSP to ensure its sustainability and made specific recommendations for improvement. (
* Hospital Improvements for Payment Act of 3014 discussion draft. HFMA commented to the
* Transition to HIPAA Eligibility Transaction System. HFMA expressed concern that a 13-month limitation will not allow providers time to research facts and, if errors are discovered, reopen claims with
* Medicare Short Stay Payment Policy. HFMA submitted comments on issues related to
* CMS Bundled Payments for Care Improvement (BPCI) Initiative. HFMA proactively submitted comments on issues related to CMS's BPCI initiative to address design issues with the episodes and other operational and administrative barriers. (
In other government relations and policy activities:
* In
* Along with the
* As a member of the
*
* HFMA was invited to speak at a public workshop on healthcare competition sponsored by the
* In
INSPIRING AT ANI
"Today, more than ever, we are called on individually, and as a profession, to go beyond our existing knowledge base and skill sets," HFMA's 3015-16 Chair,
Hancock, who is partner, health care, at
In a session exploring health care in 3035, co-presenters
Themes the two touched on during a wide-ranging discussion included consolidation, integration of services across the continuum, and changing demographics. Fifer and Morrison closed by outlining the new competencies needed for the future. The session included videos featuring HFMA chapter leaders offering their predictions about health care in 2025.
Other keynote speakers were
RECOGNIZING EXCELLENCE_
HFMA recognized industiy and professional leadership and insight with a number of awards this year.
RICHARD L. CLARKE BOARD OF DIRECTORS AWARD
HFMA's
FREDERICK C. MORGAN INDIVIDUAL ACHIEVEMENT AWARD
This year's Frederick C. Morgan Individual Achievement Award-HFMA's highest individual honor-was presented to
CHAPTER AWARDS
HFMA awarded its highest chapter honor-the
Over the past five years, the
C. Henry Hottum Awards for Educational Performance Improvement
Heart of
Awards of Excellence for Education
Platinum Awards of Excellence for Education
Charles F. Mehler Gold Awards of Excellence for Education
John M. Stagl Silver Awards of Excellence for Education
Sister Mary Gerald Bronze Awards of Excellence for Education
Show-Me of
Awards of Excellence for Membership Growth and Retention
Platinum Awards
Gold Awards
Show-Me of
Silver Awards
Bronze Awards
ñorida Chapter
Awards of Excellence for Certification
Gold Awards
Silver Awards
Bronze Awards
ñorida Chapter
Awards of Excellence for Improved Chapter Perlormance
Helen M. Yerger Special Recognition Awards
Multichapter Recipients
Individual Chapter Recipients
Heart of
Show-Me of
REPORT OF MANAGEMENT
The management of
Management is responsible for establishing and maintaining a system of internal controls over financial reporting and safeguarding assets against unauthorized acquisition, use, or disposition. This system is designed to provide reasonable assurance as to the integrity and reliability of financial reporting and safeguarding of assets. The concept of reasonable assurance is based on the recognition that there are inherent limitations in all systems of internal controls, and that the cost of such systems should not exceed the benefits to be derived from them.
Management believes that the foundation of an appropriate system of internal controls is a strong ethical company culture and climate. It has always been the policy and practice of HFMA to conduct its affairs in a highly ethical manner. This responsibility is characterized and reflected in HFMA's Code of Ethics that is distributed throughout HFMA and its affiliates.
HFMA engaged
President and CEO, HFMA
Senior Vice President
Three
tel 708.531.9600 * lax 708.531.0032
web: Mma.org
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Not« 1. Natur« of Organization and Significant Accounting Policies
A summary of significant accounting policies follows.
Basis of presentation: The consolidated financial statements have been prepared in conformity with accounting principles applicable to nonprofit organizations.
Principles of consolidation: The consolidated financial statements include the accounts and operations of HFMA, the Foundation, and LSI (collectively, the Association). Intercompany accounts and transactions are eliminated in consolidation.
Accounting policies: The Association follows accounting standards established by the
Uso of estimates: The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Estimates significant to the consolidated financial statements include the allowance for doubtful accounts and the fair value of investments.
Cash and cash équivalants: Cash equivalents include highly liquid investments with an original maturity of three months or less when purchased. The Association maintains its cash balances in bank and money market accounts which may exceed federally insured limits from time-to-time. The Association has not experienced any losses in such accounts and management believes the Association is not exposed to any significant credit risk related to cash.
Accounts receivable: Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a periodic basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade receivables are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received.
Investments: Investments held by the Association are stated at fair value based on quoted market prices. Interest and dividends, as well as realized and unrealized gains and losses on investments, are included in the consolidated statements of activities.
Fixed assets: Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable furniture and equipment.
Amortization of leasehold improvements is computed on the straight-line method over the shorter of the useful life of the improvement or the term of the lease.
Software development costs incurred subsequent to the determination of technological feasibility and marketability of a software product are capitalized. Capitalization of costs ceases and amortization of capitalized software development costs commences when the products are available for general release. Capitalized software costs are amortized on a straight-line basis over a three-year useful life.
Expenditures for maintenance and repairs are charged directly to expense; renewals and betterments which significantly extend the useful lives are capitalized. Costs and accumulated depreciation and amortization on retired or assets disposed of are removed from the accounts and the resulting gain or loss, if any, is reflected in the consolidated statements of activities.
Revenue: Membership dues and related rebates to chapters are recognized ratably over the fiscal year to which they apply. Publication revenue is recognized as revenue when publications are shipped. Fees for educational programs are recognized as revenue when the programs are conducted.
Chapter-restricted funds: Chapter-restricted funds represent amounts held by the Foundation designated to be used for certain local HFMA chapters. Interest income on these funds amounted to
Income taxes: HFMA is exempt from federal income taxes under Section 501(c)(6) of the Internal Revenue Code, and the Foundation is exempt under Section 501(c)(3) of the Internal Revenue Code. HFMA is subject to taxes on unrelated business income, which is generally HFMA's advertising revenue. HFMA had approximately
LSI has a net operating loss (NOL) carryforward of approximately
The Association follows the provisions of the Accounting for Uncertainty in Income Taxes section of the Income Taxes Topic of the Codification, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this guidance, the Association may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Examples of tax positions include the tax-exempt status of the Association and various positions related to the potential sources of unrelated business income (UBI). The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. This guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods.
As of
HFMA and the Foundation file Forms 990 in the U.S. federal jurisdiction and the Foundation does so in the
LSI files a tax return in all appropriate jurisdictions, which includes a federal and an
Marketing costs: HFMA expenses the production costs of marketing the general benefits of belonging to HFMA, or purchasing products other than educational events, the first time it takes place. Marketing expenses incurred to promote attendance at specific educational events, which include program content and registration materials, are considered direct-response marketing and are deferred until the date that the educational events take place. As of May 3i, 3015 and 2014, deferred marketing expenses totaled approximately
Pending accounting pronouncements: In
Reclassifications: Certain reclassifications were made to the accompanying 2014 consolidated financial statements to conform to the 2015 presentation. These reclassifications had no impact on the change in net assets as previously stated.
Subsequent events: HFMA has evaluated subsequent events for potential recognition and/or disclosure through June 3o, 2015, the date these consolidated financial statements were available to be issued.
Note 2. Investments
The composition of investment assets held by the Association is summarized as follows at
Net investment income is summarized as follows for the years ended
The Association invests in equity, fixed income, convertible securities, and absolute return funds. These investments are exposed to various risks, such as interest rate, market and credit risks. Because of these risks, it is possible that changes in the fair value of investments may occur and that such changes could materially affect the Association's consolidated financial statements.
Not* 3. Investments Held for Deferred Compensation
At
The Association maintains a deferred compensation plan, established under IRC Section 457, for a key employee, which provides that a certain percentage of the key employee's salary be accrued for the benefit of the participant. The Association recorded expense of
The Association also maintains a deferred compensation plan, established under IRC Section 457, which is funded entirely by former employees of the Association.
The assets in these plans are reflected in investments held for deferred compensation with the related liability reflected as a deferred compensation liability on the accompanying consolidated statements of financial position. A liability for the key employee's 2014 contribution was recorded, with no related amount within investments held for deferred compensation at
Not* 4. Fair Value Disclosures
Fair Value Measurements
The Fair Value Measurements and Disclosures Topic of the Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined under the Topic as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy under the Topic are described below:
Level i: Quoted market prices in active markets, such as the
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
For the years ended
The Association assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer. For the years ended
Fair Value - Association Investments
The Association's investments, as described in Note 2, are traded on national securities exchanges and are stated at the last reported sales price on the day of valuation and are, therefore, categorized as Level 1 in the fair value hierarchy.
Fair Value - Investments Held (or Deferred Compensation
The investments held for deferred compensation, as described in Note 3, are valued as follows:
Investments in the money market funds are traded on national securities exchanges and are stated at the last reported sales price on the day of valuation.
Investments in the equity and fixed income mutual funds reflected as Level 1 are funds which are traded on national securities exchanges and are stated at the last reported sales price on the day of valuation.
Investments in the equity and fixed income mutual funds reflected as Level 2 are funds which are valued at fair value based on the applicable percentage ownership of the underlying companies' net assets as of the measurement date, as determined by the Fund Manager. In determining fair value, the Fund Manager utilizes valuations provided by the underlying investment companies. The underlying investment companies value securities and other financial instruments on a fair value basis of accounting. The fair value of the Association's investments in private investment companies generally represents the amount the Association would expect to receive if it were to liquidate its investment in the companies excluding any redemption charges that may apply.
The following tables present the Association's fair value hierarchy for the investments held for deferred compensation as of
Note 5. Fixed Assets
Details of fixed assets at
Amortization expense of capitalized software totaled
Note 6. Lease Commitment
The Association leases office space in
Future minimum lease payments under the noncancelable operating lease are as follows:
The Association also subleases office space in
Note 7. Functional Expenses
The following table sets forth expenses, including taxes, incurred by function of the Association for the years ended
Note 8. Employee Pension Plan
HFMA sponsors a defined contribution pension plan which covers substantially all HFMA employees who complete one year of employment. Contributions are based upon a percentage of participants' earnings, less forfeitures. HFMA's contributions for the years ended
Note 9. Chapters of HFMA (Unaudited)
Chapters of HFMA may be established by charter subject to the approval of the Board of Directors of HFMA, pursuant to the provisions of the bylaws and regulations governing membership, organization, procedures and financial relations with HFMA. Should a chapter cease to function or its charter be revoked by HFMA, all funds and records held by the chapter become the property of HFMA. The financial position and the operations of these chapters are not included in the Association's consolidated financial statements.
The most recent summary financial data of the chapters is as follows:
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
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