BOARD FINANCE COMMITTEE MEETING - Palomar Health

BOARD FINANCE COMMITTEE MEETING 

* 

TUESDAY, MARCH 30, 2010 

456 E. GRAND AVENUE 

5:30 p.m. (Buffet Dinner for Committee Members & Invited Guests Only) ESCONDIDO, CA 

6:00 p.m. Meeting 1 ST FLOOR CONFERENCE ROOM 

∗ 

Time Page Target 

CALL TO ORDER............................................................................................................. ............ ............. 6:00 p.m. 

‣ Public Comments ...................................................................................................... 

5 minutes allowed per speaker with a cumulative total of 15 minutes per group. 

For further details & policy, see Request for Public Comment notices available in meeting room. 

............. 5 ............. 6:05 p.m. 

‣ Information Item(s) ............. 5 ............. 6:10 p.m. 

1. * Approval: Revised Minutes – Tuesday, January 26, 2010 (Addendum A) ............. ............. 5 ..........AG3 6:15 p.m. 

2. * Approval: Minutes – Tuesday, February 23, 2010 (Addendum B) ......................... ............. 5 ..........AG4 6:20 p.m. 

3. * Approval: Updated Medical Director Agreement Template (Addendum C)............ ............. 5 ..........AG5 6:25 p.m. 

4. * Review/Approval: Medical Director Agreements .................................................... 

• John T. Steele, MD – Trauma Program – PMC 

• Mikhail Malek, MD – Cardiology – PMC 

• Steve K. Kuriyama, MD – Infectious Disease – PPH 

.......AG6-9 

...AG10-13 

...AG14-16 

5. * Review/Approval: Physician Advisor Agreement ................................................... 

• Charles Callery, MD – Bariatric Surgery – POM ...AG17-19 

6. * Review/Approval: Department Chair Agreement ................................................... 

• Chenggang Hu, MD – Department of Anesthesia – POM ...AG20-22 

7. * Review/Approval: Consultant Agreement – Amendment ....................................... 

• Neighborhood Healthcare – Internal Medicine ...AG23-25 

8. * Review/Approval: Emergency On-Call Agreement Extensions – Ophthalmology 

– POM ....................................................................................................................... 

• Brian Le, MD 

• Lillian Lee, MD 

9. * Review/Approval: Emergency On-Call Agreement Amendments – 

Ophthalmology – POM .............................................................................................. 

• Lorne Kapner, MD 


• Erwin Omens, MD 

• Paras Shah, MD 

10. * Review/Approval: Emergency On-Call Agreement – Ophthalmology – POM ........ 

• Lillian Lee, MD 

11. * Review/Approval: Increase in Line of Credit to Palomar Physician Network, Inc 

(Addendum D)........................................................................................................... 

........... 20 

...AG26-28 

...AG29-31 

...AG32-34 

...AG35-37 

...AG38-40 

...AG41-43 

...AG44-46 

6:45 P.M. 

........... 10 ........AG47 6:55 p.m. 

12. * Review/Approval: ICOC 

• Update on Pending Vacancies and Authorization to Begin Application Process..................... ...............5 ...AG48-49 7:00 p.m. 

• Updated Policies, Procedures & Guidelines – Addition of Advisory Panel (Addendum E)....... .............10 ........AG50 7:10 p.m. 

13. * Approval: Strategic Capital Allocation Criteria........................................................ ............. 5 ...AG51-52 7:15 p.m. 

∗ Asterisks indicate anticipated action. Action is not limited to those designated items. 

AG1

Board Finance Committee, Tuesday, January 26, 2010 

14. * Approval: February 2010 & YTD FY2010 Financial Report (Addendum F) ........... 15 ........AG53 7:30 p.m. 

ADJOURNMENT TO CLOSED SESSION ............... ............... 7:30 p.m. 

~ pursuant to California Government Code §54954.5(h) 

REPORT INVOLVING TRADE SECRET 

Discussion will concern proposed new service 

Estimated date of public disclosure: April 2010 

...........20 7:50 p.m. 

~ pursuant to California Government Code §54954.5(h) 


Discussion will concern proposed new facility 

Estimated date of public disclosure: 2010 

...........20 8:10 p.m. 

 

RESUMPTION OF OPEN SESSION 

‣ Action Resulting From Closed Session Discussion – IF ANY...................... .......... 5 8:15 p.m. 

FINAL ADJOURNMENT .............................................................................................. ............... ........... 8:15 p.m. 

NOTE: If you have a disability, please notify us at 760-740-6383 72 hours 

prior to the event so that we may provide reasonable accommodations 

2010-03-30 BoD Finance Agenda.doc AG2

REVISED Minutes 

Finance Committee – Tuesday, January 26, 2010 

TO: 

Board Finance Committee 

MEETING DATE: Tuesday, March 30, 2010 

FROM: 

BY: 

Tanya Howell, Secretary 

Bob Hemker, CFO 

Background: The minutes of the Board Finance Committee meeting held on Tuesday, 

January 26, 2010, incorrectly stated the Committee’s recommendation regarding potential 

expansion of the expresscare clinics. That misstatement has been corrected, and the revised 

minutes (sans attachments) are respectfully submitted for approval (Addendum A). 

Budget Impact: 

N/A 

Staff Recommendation: Staff recommends approval of the revised minutes from the 

Tuesday, January 26, 2010, Board Finance Committee meeting. 

Committee Questions: 

COMMITTEE RECOMMENDATION: 

Motion: 

Individual Action: 

Information: 

Required Time: 

Form A - Rev'd Minutes 2010-01-26.doc 

AG3

Minutes 

Finance Committee – Tuesday, February 22, 2010 

TO: 



FROM: 

BY: 

Tanya Howell, Secretary 


Background: The minutes of the Board Finance Committee meeting held on Tuesday, 

February 22, 2010, are respectfully submitted for approval (Addendum B). 


N/A 

Staff Recommendation: Staff recommends approval of the Tuesday, February 22, 2010, 

Board Finance Committee minutes. 



Motion: 


Information: 


Form A - Minutes.doc 

AG4

Medical Directorship Agreement 

TO: 



FROM: 

Legal Department 

Background: The template used for Medical Directorship Agreements was 

approved by the Board three years ago. Due to changes in the law and changes 

in procedures at PPH, the template needed to be revised. A redlined version of 

the updated template is attached as Addendum C. All Medical Directorship Agreements 

presented at this evening's meeting have been drafted utilizing the new template. 


None 

Staff Recommendation: 

Approve for use 



Motion: 


Information: 


Form A - Medical Directorship Agreement - Updated Version.doc 

AG5

MEDICAL DIRECTOR AGREEMENT 

InInsert Subject Here 

Trauma Department – PMC 

TO: 



FROM: 

Kim Colonnelli, RN 

Chief Nursing Officer, Pomerado Hospital 

BACKGROUND: John Steele, MD, provides exclusive clinical services and medical director 

oversight for the trauma department at PMC and maintains his clinical competency as a practicing 

trauma surgeon. 

Dr. Steele has been supportive of the initiatives that are underway at PPH during his tenure in the 

position today, and this agreement represents a renewal of the exclusive agreement for another threeyear 

term. 

BUDGET IMPACT: None. 

STAFF RECOMMENDATION: 

Approval 

COMMITTEE QUESTIONS: 


Motion: 


Information: 


Form A - Dr Steele.doc 

AG6

PALOMAR POMERADO HEALTH - AGREEMENT ABSTRACT 

Section 

Reference Term/Condition Term/Condition Criteria 

TITLE 

Medical Director Agreement – Trauma Program - PMC 

Preamble AGREEMENT DATE April 1, 2010 

Preamble PARTIES John T. Steele and Palomar Pomerado Health 

Recitals E PURPOSE Clinical supervision and oversight of the Trauma Program. 

1.1, 1.2, 

1.3 

Exhibit 1.1 

SCOPE OF SERVICES Chair Department of Trauma, conduct peer review, represent 

program at County MAC (Medical Advisory Cmte) meetings, 

conduct M&M conferences, lead performance improvement and 

clinical research. 

PROCUREMENT Request For Proposal Discretionary 

METHOD 

4.1 TERM Three years 

RENEWAL 

None 

5.3 TERMINATION Without cause with 90 days written notice. 

2.1 COMPENSATION 

METHODOLOGY 

For cause as defined in the agreement 

Hourly for number of hours of service provided. 

$275.00 per hour with expected 83 hours per month of service. 

BUDGETED YES NO – IMPACT: $32,850 

EXCLUSIVITY []NO [x] YES – EXPLAIN: Required by the ACS 

JUSTIFICATION Required for compliance with County Trauma Designation 

Agreement. 

AGREEMENT NOTICED [] YES [x] NO Methodology & Response: 

1.1, 

Exhibit 

1.1 

ALTERNATIVES/IMPACT 

Duties 

COMMENTS 

Provision for Staff Education 

Provision for Medical Staff Education 

Provision for participation in Quality Improvement 

Provision for participation in budget process development 

APPROVALS REQUIRED 

CAO CFO CEO BOD Committee FINANCE BOD 

AG7

MEDICAL DIRECTORSHIP AGREEMENT 

by and between 

PALOMAR POMERADO HEALTH (“Hospital”) 

and 

JOHN T. STEELE, M.D. (“Practitioner”) 

AG8


THIS MEDICAL DIRECTORSHIP AGREEMENT (this “Agreement”) is entered into 

as of April 1, 2010, by and between Palomar Pomerado Health, a local health care district 

organized under Division 23 of the California Health and Safety Code, and JOHN T. STEELE, 

M.D., an individual (“Practitioner”). Hospital and Practitioner are sometimes referred to in this 

Agreement individually as a “Party” or, collectively, as the “Parties.” 

RECITALS 

A. Hospital owns and operates an acute care hospital facility located at 555 East 

Valley Parkway, Escondido, California, in which it operates a Trauma Department (the 

“Department”) under its acute care license. 

B. Practitioner is licensed to practice medicine in the State of California, board 

certified for the practice of medicine in the specialty of General Surgery and Trauma, and 

Critical Care (the “Specialty”) and a member in good standing of Hospital’s medical staff (the 

“Medical Staff”). 

C. Hospital desires to engage Practitioner as an independent contractor to provide 

medical and administrative oversight with respect to the Department, and believes that the 

requirements of the contract with the County of San Diego and goals of the program may be 

assured and achieved if Practitioner assumes such responsibility as set forth in this Agreement. 

D. Practitioner has the following qualifications and expertise to provide the services 

described in this Agreement: Board Certification in General Surgery and Trauma, and Critical 

Care. 

E. Hospital has considered the following factors in determining the necessity and 

amount of compensation payable to Practitioner pursuant to this Agreement: 

1. The nature of Practitioner’s duties as contemplated by this Agreement. 

2. Practitioner’s qualifications. 

3. The difficulty in obtaining a qualified physician to provide the services 

described in this Agreement. 

4. The benefits to Hospital and Hospital’s community resulting from 

Practitioner’s performance of the services described in this Agreement. 

5. The economic conditions locally and in the health care industry generally. 

Revised 3-11-2010 1 

AG9

PALOMAR POMERADO InInsert HEALTH/Palomar Subject Here Medical Center 

MEDICAL DIRECTOR/Mikhail Malek, MD – Cardiology Services 

TO: 


MEETING DATE: April, 2010 

FROM: 

Paul Patchen, Director of Cardiovascular Services 

BACKGROUND: Dr. Stein is stepping down as Medical Director for Cardiology. Dr. Malek 

has been selected as his replacement. Dr. Malek’s input will be key to our transformation 

process. Dr. Malek is an interventional cardiologist and therefore has a higher rate for 

reimbursement or hourly rate. 

BUDGET IMPACT: This change will increase the annual budget. We have compressed the 

total hours per month to help keep this cost down. It is our hope to use this position in a more 

focused and efficient manner to help defer some of the wage inflation. 




Motion: 


Information: 


Form A - Dr Malek.doc 

AG10


Section 


TITLE 

Medical Director Agreement – Cardiology, Mikhail Malek M.D. 

AGREEMENT DATE 

April 1, 2010 

PARTIES 

PURPOSE 

SCOPE OF SERVICES 

Palomar Medical Center & Mikhail Malek, M.D. 

Medical Director Agreement – Cardiology Services 

Administrative, clinical, quality, and business support of the 

service line 

PROCUREMENT 

METHOD 

TERM 

Request For Proposal 

One year 

x Discretionary 

RENEWAL 

Annually 

TERMINATION 

COMPENSATION 

METHODOLOGY 

Either Party may terminate this Agreement without cause, 

expense or penalty, effective Ninety (90) days after written notice 

of termination is given to the other Party 

Hourly rate with monthly compensation 

BUDGETED X YES NO – IMPACT: 

EXCLUSIVITY NO X YES – EXPLAIN: Medical Director is singular position 

for the service line 

JUSTIFICATION Current Medical Director of Cardiology is stepping down 

AGREEMENT NOTICED YES NO Methodology & Response: 

ALTERNATIVES/IMPACT Continue search for replacement, costs unkown 

Duties 

COMMENTS 

x Provision for Staff Education 

x Provision for Medical Staff Education 

x Provision for participation in Quality Improvement 

x Provision for participation in budget process development 


VP CFO CEO BOD Committee ____________ BOD 

AG11




and 

MIKHAIL MALEK, M.D. (“Practitioner”) 

AG12



as of April 1, 2010, by and between Palomar Pomerado Health, a local health care district 

organized under Division 23 of the California Health and Safety Code and (“Hospital”), and 

MIKHAIL MALEK, M.D., an individual (“Practitioner”). Hospital and Practitioner are 

sometimes referred to in this Agreement individually as a “Party” or, collectively, as the 

“Parties.” 

RECITALS 

A. Hospital owns and operates an acute care hospital facility located at 555 East 

Valley Parkway, Escondido, California 92025, in which it operates a Department of Diagnostic 

and Interventional Cardiology under its acute care license. 


certified for the practice of medicine in the specialty of Cardiovascular Disease (the “Specialty”) 

and a member in good standing of Hospital’s medical staff (the “Medical Staff”). 


medical and administrative oversight with respect to the Department of Diagnostic and 

Interventional Cardiology and believes that enhanced procedural standardization, economic 

efficiencies, professional proficiencies, and quality outcomes as well as enhanced coordination 

and cooperation among Department’s providers and users can be achieved if Practitioner 

assumes such responsibility as set forth in this Agreement. 


described in this Agreement and is experienced and board certified in Cardiovascular Disease, 

Interventional Cardiology, and Internal Medicine and is a member of the Medical Staff of the 

Hospital. 



1. The nature of Practitioner’s duties as contemplated by this Agreement. 

2. Practitioner’s qualifications. 

3. The difficulty in obtaining a qualified physician to provide the services 

described in this Agreement. 

4. The benefits to Hospital and Hospital’s community resulting from 

Practitioner’s performance of the services described in this Agreement. 

5. The economic conditions locally and in the health care industry generally. 

Revised 3-11-2010 1 

AG13

PALOMAR InInsert POMERADO Subject HEALTH Here 

Infectious Disease Medical Director Agreement 

TO: 



FROM: 

Opal Reinbold, Chief Quality Officer 

BACKGROUND: This request is to approve the Contract Amendment #1 to 

extend the Agreement for three (3) months, from April 1, 2010, through June 30, 2010. 

BUDGET IMPACT: 

None 


Approval 



Motion: 


Information: 


Form A - Kuriyama.doc 

AG14


Section 


TITLE 

Infectious Disease Medical Director Agreement – Contract 

Amendment #1 

AGREEMENT DATE April 1, 2010 

PARTIES 

PURPOSE 


Palomar Pomerado Health and Steve K. Kuriyama, M.D. 

To provide medical and administrative oversight for the Infectious 

Disease Program and Antibiotic Oversight Use. 

Administrative services as set forth in Medical Director 

Agreement dated April 1, 2007 


METHOD 

4.1 TERM Three (3) months (April 1, 2010 – June 30, 2010) 

RENEWAL 

4.2 TERMINATION Immediately with cause or within 90 days’ with prior written notice 

without cause 


METHODOLOGY 

BUDGETED 

Medical Director shall, on a monthly basis on or before the fifth 

(5 th ) day of each calendar month submit a written invoice to 

Hospital, detailing the date, time, number of hours and 

description of activities. 

YES NO – IMPACT: 

EXCLUSIVITY NO YES – EXPLAIN: 

JUSTIFICATION 

Compliance with JCAHO, DHS and Medicare Conditions of 

Participation for Medical Oversight of the Infectious Disease 

Program. 


ALTERNATIVES/IMPACT 

Duties 

COMMENTS 






VP CFO CEO BOD Committee Finance BOD 

AG15

CONTRACT AMENDMENT #1 

BETWEEN 

PALOMAR POMERADO HEALTH 

AND 

STEVE K. KURIYAMA, M.D. 

This Amendment is made by and between PALOMAR POMERADO HEALTH, a local 

healthcare district organized under Division 23 of the California Health and Safety Code 

(“PPH”), and STEVE K. KURIYAMA (“Medical Director”) on this 1st day of April, 

2010 (“Amendment Effective Date”). 

In consideration of the mutual promises of the parties, the receipt and sufficiency of 

which are hereby acknowledged, the Medical Director Agreement between the parties 

(“Agreement”), dated April 1, 2007 is hereby amended as follows: 

This Agreement is hereby extended through June 30, 2010. 

Medical Director shall be paid the same rate paid during the third twelve months 

of the Agreement pursuant to Section 3.1 of the Agreement. 

All other terms of the Agreement remain in full force and effect. In the event of a 

conflict, the provisions, terms and conditions of this Amendment shall prevail. 

The parties have executed the Amendment as of the date set forth below. 

STEVE K. KURIYAMA, M.D. 

By: __________________________ 

Date:_________________________ 


By:___________________________ 

Robert A. Hemker 

Chief Financial Officer 

Date:_________________________ 

February 2, 2009 

AG16

Physician Advisor Agreement for 

Bariatric Services Program 

TO: 



FROM: 

David Tam, CAO, Pomerado Hospital 

Background: Charles Callery, M.D., will act as the Physician Advisor of 

the Bariatric Services Program of the Surgery Department at Pomerado Hospital. 

The Physician Advisor will assist PPH and its bariatric surgery program in 

successfully maintaining its designation as a center that has achieved 

credentialing with the American Society for Metabolic Bariatric Surgery 

(“ASMBS”) Center of Excellence. The Physician Advisor will be the designated 

Medical Director for bariatric surgery and will participate in the relevant decisionmaking 

administrative meetings of PPH. 


No Budget Impact, renewal of agreement 

Staff Recommendation: Approval 



Motion: 


Information: 


Form A - Dr Callery.doc 

AG17


Section 


TITLE 

Physician Advisor Between Palomar Pomerado Health 

(Pomerado Hospital) and Charles Callery, M.D. 


PARTIES 

1) PPH 

2) Charles Callery, M.D. 

PURPOSE 

Charles Callery, M.D. Physician Advisor shall act as the 

Physician Advisor of Bariatric Services Program of the 

Surgery Dept at Pomerado Hospital and as Medical Director 

for Bariatric Surgery. 

SCOPE OF SERVICES Physician Advisor will assist PPH and its bariatric surgery 

program in successfully maintaining its designation as a 

center that has achieved credentialing with the American 

Society for Metabolic Bariatric Surgery (“ASMBS”) Center of 

Excellence. Physician Advisor will be the designated 

Medical Director for bariatric surgery and will participates in 

the relevant decision-making administrative meetings of 

PPH. 

PROCUREMENT Request For Proposal 

METHOD 

TERM April 1, 2010 through March 31, 2011 

RENEWAL 

N/A\ 

Discretionary 

TERMINATION 

A. Immediately for cause 

B. Not less than 90 Days of written notice without cause 

COMPENSATION 

METHODOLOGY 

Monthly Installments on or before the 15 th of the month with 

supporting documentation of the prior month’s time record 

BUDGETED 



JUSTIFICATION Medical oversight for our Bariatric Surgical Program is a 

requirement of our credentialing with the American Society for 

Bariatric Surgery 


ALTERNATIVES/IMPACT Proceeding without this agreement would cause our services to 

be out of compliance with ASBS standards 

Duties 

COMMENTS 






VP CFO CEO BOD Committee _Finance BOD 

AG18


THIS MEDICAL DIRECTORSHIP AGREEMENT (this “Agreement”) is 

entered into as of April 1, 2010, by and between Palomar Pomerado Health, a local health 

care district organized under Division 23 of the California Health and Safety Code and 

(“Hospital”), and CHARLES D. CALLERY, M.D., an individual (“Practitioner”). 

Hospital and Practitioner are sometimes referred to in this Agreement individually as a 

“Party” or, collectively, as the “Parties.” 

RECITALS 

A. Hospital owns and operates an acute care hospital facility located at 15615 

Pomerado Road, Poway, California, in which it operates a Bariatric Surgery Services (the 

“Program”) under its acute care license. 

B. Practitioner is licensed to practice medicine in the State of California, 

board certified for the practice of medicine in the specialty of Bariatric Surgery Services 

(the “Specialty”) and a member in good standing of Hospital’s medical staff (the 

“Medical Staff”). 

C. Hospital desires to engage Practitioner as an independent contractor to 

provide medical and administrative oversight with respect to the Program, and believes 

that Bariatric Surgery Services can be achieved if Practitioner assumes such 

responsibility as set forth in this Agreement. 

D. Practitioner has the following qualifications and expertise to provide the 

services described in this Agreement. 

E. Hospital has considered the following factors in determining the necessity 

and amount of compensation payable to Practitioner pursuant to this Agreement: 

1. Hospital desires to retain Physician Advisor as an independent 

contractor to provide certain administrative services 

(“Administrative Services” in the operation of Services and has 

determined that this proposed arrangement with Physician Advisor 

will enhance the Service’s and Hospital’s organization, procedure 

standardization, economic efficiency,, professional proficiency, 

and provide other benefits to enhance coordination and cooperation 

among the Services’ provides and users. 

2. Practitioner is a physician who is qualified and licensed to practice 

medicine in the State of California, is experienced and qualified in 

the specialized field of General Surgery and Bariatric Surgery, and 

who is a member of the Medical Staff of Hospital (“Medical 

Staff”). 

AG19

nsert Subject Here 

POMERADO HOSPITAL 

ADMINISTRATIVE SERVICES AGREEMENT 

MEDICAL STAFF OFFICERS, 

TO: 



BY: 

David Tam, M.D., Chief Administrative Officer, Pomerado Hospital 

BACKGROUND: Pomerado Hospital Medical Staff Officers are compensated for services 

performed as required by the Medical Staff By-laws. These agreements serve to document 

the relationship of the medical staff officers to PPH and the duties to be performed as 

consideration for the stipend to assure compliance with Federal regulations. 

Presented is the Administrative Services Agreement for the Department Chair, Department of 

Anesthesia, for Pomerado Hospital. 

Chair, Department of Anesthesia – Chenggang Hu, M.D. 

BUDGET IMPACT: None 


Approval 



Motion: 


Information: 


form a - pom officers2010 Dr. Hu.doc 

AG20


Section 


TITLE 

Department Chair Agreement - Chenggang Hu, M.D 

AGREEMENT DATE March 1, 2010 

PARTIES 

PURPOSE 


Department Chair, Pomerado Hospital and PPH 

To provide administrative services on behalf of Pomerado 

Hospital Medical Staff in accordance with Medical Staff Bylaws 

and policies 

As per duties defined in Pomerado Hospital Medical Staff Bylaws 

and policies. 

PROCUREMENT Request For Proposal • Discretionary 

METHOD 

TERM March 1, 2010 – December 31, 2011 

RENEWAL 

None 

TERMINATION As described under §5 

COMPENSATION Monthly. 

METHODOLOGY 

BUDGETED ■ YES □ NO – IMPACT: 

EXCLUSIVITY • NO YES – EXPLAIN: 

JUSTIFICATION 

These positions are elected by the Medical Staff in accordance 

with Medical Staff Bylaws. 

POSITION POSTED YES • NO Methodology & Response: 

Elected by the Pomerado Hospital Medical Staff 

ALTERNATIVES/IMPACT N/A 

DUTIES 

COMMENTS 


Defined in the Pomerado Hospital Medical Staff Bylaws 

The agreement template was developed by legal counsel. The 

Department Chair positions are voted upon by Active members of 

the Medical Staff. 

• VP •CFO •CEO •BOD Committee FINANCE •BOD 

AG21

DEPARTMENT OF ANESTHESIA DEPARTMENT CHAIR AGREEMENT 

THIS DEPARTMENT OF ANESTHESIA CHAIR AGREEMENT 

(“Agreement”) is entered into on March 1, 2010, by and between Palomar Pomerado Health 

(“PPH”), a California health district organized under Division 23 of the California Health and 

Safety Code and Chenggang Hu, M. D., (“Physician”), with respect to the following facts: 

RECITALS: 

A. PPH owns and operates Palomar Medical Center in Escondido, CA and 

Pomerado Hospital in Poway, CA (Individually “Hospital”, Collectively “Hospitals” or “PPH”). 

B. The physicians and other independent practitioners practicing in PPH have 

organized themselves into a Medical Staff in conformity with the Medical Staff Bylaws of 

Pomerado Hospital. 

C. Physician is the Department of Anesthesia Chair which has been 

established pursuant to the Medical Staff Bylaws and/or relevant Medical Staff Policies of 

Pomerado Hospital. As Department of Anesthesia Chair, Physician is required to perform a 

number of duties (the “Duties”) as set forth in this Agreement. 

D. The purpose of this Agreement is to provide a means of compensating 

Physician at no more than fair market value for performing the Duties required of a 

Department/Committee chair. Additionally, this Agreement will delineate the expectations of 

the parties and assure effective performance by Physician. 

NOW, THEREFORE, for good and valuable consideration, the receipt and 

sufficiency of which are hereby acknowledged by the parties, it is hereby agreed as follows: 

1. Recitals. The recitals set forth above are hereby incorporated into this Agreement as a 

material and substantive part of this Agreement. 

2. Duties. The Duties of Physician as the Department of Anesthesia Chair are as set forth 

in the Medical Staff Bylaws of Pomerado Hospital or relevant Medical Staff Policies, as they 

may be amended from time to time, and shall include, without limitation, the Duties set forth on 

Exhibit A attached hereto and incorporated herein by this reference (“Duties”). 

3. Compensation. 

3.1 Monthly Rate. PPH agrees to pay Physician $375.00 and the Medical Staff 

agrees to pay $375.00 totaling $750.00 per month for the months of March 1, 2010 through 

December 31, 2011 for Physician’s performance of the Duties as Department of Anesthesia 

Chair pursuant to the Medical Staff Bylaws/Policies, which shall average from four (4) to seven 

(7) hours per month. At the end of each month worked, Physician shall sign an Attestation Form 

1 – DEPARTMENT/COMMITTEE CHAIR AGREEMENT 

AG22

POMERADO HOSPITAL 

INTERNAL MEDICINE CONSULTANT – GERO-PSYCHIATRIC UNIT 

TO: 



FROM: 

Sheila Brown, R.N., M.B.A., Chief Clinical Outreach Officer 

Susan Linback, R.N., M.B.A., Director, Behavioral Health Services 

BACKGROUND: This is a request to approve the extension of the Internal Medicine 

Consultant Agreement with Neighborhood Healthcare. Neighborhood Healthcare will continue 

to provide Internal Medicine H&P and follow-up medical coverage for patients in the Pomerado 

Hospital Gero-Psychiatric Unit. By nature of their age, this Senior patient population exhibits 

concomitant medical conditions, and a medical H&P and follow-up by an internal medicine 

physician is a necessary component in the comprehensive evaluation and treatment of these 

patients. This unit provides inpatient psychiatric assessment and treatment for a vulnerable 

Senior population. 

BUDGET IMPACT: 

No Budget Impact 


Approve 



Motion: 


Information: 


Form A - Internal Medicine Consultant Agreement for GPU April 1, 2010.doc 

AG23


Section 


TITLE 

Internal Medicine Consultant Agreement – Pomerado Hospital 

Gero-Psychiatric Unit 

Neighborhood Healthcare 


PARTIES 

1) PPH 

2) Neighborhood Healthcare 

Recitals E PURPOSE To provide H&P and Medical oversight for patients in Pomerado 

Hospital’s Gero-Psychiatric Unit 

Exhibit A SCOPE OF SERVICES Neighborhood Healthcare will continue to perform H&Ps and 

provide Internal Medicine coverage for patients in the Pomerado 

Hospital Gero-Psychiatric Unit. This Senior patient population 

exhibits concomitant medical conditions, and a medical H&P and 

follow-up by an internal medicine physician is a necessary 

component in the comprehensive evaluation and treatment of 

these patients. 

PROCUREMENT Request For Proposal • Discretionary 

METHOD 

5.1 TERM April 1, 2010 through December 31, 2010 

5.2 

5.3 

RENEWAL 

TERMINATION 

N/A 

a. Immediately for cause 

b. Not less than 30 days of written notice without cause 


METHODOLOGY 

BUDGETED 

EXCLUSIVITY 

Monthly payment on or before the 15 th of each month with 

supporting documentation of the prior month’s time records. 

• YES NO – IMPACT: None 

• NO YES – EXPLAIN: 

JUSTIFICATION Medical H&P and follow-up is a community standard for Gero- 

Psychiatric inpatients. 

AGREEMENT NOTICED YES • NO Methodology & Response: Discussed with 

all eligible providers. RFP was done externally. 

ALTERNATIVES/IMPACT Proceeding without this arrangement would cause lack of medical 

support for medically compromised Senior patients on the Gero- 

Psychiatric Unit. 

Exhibit B Duties •Provision for Staff Education 

• Provision for Medical Staff Education 

• Provision for participation in Quality Improvement 

• Provision for participation in budget process development 

COMMENTS 


• VP •CFO •CEO•BOD Committee Finance Committee •BOD 

NH 2010 

AG24

CONTRACT AMENDMENT BETWEEN 


AND 

NEIGHBORHOOD HEALTHCARE 

1.) This amendment (“Amendment”) is made by and between PALOMAR POMERADO 

HEALTH, a local healthcare district organized under Division 23 of the California Health 

and Safety Code, and Neighborhood Healthcare on this 1 st day of April, 2010. 

2.) In consideration of the mutual promises of the parties, the receipt and sufficiency of 

which are hereby acknowledged, the INTERNAL MEDICINE CONSULTANT 

AGREEMENT between the parties (“Agreement”), dated April 1, 2007 is hereby 

amended as follows: 

3.) This Agreement is hereby extended until March 31, 2011. 




NEIGHBORHOOD HEALTHCARE 


By: __________________________ 

Print: _________________________ 

Title: _________________________ 

Date:_________________________ 

By:___________________________ 

Print: __Robert A. Hemker________ 

Title: __Chief Financial Officer____ 

Date:_________________________ 

AG25

Ophthalmology On-Call Agreement – Amendment 

TO: 



FROM: 


Background: Brian Le, MD Ophthalmology On-Call Agreement 

Amendment. This Amendment replaces the previously Board-approved 

Amendment #1, which incorrectly stated the term as three (3) years. The term of 

the original contract was extended to accommodate the development of a new 

amendment that incorporated adjustments for compliance with new requirements 

regarding Stark regulations and an updated Fair Market Value analysis. 


None 




Motion: 


Information: 


Form A - Brian Le Amend.doc 

AG26


Section 


TITLE 

Emergency On-Call Agreement – Ophthalmology – Amendment 

AGREEMENT DATE January 1, 2010 

(Extension of original agreement dated January 1, 2009) 

PARTIES 

1) Pomerado Hospital 

2) Le, Brian M.D. 

Recitals E PURPOSE To serve on the On-Call Panel as required by the medical staff 

bylaws, and rules and regulations of PPH. 

Exhibit A SCOPE OF SERVICES Need for continued Ophthalmology consultation call coverage for 

the Emergency Department. 


METHOD 

5 TERM Three (3) months (January 1, 2010 to March 31, 2010) 

N/A RENEWAL None 

6 TERMINATION 1. Immediate for cause 

2. Not less than 90 days of written notice without cause 

2 COMPENSATION 

METHODOLOGY 

BUDGETED 

Monthly payment on or before the 15 th of the month with 

supporting documentation. 



JUSTIFICATION Need for continued Ophthalmology consultation call coverage for 

the Emergency Room. 



1 Duties Physician shall provide On-Call Panel Coverage and professional 

services in accordance with the Hospital’s bylaws, rules and 

regulations, policies and procedures. 

COMMENTS 


Officers CFO CEO BOD Committee Finance BOD 

AG27


BETWEEN 


AND 

BRIAN LE, M.D. 

This Amendment #1 is made by and between PALOMAR POMERADO HEALTH, a 

local healthcare district organized under Division 23 of the California Health and Safety 

Code, and BRIAN LE, M.D., on this the January 1, 2010 (“Effective Date of 

Amendment”). 


which are hereby acknowledged, the Emergency On-Call Agreement between the 

parties (“Agreement”) that was entered into effective January 1, 2009, and is hereby 

amended as follows. 

This Agreement is hereby extended through March 31, 2010. 





By: __________________________ 

Date:_________________________ 


By:___________________________ 



Date:_________________________ 

AG28

Ophthalmology On-Call Agreement – Amendment 

TO: 



FROM: 


Background: Lillian Lee, MD Ophthalmology On-Call Agreement 

Amendment. The term of the original contract is being extended to 

accommodate the development of a new amendment that incorporated 

adjustments for compliance with new requirements regarding Stark regulations 

and an updated Fair Market Value analysis. 


None 




Motion: 


Information: 


Form A - Lillian Lee Amend.doc 

AG29


Section 


TITLE 

Emergency On-Call Agreement – Ophthalmology – Amendment 

AGREEMENT DATE February 1, 2010 

(Extension of original agreement dated February 1, 2009) 

PARTIES 


2) Lee, Lillian M.D. 




the Emergency Department. 


METHOD 

5 TERM Two (2) months (February 1, 2010 to March 31, 2010) 





METHODOLOGY 

BUDGETED 





JUSTIFICATION Need for continued Ophthalmology consultation call coverage for 

the Emergency Room. 






COMMENTS 



AG30


BETWEEN 


AND 

LILLIAN LEE, M.D. 

This Amendment #1 is made by and between PALOMAR POMERADO HEALTH, a 


Code, and Lillian Lee M.D., on this the February 1, 2010 (“Effective Date of 




parties (“Agreement”) that was entered into effective February 1, 2009, and is hereby 

amended as follows. 

This Agreement is hereby extended through March 31, 2010. 




LILLIAN LEE, M.D. 

By: __________________________ 

Date:_________________________ 


By:___________________________ 



Date:_________________________ 

AG31

Ophthalmology On-Call Agreement 

TO: 



FROM: 


Background: Lorne Kapner, MD Ophthalmology On-Call Agreement 

Amendment. Amendment to Ophthalmology On-Call Agreement to incorporate 



Budget Impact: Increase in collective annual collective compensation to 

include costs of district-wide Ophthalmology needs. 




Motion: 


Information: 


Form A - Kapner.doc 

AG32


Section 


TITLE 

Emergency On-Call Agreement – Ophthalmology 

AGREEMENT DATE April 1, 2010. 

PARTIES 

1) PPH District 

2) Kapner, Lorne, M.D. 



Exhibit A SCOPE OF SERVICES To provide On-Call coverage pursuant to the On-Call Agreement 

for the specialty of Ophthalmology services district wide. 


METHOD 

5 TERM Three (3) years (April 1, 2010 through March 31, 2013) 





METHODOLOGY 

BUDGETED 





JUSTIFICATION Adjustment of Ophthalmology On Call Agreement to meet the 

newly required established Stark regulations as well as Fair 

Market Value analysis. 






COMMENTS 



AG33


BETWEEN 


AND 

LORNE KAPNER, M.D. 

This Amendment is made by and between PALOMAR POMERADO HEALTH, a 


Code, and LORNE KAPNER, M.D., on this the 1st day of April, 2010 (“Effective Date 

of Amendment”). 



parties (“Agreement”) that was entered into effective September 1, 2009, and is hereby 


2. Compensation to Physician. 

2.1 As of April 1, 2010, PPH shall pay Physician for the provision of On-Call 

Panel Coverage in accordance with the On-Call Panel schedule described in Section 1.2 

above, and pursuant to the payment schedule set forth on Exhibit B, attached hereto and 

incorporated herein by this reference. Physician shall, on a monthly basis on or before 

the fifth (5th) day of each calendar month during the entire term of this Agreement, 

commencing with the second (2nd) calendar month of the term of this Agreement, submit 

a written invoice to PPH in form and detail acceptable to PPH detailing the dates and 

number of twenty four (24) hour On-Call Panel periods covered (as defined in Exhibit A) 

made by Physician during the immediately preceding calendar month. Payments by PPH 

to Physician shall be made on or before the fifteenth (15th) day of the calendar month 

following the month in which such services are rendered. 

5. Term of Agreement. 

The effective date this Agreement shall remain September 1, 2009 and shall terminate on 

the earlier to occur of (i) March 31, 2013, or (ii) the date on which PPH implements a 

new On-Call Panel arrangement, provided that PPH shall provide Physician with no 

fewer than fourteen (14) days prior written notice thereof. 

EXHIBIT A – PHYSICIAN SERVICES 

As of April 1, 2010, this Agreement shall provide for the provision of On-Call Coverage 

by Physician for the specialty of Ophthalmology at Pomerado Hospital. This shall 

include accepting patients from other Palomar Pomerado Health facilities, including but 

not limited to, Palomar Medical Center, for services not provided at that other facility. 

1 

AG34

Ophthalmology On Call Agreement 

TO: 



FROM: 


Background: Brian Le, MD, Ophthalmology On-Call Agreement. 

Amendment to Ophthalmology On-Call Agreement to incorporate adjustments 

for compliance with new requirements regarding Stark regulations and an 

updated Fair Market Value analysis. 






Motion: 


Information: 


Form A - Brian Le New.doc 

AG35


Section 


TITLE 



PARTIES 


2) Le, Brian M.D. 




the Emergency Department district wide. 


METHOD 

5 TERM Three (3) years (April 1, 2010 to March 31, 2013) 





METHODOLOGY 

BUDGETED 













COMMENTS 



AG36

BRIAN LE, MD – ON CALL AGREEMENT - CONTRACT AMENDMENT #2 


BETWEEN 


AND 




Code, and Brian Le, M.D., on this the 1st day of April, 2010 (“Effective Date of 




parties (“Agreement”) that was entered into effective January 1, 2009, and is hereby 


1.1 Physician shall serve as a member of the On-Call Panel on a rotating basis, 

at such times as shall be determined by the appropriate PPH Department in accordance 

with Section 1.2 below, to provide On-Call Panel Coverage and professional services, 

regardless of payor class, to: (1) patients who are not currently assigned to any particular 

physician at the time coverage and services are provided, and (2) patients, including 

inpatients, who may be assigned to a particular physician, but who require consultation or 

other physician services from an On-Call Panel physician during the physician’s 

scheduled On-Call Panel period (collectively, “Coverage Patients”). Specifically, 

Physician shall provide those services set forth on Exhibit A, attached hereto and 

incorporated herein by this reference, which he or she is qualified and privileged by the 

respective Hospital to provide, when PPH or either of the Hospitals request that Physician 

provide such services to a Coverage Patient during Physician’s scheduled On-Call Panel 

period. For purposes of this Agreement, “On-Call Panel Coverage” shall mean Physician 

is either physically present in the applicable Department or immediately available by 

telephone and/or pager to arrive at the applicable Department during his or her scheduled 

on-call rotation within the time frame specified in the applicable Hospital medical staff 

bylaws, rules and regulations, in order to provide professional services to Coverage 

Patients. 

1.2 Each month PPH shall, on a departmental basis, schedule Physician to be 

on-call for periods of twenty-four (24) continuous hours and shall make available to 

Physician the On-Call Panel schedule for the applicable Department. Physician shall 

provide On-Call Panel Coverage in accordance with the monthly call schedule. 

Particular days may be requested by Physician. However, PPH shall have the right to 

disapprove Physician’s monthly proposed schedule of on-call days before it is finalized. 

PPH has the right to require that Physician provide On-Call Panel Coverage for days 

other than those requested by Physician, in order to assure appropriate coverage for the 

Departments. 

AG37


TO: 



FROM: 


Background: Erwin Omens, MD Ophthalmology On Call Agreement 









Motion: 


Information: 


Form A - Omens.doc 

AG38


Section 


TITLE 



PARTIES 


2) Omens, Erwin M.D. 




for the specialty of Ophthalmology district wide. 


METHOD 






METHODOLOGY 

BUDGETED 













COMMENTS 



AG39


BETWEEN 


AND 

ERWIN OMENS, M.D. 



Code, and ERWIN OMENS, M.D., on this the 1st day of April, 2010 (“Effective Date 

of Amendment”). 



parties (“Agreement”) that was entered into effective September 1, 2009, and is hereby 















The effective date this Agreement shall remain September 1, 2009 and shall terminate on 

the earlier to occur of (i) March 31, 2013, or (ii) the date on which PPH implements a 

new On-Call Panel arrangement, provided that PPH shall provide Physician with no 

fewer than fourteen (14) days prior written notice thereof. 






1 

AG40

Ophthalmology On-Call Agreement 

TO: 



FROM: 


Background: Paras Shah, MD Ophthalmology On-Call Agreement 









Motion: 


Information: 


Form A - Shah.doc 

AG41


Section 


TITLE 



PARTIES 


2) Shah, Paras M.D. 




for the specialty of Ophthalmology district wide. 


METHOD 






METHODOLOGY 

BUDGETED 













COMMENTS 



AG42


BETWEEN 


AND 

PARAS SHAH, M.D. 



Code, and PARAS SHAH, M.D., on this the 1st day of April, 2010 (“Effective Date of 




parties (“Agreement”) that was entered into effective August 1, 2009, and is hereby 















The effective date this Agreement shall remain August 1, 2009 and shall terminate on the 

earlier to occur of (i) March 31, 2013, or (ii) the date on which PPH implements a new 

On-Call Panel arrangement, provided that PPH shall provide Physician with no fewer 

than fourteen (14) days prior written notice thereof. 






1 

AG43


TO: 



FROM: 


Background: Lillian Lee, MD, Ophthalmology On-Call Agreement. 

New Ophthalmology On-Call Agreement to incorporate adjustments for 

compliance with new requirements regarding Stark regulations and an 

updated Fair Market Value analysis. 






Motion: 


Information: 


Form A - Lillian Lee New.doc 

AG44


Section 


TITLE 



PARTIES 


2) Lee, Lillian M.D. 




the Emergency Department district wide. 


METHOD 

5 TERM Three (3) years (April 1, 2010 to March 31, 2013) 





METHODOLOGY 

BUDGETED 













COMMENTS 



AG45

EMERGENCY ON-CALL AGREEMENT 

THIS EMERGENCY ON-CALL AGREEMENT (“Agreement”) is made and entered into 

effective as of the first day of April 1, 2010 by and between Palomar Pomerado Health, a 

California local health care district created under Division 23 of the California Health and Safety 

Code (“PPH”), and Lillian Lee, M.D. (“Physician”). 

RECITALS 

A. PPH owns and operates two general acute care hospitals: Palomar Medical Center 

and Pomerado Hospital (collectively, the “Hospitals”), and provides emergency services to patients 

who present themselves for evaluation and treatment through the emergency and various other 

departments of the Hospitals, including, but not limited to, the intensive care unit and other 

inpatient departments of the Hospitals (collectively, the “Departments”). 

B. Pursuant to state and federal law, the Hospitals have established “on-call” panels of 

physicians (“On-Call Panel”) in order to assure the availability of adequate physician coverage for 

the Departments. 

C. Physician is licensed to practice medicine in the State of California, is Board 

certified or eligible for certification in his or her appropriate specialty, is a member of the medical 

staff of one or both Hospitals, and is approved by one or both of the Hospital medical staffs to 

serve on the On-Call Panel. 

D. PPH and Physician each recognize that the On-Call Panel performs a necessary 

patient care function at PPH and Physician agrees to render coverage and services as a member of 

said On-Call Panel in assuring prompt and continuous availability of services to PPH’s patients. 

E. Physician acknowledges his or her responsibility to serve on the On-Call Panel as 

required by the medical staff bylaws, and rules and regulations, of the applicable Hospital(s). 

NOW, THEREFORE, in consideration of the recitals, covenants, conditions and promises 

herein contained, the parties hereby agree as follows: 

1. Physician’s On-Call Panel Coverage Services. 

1.1 Physician shall serve as a member of the On-Call Panel on a rotating basis, at such 

times as shall be determined by the appropriate PPH Department in accordance with Section 1.2 

below, to provide On-Call Panel Coverage and professional services, regardless of payor class, to: 

(1) patients who are not currently assigned to any particular physician at the time coverage and 

services are provided, and (2) patients, including inpatients, who may be assigned to a particular 

physician, but who require consultation or other physician services from an On-Call Panel 

physician during the physician’s scheduled On-Call Panel period (collectively, “Coverage 

Patients”). Specifically, Physician shall provide those services set forth on Exhibit A, attached 

hereto and incorporated herein by this reference, which he or she is qualified and privileged by the 

AG46

Palomar Physician Network, Inc. 

Line of Credit 

TO: 



FROM: 


Background: The PPH Board approved the creation and funding of a physician 

foundation at the November 2009 Board meeting. The Palomar Physician Network, Inc. 

(PPN) has been organized and is looking forward to a start date of April 1, 2010. At the 

February 2010 meeting, the Board approved a Line of Credit (LoC) in the amount of 

$250,000 from PPH to the PPN to bridge their costs until that start date. 

PPN is requesting an increase in the LoC as a result of the anticipated acquisition of 

Centre for Health Care (CCMS and PTMA) on April 1, 2010. The LoC is for coverage 

of working capital needs for payroll and other operating expenses resulting from the lag 

in accounts receivable collections from fee-for-service business. It is expected that the 

lag will be normalized within ninety (90) days. A redline version of the LoC including 

the increase is attached. 

Budget Impact: The requested increase is for $1,000,000 above the existing line, 

for a total LoC of $1,250,000. 


Approval. 



Motion: 


Information: 


Form A - PPN LOC.doc 

AG47

Palomar Pomerado Health Hospital, Emergency Care, Trauma Center 

Improvement and Repair Measure Bonds 

Independent Citizens’ Oversight Committee (ICOC) 

TO: 



FROM: 


Background: When the members of the ICOC were first seated, members were divided into 

three classes with initial term lengths of one, two or three years. All terms commenced on 

June 30, 2005, with expiration dates on June 30 th of the Class years 2006, 2007 and 2008, 

respectively. Subsequent to their initial term, the members of each Class were then to serve a 

second term of two years, with no member allowed to serve more than two consecutive terms. 

On June 30, 2010, the members of the Class of 2008 will each have completed their second 

and final terms of office. They are: 

• William L. Corwin – At Large 

• Marguerite Jackson Dill, PhD, RN, FAAN – Nurse 

• John McIver – Business Organization – Secretary 

• Margaret Moir – At Large – Chair 

The pending term expirations will in effect create three forms of vacancy: 

• A vacancy in number, as it will reduce the membership to six (6) 

o 

§5.1 of the Procedures, Policies & Guidelines (PP&G) of the ICOC states that the 

Committee shall consist of not less than nine (9) members 

• Vacancies in two of the four “Required Member” seats – Business Organization and 

Nurse Representative 

o 

§5.3 of the PP&G of the ICOC states that the Committee shall at all times, except 

during the period of a vacancy, include the following members (collectively, the 

“Required Members”): 

• (1) one member who is active in a business organization 

• (2) one member who is active in a senior citizens’ organization 

• (3) one member who is active in a bona fide taxpayers’ organization 

• (4) one member who is a nurse or physician 

Pursuant to §5.4 of the PP&G, the District Board shall appoint members to the ICOC utilizing 

the following process: 

• The District Board shall post notice of vacancies and solicit applications from the general 

public 

• The District Board designee [the Board Finance Committee] shall review and process 

applications and make recommendations to the District Board for applicants to fill the 

vacant position(s) 


N/A 


Staff recommends the following actions: 

• Posting of the three (3) vacancies created by the pending term expirations of the 

members of the Class of 2008, to include special notice for the two (2) “Required 

Member” positions that will be vacated 

Form A - ICOC Update.doc 

AG48




• Establishment of a deadline for receipt of applications 

o posting on April 13, 2010, with a deadline of May 14, 2010, would accommodate review 

of applications at the May Board Finance and June Board meetings, respectively) 

• Consistent with previous methodology, it is also recommended that the full Finance 

Committee evaluate all applicants (conducting phone and/or face-to-face interviews with 

the finalists as warranted) prior to recommending to the Board the proposed finalists for 

the vacant seats on the ICOC 



Motion: 


Information: 


Form A - ICOC Update.doc 

AG49




TO: 



FROM: 


Background: As reported at the January meeting of this Committee, the members of the 

ICOC proposed the creation of an Advisory Panel that would be composed of those members 

whose terms of office were expiring. The members of the Advisory Panel would not hold voting 

rights; however, their experience and knowledge from their years on the ICOC would be an 

asset to the newer members. 

Also discussed was the fact that the Policies, Procedures & Guidelines (PP&G) of the ICOC did 

not address the possibility of former members reapplying for membership at a future date. 

The attached draft of the PP&G has been amended to include provisions both for the creation of 

and appointment of members to an Advisory Panel, as well as for the addition of a “sun-setting” 

period, after which former members who so desire can reapply for future vacant seats. 


N/A 


Staff recommends approval 



Motion: 


Information: 


Form A - ICOC PP&G Amendment.doc 

AG50

Strategic Capital Prioritization Matrix 

TO: 



FROM: 

Robert Hemker, CFO 

Background: At the request of the Board during Strategic Planning 

workshops, Management has been collaborating on a tool for use in prioritizing 

the strategic projects on which to allocate capital. The tool as presented at the 

December 8, 2009, Finance Committee meeting contained two options ranging 

from 3 to 6 separate criteria. 

The Finance Committee reached a consensus that the criteria and weights 

recommended would be a useful tool, and expressed a preference for the use of 

Option 1, with its complement of 6 criteria. Management was requested to refine 

the tool then return it to the Finance Committee for review and to solicit Board 

member comments. 

The updated matrix from Management is attached. No comments were received 

from non-Finance Committee Board members 


N/A 


Matrix as attached. 

Approval of the Strategic Capital Prioritization 



Motion: 


Information: 


Form A - Prioritization.doc 

AG51

Palomar Pomerado Health 

Board Directed Strategic Capital Allocation Criteria 

Recommended Criteria and Weighting 

Criteria 

Average 

Weight 

Grow the Business: 32.2% 

Financial Impacts: 20.6% 

Consumerism / Community Benefit: 11.6% 

Quality & Safety: 14.7% 

Regulatory Requirements: 13.4% 

Workforce & Workplace Matters: 7.5% 

Total Weight: 100.0% 

AG52

February 2010 & YTD FY2010 Financial Report 

TO: 



FROM: 

Robert Hemker, CFO 

Background: The Board Financial Reports (unaudited) for February 2010 

and YTD FY2010 are submitted for the Finance Committee’s approval 

(Addendum F). 


N/A 


Staff recommends approval. 



Motion: 


Information: 


Form A - Financial Report.doc 

AG53

ADDENDUM A 

ADD A-1

B OARD F INANCE C OMMITTEE M EETING 

A TTENDANCE R OSTER & M EETING M INUTES 

C ALENDAR Y EAR 2010 

MEETING DATES: 

1/26/10 

MEMBERS 

LINDA GREER, R.N. – CHAIR P 

TED KLEITER P 

BRUCE KRIDER, MA P 

MICHAEL COVERT, FACHE P 

FRANK MARTIN, M.D. P 

JOHN LILLEY, M.D. E 

– ALTERNATE 

– 2 ND ALTERNATE 

– 3 RD ALTERNATE 

– 4TH ALTERNATE 

STAFF ATTENDEES 

BOB HEMKER P 

GERALD BRACHT P 

DAVID TAM P 

TANYA HOWELL – SECRETARY P 

INVITED GUESTS 

SEE TEXT OF MINUTES FOR NAMES OF GUEST PRESENTERS 

2010-01-26 Finance Minutes - Revised.doc 1 ADD A-2

BOARD FINANCE COMMITTEE – REVISED MEETING MINUTES – TUESDAY, JANUARY 26, 2010 

1. AGENDA ITEM 

• DISCUSSION CONCLUSION/ACTION FOLLOW UP/RESPONSIBLE PARTY FINAL 

CALL TO ORDER 

• The meeting – held in the First Floor Conference Room at 456 E. Grand Avenue, Escondido, CA – was called to order at 6:00 p.m. by Chair Linda Greer, RN 

ESTABLISHMENT OF QUORUM 

• See roster 

PUBLIC COMMENTS 

• There were no public comments 

ADJOURNMENT TO CLOSED SESSION 

Chair Greer adjourned to Closed Session at 6:01 p.m., citing the following Brown Act provisions: 

• PURSUANT TO CALIFORNIA GOVERNMENT CODE §54954.5(H) 


DISCUSSION WILL CONCERN PROPOSED NEW SERVICE 

ESTIMATED DATE OF PUBLIC DISCLOSURE: APRIL 2010 

RESUMPTION OF OPEN SESSION 

Following the Closed Session, Chair Greer resumed the Open Session at 6:38 p.m. 

• Action Resulting From Closed Session 

Discussion, IF ANY 

MOTION: By Michael Covert, seconded Director Krider and 

carried to approve up to $200K for the design and investigation 

process for 3 additional expresscare centers in San Elijo Hills, 

Oceanside & Temecula 

Forwarded to the February 8, 2010, 

Board of Directors meeting with a 

recommendation for approval. 

N 

INFORMATION ITEM(S) 

• Request by ICOC for the Creation of an ICOC Advisory Panel 

o The Finance Committee is the conduit for ICOC to the PPH Board 

• Faced with the dilemma that all members are beginning to cycle off 

Original seats were filled with staggered terms of 1-3 years, with a 

maximum of two consecutive terms 

• At this stage of construction, ICOC has identified the need for continuity of 

experience on the Committee 

• Members wanted to know if there was any way to keep the experienced 

members on, even though they cannot be reappointed 

Proposed an Advisory Group that would retain members of the senior body 

(a) No ability to vote 

(b) Gain to new members of their experience and guidance 

o Would require a rewrite of the PP&G that govern the ICOC 

Information only 

• Management to work with ICOC 

Counsel to re-write the ICOC PP&G 

to include: 

o Sun-setting period of 2 years 

o Creation of an advisory panel 

• Criteria for appointment at 

end of second consecutive 

term 

• Term of 2 years 

• Final draft to be returned through 

Finance Committee for 

recommendation to the Board 

2010-01-26 Finance Minutes - Revised.doc 2 ADD A-3 

N




• Will require a Board decision 

• Current PP&G do not specify a period of time between appointments 

 

Just cannot serve more than two consecutive terms 

Suggestion that a “sun-setting” period be embedded, denoting how many 

years a member had to be off the ICOC before they could apply for reappointment 

• Advisory panel membership 

Should be a minimum of 2 years 

Criteria for appointment at expiration of second consecutive term 

1. MINUTES – DECEMBER 8, 2009 

• No discussion MOTION: By Director Kleiter, seconded by Director Krider and carried to approve the minutes of the 

December 8, 2009, Board Finance Committee meeting as presented. All in favor. None opposed. 

Y 

2. ANNUAL REVIEW OF FINANCE COMMITTEE BYLAWS 

• No discussion 

MOTION: By Director Kleiter, seconded by Director Krider and 

carried to approve the Bylaws with no recommended changes. All 

in favor. None opposed. 


Board of Directors meeting as 

Information 

Y 

3. BOARD MEMBER POSITION DESCRIPTION 


MOTION: By Director Kleiter, seconded by Director Krider and 

carried to approve the Board Member Position Description with no 

recommended changes. All in favor. None opposed. 



Information 

Y 

4. BOARD FINANCE COMMITTEE SCHEDULE FOR CALENDAR YEAR 2010 

• Bob Hemker reported the results of a matrix poll distributed prior to the meeting 

o All meetings during the last week of the month, with consensus of availability for the 

following: 

− Last Tuesdays in the evening 

− Last Thursdays in the evening 

− Last Thursdays from Noon to 2:00 p.m. 

o There was discussion that the nature of the Board Finance Committee meetings 

precludes daytime scheduling 

− Meetings are rarely short due to topics that must go through on a regular basis 

− Topics under discussion are often of interest to the public, and daytime 

scheduling might hamper their ability to attend 

MOTION: By Director 

Kleiter, seconded by 

Director Krider and carried 

to hold Board Finance 

Committee meetings on the 

last Tuesday of the month 

at 6:00 p.m.; with 

consensus to hold the 

combined November/ 

December meeting on 

Tuesday, November 30, 

2010 (Attachment 1). All in 

favor. None opposed. 



Information 

Y 





5. BOARD FINANCE COMMITTEE ACCOMPLISHMENTS FOR CALENDAR YEAR 2009 

• The annual recap of the Board Finance Committee’s accomplishments for Calendar Year 

2009 was presented for review before distribution to the Board 

• Bob Hemker acknowledged Past Chair Kleiter’s leadership during the past year 

• Michael Covert also recognized Bob Hemker and gave special thanks to Committee 

Secretary Tanya Howell for their diligent support of the Finance Committee during the year 

Chairman Greer gave 

permission to move the 

information to the full 

Board as written 



Information 

Y 

6. BOARD FINANCE COMMITTEE ANNUAL AGENDA 

• Bob Hemker discussed the schedule (Agenda 

page AG11) and requested flexibility for routine items 

to be moved, and/or for the addition of other items as 

needed 

MOTION: By Director Krider, seconded by Director Kleiter and 

carried to approve the Board Finance Committee Annual Agenda, 

with the additions and corrections noted under “Follow-up”. All in 




Information 

• Before sending the schedule to the 

Board, Secretary Tanya Howell is to 

amend it: 

o To include the Quarterly 

Initiatives Reviews in the 

months of April and July 

o To correct the topic of the June 

program review to a review of 

the new entity Palomar 

Pomerado Imaging, LLC 

Y 

DONE 

7. PHYSICIAN INDEPENDENT CONTRACTOR AGREEMENTS – EHR PROJECTS – INFORMATION SYSTEMS SERVICES 

• Branislav Cizmar, MD [12/1/09-11/30/10] • Stephen Fortus Signer, MD [11/1/09-10/31/10] 

• Nabil Fatayerji, MD [12/1/09-11/30/10] • Chris Wiesner, MD [12/1/09-11/30/10] 

• Michael S. Rafii, MD [12/1/09-11/30/10] • Rady Children’s Specialists Medical Foundation [12/1/09-11/30/10] 


MOTION: By Dr. Martin, seconded by Director Krider and carried 

to recommend approval of the 1-year Physician Independent 

Contractor Agreements for EHR Projects with all 

physicians/groups for terms as listed. All in favor. None opposed. 




Y 

8. PHYSICIAN INDEPENDENT CONTRACTOR AGREEMENTS AMENDMENTS – EHR PROJECTS – INFORMATION SYSTEMS SERVICES 

• Lachlan Macleay, MD • Kevin Daly, MD 

• Marc Gipsman, MD • Steven Zgliniec, MD 

• Julie Chuan, MD 



to recommend approval of the amended pay rates for Physician 

Independent Contractor Agreement Amendments for EHR 

Projects with all physicians as listed. All in favor. None opposed. 




Y 





9. MEDICAL DIRECTOR AGREEMENT – EXTENSION – FORENSIC HEALTH - PPH 

• Mary J. Spencer, MD 


10. CLINICAL DIRECTOR AGREEMENT – AMENDMENT – PMC INPATIENT BEHAVIORAL HEALTH 

• Irinel Chiriac, MD 

• The amendment doubled Dr. Chiriac’s time 

commitment from 4 to 8 hours per week 

MOTION: By Director Krider, seconded by Director Kleiter and 

carried to recommend approval of the 6-month [1/8/10 to 6/30/10] 

Extension to the Medical Director Agreement with Mary J. 

Spencer, MD, for the provision of Forensic Health Services at 

PPH. All in favor. None opposed. 

MOTION: By Director Kleiter, seconded by Dr. Martin and carried 

to recommend approval of the amendment to the 2.5-year Clinical 

Director Agreement with Irinel Chiriac, MD, for the provision of 

Behavioral Health Services at PMC. All in favor. None opposed. 







11. EMERGENCY ON-CALL & PSYCHIATRIC HOSPITALIST MANAGEMENT AGREEMENT – AMENDMENT & EXTENSION – EMERGENCY DEPARTMENTS, INPATIENT BEHAVIORAL HEALTH UNITS, SNFS 

& ACUTE CARE AREAS – PMC & POM 

• Psychiatric Centers at San Diego (PCSD) 

• The agreement was extended for 1 year and the 

rate of pay was amended 

12. EMERGENCY ON-CALL AGREEMENT – EXTENSION – OPHTHALMOLOGY – POM 


• Three-year extension was approved by the Board 

in December, but the agreement was never signed as 

Dr. Le only wanted to extend the Agreement for 1 year 


to recommend approval of the pay rate change and the 1-year 

[1/1/10 to 12/31/10] Extension of the Emergency On-Call & 

Psychiatric Hospitalist Management Agreement with PCSD. All in 



to recommend approval of the 1-year [1/1/10 to 12/31/10] 

Extension of the Emergency On-Call Agreement with Brian Le, 

MD, for the provision of Ophthalmology Services at POM. All in 








13. ADMINISTRATIVE SERVICES AGREEMENTS – PMC 

• John J. Lilley, MD – Chief of Staff [1/1/10-12/31/11] • Margaret Riley-Hagan, MD – Dept. Chair - Pediatrics [1/1/10-12/31/11] 

• Richard C. Engel, MD – Chief of Staff Elect [1/1/10-12/31/11] • Peter M. Lucas, MD – Dept. Chair – Anesthesia [1/1/10-12/31/10] 

• Daniel C. Harrison, MD – Dept. Chair – QMC [1/1/10-12/31/11] • Julie J. Chuan, MD – Dept. Chair – Family Medicine [1/1/10-12/31/11] 

• Thomas S. Velky, MD – Dept. Chair – Surgery [1/1/10-12/31/11] • Jaime B. Rivas, MD – Dept. Chair – Emergency Medicine [1/1/10-12/31/11] 

• Norman W. Pincock, MD – Dept. Chair – Medicine [1/1/10-12/31/11] • Gregory K. Nicpon, MD – Dept. Chair - Radiology [1/1/10-12/31/11] 

• Kevin L. Metros, MD – Dept. Chair – Orthopaedic Surgery/Rehab [1/1/10-12/31/11] • Lachlan Macleay, Jr., MD – Dept. Chair – Pathology [1/1/10-12/31/11] 

• Jerome L. Sinsky, MD – Dept. Chair – OB/GYN [1/1/10-12/31/10] • John T. Steele, MD – Dept. Chair - Trauma [1/1/10-12/31/11] 


MOTION: By Dr. Martin, seconded by Director Kleiter and carried 

to recommend approval of the 2-year [1/1/10 to 12/31/11] 

Administrative Services Agreements with the Chief of Staff, Chief 

of Staff Elect and Department Chairs at PMC for the terms as 

listed above. All in favor. None opposed. 





Y 

Y 

Y 

Y 

Y




14. ADMINISTRATIVE SERVICES AGREEMENTS – POM 

• Roger J. Acheatel, MD – Department Chair – QMC • Nabil Fatayerji, MD – Department Chair - Pediatrics 

• Roger J. Acheatel, MD – Department Chair - MSPRC • Jaime B. Rivas, MD – Department Chair – Emergency Medicine 

• Sabiha Pasha, MD – Department Chair – Medicine • Lachlan Macleay, Jr., MD – Department Chair - Pathology 

• Albert Lin, DDS – Department Chair – Surgery • Kathleen Flores-Dahms, MD – Department Chair - Radiology 

• Gary Gonsalves, MD – Department Chair - Anesthesia 

• PPH has been providing partial support and 

Medical Staff has been providing the other portion 

o Will be making a recommendation regarding 

the hospital level of support at a later date 

15. SECOND QUARTERLY UPDATE – FY2010 INITIATIVES 

MOTION: By Dr. Martin, seconded by Ted Kleiter and carried to 

recommend approval of the 2-year [1/1/10 to 12/31/11] 

Administrative Services Agreements with the Department Chairs 

at POM as listed above. All in favor. None opposed. 

• Bob Hemker stated that only those Initiatives associated with the finance domain are reviewed 

with this Committee. All the Initiatives will be reviewed at the Board Strategic Planning Committee 

meeting. He then led discussions utilizing the presentation deck included in the agenda packet as 

Addendum G, joined by EMT Sponsors and/or Initiative Managers as appropriate 

• Review of the key portions of each slide 

o If an Initiative covers multiple topics, the bolded section is applicable to the current slide 

o The red circle is in line with where the Initiative stands YTD 

o If green diamonds denoting milestones are yellow or red, there is some risk in terms of 

time or dollars 

o Not all Initiatives have sub-initiative measures 

o The Report Date on these slides is listed as January 18, 2010, as that is the date they 

were reviewed by Management before presentation to this Committee 

• Initiative1.1(a) – CDI Initiative 

o On track – ties back to global outcome measure 

− OEBITDA at 10.9% YTD, which is right on target 

o Sub-initiative is measured against the $3M put into budget as additional net revenue 

− At just over $2M through 11/09 

− On track to meet budgetary expectations at sub-initiative level 

− Tom Boyle has been asked to conduct a validation audit of the sub-initiative outcomes 

• Initiative 1.1(b) – Chargemaster Build/Rebuild 

o There are 3 phases, with the aggregate goal of having 9 departments built by the end of 

the fiscal year 

− 3 are done, and the next phase of 3 are in progress 

− Sub-initiative is on target 

1) Clean claim rate is currently at 45% against a goal of 70% 

a) Should be in the 60% range by the next review 




Information only Forwarded to the February 4, 2010, 

Board Strategic Planning Committee 

meeting for review. 


Y 

Y

BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, JANUARY 26, 2010 



b) Rate jumped up due to Medicare edits 

(i) 

Every October Medicare updates their edits, but does not communicate 

that information to providers until claims are rejected 

(ii) Providers then must research from October through present to discover 

the updates 

2) Implant gross revenue increase shows a 10% target 

a) Don’t yet have YTD figures 

• Initiative 1.1(c) – Resource Optimization for Clinical Supplies 

o 

o 

o 

o 

o 

Overall measure is total operating expenses 

− 

$11,128 is new actual for December YTD 

Sub-initiative level is right on budget 

Steve Ellis, Director of Supply Chain Services, has now been here for 4.5 months and was 

introduced by Dr. David Tam 

Utilizing the attached presentation (Attachment 2), Mr. Ellis made a report on progress 

made by the Supply Optimization Committee (SOC) YTD 

− 

− 

− 

PPH spent $70M on supplies last FY and is on track to spend $72M this FY 

Costs of transportation and pharmaceuticals are up 

Areas of focus listed are high-level – not all-inclusive 

Hope to be able to reap some benefits by the end of the FY 

• Initiative 1.1(d) – Resource Optimization for Labor Resources 

o 

o 

o 

o 

Kim Colonnelli presented information on this Initiative 

The 3 discharge subgroups are newly formed 

− 

− 

Groups are working to ensure that people aren’t working are working together, not 

against each other 

Reviewing topics such as 

1) A potential need for MRIs on the weekends, whether resources would be 

available for after hours/weekend scheduling, etc. 

2) Whether physicians are making rounds and discharging in a timely manner 

LOC has really pulled the premium dollar, with aggregate dollars actually running ahead 

Sub-initiative is the departmental salary level 

− 

− 

Over 200 departmental levels are managed 

Around 10-12% of those are running negative dollar variances 

1) Offset by positive variances somewhere else 

o At $5285/adj discharge vs. budget of $5216 

o 

Managing volatility of volume and premium pay issue 

• Initiatives 1.2(a)-(d) are strategies for growing revenue, tied to additional margin for the budget 





o 

o 

Four service lines with overall indicator of additional net contribution margin 

Performance is an estimate 

− 

− 

− 

Have worked to pull together a model to accurately assess the results of growth 

efforts 

After bills have gone and collections have been received, there is about a 6-month lag 

Will have results for first quarter at the end of January 

− Estimate is the last validated quarter to estimate going forward $1.4M or 3.4% 

• Initiative 1.2(a) – Cardiovascular 

o 

o 

CRM has been underway since the beginning of the year 

− 

Expect to soon have first feedback on downstream revenues resulting from those 

efforts 

Diagnostic cats have been established at POM 

• Initiative 1.2(b) – Orthopedics 

o 

o 

On target and moving forward 

Seeing opportunities with Kaiser based on their standardized practices 

− 

8.22% increase in volume at December 

• Initiative 1.2(c) – General Surgery 

o 

o 

Dr. Link’s joining of the medical staff provides opportunity 

Kaiser activity is consistent, with requests for additional OR time 

− 

1.64% decline in Inpatient/increase in Outpatient 

1) Due to a change in physicians 

• Initiative 1.2(d) – Neurosciences 

o 

Working with SCMG to help them bring a candidate on board 

• Initiative 1.2(e) – Rady’s discussions 

o 

o 

o 

Relicensing of pediatric and NICU beds under Rady license to create a “hospital within a 

hospital” 

Need a waiver from DPH to continue to use excess capacity for mother baby overflow 

− 

− 

− 

Latest approach is to retain 10 beds on that unit and only relicense the remainder of 

the beds 

Not yet approved, but has been done before, and Rady believes they can obtain that 

waiver 

Agreement is predicated on waiver 

HR has done an incredible job of working through personnel issues 

− 

Brenda still has to meet and confer with union 





o Had expected Agreement to be final in October 2009 

− 

Reason for yellow diamond 

• Initiative 1.2(f) – RehabCare 

o 

Just got the next steps for the process after a presentation to the Board 

• Initiative 1.2(g) – North County Radiology (NCR) 

o 

DONE 

• Initiative 2.2 – Not-For-Profit Physician Organization 

o 

o 

o 

o 

The Board approved the creation of the Palomar Physicians Network (PPN) 

− 

Vicky Lister, Acting Director of the PPN, was welcomed 

The entity will be seen later as an agenda item, with a request for fiscal support to get it 

started 

In final due diligence with CHC for the creation of the 501(c)3 entity 

− 

Have filed an application for 501(c)3 status 

April 1, 2010, is the target date 

− 

All indications are that it is on timeline 

• Initiative 5.2(c) – Capital Campaign 

o 

o 

o 

Terry Green reported that of the $7M threshold, the Foundation currently has $4.3M in 

signed commitments 

− 

61% of threshold 

Oral commitments are not counted until given in writing 

Milestones 6&7 are yellow 

− 

Portions are underway, but the staff charged with those programs has been on LOA 

16. PROGRAM REVIEW – PHYSICIAN RECRUITMENT 

• Taken out of agenda order as first item following closed session in deference to guest – 

realigned for purpose of the minutes 

• Utilizing the presentation attached as Addendum H, Lisa Hudson, Director of Business & 

Physician Development, presented a review of physician recruitment efforts 

• 3-year review, from FY07 to present 

o FY10 

o 

o 

− 

Have been a little more conservative in recruitment while finalizing with physicians 

recruited in FY09 

Actively looking for a neurosurgeon 

Of the 20 physicians recruited over the past 3 years only 2 are no longer here 

− 

Dr. Chan 

Information only Forwarded to the February 8, 2010, 


Information 

N 





o 

o 

− 

Dr. Franey 

Updates on projected area needs for the following specialties were presented (ADD H-5 to 

ADD H-7) 

− 

− 

− 

Primary care 

Internal medicine 

Vascular surgery 

There are several options for recruitment for PPN physicians, including alignment through 

PPN 

17. RESOLUTION NO. 02.10.01(01)-01 RE: DESIGNATION OF AUTHORIZED PERSONS (CORPORATE ENTITY ACCOUNTS) – MORGAN STANLEY TRUST, N.A. 

• Bob Hemker reported that the spreadsheet of bank accounts and signatory authority 

historically used by the District is sometimes not enough for specific bank entities 

o 

PPH is opening an escrow account with Morgan Stanley into which payments on the 

DPR contract will be deposited 

− 

Morgan Stanley requires that we at least incorporate their document in form 

o The presented Resolution utilizes the standard PPH Resolution format while 

incorporating the forms required by Morgan Stanley 

18. LINE OF CREDIT (LOC) TO PALOMAR PHYSICIAN NETWORK, INC. (PPN) 

• The presented LOC is the initial capitalization and funding of PPN 

o PPN is requesting to borrow funds from PPH for their initial efforts 

− LOC will be in the amount of $250K 

− Drawdown period allows us to go out 5 years to normalize, with a 5-year 

repayment term at the end of he drawdown cycle 

1) Effectively a 10-year instrument 

− Rate is 1year LIBOR + 2% 

1) Bob Hemker reviewed various indices to determine which market rate to 

use and reflect our internal invested funds’ earning power 

2) May not 100% mirror an arms length cost of risk as external lenders 

evaluate additional risk factors in establishing their lending rate 

o Management and Legal Department have reviewed the substance of the attached 

draft of the LOC 

− Draft document has also been reviewed and approved by the PPN Board 

− Similar structure to the LOCs with other related entities 

o Matter will be returned via this Committee when the PPN is ready to work through 

working capital needs and capitalization as it grows its additional business 

PPN’s first transaction is contemplated with Centre for Healthcare (CHC) 


Kleiter seconded by 


to recommend approval of 

the Resolution as 

presented. All in favor. 

None opposed. 


Kleiter seconded by 


to recommend approval of 

the Line of Credit with the 

PPN in the amount of 

$250K. All in favor. None 

opposed. 







Y 

Y 





19. DECEMBER 2009 AND YTD FY2010 FINANCIAL REPORT 

• Utilizing the presentation included in the revised agenda packet as Addendum J, Bob 

Hemker presented the December 2009 and YTD FY2010 financial statements. Only select 

slides were presented for discussion (listed below with any additional comments): 

• Balanced Scorecard (ADD J-2) 

o OEBITDA is blue 

• Executive Summary of Key Indicators (ADD J-5) 

o Saw some interesting volume shifts in December 


Kleiter seconded by Dr. 

Martin and carried to 

recommend approval of the 

Financial Report for 

December 2009 and YTD 

FY2010 as presented. All 

in favor. None opposed. 




Y 

o 

Still holding revenue per adjusted discharge above budget 

o Productivity is down against budget by about 1.5% 

o 

OEBITDA is at 11.15% MTD 

o 

Positive supply variance 

− 

Pharmaceutical costs were trued up for the mid-year, resulting in a favorable 

adjustment 

• Key Variance Explanations (ADD J-12-15) 

o December was not good for investment income 

− Still showing a negative variance to budget YTD of $582K 

o YTD calendar year employee benefits showed a negative variance of $598K 

− 

Will start seeing improvement since the change to Cigna for group health 

expense 

− 

Pension is starting to normalize based upon budgeted vs. final negotiated 

contracts 

o Supplies are positive to budget $605K 

− 

Due in large part to pharmaceuticals 

• Balance Sheet (ADD J-16) 

o Still holding cash position 

− Days Cash on Hand are at 123 

• Income Statement MTD (ADD J-18) 

o Operating income is slightly favorable to budget, continuing a FY10 trend 

• Income Statement YTD (ADD J-19) 

o Bottom bottom line is $129K favorable variance to budget 

o 

$900K negative variance in professional fees is due to significant IT projects under 

development 

o 

Total uncompensated care budgeted at $45M 





o 

o 

− Actual is a favorable $171K, a good outcome considering current economic 

conditions 

Bad debt is $200K favorable to budget 

− 

We budgeted at the level we saw last year and haven’t seen an erosion in 

terms of payer mix 

Capitation is performing well for the 2009 Plan Year 

Goes back to restructuring of the stop loss provisions 

• Income Statement vs. Prior Year ( ADD J-20) 

o Up over $7M in net revenues 

o 

o 

o 

o 

− 

We’re not seeing the same catastrophic occurrences as last year 

− Run-off will occur over the next 3 months before final results will be known 

− 

Up 10% in gross revenues 

Up 3.9% in net patient revenues 

SWC up approximately 2.4% 

− 

Consistent with union and non-union increases 

Up $2.5M on operating income 

− 

− 

Consistent with investment market conditions 

Investment interest is down approximately $1.9M 

o OEBITDA is 10.9% (up from 10.37%) and right on target for FY10 

• Statistical Indicators 

o (ADD J-31) Review of mix on patient days 

o 

o 

o 

(ADD J-44) No significant changes for payer mix 

(ADD J-45) Slight decline in case mix index 

(ADD J-47) Medicare showed a notable increase in December CMI 

• Cash Collections (ADD J-54) are only $.8M below goal 

o Represents a lot of hard work on the part of the collections department, especially in 

current economic conditions 

• Investment Fund (ADD J-59) – Quarterly reporting as required 

FINAL ADJOURNMENT The meeting was adjourned a t 8:24 p.m. 

Motion to adjourn 

COMMITTEE CHAIR 

SIGNATURES: 

COMMITTEE SECRETARY 

Linda Greer, RN 

Tanya Howell 


ADDENDUM B 

ADD B-1

MEMBERS 

MEETING DATES: 

1/26/10 2/23/10 

LINDA GREER, R.N. – CHAIR P P 

TED KLEITER P E 

BRUCE KRIDER, MA P P 

MICHAEL COVERT, FACHE P P 

FRANK MARTIN, M.D. P E 

JOHN LILLEY, M.D. E P 

MARCELO RIVERA, MD – ALTERNATE E 

NANCY BASSETT, R.N., MBA – 2 ND ALTERNATE P 

– 3 RD ALTERNATE 

– 4TH ALTERNATE 

STAFF ATTENDEES 

BOB HEMKER P P 

GERALD BRACHT P P 

DAVID TAM P 

TANYA HOWELL – SECRETARY P P 

INVITED GUESTS 

DRAFT 

2010-02-23 BoD Finance Minutes.doc 1 

B O A R D F I N A N C E C O M M I T T E E M E E T I N G 

A T T E N D A N C E R O S T E R & M E E T I N G M I N U T E S 

C A L E N D A R Y E A R 2 0 1 0 

SEE TEXT OF MINUTES FOR NAMES OF GUEST PRESENTERS 

ADD B-2


BOARD FINANCE COMMITTEE – MEETING MINUTES – TUESDAY, FEBRUARY 23, 2010 


CALL TO ORDER 

• The meeting–held in the First Floor Conference Room at 456 E. Grand Avenue, Escondido, CA – was called to order at 6:03 p.m. by Chair Linda Greer, RN 

ESTABLISHMENT OF QUORUM 

• See roster 

PUBLIC COMMENTS 

• There were no public comments 

INFORMATION ITEM(S) 

• Request to change date of April 2010 BoD Finance Meeting 

o 

o 

Email poll of Committee members placed Thursday, April 29, 2010, as the best 

option 

Meeting will be held at the same time and place (5:30 dinner/6:00 meeting, 1 st Floor 

Conference Room, 456 E. Grand Avenue, Escondido) 

• Updated program review schedule 

o Bob Hemker distributed an updated schedule (Attachment 1) 

o 

At the request of the sponsor, the Perinatology Program review was moved to April 

• Financial Performance Bonus Barometer 

o 

o 

o 

o 

Bob Hemker distributed the new tool (Attachment 2) that was created as a 

collaborative effort between HR, Finance and Marketing 

Goal was to have a simple metric to assist staff in remaining engaged, enabling 

them to see where the district stands regarding financial performance and potential 

for an incentive compensation payout for year end 

DRAFT 

If you achieve the goal on the left side, the amount of money on the right side is 

how much we will be able to pay 

Chair Greer inquired what staff needed to do make reaching the bonus fund goal a 

reality 

• We need to continue to be right on budget, then push for extra to fund the 

incentive payout fund 

 

This includes getting all the charges in, not being wasteful, etc. – basically 

being as efficient as we can in our daily tasks 

• Marketplace – bonds, interest rates, etc. 

o 

o 

Bob Hemker stated that the 2006 Auction Rate Securities (Revenue Bonds) are still 

showing favorable resets 

Based on these results and other market factors, there is still no reason for the 

district to exit that strategy and look for a fixed-rate alternative at this time 


Information only • Forwarded to the March 8, 2010, 


Information 

Y 

ADD B-3




1. MINUTES – JANUARY 26, 2010 

• No discussion MOTION: By Dr. Lilley, seconded by Director Krider and carried to approve the minutes of the 

January 26, 2010, Board Finance Committee meeting as presented. All in favor. None opposed. 

2. PHYSICIAN INDEPENDENT CONTRACTOR AGREEMENTS – EHR PROJECTS – INFORMATION SYSTEMS SERVICES 

• Jay Federhart, MD [2/1/10-1/31/11] • Sudabeh Moein, MD [11/1/09-10/31/10] 

• Mikhail Malek, MD [2/1/10-1/31/11] • Rod Serry, MD [2/1/10-1/31/11] 

• Elizabeth Rafii, MD [2/1/10-1/31/11] 


3. JANUARY 2010 AND YTD FY2010 FINANCIAL REPORT 

MOTION: By Director Bassett, seconded by Director Krider 

and carried to recommend approval of the 1-year Physician 

Independent Contractor Agreements for EHR Projects with all 

physicians/groups for terms as listed. All in favor. None 

opposed. 

• Utilizing the presentation included in the revised agenda packet as Addendum B, Bob 

Hemker presented the January 2010 and YTD FY2010 financial statements. Only select 

slides were presented for discussion (listed below with any additional comments): 

• BSC (ADD B-3) 

o Collective OEBITDA is at 10.9% 

o 

o 

− YTD Budget is 10.8% 

− 

Above 100%, so blue indicator 

Raw dollars are ahead of budget 

Productivity is just under budget 

− 

Premium pay continues to show constant improvement 

• Executive Summary (ADD B-4) 

o 

YTD 

DRAFT 

− Adjusted Discharges – negative variance of 1.5% 

1) Strong outpatient business is offsetting the negative inpatient activity 

− Acute Admissions – negative variance of 6.5% 

− Total surgeries – negative variance of 6.4% 

1) Due in large part to Inpatient Surgeries – negative variance of 460 

− ER Admissions were down by 298 

− Acute Patient Days – negative variance of 5.4% 

− Births – negative variance of 7.2% 

− ER Visits & Admissions – positive variance of 8.7% 

− ER to Admission Conversion Rate – negative variance of 2% 


MOTION: By 

Director Krider 

seconded by 

Director Bassett 

and carried to 

recommend 

approval of the 

Financial Report 

for January 2010 

and YTD FY2010 

as presented. All 

in favor. None 

opposed. 

Forwarded to the March 8, 2010, 


recommendation for approval 

Forwarded to the March 8, 2010, 


recommendation for approval 

Y 

Y 

Y 

ADD B-4




1) Roughly 1100 admissions below what we would expect for the amount of ER 

volume 

2) Doing really well with documentation initiative, which has an effect on 

conversation rate 

− Net Patient Revenue – slight negative variance of .29% 

− Total Net Revenue – negative variance of $900K 

− 

1) $700K of that delta is the January book of business 

Net Income is still about a quarter million dollars up 

− Bottom bottom line – positive by $568K 

− 

Cash on Hand is up to 117 days 

• MTD Variance Explanations (ADD B-8) 

o Investment Income – positive variance of $299K 

• YTD Variance Explanations (ADD B-9) 

o Salaries & Wages – negative variance of $730K 

o Contract Labor – positive variance of $970K 

o 

− Net delta is a positive variance of $240K 

Benefits 

− 

Group Health, FICA and pension will start normalizing though the remainder of 

the year 

1) Employer contribution to FICA increases at the beginning of a calendar year, 

and new plan rates for health coverage in January contributed to the 

negative variance of $1.18M 

• Balance Sheet (ADD B-12) 

o 

DRAFT 

Total of Cash with Board Designated Cash is up about $17M compared to prior year 

o Projects have grown by about $100M 

o Liabilities have dropped by about $15M 

o Year on year Total Fund Balance is $351M vs. $329M 

• MTD Income Statement (ADD B-13) 

o 

About half of the delta is made up in terms of volume and rate efficiencies 

o Negative Net Income volume variance of $19K 

− Opportunity column becomes rate efficiency, with a positive variance of $460K 

• YTD Income Statement (ADD B-14) 

o Net Income – positive variance of $279K 

− 

Driving about $400K of profitability based on how we’re managing the business 


ADD B-5




− 

$364 per Adjusted Discharge is more than making up the delta 

o Non-Operating Income – positive variance of $290K 

− Investment Income – negative variance of $284K 

• Income Statement vs. Prior YTD (ADD B-15) 

o We are now at the 7-month mark, with figures setting the stage for the FY2011 

budget cycle 

o 

o 

Adjusted Discharges 

− 

− 

Effectively 2 years that are similar 

Net Revenue has grown by $8.5M 

1) Raised rates 8%, but Gross Revenues are up 9.3% 

2) Net Revenue realization can be seen on units of measure, which are up 

about 3.6% 

3) Growing through Managed Care contracts and the efficiency of contractual 

realizations 

(a) Stronger in ambulatory contracts 

Salaries, Wages & Contract Labor – up about 2.7% year on year 

− 

Consistent with union negotiations and non-union labor adjustments 

o Total Expenses are up about 2.2% 

o Translates to a stronger Net Income Margin, which is up 9% 

o OEBITDA is up to 10.9% from 10.3% 

o 

Investment Income 

− 

− 

− 

Last year was $3.3M 

Budgeted $2.2M this year and sitting at $1.9M 

DRAFT 

Up another $17M in cash to invest 

• Income Statement – FY Projection (ADD B-16) 

o 

o 

o 

7 months of actual with 5 months of budgeted 

Project about $13.8M in Operating Income 

Bottom-bottom line of about $26.4M 

− 

Need around $28M to achieve 100% funding of performance bonus 

4. PROGRAM REVIEW –VHA PURCHASING COALITION 

• Bob Hemker provided historical background 

o 

In 2006, the District made a decision to convert from Premier to VHA 

− Premised on many factors 

1) Better pricing – access to contracts available at national, regional and local 

levels 


Information only Forwarded to the March 8, 2010, 


Information 

Y 

ADD B-6




2) Ability to integrate into and become involved in their networking structure 

a) PPH is a member owner, with CEO Michael Covert sitting on their Board 

b) CFO Bob Hemker (leadership role)—along with CAO’s David Tam and 

Gerald Bracht—sits on the CFO/COO Forum 

c) CHRO Brenda Turner is involved in a leadership role in their HR Forum 

• Mr. Hemker then introduced Steve Ellis, Director of Corporate Supply Chain Services 

o 

Utilizing the attached presentation (Attachment 3), Mr. Ellis provided an analysis of 

the benefits derived since the move to VHA 

− 

Information is based on calendar year, not fiscal year 

− Savings since 2006 total over $5M 

o PPH joined WestPac in January 2009 

− 

− 

− 

− 

Southern California collaborative formed last year 

1) Will aggregate purchasing power for local pricing to become better than 

that available nationally 

PPH is still part of VHA, but Westpac allows for regional purchasing 

opportunities 

Comprised of 11 healthcare systems 

We now have access to the purchasing power of the larger systems by co-oping 

with them 

5. PROGRAM REVIEW – SAN DIEGO RADIOSURGERY LLC & STEREOTACTIC RADIOSURGERY 

• Utilizing the attached presentation (Attachment 4) Gerald Bracht and Bob Hemker 

provided an update on the first full the first full calendar year of operations for the District’s 

joint venture in Stereotactic Radiosurgery (SRS) with U. S. Radiosurgery (formerly known as 

NeoSpine, LLC), under the name San Diego Radiosurgery, LLC (SDRS) 

DRAFT 

• Mr. Bracht indicated that Sheila Brown and a member of the SDRS board might join 

them for future program review updates 

• Mr. Bracht then provided background on how the transaction was structured, with 

operations beginning in late 2008 

o 

PPH was the first provider in San Diego County to obtain the Stereotactic upgrade 

to Varian Trilogy, which provided both SRS and soft tissue capabilities 

− 

Ramp up was slow by design in order to wait for and take advantage of the 

newer technology, which provided the ability to tap into the radiation therapy 

side with a small capital outlay 

o SDRS Services – (ATT 4-2) 

− 

PPH leases back the equipment 6 hours a day for traditional radiation therapy 


Information only Forwarded to the March 8, 2010, 


Information 

Y 

ADD B-7




o 

o 

o 

− 

SDRS utilizes the equipment for 6 hours a day to perform SRS procedures 

Marketing was implemented exactly as that done previously for the Denver market 

− 

399 contacts translated into 32 cases 

− There were many reasons for the conversion percentage (ATT 4-7) 

1) A large percentage was related to the San Diego County market, which has 

a much larger proportion of HMOs than that to which provider was 

accustomed 

Although not up to expectations, the venture did turn a small profit in CY2009 

Marketing strategies have been revised to fit the San Diego market, and a more 

realistic budget was created for CY2010 

− 

On target to meet or exceed budget for first two months 

FINAL ADJOURNMENT The meeting was adjourned at 7:25 p.m. MOTION: By Director Krider, seconded by Director 

Bassett and carried to adjourn 

SIGNATURES: 

COMMITTEE CHAIR 

COMMITTEE SECRETARY 

Linda Greer, RN 

Tanya Howell 

DRAFT 


ADD B-8

ATTACHMENT 1 

ATT 1-1 ADD B-9

FY2010/2011 Program Review Schedule 

DATE DUE PROGRAM FOLLOW-UP AT BOARD FINANCE 

SPONSOR(S) 

1 December 2009 SNF Beds to Sub-Acute 1 Steve Gold 

2 January 2010 

3 February 2010 San Diego Radiosurgery, LLC & Stereotactic Radiosurgery (SRS) 

4 

February 2010 

5 April 2010 Da Vinci 

Physician Recruitment 

VHA Purchasing Coalition 

6 April 2010 2 Perinatology Program 

7 June 2010 Palomar Pomerado Imaging, LLC 

Gerald Bracht & 

Bruce Grendell 

Sheila Brown & 

Lorie Shoemaker 

Gerald Bracht, 

Sheila Brown & 

Bob Hemker 

8 August 2010 Wound Care Sheila Brown 

9 TBD NICU Expansion Gerald Bracht 

10 TBD PPH Retail Group, LLC Sheila Brown 

11 TBD Residency Programs (e.g., Family Practice, ED, etc.) 


Lisa Hudson 


Bob Hemker 

David Tam & 

Steve Ellis 


David Tam 

1 

Reviews have been completed on those topics in green font ATT 1-2 ADD B-10 

2 Topics in red font have been rescheduled from original review date(s)

ATTACHMENT 2 

ATT 2-1 ADD B-11

ATT 2-2 ADD B-12

ATTACHMENT 3 

ATT 3-1 ADD B-13

VHA Purchasing Coalition 

Report to the Board of Directors 

February 2010 

David Tam, MD 

Chief Administrative Officer 

& 

Steve Ellis, MBA, CMRP 

Director, Corporate Supply Chain Services 

ATT 3-2 ADD B-14

Background 

• PPH Joined VHA in 2006 for administrative 

support and access to contracts available within 

the group purchasing organizations portfolio 

• Additionally, In January 2009, PPH joined the 

VHA Southern California Purchasing Coalition 

(WestPac) 

– 10 Healthcare Systems (Cedars Sinai, Presbyterian, 

Cottage, Pomona, Methodist, others) 

– Purpose: Leverage pricing through volume 

aggregation 

ATT 3-3 ADD B-15

VHA Services / Benefits 

• Capital Equipment Group Buys 

• Supplier & Distribution Contracts 

(Food, Medical/Surgical, Laboratory, 

Pharmacy, Laundry/Linen, Office & 

Administrative, & More) 

• Advisory & Consulting Services 

• Benchmarking 

• Spend Analysis & Solutions 

• Education Programs 

ATT 3-4 ADD B-16 

3

PPH Participation 

PPH Participates (Utilizes) 461 Contracts within the 

categories listed below: 

Anesthesia 

Capital Equipment 

Cardiology 

Diagnostic Imaging 

Facilities Mgmt. 

Food & Nutrition 

I.V. Therapy Systems 

Laboratory 

Medical Products 

Oncology 

Orthopedic 

Pharmacy 

Plasma/Blood 

Respiratory 

Surgical 

Womens/Infants/Children 

ATT 3-5 ADD B-17

Spend & Savings 

2006 2007 2008 

2009 (Q1- 

Q3) Total 

Contract 

Purchases $27,983,706 $37,995,968 $ 39,796,240 $34,778,881 $140,554,795 

Standardization 

Rebates $27,445 $97,159 $132,097 $121,302 $378,003 

Additional 

Manufacturer 

Rebates $78,615 $75,429 $85,250 $61,681 $300,975 

Savings $308,433 $113,520 $2,121,016 $2,536,079 $5,079,048 

ATT 3-6 ADD B-18

ATTACHMENT 4 

ATT 4-1 ADD B-19

San Diego Radiosurgery, LLC 


Program Update 

Gerald Bracht - CAO 

Bob Hemker - CFO 

ATT 4-2 ADD B-20

SDRS Background 

• Linear accelerator replacement approved in FY07 

• Operating agreement entered into on April 10, 2008 

• Ownership distribution: 51% NeoSpine LLC; 49% PPH 

• Structure: 

– Operating Agreement 

– Services Agreement 

• Provisions for Stereotactic Radiosurgery services 

– Block Lease Agreement 

• Lease of space occupied by SDRS 

• PPH use of space for Radiation Therapy 

– Contribution Agreement 

• Site improvements by PPH for Novalis TX equipment 

• Radiation Therapy operational May 2008 

• Stereotactic upgrade October 2008, operational November 2008 


2

SDRS Services 

• PPH Radiation Therapy 

– M-F 6 hours/day access 

– Treatment of soft tissue tumors 

– Enhanced IMRT capability 

• Stereotactic Radiosurgery 

– M-F 6 hours/day access 

– Brain tumors 

– Neurosurgeon directed 


3

PPH Benefits 

• State-of-the-Art service locally 

• Ancillary services activity: 

– MRI, CT, PET 

– Surgical placement of fiducial markers 

– Surgical tumor debulking 

• Benefits neurosurgical physicians 

• Enhanced marketing campaign 

• Spin-off radiation therapy activity 


4

SDRS, LLC Performance 

Activity 

CY08 CY09 

Budget 0 94 

Actual 7 32 

Variance 7 


5

SDRS, LLC Performance 

Financial 

CY08 

CY09 

Net Income (Bud) $52,044 $457,640 

Net Income (Act) 

EBIDTA $410,006 $1,262,278 

Distributions 0 $200,000 * 

* Distribution in June 2009, NeoSpine, LLC $110,000; PPH $90,000 


6

SDRS Marketing 

Contacts by category: 

TV 302 

Radio 33 

Website 42 

Print 9 

MD* 8 

Total 399 

*through SDRS phone line 


7

SDRS 

Contact Conversions/Treatments 

• Conversions out of 399 contacts: 

– 24 consults 

– 3 Stereotactic patients (out of 32 total) 

– 3 Conventional Radiation Therapy/IMRT patients 

• Reasons for lack of conversions call to consult and treatment 

– Callers have out of network insurance 

• Example 58 patients that gave insurance information were Kaiser patients 

– Callers were not candidates for either modality 

• Example no cancer, widespread disease, not a condition that is treated with Radiation 

of any type 

– Callers were under treatment elsewhere already 

– Patients without certain tests completed were turned away until they had results 

– Lack of physician confidence in the physicist prevented the patients being treated 


8

SDRS CY10 Budget 

CY10 

Activity 60 

Net Income $107,749 

• January actual 5 

• February actual 7 

ATT 4-10 ADD B-28 

9

SDRS CY10 

Marketing Strategy 

• Coordinated SDRS and PPH activities 

• Direct to Physician visits 

– PCP’s, IM, Oncologists, Neurosurgeons, Urologists, 

Pulmonologist, Endocrinologists, Nephrologists, Neurologists, 

– Involving Radiation Oncologist 

– Involving Physicist 

• Community presentations 

• Gain access to all area contracts 

• Continued targeted TV campaign 

• CPM “Innovations” direct mail campaign 

• Print advertising 

10 

ATT 4-11 ADD B-29

San Diego Radiosurgery, LLC 

Questions 

11 

ATT 4-12 ADD B-30

ADDENDUM C 

ADD C-1




and 

Deleted: [for use with individual 

physician] 

Deleted: SYSTEM, doing business as 

_____________________ 

_____________________, [M.D./D.O.] (“Practitioner”) 

Deleted: 12-27-07 

Formatted: Check spelling and 

grammar 

ADD C-2



as of ___________________, 20__, by and between Palomar Pomerado Health, a local health 

care district organized under Division 23 of the California Health and Safety Code and 

(“Hospital”), and __________________________, [M.D./D.O.], an individual 

(“Practitioner”). Hospital and Practitioner are sometimes referred to in this Agreement 

individually as a “Party” or, collectively, as the “Parties.” 

Deleted: System 

Deleted: doing business as 

_____________________ 

RECITALS 

A. Hospital owns and operates an acute care hospital facility located at 

_______________________, California, in which it operates a _____________ [department (the 

“Department”)/program (the “Program”)] under its acute care license. 

Deleted: in 


[certified/eligible/admissible/qualified] for the practice of medicine in the specialty of 

_______________________ (the “Specialty”) and a member in good standing of Hospital’s 

medical staff (the “Medical Staff”). 


medical and administrative oversight with respect to the [Department/Program], and believes that 

__________________________ can be achieved if Practitioner assumes such responsibility as 

set forth in this Agreement. 


described in this Agreement: ____________________________. 



1. [The nature of Practitioner’s duties as contemplated by this Agreement.] 

2. [Practitioner’s qualifications.] 

3. [The difficulty in obtaining a qualified physician to provide the services 

described in this Agreement.] 

4. [The benefits to Hospital and Hospital’s community resulting from 

Practitioner’s performance of the services described in this Agreement.] 

5. [The economic conditions locally and in the health care industry 

generally.] 

6. [Surveys of practitioner compensation prepared by _____________.] 

Deleted: 12-27-07 

Revised 3-11-2010 1 

ADD C-3

THE PARTIES AGREE AS FOLLOWS: 

AGREEMENT 

ARTICLE I. 

PRACTITIONER’S OBLIGATIONS 

1.1 Director Services. Practitioner shall provide to Hospital those medical director 

services set forth on Exhibit 1.1 (“Director Services”), upon the terms and subject to the 

conditions set forth in this Agreement. Practitioner shall ensure that all Director Services are 

performed when and as needed, but shall also perform any Director Services when and as 

requested by Hospital from time to time. 

Deleted: and Exhibit 1.1 (a) 

1.2 Time Commitment. Practitioner shall devote whatever time is necessary to 

ensure the operation of a high-quality [Department/Program]; provided, however, that 

Practitioner shall perform Director Services a minimum of ____________ (_____) hours [and a 

maximum of __________ (_____) hours] per [week/month]. Practitioner shall allocate time to 

Director Services as reasonably requested by Hospital from time to time. 

1.3 Availability. On or before the first (1st) day of each month, Practitioner shall 

inform Hospital of Practitioner’s schedule and availability to perform Director Services during 

that month. Practitioner shall use his or her best efforts to adjust such schedule of availability if 

reasonably requested by Hospital in order to meet Hospital’s needs for Director Services. 

1.4 Personal Services; Absences. This Agreement is entered into by Hospital in 

reliance on the professional and administrative skills of Practitioner. Except as otherwise 

provided in this Agreement, Practitioner shall be solely responsible for performing Director 

Services and otherwise fulfilling the terms of this Agreement; provided, however, that if 

Practitioner is temporarily unable to provide Director Services due to illness, disability, 

continuing education responsibilities, or vacation, Practitioner shall designate a qualified 

replacement to provide Director Services pursuant to this Agreement. Such temporary 

replacement must be approved in writing by Hospital prior to the replacement providing Director 

Services. Practitioner shall ensure that any such designated replacement meets any and all 

qualifications, obligations and requirements of Practitioner under this Agreement. Practitioner 

shall be solely responsible for compensating and making any tax filings or withholdings with 

respect to any designated replacement providing Director Services on Practitioner’s behalf. If 

the length of Practitioner’s absence is anticipated by Hospital to be or actually is longer than 

sixty (60) calendar days, the person who provides Director Services in Practitioner’s absence 

shall execute a written document in form and substance acceptable to Hospital agreeing to be 

bound by this Agreement. Except in the event of absence due to illness or disability, Hospital 

shall have the right to approve the length of Practitioner’s absence, and any unapproved absence 

shall constitute a breach of this Agreement. Nothing in this Section shall be deemed to limit in 

any way Hospital’s right to terminate this Agreement in accordance with Section 5.2. 

Deleted: 12-27-07 

Revised 3-11-2010 2 

ADD C-4

1.5 Time Reports. Practitioner shall maintain monthly time reports that provide a 

true and accurate accounting of the time spent each day by Practitioner in providing Director 

Services. Such reports shall be substantially in the form attached as Exhibit 1.5. Practitioner 

shall submit all time reports to Hospital no later than the tenth (10th) day of each month for 

Director Services provided by Practitioner during the immediately preceding month. 

1.6 Medical Staff. Practitioner shall be a member in good standing and in the “active 

staff” category or other applicable category, as defined in the Medical Staff Bylaws, of 

Hospital’s Medical Staff (the “Medical Staff”) and hold all clinical privileges at Hospital 

necessary for the performance of Practitioner’s obligations under this Agreement. If, as of the 

Effective Date (as defined in Section 5.1), Practitioner is not in the “active staff” category or 

other applicable category of the Medical Staff, Practitioner shall have a reasonable amount of 

time, which in no event shall exceed thirty (30) days, unless otherwise agreed to by the Parties, 

from the Effective Date, to obtain such applicable category; provided that Hospital may 

immediately terminate this Agreement if Hospital determines that Practitioner is not diligently 

pursuing such category in accordance with the normal procedures set forth in the Medical Staff 

Bylaws. Practitioner may obtain and maintain medical staff privileges at any other hospital or 

health care facility. 

1.7 Professional Qualifications. Practitioner shall be duly licensed and qualified to 

practice medicine in the State of California. Practitioner shall be board 

[certified/eligible/admissible/qualified] in the Specialty. 

Deleted: a member in good standing 

Deleted: or does not hold all clinical 

privileges at Hospital necessary for the 

performance of Practitioner’s obligations 

hereunder 

Deleted: ___________ 

Deleted: (____) 

Deleted: membership 

Deleted: and/or clinical privileges 

Deleted: membership and/or clinical 

privileges 

1.8 Continuing Medical Education. Practitioner shall participate in continuing 

medical education as necessary to maintain licensure, professional competence and skills 

commensurate with the standards of the medical community, as otherwise required by the 

medical profession and as required to effectively perform Practitioner’s obligations under this 

Agreement. 

1.9 Performance Standards. Practitioner shall comply with and perform the duties 

under this Agreement in accordance with all bylaws, Medical Staff policies, rules and regulations 

of Hospital and the Medical Staff, and all protocols applicable to the performance of Director 

Services or the [Department/Program] (the “Protocols”). 

1.10 Conduct. With respect to Practitioner’s business dealings with Hospital and 

Practitioner’s performance of duties under this Agreement, Practitioner shall not act, or fail to 

act, in any manner which conflicts with or violates the Medical Staff Bylaws, including but not 

limited to, the Disruptive Conduct Policy. Practitioner shall not cause another person to act, or 

fail to act, in any manner which conflicts with or violates the Bylaws. Practitioner shall comply 

with the Bylaws as they relate to Practitioner’s business relationship with Hospital or any 

Palomar Pomerado Health affiliates, subsidiaries, employees, agents, servants, officers, directors, 

contractors and suppliers of every kind. 

1.11 Use of Space. Practitioner shall not use any part of the space that Hospital 

designates for the [Department/Program] as an office for the private practice of medicine, except 

in an emergency or with Hospital’s prior written consent. 

Deleted: Code of 

Deleted: Practitioner hereby 

acknowledges receipt of Hospital’s Code 

of Conduct, attached to this Agreement as 

Exhibit 1.10 (the “Code”). 

Deleted: Code, and shall 

Deleted: Code. 

Deleted: Code as it relates 

Deleted: System 

Deleted: 12-27-07 

Revised 3-11-2010 3 

ADD C-5

1.12 Notification of Certain Events. Practitioner shall notify Hospital in writing 

within twenty-four (24) hours after Practitioner becomes aware of the occurrence of any one or 

more of the following events: 

(a) Practitioner becomes the subject of, or otherwise materially involved in, 

any government investigation of Practitioner’s business practices or the provision of professional 

services, including being served with a search warrant in connection with such activities; 

(b) Practitioner’s medical staff membership or clinical privileges at any 

hospital are denied, suspended, restricted, revoked or voluntarily relinquished, regardless of the 

availability of civil or administrative hearing rights or judicial review with respect thereto; 

(c) Practitioner becomes the subject of any suit, action or other legal 

proceeding arising out of Practitioner’s professional services; 

(d) Practitioner is required to pay damages or any other amount in any 

malpractice action by way of judgment or settlement; 

(e) Practitioner becomes the subject of any disciplinary proceeding or action 

before any state’s medical board or similar agency responsible for professional standards or 

behavior; 

(f) Practitioner becomes incapacitated or disabled from performing Director 

Services, or voluntarily or involuntarily retires from the practice of medicine; 

(g) Practitioner’s license to practice medicine in the State of California is 

restricted, suspended or terminated, regardless of the availability of civil or administrative 

hearing rights or judicial review with respect thereto; 

(h) 

Practitioner is charged with or convicted of a criminal offense; 

(i) any act of nature or any other event occurs which has a material adverse 

effect on Practitioner’s ability to provide Director Services; 

(j) Practitioner is debarred, suspended, excluded or otherwise ineligible to 

participate in any federal or state health care program; 

(k) any termination, non-renewal, cancellation or reduction in coverage of any 

insurance policy required to be maintained by Practitioner under this Agreement; or 

Agreement. 

(l) 

Practitioner fails or is otherwise unable to comply with any term of this 

Deleted: 12-27-07 

Revised 3-11-2010 4 

ADD C-6

ARTICLE II. 

COMPENSATION 

2.1 Compensation. In exchange for Practitioner’s provision of Director Services, 

Hospital shall compensate Practitioner in accordance with the terms of Exhibit 2.1. Practitioner 

shall not be paid until he/she has complied with Section 1.5 (Time Reports). 

2.2 IRS Form W-9. Upon execution of this Agreement, Practitioner shall furnish a 

completed and executed copy of IRS Form W-9 which identifies Practitioner’s taxpayer 

identification number. 

ARTICLE III. 

INSURANCE AND INDEMNITY 

3.1 Malpractice Liability Insurance. Practitioner shall obtain and continuously 

maintain professional malpractice liability insurance coverage, issued by an insurance company 

licensed or otherwise qualified to issue professional liability insurance policies or coverage in the 

State of California, and acceptable to Hospital, in the amount of at least One Million Dollars 

($1,000,000) per occurrence or claim and Three Million Dollars ($3,000,000) in the annual 

aggregate for the acts and omissions of Practitioner. Such coverage shall provide for a date of 

placement preceding or coinciding with the Effective Date of this Agreement. 

3.2 Certificate of Insurance. On or before the Effective Date, Practitioner shall 

provide Hospital with an original certificate evidencing professional malpractice liability 

insurance coverage, and shall provide Hospital with proof of continued professional malpractice 

liability insurance coverage on an annual basis or as periodically requested by Hospital. Hospital 

shall be listed an additional endorsed insured on Certificate of Insurance. Practitioner shall 

provide Hospital with no less than thirty (30) calendar days’ prior written notice of cancellation 

or any material change in such professional malpractice liability insurance coverage. 

3.3 Tail Coverage. If Practitioner’s professional malpractice liability insurance is 

provided on a claims-made basis, upon the expiration or termination of this Agreement for any 

reason, Practitioner shall continuously maintain such insurance or purchase from an insurance 

company licensed or otherwise qualified to issue professional liability insurance policies or 

coverage in the State of California, and acceptable to Hospital, extended reporting period (i.e., 

“tail”) coverage for the longest extended reporting period then available to ensure that insurance 

coverage in the amount set forth in Section 3.1 of this Agreement is maintained for claims which 

arise from professional services provided by Practitioner during the term of this Agreement. 

This Section shall survive the expiration or termination for any reason of this Agreement. 

3.4 Indemnification. 

(a) Indemnification by Practitioner. Practitioner shall indemnify, defend and 

hold harmless Hospital against: (i) any and all liability arising out of Practitioner’s failure to 

comply with the terms of this Agreement, and any injury, loss, claims, or damages arising from 

the negligent operations, acts, or omissions of Practitioner or Practitioner’s employees or agents 

relating to or arising out of Director Services or this Agreement; and (ii) any and all costs and 

Deleted: ( 

Deleted: ). 

Deleted: [Option A:] 

[ 

Formatted: Bullets and Numbering 

Deleted: 12-27-07 

Revised 3-11-2010 5 

ADD C-7

expenses, including reasonable legal expenses, incurred by or on behalf of Hospital in 

connection with the defense of such claims. 

(b) Indemnification by Hospital. To the extent allowable under law, Hospital 

shall indemnify, defend and hold harmless Practitioner against: (i) any and all liability arising 

out of Hospital’s failure to comply with the terms of this Agreement, and any injury, loss, claims, 

or damages arising from the negligent operations, acts, or omissions of Hospital or its employees 

or agents relating to or arising out of this Agreement; and (ii) any and all costs and expenses, 

including reasonable legal expenses, incurred by or on behalf of Practitioner in connection with 

the defense of such claims. 

3.5 Cooperation. 

(a) The Parties recognize that, during the term of this Agreement and for an 

undetermined time period thereafter, certain risk management issues, legal issues, claims or 

actions may arise that involve or could potentially involve the Parties and their respective 

employees and agents. The Parties further recognize the importance of cooperating with each 

other in good faith when such issues, claims or actions arise, to the extent such cooperation does 

not violate any applicable laws, cause the breach of any duties created by any policies of 

insurance or programs of self-insurance, or otherwise compromise the confidentiality of 

communications or information regarding the issues, claims or actions. As such, the Parties 

hereby agree to cooperate in good faith, using their best efforts, to address such risk management 

and legal issues, claims, or actions. 

(b) The Parties further agree that if a controversy, dispute, claim, action or 

lawsuit (each, an “Action”) arises with a third party wherein both the Parties are included as 

defendants, each Party shall promptly disclose to the other Party in writing the existence and 

continuing status of the Action and any negotiations relating thereto. Each Party shall make 

every reasonable attempt to include the other Party in any settlement offer or negotiations. In the 

event the other Party is not included in the settlement, the settling Party shall immediately 

disclose to the other Party in writing the acceptance of any settlement and terms relating thereto, 

if allowed by the settlement agreement. 

Deleted: 

Deleted: ] 

Deleted: [Option B:] 

3.4 [Hold Harmless. Each Party shall 

be responsible for its own acts and 

omissions and the acts and omissions of 

its employees and agents; neither Party 

shall be responsible for the acts and 

omissions of the other Party or the other 

Party’s employees and agents in carrying 

out this Agreement. Neither Party shall 

be liable for any judgment, settlement, 

award, fine or otherwise, which arises out 

of the acts and omissions of such other 

Party, or its employees and agents, under 

this Agreement. To the extent either 

Party utilizes its own equipment, 

products, or other personal property in the 

performance of its obligations under this 

Agreement, such Party shall ensure that 

such equipment, product, or other 

personal property is suitable and fit for 

the purpose intended by such Party, free 

from defects which may damage the other 

Party, and otherwise operates in 

accordance with applicable government 

standards and safety regulations.] 


3.6 Survival of Obligations. The Parties’ obligations under this Article III shall 

survive the expiration or termination for any reason of this Agreement. 

ARTICLE IV. 

RELATIONSHIP BETWEEN THE PARTIES 

4.1 Independent Contractor. Practitioner is and shall at all times be an independent 

contractor with respect to Hospital in meeting Practitioner’s responsibilities under this 

Agreement. Nothing in this Agreement is intended nor shall be construed to create a partnership, 

employer-employee or joint venture relationship between Hospital and Practitioner. 

4.2 Limitation on Control. Hospital shall neither have nor exercise any control or 

direction over Practitioner’s professional medical judgment or the methods by which Practitioner 

performs professional medical services; provided, however, that Practitioner shall be subject to 

Deleted: 12-27-07 

Revised 3-11-2010 6 

ADD C-8

and shall at all times comply with the Protocols and the bylaws, guidelines, policies and rules 

applicable to other members of the Medical Staff. 

4.3 Practice of Medicine. Practitioner and Hospital acknowledge that Hospital is 

neither authorized nor qualified to engage in any activity which may be construed or deemed to 

constitute the practice of medicine. To the extent that any act or service required of, or reserved 

to, Hospital in this Agreement is construed or deemed to constitute the practice of medicine, the 

performance of such act or service by Hospital shall be deemed waived or unenforceable, unless 

this Agreement can be amended to comply with the law, in which case the Parties shall make 

such amendment. 

4.4 No Benefit Contributions. Hospital shall have no obligation under this 

Agreement to compensate or pay applicable taxes for, or provide employee benefits of any kind 

(including contributions to government mandated, employment-related insurance and similar 

programs) to or on behalf of, Practitioner or any other person employed or retained by 

Practitioner. Notwithstanding the foregoing, if Hospital determines or is advised that it is 

required by law to compensate or pay applicable taxes for, or provide employee benefits of any 

kind (including contributions to government mandated, employment-related insurance and 

similar programs) to or on behalf of, Practitioner or any other person employed or retained by 

Practitioner, Practitioner shall reimburse Hospital for any such expenditure within thirty (30) 

calendar days after being notified of such expenditure. 

4.5 Non-Solicitation. During the term of this Agreement and for a period of one (1) 

year thereafter, Practitioner shall not solicit for employment or actually employ any employee of 

Hospital, or interfere with any relationship, contractual or otherwise, between Hospital and any 

of its employees. 

4.6 Referrals. Practitioner shall be entitled to refer patients to any hospital or other 

health care facility or provider deemed by Practitioner best qualified to deliver medical services 

to any particular patient; provided, however, that Practitioner shall not refer any Hospital patient 

to any provider of health care services which Practitioner knows or should have known is 

excluded or suspended from participation in, or sanctioned by, any state or federal health care 

program. No term of this Agreement shall be construed as requiring or inducing Practitioner to 

refer patients to Hospital. Practitioner’s rights under this Agreement shall not be dependent in 

any way on the referral of patients or business to Hospital by Practitioner. 

4.7 Physician Compensation Arrangements. Practitioner represents and warrants 

to Hospital that the compensation paid or to be paid by Practitioner to any physician who is 

employed or contracted with Practitioner is and will at all times be fair market value for services 

and items actually provided by such physician, not taking into account the value or volume of 

referrals or other business generated by such physician for Hospital or any Affiliate. Practitioner 

further represents and warrants to Hospital that Practitioner has and will at all times maintain a 

written agreement with each physician receiving compensation from Practitioner. 

4.8 No Competing Services. During the term of this Agreement, Practitioner shall 

not own any interest in, manage, operate, or provide any administrative, consulting, or other 

items or director services to or on behalf of, any person or entity (whether as director, officer, 

Deleted: (as defined in Section 

[5.4/5.5]) 

Deleted: [ 

Deleted: 12-27-07 

Revised 3-11-2010 7 

ADD C-9

employee, partner, shareholder, member, agent, representative, security holder, consultant or 

otherwise), that furnishes or intends to furnish any items or services competitive with those 

furnished by Hospital or its Affiliates, without the prior written consent of Hospital. 

Notwithstanding the foregoing, nothing in this Section shall prohibit Practitioner from owning 

securities in any publicly traded company that furnishes services furnished by Hospital or its 

Affiliates. 

Deleted: ] 

ARTICLE V. 

TERM AND TERMINATION 

5.1 Term. This Agreement shall become effective on _______________, 20__ (the 

“Effective Date”), and shall continue until _______________, 20__ (the “Expiration Date”), 

subject to the termination provisions of this Agreement. 

5.2 Termination by Hospital. Hospital shall have the right to terminate this 

Agreement immediately upon the occurrence of any one or more of the following events: 

(a) breach of this Agreement by Practitioner where the breach is not cured 

within thirty (30) calendar days after Hospital gives written notice of the breach to Practitioner; 

(b) 

death or permanent disability of Practitioner; 

Deleted: [On the Expiration Date[, and 

on each of the following _________ 

(___) annual anniversary dates of this 

Agreement thereafter], this Agreement 

shall automatically renew for an 

additional one (1) year term, unless and 

until either Party gives the other Party 

written notice of its intention not to renew 

this Agreement at least thirty (30) 

calendar days prior to the expiration of 

the immediately preceding one (1) year 

term.] 

(c) 

Practitioner’s voluntary retirement from the practice of medicine; 

(d) neglect of professional duty by Practitioner in a manner that violates 

Hospital’s policies, rules or regulations or the Protocols; 

(e) Practitioner’s clinical privileges at any hospital are suspended, restricted, 

revoked or voluntarily relinquished, or Practitioner’s medical staff membership at any hospital is 

suspended or terminated, for reasons relating to quality of care, regardless of the availability of 

civil or administrative hearing rights or judicial review with respect thereto; 

(f) Practitioner’s license to practice medicine in the State of California is 

restricted, suspended or terminated, regardless of the availability of civil or administrative 

hearing rights or judicial review with respect thereto; 

(g) except as provided in Section 1.6, Practitioner at any time during the term 

of the Agreement for any reason is not a member in good standing in the “active staff” category 

of the Medical Staff or does not hold all clinical privileges at Hospital necessary for 

Practitioner’s performance of Director Services; 

(h) 

Practitioner is charged with or convicted of a criminal offense; 

(i) Practitioner’s performance of Director Services, in the sole determination 

of Hospital, jeopardizes the mental or physical health or well-being of patients of Hospital; 

(j) Practitioner is debarred, suspended, excluded or otherwise ineligible to 

participate in any federal or state health care program; 

Deleted: 12-27-07 

Revised 3-11-2010 8 

ADD C-10

(k) 

(l) 

(m) 

for any reason. 

Practitioner acts in a manner which violates the Bylaws; 

breach of any HIPAA Obligation (as defined in Exhibit 6.5); or 

Practitioner is rendered unable to comply with the terms of this Agreement 

Deleted: , or causes another person to 

act, 

Deleted: conflicts with or 

Deleted: Code 

5.3 Termination without Cause. Either Party may terminate this Agreement 

without cause, expense or penalty, effective _______ (__) days after written notice of 

termination is given to the other Party. If this Agreement is terminated prior to the date that is 

twelve (12) months from the Effective Date (the “One Year Anniversary”), the Parties shall 

not, at any time prior to the One Year Anniversary, enter into any other agreement or 

arrangement for the provision of Director Services that modifies, changes, or alters in any way 

the provisions of this Agreement. The foregoing sentence shall survive termination of this 

Agreement pursuant to this Section. 

Deleted: [ 

Deleted: ] 

5.4 Termination by Practitioner. Practitioner shall have the right to terminate this 

Agreement upon breach of this Agreement by Hospital where the breach is not cured within 

thirty (30) calendar days after Practitioner gives written notice of the breach to Hospital. 

5.5 Termination or Modification in the Event of Government Action. 

(a) In the event of any Government Action (as defined below), the Parties 

shall, within ten (10) days after one Party gives written notification of such Government Action 

to the other Party, meet and confer and negotiate in good faith to attempt to amend this 

Agreement in order to comply with the Government Action. 

(b) If the Parties, after good faith negotiations that shall not exceed thirty (30) 

days, are unable to mutually agree upon the amendments necessary to comply with the 

Government Action, or, alternatively, if either Party determines in good faith that compliance 

with the Government Action is impossible or infeasible, either Party may terminate this 

Agreement effective ten (10) days after a written notice of termination is given to the other Party. 

(c) For the purposes of this Section, “Government Action” shall mean any 

legislation, statute, law, regulation, rule or procedure passed, adopted or implemented by any 

federal, state or local government or legislative body or any private agency, or any decision, 

finding, interpretation or action by any governmental or private agency, court or other third party 

which, in the opinion of counsel to either Party, as a result or consequence, in whole or in part, of 

the arrangement between the Parties set forth in this Agreement, if or when implemented, could 

reasonably be expected to result in or present a material risk of any one or more of the following: 

(i) 

(ii) 

revocation or threat of revocation of the status of any license, 

certification or accreditation granted to Hospital or any Affiliate 

(as defined in Section 5.5(d)); 

revocation or threat of revocation of the federal, state or local taxexempt 

status of Hospital, or any Affiliate, or their respective taxexempt 

financial obligations; 

Deleted: [ 

Deleted: 4/ 

Deleted: .5] 

Deleted: 12-27-07 

Revised 3-11-2010 9 

ADD C-11

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

prohibit or restrict the ability of Hospital or any Affiliate to issue 

tax-exempt bonds, certificates of participation or other tax-exempt 

financial obligations; 

prevent Practitioner from being able to access and use the facilities 

of Hospital or any Affiliate of Hospital; 

violation of or threat of prosecution under 42 U.S.C. Section 

1320a-7b(b) (commonly referred to as the “Anti-Kickback law”), 

42 U.S.C. Section 1395nn (commonly referred to as the “Stark 

law”) or any comparable state law governing kickbacks, bribes, 

rebates or patient referrals if Practitioner referred patients to 

Hospital or any Affiliate; 

violation by Hospital of, or threat of prosecution of Hospital under, 

any law, regulation, rule or procedure applicable to Hospital; 

prohibit Practitioner, Hospital or any Affiliate from submitting 

claims or materially reducing the reimbursement received by 

Hospital or any Affiliate for services provided to patients referred 

by Practitioner; or 

(viii) subject Hospital, Practitioner, any Affiliate, or any of their 

respective officers, directors, employees or agents, to civil action 

or criminal prosecution by any governmental authority or other 

person or entity or the imposition of any sanction (including any 

excise tax penalty under Internal Revenue Code Section 4958), on 

the basis of their approval of or participation in this Agreement or 

performing their respective obligations under this Agreement. 

(d) For the purposes of this Agreement, “Affiliate” shall mean any entity 

which, directly or indirectly, controls, is controlled by, or is under common control with 

Hospital. 

5.6 Effect of Termination or Expiration. Upon any expiration or termination for 

any reason of this Agreement: 

(a) all rights and obligations of the Parties shall cease except (i) those rights 

and obligations that have accrued and remain unsatisfied prior to the expiration or termination 

for any reason of this Agreement, and (ii) those rights and obligations which expressly survive 

the expiration or termination for any reason of this Agreement; 

(b) upon Hospital’s request, Practitioner shall immediately vacate the 

[Department/Program] premises, removing any and all of Practitioner’s personal property, and 

Hospital may remove and store, at Practitioner’s expense, any personal property that Practitioner 

has not so removed; 

Deleted: 12-27-07 

Revised 3-11-2010 10 

ADD C-12

(c) Practitioner shall immediately return to Hospital all of Hospital’s property, 

including Hospital’s equipment, supplies, furniture, furnishings and patient records, in 

Practitioner’s possession or under Practitioner’s control; and 

(d) Practitioner shall not do anything or cause any other person to do anything 

that interferes with Hospital’s efforts to engage any other person or entity for the provision of 

Director Services, or interferes in any way with any relationship between Hospital and any other 

person or entity who may be engaged to provide Director Services to Hospital. 

(e) The expiration or termination for any reason of this Agreement shall not 

entitle Practitioner to the right to a “fair hearing” or any other similar rights or procedures more 

particularly set forth in the Medical Staff Bylaws. 

ARTICLE VI. 

GENERAL PROVISIONS 

6.1 Amendment. This Agreement may be modified or amended only by mutual 

written agreement of the Parties. Any such modification or amendment must be in writing, 

dated, signed by the Parties and attached to this Agreement. 

6.2 Assignment. Practitioner may not assign any of Practitioner’s rights, interests, 

duties, or obligations under this Agreement without Hospital’s prior written consent, which 

consent may be given or withheld in Hospital’s sole discretion. Any attempted or purported 

assignment by Practitioner in violation of this Section shall be void. Hospital may, in its sole 

discretion, assign any or all of its rights, interests, duties, or obligations hereunder to any person 

or entity without the prior written consent of Practitioner. Subject to the foregoing, this 

Agreement shall be binding on and shall inure to the benefit of the Parties and their respective 

heirs, successors, assigns and representatives. 

6.3 Attorneys’ Fees. If either Party brings an action for any relief or collection 

against the other Party, declaratory or otherwise, arising out of the arrangement described in this 

Agreement, the losing Party shall pay to the prevailing Party a reasonable sum for attorneys’ fees 

and costs actually incurred in bringing such action, including without limitation fees incurred in 

arbitration, at trial, on appeal and on any review therefrom, all of which shall be deemed to have 

accrued upon the commencement of such action and shall be paid whether or not such action is 

prosecuted to judgment, provided, however, that the fees are deemed reasonable and appropriate 

by a court of competent jurisdiction in San Diego County, California. Any judgment or order 

entered in such action shall contain a specific provision providing for the recovery of attorneys’ 

fees and costs incurred in enforcing such judgment. For the purpose of this Section, attorneys’ 

fees shall include fees incurred in connection with discovery, post judgment motions, contempt 

proceedings, garnishment and levy. 

6.4 Choice of Law. This Agreement shall be construed in accordance with and 

governed by the internal laws of the State of California, except choice of law rules that would 

require the application of the laws of any other jurisdiction. 

6.5 Compliance with HIPAA and HITECH. Practitioner shall take all reasonable 

steps to protect Protected Health Information (“PHI”) provided to it by Hospital in a manner Deleted: 12-27-07 

Revised 3-11-2010 11 

ADD C-13

such that the Security and Privacy of such PHI will be maintained and appropriate safeguards 

will be used to prevent unauthorized or improper use or disclosure of the PHI. Practitioner shall 

comply with the HIPAA Obligations specifically defined and set forth in Exhibit 6.5. The 

HIPAA Obligations shall survive the expiration or termination for any reason of this Agreement. 

6.6 Compliance with Laws. Practitioner shall comply with all applicable laws, 

ordinances, codes and regulations of federal, state and local governments, including without 

limitation laws that require Practitioner to disclose any economic interest or relationship with 

Hospital, and the policies, standards, requirements, guidelines and recommendations of the Joint 

Commission. 

Deleted: as 

Deleted: on Accreditation of 

Healthcare Organizations (“JCAHO”). 

6.7 Compliance with Medicare Rules. To the extent required by law or regulation, 

Practitioner shall make available, upon written request from Hospital, the Secretary of Health 

and Human Services, the Comptroller General of the United States, or any duly authorized agent 

or representative of the foregoing, a copy of this Agreement and Practitioner’s books, documents 

and records to the extent necessary to certify the nature and extent of Hospital’s costs for 

services provided by Practitioner. Practitioner shall preserve and make available such books, 

documents and records for a period which is the longer of ten (10) years after the end of the term 

of this Agreement or the length of time required by state or federal law. If Practitioner is 

requested to disclose books, documents or records pursuant to this Section for any purpose, 

Practitioner shall notify Hospital of the nature and scope of such request, and Practitioner shall 

make available, upon written request of Hospital, all such books, documents or records. 

Practitioner shall indemnify and hold harmless Hospital if any amount of reimbursement is 

denied or disallowed because of Practitioner’s failure to comply with the obligations set forth in 

this Section. Such indemnity shall include, but not be limited to, the amount of reimbursement 

denied, plus any interest, penalties and legal costs. 

6.8 Confidentiality. Neither Party shall disclose any of the terms of this Agreement 

to any person or entity, other than its attorneys and accountants, without the prior written consent 

of the other Party, unless and only to the extent such disclosure is required by law or specifically 

allowed by this Agreement. 

6.9 Counterparts, Electronic and Facsimile Signatures. This Agreement may be 

executed in one or more counterparts, each of which shall be deemed to be an original, but all of 

which together shall constitute one and the same instrument. In addition, both parties expressly 

agree that to the extent permitted by law, this Agreement may be executed and become effective 

by affixing either an electronic or handwritten signature in the appropriate location and 

transmitting such document to the other party using traditional, electronic, or facsimile methods 

of transmission. Such electronic or facsimile transmitted signature shall be deemed and carry the 

legal significance of an original signature. 


6.10 Dispute Resolution. In the event of any controversy or dispute related to or 

arising out of this Agreement, the Parties agree to promptly, and in no case longer than fifteen 

(15) business days, meet and confer in good faith to attempt to resolve the controversy or dispute 

without an adversary proceeding. 

Deleted: 12-27-07 

Revised 3-11-2010 12 

ADD C-14

(a) If the Parties are unable to resolve the controversy or dispute to the mutual 

satisfaction of both parties within fifteen (15) business days of the meet and confer between the 

Parties, the Parties agree to first, in good faith, settle the dispute by mediation administered by 

the American Arbitration Association (“AAA”) under its Commercial Mediation Procedures, 

before resorting to arbitration, litigation, or some other dispute resolution procedure. The Parties 

agree that that there shall be one mediator, who shall be experienced in mediation and 

knowledgeable regarding the health care industry. The mediation shall be held in San Diego 

County, California. If either Party has a substantial need for information and documents in 

possession of the other Party in order to prepare for the mediation, the Parties shall, with the help 

of the mediator if needed, attempt to agree upon the extent of and schedule for the expeditious 

exchange of such information. Each Party shall bear its own costs and expenses of the 

mediation, including attorneys’ fees, except that the fees and costs of the mediator and the AAA 

shall be borne equally by the Parties. The decision of the mediator shall not be legally binding 

on either Party. 

(b) If the Parties are unable to resolve any and all controversies or disputes 

arising out of, relating to or in connection with this Agreement after mediation in accordance 

with this Section 6.10, either Party may commence litigation to resolve the dispute, with venue 

and jurisdiction exclusively in a California state court sitting in San Diego County, California. 

6.11 Entire Agreement. This Agreement is the entire understanding and agreement of 

the Parties regarding its subject matter, and supersedes any prior oral or written agreements, 

representations, understandings or discussions between the Parties. No other understanding 

between the Parties shall be binding on them unless set forth in a writing signed by the Parties. 

6.12 Exhibits. The attached exhibits, together with all documents incorporated by 

reference in the exhibits, form an integral part of this Agreement and are incorporated into this 

Agreement wherever reference is made to them to the same extent as if they were set out in full 

at the point at which such reference is made. 

6.13 Force Majeure. Neither Party shall be liable for nonperformance or defective or 

late performance of any of its obligations under this Agreement to the extent and for such periods 

of time as such nonperformance, defective performance or late performance is due to reasons 

outside such Party’s control, including acts of God, war (declared or undeclared), action of any 

governmental authority, riots, revolutions, fire, floods, explosions, sabotage, nuclear incidents, 

lightning, weather, earthquakes, storms, sinkholes, epidemics, or strikes (or similar 

nonperformance or defective performance or late performance of employees, suppliers or 

subcontractors). 

Deleted: In the event of any 

controversy or dispute related to or 

arising out of this Agreement, the Parties 

agree to meet and confer in good faith to 

attempt to resolve the controversy or 

dispute without an adversary proceeding. 

If the controversy or dispute is not 

resolved to the mutual satisfaction of the 

Parties within five (5) business days of 

notice of the controversy or dispute, the 

Parties agree to waive their rights, if any, 

to a jury trial and pre-trial discovery, and 

to submit the controversy or dispute to a 

retired judge or justice pursuant to 

Section 638 et seq. of the California Code 

of Civil Procedure, or any successor 

provision, for resolution in accordance 

with Chapter 6 (References and Trials by 

Referees), of Title 8 of Part 2 of the 

California Code of Civil Procedure, or 

any successor chapter. The Parties agree 

that the only proper venue for the 

submission of claims is the County of San 

Diego, California, and that the hearing 

before the referee shall be concluded 

within nine (9) months of the filing and 

service of the complaint. The Parties 

reserve the right to contest the referee’s 

decision and to appeal from any award or 

order of any court. 

6.14 Headings. The headings in this Agreement are intended solely for convenience 

of reference and shall be given no effect in the construction or interpretation of this Agreement. 

6.15 Litigation Consultation. Practitioner shall not accept consulting assignments or 

otherwise contract, agree, or enter into any arrangement to provide expert testimony or 

evaluation on behalf of a plaintiff in connection with any claim against Hospital or any Affiliate 

named, or expected to be named as a defendant. Practitioner shall not accept similar consulting 

assignments if (a) the defendants or anticipated defendants include a member of the medical staff 

Deleted: 12-27-07 

Revised 3-11-2010 13 

ADD C-15

of Hospital or any Affiliate, and (b) the matter relates to events that occurred at Hospital or any 

Affiliate; provided, however, the provisions of this Section shall not apply to situations in which 

Practitioner served as a treating physician. 

6.16 Meaning of Certain Words. Wherever the context may require, any pronouns 

used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and 

the singular form of nouns shall include the plural and vice versa. Unless otherwise specified, 

“days” shall be considered “calendar days” and “months” shall be considered “calendar months” 

in this Agreement and its exhibits and attachments. 

6.17 No Conflicting Obligations. Practitioner represents and warrants that the 

execution and delivery of this Agreement and the performance of his or her respective 

obligations hereunder do not and will not: (a) present a conflict of interest or materially interfere 

with the performance of his or her respective duties under any other agreement or arrangement; 

or (b) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an 

event which, with notice and/or lapse of time, would constitute a default) under, terminate, 

accelerate the performance required by, or result in a right of termination or acceleration under 

any of the terms, conditions or provisions of any other agreement, indebtedness, note, bond, 

indenture, security or pledge agreement, license, franchise, permit, or other instrument or 

obligation. Practitioner shall immediately inform Hospital of any other agreements to which 

Practitioner is a party that may present a conflict of interest or materially interfere with 

performance of his or her duties under this Agreement. 

6.18 Non-Discrimination. Practitioner shall not differentiate or discriminate in the 

provision of medical services on the basis of race, color, national origin, ancestry, religion, sex, 

marital status, sexual orientation, age, medical condition, medical history, genetics, evidence of 

insurability, or claims history, in violation of any applicable state, federal or local law or 

regulation, or Hospital Rules, including, without limitation, the Age Discrimination Act of 1975, 

the Americans with Disabilities Act and all regulations issued pursuant thereto and as may be 

amended from time to time. Practitioner and Hospital shall be in full compliance with 

Section 504 of the Rehabilitation Act of 1973, Titles VI and VII of the 1964 Civil Rights Act, 

and all regulations issued pursuant thereto and as may be amended from time to time. 

6.19 Notices. All notices or communications required or permitted under this 

Agreement shall be given in writing and delivered personally or sent by United States registered 

or certified mail with postage prepaid and return receipt requested or by overnight delivery 

service (e.g., Federal Express, DHL). Notice shall be deemed given when sent, if sent as 

specified in this Section, or otherwise deemed given when received. In each case, notice shall be 

delivered or sent to: 

Deleted: 12-27-07 

Revised 3-11-2010 14 

ADD C-16

If to Hospital, addressed to: 



15255 innovation drive 

San Diego, CA 92128 

Attn: General Counsel 

If to Practitioner, addressed to: 

6.20 Participation in Federal and State Programs. Practitioner hereby represents 

that Practitioner is not debarred, suspended, excluded or otherwise ineligible to participate in any 

federal or state health care program. 

6.21 Representations. Each Party represents with respect to itself that: (a) no 

representation or promise not expressly contained in this Agreement has been made by any other 

Party or by any Parties’ agents, employees, representatives or attorneys; (b) this Agreement is 

not being entered into on the basis of, or in reliance on, any promise or representation, expressed 

or implied, other than such as are set forth expressly in this Agreement; and (c) Party has been 

represented by legal counsel of Party’s own choice or has elected not to be represented by legal 

counsel in this matter. 

6.22 Severability. Except as otherwise provided in Section 5.5, if any provision of 

this Agreement is determined to be illegal or unenforceable, that provision shall be severed from 

this Agreement, and such severance shall have no effect upon the enforceability of the remainder 

of this Agreement. 

Deleted: [ 

Deleted: 4/ 

Deleted: .5]) 

6.23 No Third Party Beneficiary Rights. The Parties do not intend to confer and this 

Agreement shall not be construed to confer any rights or benefits to any person, firm, group, 

corporation or entity other than the Parties. 

6.24 Trade Secrets. During the term of this Agreement, Practitioner will have access 

to and become acquainted with confidential information and trade secrets of Hospital, including 

information and data relating to payor contracts and accounts, clients, patients, patient groups, 

patient lists, billing practices and procedures, business techniques and methods, strategic plans, 

operations and related data (collectively, “Trade Secrets”). All Trade Secrets are the property 

of Hospital and used in the course of Hospital’s business, and shall be proprietary information 

protected under the Uniform Trade Secrets Act and the California Public Records Act. 

Practitioner shall not disclose to any person or entity, directly or indirectly, either during the term 

of this Agreement or at any time thereafter, any Trade Secrets, or use any Trade Secrets other 

than in the course of providing Director Services under this Agreement. All documents that 

Practitioner prepares, or Trade Secrets that might be given to Practitioner in the course of 

Deleted: 12-27-07 

Revised 3-11-2010 15 

ADD C-17

providing Director Services under this Agreement, are the exclusive property of Hospital, and, 

without the prior written consent of Hospital, shall not be removed from Hospital’s premises. 

6.25 Waiver. No delay or failure to require performance of any provision of this 

Agreement shall constitute a waiver of that provision as to that or any other instance. Any 

waiver granted by a Party must be in writing to be effective, and shall apply solely to the specific 

instance expressly stated. 

6.26 Waiver of Injunctive or Similar Relief. Upon any breach or termination of this 

Agreement by Hospital that is determined to be improper by a court or by an arbitrator, 

Practitioner shall accept monetary damages, if any, as full and complete relief, to the exclusion 

of any specific performance, or injunctive or similar equitable relief. 

The Parties have executed this Agreement on the date first above written, and signify 

their agreement with duly authorized signatures. 

HOSPITAL 


Deleted: [signature page follows] 

Page Break 

Deleted: System, a local health care 

district organized under Division 23 of 

the California Health and Safety Code 

and doing business as 

_____________________ 

By: Robert A. Hemker 

Its: Chief Financial Officer 

Date: _______________________________ 

PRACTITIONER 

_____________________________________ 

Deleted: , [M.D./D.O.], an individual 

Printed Name: _________________________ 

Date: ________________________________ 

Deleted: 12-27-07 

Revised 3-11-2010 16 

ADD C-18

Exhibit 1.1 

DIRECTOR SERVICES 

Practitioner shall: 

1. provide general administration of the day-to-day operations of the 

[Department/Program]; 

2. implement the Hospital’s policies and procedures regarding the 


3. ensure physician coverage of the [Department/Program]; 

4. schedule, coordinate and supervise the provision of medical and ancillary services 

within the [Department/Program]; 

5. ensure the maintenance of consistently high quality service, and advise Hospital 

in the development and implementation of an appropriate quality assurance program with respect 

to the [Department/Program]; 

6. advise and assist in the organization and implementation of an effective utilization 

review program with respect to the [Department/Program] and related services; 

7. coordinate and consult with Hospital and medical staff regarding the efficiency 

and effectiveness of the [Department/Program], and make recommendations and analyses as 

needed for Hospital to improve services provided in the [Department/Program] and reduce costs; 

8. advise Hospital regarding budget, equipment, building, supplies, and other items 

for the proper and efficient operation of the [Department/Program]; 

9. develop, review, and provide training programs for Medical Staff and Hospital 

personnel; 

10. ensure that the [Department/Program] is operated in accordance with all 

requirements of The Joint Commission, all applicable licensing requirements, and all other 

relevant requirements promulgated by any federal, state or local agency; 

Deleted: the JCAHO 

11. prepare such reports and records as may be required by this Agreement, Hospital 

or the Medical Staff; 

12. participate in Hospital and Medical Staff committees upon request by Hospital; 

13. participate in continuing medical education, research and teaching activities upon 

request by Hospital; 

Deleted: SD\614498.1 

Exhibit 1.5-1 

ADD C-19

14. participate in development and presentation of programs related to the marketing 

of the [Department/Program]’s services and enhancing Hospital/community relations; provided, 

however, that Practitioner shall not be required to participate in any advertising or commercials 

related to the [Department/Program]’s services; 

15. advise and assist in the development of protocols and policies for the 


16. upon request by Hospital, be available at all times to respond/consult in the event 

of urgent or emergency situations; 

17. prepare a budget for the [Department/Program]; 

18. supervise maintenance of financial, patient and personnel records for the 


19. ensure and supervise compliance by Medical Staff and employees of the 

[Department/Program] with Hospital and Medical Staff rules and bylaws; 

20. [serve on Hospital’s emergency room on-call panel, as reasonably requested by 

Hospital;] 

21. [participate in utilization review programs, as reasonably requested by Hospital;] 

22. [participate in risk management and quality assurance programs, as reasonably 

requested by Hospital;] 

23. [accept third party insured patients and referrals of patients which are made by 

members of Medical Staff, subject only to the limitations of scheduling and Practitioner’s 

professional qualifications;] 

24. [work with Hospital to monitor and review the clinical performance of health care 

professionals who provide services to Hospital’s patients. Practitioner shall assist in monitoring 

the performance of those professionals who are not meeting Hospital quality and/or performance 

standards, and in disciplining any professionals who continue poor performance, recognizing that 

the Hospital Board of Directors is ultimately responsible for maintaining the standards of care 

provided to patients;] 

25. [assist Hospital management with preparation for, and conduct of, any inspections 

and on-site surveys of Hospital or the [Department/Program] conducted by governmental 

agencies, accrediting organizations, or payors contracting with Hospital[; and]] 

26. [additional services to be provided by Practitioner]. 


Exhibit 1.5-2 

ADD C-20

Exhibit 1.5 

MONTHLY TIME REPORT 

See Attached. 

Deleted: 

 

Exhibit 1.1 (a) 

 

Medical Director, Robotic Surgery 

Position Description 

 

Practitioner will provide physician 

leadership for the establishment of a high 

quality robotic surgery program at 

Palomar Medical Center. 

Responsibilities include: 

Research best practices and protocols 

for robotic surgery programs to share that 

knowledge with the medical and clinical 

staffs at Palomar Medical Center. Utilize 

those best practices in the formation of all 

aspects of this new program. 

Take a leadership role in working 

with the Department of Surgery to 

establish certification and training 

requirements for physician credentialing 

to be able to perform robotic surgery at 


Take a leadership role in working 

with the appropriate medical staff 

departments to establish patient criteria 

for eligibility for robotic surgery at 


In conjunction with the medical staff 

and the PPH Quality Department, 

establish quality measures/metrics and 

benchmarks for robotic surgery. 

Establish policies and procedures for 

robotic surgery that ensure patient safety 

and adherence to best practices. 

Act as the physician liaison to work 

with the Marketing Department on 

collateral material development, 

physician outreach/marketing activities, 

journal article submissions, public 

relations activities, and employee 

awareness activities. 

Lead efforts to target physician 

awareness and referrals through such 

activities as CME and Grand Rounds at 

the hospital, set up a fast track robotic 

surgery consult program for area 

urologists and surgeons, establish an 

annual symposium within the robotic 

surgery product line, and networking with 

appropriate specialists such as urologists, 

gynecologists and surgeons. 

Work with the Physician 

Development Department to host office 

staff luncheons to introduce the program 

and access procedures to local physician 

offices. 

Work with the Managed Care 

Department to contact provider/payer 

representatives including the major IPAs 

to inform them of the new service and the 

need to establish contract rates. 

Work with the Marketing Department 

to develop content for the PPH Website 

for robotic surgery. 

Work with the Perioperative Educator 

and CNS on staff and physician ... [1] 


Exhibit 1.5-3 

ADD C-21

PRACTITIONER_________________________________________ 

Administration Time Log 

MONTH/YEAR ________________________________ 

ADMINISTRATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 

31 

Medical Direction of [Department/Program] 

Supervision/Training of Technical Staff 

Physician/Staff Inservice 

Eval/approve/implement lab procedures 

[Department/Program] Meetings 

Committee Meetings 

Schedules and Planning 

Policies/Procedures 

Budget Activities 

Quality Improvement Utilization Review 

Advisory Duties 

Liaison Activities 

[Department/Program] Development 

Maintain Accrediting Standards 

Evaluate Staff Competency 

Evaluate Quality Control Results 

Other 

TOTAL HOURS 

PRACTITIONER CERTIFIES THAT THE ABOVE ACCURATELY REPRESENTS THE HOURS PRACTITIONER DEVOTED TO 

DIRECTOR SERVICES DURING THE PERIOD OF THIS REPORT. 

______________________, [M.D./D.O.] Date 

SD\614498.1 

Exhibit 1.5-Attachment 

ADD C-22

Exhibit 2.1 

COMPENSATION 

1. Compensation. Hospital shall pay to Practitioner the amount of 

____________________ Dollars ($_________) per hour for the provision of Director Services. 

2. Timing. Hospital shall pay the compensation due for Director Services performed 

by Practitioner in the immediately preceding month within thirty (30) days after Practitioner’s 

submission of the monthly time report in accordance with Section 1.5 of this Agreement. 

Deleted: Exhibit 1.10 

CODE 

 

See Attached. 

 

Section Break (Next Page) 

Deleted: five (5) business 

Deleted: ; provided, however, that if 

Practitioner does not submit a time sheet 

within sixty (60) days of the end of the 

month during which Director Services 

were performed, Hospital shall not be 

obligated to pay Practitioner for Director 

Services performed during that month 


Exhibit 2.1-1 

ADD C-23

Exhibit 6.5 

OBLIGATIONS UNDER THE HEALTH INSURANCE PORTABILITY AND 

ACCOUNTABILITY ACT OF 1996 (“HIPAA”) 

In the performance of duties and services under this Agreement, Practitioner shall comply 

with all requirements of The Health Insurance Portability and Accountability Act of 1996 

(“HIPAA”) and its regulations, as amended from time to time, and shall comply with the 

following: 

1. Definitions. 

a. “Designated Record Set” shall have the meaning given to such term under the 

Privacy Rule (as defined below). 

b. “HIPAA Obligations” means the obligations of Practitioner as set forth in this 

Exhibit. 

c. “Privacy Rule” means the HIPAA Regulation that is codified at Title 45 of the 

Code of Federal Regulations, Parts 160 and 164, or applicable successor 

provisions, as may be amended from time to time. 

d. “Protected Health Information” means any information, whether oral or 

recorded in any form or medium that: (i) relates to the past, present or future 

physical or mental condition of an individual; the provision of health care to an 

individual; or the past, present or future payment for the provision of health care 

to an individual, and (ii) identifies the individual or with respect to which there is 

a reasonable basis to believe the information can be used to identify the 

individual, or is defined as such under the Privacy Rule. 

e. “Protected Information” means Protected Health Information provided by 

Hospital to Practitioner or created or received by Practitioner on Hospital’s 

behalf. 

f. “Required by Law” shall have the meaning given to such term under the Privacy 

Rule. 

2. Use of Protected Information. Practitioner shall not use Protected Information except 

as permitted by and for the purpose of performing Practitioner’s obligations under this 

Agreement. Practitioner shall not use Protected Information in any manner that would 

constitute a violation of the Privacy Rule if so used by Hospital. 

3. Permitted Disclosures. Practitioner shall not disclose Protected Information in any 

manner that would constitute a violation of the Privacy Rule if disclosed by Hospital, 

except that Practitioner may disclose Protected Information in a manner permitted 

pursuant to this Agreement or as Required by Law. 

Deleted: 

SD\614498.1 

Exhibit 6.5-1 

ADD C-24

4. Appropriate Safeguards. Practitioner shall implement appropriate safeguards as are 

necessary to prevent the use or disclosure of Protected Information other than as 

permitted by this Agreement. 

5. Reporting of Improper Use or Disclosure. Practitioner shall notify Hospital in writing 

of any use or disclosure of Protected Information other than as provided for by this 

Agreement and this Exhibit within two (2) days of becoming aware of such use or 

disclosure. 

6. Practitioner’s Agents. Practitioner shall ensure that any agents of Practitioner, 

including subcontractors, to whom Practitioner provides Protected Information, agree in 

writing to the same restrictions and conditions that apply to Practitioner with respect to 

such Protected Information. 

7. Access to Protected Information. Practitioner shall make Protected Information 

maintained by Practitioner or Practitioner’s agents or subcontractors in Designated 

Record Sets available to Hospital for inspection and copying within ten (10) days of a 

request by Hospital to enable Hospital to fulfill its obligations under the Privacy Rule. 

8. Amendment of Protected Health Information. Within ten (10) days of receipt from 

Hospital for an amendment of Protected Information or a record about an individual 

contained in a Designated Record Set, Practitioner or Practitioner’s agents or 

subcontractors shall make such Protected Information available to Hospital for 

amendment and incorporate any such amendment to enable Hospital to fulfill its 

obligations under the Privacy Rule. 

9. Accounting Rights. Within ten (10) days of notice by Hospital of a request for an 

accounting of disclosures of Protected Information, Practitioner and Practitioner’s agents 

or subcontractors shall provide to Hospital an accounting of disclosures sufficient to 

enable Hospital to fulfill its obligations under the Privacy Rule. As set forth and as 

limited by the Privacy Rule, Practitioner shall not provide an accounting to Hospital of 

disclosures: (i) to carry out treatment, payment or health care operations; (ii) to 

individuals of Protected Information about them; (iii) to persons involved in the 

individual’s care or other notification purposes; (iv) for national security or intelligence 

purposes; or (v) to correctional institutions or law enforcement officials. [Practitioner 

agrees to implement a process that allows for an accounting to be collected and 

maintained by Practitioner and Practitioner’s agents or subcontractors for at least 

six (6) years prior to the request, but not before the compliance date of the Privacy 

Rule.] At a minimum, such information shall include: (A) the date of disclosure; (B) the 

name of the entity or person who received Protected Information and, if known, the 

address of the entity or person; (C) a brief description of Protected Information disclosed; 

and (D) a brief statement of purpose of the disclosure that reasonably informs the 

individual of the basis for the disclosure, or copy of the individual’s authorization, or a 

copy of the written request for disclosure. 

Deleted: 

SD\614498.1 

Exhibit 6.5-2 

ADD C-25

10. Governmental Access to Records. Practitioner shall make his or her internal practices, 

books and records relating to the use and disclosure of Protected Information available to 

Hospital or, at the request of Hospital, to the Secretary of the U.S. Department of Health 

and Human Services, for purposes of determining Hospital’s compliance with the Privacy 

Rule. 

11. Retention of Protected Information. Except as provided in Sections 12 and 13 of this 

Exhibit, Practitioner and Practitioner’s agents or subcontractors shall retain all Protected 

Information throughout the term of this Agreement and shall continue to maintain the 

information required hereunder for a period of six (6) years after expiration or 

termination for any reason of this Agreement. 

12. Term of Obligations. Practitioner’s HIPAA Obligations shall commence as of the 

compliance date of the Privacy Rule, and shall terminate when all of the Protected 

Information is destroyed or returned to Hospital, or, if it is infeasible to return or destroy 

Protected Information, protections are extended to such information, in accordance with 

Section 14 of this Exhibit. 

13. Effect of Termination. Upon expiration or termination of this Agreement for any 

reason, Practitioner shall return or destroy all Protected Information that Practitioner or 

Practitioner’s agents or subcontractors still maintain in any form, and shall retain no 

copies of such Protected Information. If return or destruction is not feasible, Practitioner 

shall continue to extend the protections of this Exhibit to such information, and limit 

further use of such Protected Health Information to those purposes that make the return or 

destruction of such Protected Health Information infeasible. 

14. Amendment. The Parties agree to take such action as is necessary to amend HIPAA 

Obligations from time to time in order for Hospital to comply with the requirements of 

the Privacy Rule, HIPAA and other applicable laws relating to the security or 

confidentiality of Protected Health Information. 

15. Interpretation of Obligations. The HIPAA Obligations shall be interpreted as broadly 

as necessary to implement and comply with HIPAA and the Privacy Rule. The Parties 

acknowledge and agree that any ambiguity in the HIPAA Obligations shall be resolved in 

favor of a meaning that complies and is consistent with HIPAA and the Privacy Rule. 

Deleted: 

SD\614498.1 

Exhibit 6.5-3 

ADD C-26

Page 3: [1] Deleted pph March 11, 2010 11:24:00 AM 

Exhibit 1.1 (a) 

Medical Director, Robotic Surgery 

Position Description 

Practitioner will provide physician leadership for the establishment of a high quality robotic 

surgery program at Palomar Medical Center. Responsibilities include: 

Research best practices and protocols for robotic surgery programs to share that 

knowledge with the medical and clinical staffs at Palomar Medical Center. Utilize those 

best practices in the formation of all aspects of this new program. 

Take a leadership role in working with the Department of Surgery to establish 

certification and training requirements for physician credentialing to be able to perform 

robotic surgery at Palomar Medical Center. 

Take a leadership role in working with the appropriate medical staff departments to 

establish patient criteria for eligibility for robotic surgery at Palomar Medical Center. 

In conjunction with the medical staff and the PPH Quality Department, establish quality 

measures/metrics and benchmarks for robotic surgery. 

Establish policies and procedures for robotic surgery that ensure patient safety and 

adherence to best practices. 

Act as the physician liaison to work with the Marketing Department on collateral material 

development, physician outreach/marketing activities, journal article submissions, public 

relations activities, and employee awareness activities. 

Lead efforts to target physician awareness and referrals through such activities as CME 

and Grand Rounds at the hospital, set up a fast track robotic surgery consult program for 

area urologists and surgeons, establish an annual symposium within the robotic surgery 

product line, and networking with appropriate specialists such as urologists, 

gynecologists and surgeons. 

Work with the Physician Development Department to host office staff luncheons to 

introduce the program and access procedures to local physician offices. 

Work with the Managed Care Department to contact provider/payer representatives 

including the major IPAs to inform them of the new service and the need to establish 

contract rates. 

Work with the Marketing Department to develop content for the PPH Website for robotic 

surgery. 

Work with the Perioperative Educator and CNS on staff and physician inservices, 

education, and training. 

Collaborate with the Perioperative Director on establishing and assessing staff 

competencies. 

Section Break (Next Page) 

SD\614498.1 

Exhibit 1.1-1 

ADD C-27

ADDENDUM D 

ADD D-1

AMENDED LINE OF CREDIT AGREEMENT 


PALOMAR POMERADO HEALTH (“PPH”) 

and 

PALOMAR PHYSICIAN NETWORK, INC. (“PPN”) 

ADD D-2

TABLE OF CONTENTS 

ARTICLE I. LINE OF CREDIT……………………………………………………………… 2 

1.1 Line of Credit…………………………………………………………………. 2 

1.2 Advances……………………………………………………………………. … 2 

1.3 Use of Advances ………………………………………………………………. 2 

1.4 Request and Delivery of Advances…………………………………………….. 2 

1.5 Contingencies to PPH’s Payment of Advances 

1.6 Repayment……………………………………………………………………… 3 

1.7 Promissory Note……………………………………………………………….. .4 

ARTICLE II. PROMISSORY NOTE; SECURITY AGREEMENT; GUARANTEE………….4 

2.1 PPN’s Deliverables………………………………………………………….. … 4 

2.2 Further Cooperation………………………………………………………….. ... 4 

ARTICLE III. TERM AND TERMINATION……………………………………………..……4 

3.1 Term……………….……………………………………..……………………... 4 

3.2 Termination by PPH……………………………………………………………. 4 

3.3 Termination by PPN……………….………………………………………..…...5 

3.4 Termination or Modifaction in the Event of Government Action………….…...5 

3.5 Rights upon Termination……………………………………………….……….6 

ARTICLE IV. GENERAL PROVISIONS………………………………………………. .……6 

4.1 Independent Contractor …………………………………………………….…....6 

4.2 Compliance with HIPAA……………………………………………………..….6 

4.3 Amendment…………………………………………………………………..…..6 

4.4 Dispute Resolution…………………………………………………………..…...6 

4.5 Assignment…………………………………………………………………..…..7 

4.6 Attorneys’ Fees……………………………………………………………..……7 

4.7 Authorized Persons……………………………………………………………....7 

4.8 Choice of Law………………………………………………………………..…..7 

4.9 Compliance with Laws…………………………………………………….…….7 

4.10 Counterparts………………………………………………………………..…….7 

4.11 Entire Agreement………………………………………………………….……..7 

4.12 Exhibits…………………………………………………………………………..8 

4.13 Force Majeure…………………………………………………………………....8 

4.14 Further Assurances; Good Faith………………………………………………....8 

4.15 Indemnification…………………………………………………………………..8 

4.16 Headings…………………………………………………………………………8 

Page 

- i- 

ADD D-3

4.17 Interruption of Services………………………………………………………….8 

4.18 Notices……………………………………………………………………….…..9 

4.19 Severability………………………………………………………………...…...10 

4.20 No Third-Party Beneficiary Rights………………………………………...…...10 

4.21 Waiver………………………………………………………………………......10 

4.22 Meaning of Certain Words……………………………………………………...10 

- ii- 

ADD D-4

Exhibits 

Exhibit 1.4 – Notice of Borrowing………………………………………………………..11 

Exhibit 2.1(a) – Promissory Note………………………………………………………....13 

Attachment to Exhibit 2.1(a) – Schedule of Advances…………………………...17 

Exhibit 2.1(b) – Security Agreement……………………………………………………...18 

Attachment A to Exhibit 2.1(b) – Description of Collateral………………………26 

Attachment B to Exhibit 2.1(b) – Notice of Security Interest in Account………...27 

Exhibit 4.2 – Business Associate Agreement…..….………………………………………28 

- iii- 

ADD D-5

AMENDED LINE OF CREDIT AGREEMENT 

THIS AMENDED LINE OF CREDIT AGREEMENT (this “Agreement”) is dated as of 

April 12, 2010, (the “Effective Date”) and supersedes the original Line of Credit dated February 

1, 2010 by and between PALOMAR POMERADO HEALTH, a local health care district 

organized under the laws of the State of California (“PPH”), and Palomar Physician Network, 

Inc., a California nonprofit Public Benefit Corporation (“PPN”). PPH and PPN are each 

sometimes referred to in this Agreement as a “Party” or, collectively, as the “Parties.” 

Deleted: February 1, 2010 

RECITALS 

A. PPH, a local health care district organized under the California Local Hospital 

District Law (California Health and Safety Code § 32000 et seq.) (the “Law”), owns and 

operates healthcare facilities for the benefit of the communities within its boundaries. 

B. PPN is a Public Benefit Corporation, organized pursuant to Section 1206(1) of the 

California Health and Safety Code as a medical foundation, and operated to provide and carry 

out charitable healthcare functions by establishing, operating and maintaining multi-specialty 

medical clinics for the provision of healthcare services in the communities served by PPH. 

C. The Parties believe that it is in the best interests of the public served by PPH to 

facilitate the proper operation of PPN so that it may fulfill its duties by entering in to this 

Agreement. 

D. PPN desires to obtain from PPH certain funds, and PPH has agreed to provide 

such funds to PPN to further the public purposes for which PPH and the PPN operate, in 

accordance with the California Constitution and according to the terms and conditions set forth 

herein. 

G. The Parties hereby reference the following additional agreements to which they 

are both parties: 

(i) 

Security Agreement dated February 1, 2010, and attached hereto as Exhibit 

2.1(b); and 

(ii) Business Associate Agreement dated February 1, 2010. 

(iii) 

Line of Credit Agreement dated February 1, 2010 (the “original” Line of 

Credit) 


1 

ADD D-6

AGREEMENT 

NOW THEREFORE, in consideration of the mutual covenants and agreements 

contained herein, the parties hereto agree as follows: 

ARTICLE I. 

LINE OF CREDIT 

1.1 Line of Credit. PPH shall make available to PPN, and PPN agrees to accept 

from PPH, a line of credit, the aggregate amount of which shall not exceed One Million -Two 

Hundred Fifty Thousand Dollars ($1,250,000.00) (“Line of Credit”), subject to the terms set 

forth in Article I. The Line of Credit shall expire in its entirety on June 30, 2015 (the “Credit 

Line Expiration Date”). This expiration date does not affect PPN’s repayment obligation. 

1.2 Advances. PPH shall advance to PPN amounts requested pursuant to Section 1.4 

of this Article (each, an “Advance”, and collectively, the “Advances”), from time to time prior 

to, but not including, the Credit Line Expiration Date. The aggregate amount of all outstanding 

Advances shall not exceed the Line of Credit. Notwithstanding the foregoing, both PPH’s Chief 

Executive Officer and Chief Financial Officer and PPN’s President and Treasurer shall approve 

in writing Advance requests exceeding One Hundred Thousand Dollars ($100,000.00). 

1.3 Use of Advances. PPN shall use the Advances for the following purposes only: 

(a) Up to One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) 

may be used for the purpose of assisting PPN in normalizing cash flow related to its business. 

PPN may make withdrawals for this purpose until June 30, 2015 based upon expected realizable 

patient services and capitation revenue collections for the then current month. No additional 

draws can be made upon this portion of the Line of Credit after June 30, 2015, nor can any 

undrawn portion be re-allocated to another portion of the Line of Credit. This portion of the 

LOC shall be referred to as the A/R Line of Credit (“A/R Line of Credit”); 

(b) Up to One Hundred-Twenty-five Thousand Dollars ($125,000.00) may be 

used by PPN to cover start up business expenses. This amount may be withdrawn for the months 

of February 2010 through June 2010. This portion of the Line of Credit shall be referred to as 

the Working Capital Line of Credit (“Working Capital Line of Credit”). 

Deleted: . 

Deleted: 

1.4 Request and Delivery of Advances. When PPN desires to obtain an Advance, it 

shall deliver to PPH a notice in the form attached hereto as Exhibit 1.4 (the “Notice of 

Borrowing”) at least three (3) Business Days prior to the date on which the Advance is to be paid 

(the “Proposed Funding Date”). The Notice of Borrowing shall specify the Proposed Funding 

Date (which shall be a Business Day), the amount of the requested Advance, and certify as to the 

satisfaction of each of the conditions set forth in Exhibit 1.4. “Business Day” shall mean any 

day which is not a Saturday, Sunday or a generally observed holiday for banks in the State of 

California. 

1.5 Contingencies to PPH’s Payment of Advances. PPH’s obligation to make any 

Advances to PPN under this Agreement shall be contingent upon the following: 

2 

ADD D-7

(a) Documentation. PPN’s submission to PPH, in form and substance 

satisfactory to PPH, this Agreement, the Note (as defined in Section 2.1(a)), the Security 

Agreement (as defined in Section 2.1(b)), and such other documents and instruments as PPH 

may reasonably request, all duly executed by PPN. 

(b) Notice of Borrowing. PPN’s submission to PPH of a Notice of Borrowing 

in which PPN certifies that as of the date of the Notice of Borrowing: 

(i) all of PPN’s representations and warranties contained in this 

Agreement shall be true, correct and complete in all material respects to the same extent as 

though made on and as of that date; 

(ii) no Event of Default (as defined in Exhibit 2.1(b)) shall have 

occurred and shall continue, or shall result from, making the Advance; 

(iii) no law or regulation shall prohibit, and no order, judgment or 

decree of any court, arbitrator or governmental authority shall purport to enjoin or restrain PPH 

from making the Advance; and 

(iv) no change having a Material Adverse Effect on PPN, either 

individually or in the aggregate, shall have occurred since the Execution Date. “Material 

Adverse Effect” shall mean a material adverse effect upon PPN’s purpose, function, operation or 

status or upon PPH’s security interest in the Collateral (as defined in Exhibit 2.1(b) attached 

hereto) or the priority thereof. 

(c) Perfection. The Account described in Exhibit 2.1(b) of this Agreement 

shall have been established in a manner satisfactory to PPH, in its sole discretion, and PPH shall 

be satisfied that all steps shall have been taken necessary to create and perfect in favor of PPH a 

first priority security interest in the Account and all other Collateral described in such Exhibit 

2.1(b). 

1.6 Repayment. Repayment of the Line of Credit is as follows: 

(a) Repayment of outstanding principle on the Line of Credit will commence 

effective July 1. 2015 and shall continue during its remaining term. Repayment shall be made in 

Sixty (60) equal installments. Should the Agreement be terminated prior to its natural expiration, 

for any reason, any and all principle amounts and accrued interest then currently outstanding are 

immediately due and payable. 

(b) The Line of Credit shall bear interest at the one year (1) LIBOR plus two 

(2 ) percent as of the actual date of funds disbursement (“Funding Date”) of each individual 

advance . Interest shall accrue from the Funding Date. Notwithstanding the foregoing, should 

PPN provide PPH with documentation that it is able to obtain a creditworthy loan on similar 

terms and conditions as that contemplated under the Line of Credit from a reputable third party 

lending institution at a lower interest rate, then PPH, in its sole discretion, may adjust the interest 

rate to match said documented fair market value rate. 

3 

ADD D-8

(c) PPN, may, without penalty, repay any and all principle and accrued 

interest at any time during the term of the Agreement. 

1.7 Promissory Note. PPN shall repay the Advances and accrued interest pursuant to 

the terms and conditions of the Note (as defined below). PPN authorizes PPH to record on the 

schedule annexed to the Note, the date and amount of each Advance made by PPH, the Interest 

Rate (as such term is defined in the Note) when each Advance is made, and each payment or 

prepayment of the Advances, and agrees that all such notations shall constitute prima facie 

evidence of the matters noted. PPN further authorizes PPH to attach to and make a part of the 

Note continuations of the schedule as necessary. No failure to make any such notations, nor any 

errors in making any such notations, shall affect the validity of PPN’s obligations to repay the 

Advances or PPN’s obligations under this Agreement, the Note, or any other document, contract 

or instrument delivered to PPH in connection with this Agreement (collectively, the “Line of 

Credit Documents”). 

ARTICLE II. 

PROMISSORY NOTE; SECURITY AGREEMENT; GUARANTEE 

2.1 PPN’s Deliverables. Concurrently with the execution of this Agreement, PPN 

shall execute and deliver to PPH: 

“Note”); and 

(a) 

the secured promissory note in the form attached as Exhibit 2.1(a) (the 

(b) the security agreement in the form attached as Exhibit 2.1(b) (the 

“Security Agreement”). 

2.2 Further Cooperation. PPH and PPN shall perform, or ensure the performance 

of, all actions and execute, or ensure the execution of, all documents necessary to perfect the 

security interests granted in the Security Agreement, as reasonably requested by PPH from time 

to time. 

ARTICLE III. 

TERM AND TERMINATION 

3.1 Term. This Agreement shall become effective on April 12, 2010 (the “Effective 

Date”), and shall continue until June 30, 2020 (the “Expiration Date”), subject to the termination 

provisions of this Agreement. 

Deleted: February 1 

3.2 Termination by PPH. PPH shall have the right to terminate this Agreement 

upon the occurrence of any one or more of the following events: 

(a) Breach of this Agreement by PPN where the breach is not cured within 

thirty (30) calendar days after PPH gives written notice of the breach to PPN; 

(b) Breach by PPN of the requirements under the Health Insurance Portability 

and Accountability Act of 1996 (“HIPAA”) (as set forth in the BAA); 

4 

ADD D-9

(c) 

any reason; or 

PPN is rendered unable to comply with the terms of this Agreement for 

other cases. 

(d) 

Upon ninety (90) calendar days written notice without cause to PPN in all 

3.3 Termination by PPN. PPN shall have the right to terminate this Agreement 

according to the following terms and conditions: 

(a) Breach of this Agreement by PPH where the breach is not cured within 

thirty (30) calendar days after PPN gives written notice of the breach to PPH or if the breach is 

not curable, then thirty (30) calendar days after PPN gives written notice of the breach to PPH; 

(b) PPN is rendered legally unable to comply with the terms of this 

Agreement for any reason, in which case termination shall be coterminous with the date of such 

legal inability; or 

other cases. 

(c) 

Upon ninety (90) calendar days written notice without cause to PPH in all 

3.4 Termination or Modification in the Event of Government Action. If the 

Parties receive notice of any Government Action (defined below), the Parties shall attempt to 

amend this Agreement in order to comply with the Government Action. If the Parties, acting in 

good faith, are unable to agree to the amendments necessary to comply with the Government 

Action, or, alternatively, if either Party determines in good faith that compliance with the 

Government Action is impossible or infeasible, this Agreement shall be terminated ten days after 

one party gives notice to the other of such fact. For the purposes of this Section, “Government 

Action” shall mean any legislation, regulation, rule or procedure passed, adopted or implemented 

by any federal, state or local government or legislative body or any private agency, or any notice 

of a decision, interpretation, finding, or action by any governmental or private agency, court or 

other third-party which, in the opinion of counsel to PPH, because of the arrangement between 

the Parties pursuant to this Agreement, if or when implemented, would: 

(a) revoke or jeopardize the status of any health facility license granted to 

PPH or any Affiliate (defined below) of PPH; 

(b) 

Affiliate of PPH; or 

prevent PPN from being able to access and use the facilities of PPH or any 

(c) subject PPH, any Affiliate of PPH, PPN, or any of their respective 

employees or agents, to civil or criminal prosecution (including any excise tax penalty under 

Internal Revenue Code Section 4958) on the basis of their participation in executing this 

Agreement or performing their respective obligations under this Agreement. 

(d) For the purposes of this Section, “Affiliate” shall mean any entity which, 

directly or indirectly, controls, is controlled by or is under common control with PPH. 

5 

ADD D-10

3.5 Rights upon Termination. Upon any termination or expiration of this 

Agreement, all rights and obligations of the Parties shall cease except those rights and 

obligations that have accrued or expressly survive such termination or expiration. 

Notwithstanding the above, upon termination of this Agreement by PPH and PPN pursuant to 

Sections 3.2 and 3.3, respectively, of this Agreement, the outstanding principal amount of the 

Advances and all accrued but unpaid interest shall automatically become due and payable. 

ARTICLE IV. 


4.1 Independent Contractor. PPH is and shall at all times be an independent 

contractor with respect to PPN in meeting PPH’s responsibilities under this Agreement. Nothing 

in this Agreement is intended nor shall be construed to create a partnership, employer-employee 

or joint venture relationship between PPH and PPN. 

4.2 Compliance with HIPAA. PPH and PPN shall comply with the HIPAA 

requirements as defined and set forth in Exhibit 4.2. The HIPAA requirements shall survive the 

expiration or termination of this Agreement for any reason. 

4.3 Amendment. This Agreement may be modified or amended only by mutual 

written agreement of the Parties. Any such modification or amendment must be in writing, 

dated, signed by the Parties and attached to this Agreement. 

4.4 Dispute Resolution. In the event of any disagreement, dispute or claim 

(collectively, a “Dispute”) arises between the Parties hereto with respect to whether an alleged 

breach hereof has or has not occurred, or with respect to any other matter related to or arising out 

of this Agreement, or the relationship or transactions contemplated hereby, the Dispute shall be 

resolved in accordance with the following procedures: 

(a) Meet and Confer. In the event of a Dispute, either Party may give written 

notice to the other Party setting forth the nature of the Dispute (the “Dispute Notice”). The 

Parties shall meet and confer to discuss in good faith and attempt to resolve the Dispute within 

fifteen (15) days of the Party receiving the Dispute Notice. The representatives of the Parties 

shall meet at such date(s) and time(s) as are mutually convenient to the representatives of each 

Party within the 15-day period. 

(b) Arbitration. Except as set forth below, any Dispute that cannot be 

resolved by the Parties under Section 4.4(a) within the 30-day meet-and-confer period, shall be 

submitted to final binding arbitration, as follows: 

(i) Designation of an Arbitrator. A single disinterested third party 

shall be selected by mutual agreement of the Parties. If the Parties are unable to mutually select 

an arbitrator within (15) days after each party notifies the other of its desire to arbitrate the 

Dispute, then the arbitrator shall be selected, and the arbitration shall be conducted, in 

accordance with JAMS’s then-current Comprehensive Arbitration Rules and Procedures or 

Streamlined Rules of Practice and Procedure, as appropriate, depending on the amount in 

dispute. 

6 

ADD D-11

(ii) Venue. The arbitration shall be conducted in the County of San 

Diego, California, unless the Parties mutually determine that another venue would be more 

convenient. 

(iii) Arbitrator’s Expenses and Fees. JAMS’ administrative fees and 

the expenses and fees of the arbitrator shall be divided among the Parties equally. Each Party 

shall pay its own counsel fees, witness fees, and other expenses incurred. 

4.5 Assignment. Except for assignment by PPH to an entity owned, controlled by, or 

under common control with PPH, neither Party may assign any interest or obligation under this 

Agreement without the other Party’s prior written consent. Subject to the foregoing, this 

Agreement shall be binding on and shall inure to the benefit of the Parties and their respective 

successors and assigns. 

4.6 Attorneys’ Fees. If either Party brings an action for any relief or collection 

against the other Party, declaratory or otherwise, arising out of the arrangement described in this 

Agreement, the losing Party shall pay to the prevailing Party a reasonable sum for attorneys’ fees 

and costs actually incurred in bringing such action, all of which shall be deemed to have accrued 

upon the commencement of such action and shall be paid whether or not such action is 

prosecuted to judgment. Any judgment or order entered in such action shall contain a specific 

provision providing for the recovery of attorneys’ fees and costs incurred in enforcing such 

judgment. For the purpose of this Section, attorneys’ fees shall include fees incurred in 

connection with discovery, post judgment motions, contempt proceedings, garnishment and levy. 

4.7 Authorized Persons. Whenever any consent, approval or determination of a 

Party is required pursuant to this Agreement, the consent, approval or determination shall be 

rendered on behalf of the Party by the person or persons duly authorized to do so, which the 

other Party shall be justified in assuming means any officer of the Party rendering such consent, 

approval or determination, or the Party’s board of directors. 

4.8 Choice of Law. This Agreement shall be construed in accordance with and 

governed by the laws of the State of California, except choice of law rules that would require the 

application of the laws of any other jurisdiction. 

4.9 Compliance with Laws. PPN shall comply with applicable laws, ordinances, 

codes and regulations of federal, state and local governments, including laws that require PPN to 

disclose any economic interest or relationship with PPH. 

4.10 Counterparts. This Agreement may be executed in one or more counterparts, 

each of which shall be deemed to be an original, but all of which together shall constitute one 

and the same instrument. 

4.11 Entire Agreement. This Agreement is the entire understanding and agreement of 

the Parties regarding its subject matter, and supersedes any prior oral or written agreements, 

representations, understandings, discussions or past practices between the Parties. No other 

understanding between the Parties shall be binding on them unless set forth in writing, signed 

and attached to this Agreement. 

7 

ADD D-12


reference in the exhibits, form an integral part of this Agreement and are incorporated into this 

Agreement wherever reference is made to them to the same extent as if they were set out in full 

at the point at which such reference is made. 

4.13 Force Majeure. Except with respect to obligations imposed with regard to 

payments to be paid by PPN under this Agreement, neither Party is liable for nonperformance or 

defective or late performance of any of its obligations under this Agreement to the extent and for 

such periods of time as such nonperformance, defective performance or late performance is due 

to reasons outside such Party’s control, including acts of God, war (declared or undeclared), 

action of any governmental authority, riots, revolutions, fire, floods, explosions, sabotage, 

nuclear incidents, lightning, weather, earthquakes, storms, sinkholes, epidemics, failure of 

utilities, or strikes (or similar nonperformance or defective performance or late performance of 

employees, suppliers or subcontractors). 

4.14 Further Assurances; Good Faith. Each Party shall, at the reasonable request of 

the other Party, execute and deliver to the other party all further instruments, assignments, 

assurances and other documents, and take any actions as the other Party reasonably requests in 

connection with the carrying out of this Agreement. In performing its obligations under this 

Agreement, each Party shall act in good faith. 

4.15 Indemnification. To the extent that such acts or omissions are not covered by 

insurance, each Party shall indemnify, hold harmless and defend the other Party and its officers, 

agents or employees, against any loss or liability arising out of or resulting in any way from the 

acts or omissions of such Party or its own officers, employees or agents, except that any such 

obligation to indemnify and hold harmless shall be reduced by any amount of such loss or 

liability arising from the contributory acts or omissions of the indemnified Party and its owners, 

employees or agents. This obligation shall not be qualified or eliminated by an allegation or 

finding that the other Party or any of its personnel is responsible for a passively negligent act or 

omission. This section shall survive the termination of this Agreement. 

4.16 Headings. The headings in this Agreement are intended solely for convenience 

of reference and shall be given no effect in the construction or interpretation of this Agreement. 

4.17 Interruption of Services. Notwithstanding any provision in this Agreement to 

the contrary, PPH shall not be liable to PPN in damages or otherwise for any failure to advance 

any funds contemplated by this Agreement. This Agreement contemplates a close operating 

relationship between PPH and PPN that will exist over a long period of time. Accordingly, in 

approving this Agreement and directing its officers to enter into this Agreement on its behalf, the 

Parties shall mutually review the performance of both Parties to this Agreement, identifying 

deficiencies in the performance of either or both Parties to this Agreement, developing (as 

necessary) a plan for addressing any such deficiencies, discussing potential modifications to the 

terms and conditions of this Agreement and the responsibilities of the Parties as set forth herein 

reviewing the outstanding principal amount of Advances, including all accrued but unpaid 

interest thereon, made pursuant to this Agreement and addressing repayment of such amounts, 

and at the appropriate time addressing a plan for PPN to attain self-sufficiency. 

8 

ADD D-13

4.18 Notices. All notices or communications required or permitted under this 

Agreement shall be given in writing and delivered personally or sent by United States registered 

or certified mail with postage prepaid and return receipt requested or by overnight delivery 

service (e.g., Federal Express, DHL). Notice is deemed given when sent, if sent as specified in 

this Section, or otherwise deemed given when received. In each case, notice shall be delivered 

or sent to: 

If to PPH, addressed to: 


456 E. Grand Ave 

Escondido, CA 92025 

Attention: Chief Financial Officer 

Copy to: 


15255 Innovation Drive 

San Diego, Ca 92128 

Attn: Legal Department 

If to PPN, addressed to: 

Palomar Physician Network 

456 E. Grand Avenue 

Escondido, Ca 92025 

Attn: PPN President 

Either Party may provide for a different address by notifying the other Party of such 

change as provided for in this Section. 

4.19 Severability. If any provision of this Agreement is determined to be illegal or 

unenforceable, that provision shall be severed from this Agreement, and such severance shall 

have no effect upon the enforceability of the remainder of this Agreement unless the purpose of 

this Agreement is thereby destroyed. 

4.20 No Third-Party Beneficiary Rights. The Parties do not intend to confer and this 

Agreement shall not be construed to confer any rights or benefits to any person, firm, group, 

corporation or entity other than the Parties, including but not limited to the Personnel. 

4.21 Waiver. No delay or failure to require performance of any provision of this 

Agreement shall constitute a waiver of that provision as to that or any other instance. Any 

waiver granted by a Party must be in writing to be effective, and shall apply solely to the specific 

instance expressly stated. 

9 

ADD D-14

4.22 Meaning of Certain Words. Wherever the context may require, any pronouns 

used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and 

the singular form of nouns shall include the plural and vice versa. 

The Parties have executed this Agreement on the date written below (the “Execution 

Date”). 

PALOMAR POMERADO HEALTH, 

a California local health care district 

Date:_____________, 2010 

By: 

Its: 

PALOMAR PHYSICIAN NETWORK, INC. 

Date: ____________, 2010 

By: 

Its: 

10 

ADD D-15


456 E. Grand Avenue 

Escondido, Ca. 92025 

Date: ___________________________, 201_ 

EXHIBIT 1.4 

NOTICE OF BORROWING 


Re: 

Notice of Borrowing 

To Whom It May Concern: 

Please take notice that Palomar Physician Network, Inc. (“PPN”), desires to borrow an 

Advance of _______________________________Dollars ($_____________) pursuant to the 

Amended Line of Credit dated April 12, 2010 from Palomar Pomerado Health, a local health 

care district organized under the laws of the State of California (“PPH”), on ___________ __, 

2010 (the “Funding Date”). Advance requests exceeding One Hundred Thousand Dollars 

($100,000) must be accompanied by signatures from PPH’s Chief Executive Officer and Chief 

Financial Officer and PPN’s President and Treasurer. 

PPN hereby certifies that as of the date of this Notice: 

(a) all of PPN’s representations and warranties contained in the Professional Services 

Agreement (the “Agreement”) and all exhibits to the Agreement shall be true, correct and 

complete in all material respects to the same extent as though made on and as of that date; 

(b) PPN shall not be in default of the Agreement, nor shall any default occur, 

continue, or result from, making the Advance; 

(c) no law or regulation of general application shall prohibit, nor any order, judgment 

or decree of any court, arbitrator or governmental authority specifically naming PPN and known 

to PPN, shall purport to enjoin or restrain PPH from making the Advance; and 

(d) no change having a material adverse effect on PPN (as such term is defined in the 

Agreement), either individually or in the aggregate, shall have occurred since the Execution 

Date. 

Sincerely, 

_________________________________________ 

Name: ___________________________________ 

11 

ADD D-16

Title: ___________________________________ 

As Approved By 


a California health care district 

Date: _______________ 

________________________________________________ 

By: 

Its: Chief Executive Officer 


a California health care district 

Date: _______________ 

________________________________________________ 

By: 

Its: Chief Financial Officer 


Date: _______________ 

________________________________________________ 

By: 

Its: President 


Date: _______________ 

________________________________________________ 

By: 

Its: Treasurer 

12 

ADD D-17

EXHIBIT 2.1(a) 

PROMISSORY NOTE 

San Diego County 

Not to Exceed $1,250,000.00 

FOR VALUE RECEIVED, Palomar Physician Network, Inc. (“PPN”), promises to pay 

to the order of Palomar Pomerado Health, a local health care district organized under the laws of 

the State of California (“PPH”), the principal sum equal to the outstanding amount of Advances 

paid to PPN pursuant to the Amended Line of Credit Agreement by and between PPN and PPH 

dated as of April 12, 2010 (the “Agreement”). Unless otherwise defined in this Promissory Note 

(the “Note”), each capitalized term shall have the meaning given in the Agreement. The 

outstanding principal amount of the Advances provided to PPN pursuant to the Line of Credit 

(the “Principal”) shall not exceed One Million-Two Hundred Fifty Thousand Dollars 

($1,250,000.00). 

1. Advances of Principal; Interest. 

Deleted: ___________, 

Deleted: 


(a) PPN hereby promises to pay to the order of PPH, at such place as PPH 

may from time to time designate in writing, in lawful money of the United States of America, the 

Principal and accrued interest thereon. 

(b) Interest shall accrue on the Advances at a rate equal to two percent (2%) 

above the one (1) year LIBOR (the “Interest Rate”), computed annually on the basis of a 360-day 

year, and the number of days elapsed from the Funding Date each Advance is deposited into 

PPN’s Account until the outstanding Advances are repaid. Accrued interest shall be paid 

monthly in arrears on the first Business Day of each month. The first (1st) Advance shall fix 

the Interest Rate for that calendar quarter. Any subsequent Advance in that quarter shall be 

assigned the same Interest Rate. Notwithstanding any other provision of this Agreement, the 

Interest Rate shall not exceed the maximum rate permitted by applicable law (the “Permitted 

Rate”). If any payments in the nature of interest exceed the Permitted Rate, as finally determined 

by a court of competent jurisdiction, any such amount in excess shall be considered payment of 

Principal and the Principal outstanding shall be reduced accordingly. 

2. Repayment. 


(a) Notwithstanding any other provisions of this Note, Principal , accrued 

interest, and other applicable fees, costs and charges (“Costs”), if any, owing on this Note shall 

be payable as follows: 

(b) Repayment. Principal and accrued interest thereon shall be payable in 

sixty (60) equal monthly installments sufficient to fully amortize the unpaid balance of this Note. 

Principal and accrued interest thereon shall be payable on the first (1 st ) Business Day of each 

successive calendar month beginning on the Agreement Expiration Date and continuing until the 

earlier of (i) the date on which the Principal and all accrued interest thereon, and all Costs, if any, 

are paid in full, or (ii) the Maturity Date (as defined below). In all events, and subject to the 

13 

ADD D-18

emaining provisions of this Section 2, the entire then-outstanding balance of Principal and all 

accrued, unpaid interest thereon, and all Costs, if any, shall be due and payable to PPH no later 

than the Maturity Date, the “Maturity Date” shall mean the date that is sixty (60) months from 

the Agreement Expiration Date 

(c) Application of Payments. Unless otherwise agreed in writing in advance 

by PPH, each payment or forgiveness with respect to this Note shall be credited as follows: first, 

against PPN Expenses; second, against accrued and unpaid interest then due and owing; and 

third, against the Principal outstanding. 

(d) Prepayment. PPN shall have the right to prepay the Principal outstanding 

in whole or in part without penalty. Any partial prepayment shall be applied against the 

Principal outstanding and shall not postpone the due date or alter the amount of any subsequent 

monthly installment. Any amounts prepaid prior to the Agreement Expiration Date may be 

reborrowed. 

3. Events of Default. The termination for any reason of the business of PPN or the 

occurrence of any Event of Default of the Agreement shall constitute an event of default (“Event 

of Default”) under this Note. 

4. Acceleration. If either an Event of Default (as defined in Exhibit 2.1(b) of this 

Agreement) occurs, or if the Agreement is terminated by either PPH or PPN pursuant to Sections 

3.2 and 3.3, respectively, of the Agreement, PPH may, at its option, declare the entire Principal 

outstanding, together with accrued interest and all other PPN Expenses immediately due and 

payable to PPH; and PPH shall have all rights, powers and remedies available under the 

Agreement documents, or accorded by law to a beneficiary or a secured party, including the right 

to resort to any or all of the Collateral or any other security for any of the obligations of PPN. 

PPH may exercise its rights and remedies with respect to the Collateral without resorting or 

regard to other security or sources for payment. All rights, powers and remedies of PPH in 

connection with each of the Agreement documents may be exercised at any time by PPH, and 

from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, 

and shall be in addition to any other rights, powers or remedies provided by law or equity. 

5. Termination. Upon the occurrence of an Event of Default or upon termination of 

the Agreement by PPH or PPN pursuant to Sections 3.2 and 3.3, respectively of the Agreement, 

the outstanding principal amount of the Advances, all accrued but unpaid interest and all other 

obligations of PPN under the Agreement may automatically become, or may be declared to be, 

due and payable in the manner, upon the conditions and with the effect provided in the 

Agreement. 

6. Costs of Collection. If PPH exercises its acceleration rights pursuant to this Note, in 

addition to the Principal outstanding and accrued interest thereon, PPH shall be entitled to collect 

all costs of collection, including reasonable attorneys’ fees incurred in connection with the 

protection or realization of collateral and PPH’s reasonable collection efforts, whether or not suit 

on this Note or any foreclosure proceeding is filed. Any and all such costs and expenses shall be 

payable on demand and secured by the Security Agreement. 





14 

ADD D-19

7. Continuing Liability. Following the occurrence of an Event of Default, PPN’s 

liability under this Note shall not be affected by PPH’s pursuit or non-pursuit of any one or more 

of its rights, powers or remedies (including, without limitation, its option to accelerate the 

payment of this Note), regardless of the order in which or the extent to which PPH may pursue 

any of such rights, powers or remedies, it being understood that the liability of PPN shall cease 

only upon satisfaction in full of all of PPN’s obligations arising under this Note and the 

Professional Services Agreement. 

8. No Waiver. No failure on the part of PPH to exercise any right or remedy under this 

Note, whether before or after a default, shall constitute a waiver of such right or remedy, and no 

waiver of any past default shall constitute waiver of any future default. No acceptance of a past 

due installment or other indulgence granted for time to time shall constitute a waiver of the right 

to insist upon prompt payment, be deemed to be a novation of this Note or as a reinstatement of 

the debt evidenced by this Note, or be construed to preclude the exercise of any right which PPH 

may have under law, by agreement or otherwise. PPH and each endorser or guarantor hereby 

expressly waive the benefit of any statute or rule of law or equity which would produce a result 

contrary to or in conflict with the foregoing. PPN and endorsers of this Note consent to renewals 

and extensions of time at or after the maturity hereof, without notice, and hereby waive 

diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted 

by law, the right to plead any statute of limitations as a defense to any demand under this Note. 

9. Waiver of Notice. PPN and each endorser or guarantor of this Note hereby (i) 

waives presentment, demand, protest and notice of presentment, notice of protest and notice of 

dishonor of this debt and any other notice respecting this Note, and (ii) agrees that PPH, at any 

time without notice to such party or such party’s consent, may grant extensions of time, without 

limit as to the number or the aggregate period of such extensions, for the payment of any 

Principal of or interest accrued thereon. 

10. Choice of Law. This Note shall be construed in accordance with and governed by 

the laws of the State of California, without giving effect to any choice of law or conflict of law 

rules or provisions that would cause the application of the laws of any jurisdiction other than the 

State. PPN and each endorser or guarantor hereby submit to jurisdiction in said State for the 

enforcement of PPN’s obligations under this Note and all other Agreement documents, and 

waive any and all rights under the laws of any other state to object to jurisdiction within such 

State. 

11. Amendments. This Note may be modified or amended only by mutual written 

agreement of the Parties. Any such modification or amendment must be in writing, dated, signed 

by the Parties and attached to this Note. 

12. Assignment. PPN shall not assign, sell, transfer or delegate any of the PPN’s rights 

or duties under this Note without the prior written consent of PPH. PPH may assign its rights 

and delegate its duties under this Note upon written notice to PPN. 

13. Notices. Any notice required or permitted to be given in this Note shall be given in 

accordance with the notices provision of the Agreement. 








15 

ADD D-20

14. Security. This Note is secured by a first priority security interest granted by PPN to 

PPH in the Collateral described in that certain Security Agreement of even date herewith (the 

“Security Agreement”) by and between PPN and PPH. All of the provisions contained in the 

Security Agreement are hereby made a part of this Note to the same extent and with the same 

effect as if they were fully set forth in this Note. 

15. Severability. If any provision of this Note, in whole or in part, or the application of 

any provision, in whole or in part, is determined to be illegal, invalid or unenforceable by a court 

of competent jurisdiction, such provision or part of such provision shall be severed from this 

Note, and such severance shall have not effect upon the enforceability, performance or 

obligations of the remainder of this Note, including the remainder of such provision not 

determined to be illegal, invalid or unenforceable. 

16. Successors and Assigns. The provisions of this Note shall inure to the benefit of 

and shall be binding upon the heirs, assigns, successors and representatives of PPN and PPH, 

respectively. The term “PPN” shall mean PPN and each heir, successor, assign, and 

representative of PPN as obligor of this Note. The term “PPH” shall mean PPH and each 

successor, assign, and representative of PPH as payee or holder of this Note. 




PPN has executed and delivered this Note as of the date and at the place first above 

written. 


By: ______________________________________ 

Its: ______________________________________ 

16 

ADD D-21

ATTACHMENT TO EXHIBIT 2.1(a) 

SCHEDULE OF ADVANCES 

Date Advance Current 

LIBOR Rate 

Prepayment or 

Repayment 

Outstanding 

Balance 

17 

ADD D-22

EXHIBIT 2.1(b) 

SECURITY AGREEMENT 

THIS SECURITY AGREEMENT (this “Security Agreement”), executed and delivered 

as of the same date of the Amended Line of Credit Agreement dated April 12, 2010 

(“Agreement”), by PALOMAR PHYSICIAN NETWORK, INC., (“Debtor”), for the benefit of 

PALOMAR POMERADO HEALTH, a local health care district organized under the laws of the 

State of California (“Secured Party”). 

RECITALS 

A. Debtor and Secured Party desire to enter into this Security Agreement to grant a 

security interest to Secured Party in the Collateral, as hereinafter defined, to secure the 

performance of the obligations and duties of Debtor under the Agreement. 

AGREEMENT 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained 

herein, the parties hereto agree as follows: 

ARTICLE I. 

COLLATERAL AND SECURITY INTEREST 

1.1 Collateral and Grant of Security Interest. Debtor hereby grants to Secured 

Party a security interest of first priority in the Collateral, as described in Attachment A, to secure 

the payment and performance of all indebtedness, liabilities and obligations of Debtor to Secured 

Party under the Agreement and repayment of the principal amount of the Advances (as defined 

in Section 3.2 of the Agreement) and accrued interest thereon. The security interest created by 

this Security Agreement shall attach immediately on execution of this Security Agreement by 

Debtor. 

1.2 Perfection and Priority. Debtor shall take all action necessary to perfect the 

security interest granted to Secured Party in Section 1.1 of this Security Agreement. Secured 

Party’s security interest in the Collateral is, and will continue to be, a first priority security 

interest which is free and clear of all liens, claims, security interest and encumbrances, except 

with respect to any liens, claims, security interest and encumbrances granted by statute or 

pursuant to any other agreement executed by and between Secured Party and Debtor. Secured 

Party shall have no duty to collect or protect the Collateral, nor to preserve rights against prior 

parties or any other rights pertaining to the Collateral. Secured Party shall perfect its security 

interest in the Account (as defined in Section 1.5 herein) by sending to the appropriate financial 

institution a letter in the form of Attachment B. 

1.3 Further Assurances. Debtor shall, from time to time, at Debtor’s expense, 

execute and file any financing or continuation statements, or amendments thereto, and other 

instruments, endorsements or notices, and take other actions, reasonably necessary or as Secured 

Party reasonably requests, in order to perfect and preserve the assignments and security interests 

granted or purported to be granted by this Security Agreement. Debtor authorizes Secured Party 

18 

ADD D-23

to file one or more financing or continuation statements, and amendments thereto, relative to all 

or any part of the Collateral without Debtor’s signature where permitted by law. Copies of any 

such statement or amendment shall promptly be delivered to Debtor. Debtor shall notify Secured 

Party of any change in Debtor’s name, identity or corporate structure at least fifteen (15) days 

prior to any such change. 

1.4 Principal Place of Business. Debtor’s principal place of operation, where Debtor 

shall keep records regarding the Collateral, is located at 456 East Grand Avenue, Escondido, Ca. 

92025 . Debtor shall not relocate Debtor’s principal place of operation without providing at least 

sixty (60)-days prior written notice to Secured Party. 

1.5 Business Deposit Account. Debtor shall establish and maintain business deposit 

accounts (“Accounts”) with Bank of America, or such other financial institution as is mutually 

selected and approved in writing by Debtor and Secured Party (the “Depository Bank”). Debtor 

shall promptly deposit all donations and grants received by Debtor into the Account. If any 

Event of Default occurs, Secured Party may, by written notice to the Depository Bank, terminate 

Debtor’s right to make any withdrawal from the Account and exercise any other right under this 

Agreement, at law, equity or otherwise applicable to the proceeds of the Account. 

ARTICLE II. 

REPRESENTATIONS AND WARRANTIES 

Debtor makes the following representations and warranties to Secured Party, which shall 

be true and correct on and as of the date of this Agreement: 

2.1 Authorization and Validity. This Security Agreement, and any other document, 

contract or instrument delivered to Secured Party in connection with this Security Agreement 

have been duly authorized by Debtor, and are legal, valid and binding agreements and 

obligations of Debtor, enforceable in accordance with their respective terms, except as limited by 

bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights 

generally. 

2.2 Governmental Consents. No consent, approval, order or authorization of, or 

registration, qualification, designation, declaration or filing with, any federal, state or local 

governmental authority on the part of Debtor is required in connection with the consummation of 

the transactions contemplated by this Security Agreement. 

2.3 No Violation. The execution, delivery and performance by Debtor of this 

Security Agreement, and any other document, contract or instrument delivered to Secured Party 

in connection with this Security Agreement, do not violate any provision of any law or regulation 

or result in a breach of or constitute a default under any contract, obligation, indenture or other 

instrument to which Debtor is a party or by which Debtor may be bound, except for any such 

breach or default which has been duly waived or consented to by all necessary parties. 

2.4 No Events of Default. Debtor is not in default under any debt or obligation of 

Debtor and no event has occurred which would become an event of default under any such debt 

or obligation with or without the giving of notice, the lapse of time, or both. 

19 

ADD D-24

2.5 Collateral. Debtor owns the property granted by it as Collateral to Secured Party 

free and clear of any and all liens, claims, charges, pledges, security interests, deeds of trust, 

mortgages and other encumbrances in favor of third parties, or any other arrangements having 

the practical effect of the foregoing, or preferential arrangements of any other kind. 

2.6 No Litigation. There is no action, proceeding or investigation pending or 

threatened, or any basis therefore known to Debtor that questions the validity of this Security 

Agreement or the right of Debtor to enter into this Security Agreement, or that would have, 

either individually or in the aggregate, a Material Adverse Effect. “Material Adverse Effect” 

shall mean a material adverse effect upon Debtor’s purpose, function, operation or status or upon 

Secured Party’s security interest in the Collateral. There is no judgment, decree or order of any 

court in effect against Debtor and Debtor is not in default with respect to any order of any 

governmental authority to which Debtor is a party or by which Debtor is bound. 

2.7 Existence and Authority. Debtor is a public benefit corporation duly 

organized and validly existing in good standing under the laws of the State of California. Debtor 

has the power and authority, rights and franchises to own its properties and to carry on its 

operations as now conducted. Debtor has the power and authority to make and carry out this 

Security Agreement. 

ARTICLE III. 

COVENANTS OF DEBTOR 

Debtor covenants that so long as any indebtedness, liabilities and obligations (whether 

direct or contingent, liquidated or unliquidated) of Debtor to Secured Party under the Agreement 

(including payment of PPN Expenses or repayment of the principal amount of the Advances and 

accrued interest thereon) remain outstanding, and until payment and performance in full of all 

obligations of Debtor under this Security Agreement: 

3.1 Compliance with Laws. Debtor shall comply with the requirements of all laws, 

rules, regulations and orders of any governmental authority applicable to Debtor or its operation. 

3.2 Performance and Compliance with Other Agreements. Debtor shall perform 

and comply in all material respects with each of the provisions of each material indenture, 

contract and other agreement by which Debtor or any of its properties is bound. 

3.3 Taxes and Other Liabilities. Debtor shall pay and discharge when due any and 

all indebtedness, obligations, assessments and taxes, both real or personal and including federal 

and state income taxes, which in the aggregate the nonpayment of which would have a Material 

Adverse Effect, except such as Debtor may in good faith contest or as to which a bona fide 

dispute may arise, so long as provision is made to the satisfaction of Secured Party for eventual 

payment thereof if it is found that payment is an obligation of Debtor. 

3.4 Notices to Secured Party. Within ten (10) days after Debtor has actual 

knowledge of the occurrence of each such event or matter, Debtor shall give written notice to 

Secured Party of: (i) the occurrence of any Event of Default (defined below), or any condition, 

event or act which would become an Event of Default with or without the giving of notice; or (ii) 

the commencement, or threatened commencement (of which Debtor has received written notice) 

20 

ADD D-25

of any litigation, arbitration or other proceeding against Debtor involving a reasonably potential 

liability. 

3.5 Records and Reports. Debtor shall maintain books and records pertaining to the 

Collateral in such detail, form and scope as is consistent with good business practice, ensure that 

such books and records reflect Secured Party’s interest in the Collateral, and permit Secured 

Party or its agents to enter upon the premises of Debtor at any time and from time to time, during 

normal business hours and upon reasonable notice under the circumstances, and at any time at all 

on and after the occurrence of an Event of Default, for the purposes of inspecting and verifying 

the Collateral, and inspecting and/or copying (at Debtor’s expense) any and all records pertaining 

to the Collateral. 

3.6 Change in Collateral. Debtor shall not transfer or otherwise dispose of or 

encumber all or any part of the Collateral, without Secured Party’s prior written consent; 

provided, however, that in the absence of an Event of Default under this Agreement Debtor shall 

be entitled to utilize the Collateral in the ordinary course of business for the payment of the debts 

and obligations of Debtor in accordance with the terms set forth in the Agreement and any 

agreements, documents and exhibits incorporated in or ancillary to the Agreement. Debtor shall 

give Secured Party thirty (30) days’ prior written notice of any proposed change in the location 

of any Collateral or in the location of Debtor’s place of operation, advise Secured Party 

promptly, in sufficient detail, of any change relating to the type, quantity or quality of the 

Collateral, or any event which could have an adverse effect on the value of the Collateral or on 

the security interests granted to Secured Party in the Collateral, and defend the Collateral against 

all claims and demands of all persons at any time claiming the same or any interest in the 

Collateral. 

3.7 Guaranties. Debtor shall not agree to any guarantee or liability or become liable 

in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or 

collection in the ordinary course of business), accommodation endorser or otherwise for, nor 

pledge or hypothecate any assets of Debtor as security for, any liabilities or obligations of any 

other person or entity, without Secured Party’s prior written consent. 

3.8 Change in Purpose and Operation. Debtor shall not make any substantial 

change in the present character of Debtor’s purpose and operation, without Secured Party’s prior 

written consent. 

ARTICLE IV. 

EVENTS OF DEFAULT 

4.1 Events of Default. The occurrence of any of the following shall constitute an 

“Event of Default” under this Agreement: 

(a) Failure, breach or default in the performance of the obligations and duties 

of Debtor under the Agreement including the payment of PPN Expenses or repayment of the 

Advances as provided in Section 1.6 of the Agreement; 

(b) Debtor fails to perform or satisfy when due any obligation, agreement, 

covenant or condition contained in this Security Agreement, and with respect to any such default 

21 

ADD D-26

which by its nature can be cured, such default continues for a period of thirty (30) days from its 

occurrence; 

(c) Any representation or warranty made by Debtor in connection with this 

Security Agreement or the Agreement proves to be false, incorrect or incomplete in any material 

respect when furnished or made; 

(d) Any levy upon, seizure or attachment of any of the Collateral, or any other 

event or circumstance pursuant to which Secured Party ceases to have a valid and perfected first 

priority security interest in the Collateral; 

(e) Debtor admits in writing its inability to pay its debts as they mature, or 

commences any voluntary proceedings under any bankruptcy, reorganization, arrangement, 

insolvency, readjustment of debt, dissolution, liquidation or other similar law of any jurisdiction; 

(f) Any application or proceeding described in (d) above is filed or 

commenced against Debtor, and Debtor indicates its approval, consent or acquiescence thereto, 

or an order is entered adjudicating Debtor bankrupt or insolvent and such order remains in effect 

for thirty (30) days; 

(g) Debtor transfers all or substantially all of its properties to, or merges with 

or into, any other entity; or 

(i) Any change having a Material Adverse Effect on Debtor, or any other 

event or condition which Secured Party reasonably and in good faith believes impairs, or is 

substantially likely to impair either: (i) the prospect of payment or performance by Debtor of its 

obligations under this Security Agreement or the Agreement; or (ii) the rights and remedies of 

Secured Party under this Security Agreement or the Agreement. 

4.2 Remedies. If an Event of Default occurs, Secured Party shall have all rights, 

powers and remedies available under this Security Agreement or the Agreement, or accorded by 

law to a beneficiary or a secured party, including the right to resort to any or all of the Collateral 

or any other security for any of the obligations of Debtor. Secured Party may exercise its rights 

and remedies with respect to the Collateral without resorting or regard to other security or 

sources for payment. All rights, powers and remedies of Secured Party in connection with this 

Security Agreement or the Agreement may be exercised at any time by Secured Party, and from 

time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and 

shall be in addition to any other rights, powers or remedies provided by law or equity. 

4.3 Action on Collateral. If any Event of Default occurs and continues, Secured 

Party may exercise with respect to the Collateral: (a) all the rights and remedies of a secured 

party on default under the Uniform Commercial Code of the State of California (the “Code”) 

(whether or not the Code applies to the affected Collateral); (b) all of the rights and remedies 

provided for in this Security Agreement or the Agreement; and (c) such other rights and 

remedies as may be provided by law or otherwise. 

4.4 Waiver. Debtor waives (to the extent permitted by applicable law): (a) notice of 

the acceptance of this Security Agreement and all other notices, demands or protests to which 

22 

ADD D-27

Debtor might otherwise be entitled by law in respect to this Security Agreement, all other 

Agreement documents or the Collateral; and (b) all rights of redemption, stay and/or appraisal 

which Debtor now has or may at any time in the future have under any rule of law or statue now 

existing or hereafter enacted. 

ARTICLE V. 


5.1 Amendment. This Security Agreement may be modified or amended only by 

mutual written agreement of the Parties. Any such modification or amendment must be in 

writing, dated, signed by the Parties and attached to this Security Agreement. 

5.2 Dispute Resolution. In the event of any controversy or dispute related to or 

arising out of this Security Agreement, the Parties agree to meet and confer in good faith to 

attempt to resolve the controversy or dispute without an adversary proceeding. If the 

controversy or dispute is not resolved to the mutual satisfaction of the Parties within five (5) 

business days of notice of the controversy or dispute, the Parties agree to waive their rights, if 

any, to a jury trial, and to submit the controversy or dispute to a retired judge or justice pursuant 

to Section 638 et seq. of the California Code of Civil Procedure, or any successor provision, for 

resolution in accordance with Chapter 6 (References and Trials by Referees), of Title 8 of Part 2 

of the California Code of Civil Procedure, or any successor chapter. The Parties agree that the 

only proper venue for the submission of claims is the County of San Diego, California, and that 

the hearing before the referee shall be concluded within nine (9) months of the filing and service 

of the complaint. The Parties reserve the right to contest the referee’s decision and to appeal 

from any award or order of any court. 

5.3 Assignment. This Security Agreement shall be binding on and inure to the 

benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the 

Parties; provided, however, that Debtor may not assign or transfer its interest or obligations 

under this Security Agreement without the prior written consent of Secured Party. Secured Party 

reserves the right to sell, assign, transfer, negotiate or grant participation in all or any part of, or 

any interest in, Secured Party’s rights and benefits under this Security Agreement, the Note and 

any other Line of Credit Document. 

5.4 Attorneys’ Fees, Costs and Expenses. Debtor shall hold Secured Party harmless 

from, and pay to Secured Party immediately upon demand, the full amount of all costs and 

expenses, including reasonable attorneys’ fees, incurred by Secured Party in connection with: (i) 

Secured Party’s administration of this Security Agreement or the Agreement (including any costs 

or other expenses incurred in establishing or maintaining the Collateral); (ii) the enforcement of 

Secured Party’s rights and/or the collection of any amounts which become due to Secured Party 

under the Agreement (including in connection with any bankruptcy, reorganization, or similar 

circumstance or proceeding); and (iii) the prosecution or defense of any claim, or action in any 

way arising out of or related to this Security Agreement, the Agreement or the transactions 

contemplated thereby, including without limitation any action for declaratory relief. Any 

judgment or order entered in such action shall contain a specific provision providing for the 

recovery of attorneys’ fees and costs incurred in enforcing such judgment. For the purpose of 

this Agreement, “attorneys’ fees” shall include fees incurred in connection with post judgment 

23 

ADD D-28

motions, contempt proceedings, garnishment, levy, and debtor and third-party examinations, 

discovery and bankruptcy litigation. 

5.5 Choice of Law. This Security Agreement shall be construed in accordance with 

and governed by the laws of the State of California, except choice of law rules that would require 

the application of the laws of any other jurisdiction. 

5.6 Compliance with Laws. Debtor shall comply with all applicable laws, 

ordinances, codes and regulations of federal, state and local governments, including without 

limitation laws that require Debtor to disclose any economic interest or relationship with Secured 

Party. 

5.7 Confidentiality. Neither Party shall disclose this Security Agreement or any of 

its terms to any person or entity, other than its attorneys and accountants, without the prior 

written consent of the other Party, unless and only to the extent such disclosure is required by 

law. 

5.8 Counterparts. This Security Agreement may be executed in one or more 

counterparts, each of which shall be deemed to be an original, but all of which together shall 

constitute one and the same instrument. 

5.9 Entire Agreement. This Security Agreement (including all agreements 

incorporated herein by referenced or mentioned herein) together with the Agreement constitutes 

the entire understanding and agreement of the Parties regarding its subject matter, and supersedes 

any prior oral or written agreements, representations, understandings or discussions between the 

Parties. No other understanding between the Parties shall be binding on them unless set forth in 

writing, signed and attached to this Security Agreement. 


reference in the exhibits, form an integral part of this Security Agreement and are incorporated 

into this Security Agreement wherever reference is made to them to the same extent as if they 

were set out in full at the point at which such reference is made. 

5.11 Force Majeure. Neither Party is liable for nonperformance or defective or late 

performance of any of its obligations under this Security Agreement to the extent and for such 

periods of time as such nonperformance, defective performance or late performance is due to 

reasons outside such Party’s control, including acts of God, war (declared or undeclared), action 

of any governmental authority, riots, revolutions, fire, floods, explosions, sabotage, nuclear 

incidents, lightning, weather, earthquakes, storms, sinkholes, epidemics, or strikes (or similar 

nonperformance or defective performance or late performance of employees, suppliers or 

subcontractors). 

5.12 Headings. The headings in this Security Agreement are intended solely for 

convenience of reference and shall be given no effect in the construction or interpretation of this 

Security Agreement. 

5.13 Notices. All notices or communications required or permitted under this Security 

Agreement shall be given in writing and delivered personally, sent by United States registered or 

24 

ADD D-29

certified mail with postage prepaid and return receipt requested or by overnight delivery service 

(e.g., Federal Express). In each case, notice shall be delivered or sent to the address set forth for 

Debtor or Secured Party, as applicable, in the Agreement. Notice is deemed given when sent, if 

sent as specified in this paragraph, or otherwise deemed given when received. 

5.14 Severability. If any provision of this Security Agreement is determined to be 

illegal or unenforceable, that provision shall be severed from this Security Agreement, and such 

severance shall have no effect upon the enforceability of the remainder of this Security 

Agreement, unless the purposes of this Security Agreement is thereby destroyed. 

5.15 No Third-Party Beneficiary Rights. The Parties do not intend to confer and this 

Security Agreement shall not be construed to confer any rights or benefits to any person, firm, 

group, corporation or entity other than the Parties. 

5.16 Termination. This Security Agreement and the security interest in Collateral 

created hereby shall terminate after payment and performance in full of all obligations arising 

under the Agreement. Upon such termination, the Collateral shall be released from the security 

interest hereby created, and Secured Party will execute and deliver to Debtor such documents as 

Debtor shall reasonably request to evidence such release. 

5.17 Waiver. No delay, failure or discontinuance of Secured Party in exercising any 

right, power or remedy under this Security Agreement or the Agreement shall constitute a waiver 

of such right, power or remedy; nor shall any single or partial exercise of any such right, power 

or remedy preclude, waive or otherwise affect any other or further exercise thereof or the 

exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any 

kind by Secured Party of any breach of or default under this Security Agreement or the 

Agreement must be in writing and shall be effective only to the extent expressly set forth in such 

writing. 

Secured Party and Debtor have executed this Security Agreement on the date first above 

written. 

SECURED PARTY 

PALOMAR POMERADO HEALTH, a local California 

health care district 

_____________________________________________ 

By: _______________________________________ 

Its: _______________________________________ 

DEBTOR 


_____________________________________________ 

By: _______________________________________ 

Its: _______________________________________ 

25 

ADD D-30

ATTACHMENT A TO EXHIBIT 2.1(b) 

DESCRIPTION OF COLLATERAL 

Except to the extent the granting of a security interest is limited by application of 

law with respect to payments from governmental entities, all present and future right, title and 

interest of Debtor in and to: (a) donations and grants from all sources; (b) furniture, fixtures and 

equipment; (c) all monies from time to time on deposit in Debtor’s business bank accounts as 

established in accordance with this Agreement; (d) Accounts Receivable; (e) insurance proceeds; 

(f) all books, documents and records in respect to the foregoing; and (g) to proceeds of all the 

foregoing, whether now existing or hereafter acquired or arising (collectively, the “Collateral”). 

26 

ADD D-31

ATTACHMENT B TO EXHIBIT2.1(b) 


Bank of America 

1655 Grant Street Bldg A-10 th Floor 

Concord, CA 94520-2445 

Date:______________ 

Re: 

Notice of Security Interest in Account 

Ladies and Gentlemen: 

Please take notice that PALOMAR POMERADO HEALTH, a local health care district 

organized under the laws of the State of California (“PPH”), holds a security interest in a 

business deposit account, number _______________ at Bank of America, maintained for 

PALOMAR PHYSICIAN NETWORK, INC. (“PPN”). 

The security interest is held pursuant to that certain Security Agreement by and between PPH 

and PPN, dated as of _______________, a copy of which is enclosed. 

Sincerely, 

Name: 

Title: 

27 

ADD D-32

EXHIBIT 4.2 BUSINESS ASSOCIATE AGREEMENT 

This Business Associate Agreement (“Agreement”), effective _______________, 2010 

(“Effective Date”), is entered into by and between Palomar Pomerado Health (the “Covered 

Entity”) and Secured Party and Debtor have executed this Security Agreement on the date first 

above written..(the "Business Associate") (each a "Party" and collectively the “Parties”). The 

Business Associate is a Secured Party and Debtor have executed this Security Agreement on the 

date first above written, and the Covered Entity, is a local healthcare district organized pursuant 

to Division 23 of the California Health and Safety Code. The Business Associate is providing 

services to the Covered Entity that may require the disclosure and use of Protected Health 

Information (PHI). Both Parties are committed to complying with the Privacy Rules 

promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 

(“HIPAA”), the Health Information Technology for Economic and Clinical Health Act 

(“HITECH”) privacy provisions of the American Recovery and Reinvestment Act, as well as to 

the California privacy laws which are codified in the California Health and Safety Code and in 

the Confidentiality of Medical Information Act (CMIA). The parties agree as follows: 

1. DEFINITIONS 

1.1. Business Associate. "Business Associate" shall have the same meaning as the 

term “Business Associate” is defined under 45 C.F.R. § 160.103, or as may be amended. For 

purposes of this Agreement, Business Associate shall include the named Business Associate 

herein. In the event that the Business Associate is otherwise a covered entity under the Privacy 

Rule, that entity may appropriately designate a health care component of the entity, pursuant to 

45 C.F.R. § 164.504(a), as the Business Associate for purposes of this Agreement “Business 

Associate” shall also include organization that provides data transmission of protected health 

information and requires access to such information on a routine basis as defined under Section 

13408 of the HITECH Act. 

1.2. Breach. “Breach” shall have the same meaning as the term “breach” in 45 C.F.R. 

§ 164.402 (Section 13400(1) of the HITECH Act), as such provision is currently drafted and as it 

is subsequently updated, amended or revised. 

1.3 Covered Entity. Covered Entity shall include all entities covered by the joint 

notice of information practices (or privacy notice), which includes Palomar Pomerado Health 

and all of its subsidiaries, including but not limited to Palomar Medical Center, Pomerado 

Hospital, Palomar Continuing Care Center, Villa Pomerado, PPH Home Health and PPH Wound 

Care Centers. 

1.4. Designated Record Set. “Designated Record Set” shall have the same meaning as 

the term "designated record set" in 45 C.F.R. § 160.103, as such provision is currently drafted 

and as it is subsequently updated, amended or revised. 

28 

ADD D-33

1.5. Health Care Operations. “Health Care Operations” shall have the same meaning 

as the term "health care operations" in 45 C.F.R. § 164.502(g), as such provision is currently 

drafted and as it is subsequently updated, amended or revised. 

1.6. Individual. “Individual” shall have the same meaning as the term “individual” in 

45 C.F.R. § 164.501, as such provision is currently drafted and as it is subsequently updated, 

amended or revised, and shall include a person who qualifies as a personal representative in 

accordance with 45 C.F.R. § 164.502(g). 

1.7. Privacy Officer. “Privacy Officer” shall have the same meaning as the term 

“privacy officer” in 45 C.F.R. § 164.530(a)(l), as such provision is currently drafted and as it is 

subsequently updated, amended or revised. 

1.8. Privacy Rule. “Privacy Rule” shall mean the Standards for Privacy of 

Individually Identifiable Health Information at 45 C.F.R. part 160 and part 164, subparts A and 

E. 

1.9. Protected Health Information (“PHI”). “Protected Health Information” shall have 

the same meaning as the term "protected health information" in 45 C.F.R. § 164.501, as such 

provision is currently drafted and as it is subsequently updated, amended or revised, limited to 

the information created or received by Business Associate from or on behalf of Covered Entity. 

1.10. Required by Law. Required by Law shall have the same meaning as the term 

“required by law” in 45 C.F.R. § 164.501, as such provision is currently drafted and as it is 

subsequently updated, amended or revised. 

1.11. Secretary. “Secretary” shall mean the Secretary of the Department of Health and 

Human Services or his/her designee. 

1.12. Unsecured Protected Health Information. “Unsecured Protected Health 

Information” shall have the same meaning as the term “Unsecured Protected Health Information” 

in 45 C.F.R. § 164.402 (Section 13402 of the HITECH Act). 

2. PERMITTED USES AND DISCLOSURES BY BUSINESS ASSOCIATE 

2.1 Except as otherwise limited in this Agreement, Business Associate may use or 

disclose Protected Health Information to perform functions, activities, or services for, or on 

behalf of, Covered Entity as agreed upon by the parties or to carry out the legal responsibilities 

of the Business Associate, and for the proper management and administration of the Business 

Associate provided that such use or disclosure does not violate the federal or state patient privacy 

laws. 

2.2 Except as otherwise limited in this Agreement, Business Associate may disclose 

Protected Health Information for the proper management and administration of the Business 

Associate, provided that disclosures are Required By Law, or Business Associate obtains 

reasonable assurances from the person to whom the information is disclosed that it will remain 

29 

ADD D-34

confidential and used or further disclosed only as Required By Law or for the purpose for which 

it was disclosed to the person, and the person notifies the Business Associate of any instances of 

which it is aware in which the confidentiality of the information has been breached. 

2.3 Business Associate may disclose to its subcontractors, agents or other third parties 

only the minimum Protected Health Information necessary to perform or fulfill a specific 

function required or permitted under the Services Agreement or this Agreement. If Protected 

Health Information must be disclosed in order for Business Associate to perform it duties 

pursuant to its Agreement with the Covered Entity, or to fulfill any present or future legal 

responsibilities, the Protected Health Information may be disclosed only if (i) the disclosures are 

Required by Law or (ii) the Business Associate has received from the third party written 

assurances regarding its confidential handling of such Protected Health Information as required 

under 45 C.F.R. § 164.504(e)(4). 

2.4 Except as otherwise limited in this Agreement, Business Associate may use 

Protected Health Information to provide Data Aggregation services to Covered Entity as 

permitted by 45 C.F.R 164.504(e)(2)(i)(B). 

2.5 Business Associate may use Protected Health Information to report violations of 

law to appropriate Federal and State authorities, consistent with 45 C.F.R. 164.502(j)(1). 

3. RESPONSIBILITIES OF THE BUSINESS ASSOCIATE 

3.1 Safeguards. Business Associate must develop, implement, maintain and use 

appropriate administrative, technical and physical safeguards, in compliance with the regulations 

in federal and state law, as now in effect and as may be amended, to protect the confidentiality, 

integrity and availability of Protected Health Information in order to maintain the security of the 

Protected Health Information and to prevent the unauthorized or unlawful access, use or 

disclosure of Protected Health Information. Development of these safeguards must be in 

compliance with the requirements under HITECH (HITECH Act § 13401 et. seq., see also 42 

USC § 1793(a); 45 C.F.R. §§ 164.308-312 and 164.316 in order to ensure administrative, 

physical and technical safeguards for electronic protected health information.) 

3.2 Audit. For as long as the Business Associate shall be in possession of any 

Protected Health Information in any form, the Business Associate shall periodically test, monitor 

and audit their information security systems, measures and procedures in order to ensure that 

such systems, measures and procedures are consistent with industry best practices and standards. 

If any audit or review reveals any material security defects, problems, weaknesses, or 

vulnerabilities, Business Associate shall correct the defect, problem, weakness or vulnerability 

immediately, and if this is not possible, the Business Associate shall notify the Privacy Officer of 

the Covered Entity immediately. Covered Entity also reserves the right to audit Business 

Associate to ensure compliance with privacy and security laws and regulations. 

3.3 Duty to Mitigate. Business Associate agrees to establish and maintain safeguards 

to mitigate any harmful effect that is known to Business Associate that would result in the 

30 

ADD D-35

improper use and/or disclosure of Protected Health Information by Business Associate in 

violation of the requirements of this Agreement. 

3.4 Reporting Violations to Covered Entity. Business Associate agrees to notify the 

Covered Entity’s Privacy Officer immediately by facsimile or telephone, of any security incident 

as defined 45 C.F.R. § 164.304, or any other unauthorized access or unlawful access, use, or 

disclosure of Protected Health Information that would constitute a violation under federal or state 

privacy law. If the Business Associate discovers a breach of “unsecured protected health 

information” under HITECH, notification to the Covered Entity’s Privacy Officer shall be made 

immediately, by facsimile or telephone, unless the notification would impede a criminal 

investigation or harm nation security. (See HITECH Act § 13402; 45 C.F.R. 164.402) 

3.4.1 Notice Requirements. Such notice shall include the identification of each 

individual whose unsecured protected health information has been, or is reasonably believed by 

the Business Associate to have been, accessed, acquired, or disclosed during such breach. The 

notice shall also include a contact person for the Business Associate; a summary of how the 

breach/violation occurred; the date of breach/incident and date of discovery of breach/incident; 

description of the types of unsecured PHI that were involved in the breach/incident; name of 

alleged violator; brief description of what Business Associate is doing to mitigate harm to 

individuals involved in the breach/incident and to protect against further breaches. 

3.5 Information Requested by Covered Entity. Within five (5) days of receiving a 

written request from the Covered Entity, provide to the Covered Entity such information as is 

requested by the Covered Entity to permit the Covered Entity to respond to a request by an 

Individual for an accounting of the disclosures of the Individual's Protected Health Information 

in accordance with 45 C.F.R. § 164.528. 

3.6 Agents and Subcontractors. Business Associate agrees to ensure that any agent, 

independent contractor, subcontractor, or any other business partner to whom it provides 

Protected Health Information, which was received from, created or received by Covered Entity, 

will agree to the same restrictions and conditions that apply to Business Associate with respect to 

such information. Business Associate will also ensure any agent, including a subcontractor to 

whom Business Associate provides electronic Protected Health Information agrees to implement 

reasonable and appropriate safeguards to protect it. 

3.7 Availability of Records. Make available all records, books, agreements, policies 

and procedures relating to the use and/or disclosure of Protected Health Information to the 

Secretary, in the time and manner designated by the Secretary, for purposes of the Secretary 

determining the Covered Entity's compliance with the Privacy Rule, subject to attorney-client 

and other applicable legal privileges. 

3.8 Accounting of Disclosures. Business Associate agrees to document such 

disclosures of Protected Health Information and information related to such disclosures as would 

be required for Covered Entity to respond to a request by an Individual for an accounting of 

disclosures of Protected Health Information in accordance with 45 CFR 164.528. Business 

Associate agrees to provide to Covered Entity or an Individual, in timely manner, information 

31 

ADD D-36

equested in order for Covered Entity to respond to a request by an Individual for an accounting 

of disclosures of Protected Health Information in accordance with 45 C.F.R 164.528 and 

HITECH Act § 13405(c). 

3.9 Aggregating Data. Where it is agreed upon by the parties through a Services 

Agreement, the Business Associate may aggregate the Protected Health Information in its 

possession with the Protected Health Information of other covered entities that the Business 

Associate has in its possession through its capacity as a Business Associate to said other covered 

entities, provided that the purpose of such aggregation is to provide the Covered Entity with data 

analyses relating to the Health Care Operations of the Covered Entity. Under no circumstances 

may the Business Associate disclose Protected Health Information of one Covered Entity to 

another Covered Entity absent the explicit authorization from the Covered Entity. 

3.10 De-Identifying Protected Health Information. Business Associate shall de-identify 

any and all Protected Health Information, provided that the de-identification conforms to the 

requirements of 45 C.F.R. § 164.514(b), and further provided that the Covered Entity maintains 

the documentation required by 45 C.F.R. § 164.514(b) which may be in the form of a written 

assurance from the Business Associate. Pursuant to 45 C.F.R. § 164.502(d)(2), de-identified 

information does not constitute Protected Health Information and is not subject to the terms of 

this Agreement. 

3.11 Prohibition on Sale of Electronic Health Records or Protected Health Information. 

Except as provided in 13405(d)(2), Business Associate shall not directly or indirectly receive 

remuneration in exchange for any protected health information of an individual unless the 

Covered Entity obtained from the Individual, in accordance with 45 C.F.R. § 164.508, a valid 

authorization that includes, in accordance with such section, a specification of whether the 

Protected Health Information can be further exchanged for remuneration by the entity receiving 

Protected Health Information of that Individual. 

4. RESPONSIBILITIES OF THE COVERED ENTITY 

4.1 Notification in Limitation of Privacy Practices. Covered Entity shall notify the 

Business Associate of any limitation(s) in its notice of privacy practices (“Notice”) that the 

Covered Entity provides to Individuals pursuant to 45 C.F.R. §164.520, to the extent such 

limitation(s) may affect Business Associate’s use of Protected Health information. 

4.2 Changes in Consent or Authorization. Covered Entity shall notify the Business 

Associate of any changes in, or revocation of, the consent or authorization provided to the 

Covered Entity by Individuals pursuant to 45 C.F.R. §§ 164.506 or 164.508, to the extent such 

changes may affect Business Associate's use or disclosure of Protected Health Information. 

4.3 Changes in Access. Covered Entity shall notify the Business Associate, in writing 

and in a timely manner, arrangements permitted or required of the Covered Entity under 

45 C.F.R. parts 160 and 164 that may impact in any manner the access, use and/or disclosure of 

Protected Health Information by the Business Associate under this Agreement, including, but not 

limited to, restrictions on use and/or disclosure of Protected Health Information as provided for 

32 

ADD D-37

in 45 C.F.R. §164.522 agreed to by the Covered Entity, to the extent such restrictions may affect 

Business Associate's use or disclosure of Protected Health Information. 

4.4 Use and Disclosure. The Covered Entity agrees not to request Business Associate 

to use or disclose Protected Health Information in any manner that would not be permissible 

under the HIPAA Privacy Rule if done by the Covered Entity. 

4.5 Amendments. The Covered Entity shall notify the Business Associate, in writing, 

of any amendment(s) to the Protected Health Information contained in a Designated Record Set 

in the possession of the Business Associate and inform the Business Associate of the time, form 

and manner in which such amendment(s) shall be implemented. 

4.6 Prohibition on Sale of Electronic Health Records or Protected Health Information. 

Except as provided in 13405(d)(2), Covered Entity shall not directly or indirectly receive 

remuneration in exchange for any protected health information of an individual unless the 

Covered Entity obtained from the Individual, in accordance with 45 C.F.R. § 164.508, a valid 

authorization that includes, in accordance with such section, a specification of whether the 

Protected Health Information can be further exchanged for remuneration by the entity receiving 

Protected Health Information of that Individual. 

5. RESPONSIBILITIES OF THE PARTIES WITH RESPECT TO HANDLING 

DESIGNATED RECORD SETS 

5.1 Responsibilities of Business Associate. In the event that the Parties mutually 

agree in writing that the Protected Health Information constitutes a Designated Record Set, the 

Business Associate hereby agrees to do the following: 

5.1.1 At the request of, and in the time and manner designated by the Covered 

Entity, provide access to the Protected Health Information contained in a Designated Record Set 

to the Covered Entity or the Individual to whom such Protected Health Information relates or his 

or her authorized representative in order to meet a request by such Individual under 45 C.F.R. 

§ 164.524. 

5.1.2 At the request of, and in the time and manner designated by the Covered 

Entity, make any amendment(s) to the Protected Health Information contained in a Designated 

Record Set that the Covered Entity directs pursuant to 45 C.F.R. § 164.526. Provided, however, 

that the Covered Entity makes the determination that the amendment(s) are necessary because 

the Protected Health Information that is the subject of the amendment(s) has been, or could 

foreseeably be, relied upon by the Business Associate or others to the detriment of the Individual 

that is the subject of the Protected Health Information to be amended. 

5.2 Responsibilities of Covered Entity. In the event that the Parties mutually agree in 

writing that the Protected Health Information constitutes a Designated Record Set, the Covered 

Entity hereby agrees to do the following: 

33 

ADD D-38

5.2.1 Notify the Business Associate, in writing, of any Protected Health 

Information contained in a Designated Record Set that the Covered Entity seeks to make 

available to an Individual pursuant to 45 C.F.R. § 164.524 and the time, manner and form in 

which the Business Associate shall provide such access. 

6. REPRESENTATIONS AND WARRANTIES 

6.1 Each Party represents and warrants to the other Party: 

6.1.1 That it is duly organized, validly existing, and in good standing under the 

laws of the jurisdiction in which it is organized or licensed; it has the full power to enter into this 

Agreement and to perform its obligations hereunder; and that the performance by it of its 

obligations under this Agreement have been duly authorized by all necessary corporate actions or 

other actions, as may be necessary, and will not violate any provision of any license, corporate 

charter or bylaws. 

6.1.2 That neither the execution of this Agreement, nor its performance 

hereunder, will directly or indirectly violate or interfere with the terms of another agreement to 

which it is a party, or give any governmental entity the right to suspend, terminate, or modify any 

of its governmental authorizations or assets required for its performance hereunder. Each Party 

represents and warrants to the other Party that it will not enter into any agreement the execution 

and/or performance of which would violate or interfere with this agreement. 

6.1.3 That it is not currently the subject of a voluntary or involuntary petition of 

bankruptcy; does not currently contemplate filing any such voluntary petition, and is not aware 

of any claim for the filing of an involuntary petition. 

6.1.4 That all of its employees, agents, representatives and members of its 

workforce, whose services may be used to fulfill obligations under this Agreement, are or shall 

be appropriately informed of the terms of this Agreement and are under legal obligation to each 

Party, respectively, by contract or otherwise, sufficient to enable each Party to fully comply with 

all provisions of this Agreement including, without limitation, the requirement that modifications 

or limitations that the Covered Entity has agreed to adhere to with regard to the use and 

disclosure of Protected Health Information of an individual that materially affects and/or limits 

the uses and disclosures that are otherwise permitted under the Privacy Rule will be 

communicated to the Business Associate, in writing, and in a timely fashion. 

6.1.5 That it will reasonably cooperate with the other Party in the performance 

of the mutual obligations under this Agreement. 

7. TERM AND TERMINATION 

7.1 Term. This Agreement shall become effective on the Effective date detailed 

above and shall continue in effect until all obligations of the Parties have been met, unless 

terminated as provided in this Section 7. In addition, certain provisions and requirements of this 

34 

ADD D-39

Agreement shall survive its expiration or other termination in accordance with terms set forth 

herein. 

7.2 Termination by the Covered Entity. As provided for under 45 C.F.R. 

§ 164.504(e)(2)(iii), the Covered Entity may immediately terminate this Agreement and any 

other Agreement between the parties if the Covered Entity makes the determination that the 

Business Associate has breached a material term pursuant to the terms of this Agreement or any 

other Agreement between the parties, including but not limited to multiple patient privacy 

breaches or multiple instances of inappropriate use or disclosure of Protected Health 

Information, if cure is not possible. If cure is possible, the Covered Entity may choose to: (i) 

provide the Business Associate with thirty (30) days written notice of the existence of an alleged 

material breach; and (ii) afford the Business Associate an opportunity to cure said alleged 

material breach upon mutually agreed upon terms. Failure to cure in the manner agreed upon by 

the parties is grounds for the immediate termination of this Agreement and any other Agreement 

between the parties. Nothing contained in this Section shall be deemed to require the Covered 

Entity to terminate this Agreement or the other Agreement between the parties upon breach by 

Business Associate of a material term of this Agreement if termination is not feasible, and the 

Covered Entity shall have the right to report any such breach to the Secretary as provided for 

under 45 C.F.R. § 164.504(e)(1)(ii). 

7.4 Effect of Termination. Upon the event of termination pursuant to this Section 7, 

Business Associate agrees to return or destroy all Protected Health Information pursuant to 

45 C.F.R. § 164.504(e)(2)(ii)(I), if it is feasible to do so. Prior to doing so, the Business 

Associate further agrees to recover any Protected Health Information in the possession of its 

employees, contractors, subcontractors or agents. If it is not feasible for the Business Associate 

to return or destroy said Protected Health Information, the Business Associate will notify the 

Privacy Officer of the Covered Entity in writing. Said notification shall include: (i) a statement 

that the Business Associate has determined that it is infeasible to return or destroy the Protected 

Health Information in its possession; and (ii) the specific reasons for such determination. 

Business Associate further agrees to extend any and all protections, limitations and restrictions 

contained in this Agreement to the Business Associate’s use and/or disclosure of any Protected 

Health Information retained after the termination of this Agreement, and to limit any further uses 

and/or disclosures to the purposes that make the return or destruction of the Protected Health 

Information infeasible. If it is infeasible for the Business Associate to obtain from employees, 

contractors, subcontractors or agents any Protected Health Information in the possession of the 

employees, contractors, subcontractors or agents, the Business Associate must provide a written 

explanation to the Covered Entity and require the employees, contractors, subcontractors or 

agents to agree to extend any and all protections, limitations and restrictions contained in this 

Agreement to the employees’, contractors’, subcontractors’ or agents’ use and/or disclosure of 

any Protected Health Information retained after the termination of the Agreement, and to limit 

any further uses and/or disclosures to the purposes that make the return or destruction of the 

Protected Health Information infeasible. 

8. INDEMNIFICATION 

35 

ADD D-40

8.1 Business Associate’s Indemnification. Business Associate shall hold harmless, 

defend and indemnify Covered Entity and its subsidiaries, parents, affiliates, agents, officers, 

directors and employees from and against all claims, liabilities, damages, losses, demands, fines, 

fees, penalties, costs, or suits (including reasonable attorneys’ fees), costs, claims, suits and 

damages, including damages for personal injury (including death), of any nature whatsoever, 

caused by Business Associate, or its employees, representatives, or agents, for property damage, 

personal injury or death, breach of state or federal patient privacy law, or otherwise arising out 

of, or in connection with, or incidental to Business Associate’s performance of or failure to 

perform services pursuant to this Agreement. This indemnity shall include, without limitation, 

costs, expenses, and attorney's fees occasioned by said loss, damage, liabilities, claims, demands, 

or suits as well as the full amount of any judgment rendered or compromise settlement made, 

plus court costs and interest. Business Associate agrees to notify Covered Entity of the existence 

of any such claims or causes of action within a reasonable period of time after Business 

Associate becomes aware of same. 

8.2 Covered Entity’s Indemnification. To the extent allowed by law, Covered Entity 

shall hold harmless, defend and indemnify Business Associate and its subsidiaries, parents, 

affiliates, agents, officers, directors and employees from and against all claims, liabilities, 

damages, losses, demands, fines, fees, penalties, costs, or suits (including reasonable attorney’s 

fees) of any nature whatsoever, caused by Covered Entity, or its employees, representatives, or 

agents, for property damage, personal injury or death, or otherwise arising out of, or in 

connection with, or incidental to Covered Entity’s performance of or failure to perform services 

pursuant to this Agreement. This indemnity shall include, without limitation, costs, expenses, 

and attorney's fees occasioned by said loss, damage, liabilities, claims, demands, or suits as well 

as the full amount of any judgment rendered or compromise settlement made, plus court costs 

and interest. Covered Entity agrees to notify Business Associate of the existence of any such 

claims or causes of action within a reasonable period of time after Covered Entity becomes 

aware of same. 

9. MISCELLANEOUS 

9.1 Survival. The respective rights and obligations of Business Associate and 

Covered Entity under the provisions of agreement solely with respect to Protected Health 

Information Business Associate retains in accordance with Section 7.5 because it is not feasible 

to return or destroy such Protected Health Information, shall survive termination of this 

Agreement. In addition, Section 5 shall survive termination of this Agreement, provided that the 

Covered Entity determines that the Protected Health Information being retained pursuant to 

Section 7.5 herein constitutes a Designated Record Set. 

9.2 Amendments; Waiver. This Agreement may not be modified, nor shall any 

provision hereof be waived or amended, except in a writing duly signed by authorized 

representatives of the Parties. The Parties agree to take such action as is necessary to amend this 

Agreement from time to time as is necessary for Covered Entity to comply with the requirements 

of the Privacy Rule and HIPAA as well HITECH. A waiver with respect to one event shall not 

be construed as continuing, or as a bar to or waiver of, any right or remedy as to subsequent 

events. PPH reserves the right to make unilateral modifications or amendments to this 

36 

ADD D-41

Agreement to the extent necessary to comply with any future changes to the HIPAA or HITECH 

laws. 

9.3 No Third Party Beneficiaries. Nothing expressed or implied in this Agreement is 

intended to confer, nor shall anything herein confer, upon any person other than the Parties and 

the respective successors or assigns of the Parties, any rights, remedies, obligations, or liabilities 

whatsoever. 

9.4 Notices. Any notices to be given hereunder to a Party shall be made via U.S. 

Mail or express courier to such Party's address given below: 

If to Business Associate: 

If to Covered Entity: 

General Counsel 


Palomar Physician Network Inc 


_________________________ 

456 E. Grand Ave 

_________________________ Escondido, CA 92025 

Each Party named above may change its address and that of its representative for notice by the 

giving of notice thereof in the manner herein above provided. 

9.5 Counterparts/Facsimiles. This Agreement may be executed in any number of 

counterparts, each of which shall be deemed an original. Facsimile copies hereof shall be 

deemed to be originals. 

9.6 Disputes. If any controversy, dispute or claim arises between the Parties with 

respect to this Agreement, the Parties shall make good faith efforts to resolve such matters 

informally via mediation or otherwise prior to any lawsuits being filed. 

9.7 Laws. The laws of the State of California shall govern this document. 

9.8 Regulatory References. A reference in this Agreement to a section in the C.F.R., 

HIPAA, or HITECH means the section as in effect or as amended. 

9.9 Interpretation. Any ambiguity in this Agreement shall be resolved to permit 

Covered Entity to comply with HIPAA and HITECH. 

// 

// 

// 

// 

// 

// 

// 

Deleted: 

 

 

 

37 

ADD D-42

By signing below each party hereby certifies that it has read the HIPAA and HITECH in full and 

understands it’s obligations under these laws independently of what is detailed in this 

Agreement. 

BUSINESS ASSOCIATE 

________________________________ 

By: 

________________________________ 

Printed Name: 

________________________________ 

Title: 

_________________________________ 

Date: 

COVERED ENTITY 

_____________________________ 

By: 

______________________________ 

Print Name: 

______________________________ 

Title: 

______________________________ 

Date: 

38 

ADD D-43

ADDENDUM E 

ADD E-1


HOSPITAL, EMERGENCY CARE, TRAUMA CENTER IMPROVEMENT AND 

REPAIR MEASURE BONDS 

INDEPENDENT CITIZENS’ OVERSIGHT COMMITTEE 

1. COMMITTEE ESTABLISHED. 

PROCEDURES, POLICIES AND GUIDELINES 

The Board of Directors (the “Board”) of Palomar Pomerado Health (the “District”) 

hereby establishes the Independent Citizens’ Oversight Committee (the “Committee”) which 

shall have the purposes and duties set forth in these Procedures, Policies and Guidelines (the 

“Guidelines”). 

2. PURPOSE. 

The purpose of the Committee is to ensure that the proceeds of bonds authorized by the 

“Hospital, Emergency Care, Trauma Center Improvement and Repair Measure” 

(“Measure BB”), approved by the voters on November 2, 2004 (the “Bond Proceeds”), are 

expended only for purposes permitted by Measure BB. 

3. DUTIES. 

To carry out its stated purpose, the Committee shall perform the duties specified in this 

Section 3: 

3.1 Review Expenditures. The Committee shall review each annual expenditure report 

produced by the District in accordance with Measure BB (each, a “District Expenditure Report”) 

to ensure that (a) Bond Proceeds are expended only for the purposes set forth in Measure BB; 

and (b) no Bond Proceeds are used for staff or administrator salaries or other operating expenses. 

3.2 Report of the Committee. The Committee shall prepare and provide to the Board for 

the Board’s consideration and response and for dissemination to the public an annual report 

concerning the Committee’s review of each District Expenditure Report. The Committee shall 

consider the response provided by the Board pursuant to Section 7.4 herein and provide a reply 

to the Board. Such report and reply shall be reviewed at the next Committee meeting and, as 

approved, or corrected and amended and approved, be submitted to the Board for inclusion in the 

Board’s public records in accordance with Section 6.4. 

4. COMMITTEE ACTIVITIES. 

4.1 Power of the Committee. In order to perform the duties set forth in Section 3 hereof, 

the Committee may engage only in the following activities: 

(a) Receive and review copies of each District Expenditure Report and personally 

conduct such physical examination of the construction sites as it deems reasonably necessary to 

verify the expenditures reported therein. 

(b) In accordance with Section 6.4, report to the Board any exceptions, discrepancies, 

issues and/or concerns regarding the use of Bond Proceeds for the Board’s consideration and 

response and for dissemination to the public. 

(c) Review and reply to the Board’s response to any report submitted pursuant to Section 

4.1(b) above and provided to the Committee in accordance with Section 7.4. 

ADD E-2

(d) Submit a final report upon the termination of the Committee’s activities in accordance 

with Section 10. 

5. MEMBERSHIP. 

5.1 Number. The Committee shall consist of not less than nine members, the exact 

number to be determined from time to time by the Board, appointed by the Board from a list of 

candidates who have submitted written applications. 

5.2 General Qualification Standards. 

(a) To be a qualified member of the Committee, a person must: 

(1) be at least 18 years of age and a citizen of the State of California and reside 

within the boundaries of the District; 

(2) not be an employee, official, vendor, contractor or consultant of the District; 

and 

(3) not have an immediate family member who is an employee, official, vendor, 

contractor or consultant of the District. 

(b) If a member fails to meet the applicable qualification standards set forth above at any 

time during his or her term of service, such member shall be disqualified from service on the 

Committee and his or her position shall be declared vacant. The Board shall appoint a new 

person to serve the remainder of the term, in accordance with the appointment process set forth 

in Section 5.4 below. 

5.3 Required Committee Members. 

(a) The Committee shall at all times, except during the period of a vacancy, include the 

following members (collectively, the “Required Members”): 

(1) one member who is active in a business organization; 

(2) one member who is active in a senior citizens’ organization; 

(3) one member who is active in a bona fide taxpayers’ organization; and 

(4) one member who is a nurse or physician. 

(b) Any Required Member who resigns from his or her business organization, senior 

citizens’ organization or bona fide taxpayers’ organization (as applicable) shall be deemed to 

concurrently resign from the Committee and the position shall be declared vacant. The Board 

shall appoint a new person to serve the remainder of the term, in accordance with the 

appointment process set forth in Section 5.4 below. 

5.4 Appointment. The Board shall appoint members to the Committee through the 

following process: 

(a) The Board shall solicit applications from the general public through appropriate 

means as determined by the Board, which may include, without limitation, (i) advertisements on 

the District’s internet web site; (ii) advertisements posted in libraries within the District; (iii) 

advertisements posted in District hospitals; and (iv) advertisements in newspapers in general 

circulation within all or part of the District. 

(b) If necessary, the Board shall solicit applications from the membership of appropriate 

local business organizations, senior citizens’ organizations, bona fide taxpayers’ organizations 

and physician and nursing groups. 

(c) The Board or its designee shall review all applications. 

ADD E-3

(d) The Board’s designee, if any, shall make recommendations to the Board regarding 

Committee membership. 

(e) Following the Board’s review or its designee’s recommendations, as applicable, the 

Board shall select and appoint members to the Committee and shall designate the Required 

Members. If fewer than nine applications are initially received, or if no applications are initially 

received that meet the requirements of one or more of the Required Members, then the Board 

shall appoint, or take such action as is necessary to allow it to appoint, members of the 

Committee such that the Committee is composed as required by Section 5 hereof. 

5.5 Ethics; Conflicts of Interest. By accepting appointment to the Committee, each 

member agrees to comply with Articles 4 (commencing with Section 1090) and 4.7 

(commencing with Section 1125) of Division 4 of Title 1 of the Government Code and the 

Political Reform Act of 1974 (Government Code §§ 81000 et seq.). Additionally, each member 

shall comply with the Committee’s Ethics Policy Statement attached hereto as Attachment A. 

5.6 Term. Committee members shall be divided into three classes, as nearly equal in 

number as the then total number of members constituting the entire Committee permits, with the 

term of office of one class expiring each year. At the Committee’s first meeting, members shall 

draw lots or otherwise select the membership of each class, with the members of one class to 

serve for an initial term expiring June 30, 2006, members of another class to serve for an initial 

term expiring June 30, 2007 and members of another class to serve for an initial term expiring 

June 30, 2008. Each initial term shall commence upon each member’s respective appointment. 

Each subsequent term shall commence on July 1 and expire on June 30. Subsequent to the initial 

term of one year, two years or three years, as applicable, each class shall serve a term of two 

years. No Committee member may serve for more than two consecutive terms. 

(a) A Committee member who has served two consecutive terms may apply for 

reappointment after a period of two years following expiration of such Committee member’s 

second consecutive term. 

5.8 Removal; Vacancy. The Board may remove any Committee member for failure to 

perform the duties specified in Section 3 or other cause, including failure to attend Committee 

meetings, upon the recommendation of the Committee Chair. Upon the removal of a member, 

his or her seat shall be declared vacant. The Board shall fill any vacancies on the Committee 

within 90 days from the initial date of such vacancy in accordance with the requirements of 

Section 5.3 and the appointment process set forth in Section 5.4 hereof. 

5.9 Compensation. The Committee members shall not be compensated for their services, 

but may be reimbursed for their reasonable out of pocket costs incurred in connection with their 

service on the Committee and previously approved by the Committee Chair. 

5.10 Authority of Members. Committee members shall not have the authority to direct 

staff of the District. With the exception of the District Expenditure Report, which the Committee 

shall receive concurrently with the Board, the Committee may only receive copies of reports, 

records and documents that have been previously presented to the Board and which are in the 

public record unless otherwise directed by the Board. Any requests for such reports, records and 

documents shall be made in writing to the Secretary of the Board of Directors or the Secretary’s 

designee. 

ADD E-4

6. MEETINGS OF THE COMMITTEE. 

6.1 Regular Meetings. The Committee shall establish a schedule for the date and time of 

regular meetings to be held at least annually. The Committee shall meet more frequently as it 

deems reasonably necessary or as requested by the Board. The Committee shall hold an initial 

organizational meeting within 30 days’ of the Board’s appointment of the Committee as set forth 

in Section 5.4. 

6.2 Location. All meetings shall be held at the administrative offices of the District 

located at 15255 Innovation Drive, San Diego, California 92128, or other District facilities, or 

such other public space as designated by the Committee, provided, however, that all meetings 

shall be held within the District. 

6.3 Procedures. All meetings shall be open and public in accordance with the Ralph M. 

Brown Act, Government Code Sections 54950 et seq. (the “Brown Act”). Meetings shall be 

conducted according to such procedural rules as the Committee may adopt. Committee members 

may participate in a meeting by means of conference telephone or similar communications 

equipment by means of which all persons participating in the meeting can hear each other, and 

such participation in a meeting shall constitute presence in person at such meeting. A majority 

of the number of Committee members shall constitute a quorum for the transaction of any 

business except adjournment. The Committee shall apply the same standards as used by the 

Board in giving notice of its meetings. All Committee decisions, including without limitation all 

decisions regarding reports to the Board, shall be made by a majority vote of those Committee 

members in attendance. 

6.4 Reports of Committee Meetings. The Secretary of the Committee shall keep or cause 

to be kept a report of all Committee meetings and shall submit such report, which may be in the 

form of minutes, initially marked as a “DRAFT,” to the Board within thirty days of the meeting 

from which such minutes were taken so that the Board may cause such minutes to become part 

of the Board’s public records and made available on the Board’s web site or other electronic 

means of communication then in use. 

7. DISTRICT SUPPORT AND BOARD REVIEW OF COMMITTEE REPORT. 

7.1 The District shall provide to the Committee necessary technical and administrative 

assistance as follows: 

(a) preparation of and posting of public notices as required by the Brown Act ensuring 

that all notices to the public are provided in the same manner as notices regarding meetings of 

the Board; 

(b) provision of a meeting room, including any necessary audio/visual equipment; 

(c) preparation and copies of any documentary meeting materials, such as agendas and 

reports, including oral or recorded presentations by District staff and consultants; 

(d) retention of all Committee records and provision of public access to such records; and 

(e) in consultation with the Committee Chair, such other support as the Committee Chair 

and the Board deem necessary. 

7.2 District staff may, from time-to-time, attend Committee meetings to explain material 

provided by the Committee as deemed reasonably necessary by the Committee Chair. 

ADD E-5

7.3 District staff shall maintain all Committee records and provide public access to such 

records. 

7.4 The Board shall consider any exceptions, discrepancies, issues and/or concerns 

regarding the use of Bond Proceeds set forth in Committee reports and shall provide a response 

in writing to the Committee for consideration by the Committee as soon as reasonably possible. 

7.5 The District shall not use any Bond Proceeds to provide the support set forth in this 

Section 7. 

8. OFFICERS. 

The Board shall annually appoint a Committee Chair, Committee Vice-Chair and 

Committee Secretary. The Committee Vice-Chair shall act as Committee Chair when the 

Committee Chair is absent. Each such appointment shall expire on June 30 each year (except 

that the initial appointments shall not expire until June 30, 2006). No person shall serve as 

Committee Chair for more than three consecutive annual terms. 

9. AMENDMENT OF GUIDELINES. 

Any amendment to these Guidelines must be approved by the Board prior to becoming 

effective. 

10. TERMINATION. 

The Committee shall automatically terminate and disband when all Bond Proceeds have 

been expended and the Committee has reviewed the final District Expenditure Report. The 

Committee shall prepare a report summarizing its findings and submit it to the Board as its last 

official act. 

11. ADVISORY PANEL. 

The Board hereby establishes an Advisory Panel (the “Panel”) to provide for continuity 

of knowledge. The Panel shall consist of at least one member appointed by the Board from a list 

of candidates submitted by the Committee Chair. To serve as a member of the Panel, the 

candidate shall have previously served as a member of the Committee. Each member of the 

Panel shall serve for a term of one (1) year, commencing on July 1 and expiring on June 30 of 

the following year. No member of the Panel may serve for more than two consecutive terms. By 

accepting appointment to the Panel, each member of the Panel agrees to comply with Section 5.5 

of the Guidelines and acknowledges that no compensation shall be provided in connection with 

serving as a member of the Panel. No member of the Panel may vote on any matters voted upon 

by the Committee nor exercise any of the duties or rights of any member of the Committee. 

ADD E-6

ATTACHMENT A 

INDEPENDENT CITIZENS’ OVERSIGHT COMMITTEE 

ETHICS POLICY STATEMENT 

This Ethics Policy Statement provides general guidelines for Committee members to 

follow. The guidelines set forth in this Statement are not exhaustive and do not excuse 

Committee members from existing laws, rules, policies and procedures as well as from concepts 

that define generally accepted good business practices and professional conduct. Committee 

members are expected to adhere strictly to the provisions of this Ethics Policy Statement. All 

capitalized terms used herein shall have the meanings set forth in the Guidelines of the 

Committee. 

CONFLICT OF INTEREST. A Committee member shall not make or attempt to 

influence a District decision related to any contract funded by Bond Proceeds or any construction 

project which will benefit a Committee member’s outside employment, business or personal 

finances or benefit an immediate family member, such as a spouse, child or parent. 

OUTSIDE EMPLOYMENT. A Committee member shall not use his or her position as a 

Committee member to negotiate future employment with any person or organization that relates 

to any contract funded by Bond Proceeds or any construction project. A Committee member 

shall not make or influence a District decision related to any construction project involving the 

interests of a person with whom the member has an agreement concerning current or future 

employment or remuneration of any kind. For a period of two years after leaving the Committee, 

a former Committee member may not represent any person or organization for compensation in 

connection with any matter pending before the District that, as a Committee member, he or she 

participated in personally and substantially. Specifically, for a period of two years after leaving 

the Committee, a former Committee member and the companies and businesses for which the 

member works shall be prohibited from contracting with the District with respect to (i) bidding 

on projects funded by the Bond Proceeds, and (ii) any construction project. 

COMMITMENT TO UPHOLD LAW. A Committee member shall uphold the federal 

and California Constitutions, the laws and regulations of the United States and the State of 

California and all other applicable government entities, and the policies, procedures, rules and 

regulations of the District. 

COMMITMENT TO DISTRICT. A Committee member shall place the interests of the 

District above any personal or business interests of the member. 

ADD E-7

ADDENDUM F 

ADD F-1

ADDENDUM F 

Financial Statements 

Fiscal Year 2010 

February 

ADD F-2

Table of Contents 

ADD F-2 

Balanced Scorecard Comparisons ......................................................................3 

Executive Summary of Key Indicators ..................................................................4-5 

Key Variance 

Month-To-Date.............................................................................................6-8 

Year-To-Date ................................................................................................9-11 

Balance Sheet – Consolidated..............................................................................12 

Income Statements 

Month-To-Date.............................................................................................13 

Year-To-Date ................................................................................................14 

Current vs. Prior Year-to-Date ....................................................................15 

Fiscal Year Projection..................................................................................16 

Monthly Trend...............................................................................................17 

Cash Flow Statement – Consolidated..................................................................18 

Financial Report Narrative .....................................................................................19-22 

Key Statistical Indicators .........................................................................................23-25 

YTD Supplies Expense by Account........................................................................26 

Bond Covenant Ratios............................................................................................27 

Budget Comparison Graphs 

Statistical Indicators.....................................................................................28-44 

Payor Mix ......................................................................................................45 

Case Mix Index Graphs...........................................................................................46-48 

Budget Comparison Graphs – Adjusted Discharges..........................................49-54 

Cash Collections......................................................................................................55 

HealthWoRx Dashboard .........................................................................................56 

SUPPLEMENTAL INFORMATION ..........................................................................................................57 

Flash Report ...............................................................................................................................58-59 ADD F-3

Balanced Scorecard Comparisons 

ADD F-3 

November December January 

February 

Actual Actual Actual Actual Budget Variance 

YTD 2010 

% Actual 

to Budget Actual Budget Variance 

PPH Indicators: 

% Actual to 

Budget 

10.53% 11.15% 10.70% 10.87% 10.35% 0.52% 105.0% OEBITDA Margin w/Prop Tax 10.87% 10.76% 0.11% 101.0% 

$ 11,761.43 $ 10,967.78 $ 10,833.14 $ 11,448.22 $ 11,116.43 $ (331.79) 103.0% Expenses/Adj Discharge $ 11,128.76 $ 10,980.02 $ (148.74) 101.4% 

$ 7,075.48 $ 6,428.14 $ 6,752.23 $ 6,883.77 $ 6,477.14 $ (406.63) 106.3% SWB/Adj Discharge $ 6,647.74 $ 6,473.03 $ (174.71) 102.7% 

6.47 6.51 6.17 6.21 6.21 0.00 100.0% Prod FTE's/Adj Occupied Bed 6.35 6.21 (0.14) 102.3% 

PPH North Indicators: 

10.25% 6.35% 5.59% 7.21% 10.07% (2.86%) 71.6% OEBITDA Margin w/Prop Tax 8.47% 10.47% (2.00%) 80.9% 



5.32 5.29 5.09 5.07 5.07 0.00 100.0% Prod FTE's/Adj Occupied Bed 5.16 5.05 (0.11) 102.2% 

PPH South Indicators: 

7.30% 18.97% 17.55% 15.70% 8.09% 7.61% 194.1% OEBITDA Margin w/Prop Tax 13.20% 9.06% 4.14% 145.7% 



6.42 6.85 6.34 6.44 6.25 (0.19) 103.0% Prod FTE's/Adj Occupied Bed 6.65 6.22 (0.43) 106.9% 

ADD F-4

Executive Summary of Key Indicators 

ADD F-4 

Statistics: 

FEBRUARY 2010 FY 10 Y-T-D @ FEBRUARY 2010 

Actual Budget Variance Actual Budget Variance 

Adjusted Discharges 3,154 3,116 38 26,688 27,027 (339) 

Acute Admissions 2,142 2,217 (75) 18,052 19,237 (1,185) 

Acute Patient Days 8,673 8,651 22 71,507 75,081 (3,574) 

Acute ALOS 4.02 3.90 0.12 3.91 3.90 0.01 

Case Mix Index (w/o Births) 1.54 1.46 0.08 1.52 1.46 0.06 

Total Surgeries 1,510 1,476 34 12,117 12,803 (686) 

Births 321 404 (83) 3,204 3,512 (308) 

E/R Visits & Admissions 7,285 6,769 516 63,828 58,748 5,080 

ER to Admit Rate 16.3% 17.4% (1.1%) 15.6% 17.4% (1.8%) 

Productivity % 100.4% 100.0% 0.4% 99.1% 100.0% (0.9%) 

Income Statement: 

Net Patient Revenue 36,589,034 34,657,315 1,931,719 301,766,900 300,623,033 1,143,867 

Total Net Revenue 37,311,278 35,294,568 2,016,710 306,794,174 305,721,057 1,073,117 

Sal., Wages, Cont. Lbr 17,275,361 16,265,727 (1,009,634) 141,750,110 140,981,104 (769,006) 

Supplies 5,913,367 5,619,325 (294,042) 47,621,894 48,728,623 1,106,729 

Total Expenses 36,107,691 34,638,792 (1,468,899) 297,003,238 296,756,716 (246,522) 

Net Inc. (Loss) before Non-Op 1,203,587 655,776 547,811 9,790,936 8,964,341 826,595 

Net Income (Loss) 2,352,896 1,685,094 667,802 18,435,608 17,198,885 1,236,723 

Cash Flow: 

Cash Collections 40,100,000 38,800,000 1,300,000 302,900,000 310,400,000 (7,500,000) 

Days Cash on Hand 130 65.0 65.0 130 65.0 65.0 

Moody 

Benchmark 

Ratios: 

OEBITDA w/ Prop. Tax 10.87% 10.35% 0.52% 10.87% 10.76% 0.11% 

Net Income Margin 6.31% 4.77% 1.54% 6.01% 5.63% 0.38% 

Bad Debt % of Net Revenue 14.7% 15.1% 0.4% 15.1% 15.2% 0.1% 6.6% 

Return On Assets 2.2% 2.1% (0.1%) 2.3% 

Annual Debt Service Coverage 3.5 3.1 

Cushion Ratio 11.0 9.6 

ADD F-5

Executive Summary & Highlights 

ADD F-5 

Stat MTD Budget YTD Budget PY 

Patient Days - Acute 8,673 8,651 71,507 75,081 73,613 

Discharges - Acute 2,158 2,217 18,284 19,237 18,832 

OP Registrations 4,729 3,784 31,569 32,844 33,803 

Total ER Visits 7,285 6,769 63,828 58,748 59,053 

Deliveries 321 404 3,204 3,512 3,456 

Profit & Loss (in millions) MTD Budget YTD Budget PY 

Capitation Breakeven Breakeven Breakeven (1.0) (0.4) 

Net Patient Revenue 36.6 34.7 301.8 300.6 290.4 

Total Revenue 37.3 35.3 306.8 305.7 295.2 

SWB 21.6 19.9 175.8 172.1 166.3 

Contract Labor 0.1 0.3 1.7 2.8 5.7 

Supplies 5.9 5.6 47.6 48.7 46.5 

Total Expense 36.1 34.6 297.0 296.8 289.6 

Net Income from Ops 1.2 0.7 9.8 9.0 5.6 

Net Income 2.4 1.7 18.4 17.2 15.0 

ADD F-6

Key Variance Explanations 

Month-To-Date 

ADD F-6 

Actual Budget Variance Detail Variance 

Net Income From Operations 1,203,587 655,776 547,811 

Total Net Revenue 1,931,719 

Net Patient Revenue 1,931,719 

Other Operating Revenue 84,991 

Welcome Home Baby (26,427) 

Other 111,418 

Salaries & Wages (1,203,376) 

Volume Variance (194,389) 

Rate & Efficiency (1,008,987) 

Benefits (519,005) 

Group Health Insurance (349,684) 

FICA (92,393) 

Pension (43,126) 

Workers Comp (15,797) 

Other (18,005) 

Contract Labor 193,742 


Rate & Efficiency 197,716 

Professional Fees 49,081 

Internal Audit Consulting (17,413) 

Organizational Development - contra to purchased services (10,583) 

Other 77,077 ADD F-7


Month-To-Date (cont’d) 

ADD F-7 


Supplies (294,042) 


Rate & Efficiency (225,514) 

Breakdown of Variance: 

Prosthesis 28,462 

Pharmaceutical (19,057) 

Other (303,447) 

Purchased Services (518,875) 

North County Radiology Agreement - Nighthawk (240,000) 

Information Systems (228,855) 

Patient Financial Services - contra to revenue (269,013) 

San Diego Radiosugery - contra to revenue (80,000) 

Other 298,993 

Depreciation 144,786 


Other Direct Expenses 678,790 

Docusys (220,110) 

Utilities 506,722 

Rent Equipment 62,761 

Other 329,417 

Total Actual to Budget MTD Variance for February 2010 547,811 547,811 

ADD F-8


Month-To-Date (cont’d) 

ADD F-8 


Total Actual to Budget MTD Variance for February 2010 547,811 

Non-Operating Income (Expense) 1,149,309 1,029,318 119,991 

Property Tax 1,166,666 1,166,666 0 

Investment Income (Loss) 282,333 314,432 (32,099) 

Breakdown of Actual: 

Salomon Bros (70% Gov't Sec, 29% Corp Bonds; 1% MMF) 115,801 

Pacific Inc (94% Gov't Sec, 5% Corp Bonds, 1% MMF) 134,413 

LAIF 15,573 

Other 16,546 

Interest Expense (359,543) (481,154) 121,611 

Other 59,853 29,374 30,479 

Net Income 2,352,896 1,685,094 667,802 

ADD F-9


Year-To-Date 

ADD F-9 


Net Income From Operations 9,790,936 8,964,341 826,595 

Total Net Revenue 1,143,867 

Net Patient Revenue 1,143,867 

Other Operating Revenue (70,750) 

Welcome Home Baby (228,575) 

Other 157,825 

Salaries & Wages (1,933,107) 

Volume Variance 1,732,869 

Rate & Efficiency (3,665,976) 

Benefits (1,699,403) 

Group Health Insurance (977,401) 

FICA (294,770) 

Pension (246,676) 

Work Comp (117,325) 

Other (63,231) 

Contract Labor 1,164,101 

Volume Variance 35,459 

Rate & Efficiency 1,128,642 

Professional Fees 91,684 

Organizational Development- contra to Purchased Services (269,328) 

Internal Audit Consulting (59,239) 

Dr. Recruitment 399,524 

Other 20,727 

ADD F-10


Year-To-Date (cont’d) 

ADD F-10 


Supplies 1,106,729 

Volume Variance 611,204 

Rate & Efficiency 495,525 

Breakdown of Variance: 

Prosthesis (196,003) 

Pharmaceutical 1,326,203 

Other (23,471) 

Purchased Services (2,251,721) 

Information Systems (780,375) 

Patient Financial Services - contra to revenue (619,916) 

Plant Maintenance (Room a Day Program, Fire Watch Program, other) (539,415) 

San Diego Radiosugery - contra to revenue (499,500) 

Patient Access - contra to revenue (403,273) 

North County Radiology Agreement - Nighthawk (240,000) 

Organizational Development- contra to Professional Fees 124,543 

Human Resources 250,455 

Other 455,760 



Other Direct Expenses 2,897,045 

Docusys (220,110) 

Utilities 1,390,797 

Rent Equipment 512,984 

Insurance 417,318 

Other 796,056 

ADD F-11 

Total Actual to Budget YTD Variance for February 2010 826,595 826,595


Year-To-Date (cont’d) 

ADD F-11 


Total Actual to Budget YTD Variance for February 2010 826,595 

Non-Operating Income (Expense) 8,644,672 8,234,544 410,128 

Property Tax 9,333,328 9,333,328 0 

Investment Income (Loss) 2,199,718 2,515,456 (315,738) 

Breakdown of Actual: 

Salomon Bros (70% Gov't Sec, 29% Corp Bonds; 1% MMF) 1,198,249 

Pacific Inc (94% Gov't Sec, 5% Corp Bonds, 1% MMF) 637,926 

LAIF 171,362 

Other 192,182 

Interest Expense (3,120,018) (3,849,232) 729,214 

Other 231,644 234,992 (3,348) 

Net Income 18,435,608 17,198,885 1,236,723 

ADD F-12

Balance Sheet 

Consolidated 

ADD F-12 

Current Prior Prior Fiscal Current Prior Prior Fiscal 

Month Month Year End Month Month Year End 

Assets 

Liabilities 

Current Assets 

Current Liabilities 

Cash on Hand $6,628,440 $11,412,969 $10,354,783 Accounts Payable $35,741,182 $23,484,399 $49,101,571 

Cash Marketable Securities 132,893,990 111,441,574 107,135,131 Accrued Payroll 14,849,625 14,416,964 12,894,999 

Total Cash & Cash Equivalents 139,522,430 122,854,543 117,489,914 Accrued PTO 14,550,683 14,146,108 14,113,565 

Accrued Interest Payable 4,556,786 8,405,751 5,384,506 

Patient Accounts Receivable 210,673,685 245,815,568 196,918,121 Current Portion of Bonds 7,393,445 7,393,445 9,780,000 

Allowance on Accounts (117,024,622) (151,927,414) (102,639,179) Est Third Party Settlements 5,192,145 2,766,661 2,343,270 

Net Accounts Receivable 93,649,063 93,888,154 94,278,942 Other Current Liabilities 24,454,111 24,463,748 16,996,638 

Total Current Liabilities 106,737,977 95,077,076 110,614,549 

Inventories 6,498,652 6,401,148 6,346,391 

Prepaid Expenses 2,944,019 6,956,839 3,996,246 Long Term Liabilities 

Other 13,638,659 13,471,807 4,443,168 Bonds & Contracts Payable 892,308,281 891,218,065 662,496,664 

Total Current Assets 256,252,823 243,572,491 226,554,661 

General Fund Balance 

Non-Current Assets Unrestricted 343,195,987 339,573,266 328,536,409 

Restricted Assets 374,191,299 394,748,799 278,894,137 Restricted for Other Purpose 314,052 314,052 312,345 

Restricted by Donor 314,052 314,052 312,345 Board Designated 11,773,309 12,043,135 0 

Board Designated 11,773,309 12,043,135 0 Total Fund Balance 355,283,348 351,930,453 328,848,754 

Total Restricted Assets 386,278,660 407,105,986 279,206,482 

Total Liabilities / Fund Balance $1,354,329,606 $1,338,225,594 $1,101,959,967 

Property Plant & Equipment 385,536,147 386,711,329 395,014,891 

Accumulated Depreciation (230,928,219) (230,517,485) (227,431,539) 

Construction in Process 529,399,277 503,319,935 400,568,817 

Net Property Plant & Equipment 684,007,205 659,513,779 568,152,169 

Investment in Related Companies 646,210 799,372 1,418,426 

Deferred Financing Costs 22,544,024 22,650,801 19,951,541 

Other Non-Current Assets 4,600,684 4,583,165 6,676,688 

Total Non-Current Assets 1,098,076,783 1,094,653,103 875,405,306 

Total Assets $1,354,329,606 $1,338,225,594 $1,101,959,967 

ADD F-13

Income Statement: Month-to-Date 

Consolidated – Adjusted Discharges 

ADD F-13 

Variance $/Adjusted Discharges 

Actual Budget Variance Volume Rate/Eff Actual Budget Variance 

Statistics: 

Admissions - Acute 2,142 2,217 (75) 

Admissions - SNF 73 83 (10) 

Patient Days - Acute 8,673 8,651 22 

Patient Days - SNF 6,014 5,950 64 

ALOS - Acute 4.02 3.90 0.12 

ALOS - SNF 79.13 72.56 6.57 

Adjusted Discharges 3,154 3,116 38 

Revenue: 

Gross Revenue $ 135,273,836 $ 129,589,949 $ 5,683,887 F $ 1,580,365 $ 4,103,522 $ 42,889.61 $ 41,588.56 $ 1,301.05 

Deductions from Rev (98,684,802) (94,932,634) (3,752,168) U (1,157,715) (2,594,453) (31,288.78) (30,466.19) (822.59) 

Net Patient Revenue 36,589,034 34,657,315 1,931,719 F 422,650 1,509,069 11,600.84 11,122.37 478.46 

Other Oper Revenue 722,244 637,253 84,991 F 7,771 77,220 228.99 204.51 24.48 

Total Net Revenue 37,311,278 35,294,568 2,016,710 F 430,422 1,586,288 11,829.83 11,326.88 502.94 

Expenses: 

Salaries, Wages & Contr Labor 17,275,361 16,265,727 (1,009,634) U (198,363) (811,271) 5,477.29 5,220.07 (257.22) 

Benefits 4,436,047 3,917,042 (519,005) U (47,769) (471,236) 1,406.48 1,257.07 (149.41) 

Supplies 5,913,367 5,619,325 (294,042) U (68,528) (225,514) 1,874.88 1,803.38 (71.50) 

Prof Fees & Purch Svc 5,141,155 4,671,361 (469,794) U (56,968) (412,826) 1,630.04 1,499.15 (130.89) 

Depreciation 1,685,227 1,830,013 144,786 F (22,317) 167,103 534.31 587.30 52.98 

Other 1,656,534 2,335,324 678,790 F (28,480) 707,270 525.22 749.46 224.25 

Total Expenses 36,107,691 34,638,792 (1,468,899) U (422,424) (1,046,475) 11,448.22 11,116.43 (331.79) 

Net Inc Before Non-Oper Income 1,203,587 655,776 547,811 F 7,997 539,814 381.61 210.45 171.15 

Property Tax Revenue 1,166,666 1,166,666 - - 14,228 (14,228) 369.90 374.41 (4.51) 

Non-Operating Income (17,357) (137,348) 119,991 F (1,675) 121,666 (5.50) (44.08) 38.58 

Net Income (Loss) $ 2,352,896 $ 1,685,094 $ 667,802 F $ 20,550 $ 647,252 $ 746.00 $ 540.79 $ 205.22 

Net Income Margin 6.31% 4.77% 1.54% 

OEBITDA Margin w/o Prop Tax 7.74% 7.04% 0.70% 

OEBITDA Margin with Prop Tax 10.87% 10.35% 0.52% 

F= Favorable variance 

U= Unfavorable variance 

ADD F-14

Income Statement: Fiscal Year-to-Date 


ADD F-14 

Variance 

$/Adjusted Discharges 

Actual Budget Variance Volume Rate/Eff Actual Budget Variance 

Statistics: 

Admissions - Acute 18,052 19,237 (1,185) 


Patient Days - Acute 71,507 75,081 (3,574) 


ALOS - Acute 3.91 3.90 0.01 

ALOS - SNF 77.28 73.14 4.14 

Adjusted Discharges 26,688 27,027 (339) 

Revenue: 

Gross Revenue $ 1,132,843,167 $ 1,124,566,305 $ 8,276,862 F $ (14,105,449) $ 22,382,311 $ 42,447.66 $ 41,608.99 $ 838.67 

Deductions from Rev (831,076,267) (823,943,272) (7,132,995) U 10,334,731 (17,467,726) (31,140.45) (30,485.93) (654.52) 

Net Patient Revenue 301,766,900 300,623,033 1,143,867 F (3,770,718) 4,914,585 11,307.21 11,123.06 184.15 

Other Oper Revenue 5,027,274 5,098,024 (70,750) U (63,945) (6,805) 188.37 188.63 (0.25) 

Total Net Revenue 306,794,174 305,721,057 1,073,117 F (3,834,663) 4,907,780 11,495.59 11,311.69 183.89 

Expenses: 

Salaries, Wages & Contr Labor 141,750,110 140,981,104 (769,006) U 1,768,328 (2,537,334) 5,311.38 5,216.31 (95.07) 

Benefits 35,664,785 33,965,382 (1,699,403) U 426,028 (2,125,431) 1,336.36 1,256.72 (79.64) 

Supplies 47,621,894 48,728,623 1,106,729 F 611,204 495,525 1,784.39 1,802.96 18.57 

Prof Fees & Purch Svc 41,239,759 39,079,722 (2,160,037) U 490,177 (2,650,214) 1,545.25 1,445.95 (99.30) 

Depreciation 14,220,620 14,598,770 378,150 F 183,113 195,037 532.85 540.16 7.31 

Other 16,506,070 19,403,112 2,897,042 F 243,373 2,653,669 618.48 717.92 99.43 

Total Expenses 297,003,238 296,756,716 (246,522) U 3,722,223 (3,968,745) 11,128.72 10,980.01 (148.71) 

Net Inc Before Non-Oper Income 9,790,936 8,964,341 826,595 F (112,440) 939,035 366.87 331.68 35.19 

Property Tax Revenue 9,333,328 9,333,328 - - (117,068) 117,068 349.72 345.33 4.39 

Non-Operating Income (688,656) (1,098,784) 410,128 F 13,782 396,346 (25.80) (40.66) 14.85 

Net Income (Loss) $ 18,435,608 $ 17,198,885 $ 1,236,723 F $ (215,726) $ 1,452,449 $ 690.78 $ 636.36 $ 54.42 





ADD F-15

Income Statement: Current vs. Prior Year-to-date 


ADD F-15 

February 10 

YTD 

Statistics: 

Admissions - Acute 18,052 18,645 (593) 



Patient Days - SNF 51,934 50,861 1,073 

ALOS - Acute 3.91 3.91 - 

ALOS - SNF 77.28 71.53 5.75 


Variance 


February 09 

YTD Variance Volume Rate/Eff Actual FY10 Actual FY09 Variance 

Revenue: 

Gross Revenue $ 1,132,843,167 $ 1,037,226,472 $ 95,616,695 F $ (194,288) $ 95,810,983 $ 42,447.66 $ 38,857.62 $ 3,590.04 

Deductions from Rev (831,076,267) (746,865,559) (84,210,708) U 139,899 (84,350,607) (31,140.45) (27,979.83) (3,160.62) 

Net Patient Revenue 301,766,900 290,360,913 11,405,987 F (54,389) 11,460,376 11,307.21 10,877.79 429.42 

Other Oper Revenue 5,027,274 4,816,309 210,965 F (902) 211,867 188.37 180.43 7.94 

Total Net Revenue 306,794,174 295,177,222 11,616,952 F (55,291) 11,672,243 11,495.59 11,058.23 437.36 

Expenses: 

Salaries, Wages & Contr Labor 141,750,110 137,660,566 (4,089,544) U 25,786 (4,115,330) 5,311.38 5,157.18 (154.20) 

Benefits 35,664,785 34,259,784 (1,405,001) U 6,417 (1,411,418) 1,336.36 1,283.47 (52.89) 

Supplies 47,621,894 46,541,033 (1,080,861) U 8,718 (1,089,579) 1,784.39 1,743.57 (40.83) 



Other 16,506,070 18,201,280 1,695,210 F 3,409 1,691,801 618.48 681.87 63.39 

Total Expenses 297,003,238 289,556,378 (7,446,860) U 54,238 (7,501,098) 11,128.72 10,847.65 (281.07) 

Net Inc Before Non-Oper Income 9,790,936 5,620,844 4,170,092 F (1,053) 4,171,145 366.87 210.57 156.29 

Property Tax Revenue 9,333,328 9,333,328 - - (1,748) 1,748 349.72 349.65 0.07 

Non-Operating Income (688,656) 37,123 (725,779) U (7) (725,772) (25.80) 1.39 (27.19) 






U= Unfavorable variance 

ADD F-16

Income Statement: Fiscal Year Projection 


ADD F-16 

Variance 


8 Act + 4 Bud FY 10 Budget Variance Volume Rate/Eff Actual Budget Variance 

Statistics: 

Admissions - Acute 27,716 28,901 (1,185) 

Admissions - SNF 1,043 1,077 (34) 




Revenue: 

Gross Revenue $ 1,697,533,047 $ 1,689,256,185 $ 8,276,862 F $ (14,100,358) $ 22,377,220 $ 42,149.60 $ 41,593.98 $ 555.62 

Deductions from Rev (1,244,788,179) (1,237,655,184) (7,132,995) U 10,330,808 (17,463,803) (30,907.98) (30,474.36) (433.62) 

Net Patient Revenue 452,744,868 451,601,001 1,143,867 F (3,769,550) 4,913,417 11,241.62 11,119.62 122.00 

Other Oper Revenue 7,576,286 7,647,036 (70,750) U (63,830) (6,920) 188.12 188.29 (0.17) 

Total Net Revenue 460,321,154 459,248,037 1,073,117 F (3,833,381) 4,906,498 11,429.74 11,307.91 121.83 

Expenses: 

Salaries, Wages & Contr Labor 212,543,108 211,774,102 (769,006) U 1,767,696 (2,536,702) 5,277.43 5,214.44 (62.99) 

Benefits 52,718,755 51,019,352 (1,699,403) U 425,863 (2,125,266) 1,309.00 1,256.23 (52.77) 

Supplies 72,068,016 73,174,745 1,106,729 F 610,796 495,933 1,789.44 1,801.76 12.31 



Other 26,236,324 29,133,366 2,897,042 F 243,179 2,653,863 651.45 717.34 65.90 

Total Expenses 445,978,189 445,731,669 (246,522) U 3,720,558 (3,967,078) 11,073.60 10,975.10 (98.50) 

Net Inc Before Non-Oper Income 14,342,965 13,516,368 826,595 F (112,822) 939,419 356.13 332.81 23.33 

Property Tax Revenue 13,999,992 13,999,992 - U (116,859) 116,859 347.62 344.72 2.90 

Non-Operating Income (1,238,048) (1,648,176) 410,128 F 13,757 396,371 (30.74) (40.58) 9.84 


ADD F-17

Income Statement: Monthly Trend 

Consolidated 

ADD F-17 

Jul Aug Sep Oct Nov Dec Jan Feb YTD 

Statistics: 

Admissions - Acute 2,318 2,188 2,260 2,276 2,220 2,313 2,335 2,142 18,052 

Admissions - SNF 96 91 93 94 86 74 73 73 680 

Patient Days - Acute 9,067 8,998 8,745 8,862 9,049 8,920 9,193 8,673 71,507 

Patient Days - SNF 6,497 6,563 6,346 6,525 6,480 6,723 6,786 6,014 51,934 

ALOS - Acute 3.86 4.03 3.84 3.79 4.07 3.80 3.90 4.02 3.91 

ALOS - SNF 65.63 73.74 69.74 75.00 74.48 96.04 92.96 79.13 77.28 

Adjusted Discharges 3,416 3,298 3,355 3,473 3,203 3,375 3,419 3,154 26,688 

Revenue: 

Gross Revenue $ 148,271,360 $ 140,677,712 $ 137,924,256 $ 143,276,871 $ 141,799,562 $ 143,054,500 $ 142,565,070 $ 135,273,836 $ 1,132,843,167 

Deductions from Rev (108,819,120) (102,084,134) (102,149,929) (105,293,252) (103,695,669) (105,344,918) (105,004,445) (98,684,802) (831,076,267) 

Net Patient Revenue 39,452,240 38,593,578 35,774,327 37,983,619 38,103,893 37,709,582 37,560,625 36,589,034 301,766,900 

Other Oper Revenue 496,566 608,956 706,193 524,546 658,524 579,423 730,822 722,244 5,027,274 

Total Net Revenue 39,948,806 39,202,534 36,480,520 38,508,165 38,762,417 38,289,005 38,291,447 37,311,278 306,794,174 

Expenses: 

Salaries, Wages & Contr Labor 18,174,843 17,838,866 16,785,894 17,755,755 18,260,411 17,487,038 18,171,942 17,275,361 141,750,110 

Benefits 4,804,941 4,715,266 3,948,844 4,235,454 4,402,364 4,207,949 4,913,921 4,436,047 35,664,785 

Supplies 6,504,026 6,214,913 6,041,313 6,147,000 5,596,443 5,784,674 5,420,158 5,913,367 47,621,894 

Prof Fees & Purch Svc 4,813,171 5,026,545 4,730,236 5,024,273 5,476,662 5,845,276 5,182,441 5,141,155 41,239,759 

Depreciation 1,773,400 1,789,000 1,820,103 1,821,843 1,822,888 1,829,379 1,678,778 1,685,227 14,220,620 

Other 2,479,232 2,365,131 2,094,906 2,264,486 2,113,088 1,861,434 1,671,259 1,656,534 16,506,070 

Total Expenses 38,549,613 37,949,721 35,421,296 37,248,811 37,671,856 37,014,352 37,038,499 36,107,691 297,003,238 

Net Inc Before Non-Oper Income 1,399,193 1,252,813 1,059,224 1,259,354 1,090,561 1,273,255 1,252,948 1,203,587 9,790,936 

Property Tax Revenue 1,166,666 1,166,666 1,166,666 1,166,666 1,166,666 1,166,666 1,166,666 1,166,666 9,333,328 

Non-Operating Income (124,084) 115,689 (81,916) (153,066) 230,458 (939,778) 281,397 (17,357) (688,656) 

Net Income (Loss) $ 2,441,775 $ 2,535,168 $ 2,143,974 $ 2,272,954 $ 2,487,685 $ 1,500,143 $ 2,701,011 $ 2,352,896 $ 18,435,608 

Net Income Margin 6.11% 6.47% 5.88% 5.90% 6.42% 3.92% 7.05% 6.31% 6.01% 

OEBITDA Margin w/o Prop Tax 7.94% 7.76% 7.89% 8.00% 7.52% 8.11% 7.66% 7.74% 7.83% 

OEBITDA Margin with Prop Tax 10.86% 10.74% 11.09% 11.03% 10.53% 11.15% 10.70% 10.87% 10.87% 

ADD F-18

Cash Flow Statement 

ADD F-18 

February 

YTD 

CASH FLOWS FROM OPERATING ACTIVITIES: 

Income (Loss) from operations 1,203,587 9,790,936 

Adjustments to reconcile change in net assets to net cash 

provided by operating activities: 

Depreciation Expense 1,685,227 14,220,620 

Provision for bad debts 5,381,928 45,550,180 

Changes in operating assets and liabilities: 

Patient accounts receivable (5,142,837) (44,920,301) 

Property Tax and other receivables (913,647) (23,507,991) 

Inventories (97,504) (152,261) 

Prepaid expenses and Other Non-Current assets 4,165,982 1,824,443 

Accounts payable 12,256,783 (13,360,389) 

Accrued compensation 837,236 2,391,744 

Estimated settlement amounts due third-party payors 2,425,484 2,848,875 

Other current liabilities 2,157,030 24,790,803 

Net cash provided by operating activities 23,959,269 19,476,657 

CASH FLOWS FROM INVESTING ACTIVITIES: 

Net (purchases) sales of investments (625,090) (132,831,037) 

Income (Loss) on investments 282,333 2,199,718 

Investment in affiliates 223,673 3,264,330 

Net cash used in investing activities (119,084) (127,366,989) 

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: 

Receipt of G.O. Bond Taxes 336,622 6,426,745 

Receipt of District Taxes 410,173 7,350,337 

Net cash used in non-capital financing activities 746,795 13,777,082 

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: 

Acquisition of property plant and equipment (23,061,555) (106,674,568) 

Proceeds from sale of asset 0 0 

Deferred Financing Costs 106,777 (2,592,483) 

G.O. Bond Interest paid (6,003,413) (12,025,725) 

Revenue Bond Interest paid (413,318) (6,380,497) 

Proceeds from issuance of debt 0 227,840,181 

Payments of Long Term Debt 0 (9,780,000) 

Net cash used in activities (29,371,509) 90,386,907 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,784,529) (3,726,343) 

CASH AND CASH EQUIVALENTS - Beginning of period 11,412,969 10,354,783 

CASH AND CASH EQUIVALENTS - End of period 6,628,440 6,628,440 

ADD F-19

Financial Report Narrative 

ADD F-19 

Statistics 

Jan vs Feb Feb Act vs Bud 

CONSOLIDATED Jan Feb % Change Budget % Variance 

Patient Days Acute 9,193 8,673 (5.7%) 8,651 0.3% 

Patient Days SNF 6,786 6,014 (11.4%) 5,950 1.1% 

ADC Acute 296.56 309.77 4.5% 308.97 0.3% 

ADC SNF 218.90 214.79 (1.9%) 212.50 1.1% 

Surgeries CVS Cases 10 11 10.0% 11 0.0% 

Surgeries Total 1,480 1,510 2.0% 1,476 2.3% 

Number of Births 385 321 (16.6%) 404 (20.5%) 

NORTH 

Patient Days Acute 6,850 6,577 (4.0%) 6,442 2.1% 


ADC Acute 220.97 234.91 6.3% 230.07 2.1% 

ADC SNF 91.71 89.64 (2.3%) 89.50 0.2% 

SOUTH 

Patient Days Acute 2,343 2,096 (10.5%) 2,209 (5.1%) 


ADC Acute 75.58 74.86 (1.0%) 78.87 (5.1%) 

ADC SNF 127.19 125.14 (1.6%) 123.00 1.7% 

ADD F-20


ADD F-20 

Balance Sheet 

Current Cash & Cash Equivalents increased $16.6 million from 

$122.9 million in January to $139.5 million in February. Total Cash and 

Investments are $151.6 million, compared to $135.2 million at January. 

Days Cash on Hand went from 116.8 days in January to 130.0 days in 

February. 

Net Accounts Receivable decreased $0.2 million from $93.9 million in 

January to $93.7 million in February. Gross A/R days decreased from 

52.9 days in January to 45.7 days in February. 

February YTD collections including capitation are $302.9 million compared 

to budget of $310.4 million. 

Construction in Progress increased $26.1 million from $503.3 million in 

January to $529.4 million in February. The increase is attributed to Building 

Expansion A & E services, construction and permitting costs of $25.8 million 

and Other $0.3 million. 

Other Current Liabilities remained unchanged with a $1.2 million 

realization of deferred property tax revenue offset by a $1.2 million 

increase in capitation liability. 

ADD F-21


ADD F-21 

Income Statement 

Gross Patient Revenue reflects a YTD favorable budget variance of 

8.3 million. Reference table for detail. 

North South Outreach Consolidated 

Total 5,909,906 2,638,350 (271,394) 8,276,862 

Routine (6,915,184) (4,286,826) - (11,202,010) 

IP Ancillary (9,275,749) (4,676,761) - (13,952,510) 

OP 22,100,839 11,601,937 (271,394) 33,431,382 

Net Capitation reflects a YTD favorable budget variance of $1.2 million. 

Cap Premium shows a favorable budget variance of $2.7 million. This 

favorable variance is due to retro 2008 premium adjustments in July and 

August. Cap Valuation and Out of Network Claim Expense both show an 

unfavorable budget variance of $0.8 million and $0.7 million, respectively. 

Other Operating Revenue has a YTD unfavorable budget variance of 

$0.1 million primarily due to Grant programs. 

ADD F-22


ADD F-22 

Income Statement (cont’d) 

Salaries, Wages & Contract Labor has a YTD unfavorable budget variance 

of $0.8 million. Reference table for detail. 

YTD Actual YTD Budget Variance 

Consolidated 141,750,110 140,981,104 (769,006) 

North 83,621,261 83,693,228 71,967 

South 35,287,117 36,032,204 745,087 

Central 17,879,790 16,401,102 (1,478,688) 

Outreach 4,961,942 4,854,570 (107,372) 

Employee Benefits Expense has a YTD unfavorable budget variance of 

$1.7 million due to unfavorable budget variances in Group Health 

Insurance $1.0 million, FICA $0.3 million, Pension expense $0.2 million, and 

Other $0.2 million. 

Supplies Expense reflects a YTD favorable budget variance of $1.1 million 

primarily due to Pharmaceutical expense. 

Professional Fees & Purchased Services reflect a YTD unfavorable budget 

variance of $2.2 million due to Information Systems $0.8 million, 

Maintenance Programs $0.5 million, and Other $0.9 million. 

Ratios & Margins 

All required Bond Covenant Ratios were achieved in February, 2010. ADD F-23

Key Statistical Indicators 

Fiscal Year-to-Date 

ADD F-23 

ACTUAL BUDGET VARIANCE FY 2009 

ADMISSIONS - Acute: 

Palomar Medical Center 13,665 14,438 (773) 13,981 

Pomerado Hospital 4,387 4,799 (412) 4,664 

Total: 18,052 19,237 (1,185) 18,645 

ADMISSIONS - SNF: 

Palomar Medical Center 276 283 (7) 276 

Pomerado Hospital 404 431 (27) 428 

Total: 680 714 (34) 704 

PATIENT DAYS - Acute: 

Palomar Medical Center 54,232 55,916 (1,684) 54,781 

Pomerado Hospital 17,275 19,165 (1,890) 18,832 

Total: 71,507 75,081 (3,574) 73,613 

PATIENT DAYS- SNF: 


Pomerado Hospital 30,217 29,889 328 29,286 

Total: 51,934 51,640 294 50,861 

ADD F-24



ADD F-24 


EMERGENCY ROOM VISITS & TRAUMA CASES: 

Palomar Medical Center 36,938 32,733 4,205 33,144 

Pomerado Hospital 16,948 15,787 1,161 15,836 

Total: 53,886 48,520 5,366 48,980 

EMERGENCY & TRAUMA ADMISSIONS: 

Palomar Medical Center 7,456 7,454 2 7,408 


Total: 9,942 10,228 (286) 10,073 

SURGERIES: 



Total: 12,117 12,803 (686) 12,584 

BIRTHS: 


Pomerado Hospital 745 784 (39) 788 

ADD F-25 

Total: 3,204 3,512 (308) 3,456



ADD F-25 


ADJUSTED DISCHARGES 



Other Activities 177 184 (7) 186 

Total: 26,688 27,027 (339) 26,693 

AVERAGE LENGTH OF STAY- Acute: 

Palomar Medical Center 3.92 3.87 0.05 3.88 

Pomerado Hospital 3.87 3.99 (0.12) 3.98 

Total: 3.91 3.90 0.01 3.91 

AVERAGE LENGTH OF STAY - SNF: 

Palomar Medical Center 80.73 79.09 1.64 78.17 

Pomerado Hospital 74.98 69.35 5.63 67.32 

Total: 77.28 73.14 4.14 71.53 

ADD F-26

Supplies Expense 

Year-to-Date 

ADD F-26 

Account Description Actual Budget Variance 

634000 Supplies Surgery General 3,748,155 3,351,875 (396,280) 

632000 Sutures/Surgical Needles 1,347,438 1,098,652 (248,786) 

633000 Supplies Surgical Pack 1,529,605 1,329,120 (200,485) 

631000 Prosthesis 12,724,138 12,528,135 (196,003) 

649000 Other Minor Equipment 698,253 612,291 (85,962) 

639000 Supplies Radioactive 470,230 404,946 (65,284) 

646000 Supplies Office/Administration 642,007 592,492 (49,515) 

645000 Supplies Cleaning 317,334 287,156 (30,178) 

648000 Instruments/Minor Equipment 340,479 322,096 (18,383) 

647000 Supplies Employee Apparel 117,803 103,827 (13,976) 

640000 Supplies X-ray Material 24,919 14,240 (10,679) 

637000 Supplies IV Solutions 329,565 323,775 (5,790) 

635000 Supplies Anesthesia Material 33,509 31,352 (2,157) 

642000 Supplies Food/Meat 351,876 408,395 56,519 

644000 Supplies Linen 21,564 79,916 58,352 

646100 Supplies Forms 261,544 330,980 69,436 

636000 Supplies Oxygen/Gas 53,596 148,843 95,247 

643000 Supplies Food Other 1,593,075 1,833,462 240,387 

641000 Supplies Other Medical 10,177,222 10,458,049 280,827 

650000 Other Non Medical 4,848,990 5,152,226 303,236 

638000 Supplies Pharmaceutical 7,990,592 9,316,795 1,326,203 

TOTAL 47,621,894 48,728,623 1,106,729 ADD F-27

Bond Covenant Ratios 

ADD F-27 

Cushion Ratio Jun-08 Jun-09 Feb-10 

Cash and Cash Equivalents 86,122,696 117,489,914 139,522,430 

Board Designated Reserves 12,117,325 - 11,773,309 

Trustee-held Funds (Revenue Fund only) 185,981 34,351 8,293 

Total 98,426,002 117,524,265 151,304,032 

Divided by: 

Annual Debt Service (excludes GO Bonds) * 16,972,692 16,639,112 13,766,910 

(Bond Year 11/1/2010) 

Cushion Ratio 5.8 7.1 11.0 

REQUIREMENT 1.5 1.5 1.5 

Achieved Achieved Achieved 

Days Cash on Hand Jun-08 Jun-09 Feb-10 

Cash and Cash Equivalents 86,122,696 117,489,914 139,522,430 

Board Designated Reserves 12,117,325 - 11,773,309 

Trustee-held Funds (Revenue Fund only) 185,981 34,351 8,293 

Total 98,426,002 117,524,265 151,304,032 

Divide Total by Average Adjusted Expenses per Day 

Total Expenses 428,153,444 436,536,225 297,003,238 

Less: Depreciation 21,572,031 21,214,879 14,220,620 

Adjusted Expenses 406,581,413 415,321,346 282,782,618 

Number of days in period 366 365 243 

Average Adjusted Expenses per Day 1,110,878 1,137,867 1,163,714 

Days Cash on Hand 88.6 103.3 130.0 

REQUIREMENT 80 80 65 


Net Income Available for Debt Service Jun-08 Jun-09 Feb-10 

Excess of revenue over expenses Cur Mo. (12,441,012) (8,535,867) 2,352,896 

Excess of revenues over expenses YTD (4,053,517) 11,477,380 18,435,608 

(General Funds) 

ADD: 

Depreciation and Amortization 21,391,200 21,214,879 14,220,620 

Interest Expense 14,912,181 16,079,661 3,120,018 

Net Income Available for Debt Service 32,249,864 48,771,920 35,776,246 

Aggregate Debt Service * 

1999 Insured Refunding Revenue Bonds 8,248,018 8,252,512 5,500,933 

2006 Certificates of Participation 8,316,457 8,497,794 4,634,407 

Aggregate Debt Service 16,564,475 16,750,305 10,135,341 

Net Income Available for Debt Service 1.95 2.91 3.53 

Required Coverage 1.15 1.15 1.15 


* The 2009 Certificates of Participation interest is pre-funded through November 1, 2011 and is excluded from 

the aggregate debt service total for these ratios. 

ADD F-28

Statistical Indicators 

Admissions – Acute 

ADD F-28 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD B-YTD 

PMC 1,733 1,681 1,714 1,761 1,674 1,721 1,748 1,633 - - - - 13,665 14,438 

ADD F-29 

POM 585 507 546 515 546 592 587 509 - - - - 4,387 4,799 

CON 2,318 2,188 2,260 2,276 2,220 2,313 2,335 2,142 - - - - 18,052 19,237


Patient Days – Acute 

ADD F-29 

12,000 

10,000 

8,000 

6,000 

4,000 

2,000 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 6,896 6,977 6,613 6,840 6,728 6,751 6,850 6,577 - - - - 54,232 55,916 

ADD F-30 

POM 2,171 2,021 2,132 2,022 2,321 2,169 2,343 2,096 - - - - 17,275 19,165 

CON 9,067 8,998 8,745 8,862 9,049 8,920 9,193 8,673 - - - - 71,507 75,081


Average Length of Stay – Acute 

4.40 

ADD F-30 

4.30 

4.20 

4.10 

4.00 

3.90 

3.80 

3.70 

3.60 

3.50 

PY 

BUD 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 



PMC 3.95 4.13 3.79 3.81 4.03 3.82 3.93 3.96 - - - - 

ADD 

3.92F-313.87 

POM 3.58 3.75 4.01 3.72 4.21 3.73 3.82 4.21 - - - - 3.87 3.99 

CON 3.86 4.03 3.84 3.79 4.07 3.80 3.90 4.02 - - - - 3.91 3.90 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON


Average Daily Census – Acute 

350 

ADD F-31 

300 

250 

200 

150 

100 

50 

- 

PY 

BUD 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 222 225 220 221 224 218 221 235 - - - - 223 230 

ADD F-32 

POM 70 65 71 65 77 70 76 75 - - - - 71 79 

CON 292 290 291 286 302 288 297 310 - - - - 294 309 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON


Patient Days 

ADD F-32 

JUN 

- 

MAY 

- 

APR 

- 

MAR 

- 

FEB 

1,155 

369 

661 

1,006 

826 

791 

752 

1,158 

211 

680 

357 

707 

JAN 

1,222 

355 

733 

1,086 

835 

796 

828 

1,134 

172 

840 

462 

730 

DEC 

1,198 

276 

710 

1,031 

862 

842 

857 

1,026 

184 

878 

428 

628 

NOV 

1,222 

354 

730 

1,084 

819 

822 

871 

1,102 

164 

843 

450 

588 

OCT 

1,188 

319 

663 

960 

816 

788 

717 

1,076 

206 

881 

440 

808 

SEP 

1,073 

370 

591 

987 

840 

763 

778 

1,059 

154 

936 

448 

746 

AUG 

1,134 

294 

635 

1,047 

888 

799 

824 

1,162 

138 

923 

454 

700 

JUL 

1,209 

272 

708 

1,088 

884 

819 

829 

1,204 

137 

915 

399 

603 

- 2,000 4,000 6,000 8,000 10,000 

ICU/CCU NICU Telemetry IMC 

Med-Oncology Surg-Ortho Medical Tele Med Surg 

Pediatrics Labor Delivery Recovery Rehb Acute MHU 


PMC 6,896 6,977 6,613 6,840 6,728 6,751 6,850 6,577 - - - - 54,232 55,916 

ADD F-33 

POM 2,171 2,021 2,132 2,022 2,321 2,169 2,343 2,096 - - - - 17,275 19,165 

CON 9,067 8,998 8,745 8,862 9,049 8,920 9,193 8,673 - - - - 71,507 75,081


Surgeries (Inpatient only) 

800 

ADD F-33 

700 

600 

500 

400 

300 

200 

100 

- 

PY 

BUD 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 441 425 460 444 418 428 404 429 - - - - 3,449 3,864 

ADD F-34 

POM 184 141 168 178 189 197 193 174 - - - - 1,424 1,490 

CON 625 566 628 622 607 625 597 603 - - - - 4,873 5,354 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON


Surgeries (Outpatient only) 

ADD F-34 

1,400 

1,200 

1,000 

800 

600 

400 

200 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 624 560 545 486 522 541 527 566 - - - - 4,371 4,242 

ADD F-35 

POM 336 355 369 354 335 348 346 330 - - - - 2,773 3,114 

CON 960 915 914 840 857 889 873 896 - - - - 7,144 7,356


Surgeries – CVS (PMC only) 

25 

ADD F-35 

20 

15 

10 

5 

PY 

BUD 

- 



PMC 19 13 8 20 5 14 10 11 - - - - 100 93 

ADD F-36 

POM - - - - - - - - - - - - - - 

CON 19 13 8 20 5 14 10 11 - - - - 100 93


Total Surgeries 

ADD F-36 

2,000 

1,800 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

200 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 1,084 998 1,013 950 945 983 941 1,006 - - - - 7,920 8,199 

ADD F-37 

POM 520 496 537 532 524 545 539 504 - - - - 4,197 4,604 

CON 1,604 1,494 1,550 1,482 1,469 1,528 1,480 1,510 - - - - 12,117 12,803


Outpatient Registrations (excludes Lab) 

ADD F-37 

6,000 

5,000 

Beginning in August, 

recurring patients 

have been omitted 

as new registrations. 

Beginning in January, 

POM includes the 

addition of CHC 

imaging services. 

4,000 

3,000 

2,000 

1,000 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 3,587 2,533 2,510 2,488 2,152 2,245 2,301 2,235 - - - - 20,051 25,311 

ADD F-38 

POM 1,512 1,074 1,039 1,077 924 1,061 2,337 2,494 - - - - 11,518 7,533 

CON 5,099 3,607 3,549 3,565 3,076 3,306 4,638 4,729 - - - - 31,569 32,844


ER Visits (includes Trauma, Outpatient only) 

ADD F-38 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 4,788 4,632 4,787 4,884 4,872 4,307 4,509 4,159 - - - - 36,938 32,733 

POM 2,211 2,059 2,078 2,250 2,207 2,204 2,004 1,935 - - - - ADD 16,948F-39 

15,787 

CON 6,999 6,691 6,865 7,134 7,079 6,511 6,513 6,094 - - - - 53,886 48,520 

CON/DAY 226 216 229 230 236 210 210 218 - - - - 222 200


ER Admissions (includes Trauma, Inpatient only) 

ADD F-39 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

200 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 973 889 896 913 970 961 968 886 - - - - 7,456 7,454 

ADD F-40 

POM 330 284 280 289 310 332 356 305 - - - - 2,486 2,774 

CON 1,303 1,173 1,176 1,202 1,280 1,293 1,324 1,191 - - - - 9,942 10,228


Total ER Visits (includes Trauma & Admissions) 

ADD F-40 

9,000 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

- 

PY 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 5,761 5,521 5,683 5,797 5,842 5,268 5,477 5,045 - - - - 44,394 40,187 

ADD F-41 

POM 2,541 2,343 2,358 2,539 2,517 2,536 2,360 2,240 - - - - 19,434 18,561 

CON 8,302 7,864 8,041 8,336 8,359 7,804 7,837 7,285 - - - - 63,828 58,748


ER Conversion (ER Admits as % of ER Visits) 

25 

ADD F-41 

20 

15 

10 

5 

- 

PY 

BUD 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 16.9 16.1 15.8 15.8 16.6 18.2 17.7 17.6 - - - - 16.8 18.5 

ADD F-42 

POM 13.0 12.1 11.9 11.4 12.3 13.1 15.1 13.6 - - - - 12.8 14.9 

CON 15.7 14.9 14.6 14.4 15.3 16.6 16.9 16.3 - - - - 15.6 17.4 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON


Trauma Cases (PMC only) 

140 

ADD F-42 

120 

100 

80 

60 

40 

20 

PY 

BUD 

- 



PMC 116 95 99 102 119 108 96 91 - - - - 826 816 

ADD F-43 

POM - - - - - - - - - - - - - - 

CON 116 95 99 102 119 108 96 91 - - - - 826 816


Trauma Admissions (PMC only) 

120 

ADD F-43 

100 

80 

60 

40 

20 

PY 

BUD 

- 



PMC 101 85 86 90 99 94 75 82 - - - - 712 737 

ADD F-44 

POM - - - - - - - - - - - - - - 

CON 101 85 86 90 99 94 75 82 - - - - 712 737


Deliveries 

600 

ADD F-44 

500 

400 

300 

200 

100 

- 

PY 

BUD 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 321 313 342 327 304 296 296 260 - - - - 2,459 2,728 

ADD F-45 

POM 100 96 114 93 89 103 89 61 - - - - 745 784 

CON 421 409 456 420 393 399 385 321 - - - - 3,204 3,512 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON

Payor Mix 

Based on Gross Revenue 

ADD F-45 

JUN 

- 

MAY 

- 

APR 

- 

MAR 

- 

FEB 

29 

8 

16 

4 

5 

25 

11 

4 

JAN 

29 

9 

13 

4 

6 

25 

12 

3 

DEC 

28 

8 

14 

3 

3 

30 

10 

4 

NOV 

25 

10 

16 

3 

4 

28 

10 

4 

OCT 

25 

8 

15 

5 

5 

27 

11 

3 

SEP 

27 

8 

14 

4 

6 

26 

11 

4 

AUG 

25 

7 

15 

3 

7 

26 

11 

5 

JUL 

25 

7 

15 

3 

5 

30 

10 

4 

0% 20% 40% 60% 80% 100% 

MEDICARE MCAR MGD MEDI-CAL MCAL MGD SELF PAY MGD CARE CAP OTHER 

ADD F-46

Case Mix Index 

ADD F-46 

1.40 

1.35 

1.30 

1.25 

1.20 

1.15 

1.10 

1.05 

1.00 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 

JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN YTD 


PMC 1.33 1.31 1.28 1.24 1.36 1.38 1.32 1.37 - - - 

ADD 

-F-471.33 

POM 1.32 1.26 1.24 1.27 1.33 1.37 1.32 1.34 - - - - 1.31 

CON 1.33 1.30 1.27 1.25 1.35 1.38 1.32 1.36 - - - - 1.32

Case Mix Index by Region 

(excludes Deliveries) 

ADD F-47 

1.60 

1.50 

1.40 

1.30 

1.20 

1.10 

1.00 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 1.54 1.52 1.50 1.42 1.57 1.59 1.51 1.56 - - - 

ADD 

-F-481.53 

POM 1.49 1.43 1.44 1.44 1.50 1.54 1.46 1.46 - - - - 1.47 

CON 1.53 1.50 1.49 1.43 1.55 1.57 1.50 1.54 - - - - 1.52

Case Mix Index by Region 

Medicare 

ADD F-48 

1.90 

1.80 

1.70 

1.60 

1.50 

1.40 

1.30 

1.20 

1.10 

1.00 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

BUD 



PMC 1.52 1.50 1.59 1.48 1.54 1.68 1.69 1.77 - - - 

ADD 

-F-491.60 

POM 1.56 1.49 1.46 1.44 1.57 1.65 1.50 1.54 - - - - 1.54 

CON 1.53 1.50 1.55 1.47 1.55 1.67 1.62 1.69 - - - - 1.58


Gross Patient Revenue per Adjusted Discharges 

ADD F-49 

44,500 

Dollars per Adjusted Discharge 

42,500 

40,500 

38,500 

36,500 

PY 

BUD 

34,500 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 44,320 43,521 40,373 41,393 44,426 42,251 41,545 42,095 - - - - 

ADD 

42,477F-50 

41,779 

POM 40,910 40,127 43,371 40,844 43,833 42,758 42,082 45,356 - - - - 42,363 41,128 

CON 43,405 42,655 41,110 41,254 44,271 42,387 41,698 42,890 - - - - 42,448 41,609


Net Patient Revenue per Adjusted Discharges 

ADD F-50 

14,500 

13,500 


12,500 

11,500 

10,500 

9,500 

PY 

BUD 

8,500 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 11,005 11,032 9,404 10,365 11,345 10,183 10,020 10,370 - - - - 

ADD 

10,459F-51 

10,523 

POM 12,371 12,936 13,812 12,046 12,850 13,325 12,997 14,434 - - - - 13,073 12,296 

CON 11,549 11,702 10,663 10,937 11,896 11,173 10,986 11,601 - - - - 11,307 11,123


Salaries per Adjusted Discharges 

ADD F-51 

6,000 

5,500 


5,000 

4,500 

4,000 

PY 

BUD 

3,500 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 4,429 4,253 4,063 4,123 4,585 4,190 4,521 4,323 - - - - 4,308 4,272 

ADD F-52 

POM 4,608 4,987 5,005 4,820 5,210 4,988 4,923 5,266 - - - - 4,969 4,969 

CON 5,321 5,409 5,003 5,113 5,701 5,181 5,315 5,477 - - - - 5,311 5,216


Supplies per Adjusted Discharges 

ADD F-52 

2,300 

2,200 

2,100 


2,000 

1,900 

1,800 

1,700 

1,600 

1,500 

PY 

BUD 

1,400 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 1,823 1,816 1,647 1,685 1,715 1,716 1,588 1,613 - - - - 

ADD 

1,701 

F-53 

1,736 

POM 1,984 1,882 2,075 1,870 1,746 1,489 1,660 1,996 - - - - 1,835 1,833 

CON 1,904 1,884 1,801 1,770 1,747 1,714 1,585 1,875 - - - - 1,784 1,803


Total Expenses per Adjusted Discharges 

ADD F-53 

13,600 

13,100 

12,600 


12,100 

11,600 

11,100 

10,600 

10,100 

9,600 

PY 

BUD 

9,100 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 10,751 10,458 9,570 9,814 10,922 10,223 10,176 10,336 - - - - 

ADD 

10,274 

F-54 

10,120 

POM 11,623 12,925 12,317 12,057 12,845 11,679 11,528 13,112 - - - - 12,236 12,225 

CON 11,285 11,507 10,558 10,725 11,761 10,968 10,833 11,448 - - - - 11,129 10,980


Net Operating Income per Adjusted Discharges 

ADD F-54 

2,000 

1,500 


1,000 

500 

- 

(500) 

(1,000) 

(1,500) 

PY 

BUD 

(2,000) 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 

PMC 

POM 

CON 



PMC 340 654 (86) 621 502 13 (42) 107 - - - - 

ADD 

264 

F-55 

486 

POM 795 67 1,565 43 75 1,712 1,520 1,377 - - - - 895 136 

CON 410 380 316 363 340 377 366 382 - - - - 367 332

PBS Monthly Cash Collections 

ADD F-55 

PPH Monthly Collections 

in Millions 

$44.0 

$40.0 

$36.0 

$32.0 

$28.0 

$24.0 

$20.0 

July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March April May June 

FY10 Goal $38.8 $38.8 $38.8 $38.8 $38.8 $38.8 $38.8 $38.8 $38.8 $38.8 $38.8 $38.8 

Pr. Yr Actual $32.8 $27.3 $39.3 $34.5 $30.5 $32.3 $36.3 $36.5 $39.5 $41.5 $38.6 $37.7 

Curr. Yr Actual $39.2 $40.6 $35.5 $37.5 $35.9 $38.0 $36.1 $40.1 

ADD F-56

HealthWorRx Dashboard 

Revenue Cycle Key Indicators 

ADD F-56 

Charge Services 

CDM Build/Rebuild Clean Claim 

Current 

Goal 

52% 70% 

MTD 

Trend 

YTD 

312 

4 

FY10 Cash Goal 

(in Millions) 

310.4 

Case Management 

CDI (Monthly) 

CDI (YTD) 

$ 798 K $ 250 K 

$2,973 K $1,500 K 

308 

Patient Access 

Co-Pay Collections (Monthly) 

Co-Pay Collections (YTD) 

$618 K $ 741 K 

$ 4,445 K $ 5,928 K 

304 

302.9 

Coding 

DNFB 

0.3 days 0.5 Days 

300 0 

0 

0 

Patient Financial Services 

Billing Edits 

$8.5 M < $ 6 M 

296 

September FYTD 

#REF! #REF! 

RAC 

Case Mgmt Review Medicare 1 Day Stays 

100% 100% 

February FYTD 

FYTD Actual 

ADD F-57

ADD F-57 

SUPPLEMENTAL INFORMATION 

ADD F-58

Weekly Flash Report 

ADD F-58 

Volume 

3/4/2010 3/11/2010 3/18/2010 3/25/2010 MTD Total MTD Budget % Variance 

Palomar Medical Center 

Average daily census 227 229 234 - 230 230 (0.08) 

Acute Patient Days 1,586 1,602 1,641 4,829 4,833 (0.08) 

PCCC Days 609 614 610 1,833 1,880 (2.49) 

Acute Discharges 410 422 400 1,232 1,248 (1.28) 

Births 70 68 60 198 236 (16.10) 

OP Visits w/o Lab 582 584 554 1,720 2,187 (21.35) 

Lab Registrations 602 686 624 1,912 2,087 (8.39) 

ED Visits 1,245 1,202 1,324 3,771 3,473 8.58 

Trauma Admits 14 15 23 52 64 (18.75) 

Trauma Outpatient 2 2 7 11 7 57.14 

Inpatient surgeries 113 103 108 324 342 (5.26) 

Outpatient surgeries 133 139 133 405 366 10.66 

Pomerado Hospital 

Average daily census 73 73 79 - 75 79 (4.75) 

Acute Patient Days 510 514 553 1,577 1,656 (4.75) 

VP Days 872 854 873 2,599 2,583 0.62 

Acute Discharges 130 133 147 410 415 (1.20) 

Births 18 22 17 57 68 (16.18) 

OP Visits w/o Lab 636 695 649 1,980 651 204.15 

Lab Registrations 445 455 430 1,330 1,219 9.11 

ED visits 533 532 576 1,641 1,604 2.31 

Inpatient surgeries 35 33 35 103 106 (2.83) 

Outpatient surgeries 57 54 42 153 127 20.47 

ADD F-59

Weekly Flash Report 

ADD F-59 

Financial and Acuity 

3/4/2010 3/11/2010 3/18/2010 3/25/2010 MTD Total MTD Budget % Variance 

Palomar Medical Center 

Gross Inpatient Charges $ 17,886,710 $ 16,530,977 $ 18,211,833 

$ 52,629,520 $ 53,126,305 (0.94) 

Gross Outpatient Charges $ 6,801,674 $ 6,197,388 $ 6,881,734 

$ 19,880,796 $ 17,613,656 12.87 

Net Revenue per Adj. Patient Day (est.) $ 2,216 $ 2,026 $ 2,195 

$ 2,146 $ 2,136 0.47 

Total Expense per Adj. Patient Day (est.) $ 2,067 $ 2,067 $ 2,067 

$ 2,067 $ 2,094 1.29 

Supply Expense per Adj. Patient Day (est.) $ 337 $ 337 $ 337 

$ 337 $ 343 1.75 

Acute Case Mix Index 1.35 1.24 1.55 

Pomerado Hospital 

Gross Inpatient Charges $ 6,369,418 $ 6,266,585 $ 6,401,784 

$ 19,037,787 $ 18,587,695 2.42 

Gross Outpatient Charges $ 3,246,370 $ 2,912,515 $ 2,989,361 

$ 9,148,246 $ 7,182,048 27.38 

Net Revenue per Adj. Patient Day (est.) $ 1,766 $ 1,722 $ 1,681 

$ 1,723 $ 1,593 8.16 

Total Expense per Adj. Patient Day (est.) $ 1,549 $ 1,549 $ 1,549 

$ 1,549 $ 1,502 (3.13) 

Supply Expense per Adj. Patient Day (est.) $ 253 $ 253 $ 253 

$ 253 $ 246 (2.85) 

Acute Case Mix Index 1.26 1.44 1.26 

Cash Collection 5,607,910 8,966,110 8,805,078 23,379,098 25,278,927 (7.52) 

Days Cash on Hand 136 137 140 140 80 

Productivity and Cash 

Productivity Hrs (PP 19) 220,701 224,699 445,400 450,116 1.05 

PMC 130,000 130,993 260,993 259,540 (0.56) 

POM 58,607 59,836 118,443 118,917 0.40 

Others 32,094 - 33,870 65,964 71,659 7.95 

Productivity $$$ (PP 19) 7,588,894 7,502,986 15,091,880 15,344,346 1.65 

PMC 4,457,025 4,353,896 8,810,921 8,873,271 0.70 

POM 1,927,227 1,907,968 3,835,195 3,894,722 1.53 

Others 1,204,642 - 1,241,122 2,445,764 2,576,353 5.07 

ADD F-60

BOARD FINANCE COMMITTEE MEETING - Palomar Health

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