PARÁMETROS DE TABLA DE VIDA PARA LAS TEMPERATURAS

Joint Operating Agreement

The applicant has submitted an executed joint operating agreement, the terms of which are summarized below:

Parties: Kaleida Health (Kaleida) and Olean General Hospital (OGH).

Operation of the Lab: The Parties acknowledge and agree that the Cath Lab shall be operated as a department of OGH; Cath Lab will be operated, and the provision of Cath Lab services will fall under, each Party’s operating certificate, as required by NYSDOH; physicians who provide professional services at the Cath Lab shall have medical staff membership and clinical privileges at OGH; the medical director of the Cath Lab, who shall be a member of the medical staff of Kaleida as well as OGH, shall be

responsible for the overall quality of services of the Cath Lab; OGH’s medical staff committees shall be responsible for medical activities in the provision of Cath Lab services, including quality assurance, utilization review, and the coordination and integration of services and the financial operations of the Cath Lab will be fully integrated within the financial system of OGH, as evidenced by shared income and expenses between OGH and the Cath Lab relating to the Cath Lab services.

OGH Contributed Services: OGH will provide the following services in connection with the operation of the Cath Lab; OGH will provide up to seven hundred square feet of space in OGH in which the Cath Lab will be situated; OGH shall employ and provide all administrative and clinical personnel who are the reasonably necessary for the operation of the Cath Lab except for the Medical Director; perform the following billing and collection services and manage care contracting; and shall provide the books of accounts and reports in regards to the Cath Lab.

Kaleida Contributed Services: Kaleida will provide the following services in connection with the operation of the Cath Lab; Kaleida will be responsible for the day-to-day management of the Cath Lab, including general planning and implementation of the day-to-day operations of the Cath Lab; Kaleida shall provide the Cath Lab Director; will advise OGH of the billing requirements of the Medicare and Medicaid programs; will prepare and submit to the management Committee for its approval annual operating and capital budgets for the Cath Lab; will oversee the procurement, storage and distribution of consumable medical supplies necessary for patient care in the operation of the Cath Lab; take other actions, necessary to obtain and maintain all licenses and permits required in connection with the management or operation of the Cath Lab, will develop and implement an efficient scheduling system to ensure access to the Cath Lab; will implement and maintain a quality assurance and performance improvement plan and will establish systems, procedures and reports to assess and report the clinical activity relating to the Cath Lab Services.

Term: The term shall be for ten years and shall thereafter automatically renew for additional, successive five year terms.

Distributions: The Contributed Margin is the amount by which the net cath lab revenues exceed the Direct Costs. The Parties agree that the Contributed Margin Sharing Ratio for a fiscal year, of any Contributed Margin during a fiscal year shall be allocated 100% to Kaleida and any Contributed Margin for a fiscal year that is in excess of $3,500,000 shall be allocated 50% to Kaleida and 50% to OGH.

The Parties agree that the Loss Sharing Ratio for the fiscal year shall be as follows: any Loss shall be allocated 50% to Kaleida and 50% to OGH.

Under the term of the joint operating agreement between Kaleida Health Buffalo General Hospital and Olean General Hospital, the cath lab will be operated as a department of Olean General Hospital, resulting in incremental revenues for Olean.

Operating Budget

The applicant has submitted incremental operating budget, in 2011 dollars, for Buffalo General Hospital for the first and third years, summarized below:

Year One Year Three Revenues: $(1,049,688) $(2,302,103) Expenses: Operating $(1,316,270) $(2,287,102) Capital 0 0 Total Expenses $(1,316,270) $(2,287,102) Excess Revenues: $266,582 $(15,001)

* Under the terms of the Joint Operating Agreement between Olean General Hospital and Kaleida Health, OGH and Kaleida will share in losses of the venture 50/50%. Other direct expenses include Kaleida’s contribution in the amount of $281,582 to offset the loss under the agreement in Year 1. Also, under the Joint Operating Agreement between OGH and Kaleida Health, Kaleida Health will receive 100% of operational gains of the venture up to $3M. The applicant projected $82,274 in non-operating revenue in Year 3, which represents the OGH payment to Kaleida under the agreement.

Expense assumptions are based on the historical experience of Buffalo General Hospital.

Capability and Feasibility

The project cost will consist of the CON fee, which will be met via accumulated funds. Presented as BFA Attachment A are the 2009 and 2010 certified financial statements of Kaleida Health, which indicates the availability of sufficient funds to meet the project costs.

The submitted budget projects an excess of revenues over expenses of $266,582 and $(15,001) during the first and third years, respectively. The third year loss will be offset via operations. As indicated previously, revenues and expenses that currently roll up to Kaleida Health Buffalo General Hospital will shift to Olean General Hospital.

Presented as BFA Attachment A are the 2009 and 2010 certified financial statements of Kaleida Health. As shown on Attachment A, the hospital had an average positive working capital position and an average positive net asset position during the period shown. Also, the applicant achieved an operating excess of revenues over expenses of

$14,178,000 and $18,768,000 during 2009 and 2010, respectively.

Presented as BFA Attachment B are the April 30, 2011 internal financial statements of Kaleida Health. As shown on Attachment B, the hospital had a positive working capital position and a positive net asset position through April 30, 2011. Also, the applicant incurred an operating excess of expenses over revenues of $10,141,000 through April 30, 2011.

The applicant has indicated that the reason for the losses are the following: the Western New York market has seen a significant downturn in inpatient volume since the third quarter of 2010, continuing through early 2011, and lower reimbursement from Medicaid and Medicare. The applicant has implemented the following steps to improve

operations: productivity improvements; labor cost control; corporate and fixed costs review and reductions; community benefit analysis, and Waterfront Health Care Center Disposition.

The applicant has demonstrated the capability to proceed in a financially feasible manner and approval is recommended.

Recommendation