the challenge? the business challenge is based on the studies that we have behind us we have approximately -- we're looking at about $223 million of investment over the next five to seven years in capital outlay as well as operational costs. it should be noted that some of the operational costs are not specifically aimed towards the purchase and implementation of the emr itself but in fact some of these to close the gap where we have short falls. for example capabilities and staffing and so on, but at the end of the day we need those gaps filled in order to meet the future requirements or to be able to support the emr effectively so how does this really translate to give you some ideas. we working hard to stabilize the infrastructure today. for example you know

that we're laying fiber to connect many of the locations so we can have a faster system in the future. the challenge is we have over $30 million in it infrastructure in dph. if they had a life of five years which they typically do that translates to $6 million a year that we have to continuously invest in in order to keep the infrastructure up-to-date so we have to make a commitment as an organization that we will do invest in keeping our systems up to speed. strategy really is not to invest $30 million immediately because that would actually exacerbate the situation because it creates peaks and valleys of investments, so what is proposed is going forward to stabilize the spend cycle to move to a five year refresh so it's

indeed $6 million every year instead of $30 million every five years. the risk of that is obviously this effort will lag behind the current lead but eventually caught up and everything will be refreshd and stabilized. it is my hope before the emr is rolled out that we will actually have done enough refresh to have a stable environment that we could put that on top of. the other part of the challenge is the it is under staffed. we know based on the studies done and my internal assessment we're short about 100 people in order to meet the building of the new emr. i would like to emphasize if we were right size we would probably ask for luses but to get to that point and maintain a new emr we would need about a hundred so significant effort is

put into budgeting and planning of that. i would like to note it's not all about status quo and hire people. it's looking other avenues of approach. for example we are adapting the [inaudible] training program so we can grow people right out of tech schools. it might take several years but it's a strict strategic effort we're trying to make. >> >> and we will need support and commitment to meet this challenge. there is a lot of work done in the hr area with much credit to that team. must has been improved. i see it already but i think there's a lot of work to be done and that would be very helpful. >> and i think this is yours. any questions commissioners? >> no questions greg. thank

you. >> just a stand by for completion of the presentation and then we will -- i am sure there will be other questions coming. >> so what we have before you today those are the general outlines and themes that we're focusing our budget planning on. what we have before you today is a set of initiatives that are in some sense the first round of housekeeping that we try to do on budget. the two things that we are accomplishing with -- or hoping to accomplish with the initiatives that are presented in front of you is we will meet the general savings target in the second year and that we will restore a previously budgeted reduction to our community

programs contracted dollars, and we will have once we get through the hearing we will have more initiatives at the next one, so to give you a piblghtd of what we have in front of you so far we're forecasting about 11 and $13.9 million of baseline revenue growth. that is a combination of what we anticipate the growth in our san francisco general hospital patient revenues and captated revenues will be over the next two years, and then modest increase at laguna honda hospital in the second year. we also are forecasting an increase in our realignment funds. these are the realignment dollars for our mental health system and this is a different formula and a different category from our

indigent realignment dollars which are declining, so and then on the uses. again we have a 6.2 million dollar reduction target and the second item i think which is the most substantive action that we're proposing today in the budget. the context on that item is that as you know beginning two years ago when we were in darker budget times we made plans to make a reduction to our community based services. the focus was to look at services for which we are not drawing down federal reimbursement and purely general fund and go through an rfp process to remark our system, and at the same time reduce the total pool of funds available by 8.8 million dollars growing to 17 in the second year, and that was done to meet our general fund reduction

targets in prior years. that's gotten carried forward and pushed, delayed in time for about two years, and we are facing that reduction in the coming budget for fiscal year 15-16. in our conversations internally and with the mayor's office we made the determination that we wanted to repull that reduction back out of the budget so that we would be going with the status quo budget rather than making funding reductions in this budget cycle, so that in order to do that costs about 8.8 million dollars per year so there is a cost to it, but i think that will also allow us to have greater sense of stability in our community programs, and the services that they use to support the network as we go forward into the the

affordable care act and then we have a couple other housekeeping type items on the proposal before you. the first is just our general cost of doing -- cost of doing business increases for our pharmacy purchases, our other materials that we purchase every year. this is just an inflation in the cost of goods and service as things get more expensive and we need to balance around that. we have two budget neutral initiatives. the first is on our environmental health program. that program is funded with fees that are collected to fund its service. those fees are established in an ordinance and every year we adjust those. the revenue and the expenses for that division to stay neutral within the fees that are collected so there is no legislated increase to the fees

proposed. there's simply the normal annual cost of living adjustment in those fees and a budget neutral proposal so we're trying to be conscious in the area of not increasing fees particularly when there are affordability issues in the city. the second item is another budget neutral item. we had an audit by the city controller's office four months ago which was on the billing and revenue collections process and they identified a number of areas for us to look at to make sure that we are in fact bringing in maximizing the revenue that we can bring in through the billing and collection system so we're working on several areas there but one of the first areas of focus that was identified there and included there we have determined that if we add some physician staffing at the

general medicine clinic at san francisco general hospital there's room there to have those attending to generate enough visits they could cover the costs and then some so we budget that to be revenue neutral to be conservative here, but we've got the model and the analytics in place to be confident that this will be a neutral or better trade and it will allow us to increase the number of visits that occur at that clinic so we're proposing that neutral initiative. so that is the list and again we will be adding to it next time. a reminder of the process as we have hearing scheduled on march 3. june 1 is the date that the mayor's office submits its balanced budget for the city so we will be having conversations through the commission by that time and beyond as the budget evolves so

we're early in the process and the board of supervisors hearings in june and final approval in july of the budget, so many months ahead of budget discussions so i am happy to answer any questions that you have. >> commissioners questions to mr. wagner or even to mr. kim? >> just one quick question. >> go ahead commissioner. >> the cost of living increases across the board regarding salaries. you're obviously showing the variance in the budget. is that factor out or is there no cola increases planned? >> yeah. >> [inaudible] >> good question. so the cost of living increases for salary and benefits is very large. the way that the budget process works and this is kind of a

quirk of our city financial practice but the way it works is those salary and fringe increases that are built into the contracts with our labor unions are already factored in when the mayor's office projects its deficit so when the mayor's office does the five year financial forecast and say we have a deficit of 15.$9 million in the first year and -- i forget in the second year. that has factored in the cost increases so the mayor's office doesn't ask us to directly absorb the entire costs of those salary and fringe benefits, so in some ways that is invisible to us in this incremental budget process that we go at with the department. >> can you give a percentage? 3% 5%, is that what we're looking at? >> the mous have increases of two, 3%. their contracts vary

between two, three years and the percentages that are included in each of the years vary, but the uniform pattern i believe 2.5 or 2.75 in the first year and three in the second year and some contracts have a third year and others do not. we have increases in the fringe benefits increases that occur every year -- i don't know jenn do you know what the fringe costs are off of the top of your head? >> [inaudible] >> okay. not as significant this year. the major reason for several years we have been paying to pay off the losses in the city reretirement fund that occurred when the economy crashed and affected the city's investment so we pumped more retirement dollars into that fund to make it whole. that's

since leveled off so they have evened out but we will provide you with data on the aggregate impact of the salary and fringe cost increases. >> commissioner singer. >> i want to congratulate you greg, you and your team on such careful fiscal management. i think we're all beneficiaries of it. >> thank you. >> the second thing is congratulate you on focusing -- not in good times, not on the harder issues. there's a famous quote that you don't know who is swimming -- naked until the tide goes out and i think we all -- there's kind of an acknowledgment around -- at least with the commissioners and barbara feels the same way that we have a lot of hard work to do to be ready to match the goals

that the mayor's administration has been articulate about about affordability in the city and huge cost of health care and the second is treating our most vulnerable populations and if we're not providing our services efficiently and capturing revenue due us we won't do as good a job on that and such as the sun shines the economic climate is going to turn, so central to that ability to meet that is the investment in the emr, so i had a few questions around that that maybe you can answer, maybe mr. kim can answer. if i go to slide eight on this so to meet your go live date when do you have to select a vendor? what is your go live date and by when do you have to

select a vendor for that? >> in order to go live by 2018 we have to have a vendor selected by middle of this calendar year. >> of this calendar year? >> yes. >> that would give us approximately a year, maybe a little more to do the contractual work so we could engage and start building in the middle of 2016. >> okay. where are you in that process of selecting a vendor? and are you confident where you stand today you will have that vendor selected by midyear? >> yes, i am fairly confident. there are a couple of pieces at play so in order for us to select the right solution for us there are two major categories that we have to consider. number one is really the fit for purpose. does this product do what we need it to do? now there's a fine balance of that with not only how much can we afford to pay to build this

thing, but also to how much can we pay ongoing to keep it operational? because we could say -- we could raise money and buy something and we build the grandest thing but if can't afford to continue to pay for the system will fall apart. i can tell you commissioners one of the challenges is collecting 15 to 17 years of refresh that some of the systems that we have haven't had so if we continue to do the old status quo and we do not have the commitment and we don't have the commitment to purchase the right system define balance for fit for purpose and our ability to pay then we will have a system that we will initially have a significant investment but unable to actually gain the benefits or

actually potentially avoid some of the issues that it will bring. >> yeah thank you for that. i mean the way i look at it is if we don't purchase the system we can't deliver care and our revenues will plummet and suffer quality so we're don't have a choice. we have to do this. so back to -- so you choose a system midyear this year. how much money does it take to do it right in fiscal year 16-17 so you can launch in 18? >> right now looking at a very conservative number proposed by the study which i say is pretty close to what i think it will cost this year -- if i may i would like to go back and talk about in 16 and 17 what we need to make the investment in. in 16 and 17 while -- in fiscal

year 15 and 16 this coming budget year we're going to spend approximately $18 million in ramping up the team, building out the infrastructure and being ready to build. once we go into the actual build you're probably looking at $25 million per year and what the spin cycle looks like is a bell curve. it's approximately five years the full cycle, so the first year you will build up. year two and three you will build. year four you will go live and year four and five you stabilize and optize the system and achieving the true capabilities. now keep in mind these numbers could change drastically based on the solution that we select. it could be much lower or a little bit higher. >> so if you get the budget required to pick the system

that you think is the best to meet our requirements what's the next reason that this will be delayed? >> commissioner, i don't think there is reason that could delay it. i don't think we could afford to delay it. >> right. so i am just saying we're now facing a situation at general hospital we probably can't open the whole hospital when we like because we can't staff it, so i am trying to take a lesson for all of us and let's think forward to a year what are the reasons outside of budget that you might not be able to deliver the emr [inaudible] >> the biggest challenge to this is the complexity of the contract that we will be facing. because this is such a large dollar amount contract over approximately 10 years possibly in terms -- because that's how

long the emrs actually last. it could be a long arduous process and why we're giving a year to go through this process. it will require some significant legal help to actually go through this. now having said that part of the budget is actually to get external consultants to help that deal with this on a regular basis to help navigate through the negotiation with the vendor. >> thank you for that. a closing comment. i think we're fortunate we're not the first system in the world to try to put in an emr so i really encourage you and dph and city council and everyone to reach out to those places and see what learnings we can get now, so that we can -- if we're going to make mistakes we will make our own new ones and not the same as other people have made. thank you. >> sure. >> just to follow up with one question.

>> sure. commissioner. >> in regards to what mr. singer has been asking how significant is the shortage of having 100 less it analysts at this point? is it mission critical and stall the ship? regards to implementing emr or is there an optimistic side to be 100 people short at this point? >> well first of all i would like to add commissioner the number 100 is an estimate based on what it will require us to get to -- what i call ideal stage of running a modern emr. >> okay. >> so the department of public health has not been if any shy of helping and chime ioning hiring people or giving the budget to hire people. i want to be clear this is not a budget challenge issue that it is facing, so right now i have significant vacancies and this

is not because the hr department didn't help us hire. i have this situation where i have significant number of people who are leaving to attrition so as i hire other people leave. now we're in a very prosperous time in the bay area which is very problematic for anybody trying to hire it folks. the vacancy rate is very low -- i mean the candidates -- people looking for a job is very low so it's challenging so to be very frank if we had the money and we have the green light to go forward and hire we have enough time to ramp up. we're literally giving a year to hire a hundred people. i think that is doable with the current situation that we have. >> okay. so you have some confidence it sounds like this will not be a significant barrier to our eventual implementation? >> no. i don't and that

hundred -- that team actually makes up not only the analysts but the engineers and the other teams for example technical teams. now having said that the actual build itself typically takes more than 100 people. these 100 people are what i consider operational people so they will help build and stay on to keep it operational. the build itself and the what contributes to the large number in terms of the budget is that there will be significant people we will bring on board temporarily in the form of temporary builders and consultants to help us build so the hundred is not the entirety of the build team. >> commissioner sanchez. >> i would just -- thought of the colleagues this is an

excellent talk and pertaining how we're getting the process of delineating these areas and given where we were as you shared in 2000 and even before then the dismantling the department of public health in a sense, rebuilding in increments and still not there yet but we are at a level as stated the general fund is solid for this year, but we're projecting the other year, but my thought is and listening to my colleagues is sfgh and the department is in a unique place. we just had the opening a few years ago of the mills hospital and part of stanford and sutter and new innovations. we had people that interacted at general and ucsf. we had the new mission bay hospital this past week which

integrated three hospitals quote unquote and plus the helen dillard cancer and started out at the old mount zion and independent hospital and part of ucsf and childrens and the east bay and they're going to be going through a shake down this coming here and there will be some positive experiences and some where they will be learning as if they did at mills and we both have the laguna honda positive and some areas of concern, so i really think the fact that we have an infrastructure where there is communication among our distinguished institutions that have been part of our history in the city and county of san francisco gives us a unique opportunity to increase both what works and what we need to be aware of and what we should avoid whether it be here or the

research triangle in north carolina with duke and other systems -- harvard -- you know we're going to need more valid communication and sharing as we navigate a unique challenge because we're still the department of public health. we're still the level one trauma center in san francisco. questions have been asked -- you know -- where do the male patients go if they can't go to mission bay? quote unquote. this is something you see and mission bay will work out. the old hospitals are going to be used as specialty clinics and worked out over time but this takes time and communication so i think there is a lot of scuttlebutt going around and misinformation and i think we as a the department of public health could facilitate the sharing of valid information to our citizens and to our colleagues as we sort of navigate the opening and the

continuum of health care in the city, but it gives us an unique opportunity and the fact that we are again looking at some of the community programs that had to be dismantled and cut back over the years, and now we're rebuilding the primarily through our director and staff and our programs a true partnership as we navigate the system. i think it gives us an unique opportunity as open as we are and as transparent as we are to say we're here together and let's share and learn and let's provide the highest level of care for this region and northern california and san francisco so i think it's an excellent start and we look forward to the additional hearings and meetings and it's a continued amount of work and sacrifice but it's well worth it and i think we're going the right course so congratulations. >> commissioner sanchez. >> i wanted to acknowledge both greg and bill in this

effort. one to ensure we are asking our staff to be realistic in the budget requests because we're trying to fund this and as ucsf open up the facility and not have the beds opened up because it's a transition we may need to do that as well. that means we will utilize the budget to ensure we move into the new hospital and grow back our beds as we can due to our hiring and also to our financial issue, and to ensure that we have enough money for the ongoing costs of the new emr. we won't have one when we open the hospital but we will have a functioning it system in that facility but we're asking for our staff to step up and be realistic in the budget requests so we can have the dollars to put into this new emr. that's a goal, a priority that everyone has said to us from our staff and our hospitals and so we're trying to meet

that. >> very good. thank you. >> thank you. i would like to stay on the same vain and slide eight and what is the system we would be using? you're actually missing that whole year in our slide here. because it says there's a medical grade infrastructure but what would we be used at general in terms of the it before you actually build out your next generation it? >> so commissioner chow if i may ask are you referring to the information system or to the infrastructure itself? >> well i am asking you from a clinical standpoint what would we expect to see at the time we move into general that the patients and the clinicians