The Health Committee (Supervisor Miley, Chair, and Supervisor Tam) met at 9:30 a.m. to receive an informational presentation from Alameda Health System (AHS) on its Fiscal Year 2026-27 Operating Budget. The presentation reviewed the budget's financial position, supplemental revenue changes, FTE levels, and long-term projections. No public comments were made.
Let's call the um Board of Supervisors Health Committee meeting to order for September 14th, 2026. Clerk would take the roll. Supervisor Tan present Supervisor Miley. Here we have a quorum. All right. So we have one item this morning. An informational presentation on Alameda Health Systems Fiscal Year 27 operating budget. All right. Good morning. Okay, and to get to the slide deck. Okay, so this is the um same presentation we did at the ad hoc committee. Um this and supervisor Tam, were you at the ad hoc committee? Okay, just I knew he was, I just couldn't remember if I saw you or not. Okay, it's not a Brown Act at committee, so Supervisor Miley and I uh cannot serve on it together. So Supervisor Cortinato Bass serves on the ad hoc committee with Supervisor Miley. Oh good information, thank you. All right, so our first slide is um the budget priorities. So we developed six um primary priorities and working with our budget with the overall goal to um preserve essential services needed to serve the county safety net population. So the first one is preserving trauma amateur and patient facing services, maintaining our capital investments so that we have the appropriate resources to provide the services, meeting all regulatory commission, uh joint commission and CMS standards, improving the quality of our current services and raising the CMS star rating, solving financial imbalance, so we are developing a long-range um strategic plan and then improving patient assets so that we reduce the um we improve the patient experience and we do reduce the rate time to obtain services. So this is our um budget. So on June 10th, um we took a budget to the um AHS Finance Committee and um board meeting subsequently for their approvals and it showed a $30.1 million dollar loss. That budget was approved with the understanding that in September we would bring back a revised budget that would close the gap. Um that gave us an additional two and a half months to work on developing more strategies. So from the 30.1 million dollar loss that we showed in June, we improved that by 10.7 million. The majority of the improvements um happened in supplementals, and there's a subsequent slide with the detail. Um we had a few offsetting items, so we closed um two contracts. The ACM, that contract actually was negotiations were finished. It took about a year after the contract expired, and the UAPD, that was their standard colour from their prior agreement. Um we had a little true up and holiday pay, and then Saint Rose, their primary supplemental program, the um was delayed for fiscal year 25-26. And so we expected to make a 9.3 million dollar um donation at fiscal year 26. Did not that did not happen. So we are anticipating we will make it in 27 along with the 2627 IGT program. So we essentially doubling that up. So we had to add one more 9.3, and then we had a little bit of true up in software amortization, which is uh a non-cash item. So we took the budget to the um committee at with a loss of 19.4 million, and it was subsequently approved by the committee or recommended for approval by the committee to the board, and the board approved it. Okay, so this is um what you would call a water flights water waterfall slide. Um so it starts with the 10.2 um projected loss for 26. Um I will just stop for a moment here and say that when we did this projection, we were projecting a loss of 10.2 subsequent to that, um we received um significant settlements, and so we are going to be showing a profit um uh in 2026 for the audit. The audit's not completed yet, but a few slides further down, you can see a preliminary view of what the profit will be. So as you um go through these various items that drove us from the projected 10.2 million dollar loss to our budget projection of 19.4 million dollar loss. The major items are you have an increase in supplemental revenue of about 40. We um we are anticipating receiving county funded FTEs for the um reduction or the stop of the layoff um activity that was 92 FTEs equal to 19.3 million. We created performance initiatives that are expected to bring a positive 50 million dollars to the bottom line, and the biggest offset to that is the increase in um labor cost, and that's 78.2 million. So if those big items you get down to the 19.54 million dollar net income loss, okay, so this is the preliminary budget. So I um the FY26, which is the second column in of numbers, um, I would kind of disregard that because those numbers are based on us showing that original projection, which is different now, um, although we did not update this deck for that change in the projection. So on the budget, um, we are gonna show this NAT loss of 19.4 and come down to an EBITDA of a positive 16 million and an EBITDA percentage of 0.9. And you'll notice that on the FTEs that we are essentially holding flat between our projection of 26 and our budget of 27. Oh through the chair, just could you help me understand that better? Uh so the projections in 2026, you show an operating loss of 6.4 million dollars, but you're saying it should go to 19.4. I mean so this is a projection, but you said the actuals came in different positive, yeah.