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simple majority of its voting members) any System performance improvement initiative or action
proposed by the CRO during the Transition Period (each, as recommended by the PISC, a
Performance Improvement Initiative). The Chair of the PISC will be one of the PISC
members appointed by Integrity, as determined by Integrity (with the approval of
BlueMountain). The Vice-Chair of the PISC will be one of the PISC members appointed by
DCHS, as determined by DCHS. The CEO and CRO shall attend all meetings of the PISC as
nonvoting observers (unless the CRO is appointed a member of the PISC). For the avoidance of
doubt, the CRO and the CEO shall be notified of all meetings of the PISC as and when the
members of the PISC receive notice thereof, and shall have access to and receive all reports and
documents of the PISC as and when such documents or reports are received or accessed by the
members of the PISC. The PISC will report to the CEO on at least a monthly basis, on any
action items and provide regular written status reports to the DCHS Board and in-person update
on the PIP, the Mitigation Plans and any Performance Improvement Initiatives as needed.
Implementation of the recommendations of the PISC shall require approval by the CEO and, to
the extent applicable under the System Authority Matrix, by the executive officer or governing
body specified for such level of action in the System Authority Matrix. Any recommendation of
the PISC requiring the approval of the CEO that is disapproved by the CEO may be referred, in
the sole decision of the Chair of the PISC, for review by the DCHS Board of Directors, who may
in their discretion overrule the decision of the CEO by simple majority vote or consent. The
PISC will meet on at least a bi-weekly basis for the purpose of tracking and evaluating activities
relating to assessment and implementation initiatives, including the PIP, the Mitigation Plans,
and any Performance Improvement Initiatives.
DCHS Retention of Chief Restructuring Officer. DCHS will retain a Chief Restructuring
Officer (CRO) within 45 calendar days from the Effective Date unless DCHS and Integrity
mutually agree to an extension of the timeframe within which the CRO must be retained. The
CRO will be selected by DCHS from among candidates recommended by the PISC, and shall be
retained by DCHS on commercially reasonable terms and conditions agreed to by DCHS,
including a term extending until at least the Closing Date. Payments to the CRO or the CROs
employer shall be made pursuant to the terms of the Agreement. The PISC will propose CRO
candidates to the DCHS Board of Directors within 30 calendar days of the Effective Date unless
DCHS and Integrity mutually agree to an extension of the timeframe within which CRO
candidates must be presented to the DCHS Board of Directors. The CRO will report to the
PISC, and is delegated the principal role of implementing the PIP and the Mitigation Plans under
the direction of the PISC, and such specific duties and responsibilities as are reasonable and
necessary to accomplish this goal as the PISC may from time to time decide in its sole direction.
DCHS shall have the authority to terminate the CRO, and after any such termination PISC will
propose new CRO candidates for selection and DCHS will select one in accordance with the
previous sentences of this paragraph. Prior to any such action, the proposed decision will be
discussed with the PISC, and the PISC shall have the ability to discuss that action directly with
the DCHS Board of Directors at a special meeting called for this purpose prior to that action
being taken. In the event the CRO is terminated by DCHS without the agreement of the PISC,
severance pay, if any, owed to the CRO shall not be paid from, or treated as a deduction to, the
Deposit.
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DCHS Retention of Consulting Firm. No later than 30 calendar days from the Effective Date,
DCHS will retain one or more strategic consulting firms (the SCFs) with experienced
healthcare operations credentials selected by DCHS from candidates proposed by Integrity.
Notwithstanding the foregoing, DCHS and Integrity may mutually agree to an extension of the
timeframe within which DCHS must retain SCFs. The SCF candidates will be recommended by
Integrity prior to the Effective Date. The SCFs shall, among other things, formally identify, and
assist Integrity in implementing process improvement initiatives identified by the PISC postclosing (each, a Steering Committee Initiative). The duties and obligations, and review of the
SCFs will be specified by the PISC, and may include (i) performing a System-wide clinical,
financial and operational assessment and (ii) recommending best practices for implementation of
performance improvements, Performance Improvement Initiatives and Steering Committee
Initiatives for PISCs consideration and eventual recommendation to DCHS Board of Directors.
The scope of work of the SCFs related to the foregoing will include but not be limited to labor
optimization practices, supply-chain and contract management, revenue cycle management, LOS
management, CDI and CMI protocol, physician alignment initiatives, IT enhancements, as well
as overall operational and process best practices. DCHS shall use commercially reasonable
efforts to retain SCFs for particular tasks no later than 15 calendar days from the date of PISCs
recommendation of such engagement, and enter into a commercially reasonable contractual
agreement for the consulting services from the date of retention until Closing. Payments to SCFs
shall be made pursuant to the terms of the System Agreement. DCHS shall have the authority to
terminate the SCFs, and after any such termination PISC will propose new SCF candidates for
selection and DCHS will retain one in accordance with the previous sentences of this paragraph.
In the event the PISC makes the decision to terminate an SCF, the DCHS Board of Directors
may continue to use that SCF, but DCHS shall not be relieved of that cost burden from the
Deposit after the termination date.
Process Improvement Covenants. The Board of Directors of DCHS shall take all such actions
or consents as may be reasonably necessary to ensure that the following covenants are adhered to
by the DCHS Affiliates during the Transition Period:
i.
ii.
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Revenue Cycle Management Initiatives. Weekly meetings shall occur with key
RCM leadership including but not limited to: PFS directors, Access Services,
Case Management and Clinical Documentation, to review performance against
critical RCM metrics, including:
a. Yield Performance Tracking & Reporting: Payment denial and write-off
reports by payor, department (e.g., PFS, patient access, CDM) and reason;
root cause analysis and action planning, A/R aging, and initial denial trending;
b. POS Collection Reports: Included but not limited to total POS cash
collections as well as prior balance for all LHMs;
c. Billing and Coding Audits: Included but not limited to coding accuracy and
filing backlog;
d. Cost-to-collect.
One-time Revenue Cycle Audits. Detailed process mapping & audits must be
performed associated with key areas of the revenue cycle, including:
iii.
iv.
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a. Access Services process mapping & shadowing, including but not limited to
scheduling, pre-registration, registration (inpatient/outpatient/emergency
room), pre-authorization, financial counseling, eligibility verification,
customer service;
b. Case Management process mapping & shadowing;
c. Clinical documentation/HIM/CDM process mapping & shadowing
d. PFS process mapping & shadowing, including but not limited to billing,
collections, cash posting, follow-up, under-payments and denials
management;
e. Denials root cause audit, including but not limited to detailed root cause audit
of 100 denial write-offs from each facility from past year; conduct audit of
root cause of denial in partnership with existing Denials Committees at each
facility.
Report Generation. DCHS shall develop bi-weekly performance reports
covering the following metrics for the PISC, including but not limited to:
a. Basic financial performance (statement of operations, cash flow);
b. Labor productivity by facility, by department (for all departments, clinical and
non-clinical);
c. Premium pay (overtime, double time, shift differential, on-call, standby, etc.)
by facility, by department;
d. Level of care by facilitypatient days by department (e.g., med surg, tele,
sub-acute, ICU);
e. Personnel report by facility (showing open positions, terminations, filled
positions, etc.);
f. In relation to purchased services activities: Detailed spend by service,
measures of activity by service (e.g. pounds of laundry cleaned);
g. In relation to supplies and supply chain management activities: total supply
spend as % of net revenue broken out by category, spend by supply type and
by vendor, supply spend by physician (for cardiac rhythm management, total
joints and spine), total supply spend as % of net revenue, off-contract/oncontract spend distribution by major supplies categories, spend for all
purchased services agreements with annual value > $50,000, vendor
distribution of all supply categories with total annual spend >$1,000 where
pricing is dependent on maintaining a specific percentage of volume with a
given vendor (along with threshold values).
Review of Third-Party Contracts, Joint-ventures or any other Business
Arrangements. Integrity may review and make recommendations with respect to
all third party contracts or business arrangements subject to an agreed materiality
threshold, and to the confidentiality provisions of such contracts as may be
specifically required in light of executed non-disclosure agreements, including but
v.
vi.
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