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Stakeholders Report:

Financial Position & Progress on Major Initiatives Issued September 2017 by Planned Parenthood South Texas


Planned Parenthood South Texas We provide and protect the health care and information people need to plan their families and their futures.

2017 BOARD OF DIRECTORS

Alison Boone

Chair

La Juana Chambers

Kathy Armstrong

Vice-Chair

Merritt Clements

Barbara Moschner Treasurer

Cheryl Davis, D.D.S.

Susan Smith

Secretary

Ceci Goldstone

Alan Kramer

Immediate Past Chair

LupĂ­ta Gutierrez Ellen Lake Rev. Jon Lowry Fernando Martinez, Ph.D. Don McRee, Ph.D. Sara Metersky Patricia Morales Yvonne Pelayo Linda Perez Stuart Schlossberg Brian Steward Gerri Wolfle

STAFF LEADERSHIP Jeffrey Hons

President & CEO

Polin C. Barraza, RN

Senior Vice President & COO

On the cover: Our new health center at 920 San Pedro Road, which opened its doors in April 2017.


STATEMENT OF FINANCIAL POSITION* 2016

2014

2015

637,432 121,665 91,867 100,308 951,272

660,600 171,525 112,341 104,593 1,049,059

2,011,414 b 378,886 95,392 78,141 2,563,833

2,383,836 855,506 21,462 6,171,328 9,432,132

283,804 823,632 23,342 7,360,111 8,490,889

260,380 871,351 25,156 7,696,494 c 8,853,381

10,383,404

9,539,948

11,417,214

Liabilities Accounts Payable Construction Payables Accrued Expenses Deferred Revenues Loan Payable Total Liabilities

126,312 1,287,549 472,651 35,884 350,000 2,272,396

100,553 482,504 112,859 350,000 1,045,916

140,877 473,594 21,446 a 2,250,000 2,885,917

Net Assets Unrestricted Temporarily Restricted Permanently Restricted Total Net Assets

5,955,622 1,922,512 232,874 8,111,008

7,786,531 473,627 233,874 8,494,032

7,835,616 460,807 234,874 8,531,297

10,383,404

9,539,948

11,417,214

Current Assets Cash & Cash Equivalents Receivables Inventory Prepaid Expenses Total Current Assets Noncurrent Assets Cash & Cash Equivalents - Temporarily Restricted Endowment Cash Value of Key Man Life Insurance Property and Equipment - Net Total Noncurrent Assets

Total Assets

Total Liabilities & Net Assets

a

Notes a. We leveraged some of the equity in 2140 Babcock to make us cash ready to act on additional clinic relocations that are part of phase two of the capital campaign. b. Receivables rose as a result of accrued online fundraising and our increased commercial insurance billing. c. Embedded here is final recognition of full ownership of 2140 Babcock, less recognition of removing 104 Babcock from the balance sheet.

*Financial data derived from 2016 Financial Audit


REVENUE 2016 over 2015

Federal Family Planning Contract Medicaid Commercial Insurance Patient Fees Methodist Healthcare Ministries Contract Contributions - Annual Fund Contributions - Capital Campaign Miscellaneous Income

Total Revenue

Difference

2015

2016

% Change

610,003 349,831 486,017 2,015,827

869,016 466,485 572,663 1,518,894

259,013 116,654 86,646 (496,933)

442,200

442,300

100

1,894,721

3,309,719

1,414,998

75% e

761,281 31,377

125,314 563,195

(635,967) 531,818

-84% f 1,695% g

$6,591,257

$7,867,586

$1,276,329

19%

a

42% 33% b c 18% -25% d 0%

Notes a. 2016 was the first full year of federal family planning support, whereas 2015 included only 9 months of

support (contract revenue began April 2015).

b. Strong growth, and 2017 is trending toward 10% growth over 2016. c. Strong growth, and 2017 is trending toward 30% growth over 2016. d. Due to provider absence over the summer, we paused abortion care for 3 months which reduced patient

fees. Additionally, the full year of federal family planning support in the S.A. market reduced patient fees.

e. Extraordinary philanthropic support, almost $900,000 of which came in a singular leadership gift. f. Capital campaign is in a quiet mode until we ramp up for phase two. g. Unusual revenue here is primarily the result of the sale of 104 Babcock.

2 | Stakeholders Report 2017


2016 REVENUE Contributions - Capital Campaign - 2% Miscellaneous Income - 7% Federal Family Planning Contract - 11% Medicaid - 6%

Commercial Insurance - 7%

Patient Fees - 19% Contributions - Annual Fund - 42% Methodist Healthcare Ministries Contract - 6% Stakeholders Report 2017 | 3


EXPENSES 2016 over 2015 2015

2016

Staffing & Contract Healthcare Services Medical Supplies & Expenses Office & Program Supplies Printing & Publications Office Expenses Travel & Training Space Costs Advertising & Program Promotion Audit, Legal & Other Professional Services Events, Associations & Sponsorships Other Expenses Depreciation

3,482,744

3,379,768

(102,976)

-3% a

897,952

1,034,465

136,513

15% b

65,492

75,748

10,256

16%

26,209 203,441 31,179 633,002 9,084

43,146 201,760 52,901 477,532 31,254

16,937 (1,681) 21,722 (155,470) 22,170

65% -1% 70% -25% 244%

202,206

226,172

23,966

12% g

128,234

164,251

36,017

28% h

209,420 225,471

252,424 341,442

43,004 115,971

21% i 51% j

Total Expenses

$

166,429

3%

NET INCOME

6,114,434

Difference

6,280,863

$

1,586,723

$

$

476,823

$

$

1,109,900

% Change

c d e f

233%

Notes a.

Some consolidation and, frankly, too much emphasis on being lean. 2017 will show significant growth as we took steps to rebuild staffing levels to support operations.

b.

Increases here primarily resulted from increased volume of mifepristone-based abortion care (regulatory changes due to new FDA label issued on March 30, 2016); increased volume of long-acting reversible contraceptives (made possible by the federal family planning contract); and general cost increases for medications and medical supplies.

c.

We increased our external communication activity.

d.

We increased travel and training for key staff and leadership.

e.

Here we see the benefits of collapsing two addresses into one, with savings on rent and property insurance leading the way.

f.

We decided to start spending on advertising again, and 2017 will show another healthy increase.

g.

We do what is needed, and legal expenses have been necessary during this difficult time. We should not expect reductions in this expense.

h.

Increases here are primarily a result of the annual luncheon, which is also a major source of revenue.

i.

Credit card fees increase as we process more transactions—in clinic and with our donors. Additionally, we spent some extra money on staff activities to show appreciation for their work.

j.

Depreciation expense has grown as a result of 2140 Babcock. PPST assumed full ownership of the property in August 2016, buying out the angel investors who helped us with early cash via an LLC of our own creation.

4 | Stakeholders Report 2017


2016 EXPENSES Events, Associations & Sponsorships - 3%

Audit, Legal & Other Professional Services - 4%

Other Expenses - 4% Depreciation - 5%

Space Costs - 8%

Travel & Training - 1% Office Expenses - 3% Printing & Publications - 1% Office & Program Supplies - 1%

Medical Supplies & Expenses - 16%

Staffing & Contract Healthcare Services - 54%

Representing less than 1% and not included in pie chart above: Advertising & Program Promotion


OPERATING ASSUMPTIONS

&

STRATEGIC INITIATIVES

Fundamental Operating Assumptions Normally, we would not see dramatic changes from one year to the next in the assumptions we hold about our operating environment. But in the past twelve months we have witnessed seismic shifts in the political and governmental reality that surrounds our work at the national level. We’ve lived this reality at home in Texas, but now a new White House, a new appointment to the Supreme Court, and the stated legislative goals of Congress—each of which poses its own threat—must be incorporated into our understanding of the world around us. This understanding creates new assumptions. Our recently resumed participation in the federal family planning program is threatened. In April 2015 we were invited to return to this funding stream (often called “Title X” because it is Title X of the U.S. Public Health Services Act) by the Women’s Health and Family Planning Association of Texas, which was awarded management of these funds by the Obama administration. Currently, Title X support to PPST exceeds $800,000 annually. There is every indication that Title X could be disrupted at the federal level, and if not, the Texas government has announced its intention to ask the Trump administration to return control of these funds to the Texas Department of State Health Services. The appointment of Neil Gorsuch to the U.S. Supreme Court spells trouble for Roe v. Wade. Another appointment similar to Gorsuch would likely be a signal to anti-abortion groups to find a test case to have the Supreme Court revisit the holdsings in Roe. Because Texas never codified Roe v. Wade into state law (as many other states did), access to legal abortion in Texas is quickly jeopardized without Roe. The fight to keep the Affordable Care Act is not over. The leadership in the House and the Senate, as well as the White House, continue to state that some version of repealing the Affordable Care Act (ACA) is a top-tier goal. Although unsuccessful in the first several attempts, 6 | Stakeholders Report 2017

The 85th Legislative Session & Special Session Overview Once again Texas lawmakers took an extreme and sweeping approach to abortion care, passing a number of restrictions with complete disregard for best medical practices, or the health and safety of women. The following abortion restrictions were passed during the regular and special sessions: Senate Bill 8 bans dilation and evacuation (D&E), the safest and most common procedure for second-trimester abortions and further restricts how health care facilities handle fetal remains. House Bill 2858 (ultimately passed as an amendment to HB 2552) singles out abortion providers and further stigmatizes abortion by requiring abortion facilities (and not all health care facilities) to post human trafficking signage. House Bill 13 requires physicians and health care facilities to report more details on abortions complications to the state—and fines those that do not comply. House Bill 215 requires doctors to document details on how minors obtained authorization to get an abortion (i.e. specific details on how the minor received parental consent or judicial bypass, or when the abortion was performed for emergency reasons). House Bill 214 bans insurance companies from providing health coverage for abortion with no exceptions for non-viable pregnancies, fetal anomalies, rape, incest, or the mental health of the mother. Fortunately, Texas lawmakers closed out the special legislative session in late August without passing HB 14, a bill specifically targeting Planned Parenthood by banning health centers from partnering with local government entities such as cities and counties. For more details on these bills please visit www.ppsouthtexas.org.


each version of repeal has been analyzed by independent industry professionals who predict that, in the wake of repeal, the nation would experience a surge in the number of uninsured people. Here in Texas, where Medicaid coverage is already so low, the effect of “un-insuring” people will likely be large. Prior to the ACA, fully one-fourth of Texas adults did not have health care coverage. Planned Parenthood’s continued inclusion in Medicaid cannot be assumed. Each effort by Congress to damage or change the ACA has included special language that would also exclude Planned Parenthood organizations from Medicaid nationwide (It makes no sense— first damage coverage through commercial insurance by hitting ACA and then damage Planned Parenthood, a safety net provider, at the precise time that millions more Americans will not be able to afford a private doctor in the for-profit marketplace). For PPST, Medicaid revenue in 2016 was $572,663, up 18% over 2015. In 2017, revenue from Medicaid is again projected to be more than $500,000. While we could grudgingly adjust operations if we lost this money, and of course we would explore a legal challenge, an ultimate loss would be

tragic in that Medicaid in Texas covers family planning only when the woman lives at or below 18% of federal poverty. This revenue is used to provide family planning to the poorest of the poor. The personal and public health implications of losing Medicaid are heartbreaking. Texas remains hostile towards Planned Parenthood. The Texas government is pursuing additional family planning funds that, according to public statements and descriptions, are designed to 1) cover persons living below 200% of the federal poverty level, and, unfortunately, 2) these funds would exclude Planned Parenthood organizations from the network of providers. Telemedicine rules in Texas were changed significantly in the 2017 legislative session. These changes, a surprising bright spot, are helpful because now health care delivery via various telecommunications and technology platforms is much more possible. While Texas prohibits any abortion care via telemedicine, our family planning program could use telemedicine, and perhaps do so in a way that connects with otherwise hard-to-reach populations.

There are also assumptions that remain in place and continue to be part of our view of the external environment surrounding the care we provide. Let’s briefly remind ourselves of assumptions we described in the 2016 Stakeholders Report that remain unchanged: »»

The unmet need for family planning services remains high.

»»

Health disparities persist. Cervical cancer, sexually transmitted diseases, and HIV occur in Latino and African American populations at rates that exceed those of Anglos.

»»

People will continue to have sex, and they will want more privacy for their sexual health care when compared to their general health care.

»»

By wide margins, Millennials and Generation Z are aligned with the mission and values of Planned Parenthood.

Taken together, these new and continuing assumptions can feel daunting, but there are solid reasons to expect success from PPST despite the difficulties in our external environment.

We have developed considerable organizational capacity in delivering on our mission without government as a helpful partner. Texas has been, unfortunately, an effective training ground for what now presents itself in our federal government. That doesn’t make it okay, but it does mean that we are smart and strong. We will step into the breach where women’s health is concerned, like we have for 78 years. There has always been a gap between what women need and what most women can find in the health care marketplace, especially women who have limited economic means. Stepping in to help is what we do. Stakeholders Report 2017 | 7


We must assume that those who are working against women’s health care priorities in general and Planned Parenthood’s help therein will, eventually, land a hit of some sort. If they do, we can already imagine the likely ground truth in South Texas. State government would fund some family planning for persons living below poverty and slightly above poverty. Any provider working with those funding streams will be censored in that the provider will not be able to even discuss anything related to abortion, and certainly will not be allowed to provide abortion care. The working poor (people in lower wage jobs without health insurance benefits but who earn “too much” money to qualify for government-subsidized family planning) will have great difficulty paying their way in the for-profit marketplace, and will look to Planned Parenthood because they will need to find the most economically reasonable place for their care. Everyone will be welcome at Planned Parenthood, just as they are today. The working poor will need us like never before. But the poorest among us may look to government-subsidized programs out of sheer necessity. All of this will be temporary as policy shifts will occur again when the political winds change, but that could take years.

We must be ready for all of this. The good news is that we already are.

Strategic Initiatives The relocation of our rented clinic on West Ashby Place to our newly-purchased property at 920 San Pedro was successful (see cover photo). The family planning clinic has been open and seeing clients since late April 2017. The building has space for our own expansion as well as space for a tenant. We hope to diversify and strengthen our revenue mix with rental income. We are expanding the scope of our clinical practice and thereby broadening the range of care available to our existing and future clients. In addition to all our core services—including family planning, gynecology and sexual health care—we now offer hormone therapy for transgender clients and pre-exposure prophylaxis to patients who seek the highest level of protection against HIV transmission. In consultation with a reproductive endocrinologist, we will launch limited fertility assistance before the end of 2017. Further, we are participating in a small group of Planned Parenthood organizations that will work collaboratively with our sister affiliate in Richmond, Virginia where Planned Parenthood offers primary care—in a payor environment that includes virtually no Medicaid reimbursement. With hard work, we hope to replicate Richmond’s success in San Antonio and the Rio Grande Valley. Our own pilot project for primary care stalled when Medicaid expansion in Texas was derailed by a 2012 Supreme Court decision (National Federation of Independent Business v. Sebelius) that stopped a significant aspect of the Affordable Care Act intended to expand Medicaid coverage nationwide. The PPST Board of Directors established a new Public Affairs Committee in January 2017. Committee members and staff are building a public affairs agenda that includes the traditional family planning, sex education and abortion rights issues that have long characterized the advocacy and government relations work of Planned Parenthood, but will include a broader range of concerns that are related to reproductive justice and the intersectionality of human rights and equality concerns present within the lives of our clients. The Planned Parenthood family nationwide has formed a new company to work on our own telemedicine platform for birth control without visiting a clinic. Pilot projects in a few markets have been successful and indicate that we can be successful in this venture more broadly. Closer to home, Texas’ recent change in telemedicine law allows us to be “moved up” in the expansion pipeline of this exciting work. 8 | Stakeholders Report 2017


Following the difficult years of 2011 and 2013 when the state of Texas dramatically curtailed support for our family planning work, we have been in a contraction mode, serving fewer clients and employing fewer staff. While this was difficult, we survived and are now a sustainable operation without the Texas government as a partner. Recently we’ve begun to build back staffing in strategic areas: clinical services, marketing, program promotion, and facilities management.

Our future We will continue with Phase Two of our capital campaign to secure funds for three more clinic relocations in San Antonio. With each of these moves, we elevate the client experience when the aesthetics of our facilities match our high-quality medical care. Additionally, we eliminate rent expense, strengthen our balance sheet with real assets, and in some cases create rental income if we have space for a tenant. Finally, security can be strengthened, and managed better, in a building we own when compared to rented space in a strip center where everything is negotiated with a property manager.

Given the small towns throughout our service delivery area, imagine what we could do with an Habla Con Tu HermanaSM project where the promotoras (community health workers) have smart phones or tablets and can facilitate access to online health care and contraception delivery. Such a project could reach women who have many barriers to accessing care. The costs of doing so are absolutely possible when you consider that we could avoid the enormous capital costs of establishing a brick and mortar clinical facility. This idea needs more thinking and polish, but some version of this is in our future.

We must have contingencies in place for our operations in the event of a deleterious outcome from Congress. Efforts to repeal the ACA and “defund” Planned Parenthood have hitherto been unsuccessful, but that doesn’t mean this is over. If Congress lands a hit, we will be prepared to adjust our fee scale appropriately. We will continue to be a compassionate provider of care with a special concern for those who have limited economic means, but our generosity must be part of a sustainable business operation. This could mean reducing the number of sliding fee centers and having more fixed fee centers (fixed fees that are still below the for-profit marketplace). But this can’t just be about doing less. We will test new operating models, find new successes and leverage those for more care.

Over the past many months, the Planned Parenthood family nationwide has come together in a once-in-a-generation effort to reflect on our current reality and contemplate a pathway forward amidst the changes around us. This project has included staff and board involvement, federation-wide data crunching like never before, external environment assessments, and health care industry trend analysis. A federated structure like the Planned Parenthood family can be difficult to organize (the independence of each affiliate is a strength, but cats are independent, too). As this large strategic thinking project comes to a close, Planned Parenthood South Texas will form our own Futures Committee to work out our plan and our place in this wave of change.

An analysis of our revenue mix shows significant changes over the last decade and an interesting current reality. Government related revenue is 17% of total revenue; it was fully two-thirds fifteen years ago. Private philanthropy and patient fees—our two most important relationships and two revenue streams that government does not control—are 61% of revenue. When commercial insurance is added in (think about it, commercial insurance, like patient fees, is another way clients direct to Planned Parenthood financial resources of their own control), these two relationships represent 68% of all revenue.

In the past few years the generosity of PPST donors has been remarkable. As a result, we are in a stronger cash position than we’ve seen in many years, and that stability strengthens us as we work to address the challenges in front of us. Executing further positive organizational transformation will take more capital than what we have at present, but we are grateful that inspired and visionary support has put us in the position to keep moving forward. We will need more capital, we will seek more, and we will deploy those resources toward PPST’s short-range economic viability and longterm sustainability. Stakeholders Report 2017 | 9


copyright ® 2017 Planned Parenthood South Texas

Stakeholders Report  

PPST Financial Position & Progress on Major Initiatives

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