OSU Medical Trust Finance Committee Minutes

OSU Medical Trust

Thursday, June 25, 2026 11:15 AMCDT
@ OSU Medical Center, 2d Floor Executive Boardroom, 744 W. 9th St., Tulsa

Agenda

Notice of the meeting was given in writing to the Oklahoma Secretary of State more than fortyeight (48) hours prior to the meeting, and the agenda of this meeting was posted at entrances of Oklahoma State University Center for Health Sciences and Oklahoma State University Medical Center twenty-four (24) hours prior to such meeting, excluding Saturdays, Sundays, and legal holidays, in compliance with the Oklahoma Open Meeting Act.

Attendance

Present:
Members: Michael Herndon, Brett Lessley (remote), Tracy Poole, Barry Steichen
Guests: Eric Atkinson, Rick Brewster (remote), Deborah Dage, Mike Fields, Courtney Finocchiaro, Catherine Gann, Melissa Macarthur, Eric Polak, Johnny Stephens, Erica Woolf
Absent:
Members: Jay Helm

1. Call to order (Presenters: Brett Lessley)
   • A quorum was established, and the meeting was called to order at 11:20 AM by Michael Herndon who is chairing the meeting on behalf of Brett Lessley.
2. Approval of the minutes from the April 23, 2026 meeting – ACTION (Presenters: Brett Lessley)
   • File Name: Draft-OSU Medical Trust Finance Committee Minutes 4.23.2026.pdf
   • Motion:
   • Motion to approve the minutes of the April 23, 2026, meeting.
   • Motion moved by Barry Steichen and motion seconded by Tracy Poole. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
3. Presentation of Budget (Presenters: Eric Atkinson)
   • File Name: OSUMT FY27 Operating and Capital Budget.pdf
   • Eric Atkinson gave description of FY27 Operating Capital Budget including input regarding the issue of a possible $7 million budget cut related to Medicaid Supplemental Funding.
   • Management presented the FY2027 budgets for OSU Medical Center Professional Services LLC, the hospital, and the consolidated organization. Discussion included growth initiatives, expense assumptions, risks, capital needs, and governmental funding considerations.
   • PSLLC budget assumptions included orthopedic growth, Dr. Stallings’ first full year, Dr. Checkets beginning October 1 with a portion of early time leased to the VA, and Dr. Shaw supporting Stillwater Athletics and sports medicine strategy.
   • PSLLC Diabetes expansion, rheumatology, and additional pulmonology opportunities were discussed as potential initiatives not included in the budget until contract certainty was sufficient.
   • PSLLC and Hospital expense assumptions included a 5% merit/market adjustment, approximately 5% supply and inflation increases, overhead allocations to PSLLC, and centralized scheduling/referral management expense methodology.
   • Hospital budget assumptions included orthopedic surgery growth, a seventh OR anesthesia site, estimated VA-related volumes, current run rates for supplemental funding, reduced investment income due to expansion cash outflows, and GASB 103 reclassification of supplemental funding from operating to non-operating revenue.
   • Risk and opportunity discussion included managed Medicaid IME SPA timing, DPP reconciliation reserve, Medicaid expansion impact, site-neutral exposure, 340B pricing, supply savings, and dependence on governmental funding.
   • The FY2027 hospital budget projected net income of approximately $30.7 million,
     and the consolidated budget projected net income of approximately $22.9 million.
   • Capital budget requests totaled approximately $10.4 million, including strategic capital, routine/break-fix needs, and FY2026 carryforward items. Discussion included ARPA spending timelines and continued cash-flow monitoring.
   • Discussion highlighted the potential system-wide impact, with estimates suggesting that 14 to 25 hospitals could be at risk of closure without SHOPP funding. It was also noted that a significant amount of tax revenue was collected but not appropriated. Despite this, there remains an estimated $85 million to $90 million funding gap for the program in the coming fiscal year, contributing to an overall projected deficit approaching $200 million.”
   • OSUMC was made aware approximately two weeks ago that OHCA was considering significant cuts to Medicaid funding, primarily concentrating on the SHOPP program. The projected impact to OSUMC is $7M. The amount is not reflected in the budget because it has not been finalized. However, Management wanted to make the Finance committee aware of the potential of the cuts, the strategic decisions that may need to be made, and the potential litigation options.
   • Trustee Clay Bullard provided the committee an update on the financial outlook of SHOPP and broader state funding dynamics. It was noted that SHOPP was originally structured with an intentional deficit, with the expectation that premium tax revenue would offset the shortfall. In recent years, the Legislature has directed agencies to spend down cash reserves, resulting in depletion of available funds.
   • For FY27, the state Medicaid budget is projected to approach $14 billion. The initial guidance suggested a need for approximately $100 million in reserves for working funds, later revised to approximately $75 million. The $66 million shortfall referenced in the legislative meeting/letter reflects available funding under those constraints. There are currently $180 million in reserves, with $130 million already earmarked, limiting flexibility. Under new legislation, the use of rate preservation funds requires prior approval, further constraining access to funds.
   • OHCA is projected to operate with approximately $5 million in cash reserves as of July 1.
   • Actuarial estimates indicate approximately 11% of members may roll off, with each 1% reduction equating to roughly $25 million in savings. Even if projections hold, reserves are expected to remain minimal by year-end. The rate preservation fund totals approximately $330 million, but statutory limitations allow access to only one-third of that amount, or approximately $112 million, which must also be repaid within the same fiscal year. As a result, it is anticipated that an emergency appropriation in the range of $50 million to $100 million may be required to sustain agency operations. It was further noted that these financial pressures are expected to carry forward to the next administration and may result in significant political and operational implications, comparable to prior funding challenges experienced by the Department of Mental Health.
   • Discussion highlighted the potential system-wide impact, with estimates suggesting that 14 to 25 hospitals could be at risk of closure without SHOPP funding. It was also noted that a significant amount of tax revenue was collected but not appropriated. Despite this, there remains an estimated $85 million to $90 million funding gap for the program in the coming fiscal year, contributing to an overall projected deficit approaching $200 million. The committee emphasized the importance of differentiating the organization’s position from broader Oklahoma Hospital Association discussions, noting its role as a teaching hospital. Questions were raised regarding whether participation in a public funding pool would be feasible or appropriate.
   • Finally, it was noted that even in a scenario where all federal programs were reduced and physician fee schedules were decreased by the maximum allowable 4%, total savings would be approximately $48 million, which is relatively modest compared to overall shortfall. Current spending levels were noted at approximately $152 million per week, underscoring the magnitude of the financial challenge.
   • Management shared that programmatic cuts will be required to cut $7M in funding. The committee emphasized the importance of maintaining the teaching mission of the hospital. Cuts to learners should be a last resort.
4. Proposed Executive Session
   1. Discussion and possible vote to enter Executive Session for the followingpurposes: - Action
      1. Pursuant to 25 O.S. § 307(B) (Presenters: Chair)
         • Confidential communications between the Board and its attorney(s) concerning pending or potential claims and/or litigation related to Medicaid cuts and/or other legal claims related thereto, where the Board’s attorney has determined disclosure will seriously impair the ability of the Board to conduct the investigation(s) and/or assess claims in the public interest as authorized under 25 O.S. § 307(B)(4).
         • Discussion of confidential and/or proprietary information submitted to or compiled by the Trust under 63 O.S. § 3290(D); 25 O.S. § 307(B)(7); 12 O.S. § 2508; and 78 O.S. § 86; including the following:
         • Review, discuss, and/or consider adoption, modification, and/or rejection of strategic plans which include marketing plans, financial statements, trade secrets, research concepts, methods or products, and other proprietary information including growth options, partnerships, market research/analysis, and potential costs of same as these items relate to Medicaid cuts.
         • Motion:
         • Motion to enter into Executive Session.
         • Motion moved by Barry Steichen and motion seconded by Tracy Poole.
           Aye: Herndon, Steichen, Poole Nay: None Abstain: None
   2. Discussion, consideration, and possible vote to adjourn the Executive Session and reconvene to the Trust Meeting - Action
      • Motion:
      • Motion to adjourn the Executive Session and reconvene to the Trust Meeting.
      • Motion moved by Barry Steichen and motion seconded by Tracy Poole. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
5. Discussion and possible vote to approve FY2027 budget discussed in the Executive Session - Action
   • Motion:
   • Motion to recommend to the Trust approval of FY2027 budget discussed in the Executive Session.
   • Motion moved by Tracy Poole and motion seconded by Barry Steichen. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
6. Finance Reports
   1. Review of Month to Date and Year to Date May 2026 Financials (Presenters: Eric Atkinson)
      • File Name: OSUMT May 2026 Financial Presentation - Finance Committee.pdf
      • Eric Polak-PS, LLC
      • Key volume statistics
        • Hospital and Clinic visits were favorable to budget due to incoming providers ramping up.
        • Hospital visits for the month of May favorable to budget due to the addition of Orthopedic service line.
        • Clinic FTE remain favorable to budget.
        • Employed Provider FTE lowered by 1.0 due to the departure of Hallie Frederick.
      • Income Statement-May 2026
        • Net Revenue favorable to prior year due to new service line volume.
        • S & B unfavorable to budget due to additional physicians and increased volume.
        • Contract Services unfavorable to prior year due to the addition of Orthopedic service line.
      • Income Statement-YTD
        • Net Revenue-favorable to budget due to increase in volume. Favorable to prior year due to new service line volume.
        • Contract Services-unfavorable due to higher than anticipated physician productivity bonuses. Unfavorable to prior year due to addition of Orthopedic service line.
        • Insurance favorable to budget due to leased physician insurance applied to contract services.
        • Other Operating Expenses unfavorable due to new physician CME allowance and membership dues.
      • Eric Atkinson-OSUMC
      • Key Volume IP Statistics
        • Total observations and admissions came in favorable to budget.
        • Patient days trending below budget which means length of stay was very favorable to budget for month and YTD.
      • Key Volume OP Statistics
        • Right on budget for surgeries.
        • Cath Lab and GI both over budget. GI not so much this month, but Cath Lab still running about 20% over and 30% to prior year.
      • Income Statement-May 2026
        • Closed the month with net income at 1.3.
        • We missed budget this month for the first time of the year. We missed by about $370,000.
        • Solid volume month, solid net revenues.
        • Contract services exceeded budget for $105k of Iron Mountain box destruction fees, $50k Forvis Payor Benchmarking and Managed Care Assessment and $20k for additional bank fees.
        • Revenue Share exceeding budget based on monthly and YTD financial performance. Increase to PY based on projected EBITDA for FY26 (change in accrual methodology).
        • Non-Operating Income lower to prior year based on decreased OSUMA allocations received in FY26 in order to fund potential Managed Medicaid IME Program.
      • Income Statement-YTD May 2026
        • Higher volume than budgeted with a lot of net revenue initiatives coming
          through.
        • Professional Fees prior year variances largely driven by subsidies. $1M DIA, $530k UTB and $550k ED Medicine.
        • Contract Service is down to prior year due to bringing Dialysis in house and no longer parking off-site. Outside consulting fees are driving an unfavorable variance to budget of $840k.
        • Revenue Share exceeding budget based on monthly and YTD financial performance.
        • Non-operating Income lower to prior year based on decreased OSUMA allocations received in FY26 in order to fund potential Managed Medicaid IME program.
      • Key Financial Ratios
        • Days cash on hand still staying at a healthy 195 days.
      • Transfer Analysis
        • Outreach is still productive.
      • RN FTEs by Type
        • Contract labor is coming down.
      • Consolidated Income Statement - May 2026
        • $14M actual on a budget of $10M.
      • The Medicaid reserve for potential reconciliation/payback was discussed, including approximately $6 million reserved through FY2026 and continuation of a reserve approach into FY2027.
   2. Discussion, consideration, and possible vote to recommend the Fiscal Year 2027 OSU Medical Trust Operating and Capital Budgets - ACTION (Presenters: Eric Atkinson, Eric Polak)
      • This was an accidental duplicate agenda item.
7. Resident Medical Professional Insurance Renewal (Presenters: Eric Atkinson)
   • File Name: 26-27 Resident Premium Summary.pdf
   • This is for the Residents medical malpractice insurance and aligns with the hospitals. The hospitals was approved at the May Trust meeting. This is just a continuation and will be taken to the Trust for approval. Total premiums have increased year over year due to a compliment increase.
8. Discussion, consideration, and possible vote to recommend the Cost Report and Audit Engagements - ACTION (Presenters: Eric Atkinson)
   • File Name: SBAR FY2026 FORVIS Engagements.pdf
     • Eric Atkinson discussed keeping Forvis for our audits. We work with them closely on several different initiatives including the audit.
     • This is just bringing forward the request to have us engage with Forvis for the FY26 audit and the cost report at the tail end of that.
     • Barry Steichen asked for amounts for each of these. The audit is $140,000 max per agreement and last year's came in at $133,000. The cost report increased $4,000 over last year which puts as at $167,800.
     • The two engagements are below our contracting authority limit but wanted to bring it forward to make sure the Trust did not have the desire to change anything from a firm perspective at this time.
   • Motion:
   • Motion to recommend to the Trust the Cost Report and Audit Engagements.
   • Motion moved by Barry Steichen and motion seconded by Tracy Poole. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
9. Collinsville Medical Office Building (Presenters: Eric Polak)
   • File Name: SBAR_Collinsville_Medical_Office_Building_2026.06.25.pdf
   • File Name: OSU_Collinsville_MOB_Business_Plan_2026.06.25.pdf
   • File Name: OSU_Collinsville_Board_Presentation 2026.06.25.pdf
   • Eric Polak gave a project overview of the soon-to-be outpatient clinic. Deborah Dage asked about it being an infusion center and was informed not at this time. Also, discussed market opportunity since it is one of fastest growing regions.
     • Management presented the Collinsville Medical Office Building project. The proposed project is a 13,834-square-foot outpatient clinic located near Highway 75 and Highway 20. The project includes primary care, urgent care/open-access planning, x-ray and lab capability, and specialty rotations including general surgery, pulmonology, cardiology, and orthopedic surgery.
     • The then-current capital cost was discussed at approximately $11.4 million, with continued efforts to reduce cost before bid awards.
     • Market demographics included just under 100,000 residents, household income approximately 34% above the state average, and continued growth in the area.
     • Discussion addressed competition, loss of first-location advantage due to Express Wellness opening nearby, urgent care strategy, open-access primary care, extended-hour staffing, and phased implementation.
     • Management indicated the project would be acted on during the Trust meeting rather than Finance Committee alone.
10. Discussion consideration and possible vote to approve 7th Anesthesia OR Site and authorization for Chairman to execute related contracts and amendments (Presenters: Erica Woolf, Eric Atkinson)
    • File Name: 7th Anesthesia OR Site.pdf
    • Erica Woolf presented the recommendation to add a seventh OR anesthesia site due to surgical volume growth and operating room capacity constraints. Surgical volumes were trending approximately 8% higher in 2026, and additional anesthesia and OR staffing would be needed to accommodate growth from orthopedic, pulmonology, ION, and general surgery initiatives.
    • Motion:
    • Motion to approve 7th Anesthesia OR Site and authorization for Chairman to execute related contracts and amendments.
    • Motion moved by Barry Steichen and motion seconded by Tracy Poole. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
11. Discussion, consideration, and possible vote to recommend the execution of the SFHS Linen Contract Extension - ACTION
    • File Name: SBAR_Linen Service Renewal .pdf
    • Management recommended a two-year extension of the Saint Francis Health System linen services agreement. The current rate of $0.46 per pound was due for renewal in September. A proposed $0.50 rate was negotiated down to $0.48 per pound, with annual escalation. Quality metrics for rejected linen per pound and on-time deliveries met or exceeded expectations.
    • Motion:
    • Motion to recommend to the Trust the execution of the SFHS Linen Contract Extension.
    • Motion moved by Tracy Poole and motion seconded by Clay Bullard. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
12. Discussion, consideration, and possible vote to recommend the execution of the SFHS Linen Contract Extension - ACTION
    • File Name: SBAR_Linen Service Renewal .pdf
    • Management recommended a two-year extension of the Saint Francis Health System linen services agreement. The current rate of $0.46 per pound was due for renewal in September. A proposed $0.50 rate was negotiated down to $0.48 per pound, with annual escalation. Quality metrics for rejected linen per pound and on-time deliveries met or exceeded expectations.
    • Motion:
    • Motion to recommend to the Trust the execution of the SFHS Linen Contract Extension.
    • Motion moved by Tracy Poole and motion seconded by Clay Bullard. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
    • Motion moved by Clay Bullard and mption seconded by Tracy Poole. Aye: Herndon, Steichen, Poole Nay: None Abstain: Barry
13. Informational - Contracts
    1. Select PSA
       • File Name: SBAR_Select_PSA.pdf
    2. Select Lease
       • File Name: SBAR_Select_Lease.pdf
14. Unfinished Business (Presenters: Brett Lessley)
    
    • None
      
15. New Business (Presenters: Brett Lessley)
    • None
16. Adjournment (Presenters: Brett Lessley)
    
    • Motion:
    • Motion to adjourn the meeting at 1:45 PM.
      
    • Motion moved by Barry Steichen and motion seconded by Tracy Poole. Aye: Herndon, Steichen, Poole Nay: None Abstain: None
      

Minutes signed off by Oklahoma State University Medical Trust Finance Committee Chairman, Brett Lessley.

If you would like a copy of these minutes, please reach out to Terri Tinkler at osuma@okstate.edu.