*Note: Individual market reports were sent via email on February 12 and 13, 2018. CLICK HERE to view email message. If you need your reports sent to you again, please reach out to Emily Cawley – ecawley@cmnhospitals.org

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Dear CMN Hospital Leadership and Program Directors,

We are pleased to share the CDO Advisory Committee has come to a consensus regarding the 2019 Children’s Miracle Network Hospitals partnership model. We greatly appreciate those who took time to offer feedback and insight to the model that was proposed at Fall Business Meeting in 2017.  Over the comment period following the fall meeting, we spoke and or met with more than a third of the markets and have responded to everyone who has reached out to us.

Throughout the process the Committee was directed by the guiding principles, trust tenets and a commitment to an equitable recommendation for all 141 U.S. markets.

Over the last several months, we have heard and considered your feedback.  The following were four consistent areas.

• Suggestion #1: Factor in cost of living index to average annual household income. Committee recommendation: Adding in the cost of living index to the partnership model calculation smoothed the differential between the markets that experienced an increase in fees and those that experienced a decrease in the model presented at Fall Business Meeting. The committee supported this change.
• Suggestion #2: Lower the partnership fee when exceptional fundraising results are achieved. Committee recommendation: In order to achieve reduced membership fees for certain member hospitals in exceptional years, those fees would then need to be absorbed and redistributed throughout the Network. Since this recommendation did not align with the guiding principles and trust tenets of being equitable for all 141 members, the committee did not support this change.
• Suggestion #3: Use Radiothon collected funds versus announced totals in calculation of the membership fees. Committee recommendation: In reviewing this suggestion we found there is a wide disparity with Radiothon timing and collections of funds. The committee and management agrees new rules will be established for reporting Radiothon numbers and will be considered for future membership fee structures. The committee did not support this change.
• Suggestion #4: Make partner adjustments including removing Chico’s FAS and *Rite-Aid locations. National partners who cease fundraising beyond 2018 have been removed. The committee supported this change.

*Rite Aid Corporate remains a committed partner. However, as they move through an internal restructure they’re unable to supply a list of stores that will continue to support CMN Hospitals in 2019. Due to the uncertainty of the timing of the restructure, all Rite Aid locations were removed.

By incorporating the changes above, the 2019 proposed partnership model, is now comprised of the following factors:

• Population (25%): Share of national population
• Average Annual Household Income (25%): Calculated with average annual household income blended with cost of living index
• Partner Total (50%): There are four factors in the calculation – Corporate Partners, Radiothon, Dance Marathon and Extra Life (CMN Hospitals core fundraising activities).  Each of the fundraising categories were weighted based on share of the total for the four categories above.
• Totals are based on 2017 direct costs and 2016 fundraising results. Because final fundraising results will not be available until March 2018, 2016 results were used for this model to give hospitals and leadership adequate time to analyze and process results.

The CDO Advisory Committee voted in favor to recommend the model on February 7, 2018 to be brought before the to the CMN Hospitals Board of Trustees for a vote on March 6, 2018.

The membership fee structure will be effective for three years. Fee adjustments will be reviewed and approved/declined by the Board of Trustees at least six months prior to the fee due date.

Below is a summary comparison between:

• Original Recommendation Base Fee – Model 12
• New Recommendation Base Fee – Model 12 A

Results of the Original Recommendation 12 and the New Recommendation 12A

TOTALS

 Reasons for:  Original Recommendation Model 12 and New Recommendation 12A Data based on: 

Next Steps and Timing:

2018

Today February 12, 2018, each market will receive their individual Partnership Model membership fee report. This will replace the estimated individual ‘Membership Fee Options’ sent in September 2017.  The February 12, 2018 email will include:

• 2019 Membership Fee Detailed Calculation, which shows the actual base membership fee and assumptions used to estimate your market direct cost
• 2019 Membership Fee Summary worksheet which allows you to calculate your base fee and assumptions used to estimate your market direct cost

February 15 & 20              Townhall calls to share plan and field questions

February 22                        Regular quarterly national call –  will allow time for Q&A

March 6                               Board of Trustees vote on recommendation

March 6                               Share outcome at CDO Summit

March 7                               Share outcome with field

June                                       Base Fee invoiced/ due August 31, 2018

2019

January 1                             New Partnership Model Begins

Members whose base fee experiences a substantial increase under this model will be contacted by February 23, 2018, to learn how they will be impacted. Should the model be approved, the first invoice for the new base fee will be sent in June 2018 for the 2019 year and the direct cost will be billed quarterly.

Thank you again for your engagement, insight, and recommendations throughout this 18-month process. We value your partnership and believe this model will help us raise more money for kids served by our children’s hospitals.

Sincerely,

John Bel
President & CDO, Children’s Hospital San Antonio, Chair CMN Hospitals CDO Advisory Committee, Member of CMN Hospitals Board of Trustees
Phil Salerno
President & Chief Development Officer, Children’s Specialized Hospitals, Member of CMN Hospitals CDO Advisory Committee