Cracking the code for small hospital sustainability

Some community hospitals are not far from major metro areas, while others serve more rural communities. No matter where they are located or their independence or affiliation with a major system, patients rely on community hospitals when they need care close to home.

Their size, limited financial resources and geographic locations can make it challenging for community hospitals to remain sustainable in an environment of competition for providers and physicians while offering scaled-down services.

At Becker's Hospital Review 5th Annual CEO + CFO Roundtable on Nov. 8, experts seasoned in the inner workings of community hospitals discussed how their entities are working to thrive. During a panel titled, "Building a sustainable business model for community hospitals," the participants emphasized what is relevant about their respective organizations and what they're doing to meet the challenges unique to community hospitals.

Bryan Slaba, CEO of Wagner (S.D.) Community Memorial Hospital - Avera, leads a small critical access hospital in rural South Dakota. His facility is 60 miles from a tweener hospital and 120 miles from a tertiary hospital. Wagner Community Memorial serves a demographic that is approximately 55 percent Native American. Its payer mix is 25 percent Medicaid, 50 percent Medicare and another 10 percent Indian Health Service. The 20-bed hospital's average daily census for acute care is one, and it has only about 2,400 annual emergency room visits. Still, it is critical to the community.

One issue Wagner Community Memorial struggled with was physician recruitment. To help address this issue, the CEO offered nurses at the hospital the opportunity to go back to school to become an advanced practice provider, with expenses paid for by the hospital. The only requirement was they come back to Wagner Community Memorial and work there as an APP for three years.

"I put them in my ER, and on my floor and in my clinic. Right now, 40 percent of my ER is covered by an APP with a physician backup who is 120 miles away through telemedicine," Mr. Slaba said.

As a result, the hospital's direct costs in the ER are down to 2012 levels and quality at the hospital has increased, he said. Patient advocacy went from the 63rd percentile to the 89th percentile on inpatient side, and on the ER side, the hospital went from the 63rd percentile in HCAHPS to the 90th percentile nationwide.

"Quality has stayed where it needs to be, costs have come back down 25 percent since their high in fiscal year 2014," Mr. Slaba said, noting that the APP initiative has also stabilized his hospital's cost-to-charge ratio.

Ginger Williams, MD, president and CEO of Oaklawn Hospital in Marshall, Mich., faces a slightly different situation at her hospital, a 94-bed community hospital in south central Michigan. Oaklawn has more than 1,000 employees and has about $130 million in net patient service revenue. Its tertiary and quaternary competitors are roughly 20 to 30 miles away, and there is another community hospital in the area.

Despite competition and challenges, Oaklawn has been able to achieve successes, Dr. Williams said. She specifically noted Oaklawn was named by Consumer Reports as being safest hospital in the country in 2015, and it was one of only four hospitals in Michigan to receive a five-star rating this year from CMS within the agency's Overall Hospital Quality Star Rating program. Additionally, the hospital established its own independent investment grade bond rating again this year.

Dr. Williams acknowledged there is no magic formula to building a sustainable business model. But she did recommend that community hospitals be entrepreneurial and look at the different service lines to assess where changes are needed.

She also said she believes one of the fundamental things for a sustainable business model in healthcare is having a culture "that not only services change but can actually thrive in change."

"Any change creates stress, and constant stress can result in some catastrophic results if you don't deal with it well," said Dr. Williams.

To be able to "thrive in change," she encourages community hospital CEOs work with physicians, provider staff and employees to adopt an outward-thinking mindset rather than an inward-focused mindset. This means instead of focusing unilaterally on their own goals and objectives, everyone working inside the hospital should recognize what others' goals and objectives are and how they can play a role in helping others achieve their individual goals, thus, helping the entire hospital.

Technology also plays a key role in building a sustainable business model for community hospitals.

Michael Monahan serves as director of solution enablement for Chicago-based GE Healthcare. GE Healthcare, a subsidiary of General Electric, has various offerings, such as medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery and biopharmaceutical manufacturing technologies, among others.

Mr. Monahan cited Oklahoma State University Medical Center in Tulsa as an example of how technology can help its community hospital partners and affiliates thrive. At OSU Medical Center, a teaching hospital, the radiology department was on different platforms. This meant when an electrocardiogram, for instance,was performed, different members of the hospital staff could view it but had to physically go to the EKG viewing platform or viewing machine. With the new GE solutions, the hospital staff and physicians are now able to use technology for a universal view whether they are in the teaching hospital, a smaller partner/affiliate facility or in a post-acute care setting. The data sharing aims to reduce costs, save time and enhance efficiencies across the board.

"I really see that as driving great quality. And truly if we we're going to start to move it down the care continuum, the closer you get to the end caregiver, and they're included in that conversation from day one, it's going to make a big difference," Mr. Monahan said.

 

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