Reinvesting in caregivers and charting a more sustained path, but uncertainties remain, says St. Charles Health CFO

Bend, Ore.-based St. Charles Health has had to deal with many of the challenges facing health and hospital systems across the country. For St. Charles, that included resulting cost-cutting measures such as laying off 105 employees and eliminating 76 vacant positions in May 2022. New initiatives are underway to help further mitigate such challenges.

Becker's talked with St. Charles CFO Matt Swafford about the ongoing obstacles and how the health system is facing up to them.

St. Charles operates four hospitals in Central Oregon as well as several outpatient, urgent care and primary care facilities. Its service area is the size of South Carolina, Mr. Swafford said.

Question: Can you give us some details on the negative impact contract labor costs have had on your operations?

Matt Swafford: We were seeing contract labor pre-pandemic at 1 to 2 percent of our costs. That rose to between 10 and 20 percent in 2022 in particular, and that is an unsustainable solution. We had to buy that talent to help the community manage through the pandemic, but there is an extreme workforce shortage as a result. We now have a bold budget for reducing travel nurses and reinvesting substantially in our permanent staffing.

Q: What are some of the other cost-cutting and revenue-optimizing initiatives you have begun at St. Charles?

MS: We have put in place processes to optimize our payer contracts, revenue cycle management and in our clinical coding. There are over 10,000 codes when it comes to clinical documentation, which is mind-boggling. We have consultant partnerships to help us with that.

Q: You have spoken about the need to deliberately set apart investment income and operating income, describing recent operating results in the industry as the real crisis. Can you speak more to that?

MS: We were 7.5 percent over budget for our expenses in 2022 and only 1.8 percent for revenue; that is a really unsustainable position to be in. We used $65 million from investment income to support our operations, but that is not something you can do forever. We could have used all our days of cash on hand (approximately 230), using up all our cash reserves, but then you can't borrow.

Q: St. Charles recently appointed interim CEO Dr. Steve Gordon as its permanent leader. Is that helping with the idea of stability running through the system?

MS: Steve represents a mix of experience and commitment that would be difficult to conjure otherwise. He has experience in internal medicine, he has been a healthcare executive, a consultant and a board member, and that expertise and broad experience is a powerful mix. He helps provide a level of hope and commitment that is mutually reinforcing.

Q: Are you feeling optimistic after the difficulties faced?

MS: We had the job cuts, which is hard on the culture and a hard thing to do. You always think, what is this going to do to the culture? We have an incredible team from the board to the bedside. We are reinvesting in our caregivers; we gave raises in February. It is about how we can drive better quality, safety and financial performance by facing these challenges together. The thing that concerns me the most is that there are so many risks we have no control over. In some ways, there is more uncertainty than ever.

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