'We can do anything, but we can't do everything': Tough decisions loom for hospital C-suites

Hospitals spent years adding specialists and service lines to meet the needs of anyone in the community, no matter the issue.

But that strategy has become unsustainable for many hospitals, especially in rural areas that were financially struggling ahead of the pandemic.

Executive teams are seeing the cost of doing business far outpace revenue and reimbursement, and more care is transitioning out of the hospital setting. Labor and supply costs increases aren't likely to cool down any time soon, despite efforts to rely less on expensive contracted labor and reducing premium pay.

"We can do anything, but we can't do everything," Mark Behl, executive vice president and COO of Froedtert & The Medical College of Wisconsin in Milwaukee, told Becker's. "We have begun to look at ways to reduce services in areas that are causing considerable strain on resources, premium pay, and contract labor. These are some of the most difficult decisions to make as executives; however, a system's ability to survive is dependent on having speed to execution."

Mr. Behl said Froedtert & The Medical College of Wisconsin is also restructuring duplicate operations and streamlining leadership structures to better support frontline workers. It's using artificial intelligence, technology and digital tools to optimize patient and employee experience. But still, conversations around service reduction persist.

And he isn't alone.

Over the last few months, Becker's reported on at least 42 hospitals closing service lines, including maternity care, long-term care and behavioral health units. Staffing shortages nationwide mean sometimes hospitals that can afford services must close departments because they can't safely staff the units.

CoxHealth's Cox (Mo.) Monett Hospital announced in April plans to close its labor and delivery unit, citing challenges recruiting obstetricians and family practice physicians.

"Even though assistance is being provided to help with deliveries, caring for newborns 24 hours a day, seven days a week, cannot be sustained with only two specialized on-site family practice physicians," CoxHealth said in an April 27 Facebook post. "Despite our best efforts, we have been unable to recruit enough physicians with the requisite skills to maintain the service."

Staffing and efficiency is top of mind for Richard Duvall, president and CEO of Claxton-Hepburn Medical Center in Ogdensburg, N.Y., as well. The hospital announced in June Carthage Area Hospital would take over operations for a majority of Claxton-Hepburn's services, and Mr. Duvall floated the potential for restructuring and cutting services if the hospital isn't able to pay its estimated $30 million to $50 million debt.

There are no service cuts on the horizon just yet, although Mr. Duvall told Becker's managing labor costs will become increasingly difficult in healthcare.

"We must continue to evaluate the services needed for our community and focus on providing those services and unfortunately for some organizations, it may mean no expansion or adding services just to stabilize staffing levels," he said.

Some small hospitals have taken advantage of the new Rural Emergency Hospital designation, which offers a $3 million annual federal grant for rural hospitals to maintain critical and emergency outpatient services, but they must forgo inpatient services to receive the funding. St. Mark's Medical Center in La Grange, Texas, took the leap in February to avoid closure.

The hospital had been considering bankruptcy and other drastic measures as it struggles to repay a $13 million mortgage debt while continuing normal functions. Mark Kimball, St. Mark's president and CEO, said in a news release labor costs for staff and contracted labor increased 31 percent compared to pre-COVID levels and medical supply costs were up due to inflation. Coupled with reduced patient volume and uncompensated care, financial challenges put the hospital in an "insurmountable situation," according to Mr. Kimball.

"Similar to other rural areas, our community frequently utilizes us for emergency and outpatient services, but bypasses us for many inpatient and surgical services," he said. "Even with this new designation, paying the mortgage will continue to be a challenge and St. Mark's will need additional financial support from the community to survive."

The decision to make cuts wasn't easy. It never is.

"When you live in a small community where people know and look out for each other, decisions that affect your friends and neighbors are very, very hard," said Mr. Kimball. "The board and our leadership team looked for any way to avoid job and healthcare service losses. If our patient volumes increase and financial status improves, one of the benefits of becoming an REH is that St. Mark's could reopen inpatient and surgical services."


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