Shake-up to sur­vive

Modern Healthcare - - NEWS - By Harris Meyer

PINEVILLE, Ky. — Stace Hol­land started hunt­ing for ways to slash un­nec­es­sary costs the minute he took over an en­dan­gered ru­ral hos­pi­tal that was los­ing $6 mil­lion a year. It didn’t take long for him to find plenty.

He per­suaded the di­etary con­trac­tor to re­duce fees by $15,000 a month. He switched emer­gency medicine con­trac­tors to save $200,000 a year. And he per­suaded some full-time em­ploy­ees to drop to 32 hours a week, yield­ing cost sav­ings equal to cut­ting 15 FTEs.

Now, eight months af­ter tak­ing over as CEO of the 120-bed Pineville Com­mu­nity Hos­pi­tal in an eco­nom­i­cally de­pressed town of about 1,800 in scenic south­east­ern Ken­tucky, Hol­land is well on the way to turn­ing around a strug­gling not-for-profit fa­cil­ity that still ex­pects to lose $3 mil­lion this year. With sup­port from the Plano, Tex­as­based Com­mu­nity Hos­pi­tal Corp., which took over man­age­ment of the hos­pi­tal in 2014, Hol­land al­ready has made sig­nif­i­cant progress to­ward sta­bi­liz­ing its fi­nances. “I was afraid we would just have to lay peo­ple off, and how would that help the econ­omy of this city if peo­ple can’t buy gro­ceries?” Hol­land said. “But we have sat­is­fied the needs of the hos­pi­tal with­out hurt­ing any­one.”

Hol­land faced a chal­lenge that is all too fa­mil­iar to ru­ral hos­pi­tal lead­ers around the coun­try: de­clin­ing pa­tient vol­umes; a pre­pon­der­ance of low-pay­ing Medi­care, Med­i­caid and unin­sured pa­tients; pub­lic and pri­vate rate squeezes; high in­ci­dence of chronic disease and drug abuse; dif­fi­culty in re­cruit­ing physi­cians; and a short­age of funds to in­vest in new equip­ment and ser­vices. Ken­tucky’s suc­cess­ful ex­pan­sion of Med­i­caid and pri­vate in­sur­ance un­der the Af­ford­able Care Act eased those fi­nan­cial pres­sures, but didn’t elim­i­nate them.

To save the hos­pi­tal, whose pre­vi­ous CEO served nearly 40 years, Hol­land, Chief Nurs­ing Of­fi­cer Di­nah Jarvis, and CHC knew they had to take tough steps that would un­set­tle physi­cians, staffers and lo­cal res­i­dents ac­cus­tomed to the old com­fort­able ways. They trimmed costs, es­tab­lished a part­ner­ship with a larger hos­pi­tal to of­fer new ser­vices, im­ple­mented clin­i­cal pro­to­cols to im­prove qual­ity of care and re­duce read­mis­sions, and ob­tained a federal ru­ral health fa­cil­ity li­cense that sig­nif­i­cantly boosted Medi­care and Med­i­caid pay­ments.

Hol­land never ex­pected to land in this poor Ap­palachian com­mu­nity. Early last year, the vet­eran ru­ral hos­pi­tal ad­min­is­tra­tor heard Com­mu­nity Hos­pi­tal Corp. CEO Mike Wil­liams speak about his not-for-profit or­ga­ni­za­tion’s mis­sion to pre­serve ac­cess to health­care in ru­ral Amer­ica. Im­pressed, Hol­land told Wil­liams he wanted to work for his com­pany, which ad­vises and man­ages ru­ral hos­pi­tals.

A gre­gar­i­ous man with shrewd eyes who re­tains his na­tive Ok­la­homa twang, Hol­land in­her­ited a staff of 338 he calls ded­i­cated but of­ten stuck in out­dated prac­tices. To en­cour­age open com­mu­ni­ca­tion, he launched a daily all-staff CEO brief­ing at 8 a.m. to share news, tamp down gos­sip and cheer­lead for change. “What mo­ti­vates me,” he said, “is when peo­ple want to learn new ways and say, ‘Let’s make more changes to­day.’ ”

With a will­ing­ness to make tough changes, many but not all ru­ral hos­pi­tals can sur­vive to con­tinue serv­ing their com­mu­ni­ties, said CHC’s Wil­liams, whose or­ga­ni­za­tion of­fers strate­gic as­sess­ments, con­sult­ing

“I was afraid we would just have to lay peo­ple off, and how would that help the econ­omy of this city if peo­ple can’t buy gro­ceries? But we have sat­is­fied the needs of the hos­pi­tal with­out hurt­ing any­one.” Stace Hol­land CEO, Pineville Com­mu­nity Hos­pi­tal

and man­age­ment ser­vices to ru­ral fa­cil­i­ties. CHC ad­vises some fa­cil­i­ties they can achieve fi­nan­cial sol­vency through fine-tun­ing oper­a­tions. For oth­ers, it may rec­om­mend shift­ing to an ur­gent-care and out­pa­tient model.

CHC of­ten urges col­lab­o­ra­tions with larger sys­tems. But Wil­liams and his team some­times have to de­liver the bad news that there’s no al­ter­na­tive to clos­ing a hos­pi­tal.

“Many hos­pi­tals are such a back­bone of their small com­mu­ni­ties that peo­ple don’t even want to think about clo­sure,” he said. “But when you come in with facts rather than base de­ci­sions on emo­tions, it’s sur­pris­ing what peo­ple will do.” Some tax-averse coun­ties will even con­sider a new sales tax to fi­nance hos­pi­tal oper­a­tions, he added.

In Pineville, Hol­land’s top chal­lenge is to com­pete ef­fec­tively with sev­eral Ap­palachian Re­gional Health­care fa­cil­i­ties in sur­round­ing towns. Pa­tient vol­ume plum­meted over the pre­vi­ous three years, leav­ing one 38-bed wing empty. He’s al­ready got­ten merger feel­ers from the Ap­palachian Re­gional sys­tem, which he re­buffed.

He and CHC in­stead moved to es­tab­lish clin­i­cal part­ner­ships with Bap­tist Health’s hos­pi­tal in Corbin, Ky., which pro­vides telepsy­chi­a­try sup­port for Pineville’s new 12-bed geri­atric psy­chi­a­try unit. That pro­gram al­ready is op­er­at­ing near ca­pac­ity.

Another pri­or­ity task for Hol­land and CNO Jarvis is to im­prove the hos­pi­tal’s qual­ity per­for­mance. Pineville was hit with the max­i­mum Medi­care penalty for ex­ces­sive 30-day read­mis­sions in 2013 and 2014. Hol­land said the hos­pi­tal has re­duced its read­mis­sion rate from nearly 32% in Septem­ber 2013 to 6% now and will be in com­pli­ance this year.

Jarvis said the key to re­duc­ing read­mis­sions has been bet­ter pre-dis­charge ed­u­ca­tion of con­ges­tive heart fail­ure pa­tients about med­i­ca­tion use and weight mon­i­tor­ing. They’ve also taken steps to en­sure fol­low-up med­i­cal vis­its and home health­care, in­clud­ing a phone sup­port sys­tem.

Be­cause of these ef­forts, the hos­pi­tal’s pro­jected forecast from Medi­care is a $180,000 bonus for its 2017-18 fis­cal year for its im­proved per­for­mance on value-based pur­chas­ing and qual­ity mea­sures, she said.

On the rev­enue side, the hos­pi­tal’s out­pa­tient clinic, with CHC’s help, just re­ceived ru­ral health fa­cil­ity sta­tus from the federal gov­ern­ment, which will hike Medi­care and Med­i­caid pay­ments by more than $3 mil­lion a year. “It’s fan­tas­tic, it takes the hos­pi­tal out of the neg­a­tive and cre­ates a pos­i­tive cash flow for 2017,” Hol­land said.

He also touted 7% growth in in­pa­tient vol­ume since last June. That was achieved through more ag­gres­sive mar­ket­ing and pro­mo­tion of the hos­pi­tal’s ser­vices and med­i­cal staff, Jarvis said.

Pineville opened as a sec­u­lar not-for-profit in 1938. While it’s li­censed for 120 acute-care beds, it’s cur­rently staffed for only 30. The hos­pi­tal also has a 30-bed skilled­nurs­ing unit, which has 26 staffers.

CHC signed a man­age­ment agree­ment with the hos­pi­tal board in Oc­to­ber 2014, at a time when the hos­pi­tal’s fu­ture looked shaky. Un­der that deal, the com­pany charges the hos­pi­tal $25,000 a month for a broad range of busi­ness and con­sult­ing ser­vices, plus the hos­pi­tal cov­ers Hol­land’s and Jarvis’ salaries. “CHC hopes I do such a great job that they don’t have to do any­thing and they can pocket $300,000 a year as pure profit,” Hol­land said.

The Pineville hos­pi­tal has strong cus­tomer loy­alty. Its staff—most of whom are lo­cal res­i­dents who have worked there for many years—have deep ties to the pa­tient pop­u­la­tion. “I wouldn’t doc­tor nowhere else but this hos­pi­tal,” said Wilma Size­more, a 70-year-old dis­abled woman who was ad­mit­ted in mid-Fe­bru­ary for bron­chi­tis and dizzi­ness. “They treat me like fam­ily here.”

But there’s a tough fight ahead if the fa­cil­ity is go­ing to be­come vi­able for the long term. In Ken­tucky, one-third of the 65 ru­ral hos­pi­tals— which serve 45% of the state’s res­i­dents—are in poor fi­nan­cial health. More than a dozen are at risk of clo­sure, ac­cord­ing to a 2015 re­port by the state au­di­tor’s of­fice. Two ru­ral fa­cil­i­ties re­cently stopped serv­ing in­pa­tients, ac­cord­ing to the Ken­tucky Hos­pi­tal As­so­ci­a­tion.

“I feel good about Pineville,” said Jim Cole­man, CHC’s se­nior vice pres­i­dent for South­east hos­pi­tal oper­a­tions. “We’re sta­bi­liz­ing now, we’ve got the right peo­ple, and we’ll have a black bot­tom line. But it’s a work in progress.”

At Pineville, as at other hos­pi­tals where it pro­vides man­age­ment and con­sult­ing, CHC started by an­a­lyz­ing and stream­lin­ing op­er­a­tional pro­duc­tiv­ity, rev­enue-cy­cle ef­fi­ciency, sup­ply-chain costs and in­for­ma­tion tech­nol­ogy sys­tems. Wil­liams said sup­ply chain is where CHC finds the most low-

hang­ing fruit, be­cause many stand-alone ru­ral hos­pi­tals can’t ne­go­ti­ate the most fa­vor­able deals with group pur­chas­ing or­ga­ni­za­tions.

Lo­cal lead­ers see the Pineville hos­pi­tal’s sur­vival as piv­otal to the fu­ture of the town and Bell County, which has no other hos­pi­tal and has lost many coalmin­ing jobs. They say the hos­pi­tal, the city’s largest em­ployer, is key to their eco­nomic re­de­vel­op­ment ef­forts, which in­clude a planned 750-acre wildlife park for elk watch­ing.

“Stace has an un­be­liev­able task in what he’s deal­ing with,” said Pineville Mayor Scott Madon. “He’s try­ing to rein­vent the ru­ral hos­pi­tal. He has to change the whole think­ing, and peo­ple don’t like it.”

At the same time, Pineville and other Ken­tucky hos­pi­tals are brac­ing for changes in the state’s ex­panded Med­i­caid pro­gram. Repub­li­can Gov. Matt Bevin has promised to add pa­tient cost-shar­ing fea­tures to Demo­cratic pre­de­ces­sor Steve Bes­hear’s ex­pan­sion pro­gram for low­in­come adults. While Bevin hasn’t yet of­fered de­tails of his plan, it could re­duce the num­ber of pa­tients who qual­ify for cov­er­age and in­crease the ad­min­is­tra­tive bur­den on providers.

“Providers un­der­stand that most of these peo­ple don’t have money for co­pays, and it will cost them more money to col­lect those co­pays than they’ll re­ceive in pay­ment,” said Bes­hear, who’s lead­ing a cam­paign to block Bevin’s planned changes.

Be­sides the pol­icy un­cer­tain­ties, Hol­land faces a press­ing need to re­cruit new doc­tors, since the hos­pi­tal has only six full-time physi­cians on staff. Most are near­ing re­tire­ment. It’s hard to re­cruit doc­tors to a poor com­mu­nity rid­dled with chronic health con­di­tions and drug abuse.

Pineville res­i­dent Orville Hobbs, 50, a Med­i­caid pa­tient who’s dis­abled and suf­fers se­vere chronic pain from a work in­jury, gets his care from nurse prac­ti­tioner Misty Turner at a new com­mu­nity health cen­ter in town opened by the Moun­tain Com­pre­hen­sive Health Corp. “I had a hard time find­ing a doc­tor,” he said. “They would turn me away be­cause they said (Med­i­caid) only paid them $25. If money is all they’re wor­ried about, that’s not right.”

Pineville’s pri­mary-care physi­cians agree that it’s hard to ar­range spe­cialty care for their pa­tients, par­tic­u­larly for those who are unin­sured or on Med­i­caid.

“We need more doc­tors here,” said Dr. Martha Combs-Woolum, an in­ternist em­ployed by the hos­pi­tal whose 90-year-old mother still races around wait­ing ta­bles at the lo­cal cafe. Many pa­tients drive 120 miles north to Lex­ing­ton or 85 miles south to Knoxville for spe­cialty care.

Some re­lief is on the way, how­ever. Hol­land re­cently signed a car­di­ol­o­gist from Corbin to work at the hos­pi­tal two days a week. Next he’s look­ing to add an or­tho­pe­dist and a ra­di­ol­o­gist. In ad­di­tion, Moun­tain Com­pre­hen­sive Health has plans to hire an OB-GYN and a pe­di­a­tri­cian. Be­yond that, Hol­land and Jarvis hope that the os­teo­pathic med­i­cal school that opened in 2007 at Lin­coln Me­mo­rial Univer­sity, 15 miles south just across the Ten­nessee state line, will pro­vide a sup­ply of new doc­tors who want to prac­tice lo­cally.

CHC’s Wil­liams said ur­ban hos­pi­tals some­times are will­ing to part­ner with ru­ral fa­cil­i­ties such as Pineville to send their sur­gi­cal spe­cial­ists for short-term ro­ta­tions.

Mean­while, some of the older Pineville doc­tors are grow­ing restive. Pass­ing Jarvis in a stair­well at the hos­pi­tal, in­ternist Dr. Steven Mor­gan stops to vent about some of the changes be­ing asked of him. “They want to pound square pegs into round holes,” said Mor­gan, who’s 67 and is em­ployed by Ken­tucky-One Health.

Later, af­ter Mor­gan leaves, Jarvis ex­plains that she’s been work­ing with him on do­ing more con­sis­tent dis­charge plan­ning with his heart fail­ure pa­tients, in or­der to meet Medi­care met­rics for sched­ul­ing fol­low-up vis­its and re­duce read­mis­sions. “We have an older med­i­cal staff and they are set in their ways,” she said.

Dr. Shawn Fu­gate, a gen­eral prac­ti­tioner in his 50s, com­plains that he had to fight with CHC lead­ers to get what he thought were ad­e­quate nurse staffing lev­els, and that CHC is mak­ing too many im­por­tant de­ci­sions from afar. “I’d like to see them here out on the floor,” he said. “Over­all, I think they may be ben­e­fi­cial to smaller hos­pi­tals. But will they save them? I don’t know.”

Hol­land knows he has plenty of tough work ahead to change peo­ple’s minds and prac­tices. He ap­pre­ci­ates the free­dom he has, as an em­ployee of CHC rather than of the hos­pi­tal, to speak frankly about what the Pineville fa­cil­ity needs. He re­cently told an older sur­geon who serves on the board that it was time for him to re­tire. “I can be to­tally hon­est,” he said. “If peo­ple don’t like it I can go back to CHC, and they can as­sign me to another hos­pi­tal.”

Hol­land’s ap­proach has been “re­fresh­ing,” said Pineville real es­tate agent David Gam­brell, who has served on the hos­pi­tal board for the past 16 years and whose son will be start­ing as a fam­ily physi­cian here in July. “We need that kind of hon­esty. It’s taken Stace com­ing here to see we needed a new vi­sion.”

“I had a hard time find­ing a doc­tor. They would turn me away be­cause they said (Med­i­caid) only paid them $25. If money is all they’re wor­ried about, that’s not right.”

Orville Hobbs (with nurse prac­ti­tioner Misty Turner)


The key to re­duc­ing read­mis­sions has been bet­ter pre-dis­charge

ed­u­ca­tion of con­ges­tive heart fail­ure pa­tients about med­i­ca­tion use and weight mon­i­tor­ing, ac­cord­ing to Chief Nurs­ing Of­fi­cer Di­nah Jarvis.

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