It takes a team - the story of a turnaround that could have and should have happened
By Roger Barnhart
As discussed in the blog, Healthcare Can Not NOT Change, healthcare is a business. And, considering the economic contribution they make throughout their region, it is big business. With each hospital closure that hits the media, it is not simply the services provided that is at issue, but the financial impact to the community as well.
Serving as a consultant at a very impressive $40M health system, I dove deep into the Community Health Needs Assessment and each component of the strategic plan. My initial task was to meet one-on-one with each member of the executive team and department heads – of course my daily rounds (LBWA) meant I was meeting front line staff throughout the day each day – before reporting back to the Board of the Directors at the end of the month.
Meeting with the CFO, she was gravely concerned with the system’s operating margins, which were the narrowest they had been in her entire 12-years. She provided me with benchmark data showing the continuous decline over the last several years.
“Cutting cost and increasing revenue do not have to be exclusionary of one another.”
I appreciated her insight, and assured her that turnaround management and business development are two of my strongest skill-sets.
Thankfully, I was able to utilize the information, and share it in each of the subsequent meetings with leadership.
Those department head meetings brought forth several operational issues. Many had been increasing in severity for quite some time. I was impressed, the leadership showed great enthusiasm with turning the health system around.
Once such issue was home health services. Over the years, the regional coverage had incrementally expanded – seemingly one new client at a time – to be more than 130 square miles beyond the health system’s service region. Moreover, there were three other rural hospitals within those areas.
The expanded region for home health was not a factor within the strategic plan, nor was it even mentioned as a need in the CHNA – though it may have been a component of the other Communities’ Health Needs Assessment.
Working alongside Home Health’s Nurse Manager, there were many other operational issues. She had great difficulty finding qualified staff to go into client’s homes, so in addition to overseeing all administrative duties, she was serving as the nurse and spending hours behind the wheel. She made it clear that it was not sustainable.
Bringing in both human resources and the CFO, we assessed how much was being lost in serving such a large geographic area. We determined that the health system was losing approximately $75/hour from the moment the Nurse Manager started her car.
With information in hand, we set out to develop a plan, ensuring sustainability of home health services for the community. Delving into other issues raised by the department heads, we quickly uncovered approximately $1M in operation inefficiencies that had seemingly gone unchecked for several years.
It was a few weeks later that I met with the Board. Reporting on what we learned from leadership – particularly the CFO – with a special presentation on home health and its negative impact upon the system’s operating margin.
I presented the strategic plan, discussed the CHNA and even reviewed the mission statement. Each made reference to caring for the communities within the district – but absolutely no reference to those communities in other hospital districts.
Showing a map of the health system’s coverage area, I then showed an overlay of the current region being served by home health services – all 130 square miles beyond the region, being supported by the district’s tax base.
Accompanying that was a breakdown of home health services, the operating cost and charges, along with subsequent and significant bad debt being incurred from those outside the service region. In essence, the local tax payers – unknowingly - were supplementing home health services to other communities.
At current Medicare and private pay rates, narrowing the service region to the district would not ensure significant revenue, but likely enable a break-even model, allowing sustainability of home health services for the health system’s community.
Presenting all the financial and geographic information, providing recommendations and likely consequences if we do not implement changes, one board member immediately interjected that the three other rural hospitals did not provide home health services. I learned later that his mom lived in one of those communities, and had in fact been a Home Health client.
I again reiterated the financial losses incurred by providing services to those communities, and stressed that the mission statement did not include providing care beyond the health system’s region, and that it was outside the scope of the strategic plan. Those communities did not have home health services, and likely for very good reason.
It quickly became obvious that the Board was not prepared to address any of the issues presented by the department heads, including Home Health.
It was just two years later when that same health system made the news. Home Health had been cut entirely. Not just limited – as the CFO and I had shown to enable sustainability – but completely shut down. The quote in the paper attributed it to Medicare reimbursement.
Wait, what ..?
The article went on to discuss how the health system was in dire financial jeopardy. This, they blamed on Medicaid. Suddenly, staff were expected to take pay cuts along with reduction to health insurance and paid time off. The very department heads and staff that tried to be a part of the solution were now carrying the burden from the Board’s inability to affect change.
Though not always convenient -- and rarely comfortable – healthcare is a business and has to be ran as such for sustainability.
The Board wanted to provide home health to a very large region. They meant well. But in doing so, ignored the issue that trying to be all things to all people often means you will be ineffective in completely caring for anyone. Thus, rather than being willing to limit regional coverage for home health, they continued until such time that the service had to be cut entirely.
Senior leaders and Board of Directors must be committed to the strategic plan and its goals for sustainability in continuing to care for our community.
Employees are an ideal source of ideas for what goals should be established. Just as leaders have to educate Boards, the front-line staff should be made aware of the financial implications, and then given a voice. The greatest insight toward improving culture and care for your community can come from the people who deliver that care every day. They are often the first to recognize opportunities.
Just as too many strategic plans are developed, only to be placed upon a shelf with any hurdle that comes up. An innovative idea is of little benefit without the driver(s) to fully integrate the solutions.
Whether department heads, CEOs or Board of Directors, all healthcare leaders are facing challenges now and into the future. Boards must be willing to back the CEO who in turn supports department heads and empower staff to implement initiatives for sustainability in providing care to our communities.