2014 Dynamic Dozen No. 2: CoxHealth

The challenges of the health care industry have led to significant growth for one Springfield-based health care system.

With promises of more than $100 million in technology and facility investments, CoxHealth merged with Branson-based Skaggs Regional Medical Center in January 2013, a move that bolstered CoxHealth’s revenue last year. Between 2011 and 2013, gross revenue jumped by 34 percent to $2.99 billion from $2.23 billion.

Add to that the steady growth in the area’s population, the aging of baby boomers, a well-timed $200 million bond issuance and new partnerships designed to increase the system’s purchasing power, and it seems CoxHealth is poised to remain in growth mode.

CoxHealth President and CEO Steve Edwards says the addition of Skaggs has played the biggest role in its recent growth.

“The gross revenue in Branson is about $500 million a year,” Edwards says, “so, that’s a big piece of it.”

Edwards says that gross revenue for hospitals is typically much different than net revenue, because the difference between what is charged to customers and what the hospital brings in can be quite large.

Lower reimbursement rates from Medicare and Medicaid are putting strain on smaller health care systems, such as Skaggs, that needed to expand to remain competitive, Edwards says.

Cox is investing in the future with a $28 million expansion at its Branson hospital, even as it undertakes a $130 million patient tower addition at Cox South in Springfield.

Both expansions have been made possible by the bond issuance last year that took advantage of a favorable market conditions. “Interest rates were at a 30-year low,” Edwards says, adding the move saved an estimated $42 million in projected interest payments based on 2014 rates.

Edwards says CoxHealth’s participation in the BJC Collaborative has helped increase the equipment buying power for the system through its purchasing group, Mid-America Service Solutions. “BJC joined our buying group, and it has a $600 million to $1 billion per year supply spend,” Edwards says.

In March, BJC HealthCare in St. Louis joined the buying group after working cooperatively through the four-system collaborative.

“We offer other hospitals the chance to buy from our group, and we now have about 170 hospitals in the group that we own; we are one of eight owners,” he says. “Our buying power now makes us one of the biggest purchasing groups in the nation.”

Through the purchasing group, CoxHealth’s Dr. John Duff says he is working with medical staff in Springfield, Branson and Monett to hone in on products the system’s 10,000 employees find most effective. Those efforts should realize additional savings, he says.

“A physician doesn’t have strong feelings about the Band-Aids we buy, but they may have strong feelings about the kind of spinal implants we buy,” says Duff, the health system’s senior vice president and chief of corporate services. “We are working with our buying group to narrow down the kinds of vendors for some of these very high-dollar items – items that can cost anywhere from $20,000 to $80,000 per device. If we can narrow down the number of vendors from five or six to one or two, we’ve doubled or tripled our buying power.”[[In-content Ad]]