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CEO Roundtable: Health Care

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Springfield Business Journal Editor Eric Olson talks health care on March 9 with Steve Edwards, president and CEO of CoxHealth; Gary Fulbright, CEO of Citizens Memorial Hospital; and Craig McCoy, president of Mercy Hospital Springfield.

Eric Olson: There’s been these long-reported shortages of nurses first, and then hearing about doctors, as well. Are those shortages still there or are you seeing some progress?
Craig McCoy: I don’t think we’ve peaked yet. The last numbers that I saw, I think it’s in the next five years, 30,000 nurses [in the Missouri region] are expected to leave the workforce. The problem with that is even if you can produce that many more nurses coming out of school, it’s that experience level that you lose. When you think about your critical care nurses, that’s usually not an entry-level position. We’re making headway through strategic partnerships on the nursing side, partnering with nursing schools, making sure that we’re opening up clinical rotations. The other part is on the physician supply. There’s more and more demand on the provider side, more and more demand for health care. Nobody is really talking about if we wind up with a socialized medicine system, what do you do about all of the physicians? We’ve got shortages now. Both Cox and Mercy are partnering with University of Missouri to open up clinical rotations for residents. The prevalence of strong health systems here is an attractive area to providers. I’ve worked in markets where it’s very, very difficult to recruit.
Steve Edwards: By 2023, they expect to have 1 million nurses shortage in the United States and there’s only about 3 million practicing nurses, so that’s a huge number. We’re trying to do similar things, partnerships with every university. Our Cox College, we’re about to cut the ribbon on that expansion. It’s got 1,000 students and we are growing the nursing program from 225 per class to 400, so it would be the second largest program in the state. We have taken a tactic to go out and look for international nurses. We have about 150 that are on board now and 250 more that are in process. They typically come from the Philippines and then Puerto Rico. We have a family medicine residency program and we are pursuing grants to expand it further. About 56% of all primary care docs in our area come from that program, so expanding it can help all the hospitals. And then, retention. We’ve got to keep the ones we have.
Olson: How did Cox come into that international recruitment?
Edwards: We did the math and we realized that no matter how quickly the schools around here are grown and built, we wouldn’t catch up. We partnered with the city of Branson in Puerto Rico. We came together with their chamber of commerce and began creating connections. In Puerto Rico, nurses are graduating without jobs. They tend not to be as experienced. The ones we’re getting from the Philippines tend to have five, 10 years experience.
Gary Fulbright: One thing we did back in 1990, we started a medical excellence scholarship program. We help about 40 to 50 students a year, many of them nurses, also physical therapy. We also work with Southwest Baptist University. They just started a (bachelor’s in nursing) program. Also, Bolivar Technical College has (a licensed practical nurse) and (registered nurse) program. As far as physician recruiting, there are a lot of hospitals competing for the same candidates. It’s a matter of just finding the right person who wants to live in a rural area and breathe the clean air and short commute to work.

Retaining talent
Olson: On physician retention, what are the challenges in keeping those doctors that do come from out of the state, out of the country?
McCoy: My dad is a physician; my oldest brother is a physician. My dad was always in one town and one practice. He was not employed or integrated by either of the health systems. He worked at two different health systems and he built his panel of patients. The ability for him to pick up and move and hang his shingle somewhere else would be very difficult to do. This day and age, there are so many of the providers that are employed or integrated that it’s not as difficult for them to pick up and move somewhere else if they choose to do so. The recruitment pressures that are out there, the offers that are out there, especially around certain specialties, it’s amazing some of the salaries. Southwest Missouri is unique from the standpoint of a lifestyle (and) the cost of living. It’s very attractive. There’s a lot of strong volume of patients here. The payer mix is actually better than a lot of places.
Olson: This is a perception – tell me if it’s wrong – that we’re doing a pretty good job attracting physicians, it’s their retention.
Edwards: Our turnover rate is really low. It’s like 3%. Think of it, you’ve invested $400,000 for education and Springfield is a great place to raise a family and a great place to practice. Once someone gets here and starts to set in roots, we tend to keep them.
Fulbright: Our turnover with physicians has been very low. Our satisfaction with the organization has been at the 90th percentile for the last four years.

Union chatter
Olson: Are talks of unionizing happening here?
McCoy: There’s a lot of it in social media right now. The approach that we take around it is really trying to keep an open-door policy. We can do a whole lot more for our employees working with them without a union involved. When the union gets involved, the regulations around work shifts, and all that makes it very difficult both for the individuals who are in the union, as well as for the health systems. The other aspect is if there is a choice to unionize, Missouri is not a right-to-work state. So even if you’re not in the union, you pay dues. One of three things can happen: wages and benefits can go lower, they can stay the same or they can increase. The problem is you’ve got union dues now, and so in two of those situations you’re actually going to be making less money because you’re paying union dues.
Olson: Another factor in what you described there financially would be a union pension too. That’s something that they would have to consider, as well, not just the annual salary.
McCoy: There are a lot of factors that go into it.
Olson: At Mercy, I was looking back at our past reporting, talks about unionizing date back at least to the 1990s and resurfaced again in 2014, 2015. Are they present here again today?
McCoy: We still hear a little bit of noise and it’s not just in Springfield, it’s in St. Louis. I don’t think it’s targeting one health care organization. They get mailing lists of nurses in the state.
Edwards: Unions and health care are prominent in California, in the northeast. If you’re running the business of a union and you’re looking for more opportunities, I think there is a push right now in the St. Louis market.
Fulbright: Really haven’t heard any union activity in Bolivar.

Medicaid expansion
Olson: What about Medicaid, will expansion ever happen in Missouri? What’s it going to take?
McCoy: A shift in the mindset of legislators. There’s still a lot of uninsured individuals here. We report charity care as our actual cost of providing the care. That was $53 million for fiscal year ’19. In addition to that, it was $28 million worth of Medicaid shortfalls. That’s in Springfield. In Medicaid expansion, you would see a large dent in that charity care number. Right now, by not being a Medicaid expansion state, the dollars that would come to Missouri are going to Arkansas, apparently, and other places around us.
Edwards: There’s likely to be a ballot initiative on Nov. 3. When it first happened, my prediction was that Missouri would pass it and we’d be one of the final five to pass it. It’s the nature of the Show-Me State. In Missouri, I’m particularly sensitive to the idea that to qualify for Medicaid, you essentially have to be a poor, pregnant mother or her children. One of the things I’m hoping for is we can be like other states and take care of those who are suffering from mental illness because it’s a huge crisis. I don’t care if you’re liberal or conservative, fiscally conservative, I don’t like being taxed and then giving the money to Massachusetts or Arkansas.
Fulbright: A lot of people don’t realize that where a lot of that money came from, it came from Medicare cuts to hospital reimbursement. In the first couple of years of the Affordable Care Act, we think that it was a net positive to us because our uninsured rate did go down. We had the insurance companies that were on the exchange. They paid us fairly well. But since then, they don’t pay us as well, the premiums have gone up, less people are covered. The uninsured rate has ticked back up. If it was an option for Missouri to either totally opt in or totally opt out of the Affordable Care Act, that would be a different question than what we have today. Because the fact that we’re kind of half in and half out, we have all the bad components. For us in the current year, our Medicare payments are cut by $4.5 million to help fund the Affordable Care Act. We looked at even our own employees, how much our own employees and us as employer, how much Medicare taxes we pay. It’s only $3 million. So we’re sending that $3 million to Washington and then part of it is not coming back.
Edwards: Thirty-six states have expanded, 16 of those were signed into law by Republican governors. I don’t think it has to be a partisan issue. Missouri is in the top six states in the last decade of hospital closures. 
Missouri Hospital Association estimates there’s 50 hospitals in Missouri that are considered distressed financially. You hurt health care, you hurt the whole economy.
Fulbright: The Affordable Care Act with the Medicare cuts to hospitals disproportionately does hurt the rural hospitals because we have a higher elderly population, more people are covered by Medicare.

Mergers & acquisitions
Olson: Mergers and acquisitions have increased in recent years. Do you see this very financial conversation as the main reason why or what other reasons are there?
Edwards: Stress creates the conversations most often. If you look over time in the last 30 years, you can see where hospitals start to struggle and create opportunity to come together. I would say that hospitals are being more and more careful now because if there’s a hospital 100 miles away that’s struggling, it’s likely that the choice to join another system has passed them. I don’t think the appetite is what it was five years ago to take on those hospitals.
McCoy: I would completely agree.
Olson: Can we expect more?
McCoy: You’ll continue to see a lot more mergers and acquisitions. I think you’ll see a lot of closures on the rural aspect, where you’ve still got either smaller systems, or even still there are some standalone facilities. I worked four years in Atlanta and watched it go from about eight health systems down to about four now. It was trying to create that strength in numbers. Being able to work together, you get buying power in your supply chain, you’re able to help staffing shortages, recruit providers together and a lot of things that you can do together as part of a bigger system. It’s hard for either a small system or standalone to even be able to accomplish. Not to mention borrowing rates, the debt ratings and everything else that impact the ability to borrow and capital investment.
Olson: It takes big money to buy out a hospital.
McCoy: Not just that, but to keep it going. You look at the cost of the technology that is going into them and many times technology nowadays, there is no additional payment for the technology you’re using. You take a surgical robot, it’s a $2.5 million piece of equipment, there’s no additional reimbursement because you did the surgery robotically versus laparoscopically, but you have enhanced outcomes in many of the surgeries. Generating $2.5 million to reinvest takes a lot of volume and a lot of patients.
Olson: Let’s stay on technology. Is there anything emerging in your health systems that you are looking at now or have just recently acquired?
Edwards: In a day like today with the coronavirus, the ability to be able to take care of patients through telehealth is really critical and improves access. While that’s not especially sophisticated technology, it is complicated to make it work well – trying to steer people away from (emergency rooms) and urgent cares. 
It’s safer and it’s a lot cheaper. We can queue up doctors in our system now, I think of like an Uber driver. We think as health care is kind of becoming more retail, not waiting in an office and being able to wait from your couch and see the doctor is really helpful.
McCoy: The Mercy virtual center is run out of St. Louis, (it) provides care across the nation and provides care not only to the Mercy health system. When I was touring the other day, they were monitoring 3,000 patients at home. They monitor in our rural markets, where it’s more difficult to get some of those specialists. They can provide intensive care services, remote hospital services. A lot of the drivers behind that are like the wearable technologies. They’re small, just stick-on devices. They monitor everything from the patient’s heart rhythm to their temperature to 10 or 12 different things.

Excerpts by Features Editor 
Christine Temple, ctemple@sbj.net.

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