Springfield Business Journal Executive Editor Christine Temple discusses the health care industry with local leaders David Argueta, president of Mercy Hospitals Springfield; Max Buetow, president and CEO of CoxHealth; and Michael Calhoun, CEO and executive director of Citizens Memorial Hospital. All three are new to their positions this year.
Christine Temple: The height of the COVID-19 pandemic crisis is seemingly behind us. How is this impacting each of your workforces?
David Argueta: For all of us, COVID was devastating for our co-workers professionally and personally. It brought a lot into question when you think about our co-workers assessing what’s valuable to them. All the pressures of the unknowns and what was to come during a pandemic. We’ve seen people leave the industry; we’ve seen people take different routes in health care. That’s caused some additional constraint in the workforce. We hope that that’s beginning to soften a little bit. As many that may have left or retired early, we still have over 9,200 co-workers who walk through the doors, go to their departments and carry out our ministry. It’s so important that we keep taking care of them so that they can care of our community.
Michael Calhoun: More than ever, our primary focus is on the people that are caring for the patients. A significant amount of our effort is how do we support our staff and caregivers? Along with that, we’ve had inflationary pressures, wage pressure in the market. It’s been a challenging time, but it makes us refocus on the fact that the people that make up our organization are the most important part of what we do.
Max Buetow: Health care is not an easy industry. People that gravitate toward health care, it’s truly a calling for them. You’ve seen that through the pandemic. There are a lot of people that were in the workforce during the pandemic that probably would’ve retired a year or two earlier based on their current plans, where their financial situation was at, but stuck it out for those years because they wanted to see it through. We may have an opportunity to leverage these things. You look at the millennials and the Gen Zers; as many of the things you want to say about that segment of the workforce, they’re attracted to missions, and they want to be a part of an organization that they know they’re making an impact at the end of the day. At the same time, we do have to take care of our employees.
Temple: How do your workforce numbers compare to pre-pandemic? CoxHealth Springfield Hospitals President Amanda Hedgpeth recently described it as an “accelerated decrease” of the health system’s workforce.
Buetow: We’re starting to stabilize a little bit more as an industry. We’re seeing some of those folks that have been pulled to do travel work, as an example for nurses, many of those people are starting to return home into the cultures that they’re accustomed to. But there’s going to be a workforce shortage going forward. The onus is back on us as organizations to find different and more creative ways to really support the people in creating different opportunities for them to leverage their skill sets and to work at the top of their license. We’re going to have to look at the workforce very differently. We just spent some time with our board last (week) talking about diversity, equity, inclusion and belonging in our organization, knowing that we’re recruiting across the world for the people we know that are going to come to this community and help us give the best care to our patients. What does it mean for our cultures to be accepting and open to that level of workforce?
Argueta: There are areas, nursing, as you would expect us to say, where we have a need. To Max’s point, it’s so true, our traditional model of care where in the way we’d use nurses or other allied health professionals is changing and it needs to.
Calhoun: For us, it’s maybe a little bit different. We’re pretty stable with the number of people that we have. We have more openings than we’ve ever had before. We’ve consistently grown over the last 10 years. It used to be that we would see that our total number of workforce would increase significantly every year. It took a little bit of a dip last year and then kind of stabilized. We have openings because health care resources were scarce. A lot of people chose to get care locally instead of traveling like they would before because there was not as much access during the pandemic. That swell of demand, we had a hard time keeping up with that just like everybody else did, but maybe for slightly different reasons. I’m really encouraged by the amount of young people that are entering into health care. I was concerned maybe early on that it wouldn’t have seemed as attractive because of the pandemic, but, actually, our local nursing schools are seeing increased enrollment, and we’re seeing more of them choose to come to work for our hospital.
Buetow: Our workforce is very dynamic, too. It’s not just that we’re hiring doctors and nurses and respiratory therapists; we’re having to be competitive for IT salaries. We hire architects, and we hire engineers, and we hire electricians.
Calhoun: Nutritional service workers, clerical, maintenance.
Buetow: We’re not just competing against each other for this top talent. We’re competing against Applebee’s for the person that’s going to work in their restaurant versus our restaurant. Just as an example, we have a little over 200 people in our IT field just within CoxHealth alone.
Temple: Each of your health systems has invested in raising entry-level wages. What are those right now, and what additional pressures to increase are you facing with these things you’ve mentioned?
Argueta: When we look at the very needed reinvestment in our co-workers, across Mercy, over $100 million has been in the last two years invested into higher base rates addressing retention and different programs to reward from a total perspective. Our minimum is $15.
Buetow: We’re at $15.50 with market adjustment in the last year. But entry-level wage will never be a livable wage. Our plan is to come alongside people and offer career pathways for them so they can progress into really wonderful careers and wages that they can live on from a community perspective. Part of that is their educational needs. There are great access to things like Fast Track programs in our community where people older than 25 can get a bachelor’s degree for free. You can put that to use in the health care setting. How do we partner with local institutions to be able to offer these kind of career development pipelines?
Calhoun: Ours is a little lower … at $12.65, but we took a little bit of a different approach. Rather than just address the minimum wage, we actually went through all of our pay scales and readjusted them to help take out some of the inflationary pressure that minimum wage had. Some of those entry-level wages were bumping up on tech wages and the next level. We were concerned there’d be a lot of dissatisfaction if those got too close because people went through education to be able to get that certification. We looked at every scale and increased it proportionately. It kept parity throughout the health system. All of us have addressed things like tuition reimbursement, help with providing tech opportunities while they’re going through school so that they can provide for their family. A lot of our new nurses aren’t new graduates from high school; they’re moms that are going back into the workforce.
Temple: If you could snap your fingers and make it happen, what’s a piece of legislation or regulation on the industry that you would change?
Argueta: Things around co-worker safety are really prominent right now. The ability for health systems to be able to, when necessary, file charges on behalf of our co-workers when there’s violence in the workplace. That’s experienced more and more. It’s a huge topic for all of us in health care right now. They’re doing a hard job already, and to have violent acts toward them or around them just makes it that much harder to care for our community.
Buetow: About 70% of nurses will face some type of violent action against them in their career. That’s tough.
Calhoun: If I could just snap my fingers and things would change, it would be to update the guidance for long-term care facilities related to COVID precautions to be more in step with where we’re at right now in the pandemic. Outbreaks within long-term care facilities, it looks different now than it did early on in the pandemic, but yet staff are subjected to a lot of the same protocols as they were early on. When we talk about the workforce, the area where we need the most help is in our long-term care facilities; that’s been hit the hardest. And yet the guidance that we have is from earlier on in the pandemic and it’s out of step. In long-term care facilities, it’s pretty significant and it keeps workforce from choosing long-term care as a place for employment.
Buetow: Our medical schools and residency programs are turning out incredible non-U.S. based positions. However, we have a very stringent allocation of individuals we can sign up to join our community. There’s Conrad 30 legislature in place that says for the entire state of Missouri, every year we get 30 J-1 visa spots. When you finish your medical school training, you have to go back to a non-U.S. based country for at least two years before you could come back and be eligible – unless you get a J-1 waiver. In the last several years, we’ve lost several physicians who want to come and join our communities who are highly qualified, but they’re outside that 30. If we could wave our magic wand, especially in the more rural or urban areas of where they’re underserved, these individuals want to come here. They have incredible training. We lost a cardiologist this last year, highly trained, couldn’t believe what she was going to do for that community, but she was on the outside of that 30 looking in. That’s just a completely arbitrary number that shouldn’t be in place when every single projection shows we are in a massive deficit for that talent. We have to reimagine what those immigration policies look like around this top talented workforce.
Temple: Kaufman Hall research put out a snapshot of the financial situation of U.S. hospitals. Some highlights: Expenses are at record highs. June saw some gain in profitability, but year-to-date numbers are behind and patient volumes are up. What conversations and strategies are you discussing internally around profitability?
Buetow: Across the country, we’re all in the same boat right now, especially those that are larger tertiary care centers that can’t block beds and have to accept all patients. You’re stuck between this paradigm of there’s no ability to curb the expense side of it, but there’s also very little ability to improve the revenue side of the equation either. Our cost may go up on supplies by 10%. Our labor’s gone up between 20% and 30%, but then Medicare comes out and they’re going to give us a 2.6% adjustment. In our negotiations with the managed care companies, the commercial payers, they’re wanting to offer between 2%, 3%, 4% adjustments, and it just doesn’t work. Those are the areas that we have to continue to see sustained improvement in terms of what our reimbursement is. It’s also a good time for us to reflect on: Are there ways that we need to drive out cost out of health care? Health care is still an industry. There is waste to be had, whether it be positions or solutions that we’ve had in place that just never came to fruition. We need to be looking at technology. We call it stacking nickels right now. How do we stack those nickels and find out, maybe we don’t need this $300,000 spend on an IT software that just isn’t providing value to us. How do we reallocate someone that’s in this line of business to an area that we need them more? But until we can get the commercial payers at the table and until we can get Medicare at the table looking at really the reimbursement side of it, it’ll be very difficult for us to get back in the black. Straight Medicare, we’re probably in the 40% range. It’s not even break even anymore. Every Medicare patient that walks through the door, we’re losing money.
Argueta: No doubt we’re in line with the Kaufman Hall study. When we look at just our financials in FY22, salaries and wages were up almost $100 million over prior year.
Temple: In just Mercy Springfield Communities?
Argueta: Yes. It is, for all of us, difficult when we’re not growing on the revenue side, payer side. We’re focused on what Max was talking on. Patients still need us. What we’re really trying to do is to grow access, which in turn helps with a revenue standpoint.
Calhoun: We’re always looking at ways to make things more efficient and reduce costs. The numbers that Max used were probably the most accurate depiction. Wages year over year increased 15% to 30%. (Protective personal equipment) costs, temporary staffing and stop-gap measures and additional resources, the costs have just really increased. The 2.6% factor that (Medicare is) using for an increase in payment this year – that doesn’t match. Medicare is not a profitable venture anyway, and it’s not in line with inflation. We’re all concerned about finding more ways to be efficient. Our conversations are around, how do we make sure that we’re fully staffed? If you’re not fully staffed, you’re staffing with overtime hours, bonus hours, agency hours. No. 1 priority for us is to get fully staffed – our volumes are still up – and continuing to advocate for putting reimbursements in line with our costs. It’ll have to be addressed in the health care industry, or it’s not sustainable.
Buetow: We’re all focused on the sustainable margin. We’re all focused on trying to help fund our own futures. Not-for-profit health systems are 2% and 3% margin industries. That’s our target. Anything above that, we’re applying back in the community and organizations to be more sustainable.
Temple: What are your margins now if the goal is 2%-3%?
Buetow: We’re on the opposite side of that.
Temple: Similar at Mercy?
Calhoun: We would like to be close to 2%-3%. We were closer to break-even last year. And then a little under that so far this year.
Argueta: We can’t stay there. It’s about reinvestment.
Buetow: We’re all making progress toward that break even, but then you’re faced with that next set of challenges. We’ve got to continue to reinvest all the time. Every time you feel like, OK, we’re back at that break-even point, but now we’ve got to make an adjustment to nursing salaries. We’re back at that break-even point, we’ve got to be able to offer scholarship opportunities.
Temple: Capital investments are still happening amid these pressures. CMH this summer announced a $77 million campus expansion. Cox has been opening “super clinics”; Mercy has opened clinics and revamped ER and pediatric ER. Let’s start with the expansion at CMH. How will that impact services?
Calhoun: We celebrate 40 years in September. The very first building that was built at CMH is the hospital that we’re actually adding onto. One of the biggest problems that we have right now that we’re trying to address is emergency room utilization. We just don’t have adequate space to be able to handle the demand. Our emergency room is going to double in size. Right now, our inpatient rooms are too small and semiprivate. We run a (catheterization) lab right now in a temporary unit. We’re going to have two permanent cath labs. There’s a lot of additional services that we’re going to be able to provide. And we’ve expanded with bringing specialists into our community to support the hospital. Everything else around us has grown and the hospital has really stayed about the same size over the last 40 years. We’re going to increase the ICU by about 50%. It’ll really allow us to go into the future and take care of the needs of the community better.
Argueta: We broke ground on South Creek Clinic, adding about 1,500 additional square feet and capacity for more providers. We’re getting closer to having details on a clinic on the west side of Springfield, near West Bypass. Also, not just physical structures, but orthopedic walk-in clinics, Mercy On Call if you need care after hours. Closer to right care, right time, right place. Over the next three months, we’re onboarding 70 new providers. It’s all pointing to meeting the needs of the community in a better way where they need us.
Buetow: We’re excited for our new Sunshine and National facility that’s going to be coming online. We needed a Midtown presence. We’ve got some good neighbors.
Temple: That’s staring right at Mercy.
Buetow: It’s the gateway to the Medical Mile. That’s where our organizations can be seen. We’ve done a lot of good things and continue to collaborate. It’s great where our competition can breed improvement for the community. We pretend to be really competitive with one another, but we’re here to serve a very noble cause. I love it when David or Michael do something that’s really exceptional and we try to do it to a better level. Everyone that lives here is just the beneficiary of that.
Inflation Reduction Act
Temple: The Inflation Reduction Act that President Joe Biden signed into law this month caps the annual limit on prescription drug costs for Medicare patients at $2,000, allows Medicare to negotiate prices on some drugs, caps the price of insulin and expands subsidies to more low-income seniors. I imagine Medicare is a substantial part of your business. What impact do you anticipate locally from the IRA?
Argueta: Managed Medicare makes up around 50% of what we do. While the legislation passed was definitely focused on prescription, Part D, really the hope is that this will help seniors get the care that they need access to, so give some room for accessing care that they may have been spending on really high price drugs.
Temple: A study from Health Affairs finds about one in three seniors on Medicare who don't qualify for low-income subsidies don't fill prescriptions for their cancer drugs because they're too expensive. It sounds like this would make a big impact on access to care.
Buetow: They're facing some tough tradeoffs right now. Medicare recipients, many of them are living on very fixed income. There will probably be between 4,000 to 5,000 individuals just here locally in Greene County that will be affected by this change. They're not just looking at cancer care, they are looking to buy insulin. I was visiting with a gentleman at church the other day and asked him how he was feeling. He goes, well, I couldn't get my insulin because we wouldn't have been able to get groceries. That's a tough compromise to be able to make and the deterioration of health over the course of time. It'll be nice to see those changes go into effect. We're hoping on the other side of that, the pharmaceutical industry doesn't hike up rates for other people to make up or compensate for that.
Calhoun: Reducing the drug costs for the seniors is really important. We work on that a lot in health care, looking for alternatives for patients to make sure that they can afford their medication. In primary care especially, those physicians and their staff are really in tune to the fact that if they can't afford their medicine when they go to the pharmacy, they're not going to be able to make gains in their health care. This is something that we're really plugged into in terms of accessing discounts from the manufacturers;, the 340B program is really important for us to be able to help access medications at a lower rate for our patients. I don't know that we'll see a big change in an influx of care into our facilities because of this, but hopefully what it'll do is it'll just enable what we're already doing, which is trying to reduce those costs and make sure they can afford the medicine that they need.
Buetow: You can go and see the best primary care physician in the world, they can prescribe the best medication and the care plan for you, but if you can't ultimately afford to fill that prescription, you're not going to see improvements.
Temple: What innovations to care or processes in operations are you working on now?
Argueta: A big one for us was the partnership that we just announced with the Mayo Clinic. It's a first of its kind alliance, really taking what we have from a data science perspective and years of deidentified patient data and outcomes to find disease earlier through that data and quickly start patients on a better path to health. Our hope is that having that broad swath of deidentified patient data between the two systems can lead to earlier detection, more personalized approach to medicine. It's a 10-year partnership to begin with. Another example of precision medicine for us, we've partnered with a community called Grail on a multicancer early detection blood test, it's almost like a liquid biopsy. Right now, recommended cancer screenings in the U.S. currently only cover about five types of cancer and this test is an early detection for up to 50 different. We've seen about 1,500 people have this test done. Just this (month) we had our first early detection in one of our communities.
Calhoun: One thing that we're working on right now is improving the ability to share care records with other health systems that are in our service areas. When we have shared patients, how can we make sure we have immediate access to the record? That makes such a difference in being able to communicate between the health systems. That's something I'd be interested in exploring with you guys [gestures to Argueta and Buetow] about how we could do that better. We're excited about that and also collaborating with some of those other rural health systems in our service area in an accountable care agreement to look at ways that we can improve quality and decrease costs for our Medicare population. We're starting that in '23. Every day we're trying to improve care through technology and collaborative efforts.
Buetow: In the last year, CoxHealth has made significant investments in our robotic surgery platforms. We're very excited about what those capabilities will bring. All the data shows us that robotic surgery helps decrease people's lengths of stay, gets them home, gets them up on their feet more quickly, reduces number of infections. We've essentially doubled our capacity for our urology, our gynecology, our general surgery platforms. We're going to be doing our first robotic surgery case for orthopedics on (Aug. 22).
Temple: You are all new to your positions this year. Michael and Max, you've been at your organizations for some time and David, you're new to our community. What have been some surprises as you've assumed your roles? How have you seen your leadership style take form?
Buetow: For me, growing up in health care within the same organization, being around a really strong leadership group and team, there wasn't a bunch of change in the transition, which is wonderful for us. That was probably Steve Edward's greatest gift to us is he built this incredibly solid, cohesive group of individuals that if there's been a gap, we filled it together. It's hard to lose an iconic figure like Steve Edwards to this community from a local leadership role. It's very different for me, someone that's been internally facing the organization to the external role. Steve and I talked a lot about, and he coached me, he says you have to understand the difference between the role and the task and how much more responsibility you have in the role as a CEO and the things that only you can do and how you're representing this organization in the community and inside the organization versus getting tasks done. The tasks will be less important. You've got 12,500 people on your roster to take care of the tasks. There are only certain things that you can do for this organization and the role. It's been good, but it's been very different for me.
Calhoun: I've been with CMH since 1999. There weren't a lot of things that came up that I was surprised by. There were a lot of responsibilities that I assumed that I wasn't really exactly sure how to handle, but Don Babb was our founder and he still sits on our foundation board and has been available to me. Gary Fulbright, our last CEO, also sits on our foundation board and has been available to me. When I have surprises that come up, I've got good people around me and really supportive boards, experienced boards. One of the things that has been most exciting for me has been to see the excitement of our team as we take this great foundation that we've built over 40 years and we talk about what does it look like to step it up even further and go into the future and increase and raise the bar? I'm humbled that as we work together to achieve the vision that we have, how excited and how passionately they've got behind that. It's a unique position being at the helm, but it's been rewarding and humbling.
Argueta: I've only been here for about nine or 10 weeks. I feel extremely grateful and humbled to have gotten a chance to be here. It's an amazing community. It's been extremely welcoming. I've been with Mercy for five years in a different part of our ministry. The history of Springfield and Mercy is a storied one. It's an extremely important part of who we are as Mercy. Just the sense of accountability and this ownership and just this personal desire to do whatever possible to help it be the best it can be for our community. It's kind of palpable every day. There's an amazing team that I've kind of walked into. It's really just continuing to move forward. I'm feeling really thankful.
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