Most lessons of life, business and strategy recall a truism. Among the best known is "Nothing is certain but death and taxes." It's time to add another one to this short list: tough decisions. With increasing regularity, trustees are being asked to make hard choices about their hospitals in response to precarious or outright disastrous financial situations. In such circumstances, three strategies may help trustees protect community interests: agreeing on next steps; realizing that local management teams may need help to execute those decisions; and keeping the community informed.
Trustees want to ensure patient service continuation, yet profitable operations are needed to fund the hospital enterprise, and decisions have to be made when profitability declines. Hospitals and health systems around the country are taking stock of their unprofitable business units, because continuing to subsidize failing facilities or services puts the financial security of the entire organization at risk. Yet, changes could mean the elimination of jobs, a possible reduction in access to care for the community, the loss of income to the community and potential community backlash.
Trustees and hospital executives at Central Kansas Medical Center of Great Bend recently had to make some tough decisions. Founded in 1903 by the Dominican Sisters of Peace and now a part of Catholic Health Initiatives, CKMC played an important role in this rural community's history.
Nevertheless, CKMC was struggling: operating losses were increasing each year and were being subsidized by CHI. Average daily census had dropped to 17 or 18 patients and those who needed tertiary care were directed to other hospitals. Trustees and executives decided to assess the situation and determine whether the medical center should revise service offerings, close the hospital and exit the market entirely, or terminate inpatient services.
Local leadership teams don't often have the expertise to assess an organization's true financial situation. At the same time, they are reluctant to face the potential end of services because jobs are involved, possibly their own. Using an objective adviser to assist with the review enabled CKMC trustees to fully vet the options and draw conclusions.
After an exhaustive review of operational performance, new programs and services, and market opportunities revealed that even with additional cost-saving initiatives and new revenue-generating programs, it still wasn't sufficient to turn the hospital's situation around. With this data, the trustees were able to achieve consensus: they made the unanimous decision to close inpatient services but maintain physician practices, clinics, urgent care and outpatient diagnostic services.
At first glance, the decision to transform CKMC into an ambulatory and surgery center seems an obvious one — it was a way to retain a local ambulatory presence and protect community interests. But drawing this conclusion required five months of methodical analysis, detailed planning and trustee meetings.
Breaking New Ground
It's important for all trustees to get on the same page behind closed doors. Unanimity is highly desirable and is only possible if trustees take enough time to evaluate every possible option. Once made, trustees have to stand by their decision to present a consistent face to the community, which can minimize social and emotional consequences.
"The board realized very quickly that major changes were necessary," says Ron Vratil, CKMC's board chair. "We took the time to ask all of our questions and get good answers … . By achieving consensus and staying involved in the details, we could answer questions easily and honestly. I believe this transparency helped reassure the community and will position us to achieve a favorable outcome."
CKMC, CHI and external advisers collaborated to develop a transition plan to support the decision to close inpatient services. At first, the market and feasibility study didn't reveal all the information needed: for example, CKMC knew that it needed to work with state and federal agencies, but many local leaders didn't know what had to be done in terms of resurveys and permission to close services or even how to get relicensed as an ambulatory care center. This conversion was the first of its kind in Kansas, so there were no precedents from which to draw.
CKMC and CHI were able to piece together a plan over time by working with local health care attorneys and state and federal agencies. Still, the original timeline had to be adjusted several times to accommodate the schedules of regulatory and accrediting agencies. CKMC trustees were wholly engaged during this time and met regularly throughout the six-month conversion.
In this type of situation, it's critical to communicate with those who are affected by this decision. No constituency's interests would be effectively served if the decision had been emotional rather than logical or if the decision had devolved into a political battle. CKMC's communication plan included talking with the mayor, key civic and municipal organizations, the Kansas attorney general, state legislators and the governor.
Each week throughout the transition process, CKMC issued press releases, hosted presentations or posted articles on its website to inform local residents of the changes and to reaffirm that the transformed ambulatory entity would continue to provide high-quality care.
The value of internal communications became even more apparent throughout this process. CKMC trustees worked closely with the physicians and employees because they were the best ambassadors for board decisions. It was also important to CHI to celebrate the hospital's history, so the new organization is named St. Rose Ambulatory & Surgery Center, in recognition of the hospital's 1903 founding as St. Rose Hospital.
Any big decision regarding the future of a community hospital has the potential to create a highly volatile situation, especially when jobs are at stake. Unfortunately, it's a decision many communities will face as pressure on small hospitals increases. It is possible to weather that storm and protect community interests if board members determine an appropriate and realistic course of action based on objective advice, unanimously support that decision and then prepare for a successful transition with a robust and well-executed transition plan.
Margaret P. Price, R.N., M.S., (firstname.lastname@example.org) is a principal with Insight Health Partners LLC, St. Petersburg, Fla. Beth O'Brien is senior vice president and group executive officer, Catholic Health Initiatives, Denver.
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