Hospitals Archives - BusinessWest

Hospitals Challenged by Rising Costs, Falling Revenues

By George O'Brien March 2, 2023

Critical Condition

An “inflection point.”

That’s what Dr. Robert Roose says hospitals have reached when it comes to their bottom lines and the ongoing challenge of making ends meet at a time when revenues continue to fall and expenses continue to rise.

Hospitals have perpetually struggled from a fiscal standpoint amid continually rising prices, the need to constantly upgrade technology and innovate, and reimbursement rates from payers that have historically been below 80 cents on the dollar, Roose said. But trends and conditions that existed before the pandemic have only been exacerbated over the past three years, and now, hospitals are at a critical, and extremely challenging, crossroads.

“There’s no way to sugarcoat it — hospitals and health systems across Massachusetts, and across the majority of the country, are finding themselves struggling in many regards, and at an inflection point where there are going to need to be continued efforts to support hospitals, or there will continue to be systems and hospitals that remain in distress,” said Roose, chief administrative officer at Mercy Medical Center in Springfield, part of Trinity Health Of New England.

He quantified the situation by noting that Mercy is on a path to lose roughly $25 million for the fiscal year that will end in June, about the same amount as last year.

“There’s no way to sugarcoat it — hospitals and health systems across Massachusetts, and across the majority of the country, are finding themselves struggling in many regards, and at an inflection point where there are going to need to be continued efforts to support hospitals, or there will continue to be systems and hospitals that remain in distress.”

Dr. Robert Roose

“It will be challenging to persist with the current models that are in place in the same ways that we have in the past,” Roose went on. There are a multitude of reasons for that, but the challenges remain significant, and the pathways forward are going to require multiple initiatives and ongoing support from a variety of different angles.

Dr. Lynette Watkins, president and CEO of Cooley Dickinson Hospital, an affiliate of Mass General Brigham, agreed, noting that COVID put the challenges that all hospitals are facing under a brighter spotlight.

“The past three years have been particularly challenging,” she said, citing everything from staffing issues to the aging of the population and the pressures they put on hospitals. “What COVID laid bare is that all of these issues are there, and that it’s incumbent on us to be creative, accelerate the solutions, and leverage a lot of the tools that we were in many ways reticent to use, such as telehealth and virtual visits.

“While this situation has challenged us, it has also provided us with an opportunity to think differently, to treat patients differently, to engage differently — with our patients and with the community,” Watkins went on, adding that she and her team at CDH are working to taking full advantage of that opportunity.

Spiras Hatiras, president and CEO on Holyoke Medical Center (HMC), concurred. In remarks made to BusinessWest for its annual Economic Outlook, he spoke of both challenge and opportunity, on several fronts, but especially when it comes to workforce issues.

The ongoing workforce crisis, while it has impacted all sectors, has put healthcare providers, and especially hospitals, at an extreme disadvantage, especially when it comes to nursing and the need to fill vacancies with contract or ‘travel’ nurses, which can cost two or three times what a staff nurse might, Hatiras noted.

“In healthcare, there is a great deal of concern, and the most concerning part is the continuing shortage of personnel, which has created this market for temporary staffing at rates that are truly outrageous,” he said. “To put things in perspective, we have about 20 nurses on temporary staff that we get through agencies. Those 20 nurses, on an annual basis, cost us $5 million; each nurse costs us $250,000 because the rates are exorbitant — the nurses get a lot of money, but there’s also a middleman that makes untold amounts of money from this crisis.

“As a nation, the federal government is doing a lot of things — they did some things with railroad workers, they’re helping Ukraine, they’re talking about a lot of things. They should have stepped in and regulated this and said, ‘the pandemic created a tremendous amount of shortage; we cannot allow private companies to go out and profit from that shortage of staffing and bring hospitals to their knees.’ With all this, it’s going to be very difficult for hospitals to cope, and that’s why all our strategy centers around finding a way to attract nurses here.”

For this issue, BusinessWest takes an in-depth look at the fiscal challenges facing hospitals today, and what must happen for these institutions to weather this severe storm.

Dollars and Sense

When asked how hospitals arrived at this inflection point, as he called it, Roose said it was a combination of factors, but, as he and others noted earlier, it comes down to an exacerbation of, to borrow an industry term, some pre-existing conditions.

These include a trend toward outpatient, rather than inpatient, care, which certainly impacts overall revenues, and also shortages on the workforce front, which increase the cost of doing business in many ways, and sharp rises in prices of … well, just about everything, from medications to PPE.

“What COVID laid bare is that all of these issues are there, and that it’s incumbent on us to be creative, accelerate the solutions, and leverage a lot of the tools that we were in many ways reticent to use, such as telehealth and virtual visits.”

Dr. Lynette Watkins

“We’ve been dealing with the aftershocks of one of the most significant public-health crises of our time,” Roose explained. “And it occurred at a point where many shifts in healthcare were already underway, including a shift from inpatient care toward the delivery of care in a lower-cost outpatient, ambulatory setting where the trends of consumers, our patients, were beginning to change, but where the reimbursement for those services had not been able to keep up with those changes. This was layered on top of an existing healthcare-workforce shortage.

“So, the pandemic caused a significant challenge amidst what was already several headwinds that were providing stiff challenges for smaller hospitals across the country to overcome,” he went on, “forcing them to transform, to look differently, to meet those challenges and the needs of our community.”

Elaborating, he turned the clock back to late 2019 for perspective. He said that there was already significant movement in how healthcare was being delivered. More services were being provided in settings outside hospitals, he explained, with surgeries taking place in outpatient, ambulatory settings. Meanwhile, insurance companies were adjusting as well, covering certain types of procedures, such as joint replacements, only if they took place in those lower-cost settings.

“With that, inpatient volume was beginning to decline by a few percentage points,” Roose said, adding that those shifts were beginning to accelerate when the pandemic hit. Overall, there has been movement away from the fee-for-service model that had dominated healthcare delivery for decades and a shift toward promoting wellness, he explained, but not enough movement to shelter hospitals, especially smaller community hospitals, from those headwinds he described earlier.

“It has certainly not kept pace with the dramatic impact on volume and the lack of reimbursement for fee-for-service care that has occurred to make up that gap,” he went on, adding that staffing shortages already existed before the pandemic, but they, too, were exacerbated by COVID and its many side effects.

Watkins agreed, and, like others we spoke with, she said revenues have certainly improved since the depths of the pandemic, but they are still not at pre-COVID levels.

And there are many other forces at play that are challenging hospitals, she added, including a shortage of workers at post-acute facilities such as nursing homes, which often leaves patients who are otherwise ready for discharge with no place to go, putting more pressure on hospitals.

“We have two, three, or sometimes more patients who are ready for medical discharge, but when we don’t have a place to send those patients, so they stay with us,” Watkins said. “And that means that some patients who need to in an acute-care facility are in the emergency room or cannot get in; that’s been a huge, huge challenge.”

Work in Progress

One of the factors greatly impacting hospital finances is the ongoing workforce crisis, which has certainly increased the cost of providing care. Roose told BusinessWest that, while Mercy’s overall workforce is down perhaps 20%, due to a variety of factors, its workforce costs are still 7% to 8% higher than before the pandemic.

Indeed, with many positions, not just nurses, hospitals have had to rely on contract employees, which are considerably more expensive than those on staff.

“In healthcare, there is a great deal of concern, and the most concerning part is the continuing shortage of personnel, which has created this market for temporary staffing at rates that are truly outrageous.”

Spiros Hatiras

But there are other factors as well, said Watkins, including additional overtime, bonuses needed to attract job candidates, shift bonuses, and more.

“It’s a huge challenge, and it significantly affected our financial performance, as well as that of other systems in the Commonwealth and across the country,” she said. “And we have to make sure that we are staffed to take care of the patients here that are sicker and that are staying longer.”

Elaborating, she explained that Cooley Dickinson used very few contract nurses prior to the pandemic, but the need for such personnel has risen dramatically due to retirements, burnout, and individuals simply leaving the profession to do something else.

These forces have left hospitals to fill the gaps as best they can and, for the long term, focus energies — or even more energies, as the case may be — on attracting and retaining personnel across the board.

Indeed, Hatiras told BusinessWest that closing the staffing gap is critical because it will bring down the overall cost of doing business and help hospitals cope with lower amounts of COVID relief and revenue levels still below those from before the pandemic.

“With ARPA funds drying up, we’re going to have pull ourselves up by our bootstraps. So our emphasis is on closing the staffing gap,” he said. “If we can do that, and not bleed money on the expense side, I think we’ll be OK; I think we’re poised to have a good year, as long as we’re able to attract nurses here.”

Elaborating, he said closing this gap involves making HMC a preferred place to work, one where applicants with choices will want to go — and hopefully stay, thus reducing the high cost of continually filling vacancies.

“We’re doing OK because we had to respond to what was going on in the market by creating even more attractive reasons for coming here — we raised our rates, we’re enhancing benefits, and at the same time, we’re looking at economic assistance for the lower-earning employees,” he said. “Where it’s more difficult is with the professionals because the dollars are significantly more, so competing just on price is difficult. The key for success — what keeps people here and makes them come here — is the culture of the place, so we put a tremendous amount of effort in the 10 years I’ve been here on creating a good culture. Now, it’s become a differentiator, and we’re pushing it even more. We’re an employer that listens to employees, responds to their needs, and cares. That’s what people want.”

Roose concurred, and told BusinessWest that the recent challenges that hospitals have faced have put even more emphasis on the importance of people in the overriding task of providing quality care to patients — and the overall success of a provider.

“Never has it been more apparent, and critical, to realize that people are the vehicles through which we deliver healthcare,” he said. “We do not deliver services that can be provided by machines; we’re reliant upon the great skills of care providers — and we don’t take that lightly.”

Bottom Line

Moving forward, Roose said, as hospitals cope with these various challenges — and, again, there are many of them — state and federal governments need to step up and continue to provide needed support.

“The ARPA funding and other sources of relief through the pandemic and beyond, which is greatly appreciated, is not enough to close the gap from the challenges that we have encountered,” he noted. “The cost structure for delivering care has increased so dramatically, the models for fee-for-service care have not shifted quick enough, and the rates from commercial and other payers has not kept up with inflation.

“So even with all that support, hospitals like Mercy Medical Center are expected to lose about $25 million this year, which is very similar to what it was the year before, and Trinity Health Of New England lost $65 million in fiscal 2022 from operations,” he went on. “And that puts incredible stress on hospitals.”

Indeed, it does, and these losses, and the forces behind them, explain why hospitals are at an inflection point, and why change is needed if they are to move from critical condition fiscally to something far more sustainable.

Health Care

Hospitals Take Creative Steps to Attract and Retain Nurses

By Kailey Houle July 7, 2022

Support Systems

The past few years have been extremely challenging times for all those in healthcare, but especially the nurses on the front lines. The stress and long hours stemming from COVID have led many to leave the profession — intensifying an already-critical shortage of nurses. In an effort to better attract and retain nurses, area hospitals are taking a number of steps — everything from dramatic increases in pay and signing bonuses, to the introduction of ‘quiet rooms,’ where nurses can unwind during their shifts, to initiatives to create a wider pipeline of nurses. These measures are being implemented to create a better work environment and, overall, help stem a workforce crisis that has taxed hospitals in every conceivable way.

“Quiet rooms’ like this at Mercy Medical Center are just one of the initiatives aimed at helping nurses and other healthcare professionals battle stress.

Kelly Chevalier, DND, is a military veteran, having served in the Air National Guard at Barnes Airport in Westfield.

She said there have been many comparisons between actual combat and day-to-day life in hospitals and other healthcare settings at the height of COVID. She believes they are valid.

Recalling those days, Chevalier, director of Nursing Education at Mercy Medical Center and director of the Emergency Department, said healthcare professionals would show up for work facing a great unknown and danger to their own health and safety.

“That made me proud to be a part of this career and proud to be a nurse,” she said, comparing the nurses she worked beside to soldiers going into battle. “They showed up when a lot of people didn’t want to.”

But while most nurses did, indeed, show up, combatting COVID and its many side effects has taken its toll — on both the nursing profession locally and everywhere, and on facilities trying to maintain a full staff of nurses.

As Chevalier and others told BusinessWest, COVID prompted many nurses who were at or near retirement age to take that step and leave the profession behind. And for some not near retirement, the COVID fight and a desire not to endanger the health of loved ones prompted them to look at other career options, with many eventually finding opportunities elsewhere.

Kelly Chevalier says many nurses were pushed into retirement by COVID, while others went into other professions or became travel nurses.

This dramatically altered landscape has left area hospitals scrambling to fill their nursing ranks, often resorting to the hiring of very expensive travel nurses, individuals willing, as that name suggests, to travel (sometimes long distances) to take nursing positions at different kinds of facilities.

In the wake of COVID, but in some cases before it arrived, hospitals have been taking steps to more effectively attract and retain nurses and create work environments that help them confront the stress and strain of everyday work. Such initiatives range from signing bonuses and generous wages to ‘appreciation meals’ and so-called ‘quiet rooms.’

Spiros Hatiras, president and CEO of Holyoke Medical Center (HMC), said his institution has put in place generous sign-on bonuses and other initiatives, steps that were in place long before COVID, to not only bring nurses to HMC but draw people into the nursing profession.

“From day one, I’ve implemented, one of, if not the most generous education benefits in the valley, to help people go back to school and advance their degrees,” he explained. “The last element is reaching out to new grads, but we need to make it so we offer something they can’t say ‘no’ to. We’ve decided to offer each new grad nurse $50,000 when they sign on with us, check in hand, as long as they sign to work with us for four years.”

Spiros Hatiras

“From day one, I’ve implemented, one of, if not the most generous education benefits in the valley, to help people go back to school and advance their degrees.”

Not only do new nurses get a bonus, but already employed nurses can receive an additional $20,000 to their annual income if they agree to work with Holyoke Medical Center for another five years.

For this issue and its focus on healthcare, BusinessWest looks at the current landscape in nursing and how area hospitals are working to address the many ongoing challenges they, and their nurses, are facing.

Supply and Demand

The challenge of securing adequate numbers of nurses is nothing new for area hospitals. With the aging of the Baby Boom generation, matching the number of retirements with new hires has been a difficult assignment.

And COVID, and the so-called Great Resignation, have only exacerbated the problem. Indeed, according to Nursing Solutions Inc., the national healthcare retention and registered nurse (RN) staffing report of 2021 said that for the first time ever, retirement is one of the top three reasons for resignations among registered nurses.

This phenomenon has created what Joanne Miller, chief nurse executive, Baystate Health and chief nursing officer, Baystate Medical Center, called an ‘experience gap.’

Joanne Miller

“We’re investing in and learning more about the antidote to fatigue and burnout — that is the ability for our nurses to become resilient. In order to identify and address stress, we’re creating an environment where we can openly share and discuss these feelings.”

“The experience of the complexity gap has widened,” she explained. “Meaning the nursing workforce experience has dropped and the complex care that patients need today is rising. So the overall growth of an RN workforce is primarily new graduates.”

Contending with this gap is just one of the challenges facing hospitals, said those we spoke with, adding that COVID pushed more nurses into retirement and other professions, while it inspired others to join the ranks of travel nurses, and, in doing so, earn much more than they were making.

“We had a large group of nurses that jumped on the travel nurse wave,” said Chevalier, adding that for many in the profession, the chance to earn the wages being offered by travel-nurse agencies was an opportunity they could not pass on.

Hatiras agreed.

“Some people don’t mind traveling and bouncing around from facility to facility and seeing the country,” he noted. “Because of the shortage, the amount of money these agencies were offering nurses to do that was incredibly high, so more nurses left regular full-time jobs to do that. It’s a supply-and-demand issue.”

All three hospitals we spoke with have been working hard to increase the number of staff available on their floors, many of which are again operating at or near full capacity as COVID cases wane.

One way that facilities are combating the issue of staffing is moving staff to areas where the help is needed most and make greater use of certified nursing assistants (CNAs).

The ‘comfort cart’ at Mercy Medical Center’ is one of many steps being taken to improve morale and battle stress.

“Before, we only had a few (CNAs) on the floor,” said Hatiras. “There were only two nurses and four CNAs on the floor. Now, we’ve teamed up every nurse with a CNA and they work as a team. It’s a one-to-one ratio, and it has helped out a lot,” said Hatiras.

CNAs are able to assist nurses by fulfilling tasks that don’t require a nursing license, such as gathering supplies and medications, documenting important information, assisting in procedures, and transporting patients.

Each facility has its own kind of float pool to help nurses in other areas of the hospital. Nurses are able to volunteer to be moved to other areas that need more assistance, said Hatiras, stressing the importance of volunteering; moving nurses from a unit they enjoy can cause “a lot of dissatisfaction.”

Hospitals are also taking steps to improve the pipeline of nurses from area colleges through various programs designed to only provide experience but introduce them to the institutions in the hope that they will stay with a hospital after they graduate from college.

Baystate and Mercy have partnerships with colleges in the region whereby nurses are able to join an internship program, known as clinicals, and can have a paid position with the facility.

“It’s a great opportunity to be exposed to nursing from an ancillary level with some infusion of higher level of learning from a registered nurse’s perspective,” said Chevalier. “It’s a great way for us to pick from the best of the best that’s out there and really make sure they’re not just an academic good fit, but a cultural good fit.”

Miller told BusinessWest that one step taken at Baystate was to hire 39 student nurses from a Student Nurse Association Program (SNAP) to help further their learning at Baystate Medical Center. The program provides experience for the student nurses and introduces them to Baystate — and the job opportunities there. “They’re not nurses yet, but they’re in college,” she explained. “They do this outside of their clinical practicum. In their junior or senior year of college, a student is able to get a job at the local hospital, practicing and learning since we know they’re in a nursing program; we show them the ropes a little bit more. It’s a great experience for a nursing student.”

Meanwhile, hospitals are taking steps to improve the overall experience for nurses, through initiatives like quiet rooms, or what Mercy calls ‘zen rooms.’

Quiet rooms are specifically designed to have minimal noise, allowing nurses a welcome break from the stress of an average day. Nurses are encouraged to practice breathing techniques, meditate, and decompress while in these rooms. Most rooms even include a massage chair and minimal-interaction videos.

“We’re investing in and learning more about the antidote to fatigue and burnout — that is the ability for our nurses to become resilient,” said Miller, noting that Baystate has created eight quiet rooms for its nursing staff. “In order to identify and address stress, we’re creating an environment where we can openly share and discuss these feelings. It is very important to be able to do that. We’re working to promote and include self-care in their everyday lives.”

Space and quiet aren’t the only way hospitals in the area are making their nursing staff feel appreciated. Facilities are raising the bar when it comes to ongoing work to keep their nurses motivated and wanting to work.

“It’s a struggle to find fun things to do to keep people engaged and excited and interested that don’t tax our resources,” said Chevalier, adding that Mercy continues to look for ways to support its nurses.

Care Package

Facilities also offer smaller incentives such as food truck events, family and friend picnics, and an extra week of vacation to help nurses relax.

Mercy Medical Center has come up with the ‘comfort cart’ — the executive team travels the entire hospital with a car filled with snacks and “trinkets of appreciation,” said Chevalier.

A popular favorite at area hospitals has been meals and appreciation picnics with the families. Hatiras said his staff’s most popular pick is Chick-Fil-A meals.

Taking such steps is just one way hospitals are addressing a problem that began well before the pandemic but has been put into new perspective by what are challenging and truly unprecedented times.

Health Care

New Inpatient Beds Will Meet a Long-time Regional Need

By Joseph Bednar April 14, 2021

Mental Block

The health anxieties, economic stresses, substance abuse, and feelings of isolation exacerbated by COVID-19 aren’t exactly new, Dr. Barry Sarvet says. And they won’t fade when the pandemic does.

“Prior to the pandemic — and it’s easy to forget this now — we had an enormous amount of stress in our communities related to poverty, homelessness, economic struggles … people just facing an enormous amount of stress in their lives,” said the chair of Psychiatry at Baystate Health. “We had underemployment, unemployment, an opioid epidemic. It’s a very distressed community with a lot of long-term struggles, a lot of psychosocial stress. Every psychiatric disorder is influenced by environmental stresses, and those aren’t getting better. We need to pay more attention to them after the pandemic.”

Well before COVID-19, Sarvet noted, the region’s mental-health needs laid bare a shortage of inpatient beds for patients who need more help than outpatient visits can provide. It’s why Baystate announced a joint venture with Kindred Behavioral Health last summer to build and operate a $43 million behavioral-health hospital for the region, set to open in 2022. The hospital will be located on the former Holyoke Geriatric Authority site on Lower Westfield Road in Holyoke.

Dr. Barry Sarvet

“Every psychiatric disorder is influenced by environmental stresses, and those aren’t getting better.”

Holyoke Medical Center (HMC) had revealed a similar proposal in March 2020 to build a $40.6 million, 84-bed behavioral-health facility on its campus. But when Baystate’s plans came online, and the threatened closure of 74 inpatient beds at Providence Behavioral Health Hospital were saved by a change in ownership, HMC reverted to an earlier plan, to repurpose two of its existing units for behavioral health.

“We were concerned about providing a solution to get beds online as the state was developing guidelines for all hospitals to incentivize an increase in behavioral-health beds,” said Spiros Hatiras, president and CEO of HMC and Valley Health Systems.

The process of converting two units to behavioral health — an adult unit and one with a likely geriatric focus — began in October and will be finished by late April, and will add 34 new beds to the existing 20 at the hospital, more than doubling the total to 54. In doing so, it provides a more immediate solution to regional bed shortages, avoiding the need for a lengthy construction period (HMC’s new hospital was also expected to open in late 2022).

The internal repurposing of units had been conceived as a stopgap measure, but when Trinity Health announced the sale of Providence to Health Partners New England (HPNE), which committed to keeping inpatient beds open — and Baystate moved forward with its project — the stopgap made sense as a longer-term solution, although HMC could revisit a standalone behavioral-health hospital at some point in the future, Hatiras said.

Baystate’s project, meanwhile, will include 150 beds — 120 of them part of the original plan. The system has also contracted with the state Department of Mental Health to operate a 30-bed, long-term continuing-care unit for chronically mentally ill people who need a longer time in the hospital to stabilize before returning to the community, Sarvet explained.

This state-funded program, not accessible to regular referrals, was launched after the closures of Northampton State Hospital and other facilities like it. “Some patients need longer-term care, and this offers a length of stay to support people who don’t benefit from short-term hospitalization,” Sarvet said, adding that the DMH unit will be physically connected to the new hospital, but offer its own unique resources.

“New beds will be needed over the long term,” he said, speaking of the project as a whole. “We have had quite a shortage for many years, prior to the potential closure of Providence and prior to the pandemic. This substantial increase in needs is reflected in emergency-room visits from patients with a mental-health crisis. And we certainly see evidence that this isn’t a short-term blip, but part of a longer-term trend that predated the pandemic.”

Multiple Pivots

The prospect of any additional behavioral-health beds in the region is certainly a turnaround from a year ago, when Trinity Health announced it would close 74 inpatient beds at Providence Behavioral Health Hospital.

However, two months ago, the health system sold Providence to HPNE, which provided some management services at the facility from 2011 to 2014, and will operate the facility under the name MiraVista Behavioral Health. In doing so, it will resume operations of numerous outpatient programs, as well as including up to 84 inpatient psychiatric beds.

Spiros Hatiras

“We were concerned about providing a solution to get beds online as the state was developing guidelines for all hospitals to incentivize an increase in behavioral-health beds.”

“At the time we put forth the plan to build a new behavioral-health hospital, everyone else had pretty much abandoned any behavioral-health expansion,” Hatiras told BusinessWest. “People were shrinking programs; Providence was closing down their campus, and Baystate had put their plans on hold indefinitely. We decided we needed to do something to service the region. Since then, Baystate resurrected their plan to develop the old Geriatric Authority site.”

The recent moves come as no surprise at a time when state health officials have been incentivizing hospitals to open up behavioral-health beds in the wake of a sharp increase in cases due partly to the pandemic.

However, “we had a concern that what seemed like no beds could potentally become too many beds,” Hatiras explained. He disagrees with Marylou Sudders, secretary of Health and Human Services for the Commonwealth, who has said there can never be too many beds because the state has so many needs. Rather, he noted, “demand may be greater now than it will be a year from now as we move away from the pandemic spike; we might see demand go down.”

Two other factors, both geographic, also played into the decision to scale down HMC’s behavioral-health expansion. One is that HMC, Baystate, and Providence would have been providing around 225 beds within a three-mile radius of each other, and though the need for services is great statewide, there’s only so far patients and families will be willing or able to go to seek access to treatment — not to mention the difficulty of recruiting more physicians, nurses, and ancillary staff to such a concentrated area.

“We might find ourselves very quickly in a situation where we might not be able to staff those beds. Can we attract staff to this area? That’s always been difficult for Western Mass.,” Hatiras said, another reason why a smaller-scale project makes sense right now.

“I’m optimistic about the units we’re building coming online quickly and providing some relief,” he said. “It’s a good project, and we have a good track record in behavioral health. We know we can run it well, and the state has been very enthusiastic about it. I think we’re in really good shape.”

While the standalone hospital proposal is ‘parked’ for the moment, not abandoned completely, HMC has to be sure something of that scale would be both necessary and practical before moving forward, Hatiras added. “We’re a small community hospital. A project can’t be something that may or may not succeed financially; we can’t take a $45 million risk.”

Baystate currently has 69 behavioral-health beds at three of its affiliate locations: 27 at Baystate Wing Hospital, 22 at Baystate Franklin Medical Center, and 20 at Baystate Noble Hospital. When the new facility opens next fall, these three locations will close. A fourth location, the Adult Psychiatric Treatment Unit at Baystate Medical Center (BMC), which accommodates up to 28 medically complex behavioral-health patients, will remain open. Kindred Healthcare will manage the day-to-day operations of the behavioral hospital.

Sarvet firmly believes Baystate will able to fully staff the new venture.

“We do have a nursing shortage, so this will present a challenge, but I don’t think it’s insurmountable,” he told BusinessWest. “We’ll work very hard to include people from the region and hire locally, but we might need a wider net to bring people in. We are very confident we’ll be able to be successful.”

Not Waiting Around

In fact, all the local players in the inpatient realm of behavioral health need to be successful, Sarvet noted. For example, suicide rates are increasing, as are instances of anxiety and depression, including in young people (see story on page 4). Meanwhile, the workforce of psychotherapists and clinicians in outpatient settings haven’t been operating at full capacity — again, partly due to the pandemic and the shift to remote treatment settings.

Like HMC, Baystate isn’t waiting for a new building to expand certain aspects of behavioral care. It will open a 12-bed child unit at Baystate later this month, which will expand to a 24-bed unit in the new hospital next year, in response to a shortage of beds specifically for that population. “We see a large number of kids taken care of on medical floors, waiting for beds, up to several weeks,” Sarvet said.

All this movement is positive, Hatiras noted, though he does wish that leadership from HMC, Baystate, and Providence had engaged in deeper conversations about the region’s long-term behavioral-health needs and how to meet them before the recent rush of project launches and changes, bed closings, and ownership transitions.

“Let’s talk as a regional team and determine what makes sense for the region,” he said. “That still has purpose now. Let’s decide what makes sense in these areas before we build 250 beds and can’t staff them, or half of them sit empty.”

For his part, Sarvet agrees that the meeting the region’s inpatient behavioral-health needs is not a solo effort. “We don’t want to win the battle; we want all hospitals to be staffed. We’re in a friendly competition, and we want everyone to win.”

Joseph Bednar can be reached at [email protected]

Health Care

Beset by Wasteful Spending, American Healthcare Needs an Overhaul

By Contributor November 10, 2020

What’s Next for Hospitals

By Spiros Hatiras

The year is 2020, in the midst of an unprecedented pandemic, and the subject is the U.S. healthcare system — more specifically, the average U.S. hospital. Is it alive and well, or is it ailing?

I will argue that all is not well with our healthcare system, and that the average U.S. hospital is facing tremendous challenges now and for the foreseeable future.

It is important to establish that, while the healthcare-delivery model has been shifting to less hospital-centric models, the acute-care hospital remains solidly in the center of our delivery system and, in my opinion, will continue to do so. Any notion of a more decentralized model with less emphasis on hospitals has been pushed many years into the future, in part as a result of the COVID-19 pandemic. Despite the accelerated growth of telemedicine during the pandemic, the need for hospital bed capacity, specialized equipment, and personnel — including the ability to ‘surge’ when needed — has all but ensured that the trend toward a smaller hospital footprint will slow down if not entirely reverse.

Shouldn’t that be good news for the future of hospitals? Well, not quite. While we may have a new appreciation for the need of readily available inpatient hospital care, we have also not solved any of the problems that hospitals have been facing for many years. In fact, the pandemic laid bare one of the most fundamental problems facing the industry, especially for smaller community hospitals. At the very onset of the pandemic, it was immediately clear that many hospitals, suffering from years of underfunding, faced immediate financial threat and would not be able to survive without a financial bailout, while private insurance companies reported record profits.

“I will argue that all is not well with our healthcare system, and that the average U.S. hospital is facing tremendous challenges now and for the foreseeable future.”

Why is this the case in a country where healthcare demands the highest per-capita expenditure of all developed countries? According to a study published in January 2019 by the Johns Hopkins Bloomberg School of Public Health, the U.S. topped the ranking of healthcare spending among developed countries in 2016 at $9,982 per capita per year, a figure that is more than double the median of $4,033.

The reason for this disconnect is that most of that money is spent not on actual care, but on administrative costs. A recent study by the Center for Medicare and Medicaid Services found that, of the $3.5 trillion spent on healthcare in 2017, 33%, or $1.1 trillion, was paid to hospitals. Unfortunately, a significant portion of that money covered unnecessary costs to process bills and get paid by insurance companies, meaning the total spent on actual hospital care was far less. The same is also true for doctors’ offices.

In a study published in 2017 in Annals of Internal Medicine, Steffie Woolhandler and David Himmelstiein noted that the administrative cost of our healthcare system was estimated to be $1.1 trillion, of which the vast majority is excess and unnecessary spending. We are spending vast sums of money on a deliberately confusing and complex insurance system.

Trying to navigate the onerous billing requirements, denied-claims management, pre-authorization requirements, and a host of other administrative hurdles unique to the U.S. healthcare system is wasteful and frustrating to hospitals, doctors, and patients alike. We spend more money administering the system than we spend on care. This should alarm each and every one of us and prompt us to look a little more carefully at proposals for a single-payer system.

It is time to ignore private insurers who portray a single-payer system as the boogeyman, or the end of healthcare as we know it, and recognize their argument for what it really is: a reluctance to part with huge profits being made from a broken system at the expense of our health.

Spiros Hatiras is president and CEO of Holyoke Medical Center.

Health Care Special Coverage

Hospitals Bleed Millions in Revenue from Lost Volume During Pandemic

By Joseph Bednar July 21, 2020

Critical Condition

Guy DiStefano says the non-urgent procedures that were shut down in March typically support the rest of what hospitals do, leading to major revenue shortfalls this spring.

Back in March, when COVID-19 was just starting to crest, hospitals took steps to brace for a potential surge of patients. But while COVID-19 surged, revenues slowed to a trickle.

“Early on, we realized we needed to build capacity for a surge of patients so we didn’t get overwhelmed like they did in New York City, so we shut things down early in March — which blew a hole in everybody’s finances,” said Mark Keroack, president and CEO of Baystate Health. “We’ve been gradually returning to prior operations. We always remained open, of course, but it was only a week or two ago that we resumed more elective kinds of cases.”

Many hospitals are doing the same, but the overall losses to the state’s hospital industry are, as Keroack put it, “staggering” — expected to total between $5 billion and $6 billion by the end of the fiscal year on Sept. 30. “It’s a big stress test, if you will, for hospitals. And some have been hit more than others.”

All area hospitals have taken a financial blow.

“This has been very challenging, with the reduction in services,” said Guy DiStefano, vice president of Finance at Mercy Medical Center. “All our outpatient services — what are termed non-urgent cases, which usually help feed and support what a hospital does in its normal, day-to-day business — has been shorted, leaving us with a great revenue shortfall.”

At the same time, he added, “we still have all our expenses in place, just like any other business. Look at restaurants — the doors were closed, but they still had rent, utilities, all the other expenses, and the employees.”

Through May, Mercy saw a $25 million reduction in revenues due to pandemic-related reductions in services — and plummeting volume in the ER, a development that surprised hospital officials nationwide. At Mercy, daily Emergency Department cases dropped from a typical average of between 225 and 250 to around 100 to 120.

“Those slowly crept back up — we’re at 150 to 180 on a daily basis, so we’re not at full capacity, and there’s a lot of pent-up demand. Our business is coming back, but we lost a lot of revenues.”

“All our outpatient services — what are termed non-urgent cases, which usually help feed and support what a hospital does in its normal, day-to-day business — has been shorted, leaving us with a great revenue shortfall.”

Joanne Marqusee, president and CEO of Cooley Dickinson Hospital, said the hit has been significant. Through May, the facility recorded a loss of $18 million, partly due to COVID-related costs, but mostly because of lost volume. That number would be worse if not for $5.5 million in federal support.

“But that in no way covers our losses,” she added, noting that Cooley Dickinson Health Care could see a revenue shortfall of well above $30 million for the fiscal year ending on Sept. 30.

“We’re now planning for a fiscal-year 2021 budget and considering a number of measures to mitigate some of this — things like hiring freezes and reducing a lot of discretionary expenses. Everywhere we can hold off on spending, we have,” she went on, noting that service hours could be temporarily curtailed in some services, while employees making more than $26.50 per hour will forgo raises for the time being.

While that move shaves some costs while protecting lower-paid employees, it doesn’t make nearly enough of a dent, Marqusee noted. “So we’re looking at ways to further reduce expenses. But the work we’re doing already will certainly have an impact.”

DiStefano said Mercy has also had to take steps like furloughs and reducing hours to mitigate the losses. “We did everything we could to help employees keep their benefits in place. But employees are the number-one cost of a typical hospital — about 50% to 60% of the cost structure.”

Holyoke Medical Center has been losing roughly $6.5 million per month since services were curtailed back in March, President and CEO Spiros Hatiras said. But the community hospital did take some steps early on to gird against the damage.

“We were probably the first hospital in the area to furlough folks; we didn’t hold off because we saw it was absolutely important to be financially viable because we don’t have a parent company to spot us money,” he told BusinessWest, adding that many furloughed employees took advantage of the $600 federal boost in unemployment and wound up bringing in more than they did while working.

Joanne Marqusee says she hopes patient volume returns not because of the revenue issue, but because patients shouldn’t forgo necessary care.

“That helped reduce expenses significantly,” he added, noting that almost 170 of 250 furloughed employees were back at the start of July, with another 80 to 90 expecting to return at month’s end. “Then MassHealth stepped in and allocated $11.8 million over four months to cover some of the losses, and we got a one-time payment from the feds of about $3 million. Add it all up, and through May, our losses were roughly $3 million — not insignificant, but we were able to survive it.”