Page 6 - BusinessWest October 28, 2024

“The light at the end of the tunnel can’t be another train coming —ithastobe something better.”
ly,” he said, adding that the system will start with reducing corporate overhead and improving billing and collections.
As he goes about leading this ‘transformation,’ a word he used instead of ‘turnaround’ to describe what’s taking place, Banko said he will call on his considerable experi- ence with such efforts (more on that later).
Ultimately, he is confident that Baystate can and will pull out of this dive and return to something approaching profitability.
“I have complete confidence in where we’re headed,” he said. “Everyone knows where we need to go; we’re aligned about where we want to go. Everything here is fix- able, and there’s a great path forward to be able to invest $1.2 billion over the next six years and get into the fun stuff.”
For this issue, BusinessWest talked at length with Banko about how Baystate Health arrived at this moment, but mostly about what happens now — especially those hard decisions, the turning over of all those stones, and everything else needed to move the system into recovery.
While doing so, he provided some insight into the challenges facing virtually every healthcare system in the region — and the country, for that matter.
Numbers Game
As noted earlier, Banko knew exactly what he was fac- ing when he agreed to succeed Dr. Mark Keroack as pres- ident and CEO at Baystate Health.
“The board was very transparent, and there have been no surprises,” he said, joking that, while there was a very short honeymoon period as he transitioned into the job, it is long over, and the hard work of returning the system, which includes four area hospitals — Baystate Medical Center, Baystate Noble Hospital, Baystate Wing Hospital, and Baystate Franklin Medical Center — to sound finan- cial health is well underway.
Similar work is taking place almost everywhere in healthcare, especially across the Commonwealth, he said, noting that a recent Massachusetts Hospital Assoc. report noted that, in 2023, 75% of the hospitals in the state lost money, with some losing at a more dramatic rate than Baystate, while most others lost less.
“The American Hospital Association reported that, over the past few years, inflation grew by 12.5%, so let’s say it’s 6.25% per year,” he said, while explaining how Baystate arrived at this moment. “Our revenue at Baystate over the past 10 years has grown 5.3%, and there’s the issue: our expenses have been growing faster than our revenue.
“We have an aging population, so more than 70% of our patient base is Medicare and Medicaid, and we know neither of those cover their costs,” Banko went on. “So we rely on the other 30% to cover the cost of Medicare and Medicaid. We’ve lost commercial market share and key services to Boston and Hartford, including cancer, heart and vascular, and to a lesser extent orthopedics, neuro- surgery, and gastroenterology. So all the key procedural areas that are profitable for us ... we’ve lost some business to elsewhere, and for a variety of reasons.”
Listing some of them, he mentioned access to physi- cians — “if you call us and it’s a month and you call some- one in Boston and it’s ‘we’ll see you next week,’ you’re going to go to the place that will see you next week, if you have the ability to get there” — as well as a lack of aware- ness within this region of the talent and services available at Baystate.
This loss of revenue, compounded by rising expenses, has had far-reaching ramifications, he said, adding that it limited the system’s ability to reinvest back into itself and the communi-
ty, while also
stunting its
ability to grow
Baystate
>>
Continued on page 8
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