Modern Healthcare Editor David Burda moderated a CEO roundtable discussion Oct. 15 on issues facing rural healthcare providers. He met with Scott Bullock, president and CEO of Maine General Health; Pat Schou, executive director of the Illinois Critical Access Hospital Network; Bill Sexton, CEO for the North Coast Service Area of Providence Health & Services in Oregon; and Phil Stuart, CEO at Tomah (Wis.) Memorial Hospital. Modern Healthcare reporters Vince Galloro and Jessica Zigmond also participated in the discussion.
Burda: Just want to welcome everyone here to Modern Healthcare's first CEO roundtable. It's something we've never done before so you are groundbreakers. The subject of the discussion will be issues facing rural healthcare providers. So we'll do the thing that everybody hates to do and ask our panelists to go right down the line, identify yourself, and give us a little description of the network of hospitals or hospital or hospital system that you oversee. Phil, why don't we start with you?Stuart: My name is Phil Stuart. I'm the CEO at Tomah Memorial Hospital in Tomah, Wisconsin. Tomah is on the western side of the state of Wisconsin. We're a 25-bed critical-access hospital. The primary service area is right around 20,000 people covering a large portion of Eastern Monroe County, parts of Juneau and Jackson counties.Burda: Very good. Bill? Sexton: I'm Bill Sexton. I'm the Chief Executive for the North Coast Service Area of Providence Health & Services in Oregon. We're a 25-bed critical-access hospital linked to three primary-care clinics. We have a nursing home, we have a home health agency and we pretty much serve most of the county of Clatsop, which is the Northwest corner of Oregon about 17 miles south of the Washington border. We're a part of Providence Health & Services, which means that Providence Health & Services serves five states -- Alaska, Washington, Oregon, Montana and California. Burda: Very good. Scott, tell us a little bit about your operation.Bullock: I'm Bullock. I'm the President and CEO of Maine General Health based in Waterville and Augusta, Maine. We're the product of a merger in 1997 between the healthcare system in northern Kennebec County and the healthcare system in southern Kennebec County. We have 287 acute-care beds on three sites. We have three long-term-care facilities, a large physician practice network, home care and hospice as well as a retirement community. Kennebec County is a county of about 120,000 people; that's our primary service area. And we have a secondary service area of an additional 60,000 people.Burda: Very good. Welcome.Bullock: Thank you.Burda: Pat?Schou: I'm Pat Schou and I'm the executive director of the Illinois Critical Access Hospital Network, which is relatively new over the past several years. It's a network composed of 51 critical-access hospitals located across Illinois from Metropolis up north to Galena. And then you look over to the west and you look over by Pittsfield over to the east by Mount Carmel and all that area. There are 51 critical-access hospitals and I represent them and we work very closely together in educational programs. At each critical-access hospital, as Bill describes, there are 25 beds. They have a service area of about 15,000 to 25,000. In Illinois most of our critical-access hospitals cover about 50% to 60% of all our counties' primary healthcare and emergency services and about 65% of secondary. They cover different areas so they really do spread across Illinois and provide a great primary service. Burda: Great. Welcome Pat. Schou: Thank you. Burda: At the top of any CEO survey we've ever seen in terms of what issues they are most concerned about is always reimbursement. So I thought that might be a good place to start. Phil, could you tell us a little bit about your payer mix at your hospital and how that is affecting you financially? Stuart: OK. Roughly 60% of our payer mix is Medicare/Medicaid at this point. I would say that if it wasn't for the critical-access hospital program we probably would ... I won't say we wouldn't exist but we certainly wouldn't be doing as well as we are today so that really has provided us with a great shot in the arm, so to speak, if I can use that metaphor. What we're seeing now is the private pay or the noninsured or underinsured is now making up a much larger portion of our population -- probably about 20% or half of what's remaining after Medicare/Medicaid is now involved with underfunded insurance programs. So our charity care and bad debt write-offs are going up every year. We have to budget for that so it makes it rather difficult. The other 20% is primarily HMO or what few remaining indemnity plans are left out there. But that's kind of...Burda: Who's your major private payer in that part of Wisconsin? Stuart: Blue Cross and United are our two biggest that are out there; they're probably the two biggest in the country anyway, but they're certainly impacting for us. Burda: How do their rates compare with those from Medicare and Medicaid? Stuart: Actually, from our standpoint we actually do very well with our negotiations. I don't want to give away any trade secrets but we've been able to negotiate some pretty reasonably good contracts. Burda: Bill, can you tell us a little bit about your payer mix and how that's affecting your reimbursement? Sexton: Sure. Like Phil's hospital, probably 60% of our payers are Medicare and Medicaid and that's consistent with what we see across the U.S. Rural communities are older, poorer and sicker than the urban counterparts so one of the things that we rely heavily on are the federal payers. Our commercial insurance is primarily the Blues and our reimbursement from the Blues is better than it is (from) the federal payers, but what we're seeing are declining levels of payment and so that causes us to reduce costs and do some things that we probably haven't had to do in the past. Burda: Good. Scott, how about at your facility? What's your mix? Bullock: I think it depends on which part of the system, but the hospital is like the other gentlemen said -- about 60% Medicare and Medicaid. It's a higher Medicaid mix in our physician practices and our nursing homes. Maine has about 20% of its population on Medicaid. We've expanded Medicaid greatly in the state of Maine to try and draw the federal matching dollars and provide access to care for people who can't afford health insurance, but it does create a number of issues for us. We do frankly a lot of cost-shifting. Anthem is the largest commercial payer and so we receive overall I would say somewhere a little bit better than 90% of our costs from Medicare, about 70% of our cost from Medicaid and then we shift the balance of those losses on to the commercial payer. So the commercial payer is paying anywhere from 120% to 150% more than the cost of the care for their particular enrollees.Burda: Now the Anthem plan -- that's the old Blues plan for Maine? Bullock: Exactly. Anthem bought Maine Blue Cross and Blue Shield several years ago. Burda: And they converted to a for-profit? Bullock: Yes, they're for-profit? Burda: Do you see any change in their (inaudible)... negotiating? Bullock: They do a good job and the proceeds of the sale were made into a healthcare access foundation so there's a large foundation in Maine that helps promote special programs. For example our statewide health information network is being helped along by the Maine Health Access Foundation. So I think that Anthem, from my perspective, has done a good job in terms of buying Maine Blue Cross Blue Shield, and we have not noticed major differences as a result of the conversion from not-for-profit to for-profit.Burda: Very good. Pat, can you tell us a little bit about what your 51 members are facing? Schou: It's probably not that much different as far as the breakdown of Medicare and commercial and Medicaid. I really believe that in Illinois had we not had critical access that over half of our hospitals would have closed because the reimbursement for Medicare has really made the difference. It's allowed them now to begin some capital improvements and we'll talk about them a little bit later as access to capital but that's made all the difference in the world. We've had really good luck with our commercial carriers. It's a small percentage because these are rural communities that you have. However, if they do have Blue Cross and Blue Shield, Aetna, United Healthcare or Health Alliance, they have been good. What we don't really know on the horizon is the impact of Medicare Advantage in our rural communities in Illinois. We are seeing some activity. At this point they are willing to meet us halfway and at least work with our critical-access hospitals as far as reimbursements for our Medicare at least at cost plus -- the 101%. What we still don't know is any settling on the cost report and things like that. What faces critical-access hospitals in Illinois are the difficulties we experience with our state Medicaid program because it's so underfunded. That has created a burden because as critical-access hospitals they're fragile and even though they might have increased reimbursement, it's only 1%. You have a growing number of uninsured that if you have a high proportion of Medicaid in your particular county area ... it can really tilt it. If you have 10% or 20% of public aid and you're not getting paid for a number of months and maybe 40% of your charges, it's very difficult to do business. So they don't have a lot of leeway with their budgets so they have to be very careful. So reimbursement is ultimately what they worry about because you've got to have the money to do the work and provide services and it's a constant balance of trying to make things work for them. Burda: Now where do programs like SCHIP (State Children's Health Insurance Program) or there is a program in Maine...it starts with a "D." Dirigo?Bullock: Dirigo. Burda: And maybe some of the military payers that ... (do they) affect your operation at all? Scott, do you want to try that? Bullock: Yes, I think...of course SCHIP has been used very effectively in Maine to expand primarily access to MaineCare for children. But Dirigo has about 15,000 enrollees. Maine's total population is about 1.3 million so it's still a very small program and it's going through some changes this year because of some funding issues for that part of the state's program. So the military is a big part of what we do and I would say that helps. There are a lot of veterans in Maine. Their insurance, I think, is a good program and that's not a big a challenge for us. Jessica Zigmond: If you could just elaborate a bit more about the veteran population in Maine I'm kind of interested in if you think there is any interest on the part of the local hospitals to work with the (Department of Veterans Affairs) on kind of networking or collaborating in any way.Bullock: Yes. We already work with our local VA. We have a VA hospital in Augusta -- the Togus VA Medical Center -- and they're part of our family practice residency. Our family practice residency is in partnership with Dartmouth Medical School and the VA is part of that program as well. So we work where we can to share specialists and other resources. But the federal bureaucracy sometimes makes that very challenging and so there are often changes in federal policy, which you work something out and the next thing you know it's changed a year later and it doesn't work quite the way it was envisioned by the people that you worked it out with. So there's certainly always the problem of federal bureaucracy and how quickly it shifts its plans, and yet we do our best to work within that. Burda: Bill, do you want to talk a little bit about programs like SCHIP? I don't know if your area or your state has any other special sort of government insurance programs. Sexton: Well, our experience with the military payers is a bit different than Scott's. One of the things that we find is that Tricare is a federal payer and it probably is at the bottom echelon. They don't pay nearly as well as Medicaid or Medicare, which is really frustrating to me as a former serviceman. The Veterans Administration is bringing on some additional resources and they have the VA Scarce Sharing Act, Scarce Resources Sharing Act, which I think will improve things. But I think there are a lot of things that we need to do for our rural veterans that we currently are not doing. And we need to put the incentives in place to make that happen. Jessica Zigmond: Can you give us some examples or some ideas of what could be happening and it's not? Is there more that we could be doing for our rural veterans for example? Sexton: Well, for example as we talk about the Tricare issues, one of the things that the Tricare legislation as they change that from paying charges they put in place modeling after the Medicare standards but they're not following the Medicare standards. They dropped well behind those, so one of the things that we need to do is at least bring them up to the Medicare payment levels. The other thing that we can do for our returning veterans ... one of the things that we see in terms of our veterans is each war has a signature element. And as we look at what's really happening to the veterans that are coming back from Iraq, much of this today, with the body armor, is very similar to Shaken Baby Syndrome. And so we're preserving people who otherwise would have been killed. So we've got a lot of neurological damage that we've not seen in the past. So I think one of the things that we need to put in place are some of the resources to assist those veterans because right now they're having to travel in my case 90 miles over winding, wooded roads to receive care in the city.Burda: Phil, can you tell us a little bit about some of the other government programs and how they are as payers in your area? Stuart: Well, Badger Care...what we have in Wisconsin, which was part of Tommy Thompson's legacy ... Unfortunately, the state of Wisconsin has the distinction of being the only state in the union that has not passed a budget yet. They're 102 or 103 days and counting at this point. And part of that has to do with they're trying to invoke a hospital tax now to get some matching funds from the federal government. We have not seen an increase in our Medicaid reimbursement from the state in over a decade, so there are a lot of issues involved with trying to improve that and Badger Care certainly is a part of that. We want to expand Badger Care for more enrollees so whether that comes to fruition I'm sure it'll get notices....Burda: How about SCHIP? Stuart: We don't really...I don't know that I could really articulate much on that from our perspective. We really don't have a lot of pediatrics that we deal with. ... We do have a large military installation and a VA medical center in Tomah so that is an issue for us as well. Burda: Do you feel the same way about the Tricare reimbursement rates? Stuart: Oh yes. And in fact, as Bill was saying, we actually went to the Department of Defense and tried to get Tommy Thompson to help us when he was secretary (of HHS). They won't recognize critical-access hospitals as an entity. You can go and negotiate as a sole community provider hospital but we would have to give up our critical access hospital status to do so, so we elected not to. But their reimbursement, as Bill said, is very, very low.The VA medical center in town does not do acute care in our community. They do more long-term care and (inaudible) site kinds of things, so we see a lot of that and we do have a lot of cooperative relationships, which actually works very well for them and us so the veterans can get some care at least locally. Jessica Zigmond: You said they won't recognize...you're saying they won't recognize (critical-access hospitals) in the area? Could you talk a little bit about that? And did you mean the Department of Defense or the VA? Stuart: The Department of Defense. Tricare is through the Department of Defense; the VA is through the (Veterans Affairs) medical system, so they're actually two separate entities. When we were looking at trying to increase reimbursement from Tricare or from the Department of Defense and trying to negotiate that you can go off the fee schedule if you can prove a sole community provider status. Because we are a critical-access hospital they said, well that in their vernacular, it didn't exist. So at the time Rear Admiral (Richard) Mayo was in charge of that program, but we got actually nowhere. But our board of directors looked at that and how we wanted to deal with it because they are such poor payers we elected as a community hospital and because of our large military contingency we are more than happy to serve them and their families.Burda: Pat, let's go back to something you mentioned earlier. You mentioned the word capital. If we could talk a little bit about your hospitals' ability to borrow money and how that's changed in the past year or so and tell us about what that may look like in the next couple of years. Schou: Sure. When the critical-access program came on board in 1999 and 2000 as it started to unroll, at that time the rural hospitals had very limited power to borrow anything in the market. There just really wasn't anything out there. Of course their financial status was not strong; many of them were losing money. And over the progression of the last three years there has been a change. It started first in about 2002 when HUD came on the scene and off of their (Section) 242 program, which allowed critical-access hospitals to be reimbursed and go through the loan program of 242, which provides the insurance and so forth. That was a viable option except at times it takes a period of time to go through and may not be the best fit. With that coming on the scene and a lot of studies being done and recognizing that critical-access hospitals were stabilizing, that Medicare was a good payer and that it did reimburse based on percentage of Medicare patients ... the private sectors come into being. And you started with Pine Creek and Red Capital and now you've moved to a lot of other organizations. I realize I'm not mentioning them all but it's really opened up the market quite a bit. We actually had a critical-access hospital in Illinois that was able to even go out with their own bonds in the private market and be ... what is it, BBB rated, which is very unusual for a rural hospital to even be able to be rated. So it has really opened up and we're seeing (entities) like Illinois Finance Authority... finance authorities in your states jumping into the arena and it's really made a difference. We have two hospitals in Illinois that will soon have their buildings finished. They're relocated and have a brand new building. And we have three more under way and we have about four or five that are under careful consideration. On top of that we probably have at least 10 to 15 hospitals that have done major renovations, have completed it or are in the process and others that are considering so here we had buildings that were old Hill-Burton. We had one hospital that is one of the new hospitals that's being built. Its first building was in 1917 and there have been a lot of hospitals that have not had any major changes. Of course with the focus with critical access being on outpatient and emergency services, here you had all these old buildings that are three, four or five stories tall really conducive for inpatient care so it's really added a lot of efficiencies. There are now studies out that really show the efficiencies and increasing in market share. So for us in Illinois it's been a real good thing. We're seeing building on the horizon and it will make a difference in our efficiencies and stabilizing our local economies and having services for our rural community people. Burda: Scott, what's your opinion of how lenders view the credit risk of rural hospitals and has that changed? Bullock: I think in Maine we have two things that are affecting us. One, we have the Maine Health and Higher Education Facilities Authority so virtually all not-for-profit, college and healthcare financing is done through the state financing authority and is backed by the credit of the state of Maine. So it's not the same issue in terms of access to capital.What we do have is the CON, the certificate-of-need program, and the CON development account, which was part of the Dirigo health legislation that was passed in 2003. So the state limits the total amount of capital that is available to hospitals in Maine and looks very closely at all of the projects that we propose so that, for example, in our case we needed to replace both of our cancer centers, the one in Waterville and the one in Augusta and we consolidated that and built one single new cancer center and brought those two facilities together under one roof. Our three acute-care sites ... we're now looking at consolidating them in one site so the state isn't, if you will, working with access to capital as much as they are with the CON program saying whatever new projects get approved by us are going to have to be more efficient and are going to have to show real savings before we'll approve them.Burda: Bill, do you find that borrowing money is easier now then it has been? Sexton: Well, borrowing money should be easier because one of the things, as Pat says, is that with critical-access hospital legislation, we've been able to change a non-profitable entity to a slight margin. And of course one of the things lenders are looking for is the ability to repay. The concern that we have at the current time is many of the facilities -- and Pat shared her example of a building that was built in 1917 -- trying to retrofit a building of that age to current standards will be far more expensive than to build new. So the current strategy is to build new with the current tactics and the current philosophy that the (CMS) has. They are putting restrictions on that and they will not certify that a new hospital close to the old hospital when it is completed will be certified as a critical-access hospital. So if you're a lender you don't know that you're going to have an entity that will be viable when it's done. Burda: Phil, you're nodding your head. Stuart: Yes, that's true. CMS has come out with those rules and I think that's a story that's yet to be told so take that for whatever it's worth.Burda: So Tricare doesn't believe you exist? Stuart: In Wisconsin (inaudible) we have the Wisconsin Health and Educational Facilities Authority, so that is back and that's good. I can also...the facility that I've been at almost 13 years and we were not very financially solvent several years ago and if it weren't for our local banks backing the hospital with their assets, that hospital probably would not have survived. So I think in the small communities even though you may not have access to the big lending institutions I think our local banks see the value of that from an economic development standpoint. So we did have some very good backing from our local lending institutions. We did complete a major renovation of our hospital here a couple of years ago. We basically gutted the whole thing and rebuilt it, but it was sorely needed --a lot of infrastructure issues had to be taken care of. Burda: You're mentioning a lot of capital expense but it seems most of it is going toward construction rather than maybe new technology... Pat, tell us a little bit about what your hospitals are spending their money on. Schou: Right. It was interesting. When I first (became involved with) with critical access back in 2000 or so most hospitals were lucky to have a CT scanner. Now they're looking at a 64-slice (unit), and so the access to capital allows them to do that as well as moving into IT, the information technology arena, where they can have PACS and other kinds of things to begin to modernize and be able for the exchange of medical records -- they have to be just as able as the larger institutions -- so it has improved dramatically. They've been able to add a number of different types of lab and X-ray and so forth ... surgery -- they've been able to outfit their surgery (areas) to really bring things up to speed. But also be able to look at information technology equipment and things along that line. Burda: How about in Maine, Scott?Bullock: If you take our new cancer center, by consolidating we are able to upgrade our radiation therapy capabilities so that we have image-guided radiation therapy and IMRT. We also have a PET/CT scanner in the new cancer center. So by consolidating two centers into one we are able to afford the most up-to-date technology in both the radiation therapy and imaging.We're also investing heavily in information systems as well and have an ambulatory emergency electronic medical record and just installed an inpatient electronic medical record that provides a number of safety features -- CPOE, or computerized physician order entry. It also has the evidence-based guidelines within the system. It has the various medication checks to try and prove safety through the use of information systems.Burda: Bill, how about your hospitals? What are they spending their money on? Sexton: Well, a lot of the expenditure is in information technology -- probably 40% of the capital goes toward information technology or something that's related to that. One of the things that we've been able to do in Seaside is really be a leader for the system because rurals can develop things and you can test it on a small platform. So we've had an electronic medical record now for over 10 years and as we migrate other systems and titles together I think part of the challenge is the interface that you develop. But a part of it is the ability to share information and as you begin to build on the information technology then you're able to improve the quality and the safety of the patient care that you provide because you're putting in safeguards and you're sharing information that you otherwise couldn't share in the past. Burda: Phil? How about Wisconsin? Stuart: Yes. The things that we've done in Tomah...we now actually do have a complete electronic medical record. Our pharmacy is all online, a PAC system. The only piece that we have yet to put in would be computerized physician order entry, but all of our documentation is online. All of our monitoring system is all voice over IP so the nurses, if the alarm goes off, they can look at their cell phone and see the actual alarms right on the cell phone. So like everyone at the table here we put an awful lot of money into our infrastructure. In terms of our diagnostics we have put in an MRI unit. Our CT scanner is a few years old; we're looking at upgrading that. But we have found that a lot of the companies, because the market has become so competitive, you can get those on capital leases now that actually make it attractive where you might not have been able to get in the market before now. So those are some of the things we've also taken advantage of in terms of building up our infrastructure. Burda: Phil, one question I had was, taking a hospital that's standing alone and integrating a lot of these technology pieces, is that difficult for you? You don't have the scale and size of a large organization that covers 10 or 12 hospitals and has that sort of depth. How do you combat that? Stuart: Well, there are two things I'll say about it. Number one, when we set out to look at upgrading our information technology we had to put it on a five-year plan and we had to figure out which piece was first, which was second, which was third so that when you rolled out one you're already beginning the implementation for the next one. So we've been able to carry that off fairly well; at least I think we have. The other thing that's going on in Wisconsin that our hospital is part of, the rural Wisconsin Hospital Cooperative, has created an ITN and there's going to be three of us rural hospitals that will be starting out ... and it's just happenstance. We wouldn't have done it if they hadn't have picked a computer system that we're using, but it was competitively bid and they just happened to pick the same system that we have. But there will be three us that actually have a $1.6 million federal grant to get this implemented, so we're really excited to be part of that. There are six other hospitals that will participate once this is up and running and I think going forward for rural hospitals that's a great model for a lot of us to be able to share where otherwise we would not be able to afford it. So we just happened to have gotten all of our infrastructure already in place, but it's a great program. Burda: Now Scott let me ask you. Do you think it would surprise most people to hear that rural hospitals are on the cutting edge of IT and medical technology? I mean does that buck conventional wisdom? Bullock: I hope not. I think that there is a great tradition of rural healthcare and I think that very commonly we do the things that really need to be done and can get them done more quickly sometimes than our urban counterparts. So I know the image is such that may not quite fit with the picture, but I'm often struck by...we have people that send their kids to camp and they're often from very wealthy parts of New York and other parts and they send their kids up to camp and they'll have to come to our hospital and we get the calls from the parents saying they think we have witchdoctors in Maine. We'll say our doctors have graduated from the finest medical schools and have completed the best residencies in the country. They just prefer to live in a rural part of the country. So it's always interesting to hear the perspective from the big city. Burda: Bill, would you agree with that? Sexton: Absolutely. I think rurals have been survivors for a long period of time. They've had to be. They've had to be innovative, they've had to be creative and I think they still are. We're able to do things, as Scott said, more quickly. It's kind of the parallel of trying to turn a PT boat or turn an aircraft carrier. We can turn the PT boat much more quickly. Burda: Pat, Scott said something about physicians on his medical staff coming from the finest medical schools. How does all this translate? The purchase of cutting edge information technology, medical diagnostics, new buildings, how does that affect the recruitment of physicians into your hospital service area? Schou: It does affect that but I just would like to make one comment on the IT part before you move away. I believe that we are cutting-edge and have an opportunity; however, it's a challenge for our rural communities for recruiting people trained in information technology. It's hard to find sometimes people there locally as in a bigger city so that becomes our challenge and I guess that moves over to physician recruitment. I think having the new diagnostic equipment and building facilities has helped in the recruitment of physicians; however, we still are on a down slope in the sense that there are 9% physicians in rural practice and we've got 20-some percent of the population, so there's still a difference there. However, we have seen with our critical-access hospitals that those that have done major renovation and have new facilities that it has been much easier to recruit. A lot of places physicians don't want to come if they don't have call and other kinds of things so it's not always the building but that's a good attraction of making that first impression ... because if you're a physician out there alone you want to make sure that you have the best of equipment that you can have there so I think that sometimes is important and it's been really helpful to our hospital. It still is a challenge because not everybody is familiar with the critical-access hospital. We have recruitment services with our critical-access program and our recruiter was up at one of the medical centers in Chicago and people stopped by and they said, "Are there rural areas in Illinois?" And, "What is a critical-access hospital?" So you know part of it is that barrier and I think the more we have a better image and work hard with information technology and diagnostics the more we'll be able to attract and keep good people there. Burda: Phil, how about that link between technology and the ability to recruit physicians and nurses? Stuart: Well, I think people coming out of residencies today are looking for facilities that have the technology. I think the quality of life is an issue that we always talk about in terms of why you want to attract someone. But the call schedules, those kinds of things are huge impediments. A lot of physicians don't want to go in where they're going to be expected to be on call every third night where they can get a one-in-six or one-in-seven call rotation, so that makes it difficult to recruit and/or retain.Also, our medical schools...there has been a big push in Wisconsin with the Medical College of Wisconsin to have what's called WRM, which is Wisconsin rural medicine track program because a lot of the residencies are totally ignoring what rural healthcare is, and our environment is different. You don't have every subspecialty at your fingertips. You have to be a true generalist and that I think makes for some difficult recruitment.Our standpoint -- we've had a terrible time -- four years to find a general surgeon to come in that does C-sections because there is not enough business for an OB/GYN to come in and they don't train general surgeons to do C-sections anymore. So you either have to find a program that's willing to train them or find a surgeon that's...we call them "old school" but they're over 50 years of age that were actually trained for that. So the training most of the residents are getting is not geared towards rural healthcare, and that is a problem. Burda: How about nurses? Stuart: Well, we're a little fortunate that I have two schools of nursing 40 miles away so we provide a lot of clinical training at our facilities so even though we've had to use agencies ... those kinds of things are still there. We are much more fortunate because of our proximity. But it is an issue throughout the state. An aging workforce. Fewer and fewer people want to go into nursing. Even though the pay is good, you still have to work all three shifts, you have to work weekends, and you have to work holidays. There are a lot of jobs that you can work 9 to 5 and not have to put up with what nurses put up with. Burda: Bill, how about your experience recruiting physicians and nurses? Sexton: Well, you would think that on the Oregon coast it would be easy to recruit. I think I've got the same challenges that Pat explained and that Phil has discussed.One of the global issues that we have is that we have a quarter of the population that lives in the rural area but less than 10% of the physicians that practice in the rural areas, so you already start at a challenge. As you look at the recruitment process that has been my biggest struggle and my highest priority.There are three key elements that cause physicians to struggle in a rural area like Seaside, one of which is the call. If you join a small group, you're going to take call more often than if you joined a group of 50. The second is work for the spouse. A lot of the physicians that are graduating today have spouses with technical backgrounds and so if they're a teacher or a nurse that's an easy transition. But if they're a marketing executive ... we're not going to find jobs for them at Seaside. And finally it's the cost of housing. When physicians are coming out of training today they have significant debt and so to take on additional debt is a real struggle for them. Burda: Scott, how about your recruitment and retention strategies? Bullock: I think my fellow panelists have touched on many of the challenges that we have. I'll just touch on a couple of things. One is we're very concerned about the long-term future. We have major challenges today but if you look at the age of our medical staff, if you look at the needs of the population as we age, the baby boomer generation in particular, we see major dislocations coming in the next 10 to 15 years -- almost on the order of magnitude that we sort of see it as a real crisis brewing if we don't really start to do some things differently.We also have real challenges with primary care. I have to say that even with a primary-care residency because of the differences in reimbursement, the call burdens; there are real challenges for primary-care physicians. They are often the doctors that have to deal with the precertification requirements of getting certain imaging studies approved by the insurance companies, certain medication regimens approved by the insurance companies. So one of our biggest concerns is really the health and long-term staffing of our primary-care needs in our community so that's another thing that I would touch on.The subspecialization, just to reinforce what Phil has said, you know it's easy to be paranoid in the rural communities because all of our new physicians come from the major teaching centers. But at times it does look like the increasing subspecialization within virtually every field of medicine just seems to work against rural providers whether it's orthopedics, cardiology or neurology. So many physicians today are subspecializing in parts of neurology, parts of cardiology or parts of orthopedics, so it does become much more challenging to provide that type of care in rural communities with increasing subspecialization of the specialists.Burda: Now on the staffing front, have any of you gone the outsourcing route? I mean let's say to hire an outside firm to staff your ER? Hire the use of agency nurses? Or is that just something that doesn't happen much in rural areas? Or is just the opposite -- it happens all the time? Bill, you want to try that one? Sexton: We've not gone to staffing primarily for the physicians through agencies. although we have had some occasion to do that. Sometimes that will be a good recruitment tool because we'll bring in an agency physician, they'll get their first experience with rural healthcare and they'll say, hey, this is pretty great. I want to stay. So that's an opportunity, but we've probably used more in the area of the agency staffing.One of the things that we're experiencing is our nursing staff is getting older. I mean they're aging. And one of the struggles that we have with that is they can't lift and they can't maintain the hours that they could in the past so we've purchased lifting equipment and we've put in some creative structures to support them in this process, but I think what our challenge is going to be for the future is being able to recruit young, new nurses coming into the workforce, and that's a struggle today. As Phil says, there are other opportunities and folks are just not coming into the workforce in the nursing and clinical areas that they used to. Burda: Pat, do your facilities rely on outsourcing to fill their staffing needs? Schou: A few use locum tenens when somebody is gone but a lot of them use ER physician coverage for their emergency departments. They use ER groups, and that has been a good way to help fill that void trying to cover the emergency department and allow the primary physicians to have their practice and so forth. Also, we are looking at many of the hospitals have what they call rural health clinics and community health centers where physicians can practice. That helps fill the void and it helps the hospital with costs of trying to bring a physician on board by having a clinic and so forth so they've tried to use those strategies. Some of them have brought on internists. I shouldn't say internists but hospitalists. A couple of the rural communities have brought in a hospitalist to cover the call and admission and so that...Burda: Is that usually somebody they go to an outside firm for? Schou: No. Burda: Or do they hire them themselves? Schou: They usually hire them themselves. So they really don't use outside firms unless it's a situation like a locum tenens. They lose a surgeon or an OB person for a period of time. Or they all pretty well use a group for ER physician coverage. They can't have those themselves. They really have to rely on outside sources. Burda: Scott, have you done some outsourcing? Bullock: We don't contract with major companies to deliver our staffing but we do, as I'm sure most of us do, we use locum tenens firms from time to time. We also use agencies to staff particular challenged areas from time to time. But we really try to wean ourselves off that as quickly as we can and minimize that as much as we can. The cost of that, the consistency, the difficulty you have in assuring quality, safety and proper training -- it's just a last resort is the way we look at it. Burda: Phil, how do you see outsourcing as a cost-saving strategy? Stuart: I would never say outsourcing is a cost savings because you usually pay at least 50% above and beyond the rest so you really don't want to be involved in it and there are issues with they're not familiar with our system so your error rate will probably go up. The only thing that we've done is we've gone into some creative ways of ... we own the practice and then we contract out with providers to come in. Our orthopedic practice is a job-share program with orthopedists. They work a week on and a week off and they kind of like it and it gives us the coverage that we need. So we actually have to find some real creative ways to make these things work but again we've been reasonably successful. Burda: Let's pick up on that error rate comment that you made. We do a lot of coverage in the magazine of patient safety issues and I'm just wondering if you see any organization out there that you would say is kind of leading the charge on safety whether it's the Joint Commission Leapfrog Group, IHI, and National Quality Forum or is it all homegrown for you? Stuart: Well, I would say that they all have great points. The issue is, and including our insurance carrier, they all want to get on the bandwagon. They're all using different metrics. There isn't any consistency and when you're trying to figure out which metrics to use and what you're being forced to use there isn't any consistency, so it's just a hodgepodge of stuff out there until we get this figured out. So I don't know that anyone is better than the other. I think the awareness factor certainly is a positive thing for all of us. I think the technology that we're putting in helps us understand and reduce those errors but I think there really needs to be a national standard on this stuff because it is really all over the board. And the infrastructure and personnel that we have to use just to do all of the metrics really doesn't make any sense at this point. Burda: Bill, how do you feel about that? Sexton: Well, I think we've also been leaders for a long time in the area of quality and quality reporting. One of the challenges that we have in the rural areas is that our numbers are very small. So if you do three cases and you miss one, I mean it's a significant challenge for you in some of those areas. I think one of the other things that we tend to do is we tend to know our patients because we are closer to them. One of the things that I'm familiar with is there was a study done by the University of Washington about 10 years ago that measured outcomes between rurals and urbans and in all but one case the rurals outperformed the urban counterparts. Vince Galloro: Scott, where do you see public recording of outcomes data and the patient-safety movement? Bullock: I think we have tried to be as transparent as we can possibly be and we have the Maine Quality Forum, which is again part of the Dirigo health legislation. Our health system has been active with the IHI, with 100,000 Lives campaign and now the Five Million Lives campaign. Where I come from ... because I think many of us have been doing this for quite a while, is you're trying to transition the U.S. health system, which essentially was built on taking physicians that were often the smartest people we could find, train them, and then saying now go and do what's best for your patient. So we're almost turning this entire system upside down by now saying we want to be very systematic and predictable and let's all treat patients in a consistent manner. So I see our physicians really having made major leaps over the last five years and now are really putting pressure on us to say, give us the systems to be sure that we can care for all diabetics in a consistent manner and help us do this well, and that's a real change that we've seen in our medical communities over the past five to 10 years.Burda: Pat, are any of your hospitals using some quality-improvement strategies from other industries in their operation? Schou: Sure. Many of them participate in the Five Million Lives and so forth, but we've been looking at medication safety, in particular medication reconciliation, and looking at how we can do a better job internally. Part of the problem with rural is that not having a lot of pharmacists available so you have to rely on technology or you have to work with larger facilities or develop some kind of information system that you can keep track of medications. ... I think that will help with your safety. As far as like with other industries it's really hard to...Burda: Lean management, things like that...Schou: Yes, not so much. I think we always hear a lot about the airlines industry and at times that you've seen healthcare doesn't always rate as well as sometimes baggage carriers. But I think the point made about rural is I think we know our patients better and I think we have some advantages that way. As far as monitoring our infection rate, you rarely ever see an infection rate in a rural facility because you don't have a high risk and high volume and there are a little bit better protocols. So as far as borrowing a program there's not much out there. But there's not really a lot out there for rural because it's very unique because of the numbers and that. It's frustrating right now because many of our employees that work in our rural communities have to wear a lot of hats to do things as far as watching patient safety, compliance, quality improvement and so forth. And when there are so many different demands it's really hard. I think there's more of a challenge in that because of wearing so many hats.... We have a state reporting act now in Illinois. We have the CMS and we're now doing morbidity, mortality and patient safety, medication being reportable. I think if you develop a good working relationship with your patient and your physician that goes a long way and you have really worked hard on programs, fall safeties and things like I.D. bands and a lot of things like that are real simple but the hospitals I think have really worked hard to do that and communicate that to the public. That's the challenge sometimes... how do you let them know that you're doing all these things without scaring the public because I think we are very safe with our patients and we don't want to frighten them. We want to know it's a good part of care. Burda: Very good. Well, why don't we take some last comments on issues facing rural providers? Phil, any wrap-up comments on where your facility will be a year from now? Stuart: A year from now we'll probably be the same. I think more like five or six years down the road I think there's going to be challenges. I think the primary-care (physicians), which we rely very heavily on with our providers, for the first time are actually recording that there are actually openings that people aren't even applying for some internal residency slots. I think that's going to create a fundamental shift in rural healthcare.The other thing that I find somewhat troubling is we've got pharmacists who now are Ph.D.s, our physical therapists are going to be Ph.D.s, and nursing is going to make the nurse practitioners be Ph.D.s. We've got a lot of creep in that, which creates a shortage because of the longer education. It's going to drive up costs. I have yet to see too many studies that actually show the outcome is better, but we certainly have seen a lot of changes that way and I think those are going to be the challenges for us going forward. ...Burda: Bill? Sexton: Well, we'll be better and stronger than we are today in the future at least in the near term primarily because we've been able to add capacity. The key for us is having the capacity with physicians. I tell my staff that it's very simple: Nothing happens on our campus without a physician's order. If you don't have the physicians, you don't have the orders, you don't have the care being provided to the patients, you don't have the reimbursements, so that's kind of a vicious cycle. The one issue we didn't talk enough a lot about is EMS. One of the things that our emergency medical services struggle with is that most of that is provided by volunteers and the support and the structure for our emergency medical systems is very difficult at best. One of the things that we're challenged with in the rural areas is it's not a few blocks for us, it's several miles. And it's the time from injury until the EMS staff arrives and they're able to transport them to the rural facility. We're able to really provide that first level of significant care so I think EMS is going to continue to be a challenge for us, too. Burda: Scott, how about yourself? Bullock: Just a couple final thoughts. One is I am very optimistic about the future. I've watched the health system in this country adapt to so many things over a 30-year career that I'm very optimistic about our ability to continue to adapt. A couple of thoughts. One is we've just entered into a collaborative relationship with Eastern Maine Healthcare, which is a large system based in Bangor and MaineHealth, which is a large system based in Portland, so all of the systems in Maine are trying very hard to collaborate on connecting our disparate information systems. We have electronic ICUs now; we're working on 24-hour pharmacies that can be used to help the pharmacy shortage throughout the state of Maine so we seem to be headed in a more collaborative direction than we have in the past. I guess one final thing I would just suggest is we need to keep aligning, if you will, the payment system with the actual needs of the population so where we talk about needing to prevent illness more in the future, do a better job with chronic-disease management. We have a huge issue with behavioral health, substance abuse and issues like that. We just need to constantly look at how our payment system funds the things that the people need so that we keep working on how to best deliver the care that the people of our country need. Burda: Very good. Pat, any wrap-up comments? Schou: Yes. I would like to think that after the next couple of years that we'll be able to really put innovation back into patient-care delivery. The reason being right now information technology and all these diagnostics are driving us. Instead of the providers and the care being driven it's the technology. I have to learn how to do electronic medical records rather than thinking how can I make that work better for us. And I think once we get a lot of our IT equipment and other diagnostics installed that will allow us to think better how we can deliver the care, how we can we be safer and how we can even move to directions of better chronic-disease management because particularly our rural communities we're going to face a lot of elderly chronic-disease management. Yes, we still have to be able to provide emergency services, but we're going to have that population there. So I think we really have to look for innovation and really work with our workforce because we're in this...we're in this kind of lateral right here and we just really need to step up and take what we have now and be more innovative and look at ways to reduce the cost of healthcare and let technology help us do that and use the good things that we have with patient-care delivery, and I think we need those sparks out there. So I'm hoping that our rural colleagues ... can be the learning centers and be the leaders out there.Burda: Well, Pat, Scott, Bill and Phil, on behalf of Modern Healthcare and its readers we appreciate your time this afternoon and thank you for visiting with us. Stuart: Thank you. Schou: Thank you. Sexton: Thank you. Bullock: Thank you.