Rarely has a hospital received a “death sentence” from the CMS—the revocation of its Medicare and Medicaid certifications—and survived without a significant change in ownership or organizational structure. One such rarity, however, is the story of Haywood Regional Medical Center in Clyde, N.C. As there was scant history dealing with decertification, the steps necessary to create lasting change had to be developed on the fly.
Righting the ship
Renewing a hospital after Medicare decertification
Despite colleagues telling Mike Poore that he was crazy to risk joining a hospital that had been recently decertified, then conditionally recertified, by Medicare, the challenge seemed too interesting to ignore. When Poore joined Haywood on Oct. 1, 2008, he implemented a three-step plan to put the hospital back on a healthy foundation.
Step 1: Rebuild the team. In addition to the loss of Medicare and Medicaid funding, many private payers abandoned the hospital. Because of the lack of revenue, the hospital was dying financially, losing $13.5 million in the six months prior to Poore's arrival. Because of the cloudy future of the hospital, the C-suite was practically empty. Poore quickly assembled a team to create lasting organizational change for the hospital.
Step 2: Develop a short-term strategy with clear and measurable goals. The key to addressing a problem or issue is to correctly identify and define it. As the C-suite team solidified, Poore began to shape a 90-day action plan by interviewing hundreds of employees and physicians to understand the issues. The hospital began to effectively move the clinical operations in the right direction, culminating with an unconditional triennial certification by the Joint Commission in early 2009.
Step 3: Concentrate on the basics. The new team retooled the hospital's operational culture. Management had to change from a “silo-focused” business culture into an open cooperative model, holding directors accountable for their clinical and financial benchmarks.
This was done in three ways:
- First, the management set departmental productivity standards, which were compared with those of a large peer group. Although this was initially a foreign concept, annual cost savings of $1.8 million have been realized. Plus to foster team cooperation, if one department falls short of its goal, a system of remediation measures immediately takes place with a group of peer advisers.
- Second, the challenge was made to enhance the financial results without affecting quality or access. Examples include point-of-service collection improvements, renegotiating managed-care contracts and restructuring the chargemaster, yielding millions in additional net revenue for the same patient load. At the same time, the hospital extended its lowest managed-care rates to self-pay patients.
- Finally, the single most important change: Management increased frequency and openness of communication with the employees, the medical staff, the board, the media and the community. Poore instituted a policy of total transparency with virtually no questions off-limits. Prior to the decertification, the employees, and even the hospital board, often found out things about the hospital in the local newspaper. Now, the goal is that each employee understands the impetus behind every major decision. Poore implemented town hall meetings, detailed e-mail communications and direct communication with employees. The financial status of the hospital is now shared in detail with all of the hospital's constituent groups, including the media.
It is important to recognize the dedication and perseverance of the employees and medical staff at Haywood. Without this dedication, the turnaround would not be possible. The core of a quality hospital was already in place—leadership was the missing ingredient.
While significant changes remain to be implemented, including completion of an affiliation with two hospitals to the west of Haywood, the hospital has exited this difficult period with a broader mission, a stronger clinical focus and a management team poised to successfully reposition the hospital within its region.
Gene Winters is chief financial officer of Haywood Regional Medical Center, Clyde, N.C., and Mike Poore is its CEO.
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