The health system's job cuts included a hiring freeze for 200 vacant positions that amount to 5% of KentuckyOne's workforce, which CEO Ruth Brinkley said will help to erase a shortfall of $220 million over the next 16 months.
“We have a fundamental shift in how care is organized and delivered, moving more from an inpatient model to an outpatient and wellness model,” Brinkley said. The Affordable Care Act's emphasis on wellness, prevention and outpatient care is contributing to that shift. “I do think the ACA is driving a lot of it,” she said.
In fact, KentuckyOne opened its newest ambulatory location this week and continues to invest in retail clinics and telehealth to expand beyond the hospital and increase its outpatient reach, she said.
The system is testing new payment models that do not rely as much on volume, such as accountable care, among its employees and under the Patient Protection and Affordable Care Act. KentuckyOne is under contract with Medicare as an accountable care organization. It's all part of adapting to the new environment that will stress health promotion and quality of care over fee for service models.
“We are moving in that direction,” Brinkley said. “I won't even imply to you we have figured it all out.”
The regional system's distress also underscores the volatility that hospital operators face as some of the industry's largest players try to adapt to the changing marketplace and health policy. KentuckyOne is a subsidiary of Catholic Health Initiatives, Englewood, Colo. With more than $2 billion in annual revenue, KentuckyOne is one of CHI's largest hospital systems. CHI has been an aggressive dealmaker since the 2010 health reform law, with acquisitions that have expanded its geographic reach and diversified into health insurance and consolidated markets, as was the case in Kentucky. Executives say these strategies will prepare the system for new payment and delivery models.