Community trepidation, tense provider relationships and tumbling revenue at Summa Health in Akron are making an already difficult job more challenging as interim CEO Dr. Cliff Deveny tries to right the ship after a tumultuous start to 2017.
Deveny shared some grim facts with staff and the community last week "not to create fear," he said, but to state the reality facing the health system: Dramatically decreased inpatient and outpatient volumes have resulted in staggering operating losses that, at the current pace, would mean a more than $60 million loss projected this year.
This would come on the heels of a nearly $30 million profit last year.
Deveny began taking steps and making cuts to address this, but he does not believe the health system can break even this year, which started with a $15 million operating income loss in the first quarter. Deveny expects the second quarter to look similar.
And the forces that have largely driven the falling revenue and restricted patient volumes will likely take more time to address.
For one, the payer mix has become challenging. Summa saw a greater-than-expected shift in the portion of patients using self-pay, Medicare and Medicaid, which reimburse at lower levels than commercial insurance. Health systems across the country are already facing tough-to-swallow reimbursement levels that are potentially facing drastic changes as Washington works through health reform.
And in the first quarter of the year, outpatient visits were down 5% and inpatient admissions were down 7% compared to the same timeframe last year, according to Summa's first quarter financial disclosure.
Deveny attributes the drop to competition in the market as well as provider and patient perception of Summa following a rocky start to 2017.
Deveny began his role in March, replacing Dr. Thomas Malone, who resigned after strong backlash to a decision to not renew the contract of the independent physician group that had staffed the hospital's emergency departments for decades.
Summa's bond rating and balance sheet put it in a good position to be able to weather this, Deveny said, but changes had to be made.
He announced in a June 26 memo to Summa employees, staff and boards that the system would eliminate about 300 positions — saving an estimated $12 million — as well as discontinue services, consolidate units and re-evaluate ongoing capital needs. Next year, Summa will also see a $14 million improvement to finances as a Medicaid sanction lifts.
"We've had a long history of doing well, and this is a very unique situation (that) compounded with everything else that went on," he said. "And the precipitous drop in volume and revenue was unprecedented."
The cuts come as Deveny has already spent months trying to mend the wounds of a contentious relationship between administrators and providers. Despite efforts, bad blood remains.
Summa nurses have been organizing in the hopes of forming a union — something the administration is advising against — and independent physicians have been raising concerns about quality, which Summa adamantly disputes.
Deveny said he's worked to ensure that the cuts don't reach bedside positions. About half of the positions eliminated were open, and he focused on administrative and overhead roles.
Though Deveny wrote in his memo that changes will include "re-evaluating our ongoing capital needs," this will primarily affect day-to-day capital spend. He said Summa's $350 million investment announced last year, which includes a new inpatient facility and medical office building on its Akron campus, will move ahead as planned. The investment would help keep Summa competitive as University Hospitals and Cleveland Clinic stretch into Akron.
Deveny said the system has seen about a 70% reduction in patients from Portage County since UH took over Robinson Memorial Hospital — now known as UH Portage Medical Center — in 2015.
The Clinic, meanwhile, took full ownership of Summa's rivaling Akron General in November 2015 and has since seen a boost in patient volumes. Admissions at Akron General in 2016 were up 5% from 2015 and outpatient visits increased 2%. A hospital spokesperson said patient volumes and revenue were also up in the first quarter 2017 compared to the first quarter last year, but didn't provide specific numbers.
Deveny also sees referral practices hitting Summa's volumes. Leaders of some of the area's bigger physician groups have told Summa they've moved patients over to Akron General, citing concerns around quality.
"We've spent a lot of time trying to understand what those specific concerns are and addressing those," Deveny said. "And what we've found is in many cases, there isn't a lot of substantiation of that concern."
Summa points to various metrics: SummaCare returned to a four-star rating; metrics in the emergency departments have all improved other than length of stay; Summa received an award from the Ohio Patient Safety Institute for a quality improvement project between January 2015 and September 2016.
But concerns remain, as is evidenced by a June 9 internal memo from Dr. Kevin Mineo, medical director for Unity Health Network, an independent physician network that earlier this year lost a contract that its division of Neurology, Neuroscience and Sleep Medicine had with Summa.
In the memo to providers, Mineo wrote that he is "increasingly concerned about continuing to refer our patients to an institution that is not focusing on quality care." He cited concerns about the nurses' recent efforts to unionize, the impact on providers of a conversion to a new electronic medical record and the use of physician extenders to see patients independently in the emergency department.
If Unity was unable to get satisfactory answers or a plan to improve some of their concerns, Mineo wrote that sanctions need to occur in which the physician network "ceases its support of Summa Health, its providers and its subsidiaries."
Representatives from Summa and Unity have since met and talked. In a statement, Mineo said that the two had a "positive initial meeting" and he considers it an "ongoing, active discussion."
Summa has met with other groups as well and is seeing "a lot of acknowledgment of the facts," Deveny said. "The question is how it will play out, so it's probably too early to tell."
In 2013, Mercy Health purchased a 30% stake in Summa for $250 million through HealthSpan, a non-religious auxiliary of Mercy. The deal was designed to bolster Summa's finances and allow Mercy to share in Summa's revenue.
Mercy has maintained a low profile during Summa's administrative and financial turmoil this year, but said through a spokesperson: "The minority stake allows for participation in the Summa Health board of directors. We are not directly involved in the day-to-day operations of Summa Health."
Mercy said HealthSpan will continue to work closely with Summa's leadership, and Summa spokesman Mike Bernstein said that the relationship remains "very strong," and the two are engaged in active conversation.
Keeping Akron locally managed and controlled is key, he said. People in the community say they want local decision making, Deveny said, but notes that they've welcomed the Cleveland Clinic "with open arms" over at Akron General.
Still, following that acquisition and Huntington Bancshares Inc.'s acquired Akron's FirstMerit Corp., local control remains important for Summa and its board, he said.
"Akron has been in a situation where we lost the health system, and now we've lost the bank, and you know, what's next?" Deveny said. His direction from the board: Not Summa.
"Summa presses on amid turmoil" originally appeared in Crain's Cleveland Business.
