Last year, the National Institute of Standards and Technology recognized only one hospital among its five Malcolm Baldrige honorees. Adventist Health Castle in Kailua, on the island of Oahu, about 12 miles from Honolulu, is also the only healthcare organization in the state of Hawaii to ever receive the award. It's the highest honor given by the president to recognize excellence in the public and private sector. Adventist serves a population of 130,000 to 150,000, many of them tourists. It's a community-based medical center with 150 beds and a physicians group that takes care of about 50,000 lives. It is led by Kathy Raethel, who's been CEO since 2011. Adventist's payer mix is about 51% Medicare and 25% Medicaid. The Baldrige award wasn't Raethel's only accomplishment last year. She was also inducted into the Fire Starter Hall of Fame, the highest award for excellence given by the Studer Group. Modern Healthcare Editor Aurora Aguilar recently spoke with Raethel. The following is an edited transcript.
MH: Tell us about your Baldrige journey.
Raethel: One of the things that drew me to Castle was a commitment to quality. When the quality movement took wings in the 1980s, for a lot of people, it was flavor of the month; they'd try something and then they'd let it go. And they'd try something else. But at Castle, they introduced quality initiatives and they kept building on them. So when I got here in 2000, it was a good organization, with a lot of good results, but we weren't yet great. We really had our sights set on being in the top 10% in the country.
The Baldrige process was the thing that resonated with us, about how we could harness the good that we'd already done, how we could build on it and how we could move to much higher levels of achievement. We made a commitment to it in the early 2000s and submitted our first state application in 2003. We ended up with three state applications and awards. And by 2015 we had attained levels high enough at the state level to allow us to apply for a national Baldrige award, which we did, in 2015. We didn't get it.
So we worked really hard, and in 2017 we were the only hospital in the pool to receive the award. For us, it was really about getting to that top level of performance.
MH: What has it meant for your staff?
Raethel: There's just a tremendous amount of pride. This is not an award for me, it's not an award for our executive team. This is an award that resonates all the way to the front lines. I was traveling when I got the phone call. When I arrived back at the hospital the next day, it was a little before 6 a.m., and there was a housekeeper cleaning the floors in the administration corridor.
She put down her mop, came over to me, and said, “Oh, I have chicken skin.” That is goosebumps here in Hawaii. And she said, “I have chicken skin. We won the Baldrige award.” And for me, that was really the epitome of the award, that the housekeeper felt the joy in winning that award, just as much as I did.
MH: Your system was in the top 3% in the nation in performance under value-based purchasing. What's your secret?
Raethel: You know, that's kind of a black box calculation that the CMS does, but there are a lot of things. In the state of Hawaii, we have some of the lowest utilization rates in the country for hospital care. We're one of the healthiest states in the nation. So those kinds of things help us along the way. We've been able to almost obliterate any kind of infection or untoward events, which all add to the cost of care. And when you're able to have those not happen in your patient population, then you can see those results in the value-based performance calculation.
MH: Two challenges in Hawaii are physician shortages and serving rural areas. How are you coping?
Raethel: The state has an issue, but it's not that big for us. It is difficult to recruit from the mainland. It's an expensive place to live. But if people really want to be here, then we can provide a really good practice environment for them. Our biggest problem is that we have a lot of rural areas, and it's difficult for physicians to practice in those more remote areas, with little specialty support.
So we established a primary-care clinic about 30 miles away from here on the north shore of Oahu. We applied for and were given rural health clinic status. We're about to add a dental clinic. We have pockets of patient population that have difficult healthcare issues, just like anywhere else in the country. Some of our native Hawaiian patient groups have diabetes and are obese. We develop programs around those; we have a wellness center that focuses quite heavily on the patient populations that we serve. We have a program around childhood obesity. We have a bariatric program that helps people with medical weight loss, as well as surgical weight loss. So we try to tailor our programs to the needs of the community, as we identify them each year, through our community health needs assessment process.
MH: You hold 60% of the share for inpatient care in your market. What advantages has that given you and how has that benefited your patients?
Raethel: It keeps us viable. Being a sole provider in a community can be difficult, especially when the big community is just 12 miles away. But when you aspire to excellence, patients and community become aware of that. We have a very loyal community; I hear over and over again from our community members, “This is my hospital.”
We try to sustain that reputation. We also have a large military base not too far from us here in Windward Oahu, and we are their primary provider for emergency and urgent care. We deliver a lot of military babies here, those kind of services as well.
MH: Are those Tricare patients or VA Choice?
Raethel: Mostly Tricare. Choice has been a bit of a challenge. I won't say too much more than that. You know, it's a challenge to provide care when the reimbursement doesn't cover your costs. So we're constantly evaluating those services, and trying to work together with the military and with Tricare to make sure that the reimbursement's adequate to at least cover the costs of services. Last year, Tricare covered just over 700 inpatient stays, about 2,700 ER visits and about 1,750 other outpatient visits.
MH: How have drug shortages affected you on the island?
Raethel: We are constantly working through those processes.
We've done a lot of work with our physicians about ordering practices, around things that are in short supply. There's been a change in how we use IV fluids.
MH: Have the shortages increased your costs?
Raethel: We have seen some fairly significant increases in drug expenses in the last 12 months or so. We're also vulnerable to natural disasters: hurricanes, tsunamis and so on. We need to have an adequate supply of really important drugs and supplies, should we be cut off from the mainland. Most of what we eat and drink and buy comes in by ship. And if we were to be cut off for any period of time, we would need to have all those supplies. So we keep supplies like water in storage. And we have systems in place to make sure we can access the drugs and supplies necessary in an emergency.
MH: How are you addressing social determinants of health?
Raethel: We start with our own associates. We're the largest employer in our market except for the military, with 1,100 associates and their family members covered under our insurance. We have a living-well program, and we really encourage healthy lifestyle. People get incentives to enroll, and we get good results from that program. We measure biometrics every year for our associates. That's where we start. We participate with organizations like the Boys and Girls Club, teaching children about vegetables—it's amazing how many kids are not familiar with commonplace vegetables—and teaching them how to eat healthier.
We have accountability and responsibility to help make our communities healthier. A few years go we went through a rebranding that looked at how we were structured. We looked like a hospital organization, but we want to be more of a community-based healthcare organization. Castle Medical Center still exists, the hospital is still here and we provide the same services, but Adventist Health Castle is bigger than a hospital. More expansive.
MH: You've been quoted saying that people shouldn't aspire to the title of CEO, rather to the journey. Given all of the turnover happening in the C-suite currently, how does that relate to today?
Raethel: I sometimes meet people who think they just want to be in charge. And it's not really about that. Success comes when you work hard at the task at hand, or the job at hand, and you excel in whatever comes in front of you. That also means going through doors that open for you with gusto. When you are given an opportunity, you should grab it with both hands, and you should excel in that role.
I think that leadership comes to those who excel, rather than saying at the start of your career, “Well, I want to be the CEO.” It's just a different way to get to the same place. It's really about aspiring to be the best that you can be and make the biggest contribution that you can, in whatever role that you find yourself in.