When we formed Ballad Health, we were two competing systems in a region with declining hospitalization rates, no population growth and stagnant economic output. Our two most competitive hospital markets were accumulating $150 million in operating losses over five years, and growing. One rural hospital closed and others were at imminent risk.
Our healthcare spending was duplicative, while we struggled serving a population with higher death rates from cancer, diabetes, heart disease and other preventable illnesses. Our workforce participation rates are below the national average due to social-determinant issues, addiction and behavioral health needs.
And what did our two legacy systems spend their resources on? Two Level 1 trauma centers serving a metropolitan service area roughly the size of Asheville, N.C.’s MSA. Most communities that size can only support one trauma center—a Level 2. We also had two high-level neonatal intensive-care units within 25 miles of each other in a region that can barely support one. Three hospitals in one county with a population of 40,000. Two hospitals in another county with a population of 70,000, one of which was set to run out of cash within eight months.
That’s a lot of irrational duplication leading to a costly waste of resources—paid for by our employers and taxpayers.
The conclusion? We cannot decrease the cost of healthcare by sustaining the high cost of healthcare. It would take difficult decisions that we knew would be uncomfortable.
What has resulted so far?
Just a few weeks ago, one of our major employers announced that, for the first time, their employee healthcare costs actually decreased by 10%—crediting Ballad Health. Our accountable care organization is among only 21 in the nation that has brought savings to Medicare each year of the program.
What is the formula that produced results like this?
We have turned losses into gains—$100 million of which has been redirected to increasing nurses’ pay over the next 10 years—something neither legacy system would have been able to do; $308 million redirected to expanding access in rural communities, such as desperately needed behavioral health services and focusing on root causes for some of our region’s biggest health disparities.
There is also our partnership with the governor of Tennessee creating the nation’s newest rural health research center at East Tennessee State University, and new residency programs in dentistry, addiction medicine and additional mental health programs. America’s newest rural hospital opened and another new one is about to open—one that had been shuttered before our merger. We also expanded charity care to reach more low-income residents who need assistance.
What about quality? Most of the quality measures pre-selected by the states have improved. All our major hospitals have high-performing programs in Virginia and Tennessee as rated by U.S. News & World Report, and two of our major hospitals went from being ranked 10th in Tennessee to now being ranked seventh. Another major hospital was just named one of the best employers in Tennessee. And after more than a dozen regulatory and Joint Commission surveys, our hospitals have performed among the best in America.
In order to reposition the funding necessary to achieve these goals, it meant having the conviction of a board of directors and management team that understands the old model of building high-cost capacity is not the future. Redirecting resources to where they are needed, reducing costs and becoming more agile is how our nonurban system will survive and serve.
Some are not happy. Some have a vested financial interest in the status quo, while others will continue to be parochial. We understand that. But we are not alone in this. More than 250 local organizations, school systems, businesses, chambers and not-for-profits came together to form one of the largest accountable care communities in the nation—to help plan and support our efforts.
Transforming a health system, reducing cost and improving the health of a region is never easy. It requires a willingness to be criticized. But we, a local board, whose families are served by this health system, are determined to stand by this vision.
