How do you balance inpatient and outpatient expansion?
We will be hospitalizing a smaller percentage of patients [as more care is outpatient-based], but they'll need higher-acuity services. That means we need to think about stepdown services, such as rehabilitation. We’re trying to build that flexibility into our physical expansion plans.
Are you looking to expand through mergers and acquisitions?
Not really. Houston is a big area. There's plenty for us to do. That's not to say that we don't need to be thinking about that as we go forward—there’s always potential benefit in terms of scale. But right now, we don’t see anything close in terms of an M&A opportunity that would drive us more toward value.
What types of partnerships are you pursuing?
One of the significant partnerships we've created is with Accent Care, which focuses on home healthcare.
For years, we’ve provided care for the athletes at the University of Houston, which recently established a medical school. We’re not doing anything less with University of Texas, which is our primary academic affiliation. If you look at the different colleges and universities that our employees have attended, University of Houston is No. 1.
University of Houston has a very strong standing with the business community in Houston, so that's another aspect of it. The University of Houston has an incredible research capacity and capability focused on public health. We’re working with it to look at the issue of maternal mortality, which is a huge issue in Texas.
What investments have you made in recruitment and retention?
We've spent a significant amount of time this year developing pipeline programs, where we create entry-level positions and pay for education, not just provide loans. There's no out-of-pocket expenditure for tuition and books. For instance, we help people advance from a patient technician role to a licensed vocational nurse or registered nurse. That encourages people to stay with us. We’ve worked with the educational institutions to allow people to stay in school longer so they can work while getting an education. We have a peer-to-peer support program called Code Lilac, which we recently expanded to all of our hospitals.
We also have a collaboration with the United Way to help folks find entry-level positions and progress through the organization. We can use these types of programs to attract employees who historically haven’t considered entering healthcare.
How are Medicaid redeterminations affecting Memorial Hermann?
It’s a huge challenge for us. Almost 1 in 4 people in Houston are uninsured today, and our state has not adopted Medicaid expansion. We certainly are seeing a shift away from Medicaid to exchange products. Financially, we can deal with that. But when you think about 1 in 4 patients being uninsured, we're essentially at risk for those patients.
I was recently visiting with one of our colleagues from the University of Chicago who said that if the uninsured population is using our emergency rooms to access specialty care, we're all going to go broke. That's absolutely right. Being out in the communities through navigator programs and establishing access to primary care through federally qualified health centers makes a lot of sense for us.
How is the current financial environment affecting negotiations with commercial insurers?
We’re experiencing increased labor costs, supply costs and pharmaceutical costs, and payers are turning around and telling employers, "I’m sorry, we have to raise the rate for your employees 10%." That’s a hard conversation to have. We're trying to be collaborative, such as by working with them to push more toward value-based reimbursement. A big part of driving value is lowering cost. We’ve worked really diligently to try to take $1 billion out of our cost structure over the last five-plus years.
How are you cutting costs?
We’re making a huge investment in analytics. Being able to predict better will further help us reduce costs. Clinical care redesign is another way: Clinical practice committees work with us to define efficient approaches for delivering care. That covers everything from the labor involved, length of stay and the supplies we use.
What do you make of the new competitors in healthcare?
We are evaluating new competitors like Amazon and One Medical. What portions of the population are they going to impact? Well, probably not the uninsured, and not the members of the Houston population that are living paycheck to paycheck. But what does that do to us? We're asking ourselves how we need to change our delivery configuration to respond to not only our current situation or our projections for the future in terms of aging of the population, but to new competitive entrants.