BusinessReport.com

THE PARTICIPANTS

Teri Fontenot, CEO, Woman’s Hospital

Bill Holman, CEO, Baton Rouge General

Randy Olson, CEO, Lane Regional Medical Center

Mitch Wasden, CEO, Ochsner Medical Center Baton Rouge

Scott Wester, CEO, Our Lady of the Lake Regional Medical Center

Health care is full of challenges these days—coordinating the schedules of five hospital CEOs for a roundtable discussion, for instance, was no easy task.

But Teri Fontenot of Woman’s Hospital, Bill Holman of Baton Rouge General, Randy Olson of Lane Regional Medical Center, Mitch Wasden of Ochsner Medical Center Baton Rouge, and Scott Wester of Our Lady of the Lake Regional Medical Center joined Business Report to talk about what’s new at their respective institutions, the difficulties of running a hospital in today’s environment and reasons for optimism.

Question: Bring us up to speed on what’s going on at your respective institutions.

Bill Holman: We have completed the $87 million expansion at our Bluebonnet campus, so we have more than doubled the square footage on the campus and increased the bed capacity from 105 beds to 203 beds. We have a patient care tower that has 60 new general medical surgical beds in it, and a nine-bed neonatal intensive care unit and a 19-bed labor and post-partum unit. In the critical care tower, we have a 24-bed intensive care unit as well as a 24-bed emergency room. At our Mid City campus, we continue to look at building programs and services on that campus to meet the needs of West Baton Rouge and north Baton Rouge and downtown.

Teri Fontenot: The big story at Woman’s Hospital is the relocation, the replacement facility. We broke ground in early June, and we are trying to stay under our price tag of $299 million and so far we’re having pretty good success with that. We’re going to be building a $50 million, 260-square-foot office building—actually it’s twin towers—for physicians and outpatient services. The whole project right now is about $350 million. We’re on schedule, the construction’s going well and we hope to open in January of 2011.

Back to present day, our [patient] volume statistics are holding up. They’re doing better than projections. We’re in our seasonal high. May, June and July is typically a high-volume time for us, for women’s and infants’ services. We’ve added three new programs since January. We started bariatric surgery, which has been successful, and then we bought a da Vinci robotics system, which is a big chunk to bite off, but the physicians are really liking it as they become trained to use it. We use it for gynecological procedures, though it has other applications. We just started a couple months ago providing gastroenterology procedures. We continue to try to be very efficient and productive at our current location. We’re not just waiting till the new hospital opens to continue to implement and execute our strategic plan.

Scott Wester: The Lake over the last couple of years has established a new strategic vision called Vision 2020. We’re about halfway done with what we call our onstage look of our hospital’s beds. We’ve taken three rooms and made them into two rooms. We’re about halfway completed with that project. Our new tower expansion, which is five additional operating rooms, just began construction about three months ago. That’s going to be about a year and half worth of construction. One of the largest things we’re continuing to plan is our Livingston site. We have about 200 acres of property in Livingston right on the Walker exit. We’re beginning the mitigation phase of that and hopefully will begin the hard construction sometime in the summer of 2009.

A lot of things we call offstage with the Vision 2020 plan, some of the things with being a facility that’s almost now 30 years old at the Lake—generators, air conditioning, elevator systems—all that’s getting upgraded. So it’s a very nice feel for the things we’ve done over the last couple of years to upgrade the whole main campus. We announced last week we’ll have a strong partnership with Surgical Specialty Centre, located on Bluebonnet, and hopefully we’ll get all that completed by Sept. 1.

Randy Olson: Probably the biggest thing we’re doing is a three-story medical office building. It’s about 60,000 square feet, which is big for Zachary. One of the problems I ran into was trying to recruit doctors to quality office space. We didn’t really have any, so we built one building that we opened almost two years ago and we already see that we need more. So what we’ve done is this three-story medical office building. The first floor is going to be our cardiology program primarily, and then we’ll have some diagnostic capability there as well. The second floor is primarily office, ob-gyn and others. We’re looking at the feasibility of moving endoscopy to the medical office building’s third floor, which will free up some inpatient areas. Our medical office building should be done by about the first of September.

Then two years ago this month we signed an agreement with Cardiovascular Institute of the South for cardiology services, and today we opened our cardiovascular center. Today [Aug. 4] we started with our 64-slice CT scan, which is in one of our labs. In our other lab we have a Toshiba dual plane [X-ray system], which can do hearts as well as peripheral vascular work. All that’s opening today and tomorrow [Aug. 4-5], and we’ll have an open house the 25th of August. It’s a beautiful suite. It’s 9,200 square feet.

Probably the biggest thing that we continue to work on is our quality initiatives. We need to make sure our quality indicators are as good if not better than the people in Baton Rouge. So we really watch those very carefully. Bigger to some people is always better, but we’re trying to say it’s not necessarily true.

Mitch Wasden: Our biggest news is that about seven months ago Ochsner finished buying the other 50% of Ochsner Medical Center Baton Rouge. Some people don’t realize that actually we were in a joint venture for a couple of years with a company out of Nashville. It got to the point where it seemed like it made sense for us to buy the other 50%. We started with a large medical group, about 100 providers if you include midlevels and our specialty and primary care group. We’ve really been trying to grow a lot of programs at the hospital as well as grow some of our satellite clinics. This next year we’ll look at rebuilding our Prairieville clinic and getting that to be a bit larger as well as continue our investment in robotics.

Right now we’re fairly deep into robotics in gynecological surgery. We have one of the biggest programs in the country in terms of volumes. What we’d like to do for this next year is actually take that and do more urologic cases as well so that we get more use out of our robot. We get a lot of use out of it right now but we’d like to do some other specialties. We’ve been pretty focused on renovation at our O’Neal campus. We completed a $2 million renovation of the medical office building space. This next year we’ll be doing more renovations to patient rooms. The last couple of big programmatic items: Last year we started our open-heart program, and the volumes have grown there. We’ve just grown our cardiology group by two more physicians.

Q: What’s making hospital CEOs grind their teeth these days?

Holman: Probably two that stand out are reimbursement—whether it’s the federal government with Medicare or the state program with Medicaid. I refer to Teri as the Medicaid queen because she probably has the largest Medicaid population of any hospital in the state. I really do believe reimbursement is a major issue. Probably the other common thread that we all have is the charity health care system—how that care is presently delivered and how it should be delivered in the future.

Fontenot: I certainly don’t disagree with what Bill said. There’s so many different dynamics going on. There’s a lot of moving parts. I guess I hear a lot about the challenges of physician relations in employment—some of the things that Randy talked about. And that is, particularly as there are more and more women becoming physicians, they’re looking for places to practice where they don’t have to run small businesses. They don’t have to fool with the administrative hassle. They’re in large groups where they take calls infrequently, where they simply are an employee. They get a paycheck and they go home and raise their families or work part time if they want.

We recently completed a strategic plan, and one of the key parts we really wanted to understand and analyze was the generational differences and the future long-term needs of physicians. Every one of us [hospitals] has got to have a vibrant medical staff in order to exist. That’s something that you have to plan many years in advance: having a structure in place where physicians want to practice at your facility and being flexible with their needs. And then on the reimbursement piece, part of its government but also just simply the fact that costs are going up faster than general inflation. There’s just so much cost-shifting to the private payers you can do. At that point employers start seeing their premiums go up, and they start dropping coverage, and then the hospitals have more uninsured patients to treat. It’s a spiral that’s out of control.

Q: Hospitals shift costs to private insurers to offset inadequate Medicaid reimbursements and bad debt from treating the uninsured, but you can’t ramp it up forever. Has cost-shifting gone as far as it can?

Fontenot: I think so. Every year the number of uninsured goes up and you see employers raising the deductibles or co-insurance amounts, which means that becomes a bad debt to some of us if the person who’s got insurance can’t pay their out-of-pocket costs. It’s almost the same thing as having an uninsured patient. Or the employer decided they just can’t afford that benefit anymore and they don’t offer it.

Wester: Bill said it, with reimbursement probably being the first major issue, and Teri, too, that salary and other outside costs are going higher than what the revenue stream is on a cost-per-unit basis. We have a continued shortage of nurses and other health care professionals, which drives up labor costs, but we’re just not getting any relief on the state side, the federal side or even from the commercial payers.

Holman: We beat up each other, seriously. If Our Lady of the Lake does an across-the-board raise, let’s just say with nurses, I’ve got to match that or I’m going to lose my nurses, and who does that get passed on to?

Fontenot: They’ll switch for a dollar an hour.

Wasden: Because with $4 gas you have to.

Olson: About 12% or 13% of our business is Medicaid. The way the Medicaid system started years ago, there were different tiers. Lane was kind of a sleepy old hospital when those tiers were established. We’re not your father’s Oldsmobile anymore, and we’re still in the same tier of per-diem payments, and we just can’t seem to get out of that.

Wester: And that’s not just Lane. A lot of our Baton Rouge hospitals I think have different tiering than in other parts of the state. How we get paid on a medical day in Baton Rouge is different than a Medicaid patient that might be in Alexandria. They’re predominantly higher outside of Baton Rouge. We’ve addressed it through [the Louisiana Hospital Association] and through the state. LHA’s trying to get parity across the state related to Medicaid payments, but just hasn’t been able to push anything through the Legislature.

Olson: Just for [Lane] alone, Medicaid’s about a $4 million shortfall from what it costs us to take care of our patients to what we get paid. You can’t make that up in volume. If you’re losing on one you’d lose more on hundreds. The other thing, too, is just adequate staffing. Many years ago people flocked to the health industry because it was a great profession. But nowadays there are so many other options. Plus the shifts: We’re open 24/7, 366 days a year it seems like. People are looking for other places to work. There’s a lot of competition out there for the same labor that we’re looking for, especially some of the untrained labor.

Last but not least is the LSU issue. Because we’re fairly close to Earl K. Long, we get a lot of the patients that historically had gone there who now choose not to go there because it’s kind of a mess. But the money still goes to the charity system. But the patients come to us. That’s just another bad debt writeoff, but I’m not sure people are hearing.

Q: Louisiana is supposedly taking its first steps toward a Medicaid overhaul. Does the administration feel your pain?

Holman: We’re very fortunate that we have a new governor who is well-versed in health care. I think that he was very fortunate in recruiting an individual [Alan Levine] outside of the state to come to Louisiana to be our secretary of health and hospitals, who is a former CEO of a major health care provider in South Florida. Does that mean that it’s going to be utopia? Absolutely not. He still has to work within a budget. But I think he has a better fundamental understanding of what our concerns and issues are than previous DHH secretaries.

Olson: We do have a problem with the Legislature. There are so many new faces because of term limits that it’s going to take us a lot of time, each and every one of us, to educate them on what the health care issues are. They’re just inundated with other stuff, and I think you saw that through the legislative session. They spent probably more time and energy on their own darn pay raise then they spent on anything else. And they expect us to do the educating I think. That’s an issue.

Fontenot: One of the concerns I have is there continues to be a focus on bricks and mortar. In my opinion, until there is a collective agreement among all the stakeholders and decision-makers about what model we’re going to implement, it’s kind of like we’re starting in the middle rather than at the beginning. There’s no agreement.

Q: Anything else?

Fontenot: Since there’s a real focus these days on the economy and contributors to the economy, I think that health care has long gotten short shrift. Right now in the state of Louisiana, there’s over 100,000 employees in health care and the payroll is millions of dollars. Nationally, health care represents about 17% of the GDP, and it’s only going to grow as the baby boomers get older. I think there needs to be a better understanding of how health care—and hospitals and physician practices in particular—contribute to the overall economy. When it’s not funded adequately, not only does it affect the health of the population but it also affects the health of our economy.

Q: As for staffing challenges, Louisiana has launched a big workforce campaign. Will that help?

Holman: I believe so. Through some of the training programs that are being established, the expansion of some of the programs at the professional level and at the technical level, an increase in the volume of students that are enrolling in these programs—those will benefit health care providers.

Q: Louisiana Medicaid reform, as well as the national debate on how to fix health care, is about bringing sense to an incredibly fragmented, wildly inefficient and expensive “system” of care. What’s the answer?

Fontenot: The [American Hospital Association] has been working on this for two years now to come up with some kind of consensus position so they can attack this problem of the uninsured with the intent of making it a presidential campaign issue. There are a lot of models out there, either other countries or something at the federal level that could be brought down to the state level.

Wasden: I don’t know how you all would contrast how you feel today versus how you felt when health care reform was being pushed by Hillary Clinton the first time, but I’ve personally noticed a big difference in the attitude of hospital administrators, physicians and other people. Back then we were actually afraid of what might come out of it. Now there’s almost a sense of desperation, where almost anything could be better than what we’re going through now from a payer standpoint and all the rest of it. I think most industries only achieve transformation after an intense period of pain. As much as we hate $4 gas, what’s it driving? It’s driving more hybrid vehicles, hydrogen vehicles. It’s driving this paradigm shift.

Q: As a country, are we going to be forced into a single-payer system like Germany has?

Fontenot: And France does it, too.

Holman: I’d have to look and see what their outcomes are.

Wasden: Usually in Germany or some of these other countries, really the single-payer system is just a safety net. Most people will have a supplemental plan that you can upgrade. I don’t think it completely does away with the private insurance market. If you’re at a good employer, they may give you secondary insurance that covers things that the state plan doesn’t. In Germany, if you’re on the state plan and you need a procedure, you may be waiting three or four months, but if you have private insurance they move you in quicker. We hate that idea in America because we just think that’s so wrong. But it doesn’t matter what country you go to, there are always different tiers of health care depending on your ability to pay. There’s no such thing as a system that’s not tiered.

Fontenot: There’s an old axiom in health care that says there’s three components: quality, access and cost. Choose the two you want. You can’t have all three. We’re still working on all three, and that’s why we’re floundering a little bit.

Q: Shall we end on a positive note?

Wasden: We probably just sounded like a bunch of complainers this last hour, but this is a still a noble industry. It’s a great industry to have a career, whether you’re a nurse or med tech or whatever. You look at some of the scientific advances in health care and they continue to just blow you away. Health will continue to be a great industry, and we’ve just got to get through this snag.

Olson: Every one of our colleagues is pretty resilient. We take a punch here and a punch there and we come back. How many times have the “rules” changed in our careers?

Wester: I think the Baton Rouge region is very fortunate to have the caliber of health care it does. It’s very good, if not phenomenal, compared to like-size cities. I think we do have a wonderful opportunity to help lead the charge of whatever reform road we’re going to take.