Ministry Configuration: A Case Study of Lourdes Health Network

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Ministry Configuration A Case Study of
Lourdes Health Network

• Laura S. Kaiser
• James Dover
• John Serle

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Background

• At the December 2002 joint meeting of the Board
  of Trustees and Sponsors Council, strategic
  discussion was initiated on the development of a
  System-wide Ministry Configuration Strategy.
  Ascension Health leadership was charged with the
  responsibility of pursuing the development of a
  strategy.
• The work was initiated by, and moved forward at
  the direction of the Board of Trustees and
  Sponsors Council.

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Need for a Ministry Configuration Strategy

• The Ascension Health Sponsors Council and Board
  agreed that Ascension Health needs a Ministry
  Configuration Strategy at both the System and
  Health Ministry level to
• Strengthen the Catholic health ministry in the
  United States
• Position Ascension Health to be a strong, vibrant
  Catholic health ministry distinguished by its
  major contribution to Catholic healthcare
  commitment to the poor and vulnerable
• To provide an ongoing tool for continual
  evaluation and management of health ministry
  positioning.
• The work called for careful review of our
  existing configuration and of opportunities for
  growth and investment to ensure we are well
  positioned within our current markets.
• This work also would inform capital allocation
  decision making in the capital constrained
  environment.

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Ministry Configuration Purpose
Objective
Outcome

• Proactively develop a Health Ministry
  configuration (e.g., location, type, etc.) that
  ensures a vibrant Catholic system
• Accomplished through rigorous analysis and
  discussion among leaders at both System and
  Health Ministry levels

• A clearly articulated strategy for each Health
  Ministry based on their role within the System
  that is responsive to community needs in their
  respective markets
• Will lend additional focus to capital allocation
  and strategic opportunity assessment

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Matrices Elements

• Demographics
• Household Income, Projected Population Growth, RN
  Shortage Rate
• Pricing Flexibility
• Hospital Charge Index, Average market Hospital
  Occupancy Rate
• Competition
• Payor Environment
• HM Financial Performance Financial Strength
• Long-Term Debt to Capital
• Days Cash on Hand
• Effectiveness of Capital Operations
• Operating Margin, Operating Cash flow to Net
  Fixed Assets, Average Medicare Case Mix, Hospital
  Cost Index
• Evidence of Growth
• Three-Year Growth in Net Patient Revenue per Adj.
  Discharge, Level of Local Competition

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Ministry Configuration Process
Stakeholders
Timing
Task
Implementation
6/04-Present
All
AH Board Sponsors Council
Approval of HM Strategies
6/04
Final Report Preparation
4/04
Steering Committee
AH Board Sponsors Council
Interim Report to Board Sponsors Council
3/04
Work Team, HMs, Sponsor Liaisons
Develop HM Strategies
1/04-5/04
Dialogue
Evaluation and Assessments
9-12/03
All
Health Ministries Profiles Other Analysis
Steering Committee Work Team
Sustainability criteria
Strengthening Catholic health care
3-9/03
AH Sponsors Board
Approval to Proceed
3/03
Principles and Criteria
Goals Objectives
AH Sponsors Board
1-3/03
Process
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Ministry Configuration UpdatePasco
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Lessons Learned System Perspective

• Solid and ongoing communication is essential
• Strike delicate balance between involvement and
  directing ministry
• Involvement early to help facilitate process and
  direction
• Provide guidance on System direction and strategy
• Foster sense of belonging with Ascension Health

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Ministry Configuration The Early Work
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How Do You Get A Board To Let Go Of Current
Configuration?

• Confront reality
• Engender trust then seek common vision
• Utilize a strategic planning process that has a
  look forward approach to external market
• Assure all management metrics are at best
  practice before looking to change vision
• Work with informal leaders on the board to insure
  they understand the challenges facing the
  organization
• Create the same environment for the Board and
  Stakeholders that will lead them to the same
  conclusion
• Without this, the board will not buy in

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Lourdes Health Network Current State 2000

• The Need to Stabilize
• 3.6 million loss in 18 months
• Negative cash flow of 300K per month
• 22 days cash on hand
• Owed 13.5 million
• 11.0 million equity
• Employed Physician Network losing 1.8
  million/year
• Local competitors outspending LHN 601
• 47 Medicaid/SSI eligible Medicare/Medicaid 68
• The Call
• CMS revoking DSH status - 5.2 million owed

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Board Education

• Sustainability Possible Models
• Turnaround
• Sale to Ascension Health
• First Profitability in 3 years
• Integrated Strategic Financial Plan
• Current configuration not sustainable

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Board Education

• Strategic Planning Process
• CAH considered not feasible
• Revised vision smaller and relocation niche
  vision
• Board rejects vision based upon
• Relocating the hospital considered abandonment of
  the local community
• Emotional tie to the 86 year old building and
  location
• Medical Staff Ownership of nearby MOB . . . No
  value if the hospital moves
• Ascension Health offers to provide Discernment
  Day to search for new vision

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Discernment Day

• Fall 2003, Sr. Jean DeBlois, CSJ, Sponsor Liaison
  facilitates
• Day of Spiritual Retreat and reflection of all
  positions
• Final decision to maintain Catholic Health Care
  but no commitment to any one model
• Keep looking for alternative that meets needs of
  the community yet is financially sustainable
• December 2003, The Answer to Our Prayers
• CMS Notification of change in CAH regulations and
  criteria
• Board Initial OK to pursue detailed analysis
• CAH analysis utilizing an expert in modeling CAH

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Once the Decision Was Made

• January 2004, Due diligence begins
• Full Board, dedicated meeting authorizing
  Administration to evaluate feasibility of
  conversion
• Due diligence January through March 2004
• April 2004, Application submitted
• Board authorizes application to Medicare Rural
  Hospital Flexibility Program (aka Critical Access
  Hospital Program)
• July 2004, Ascension Health
• Board authorizes submission to Ascension Health
  Board and Sponsors Council for conversion to CAH
• September 2004, Approval
• Ascension Health Board and Sponsors Council grant
  approval
• February 2005, Critical Access Hospital begins

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Critical Access Concept Buy-In

• Extensive Communications Campaign CEO must
  manage outside relationships every step of the
  way
• Dialog with competing hospitals and the community
• Informational communication with Bishop
• Solicitation of informal leaders re the need to
  change
• Carry the message of 35 beds or no beds
• Ascension Health re CEO succession planning to
  identify CAH leadership talent
• Do not assume that you as current CEO have what
  it takes to lead the new vision
• Operational Transition Team assign best detail
  person to oversee
• Joint Leadership Retreat to develop operational
  plan

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Lessons Learned

• Never underestimate the attachment of
  stakeholders to bricks and mortar
• To convince medical staff, you must have a long
  term respected member of the staff champion the
  revised vision
• Strategic Planning do not use a sub-committee of
  the board, make it the committee of the whole
• Administrative team needs to know up front what
  role they will have when transformation of
  organization is complete
• Sponsors on the board work directly with each
  one on revised vision
• Do not assume one speaks for all

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Lessons Learned

• Communicate, Communicate, Communicate
• 1 job as CEO in this process is as Chief
  Communications Officer
• Communicate with
• Board
• Medical Staff
• Employees
• Community
• Sponsors
• Bishop
• Corporate Office
• Media (Newspaper, TV, Radio)
• Congressional Representatives
• Local City Officials
• Other Power Brokers

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Ministry ConfigurationThe Implementation
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Implementation

• Conversion to CAH began February 1, 2005,
  implementation required
• Continued communication plan
• Active management of employee, medical staff
  concerns
• Architectural changes needed in nursing units
• Financial focus
• Task Force disbanded May 2005

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Where is Lourdes Now?Financial
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Where is Lourdes Now? Employee Satisfaction

• Turnover Rates
• 2005 CY 11.3
• 2006 CY 11.8
• 2007 CY 8.11 annualized
• Employee Survey Question I believe this
  organization is headed in a positive direction
• FY 2005 76.1
• FY 2006 85.2
• YTD FY2007 84.6

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Where is Lourdes Now? Employee Satisfaction

• Workers Compensation claims
• FY 2005 45
• FY 2006 30
• FY 2007 13 annualized
• Patient satisfaction survey Overall Rating of
  LMC
• FY 05 85.0
• FY 06 86.3
• FY 07 YTD 85.8

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Cost Report

• The Cost Report takes on new meaning
• Learning curve to optimize CAH methodology
• Staff training
• Mini cost reports
• Accurate forecasting month-to-month dependent on
  current cost, payor mix, and volume analysis
• A good day at a CAH is not necessarily a good
  day conversely, a bad day is not necessarily a
  bad day

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Dynamics of Critical Access ReimbursementCapita
l Projects

• FY05 Begin Women Childrens Center planning
• FY06 LMC Medical Record remodel
• LMC High Efficiency Boiler
• LMC Fixed MRI
• LMC Observation Unit
• LMC Doctors Lounge
• LCC Adult Unit
• FY07 LCC Adult Unit
• Pulmonology Clinic remodel and move
• LMC Chiller
• LMC Admissions/ER/Lobby
• LMC Interiors Upgrades
• LMC Parking/Access/Landscaping
• LMC Ambulatory/Surgery

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Dynamics of Critical Access Quality

• State of Washington requires participation in an
  outside organization for peer review
• The Rural Health Quality Network (RHQN) is the
  primary organization in the State
• Membership in such an organization is a CAH
  requirement in Washington State to assure
  adequate peer review
• The peer review by RHQN has benefited Lourdes
• Opportunities for benchmarking with similar
  organizations

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Dynamics of Critical Access Strategic Planning

• Strategic Positives of CAH
• Embarked on analysis to transition several
  physician practices to Hospital Based Clinic
  status to recover costs under CAH
• As Medicare and Medicaid are positives under CAH
• Lourdes is able to increase access to care for
  these patients
• Lourdes moved off the radar of competitor
  hospitals

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Dynamics of Critical Access Medical Staff

• Positive for Recruitment and Retention
• Transfers from competitor hospitals
• Physician Lounge remodel
• Improved food, amenities, availability
• Annual Physician Appreciation Dinner
• Christmas gifts

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Challenges Encountered

• Uncertainty among employees, Medical Staff, and
  community
• Philosophical changes for the Board, Medical
  Staff, and employees
• Financials and recovery
• Spending on improvements
• Positive and negative perceptions
• Bed utilization
• Admission/discharge bottlenecks
• Reserved beds legitimate or not
• Organizational credibility in the community of
  being a real hospital
• Effect on senior management and leadership

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Challenges Encountered (cont.)

• Concern among employees for
• Their ongoing employment
• New responsibilities as nursing units were
  combined
• Required re-training and cross-training
• Challenges related to 25-bed limit length of
  stay, State decision related to extra beds,
  distinct part unit and definition of beds in
  Observation Unit
• Initial fluctuations in quality due to staffing
  and cross-training

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Lessons Learned

• Needed stronger Communication Plan for internal
  and external customers do it early and often
• Needed more comprehensive on-going education of
  Medical Staff, employees, and Board for improved
  understanding of what a CAH is and does
• Needed better plan for care model, bed
  utilization management plan, and staffing plan
  supported by staff

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Conclusion

• The conversion of Lourdes Medical Center to a
  Critical Access Hospital has allowed Lourdes
  Health Network to become a stronger, financially
  viable organization
• As a financially stronger organization, Lourdes
  Health Network is able to improve access to care
  for Medicare and Medicaid clients and for the
  most vulnerable clients needing mental health
  services
• The reconfiguration of Lourdes Medical Center has
  stabilized and extended Lourdes mission in our
  community

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Questions?