Planning for Uncertainty: Wills Memorial Hospital, Washington, GA
Wills Memorial Hospital in Washington, Ga., found itself in the midst of a perfect storm five years ago, when events good and bad converged. The hospital had completed necessary renovations, including a new patient wing, but was left with a $13 million bond debt. This debt obligation combined with years of significant losses and new healthcare regulations left the hospital in a bad spot, says hospital CEO Tracie Haughey: “We knew we were sinking and needed help.” A comprehensive operational assessment by CHC Consulting and its accompanying action plan delivered the hospital from the storm and provides ongoing guidance.
Wills Memorial is a 25-bed critical access hospital that draws from three counties. Roughly equidistant from Athens and Augusta, the hospital’s town of Washington, Ga., is well-located yet somewhat remote. By the time CHC Consulting stepped in, the hospital had been running not on operating cash but reserves — to the tune of $1 million annually over several years.
In addition to servicing debt, complying with new regulations from the Centers for Medicare and Medicaid Services (CMS) contributed to declining inpatient hospital stays and worsening cash flow problems. The hospital went from an average daily inpatient census of 18 to around 10, with swing beds accounting for the majority of its current patients.
The hospital in 2010 had a 50-50 makeup of inpatient and outpatient visits; today, the ratio is 75-25 in favor of outpatients. Hence, changes in healthcare forced hospital leaders “to rethink the whole revenue philosophy” of critical access hospitals, says Haughey, who also serves as CFO.
The hospital initiated an RFP process in order to consider a variety of options, including a partnership with a larger entity. Eventually leadership found the perfect match in CHC Consulting.
“CHC understands, as we do, how important it is to stay strong so we can continue to serve our community,”
Tracie Haughey, CEO, Wills Memorial Hospital
At the start of 2015, “CHC came onsite for the better part of a week and went through every aspect of our hospital’s operations you can imagine,” says Haughey, adding that the thoroughness was necessary and appreciated.
This operational assessment produced a 100-page report with specific actions required to address inefficiencies and improve revenue. Action plan items were prioritized as low, medium and high. The result was an adaptable step-by-step guide of “what we needed to do to right our ship,” Haughey says. “It was a lot of work but no one expected it to be easy. CHC was there every step of the way.”
The first steps involved a close look at the supply chain, an area that would provide significant—and highly motivating— results in a short period, as well as labor productivity improvements. Specific areas of focus included:
- Poring over vendor contracts for savings opportunities
- Implementing supply chain improvements
- Completing the first Chargemaster update in 17 years
- Increasing productivity and workflow efficiency
Onsite assistance followed by regular debriefing and planning calls with CHC Consulting kept the action plan on track and cemented positive cultural changes taking place as the hospital’s efforts began to pay off.
“Our culture needed to shift with the times, and it did,” Haughey says. “Because of CHC’s educational approach, everyone was receptive to new ways of doing things. You can’t entirely quantify this shift, but the influence of a positive culture on a hospital’s success or failure should not be overlooked.”
As for monetary results, joining CHC Consulting’s group purchasing organization (GPO), now named CHC Supply Trust, instantly gave the Tier 4 hospital access to Tier 1 pricing. With membership also came the opportunity to adjust eligible vendor contracts to GPO pricing for a relatively quick and easy savings of $100,000.
Pricing analysis and benchmarking resulted in a streamlined Chargemaster with about 2,000 lines (down from 7,000), which enables the hospital to more accurately capture charges and collect revenue the facility is due.
Supply chain savings were seen almost immediately, but “the long-term effects of the Chargemaster cleanup, pricing analysis along with productivity improvements will offer the best return over time,” Haughey says.
“Rural healthcare will continue to be a challenge,” the seasoned hospital executive says. “CHC educated us in areas where we were lacking, and they brought resources to the table we didn’t have. From CHC, we learned how to take positive steps that resulted in measurable improvement and the ability to successfully navigate uncertain times ahead.”