The challenges facing children's and rural hospitals

Julie Lautt, CFO of Avera Health, and Gordon Edwards, CFO of Akron Children's Hospital 

Photo: Susan Morse/HFN

LAS VEGAS - Children's and rural hospitals have the same challenges as any other health system and face issues specific to them.

"Our patients don't schedule their own appointments or pay their bills," said Gordon Edwards, CFO of Akron Children's Hospital. "Parents don't want to make phone calls to schedule. They want to do it on an app. We have the same nursing, reimbursement challenges. Over half our budget is Medicaid."

Akron Children's has two hospital campuses that serve the eastern part of Ohio. It's a competitive market that includes the Cleveland Clinic.

Julie Lautt is CFO of Avera Health, a regional health system based in Sioux Falls, South Dakota, spanning 37 hospitals across five states and 72,000 square miles.

"We've had to figure things out, how do you keep care local," Lautt said.

Telehealth has been an important part of care access for over 30 years. 

"We've had to be pioneers in telemedicine," Lautt said. "We started in 1993."

The session, "Health Leader Panel: Insights from the C-Suite" at the HFMA Annual Conference, was moderated by Kevin Holloran, senior director at Fitch Ratings.

Holloran asked about one of the biggest issues affecting all health systems: workforce shortages.

Remote staffing has helped keep people local rather than requiring them to come to Sioux Falls, Lautt said. 

Avera has been doing recruitment in high schools and has created its own internal traveling program for nurses.

Since COVID-19, people don't want to come back to the office, Edwards said. To attract and keep staff, Akron has rolled out a better benefits package that includes mental health benefits and a competitive salary.

An aging baby boomer population is helping to fuel workforce shortages as that generation retires. The average age is 71 and by 2030, many will be over the age of 75, when healthcare needs escalate. 

This is contributing to another major hospital trend, the shifting payer mix away from the more lucrative commercial reimbursement to more government pay from Medicare and Medicaid.

Competition from disruptors such as retailers, family health centers, pharmacies and quick labs means finding ways to compete, Lautt said.

"Access is a big one and making it quick and easy," she said.

Edwards said: "I think disruptors are always looking at where we're not performing well. We've seen disruptors come in and realize it's harder than they thought."

AI and automation have helped free up physician time, and physicians are the health system's biggest expense, Edwards said.  

Denials and prior authorizations tie up administrative time.

"Ultimately 1% is actually denied," Edwards said. "All the resources going in toward denial, it's a colossal waste of energy."

Currently, there's perverse incentives, rather than a working together of providers and payers, he said.

Medicare Advantage is finally getting some of the transparency it needs, Lautt said.

"I think there's enough groundswell that it's finally coming to light," she said. "Many in our market have stopped taking MA at all."

"We're focused on our mission," Edwards said. But on the finance side, he said, "how do we balance it all?"

Email the writer: SMorse@himss.org

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