Time for recovery and rebuilding: Kootenai Health faces financial challenges ahead.

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COEUR d’ALENE — Kootenay Health is not for sale or on the brink of financial failure.

The hospital and health care system, however, are facing significant financial challenges due to a national health care workforce crisis that Kootenay Health CEO John Ness has been warning the public about for months.

At the same time, a July 1 change in Idaho law cleared the way for hospital districts like Kootenai Health to transition from state ownership, to locally elected boards and tax authority, to nonprofit organizations.

This amendment to the law, which would give hospital districts the same option long available to county-owned hospitals, prompted Kootenay Health leadership to begin evaluating the pros and cons of such a move.

“It’s just an opportunity to make sure what we’re doing is right for the community,” Kathy Brody, chair of the Kootenay Hospital District board of trustees, said Thursday.

Nese says he’ll take it a step further and Brody agrees.

“I think our board has an obligation to evaluate whether this is a good idea,” Ness said.

Nursing shortage and COVID-19

as if Guest column published in the press in JuneNess cited a growing shortage of medical professionals, primarily nurses, as the reason for the high labor costs in the hospital industry.

“Hospitals are going to face both service and financial problems,” Ness wrote last spring. “We can’t continue to do things the way they’ve always been done.”

That hospital staffing shortage, exacerbated by the Covid-19 pandemic, was growing years before anyone in America had ever heard of the coronavirus.

A widely shared national study published in 2018 in the American Journal of Medical Quality pre-pandemic showed that the shortage of registered nurses in 2018 It is predicted that it will continue to spread across the country until 2030. It was also predicted to be worst in the South and West.

Then came COVID-19, which strained the already dire hospital staffing situation.

“It’s been an unprecedented, once-in-a-century challenge for hospitals, and at Kootenay Health, we’ve really been affected by COVID-19, not only in terms of how many patients we treat, but it’s created a lot of stress and fatigue.” ” Ness said Thursday. Many people have asked why they work in the industry… People are leaving the healthcare industry in droves.

In 2020 and 2021, the impact of the vaccine and mask mandate on the exodus of healthcare workers from the industry is less than other factors, namely burnout.

At Kootenay Health, nearly everyone meets immunization requirements, and 99% of employees’ requests for medical or religious exemptions are approved. Of the 3,700 Kootenay Health workers, only 18 remain in need of the vaccine.

The hospital’s board decided to implement the vaccination policy in response to changes to the federal Medicare and Medicaid Services Act to allow hospitals to be reimbursed for services covered by Medicare and Medicaid.

“If you’re not in compliance … you may be considered ineligible for Medicare and Medicaid, which is 60% of Kootenay Health’s income,” Ness said. “Like every other hospital in the country, we had to make that decision. I don’t know of a hospital that is understaffed.”

The financial impact and impact on regional health care — if the Kootenai Board of Health rejected the vaccination policy — would have been severe.

“Kootenai Health was closing,” Ness said.

Financial implications of traveling nurses

The need for more nurses during the Covid-19 pandemic has prompted hospitals nationwide to increase their reliance on a long-used resource to fill temporary staffing gaps — contract staffing companies that provide traveling nurses.

The American Hospital Association reported in April that 95 percent of health care facilities hired nurses from contract staffing firms during the outbreak. From January 2019 to January 2022, the recruitment of contract or travel nurses by these organizations increased approximately 120%. At the same time by 213%.

“To put it roughly, let’s say a journeyman can make $150 an hour to $200 an hour, and the average nurse can make $42 to $60 an hour,” Ness said. “So if you’re making $200 an hour as a traveling nurse, if you annualize it, that’s the equivalent of making $400,000 a year for each traveling nurse.”

Ness said Kootenay Health is now spending an average of $6 million a month on contract travelers. In the year In 2019, before the outbreak, the hospital spent $7.5 million on these workers throughout the year.

“One source of our financial problems is nothing wrong with our strategy or financial management. It’s the cost of labor and the use of contract traveling nurses,” Ness said. “It’s an issue.”

He pointed out that all this is happening when the baby boomers are retiring and leaving the workforce. The average age of a nurse in America is 50.

“And we’ve had all these new residents move into Kootenay County, 75% of whom are 65 and older,” Ness said.

These new residents are mostly out of the workforce and have more health care needs.

Every year from 2010 to 2021, Kootenay Health met or exceeded its budget targets, Ness said, and the hospital maintained an A rating from Standard and Poor’s.

This year will be different.

Like all hospitals of our size in the United States, we are expecting a budget shortfall. The entire hospital industry is facing the same problem,” Ness said.

By developing a financial turnaround plan, the hospital was able to offset the loss by identifying $35 million in savings and additional revenue. The number 1 priority is to reduce contract labor costs and fill positions with regular employees. This includes increasing pay for hard-to-fill positions, efforts to retain and recruit workers, along with other labor strategies including layoffs and more time to address burnout.

“We want to get back to growing, but it’s going to take some time. So it’s not a financial collapse, it’s a recovery,” Ness said. “We want to rebuild, recover, and then immediately go back to our original strategic plan. We’ve never changed our vision. We’ve never changed our mission.”

As a hospital district with taxing authority, the Kootenay Board of Health has the power to levy a tax to help finance the transition, but is unlikely to.

“The makeup of this board is very conservative and taxes have very little time on the agenda,” Brody said. “Even in the worst of times, he doesn’t talk.”

Public to private, new option

While addressing the financial situation at Kootenay Health is at the forefront of everyone’s mind, another issue has arisen for hospital leadership to consider.

For the first time, Idaho’s legislature and governor have created a path for public hospital districts like Kootenay Health to transition to private nonprofit organizations.

Considered in the last legislative session, the purpose of the bill, which is now law: “This bill amends the law to allow district hospitals the same options as county hospitals to lease or sell property to a nonprofit organization. Continuity of service in the community. It provides options for district hospitals to address future budget challenges.

Hospital advocates called the Liberals’ attempt to “steal” the hospital from considering the Kootenay Health Reform Act. However, the change to the law was unanimously approved by Boise lawmakers in February and March, including the state’s most conservative Republican representatives, Dorothy Moon, Chad Christensen, Priscilla Giddings and Ron Nett. Local GOP lawmakers who voted in favor included Jim Addis, Paul Amador, Vito Barbieri, Ron Mendieve, Doug Okuniewicz, Tony Wisniewski, Heather Scott, Peter Riggs, Mary Souza and Steve Vick.

There are only two large hospitals with more than 300 beds in the Pacific Northwest public hospital districts: Kootenai Health and Evergreen Health in Kirkland, Wash.

“And Kirkland, Washington and Evergreen Health will retain their hospital district as they increase tax authority. Last year they got $28 million in tax revenue from the residents,” Ness said. “Kootenai Health has not exercised its taxing authority since 1995. And it has not received any tax revenue.”

Kootenay Health is unusual and unique in that it remains a public hospital district, he said. Only eight of Idaho’s 50 hospitals are in a similar situation, and they are primarily very small, rural, critical care facilities. The dominant model for hospitals in America is the 501(c)3 nonprofit corporation, Ness said.

Brody thought it was an exciting opportunity to explore Kootenay Health. She said she doesn’t think switching to a nonprofit model will result in a loss of local control because the elected board will remain in place and future members will be appointed by the board.

“We’ve said all this time that this is not a condition for us to sell the hospital,” Brody said. “…it’s not true. There are currently no plans.

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