Michael Slubowski talks candidly about the future of healthcare and rising costs for nonprofit health systems.
Editor's note: This article appears in the June 2023 edition of HealthLeaders magazine.
With the COVID-19 public health emergency (PHE) coming to an end in May, nonprofit hospitals and health systems, which are already facing a myriad of challenges, will have to face even more as regulations get stricter and costs continue to rise.
Among those health systems to be affected is Trinity Health, a $21.5 billion nonprofit Catholic health system that operates 88 hospitals across 26 states. Recently, the health system posted a financial loss of $298 million as the rise of expenses outpaced revenue coming in during the first six months of fiscal year 2023.
Michael A. Slubowski, who is the president and CEO of Trinity Health, spoke with HealthLeaders about the challenges the organization is facing in the wake of the PHE ending, including lost coverage for Medicare- and Medicaid-covered patients, steps already taken to reduce costs for the system, and the future of healthcare delivery and payer models.
This transcript has been edited for clarity and brevity.
HealthLeaders: What does the COVID-19 PHE coming to an end mean for Trinity Health?
Michael Slubowski: The end of the public health emergency is going to create a lot of challenges for us—it already is—because a lot of the regulatory agencies are back at full strength.
There are two big impacts. The first is with Medicaid. Nationally, 91 million people have to re-enroll in Medicaid. In our case, we're estimating 5% to 13% [of patients] could be impacted by not getting coverage. For Trinity Health, 5% would be $80 million in lost revenue, by way of example. It's an enormous number, but beyond the financial impact on us, the impact on people having coverage is a big concern that we have. Second, there was a 20% add-on for Medicare on DRG payments for COVID-positive patients and that goes away in May, as well.
We've taken some positive and proactive measures to try to help folks get re-enrolled in Medicaid. We're reaching out proactively through email or text message, we're setting up stations for re-enrollment at our sites, and we're doing our best to make people aware of what they have to do and how we can help them to reapply to keep their coverage.
HL: How has the current landscape changed the way you lead Trinity Health's operations and strategy?
Slubowski: Our labor costs have gone up over 20% with the great resignation. Our pharmaceutical expenses have gone up 24%. With two-thirds of our revenue from Medicare and Medicaid, and many of the commercial payers are unwilling to provide any kind of an increase in payment for the impact of inflation, it's put a tremendous financial strain on our health system.
Our mission hasn't changed. We always say that we're a ministry running a business, but the business is unhealthy right now. We're going through a lot of change right now on operating performance, we are not only trying to run the ministry, but evolve it. We have a $1.1 billion improvement plan and that includes some efforts on growing our patient base, but a lot of it is around cost reduction.
We have implemented a number of new care models. Before the pandemic, we created our own internal staffing agency called First Choice, so that colleagues who decide to leave the profession full-time or part time have an option to work on their terms and what works for them. So, creating flexibility for people and providing an opportunity for them to earn some income has been an important vehicle for us.
We've implemented a new care model called Together Team. We piloted it, and now we're rolling it out across all our hospitals. It's a three-person care team; it includes a floor nurse, it includes either a certified nursing assistant or LPN, and then the third member of the team is a nurse that is in a hub that can [virtually] support the patient's care needs. Those three people function together as one team for a set of patients. The floor nurses, who are generally new grads, feel supported because there's an experienced nurse at the health hub that is supporting the care and working as part of their team. We've been able to keep nurses who otherwise would have left the profession, either because the work is too much for them given physical demands, or flexibility, who still want to provide care, and they're working in these hubs that are located in our campuses. They can beam into the room, they have full access to the medical record, and the cameras are good enough now that they can look at skin conditions. The nurse assistant or LPN can practice at the top of their license as well. It's helping us with the retention of new nurses and keeping experienced nurses in the workforce.
Patients and families love it. Think about it, you push your call light, and somebody comes on the screen instantly, and can attend to you, help coordinate the care, and they can do discharge planning with the patient. And spend the time with the patient and the family. Patient satisfaction is very high with this model. It's one of those transformational things that can help us with staffing as well as patient satisfaction.
We have been implementing what we call TogetherCare, powered by Epic, across all our 80-plus hospitals, and we've done it on a common platform and a common build, so our care protocols and our order sets are the same for similar conditions across the organization. Those are ways to improve care and improve efficiency.
At the same time, when I talk about operating performance, it's also about how we connect to our patients and members. Our brand promise is "we listen, we partner, and we make it easy." We have to try to live out all three of those things as we support our patients.
Running the business and evolving the business is paramount, but the third thing is about transformation. We're trying to reorganize around hospital-based services and community-based services. Community-based services, which is the growing segment of healthcare, [includes] primary care, our integrated medical groups, ambulatory surgery, diagnostic procedures, all home-based care services, and urgent care at a lower price point, because it has to be affordable to patients and members, as well as to the plans that pay us. That transformation of what we do in community-based services is critical right now and it's an area that we're moving on aggressively.
We're [also] the largest not-for-profit provider of PACE in the country. PACE is an emerging model for care for the elderly. We're at full risk for their care; this is a program where we receive total cost of care and we can integrate clinical care and social care services for seniors, and people that are dually eligible for Medicare/Medicaid. We have a great organization and the potential for growing PACE is very strong.
HL: In January, Trinity Health's chief clinical officer, Daniel Roth, spoke with HealthLeaders about the organization's urgent care growth strategy. What are some other ways the organization is doing to grow its footprint and operations?
Slubowski: We've expanded in Iowa quite a bit. We acquired CommonSpirit's [MercyOne] facilities in Iowa and we recently made another acquisition [of Genesis Health System] in Iowa to grow our footprint there.
We had a very significant [Medicare Advantage health plan] in Columbus, Ohio, and we've replicated it in some other states, like Idaho, Iowa, [Connecticut, and New York]. So those are other ways that we're growing.
The thing I would say is we're trying to do prudent growth. You have to be careful about how you expand and how you integrate that into your continuum of care because it doesn't make sense to be providing a bunch of disjointed services. Our focus is on whole-person care and connecting the care across the continuum for the people we serve. It isn't just viewed as episodic care, but as treating them as members of our health system, regardless of how they're insured.
HL: What strategies are you using to ensure the sustainability of your health system during current financial stress?
Slubowski: We are doing a lot of work in advocacy with both our local, state, and federal government contacts to support new care models, to support inflationary issues. I'm very concerned that there's been no real preparation for the next pandemic. From a public health standpoint, we're going to do this all over again if we have another pandemic because the coordination between federal, and local governments, and the role of the health systems, there were a lot of challenges and there's not a proactive plan [moving forward].
One of the other things that I'm very concerned about is, people keep talking about the growing healthcare industry. But when they say industry, they're including commercial health insurers, who are now also the biggest providers of Medicare Advantage; big pharma; medical device suppliers; big tech; and retail pharmacy companies. There's a real imbalance because most of their focus is on commercially insured patients and not public patients, and especially shying away from Medicaid. We have a social responsibility to care for folks and those companies, most of them are making double-digit margins. They're in the 20+% margin range. We're struggling to break even right now. There's an imbalance in the people who actually provide the care and add value, and the people who are the farthest from the patient.
From a public policy standpoint, there's going to have to be some recognition of change. I'm not naive enough to think that payers, and medical device suppliers, and Big Pharma are going to become charity organizations, but when you're talking about 20%-25%, margins, and zero or less, there has to be a little bit of movement towards supporting the nonprofit health system in particular. That's something that we're trying to get the attention of legislators as well as those third parties that their revenue is our cost and we cannot sustain ourselves at the levels that we're being paid for or not being paid for. We've got to work together on these solutions for healthcare in America.
We have a responsibility to prove that we're living out our tax-exempt charity goals. In the case of Trinity Health, we do $1.4 billion a year in community health and well-being. We have outreach programs, we use community health workers, we fund housing and food initiatives. And the loss on Medicaid is part of that equation because Medicaid doesn't come close to covering the cost of care. We're being very proactive in making sure that people realize that we are living out our charitable purpose, and for us being a faith-based health system, it's endemic to our mission.
How are we going to make sure that we live out what we call the common good, because the common good isn't common, right? I'm seeing a two-tier system evolving, those who can afford to pay or are well insured, and those who do not have the means and end up in public programs. How do we make sure that there's a consistent level of access and quality of care for all? That's why things like the expansion of Medicaid which appears to continue to move across the country, despite all the pushback that happened early when the Affordable Care Act was passed, is a good thing. But we have to be able to fund that appropriately, too.
“Our focus is on whole-person care and connecting the care across the continuum for the people we serve. It isn't just viewed as episodic care, but as treating them as members of our health system, regardless of how they're insured.”
— Michael A. Slubowski, President and CEO, Trinity Health
Melanie Blackman is a contributing editor for strategy, marketing, and human resources at HealthLeaders, an HCPro brand.