The CEO of Cheshire Medical Center in New Hampshire shares plans on getting his hospital out of the red and becoming top choice for patients and employees.
Editor's note: This article appears in the October-December 2023 edition of HealthLeaders magazine.
Rural hospitals are facing a lot of difficulties lately, including margins in the red, aging employees and communities, and challenging payer mixes.
One such hospital is Cheshire Medical Center in Keene, New Hampshire, a 150-bed hospital that offers programs not often available in rural medical centers, such as primary care, cardiology, gastroenterology, and ophthalmology. The rural hospital ended fiscal year 2022 with a -4.2% margin, $10.8 million loss where staff salaries were $8 million over budget due to reliance on contract labor, according to its 2021–2022 annual report to the community.
Joe Perras, MD, was recently selected to serve as the hospital's new president and CEO, and has the role of leading the hospital out of the red. He recently spoke with HealthLeaders about financial and workforce strategies that will hopefully see the hospital go from surviving to thriving.
HealthLeaders: How is everything going so far as you hit the ground running in your new role as CEO?
Joe Perras: Like a lot of rural hospitals across the country, we have a lot of headwinds that we're facing and we're taking them head on at Cheshire. We've had a lot of financial pressures over the last couple of years, some significant losses that we need to start filling in the holes that those losses created. We need to rebuild ourselves financially and clinically so that we're here for the next 100 years. There's no plan B for Cheshire County; we are the largest provider of healthcare for our county and serve as a regional referral center. We need to make sure that we shore up our finances, our clinical work, our service lines so that we can keep fulfilling this incredibly critical role for the region.
HL: How will you be prioritizing the financial health of CMC and working through those issues?
Perras: It's a balance. We need to make sure that we are a lean organization. We need to make sure that we are staffed appropriately to provide the highest quality care and the safest possible environment for both our staff and our patients. But we have to balance that desire to be lean with an ability to still grow and meet the needs of our community.
There's an old saying around hospital leadership: no margin, no mission; and that's true. We are a nonprofit, but we have to make some money so that we can reinvest in our institution, so that we can upgrade aging infrastructure, so we can invest in our providers and nurses and all of our staff, and make sure that we remain competitive with a rapidly changing labor market. It sounds simple and a little archaic, but it's true— if we don't have a margin, we have trouble meeting the goals that we have set to care for our community and to care for our staff.
I've tried to focus early efforts around making sure that our staff know that they are the most critical part of our mission, providing a safe environment of care for them, and growing reliance on each other, because if we don't take care of our staff, they're not going to have enough left in the tank to take care of our patients.
HL: What has and hasn't been working with CMC's current and previous financial strategy and what other strategies you'll be implementing to pull CMC out of the red to provide for your patients?
Perras: There's another quote that flies around systems analysis, and it comes from a professor at the Dartmouth Institute, a gentleman named Paul Batalden, who said 'every system is perfectly designed to get the results that it gets.' The system that we've had in place here for years I don't think it can work in our current operating environment post-pandemic.
We have to be more analytical in how we look at the things that we do, even something as forward facing as patient care and the intimacy that comes with that. We've got to look at how we care for patients; how patients move through our health system. We're dealing with a hyper mobile workforce now and we have a reliance on traveler staff or contracted labor that we didn't have to deal with before.
People talk about the great resignation that occurred during the pandemic for healthcare, but it was more of a great reckoning. We now have to reckon with how our staff moves around the country very, freely, how remote work affects what we do for staffing, what tech solutions there are that can actually decrease some of the administrative burden that our providers, physicians, nurses, associate providers have to face every day. We need to look at things differently than we used to because we've seen the results of what the current system has led to. Now we've got to adjust.
The practice of medicine and the leadership of hospitals is not going to go back to what it looked like in 2019 up through March of 2020. Things have changed and we have to respond to it. We have to change in accordance with the environmental challenges that we have. There's no one strategy—it's all strategies.
HL: How does your background as an MD and chief medical officer give you a different perspective on ways to keep a rural hospital financially viable?
Perras: I have an awareness of how hard the jobs are for providers and nurses. I've always had good insights to stresses on both sides for nurse and provider. That said, I've had to learn a lot about hospital finance, contracting, care management, other work over the years, all the other non-clinical side and my job is to balance all of the operational needs of the hospital, the needs of our provider and nursing staff, and all of our staff from surgeon to environmental services and everything in between. We need to make sure that we make decisions that make us not just the provider of choice for patients, but the employer of choice for staff because we have intense workforce shortages that were brewing before the pandemic and have been amplified wildly since the pandemic kind of ended.
I try to bring an awareness of what it's like from the bedside to the C-Suite and balance a lot of competing priorities.
HL: Aside from financial challenges, rural health organizations struggle with recruitment and retention. What can you implement or refine to improve with recruitment and retention efforts in a rural location?
Perras: The first thing we could do is try to grow our own staff. And that means working with area colleges, community colleges, high schools to develop a pipeline for folks to the healthcare industry. What I tell folks is healthcare is really one of the last remaining true paths to the middle class. In the old days, we had manufacturing and auto work, and a lot of those pathways to the middle class have dried up over time. And we see it in Northern New England, old mill towns and old manufacturing sites that have gone away. And then what's left in the town? Well, oftentimes what's left in the town is a hospital. We tend to be the largest employers and real engines for the communities that we serve. We need to stress that.
Every hospital I've ever worked in has had examples of folks who came in as a volunteer or started as a licensed nursing assistant, and then rose to a managerial position along the way, and had the support of the hospital to do so. We do things like tuition reimbursement, we look for leadership opportunities and extra training for our staff. There's always opportunity for folks who are interested, so we need to grow our own. We need to make sure that we are doing everything we can to improve employee engagement across our hospital. Engaged employees provide higher quality, safe care than unengaged employees. People who believe in the mission will give their all to take care of patients, and we need to foster that.
We need to have improved financial performance so that we can respond quickly to when the market changes for compensation and benefits. We're part of a larger health system, Dartmouth Health, and we are trying to align ourselves with how Dartmouth Hitchcock and other system members are paying their staff. That's typically more than rural hospitals can afford to pay, so we need to make sure that we're operating at a level that we can afford to do that.
I go back to my point around having a hyper mobile workforce. People will drive for a few bucks an hour or more at a certain position and we have to be aware of that. So make sure that we are like I said earlier, not just the provider of choice, but the employer of choice. If we can do that, then we'll solve some of our workforce challenges.
I don't think our reliance on traveling nurses and traveler tech positions, I don't think that's going away. They'll always be some and we need to make sure that we try to minimize that amount. But if safe, high quality care demands that we have more travelers, than we need to allow for that and pay for them.
HL: As a former CMO and current CEO, how do you balance being competitive with compensation with the financial challenges being faced as a rural hospital?
Perras: The same stresses that we are facing in our rural environment around compensation is what everyone else is facing too. I Chair The American Hospital Association's Committee for Rural Health Services. I have a forum where we get together three or four times a year and share our stories for rural health providers and it's the same everywhere. Everyone's thinking about becoming part of a larger health system or thinking about joining with another rural hospital to gain a little bit of scale to allow for better benefits and to improve staffing.
But it's challenging. We are dealing with an older demographic. Rural environments tend to be older, we get reimbursed largely through Medicare and Medicaid, those are our primary payers for patient care reimbursement. Most rural areas are not growing in population unless you're in a resort mountain town. It's shrinking populations which makes everything that much harder. You've got an older population and an older workforce, net migration out, and a payer mix that is challenging. So, despite all of that, we have to kind of thread the needle and make sure that we can provide competitive wages so that we're not losing the limited staff that we do have to other folks in the market.
That said, if word gets on the street that Cheshire is the place to work, we will attract folks and we have been successful in attracting physicians and other providers from out of state to come. Keene is a lovely community and it kind of sells itself when you get here.
“People talk about the great resignation that occurred during the pandemic for healthcare, but it was more of a great reckoning.”
Joe Perras, MD, President and CEO, Cheshire Medical Center
Melanie Blackman is a contributing editor for strategy, marketing, and human resources at HealthLeaders, an HCPro brand.