David Schreiner shares strategies for other leaders in rural settings trying to keep their doors open.

CEOs of rural hospitals are dealing with their own unique set of challenges for remaining financially viable.

To have and sustain success right now as a rural facility, leaders must be willing to be more proactive than reactive, says David Schreiner, CEO of Dixon, Illinois-based Katherine Shaw Bethea Hospital.

Not every strategy will work, but Schreiner believes in fighting to keep rural hospitals locally owned because of the impact on quality of care.

Below, Schreiner gives three simple tips to fellow rural hospital CEOs for staying up and running for the long haul:

The leader of Memorial Regional Hospital South shares strategies for bolstering the workforce.

For Phil Wright, CEO of Memorial Regional Hospital South, attacking labor shortages begins before you even get a potential worker through your doors.

Finding ways to recruit and retain staff is a priority for leaders of hospitals and health systems across the country dealing with workforce challenges. However, one part of recruiting that Wright believes is often overlooked is the hiring process.

“What I know every organization must have is a very efficient process for how you bring people on,” he said on a recent episode of the HealthLeaders Podcast.

Once you’ve found qualified candidates for the position you’re hiring for, drawing out the process for multiple weeks will do more harm than good, according to Wright. Dragging your feet will not only keep you from filling the job sooner, but it may drive away talent.

“Team members and potential staff members will go elsewhere and look for opportunities with other organizations if they feel like they can bring them on faster,” Wright said.

Hiring efficiently doesn’t mean hiring as quickly as possible though. Identifying and seeking out the right traits in potential employers from the start can keep organizations from having to fill the role again sooner than they’d like. For CEOs, that requires creating an environment where culture is prioritized.

“You waste time if you don't hire for fit versus the obvious competency,” Wright said. “We're all guilty sometimes of wanting to just get the position filled, but you end up wasting more time and money if you've got to replace that person after 60 or 90 days because they've were not a good fit or they left the organization. I'm a true believer of hiring for fit first. If you go after culture and fit first, then you have a better chance of retaining that person long-term.”

Cultural fit, of course, goes both ways. People want to choose a place to work based on the values it upholds just as much as the other way around.

That means once you’re brough on talent, you need to foster the relationships with your employees, Wright believes. With work overload and burnout causing many to leave their positions at hospitals, the typical employer-employee dynamic is no longer sufficient for cultivating an environment in which people want to stay.

“You’ve got to find a way to connect with people in a different way than just the traditional supervisor and staff member” Wright said. “What I’ve found is that people are seeking that connection. They want more of a connection with their supervisors and team members that they work with every day and if you can provide that atmosphere for them, especially within that first year, which is so crucial in any organization, any team’s hiring process, you have a better chance of keeping them on.”

Culture also extends to how workers are rewarded beyond just compensation. As hospitals and health systems strive to keep labor costs down, CEOs must get creative with what they can offer employees.

“These days with the competition, especially in some non-clinical type positions where folks have choices to go work for lots of other organizations, especially for the dollars that are being paid, you've got to turn over every single rock day and really make sure you've exhausted all the potential possibilities for bringing people on,” Wright said. “That includes being a little more flexible and things that, especially in the healthcare setting, we haven't traditionally been as flexible about.”

Some perks Wright points to are the ability to work from home and malleable scheduling, which were made more common by the COVID-19 pandemic.

Hospitals and health systems are recognizing the importance of investing in their staff. According to a recent survey by Aon, 95% of hospitals offered tuition reimbursement programs, 93% offered flexible work options, 84% offered personal leave, and 80% offered financial wellness/planning, among other benefits.

Wright acknowledges that there’s no “silver bullet” to solving the workforce, but these strategies can go a long way to creating sustainability in an area that is in serious need of it.

The primary care chain has been searching for ways to climb out of financial turmoil.

Cano Health has filed for Chapter 11 bankruptcy, reaching a decision that appeared inevitable after months of financial struggle.

The Miami-based provider, which offers value-based primary care to over 300,000 members, announced the filing is part of a restructuring support agreement with lenders holding approximately 86% of its secured revolving and term loan debt and 92% of its senior unsecured notes, allowing Cano to reduce its debt and potentially find an M&A partner.

To stay afloat during the restructuring, which the company expects to emerge from in the second quarter of this year, Cano has also received a commitment for $150 million in debtor-in-possession financing from some of its existing secured lenders. The liquidity funds are subject to court approval.

Through its recent moves, Cano said it expects to save approximately $290 million in costs by the end of 2024.

“By entering this court-supervised restructuring process, we are positioning the Company to achieve those goals on an accelerated basis and focus on what we do best – improving health outcomes for patients at a lower cost,” Cano CEO Mark Kent said in the news release. “I am confident we will emerge from this process a stronger organization with the necessary resources in place to continue delivering the quality of care our patients expect and deserve.”

Part of an industry trend

Cano is part of a recent bankruptcy surge in healthcare. According to a report by Gibbins Advisors, 2023 had the highest number of bankruptcy filings in the past five years with 79, which was more than three times the level recorded in 2021.

The past year featured 28 filings with liabilities over $100 million, compared to just seven in 2022 and eight in 2021.

Although the rise in bankruptcies in 2023 mainly affected the senior care and pharmaceutical subsectors, the factors that caused financial distress—capital market constraints, labor and supply cost pressures, and revenue—are also impacting the entire healthcare industry.

In the case of Cano, the company could not claw its way out of sizeable debt despite attempts to evolve. After being appointed CEO this past August, Kent narrowed the company's focus to its Medicare Advantage (MA) and ACO REACH business lines. However, Cano found MA to be less profitable than expected with adjustments made to the payment model and bonus program.

This problem isn't limited to Cano as all companies involved in MA are having tough sledding compared to previous years when MA was a cash cow ripe with overpayments.

In its filing with the Bankruptcy Court for the District of Delaware, Cano listed estimated assets and liabilities in the range of $1 billion to $10 billion.

It’s likely that the company will now look for strategic partners or buyers of all or some of its assets. That pursuit will be helped by Cano converting nearly $1 billion in secured debt to a combination of new debt and full equity ownership in the reorganized company through the restructuring agreement.

Cano has already been an active seller, divesting its Texas and Nevada primary care centers to Humana’s CenterWell Senior Primary Care business for nearly $67 million.

That sale was sandwiched between second and third-quarter earnings reports which saw the company experience net losses of $270.7 million and $491.7 million, respectively. Cano also cut 21% of its workforce in the third quarter of last year to create nearly $65 million in annualized cost reductions.

Editor’s note: This story has been updated on 2/6/2024.

The leaders of the venture share their plan for transformation in an exclusive interview with HealthLeaders.

Summa Health CEO Cliff Deveny and HATCo CEO Marc Harrison hear the critics and the skepticism directed their way.

After General Catalyst announced its plan to buy the Ohio-based nonprofit integrated delivery system earlier this month, industry reaction to the venture capital firm diving into the deep end with its own health system has been mixed. Deveny and Harrison understand the noise yet are unwavering in their vision's ability to be transformative, the duo tells HealthLeaders.

Firstly, Harrison rejects the premise that the acquisition is a private equity or venture capital (VC) deal. General Catalyst is behind the transaction, but it's through its business spinoff HATCo, which Harrison characterizes as an independent company. That means the commitment timeline won't be akin to typical VC involvement.

"This is a long-term investment done outside of fund structures without the same expectations," Harrison says.

Whether that holds true is yet to be seen. In the meantime, Deveny and Harrison want the skeptics to answer their question: What's your answer to the challenges plaguing healthcare?

"We can't keep merging inefficient health systems into other health systems because then the problems just get compounded," Deveny says.

Why Summa?

General Catalyst and HATCo were fairly quick in making good on their promise of buying a health system, landing on Summa merely three months after revealing their plan.

To Harrison, it was the right fit at the right time. Summa checked the boxes with its size at 1,300 beds and 1,000 physicians, as well as with its status as an integrated delivery system and the largest provider in its market. Perhaps most importantly, Summa is "ready for transformation," Harrison says.

That readiness partly stems from necessity. Summa has been looking for ways to steady its recent financial instability, which has seen it record an operating loss of $37 million for the first nine months of 2023, following an operating loss of $39 million in 2022. Merging with another system was explored as an option, but Deveny states that it would have, in most cases, led to prices for care going up.

"We felt like we really couldn't just keep doing the same thing of trying to look for ways to cut costs and we weren't generating enough capital to really build the ability to grow at a point that we wanted to," Deveny says. "So this gave us the opportunity to, in some sense, leap forward with a lot of technological opportunities that we had put off."

Summa has been implementing incremental changes and updates to its technology, but still felt like it wanted to go further to meet the needs of people who wanted access to the system. Partnering with HATCo solved the issue of lack of capital and resources.

"It's just getting that extra Miracle-Gro on top of all these great ideas," Deveny says.

'Not a laboratory, but a proof of concept'

How those ideas are executed could ultimately determine whether the partnership is successful.

Conceptually, Summa will allow HATCo to test new technology without the usual restrictions and roadblocks that traditional providers face. However, Harrison is clear that this doesn't make Summa a sandbox where constant trial and error will take place.

"This is not a test bed for extremely immature technologies," he says. "Cliff wouldn't allow us to put a brand new company in here that could potentially have a negative impact on patient care. So we have a real bias towards companies with proven solutions. This is not a laboratory, it's a proof of concept for what we think is the model for the future.

"This is thoughtful. It's intentional. It is open-minded, but I'd say this is bold, it's not risky because Summa is such a good system."

While the function of the technology will be to improve quality and access to care, both Deveny and Harrison recognize that success will still be measured by improved financial outcomes. "Obviously we'd like to see financially that we're doing better than we have been in the last few years and get back to where we were at pre-COVID," says Deveny, who also points to employee retention, growth in Summa's health insurance plan, and education expansion as objectives.

Of course, everything hinges on the deal passing regulatory review, which is no small matter in this case, considering Summa will transition from a nonprofit to a for-profit operator. Deveny and Harrison say they've been working with the Ohio Attorney General's office and the Ohio Department of Insurance, with their commitment to charity care and participation in federal programs like Medicaid and Medicare well received by many government officials. As such, the leaders are not seeing regulatory scrutiny as a "huge issue."

If the acquisition passes, HATCo and Summa have a long road ahead of them to prove the naysayers wrong. History is not on their side and while this undertaking may not have a true precedent, the road to transformative healthcare is paved with new, but failed, ideas.

Harrison and Deveny are ready to change that.

"I really believe that the iterative, thoughtful approach is going to result in a different way of delivering care and because the other people who are running other systems are good folks, they will both by necessity and out of choice adopt some of the lessons learned from us," Harrison says.

"That would be a great legacy for Cliff and me."