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Ballad Health's annual report: Health care improvements, strong financial results

Hank Hayes • Aug 15, 2019 at 3:36 PM

JOHNSON CITY — Ballad Health announced on Thursday a strong first full fiscal year of operation as a combined system.

“Despite the national challenges faced by hospitals, including nursing shortages and the phenomenon of ‘ER boarding’ of patients in need of behavioral health services, Ballad Health’s operational performance has been demonstrably exceptional, as evidenced by objective performance measures,” said Alan Levine, chairman and chief executive officer of Ballad Health. “This is attributable to the incredible work of our doctors, nurses and support team members who focus every day on better quality and lower cost.

“The improvement in our financial and quality performance has led to lower costs, which translates into savings for the employers in our region, a goal we remain committed to. This improvement has also allowed us to make additional investments in nursing resources, which we hope will help alleviate the stress of the nursing shortage on our staff.”

Nursing shortage an imminent and growing issue for the nation

According to the United States government, there is a projected national shortfall of 800,000 nurses by the year 2020. The U.S. Health Resources and Services Administration projects Tennessee will only be able to meet half of the demand for registered nurses by next year.

In a comprehensive report released by the NSI Nursing Solutions, Inc., titled “2019 National Health Care Retention and RN Staffing Report," the shortage of registered nurses will reach 1.13 million by 2024. The report cites “rising turnover and a retirement wave about to break,” with nursing turnover about to “set a new high-water mark for the decade.”

“Ballad Health has not been immune to the effects of the national nursing shortage, and no doubt this shortage is being felt throughout our system, both by our team members and by our patients,” said Lisa Smithgall, Ballad Health’s chief nursing executive. “We have taken, and continue to take, steps to alleviate this problem — a problem not created by Ballad Health, but certainly one we must deal with.”

Certain steps have been taken by Ballad Health to alleviate this issue, including: A $10 million annual investment into increasing direct patient care nursing wages, affecting nearly one-third of Ballad Health’s workforce. To put this investment into context, Ballad Health’s entire operating income in fiscal year 2018 was $9.9 million. This investment represents 100 percent of Ballad Health’s operating income from the last fiscal year.

Ballad Health said it has guidelines for nurse-to-patient ratios that are appropriate and within the standards of the industry.

Consolidating care

As it relates to patient wait times in the emergency department, Ballad Health said it is also dealing with another national problem associated with the “boarding” or “holding” of patients with mental illness who need behavioral treatment placement. On many days, Ballad Health is holding more than 60 patients in emergency departments, while resources are identified in the community to provide assistance. Ballad Health said its new Behavioral Services Division is developing alternative solutions to assist these individuals.

Ballad Health reported it has endeavored to eliminate unnecessarily duplicative services, as duplication spreads out nursing resources such that optimal staffing cannot be achieved. For instance, if there are two emergency departments located within four miles of each other in a community where the hospitals are running at or below 30 percent capacity, then it requires more nurses to staff both emergency departments and hospitals. For instance, in Wise County, Virginia, the cross-coverage of physicians made possible by the merger has led to more stable staffing and an 18 percent increase in surgical volume. Prior to the merger, surgical cases were often transferred to Kingsport due to inconsistent staffing coverage and the inability to refer patients to a competing hospital in the same county.

Prior to the merger that created Ballad Health, it was estimated as many as 1,000 jobs would be eliminated had both legacy health systems been acquired by systems based elsewhere. The administrative consolidation of Wellmont Health System and Mountain States Health Alliance resulted in the elimination of approximately 200 administrative positions, according to Ballad Health.

Quality improvement results

Recently, Ballad Health said U.S. News reported that all four of Ballad Health’s flagship hospitals – Johnson City Medical Center, Holston Valley Medical Center and Bristol Regional Medical Center, in Tennessee; and Johnston Memorial Hospital in Virginia – are among the top-performing hospitals in Tennessee and Virginia in several specialties, with each hospital providing “top performing” services and programs in heart failure and COPD in both states. In each state, less than 30 percent of all hospitals had any top-performing programs, according to U.S. News

In partnership with physicians and clinical staff, Ballad Health has seen a focused effort on quality improvement significantly benefit patients. Specific examples include: Zero infections for abdominal hysterectomy cases across the system; 47 percent reduction in pressure injury rate; 42 percent reduction in clostridium difficile infections; 39 percent reduction in iatrogenic pneumothorax rate; and a 13 percent reduction in central line blood stream infections.

Ballad Health recently announced the opening of the region’s newest assisted living facility in partnership with Signature HealthCARE, a facility focused on the emerging needs of the elderly. Ballad Health also announced a new dental residency program in Southwest Virginia, the funding of a new master’s program in addiction counseling in partnership with Milligan College and an addiction medicine fellowship program at East Tennessee State University’s Quillen College of Medicine. Ballad Health also announced plans to open a new rural hospital in Lee County, Virginia – an effort not required by the Certificate of Public Advantage (COPA) or Cooperative Agreement, but supported by the board of directors to improve access.

In the past year, Ballad Health also announced it was one of only 21 Accountable Care Organizations in the nation to help Medicare achieve cost savings in each of the first several years of the program — with the health care provider saying it is saving taxpayers more than $45 million.

Investment into new physicians and advanced practice providers for region

Since the closing of the merger, Ballad Health said it has recruited more than 150 new physicians and advanced practice providers to serve the region. Successes include the recruitment of cardiology in rural Wytheville and Norton, Virginia; nephrology in Abingdon, Virginia; and urology in Kingsport.

Financial strength

“Ballad Health has so far been successful providing lower overall costs to consumers while also improving its own financial performance, proving that better quality should mean lower costs,” Levine said. “Our improved financial performance is positive proof that by reducing lower acuity admissions and working with our payers across Medicare, Medicaid and commercial lines of services, we can reduce the cost of care for employers and consumers. These opportunities will expand as payment models move further toward increased sharing of risk between the payers and Ballad Health. By focusing on reducing unnecessary duplication in cost, we can be stronger financially as we continue to see a decline in inpatient utilization.”

Financial results for the year include: For the year ending June 30, 2019, operating cash flow improved to $228.1 million from $197.6 million in the prior year, a 15.4 percent improvement; total cash flow improved to $254.6 million versus $199.6 million in the same 12-month period prior year, a 27.5 percent increase; revenue for the year grew 1.3 percent, while expenses remained flat, leading to an improvement in the operating margin to 1.7 percent from 0.5 percent in the prior year; and operating income for the year improved to $36.5 million from $9.9 million in the same period prior year.

Ballad Health said it spent $1.043 billion on salaries, wages and benefits for the year.

Ballad Health also said it continues to experience declining inpatient and hospital utilization rates, a phenomenon experienced throughout rural America. This year, Ballad Health said it had 5,085 fewer admissions, with approximately 4,290 of those admissions being lower acuity medical admissions.

Ballad Health said it has also continued to invest nearly $200 million in capital for new equipment, diagnostic technology, building improvements, information technology infrastructure and a common electronic health record.

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