Genesis makes operational changes because of national crisis in health Leave a comment
Matt Perry | Guest Columnist
Fueled by the pandemic, health care systems across America are facing the worst financial environment in decades (i) and Genesis is no different. While the impacts of inflation and national workforce shortages are widespread in all sectors of the economy, health care systems face additional and unique challenges. Over the past year, to keep pace with rising wages nationally, we have increased compensation for our dedicated staff by $20.1 million. To keep all our services operational and caring for all our patients in need, we utilized out-of-town traveling staff at a premium cost of $27.7M. Medical supplies, drug costs and all other expenses have increased more than 6.7% ($23.9M). Most other businesses are raising prices to offset their cost increases, but Genesis (and health care systems nationally) are receiving minimal reimbursement increases from payors of between 0% to 3.5% annually, certainly not enough to offset the significant jump in our expenses (ii). In fact, as health care insurance premiums continue to rise, hospitals and physicians are receiving a very small percentage of this increase.These national environmental forces have caused Genesis’ financial results to suffer. Even with one-time financial grants of $29.6 million from the federal government and $2.3 million from Muskingum County, for the full year of 2022 Genesis reported a loss from operations of ($7.2) million (-1% operating margin). Year to date 2023 financial results are trending similarly. Genesis must be financially healthy in the short and long term to sustain our mission of service to our community.For 133 years Genesis has faithfully served the health care needs of our community and region. To ensure Genesis continues to deliver the highest-quality patient care, which has earned us both a 100 Top Hospital and Top 50 Heart Hospital award from Fortune Magazine, and heal our finances, we are implementing a comprehensive and innovative economic recovery plan. This plan is designed to ensure Genesis’ long-term financial stability as a locally controlled, independent system and preserve our ability to fund our mission of high-quality patient care for our region. With the help of our entire team of 4,000 staff and all our physicians we have developed and are implementing this plan, which includes the following initiatives:Improving quick access to the highest quality patient care:Genesis is expanding access for patients to receive the care they seek throughout our system. We are reducing the time it takes to get appointments with our specialists, at our multiple Centers of Excellence (ex. Orthopedic Center, Heart and Vascular Institute, etc.), and our hospital services. Also, we are expanding our geographic footprint to include the new Genesis Coshocton Medical Center. Getting the care our patients need, when and where they need it has never been more important for everyone and will help us grow revenue.Innovating to implement new efficiencies and reducing expenses throughout the System:To improve efficiency, we are reinventing how we operate in many parts of Genesis in ways that are consistent with our values and preserves and improves our core mission of excellence in patient care. We are leveraging our advanced technology systems, renegotiating with our suppliers, reorganizing administrative functions, refocusing resources on our core patient care services and much more.Addressing the labor shortage by building our local workforce:With the labor shortage affecting health care systems nationwide, Genesis is partnering with our local colleges and high schools to support education programs that give our local residents the opportunity to learn a health care profession and build a career at Genesis. Supporting these local institutions and students will decrease the financial strain caused by reliance on out-of-town traveling staff and continue to grow our local economy and workforce.As a member of our community, you can expect all these changes to result in a Genesis that will serve you quicker, continue to provide you with nationally recognized high-quality care and continue our role as a strong economic cornerstone of our region.The entire team of physicians, leaders and staff at Genesis have shown extraordinary dedication and resilience over the past few years. We have received amazing support from you, our community, throughout the pandemic and to the present. Together, through innovation, hard work and your support we will overcome this financial challenge together.
(i) Sudimack, A. & Polsky, D. (2022). Inflation is squeezing hospital margins – What happens next? Health Affairs Forefront. https://doi.org/10.1377/forefront.20221021.288337Note: “Health Affairs Forefront articles are cited in congressional testimony and by members of Congress. Media outlets that have cited Health Affairs Forefront include The New York Times, Washington Post, Forbes, National Journal, Reuters, and many others.”(ii) Hut, N. (2023, January 10). Labor costs and other concerns dampen the outlook for not-for-profit hospitals this year. Healthcare Financial Management Association (HFMA). https://www.hfma.org/finance-and-business-strategy/healthcare-business-trends/not-for-profit-hospital-outlook/
Matt Perry is the president and chief executive officer of Genesis HealthCare System.
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