Government officials and economists tell us that the so-called Great Recession hit our country in 2007, on the heels of a drastic correction in the home mortgage market.
Since that time, few in our country have escaped the ill effects of a the national economic crisis that is the worst our country has seen since the Great Depression.
Though the official end of the recession was supposed to have come about sometime in late 2009, most of us have yet to see or feel the positive effects of our national economy’s upgrade.
Closer to home, some of our area’s largest employers have reeled during these treacherous times. Local business owners have been forced to make hard decisions, and take unsavory action, including layoffs and reductions in operations, in order to keep the doors open. Some area enterprises have simply failed altogether.
Athens’ two largest employers, East Texas Medical Center and Athens Independent School District, have likewise seen their fair share of hard times in recent years, as lawmakers at both the state and federal levels have sought to balance their budgets on the backs of healthcare and education.
It wasn’t so long ago that the healthcare and education job sectors were considered to be among the most stable for prospective career seekers. Jobs in both of these industries, however, have become hard to keep and harder to come by. ETMC and AISD, both, have seen their staffs reorganized and reduced as a means of reducing overheads.
Perhaps ETMC has taken one of the hardest hits in our area as a result of the downturn in the economy. ETMC has made the news recently as system officials have talked of layoffs, and have dealt with a recent drop in their Fitch bond rating from “stable” to “negative.” This news was followed by a whirlwind of rumor and speculation as to the overall health and stability of East Texas’ largest healthcare provider.
Recently, ETMC Vice President of Marketing Mike Thomas sat down with the Athens Daily Review to speak of the state of affairs at the hospital system, and specifically, the facility in Athens. He addressed some of the hear-say that has surrounded the hospital of late.
To begin, Thomas said that ETMC doesn’t operate like most other hospital enterprises.
“The first thing is, always remember that ETMC is not for-profit organization. There are no stakeholders or stockholders who we have to have a return for. It’s against the law,” Thomas said. “Every dollar we make goes back into (patient) care. Fundamentally, ETMC has had a philosophy of pushing as many services as possible out into rural communities. Mr. Ellis (ETMC CEO) has always pushed the envelope of trying to deliver the highest level of care into smaller communities.”
Thomas said that such a heart-felt philosophy for doing business sometimes creates some very difficult cost/benefit decisions for managers to make.
“I’ve been in the business 30-plus years. Maybe three times, I’ve seen profound changes in the industry. Right now is one of those profound periods in healthcare. What we expect, and the way we think things are going to be done, is going to change. We have to respond to that,” he said.
Thomas said that healthcare is unique to other industries in that, contrary to what many believe, hospitals have no ability to control what they are paid in return for their services. Through various reimbursements from the government and commercial insurers, ETMC derives most of its income. Recent changes in these reimbursements, due to a unstable economy and new legislative guidelines, have had a sobering impact on healthcare systems nationwide.
“In the last couple of years, we’ve looked at the future, and here’s the bottom line: We’re going to be expected to do the same things at 6-percent to 8-percent less reimbursement. That’s our best estimate,” he said. “We’re going to have to deliver the same level of service, improve quality, and to some degree, expand services. And we’re going to have to do it for 6-percent to 8-percent less. We have no choice. We have to reduce our costs, and still do the same things. Is it catastrophic? Are we going under? No. It’s very do-able.”
Thomas said that the 6-percent to 8-percent reduction is the equivalent of $50-million to $70-million dollars that will have to be trimmed for the budget. Specifically, according to a 2010 study by the New York Times, commercial insurers have reduced reimbursements to healthcare systems by 10 percent to 12 percent since 2009. Furthermore, ETMC is looking at a drop from 63 percent to 51 percent in reimbursement of costs for Medicaid patients, and a drastic drop in Medicare reimbursements as well.
While the reduction in income could be staggering to the hospital system, and even though there are some very tough budgetary decisions currently being made by managers, Thomas said that ETMC is committed to delivering second-to-none healthcare services for East Texas residents through its facilities.
“We believe that the hospital has a moral obligation to care for its patients. When someone comes in needing care, you give it. You have to,” Thomas said. “With the economy as it is, there has been a much higher incidence of indigent patient care. As many as 25 percent to 35 percent of the patients in our facilities that come through the ER can’t pay for it.”
As families have struggled with making ends meet financially in recent years, these indigent numbers have been on the rise.
In responding to some of what has been speculated upon as to recent changes, Thomas confirmed that ETMC managers have been forced to make some hard decisions lately regarding staffing.
As was recently reported in the Malakoff News, officials at ETMC Tyler recently issued a statement saying that “…ETMC is responding to the external economic climate by streamlining operations. This means becoming more efficient by reducing non-critical staff positions…”
Thomas tackled the staff reduction issue by saying that while a staff reduction number is specifically “unknowable,” managers are pushing to monitor employees’ work hours more closely, and reduce excessive overtime hours for employees, or the use of staff from staffing agencies.
ETMC staffs it’s personnel using a Full Time Equivalent (FTE) of 2080 regular work hours per employee, per year. Unconfirmed reports have speculated that as many as 20 individuals have been laid off, or dismissed, from the ETMC Athens facility, while up to 70 have departed from ETMC Tyler, although Thomas says he believes many of the so-called layoffs have been reassigned, or used to meet other needs within the system.
“We’ve asked them (managers) to tighten standards.... We are not massively laying off people,” he said. “We have no ability to do so. But are we thinking about how to be more efficient…maybe do without? Yes.”
Thomas said that while staffing may be tighter among the departments, service, quality and safety standards are still being maintained diligently.
Other reported reductions in educational programs and tuition reimbursements for some employees was addressed by Thomas, who said that these programs were not totally cut out, and were only reduced when it was deemed that they served no direct benefit to ETMC, or its ability to care for its patients.
Perhaps most notably discussed by Thomas was the reduction in the trauma level at ETMC Athens from being a Level 3 trauma facility to being a Level 4 trauma hospital. This drop in trauma level could mean a reduction in the availability of specialized care at the facility and a reduction of specialized, on-hand physician staff on a 24-hour basis. It might mean a greater instance of ambulance diversion, or transfer of patients to ETMC Tyler.
Thomas said that only 16 percent of the patients that visit the Athens emergency department are trauma-related patients, and that during these difficult economic times, the cost savings derived by the trauma level reduction is justified. Dropping from a Level 3 to a Level 4 trauma center will save the hospital close to $500,000 per year.
“Compared to the market size, Athens is one of the smallest areas to have had a Level 3 trauma center,” he said. “We’ve been pushing the envelope to try and maintain the trauma level here, and we just can’t do it anymore. Would we like to keep it a Level 3? Yes. This has been a thoughtful, difficult decision, but we have to do it. We have to cut costs 8 percent. We have no choice.”
As to the rumor that ETMC Athens is being, or has been, looked at for a buyout by the Baylor Medical System, Thomas said flatly, “No way. No how. Never been discussed. It’s laughable, really.”
The ETMC Athens facility is in the process of completing a major expansion of its emergency facilities, and some of its other patient care areas. Thomas said that while this renovation may seem excessive to outsiders during such touch times, these changes have been in the planning stages for many years, and that the remodeling is essential for the Athens facility to be able to provide the care that it needs to for patients in the community.
In closing, Thomas said that while the ETMC hospital system remains profitable, long-term goals may not be met if the needed reductions are not made, and efficiencies aren’t improved. Thomas also emphasized that while many concerned citizens may want to dwell on economic indicators, such as the drop in ETMC’s bond rating, to determine the health of the system, other factors should be considered as well.
“Prior to this drop in our rating, we’ve had five bond-rating increases…”, in the past several years.
Even in hard times, ETMC continues to pursue its core values, that being to advance quality medical care as far as possible for rural areas of East Texas.