(Editor’s Note: Corrections have been made to this article. See the end of the article for details.)
Conway Regional Medical Center has seen a 25 percent drop in emergency room volume since Baptist Health opened its hospital across town last September.
But Conway Regional Health System CEO Matt Troup has a plan to deal with the increased competition from the Little Rock health system’s Baptist Health Medical Center-Conway.
“We’ve added clinics; we’ve recruited physicians and added some services,” he said last month in an interview at his hospital office.
Arkansas Business was invited to spend time at the hospital as part of its Immersion Day program, which started earlier this year to give the health system’s board members a peek into the inner workings of the hospital. Board members observe a surgical procedure, go on rounds with doctors and visit hospital departments.
The program also includes spending time with Troup, who became the CEO in 2015.
During lunch, Troup waded into the complexity of hospital finances.
Hospitals generally make money by providing procedures rather than just on admissions, he said. “We tend to have better margins on service lines like cardiology, orthopedics,” he said.
Other valuable services are related to neurology.
“We may not make a lot of money, per se, on a stroke admission, but that patient comes back for imaging. They come back for rehab, other procedures and services. Those do tend to add up.”
Conway Regional Medical Center reported net patient revenue of $143.4 million and net income of $6.4 million in 2016, according to its annual Medicare cost report. That was an improvement from $132.5 million in net patient revenue and net income of $2.4 million for 2015.
So far, revenue for 2017 is close to what it was in 2016, Troup said.
Still, even at Conway Regional, “at a very specific level, it’s hard for us to know what stuff costs,” Troup said. “You can imagine all the things we do to people over a five- or six-day length of stay. … And how do you add up the cost of that?”
Typically four out of 10 patients at Conway Regional will be on Medicare, one will be on Medicaid and one or two patients won’t have insurance. Hospitals usually lose money on patients who have Medicaid or Medicare because those government programs’ reimbursements are lower than the cost of providing the service.
Conway Regional might charge $10,000 for a hospital stay, but the patient might pay only $1,000 if he has insurance. A self-pay patient, however, might negotiate that charge down to $5,000. But the reality is, self-pay patients pay pennies on the dollar of a charge, Troup said. A Medicaid patient would pay just the deductible for the admission to the hospital.
“So more and more you get charges that are almost like Monopoly money,” Troup said. “And it’s out of whack with what it actually costs and other insurers pay. But that’s the nature of the beast in our health care system today.”
Conway Regional and other hospitals base their charges on cost, a market-based assessment, or both. “Those charges do not reflect what the overwhelming majority of people actually pay,” Troup said. “What we get paid is determined by a negotiated contract or rate set by the government in the case of Medicare or Medicaid. … The charge can be and often is out of relevance to the patient.”
To retain Conway Regional’s 200 or so doctors, Troup changed the culture at the hospital, making it a place where physicians want to practice, Conway Regional’s chief of staff, Dr. Greg Kendrick, said during the lunch with Troup.
“That’s not an easy thing to do,” Kendrick said. “And that means that you have to have trust between the administrator and the practicing physician.”
He said physicians have been placed on hospital committees and are making decisions that have a deep impact on the hospital. That’s not common at most hospitals, he said.
“In the past, those decisions were handed down from the administration, and we kind of did what they asked,” Kendrick said. “Now, these committees are making those decisions.”
He said that as a result of the change, which went into effect in October 2016, doctors have a better understanding of the administration’s point of view. “That is the culture now, in that there is collaboration between the medical staff and the administration, instead of separation and frustration,” Kendrick said.
The hospital’s women’s center is undergoing a renovation costing about $700,000; work is expected to be completed by the end of the year.
One feature of the renovations will be a makeover of the 16 delivery rooms.
“We want it to feel like home as much as possible,” said Mary Salazar, the director of Women’s & Infants’ Services. The renovations call for lighter colors in the rooms, and for the existing walk-in closets to be turned into small family areas with a table and mini-refrigerator.
Conway Regional delivers about 1,800 babies a year.
Salazar said an affiliation between Arkansas Children’s Hospital of Little Rock and Conway Regional Health System that was created in November has increased the number of babies in Conway’s nursery. The Arkansas Children’s Nursery Alliance coordinates care between neonatologists at ACH’s Neonatal Intensive Care Unit and physicians in Conway Regional’s NICU and newborn nursery to improve the quality of care.
Salazar said the number of babies increased from two a day to four or five after the partnership.
“We are keeping more of our kids instead of transferring them,” she said. “The mothers stay here while [their babies] are here.”
Troup said the women’s services cover their costs at the hospital. Women are typically the ones who make health care decisions in the family, as well as decisions on care for aging parents.
“We may not make much money on the delivery, but mom comes back for her mammogram. … She sees her gynecologist, has a hysterectomy six years later,” Troup said.
In August 2015, Conway Regional Health System signed a five-year management agreement with CHI St. Vincent of Little Rock. The partnership called for each health system to keep its name and boards of directors.
Troup, who is one of the handful of people at Conway Regional who is a CHI St. Vincent employee, said one of the benefits of the partnership was the ability to buy supplies at a lower cost.
The health system also has been adding clinics. It now has clinics in Clinton, Conway, Greenbrier, Mayflower, Pottsville and Vilonia.
Conway Regional’s hospitalists also began working at Ozark Health Medical Center in Clinton on Aug. 1.
Troup also said a focus is on adding to the staff of more than 1,200 employees.
In the last three years, Conway Regional has recruited 30 doctors to the area.
Conway Regional had eight hospitalists in 2015 and now it has 11 and is recruiting a 12th. The hospitalists, who take care of hospital patients, free up the time of other physicians to see patients.
“So rather than think, … ‘We can’t possibly recruit more hospitalists because volumes are going to go down,’ we took the opposite approach,” Troup said. “We’re going to find a way to expand.”
(Corrections: A previous version of the story incorrectly said that typically four out of 10 patients at Conway Regional will be on Medicaid and one will be on Medicare. Also Conway Regional’s hospitalists also began working at Ozark Health Medical Center in Clinton on Aug. 1. It is partnering with Ozark to provide hospitalists services, but that’s it.)