Staying True to Our Mission: Reflections from the CEO

Dear friends,

As you've seen reported in regional and national media, U.S. hospitals and health systems are facing significant financial headwinds. Rural hospitals are being especially hard hit, with 50% of rural hospitals losing money last year. As a result, more and more hospitals are vulnerable to being sold -- resulting in mergers, consolidation, and many hospital closures. 

It's my priority, along with the Board of Trustees, to create long-term sustainability for St. John's Health so we can continue to be independent and locally-led -- not beholden to a business model that would eliminate local access to many medical services. 

I want to share with you some momentous changes we're planning to help ensure we can remain independent. With leadership from our new CFO Mitch Watson, our team is developing a three to five-year Recovery Plan to move SJH from our current $19.4 million operating loss to a break-even result from operations.

So how will we get there? Our Recovery Plan focuses on revenue cycle optimization, non-labor expense management, labor standardization, and clinic access and operations improvement. 

Revenue Cycle -- We've conducted a third-party audit to help us improve billing and collecting processes. SJH is confronting unprecedented, unnecessary denials on insurance claims, and we aren't being paid appropriately/timely for the services we provide. There are many parts to our plan, and we project these changes will help us recover significant patient revenues once fully implemented. 

Non-Labor Expenses -- We will be reviewing each contract, renewing discipline around contract renewals, developing an incentive plan for team members that find areas of opportunity, and creating an expense savings tracker. We've already identified $1 million in savings from commercial leases we've discontinued, and by re-negotiating service agreements.

Labor Expense -- Our labor expense is 63% of net patient revenue, and we have developed a target of 55% , in alignment with metrics achieved by sustainable hospitals. Our workforce is our most valuable asset, and we will move toward this goal in a thoughtful, methodical way. We are using a new tool to benchmark productivity and creating a seasonally-adjusted staffing plan for each department.

Clinic Operations -- We are identifying opportunities to improve patient access, including scheduling.

Service Line Review  -- We've made the decision to eliminate certain services where patient volumes and the financial contribution of the service line was low -- for instance, we have closed inpatient physical rehabilitation and the clinic in Grand Teton. Each of these services had an average daily census in the single digits. Through efforts like these, we've already reduced our expenses by nearly $2 million/year. 

On the other hand, there are services that have high patient need and which could contribute to the hospital's financial position. For instance, fifty percent of cancer diagnoses require radiation therapy in the treatment plan -- so we will be seriously exploring how to bring radiation therapy to our community. Too many people are traveling far distances for radiation therapy, often at considerable expense and weeks away from work and family needs.

We will continue to depend on property tax revenues from the mill levy -- recently reduced by the WY legislature, with more cuts threatened -- to support care we provide for the growing number of our friends and neighbors who are uninsured and underinsured. And the continued generosity of donors to the SJH Foundation will help us maintain our status as one of the best independent community hospitals in the country.

Thank you for everything you do to help St. John's Health remain independent. Teton County is a very special place, and we want to keep it that way by keeping healthcare local.

Sincerely, 

Jeff