How Medicare Termination Can Push Your Hospital to the Brink of Closing

This is an excerpt from the “Hospital Near-Death Experience: How Medicare Termination Can Push Your Hospital to the Brink of Closing,” white paper.

IT CAN HAPPEN TO ANYONE … EVEN YOU

The leadership, staff, and physicians of Haywood Regional Medical Center (Haywood) never imagined their organization would experience involuntary Medicare termination. Termination usually results in closing of the hospital because most cannot survive without Medicare funding. Haywood came close to such demise, but returned from the brink of death to regain CMS certification.

The story of Haywood is a chance to learn from someone else’s mistakes. It should encourage you to take preventative action, to assure that your hospital is not faced with a Near-Death Experience.

TAKE A CLOSER LOOK

Prior to Haywood’s frightening Near-Death Experience, it was quite successful.

This 190-bed medical center was experiencing increased revenue, successfully recruiting physicians, and investing in capital improvements and new facilities. 1 The medical center was very well-respected in the community, and its publicly-reported quality data exceeded national benchmarks. Haywood was honored with national quality awards, including a Health Grades 5-star rating. 2

However, after several CMS-focused assessments by the state health department, a notice of Immediate Jeopardy arrived, taking many of the medical center’s leaders and staff by surprise.

Several factors contributed to the disruption of Haywood’s seemingly perfect operations.

The Board of Trustees largely ignored clinical quality data and made the medical center’s financial condition the center of attention.
The CEO overlooked day-to-day operational problems as he spent increasingly more time engaged with outside organizations.
The relationship between medical staff and leadership deteriorated as feelings of distrust and lack of respect compounded.
Vacancies in nursing leadership and inconsistent direction created turmoil among nurses.
Significant use of agency and traveling nurses without attention to orientation and supervision created numerous care concerns and physician dissatisfaction.

WATCH FOR EARLY WARNING SIGNALS

In the months before Haywood lost its Medicare certification, there were signals that should have been apparent on the radar screen of the medical center’s leaders.

Board members accepted quality data prepared by supervisors without questioning the source or the calculations. Early indications of financial trouble appeared, causing Board members to focus on cost-cutting without analyzing the causes of deteriorating financial performance.

The pressure to address these financial concerns strained communication between the CEO and the Board members as the Board became fixated on the medical center’s financial health during meetings.

PROBLEMS BEGIN TO MOUNT

Administration – The CEO, who historically had a good working relationship with the Board and medical staff, had become more active in external activities. He spent a significant amount of time in leadership roles with outside organizations at the expense of leading institutional strategy and operations. His increasing physical absence spoke volumes to staff, physicians, and the Board about the CEO’s commitment to leading the organization.

Medical Staff – The medical staff’s distrust of the administration grew in the absence of visible leadership. Previously, the orthopedic service line dissolved after a disagreement between an orthopedist and the CEO. Shortly thereafter, the entire anesthesia physician group resigned, again due to a difference of opinion with the CEO. Finally, the contract with the emergency room physician group was terminated. 3 These changes damaged long-standing relationships with key physicians and contributed to distrust among the medical staff. The Chief Medical Officer (CMO) was not well integrated in nor influential with the medical staff and thus was unable to serve in a vital communications role.

Nursing – The nursing department was also in turmoil. Members of the medical center’s administration implemented new processes with the goal of improving nursing practice, but did so without critical nursing and medical staff input. Most of the nursing department directors expressed their opinions about these changes by resigning or retiring. Administrators chose not to hire interim nursing directors due to financial constraints, leaving key clinical departments to function without sufficient leadership.

Changes in requirements and classification of temporary nurses caused many part-time nurses to leave, further exacerbating staffing challenges. Agency nurses were the only option to address scheduling concerns created by lack of full-time staff. Increasing reliance
on agency and traveling nurses for core staffing created discontinuities in care delivery.

Continuing changes in policies and procedures left nurses confused and frustrated. Morale plummeted as the pace of change increased. Physicians began vocally expressing concerns about the quality and continuity of nursing care – concerns largely falling on deaf ears.

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END PART 1

Download the complete white paper“Hospital Near-Death Experience: How Medicare Termination Can Push Your Hospital to the Brink of Closing,”