By Rod Ray

The costs of health care are front-of-mind for all of us. And St. Charles Health System is no exception. As has been reported, St. Charles is taking action to improve its financial performance in the short- and mid-term.

In my opinion, their approach is resulting in a solid plan for patients, caregivers, and employees.

The present state of the health care financial picture in many hospital systems, and in Central Oregon with St. Charles, is in many ways, a “perfect storm.”

Revenues are eroding due to legislated changes and the high percentage of patients on Medicare and Medicaid (those reimbursements don’t cover the costs of care.) Costs of drugs and supplies and of the caregivers have continued to increase. And finally, the legislative picture is highly uncertain, as we see in the national and state news every day.

St. Charles Health System is a nonprofit entity, and as such does not make profits for anyone. Nevertheless, St. Charles must generate an “operating margin” (reasonable excess of revenues less costs) so as to have cash reserves for events out of their control (such as a disaster or to have the resources to react to a change in the legislative landscape). Also, the capital needs (e.g., equipment and facilities) for health care organizations are high. This capital must also be generated from this “operating margin.”

It is crucial to keep Central Oregon’s health care system financially viable. Action must be taken to preserve the financial health of St. Charles so as to have the care available for the health of our families and employees.

Since early this year, I have been part of a financial advisory work group formed by the leadership of St. Charles. The mission of this group is to provide a sounding board for the leadership as they grapple with these financial challenges. The group is made up of folks from the community, like me, who do not have formal affiliation with St. Charles along with a few members of the board of directors and senior hospital system leadership.

This advisory work group approach has been effective. In many meetings over several months, we have carefully worked through the tough financial and operational issues facing St. Charles.

The leadership has solid ideas and plans on how to keep the organization financially viable in the short- and mid-term future.

They have been extremely forthcoming with information and have answered all of our questions fully. We have had in-depth discussions and brainstorming—and good ideas are embraced and acted upon. This process, in my opinion, has resulted in a determination of the “right thing to do” for the patients and employees.

Through this process three key principles have prevailed: 1) patient safety; 2) providing the highest quality health care; 3) respect for the caregivers and staff, and their livelihood.

With the leadership, this work group has looked for opportunities to “do things better” that also save money, rather than just “cutting.” The approach on caregiver and staff positions has been to work smarter, make better use of the talents of the people that deliver the health care, and only use reductions in staff when necessary.

This difficult, but open and direct approach, is a model for how these sorts of challenges should be addressed.

During this process, I have developed the highest respect for Joe Sluka, the chief executive officer, and Jenn Welander, the chief financial officer, as well as the rest of the leadership team.

They are proving to be good stewards of our health system.

I am confident that this process will result in the best short- to mid-term approach to improving the financial viability of our St. Charles Health System.

For the long term, the way health care is delivered must fundamentally change — and that’s the next challenge.

— Rod Ray was chief executive officer at Bend Research, Inc.

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