What would happen if Lutheran Health Network (LHN) were sold by Community Health Systems (CHS)? Could the past be recaptured? What would a new owner do to build confidence, regain trust and reverse a loss of market share–and guarantee a focus on clinical quality? We have an example in neighboring Ohio from Steward Health Care Network.
We know that CHS manages costs. It is not difficult to make the financial case for removing fat in healthcare–for cutting unnecessary costs, buying smartly, employing IT, managing inventory and employing labor carefully. Hiring freezes and reductions in full-time employment numbers (FTEs) are obvious cost-cutting measures in the hospital industry where over half of all costs are associated with labor. CHS has done many of those things well; they have been lean–particularly with labor costs–especially since being overburdened by debt. In fact, this cost-cutting focus, LHN physicians tell us, led to the so-called “doctor rebellion” and Fort Wayne Physicians’ unsuccessful effort to buy LHN. But, in Warren, Ohio, Steward did address the problems of a previously managed CHS hospital. The experience there is instructive.
From the Warren, Ohio, Tribune Chronicle (http://www.tribtoday.com/…/steward-boosts-staff-at-2-hospi…/ ): “Less than six months into its ownership of several area hospitals, Steward Health Care has increased its workforce and is implementing technology that company leaders say will allow them to provide enhanced services to the community. Earlier this year, Boston-based, physician-led Steward purchased eight hospitals from Community Health Systems, including Trumbull Memorial Hospital in Warren, Hillside Rehabilitation Hospital in Howland and Northside Medical Center in Youngstown, all part of ValleyCare Health System of Ohio.”
The Tribune Chronicle article referenced above also documents the growth of Trumbull Memorial Hospital. Since being purchased Trumbull, a 346-bed facility has added 107 FTEs and added 75 network physicians. Dr. Mark Girard, M.D. Harvard Medical School, and President of Steward Health Care is quoted as saying that each facility is “to act like a local company” in the community it serves.
Steward Health Care has financial backing from Cerberus Capital Management LP, a New York City private investment firm. Steward has hospitals in Ohio, Pennsylvania, Florida, Texas, Utah, Arizona, Arkansas, Louisiana and Colorado.