UPHS-M CEO talks industry, local impact
MARQUETTE — Battling industry challenges faced by hospitals across the nation and an increasing number of patients seeking care outside of the Upper Peninsula, UP Health System-Marquette CEO Brian Sinotte is hoping to reverse that trend and improve his hospital’s position long-term.
“Having a lens or paradigm that we’re still where we were 10 years ago is completely irrelevant now. It’s a different industry; hospitals have to … change, and that causes pain and we’re going through some of that right now,” Sinotte told members of the Lake Superior Community Partnership and Marquette County Ambassadors during an event Wednesday at UP Health System-Marquette.
Over recent months, Sinotte said about 2 percent of the hospital’s roughly 2,100 employee positions were cut, but that he doesn’t expect any more going forward. Officials declined to confirm an exact number, but said it was around 50.
However, the downsizing, Sinotte said, isn’t as significant as some larger hospitals in the U.S., such as Brigham and Women’s Hospital in Boston, an affiliate of Harvard Medical School.
“They are a really strong, high-performing hospital,” he said. “A couple weeks back, they (offered voluntary buyouts to) 1,600 people.” Hospital officials there expect layoffs later this year if the buyouts — offered to nearly 9 percent of the workforce — aren’t effective, according to The Boston Globe.
“You’ve got MD Anderson (Cancer Center), one of the best cancer organizations in the world, … they laid off 1,000 people two months ago,” Sinotte added. MD Anderson announced the cuts earlier this year, and, according to the Houston Chronicle, about 78 percent of them were actual layoffs, while the rest were through attrition.
“So, it isn’t just small community hospitals, it isn’t just urban hospitals, or just hospitals that aren’t good at what they do that are going through this challenge,” Sinotte said. “It’s everyone.”
He said around the mid-1900s, the number of U.S. hospitals had grown to around 6,000 and remained fairly steady up until about 10 years ago. But more than 20 closed in 2016, he said, and around 1,000 are considered at risk of closure.
Part of the issue, he said, is a growing number of people on high-deductible insurance plans through their employers, which was around 3 percent in 2016.
“Now … almost a third of the U.S. is on these high-deductible or catastrophic plans, where it can be a $5,000 or $10,000 deductible, where you’re sure going to think about whether or not you get that $1,000 MRI, versus a $20 copay situation … 15, 16 years ago,” he said, later adding, “We’ve continued to shift the burden of costs onto consumers so that they think twice about getting health care versus racking up the big bills.”
That means fewer patients and less revenue for hospitals, he said, as expenses continue to rise.
“This is creating that pressure where a lot of hospitals now don’t have enough (profit) margin … to reinvest in technology, to reinvest in a new building, to give staff raises, to do all those kinds of things that used to be pretty easy to do,” he said. “Your margins aren’t there anymore, and a lot of them are actually under water and either going away or filing bankruptcy, or finding a partner who can help them reposition themselves long-term, because these pressures and how quickly they’ve changed are putting them in a bad spot.”
Sinotte said the partnership with Duke LifePoint has had a positive impact on the Marquette hospital, and the company helped the long-term position of UP Health System.
“Since 1999, since (LifePoint Hospitals Inc. was) formed, they have never issued a dividend to their investors,” he said. “They reinvest in capital, of which we’re privy to getting. By the time it’s all said and done, when you include the $90 million pension, and by the time we open up our (new) hospital, it will be about a $450 million investment in our community.”
Meanwhile, the outmigration of patients has continued to impact the hospital’s revenue stream.
“We’re upwards of $100 million a year leaving the U.P. for care in Wisconsin,” he said. “That’s just Blue Cross (Blue Shield patients) crossing our border into Wisconsin to get care. So, it is significant. Like I said before, if we even cut that by 10 percent, it’s a total different financial scorecard.”
Sinotte said the hospital is focusing on fundamentals like quality, safety and service, and building “systems of care,” that focus on processes rather than individuals “so that you can have Fred, Jane or Joe doing the same thing, (and) you see minimal deviation in performance and outcomes.”
It’s also redesigning the focus of its board of trustees, encouraging physicians to become engaged in leadership roles and attempting to improve communications and its relationship with the community, which Sinotte said has evolved into a negative perception of the hospital and likely contributed to outmigration of patients.
“I think we have not messaged well; we haven’t celebrated our wins well; we let a whole bunch of negative wind just flood the sails and take off to where by the time I got here last summer, guys, I would have thought we had the worst hospital around, and it’s just not true,” he told the crowd. “You’ve got amazing doctors, nurses, staff here — amazing, committed Yoopers that are your friends, family and neighbors. But somehow we created a perception that whatever happens inside these walls is just dysfunctional, and it’s just not true. We have challenges like any other hospital, but this is a very, very good hospital.”
Ryan Jarvi can be reached at 906-228-2500, ext. 270. His email address is email@example.com.