James
M. Full, FACHE
Chief Executive Officer
Randolph County Hospital and Health Services
Indianapolis, Indiana
Organizational
Information
The organization is a rural healthcare system with inpatient and ambulatory
care services. The hospital is the sole hospital provider in a rural county
with a population of approximately 27,000. The county has the highest
unemployment rate in the state, and is located in a health professional
shortage area. The hospital is a not-for-profit, county-owned, stand-alone
rural health system now managed by one of the top 100 hospitals and based
in a town of 6,500 people. Five rural health clinics are situated throughout
the county. The payer mix for the hospital is 70 percent Medicare, Medicaid,
and self-pay.
The facility
is licensed to be a 49-bed hospital and has 30 operating beds, five federally
designated rural health clinics, home health care, and wellness programs.
In September 1999, the hospital became a critical access hospital with
25 beds. It has an annual budget of $19.5 million. Over 80 percent of
the hospital’s revenues are from outpatient sources.
Brief
Summary of the Problem
The hospital discussed in this report had a dysfunctional medical
staff that was perceived by the community as providers of poor medical
care and was experiencing an acute shortage in the number of physicians
to meet the healthcare needs of the community. When I was appointed chief
executive officer for the hospital, approximately 85 percent of the residents
in the county traveled at least 30 miles for their healthcare. The physician
shortage had an adverse effect on the hospital’s financial status and
future survival.
Description
of the Problem
Rural physicians recruitment and retainment has traditionally been
a challenge for hospitals and rural communities. According to the University
of North Carolina Center for Rural Health, although 22.5 percent of the
population in the United States resides in nonmetropolitan areas, only
13.2 percent of physicians practice in these areas (Weisfeld 1993). Three
reasons have been identified for the unpopularity of rural practices:
lifestyle issues, medical practice issues, and competitive issues.
Lifestyle
Issues
Physicians are concerned about residing in a community that has access
to a variety of social activities. Many rural communities are often located
a significant distance from larger cities. During their residencies, physicians
are usually trained in urban settings and perceive rural areas as lacking
cultural outlets, social activities, and accessibility to convenient shopping.
Rural school systems are frequently perceived as weaker when compared
to their urban counterparts. In addition, employment opportunities for
the physician’s spouse may be limited.
Medical
Practice Issues
Physicians in small, rural communities work longer hours than their urban
peers (NRHA 1998). Vacation and leisure time is often limited because
of the lack of professional backup. Group practice opportunities are limited.
Many times the physician’s office may be located a good distance from
the hospital. Most physicians are trained in large, tertiary care settings
with the latest technology; this technology may not be available in rural
settings. Many physicians are nervous about the prospect of providing
medical care without the immediate availability of specialists.
In addition,
physicians in rural areas receive less reimbursement by Medicare and other
payers. The population in rural settings is usually older, poorer, more
likely to be uninsured, and in poor overall health.
Competitive
Issues
Primary care physicians are in heavy demand. Often a rural hospital’s
major competitor has a residency program and locks a physician
resident to the organization before the physician is aware of other opportunities.
HMOs have a heavy demand for primary care physicians. Finally, competitors
of the rural healthcare providers may be better able to offer employment
opportunities that a rural hospital cannot offer because of a lack of
financial or practice management resources.
I was appointed
as CEO for the rural hospital in 1992, and I was the third CEO appointed
in a five-year period. Five years before my arrival, most of the physicians
had either retired or left for personal reasons. The remaining five primary
care physicians in the county of more than 27,000 had independent private
practices. Three of these clinicians had poor clinical reputations and
their practices were struggling. When I arrived, the county’s healthcare
had an outmigration rate of 85 percent because of the shortage of quality
physicians. Residents traveled over 30 miles for healthcare. Two physicians
made 90 percent of all admissions to the hospital. For a number of years
the hospital was in financial distress and operated with a negative cash
flow. Without the successful recruitment of quality physicians, the hospital’s
future looked bleak.
Administrative
Decisions
My strategy was to successfully recruit a quality medical staff in
a four-step process I call plan, locate, screen, and sell.
Plan
I put a great deal of emphasis on the education of the board of trustees,
the medical staff, employees, and community leaders about future trends
in healthcare. This training was successfully accomplished through strategic
planning retreats, discussions at medical staff meetings, and community
presentations to service groups.
The first
day of the initial strategic planning retreat, the board of trustees participated
in extensive brainstorming sessions and discussions regarding the strengths
and weaknesses of our medical staff. At this meeting the board of trustees
identified the two physicians around which the hospital would build a
quality medical staff. The board also determined that seven additional
primary care physicians would be required to meet the needs of the community.
This number was based on the norm that there should be on physician to
every 2,000 to 4,000 members of the population. This goal was incorporated
into the five-year strategic plan. The two core physicians were later
brought into the process, and were supportive of the goal.
The hospital’s
strengths and weaknesses were also assessed at this strategic planning
retreat, and a vision for the future was created. This long-term
vision was initially used to sell the hospital to physicians. On
my arrival, the hospital’s environment was dreary, and the medical equipment
was outdated. Updating the medical equipment took about three to four
years because of limited resources. We began by reviving the patient rooms
and hallways with fresh paint, new wall coverings, and tile improve the
patients’ initial impression of the hospital.
Locate
Physician search firms, both retainer and contingency firms, were
used extensively to locate potential physician candidates. The retainer
firm, which works strictly for the client employer but requires a significant
financial deposit, was not successful. The contingent search firm, which
only gets paid if one of their recruits is signed to a contract, proved
to be more effective. The contingency firm is usually paid $15,000 to
$22,000 when a physician and hospital agree to terms.
Our hospital
signed agreements with 16 contingency firms, and about seven worked regularly
with the hospital. I found that developing a positive relationship with
the individuals in the search firms, including responding promptly to
phone calls and providing timely feedback, helped us develop a win-win
relationship. Once rapport was developed, we screened an abundant number
of candidates over the years.
The National
Health Service Corps afforded us another opportunity to identify potential
candidates. After learning about the potentially valuable benefits associated
with being identified as a health professional shortage area,
we requested that the state board of health initiate a study to determine
if the county was a shortage area. The state recommended to the federal
government that our county be designated as a health professional shortage
area because one physician served 3,500 members of the population. Our
status became official in a few months.
This health
professional shortage area designation has many benefits:
- Federal
loan waivers are available for physicians who practice in such an area.
- National
Health Service Corps physicians, though few in number nationally, are
required to practice in an area with such a designation.
- Physicians
with visas are allowed to stay in the United States permanently if they
provide medical services in a shortage area for a five-year period.
- All primary
care physicians receive a 10 percent quarterly bonus in their reimbursement
from Medicare for practicing in a shortage area.
- Many physicians
review and respond to the government’s posting of all health professional
shortage area sites that have access to student loan waivers.
Screen
Once a potential physician is identified, an initial screening is performed:
a National Data bank inquiry is made to investigate their history of malpractice
claims, their curriculum vitae is assessed by the CEO and chief of staff,
the physician’s status as Board eligible or Board certified is confirmed
(this is a requirement of the board of trustees and the medical staff),
and we check to see if the candidate has moved frequently (if so, that
candidate is ruled out). I then initiate a telephone interview with the
candidate to assess communication skills, longevity potential, community
involvement, professional interests, spouse’s career needs, academic concerns
for their children, and professional requirements (i.e., employment versus
private practice). If the interview is positive, materials about our community
are mailed to the physician. During the second contact, the physician
and his or her family are invited for an on-site visit.
Sell
The most important event during the physician recruitment process is the
on-site visit. I dedicate 100 percent of my time to the candidate and
his or her family during this visit. The visit is structured yet flexible
to address the needs of the candidate. All travel arrangements are made
by the hospital. Flowers or a fruit basket are ordered for their motel
room. The first face-to-face contact is usually over breakfast. The visit
usually includes a tour of the hospital, a drive through the community
to look at housing, a meeting with the school superintendent and a visit
to the local school, dinner with the physicians and board members, and
a tour of the local businesses to meet community leaders. I actively listen
to the candidate and their spouse to assess their ideal needs. I also
reinforce the community’s strengths (i.e., low crime, low cost of living,
strong sense of community, location, excellent school system, the hospital’s
vision).
The hospital
has had to make changes and adjustments to meet the needs of candidates.
One major change has involved the provision of employment opportunities
for physicians. Most candidates that we interview right out of residency
prefer to be employed by the hospital. Over the past five years, the hospital
has activated five federally designated rural health clinics. These clinics
are funded based on cost by Medicare and Medicaid. These clinics have
allowed the hospital to provide employment opportunities for primary care
physicians. A base pay with an incentive program is usually proposed to
a physician when they request employment. An income guarantee is provided
if they prefer to be in private practice. This flexibility has been a
successful selling point for the hospital.
During on-site
interviews, candidates often openly express concerns, which I address
immediately. Some candidates are concerned about their student loans,
and we discuss the Federal Loan Waiver option. Several physicians have
taken advantage of this program. Another candidate who had been a chief
resident at his medical school expressed a desire to continue to teach.
The state’s medical school was contacted and an adjunct faculty appointment
was arranged. Job interviews for the wife of another candidate were arranged
during their on-site visit to meet her employment needs. One first-year
resident was concerned about being in debt when he completed his residency
program. A contract was provided whereby the hospital paid him a monthly
stipend during his residency and he made a five-year commitment to practice
in our community so he would not have debt when he began his career. Active
listening skills, genuine personal contact, creativity, and flexibility
have been essential in the successful recruitment of physicians in our
rural setting.
Results
The hospital has been extremely successful in the recruitment of a young,
quality medical staff of the past six years. As new physicians have moved
into our community, the physicians whose performance was questionable left
on their own. During this period, the hospital recruited seven family practitioners,
one general internist, the area’s first OB/GYN and pediatrician, an anesthesiologist,
and an invasive radiologist. With the exception of one, our oldest physician
is 46 years of age! Five of our physicians are employed by the hospital
and provide clinical services at the five rural health clinics. We have
also recruited four family nurse practitioners. All of the employed physicians
signed five-year contract extensions.
The hospital’s
financial status has dramatically improved during this period, despite
the cash drain that new physicians initially have on the organization.
Gross revenues have increased by an average of 19 percent per year. In
1992, the hospital employed 75 people. Today 230 employees are listed
on the payroll. Market share has nearly doubled. The hospital received
Joint Commission accreditation in 1998 for the first time in 35 years.
We have successfully negotiated a merger with a large health system, and
they have commented that the quality of our medical staff is just as good,
if not better, than theirs. This organization was recently rated as one
of the top 100 in the country.
I recently
surveyed our medical staff to inquire why they chose to move into our
community. The following were their reasons:
- The community’s
strong need for physicians;
- The supportive
and quality-oriented physicians;
- The well-organized
on-site interview in which the physician felt valued;
- A hands-on
recruitment approach by the CEO;
- The availability
of federal loan waivers;
- The hospital’s
proactive vision for the future;
- The ability
to locate spouse employment;
- The friendly
community;
- The flexibility
of the hospital to support either employment or private practice opportunities;
- The health
professional shortage area status; and
- The availability
of an academic teaching opportunity.
It is my
opinion that the CEO of a small rural hospital must play an active role
in all phases of the physician recruitment process. Active listening skills,
creativity, and flexibility were essential in the successful recruitment
of our medical staff.
Source
Material
National Rural Health Association. 1998. An Issue Paper Prepared
by the National Rural Health Association. Kansas City, MO: NRHA
Weisfeld,
V. 1993. Rural Health Challenges in the 1990s—Strategies from the
Hospital-Based Rural Health Care Program.
James
Full, FACHE, serves as chief executive officer for the Randolph County
Hospital and Health Services, managed by St. Vincent Hospital and Health
Services in Indianapolis, Indiana. This hospital will be sponsored by
the organization on July 1, 2000, and renamed St. Vincent Randolph Hospital.
He has previously worked for Alliant Management Services in Louisville,
Kentucky, and was the executive director for the Greater Randolph Community
Health Plan in Winchester, Indiana. In these positions he has coordinated
the merging of a rural hospital system with the St. Vincent Hospital System/Ascension
Health; is coordinating the planning for construction of a new critical
access hospital; and has activated specialty clinics, comprehensive wellness
and occupational medical programs, and model rural health clinics and
training centers to provide rural exposure for medical residents and students.
Prior to these experiences, Mr. Full worked as a CEO for a Charter Medical
Corporation Hospital in Lafayette, Indiana, and as administrator for the
Veterans Administration in Colorado and Illinois. Mr. Full is a member
of the National Association of Social Workers, the Indiana Hospital and
Health Association Council on Rural Health, the Indiana Primary Care Association,
and the Indiana Rural Health Association. He has received several awards
for innovative program development, and volunteers his time with Junior
Achievement, Boy Scout Medical Explorers, Rotary International, and the
Randolph County United Way. He has been a member of the American College
of Healthcare Executives since 1985, and achieved Fellow status in 1999.
This case study represents a part of his Fellow project and was voted
one of the best case studies in 1999.
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