June 15, 2023 at 11:21 a.m.
River News: Our View
Marshfield numbers raise questions, demand answers for community
The Marshfield system closed last year catastrophically in the red, to the tune of an operating loss of more than $360 million. Given its first quarter numbers, 2023 isn't going much better.
Along the way, in some of its documents, Marshfield has said its situation reflects "financial difficulties." That's putting it mildly, kind of like a pilot in a plunging plane saying he seems to be in a pickle.
It's a little more than a pickle, and the question we have is, what kind of pickle does that put our community in?
To hear Marshfield tell it, its health care system is not at all in a death spiral; it only needs a course correction, as its own corporate consultants confirm. The System says its losses, and weakened market position - not to mention substantial debt and debt service - are due to the same inflationary pressures everybody else is suffering from, and then there's that one-time glitch arising from problems associated with implementing a new health records system.
Then, too, it's a dismal economy. After all, hospitals around the country are strug- gling with their operating mar- gins.
Perhaps all that is true, but given the numbers and reading between the lines of the con- sultants' assessments, our com- munities need more assurance than that.
For one thing, compared to other major hospital systems, those consultants found lagging physician productivity, inefficiencies in revenue cycle management and inpatient care, too many staff, and salaries that were too high, among other things.
Reading between the lines suggests that, while Marshfield pursued relentless expansion and market consolidation over the past seven-plus years, it has taken its eye off of the fundamentals, leading to mismanagement, or at least a lack of adequate management, in many areas.
To be sure, by the time the consultants came to assess things, Marshfield had already realized that the engines keeping it airborne were beginning to stutter and stall, and so it hatched an aggressive plan to dump $185 million in costs. And the consultants say it all seems reasonable, if everything plays out like Marshfield says it will.
But there are a number of caveats. The first is that corporate consultants always serve two purposes. The first is to let their clients know just how good or bad things are and suggest those course corrections. The second is to always put on a good public face for their clients, no matter how dismal the situation is: The canary in the coal mine may have died, but don't worry, the miners will get out alive if they just hurry and turn right instead of left. Everything will be just fine.
We're not saying that's the case here, but the reports boil down to exactly that - if you do a better job, and do this instead of that, then your fiscal health will be better. If your doctors become more productive, if you pare staff and salaries (and it has already laid off 346 employees), if you hire competent managers, what's to worry?
Well, what's to worry is why those inefficiencies existed in the first place, and what is Marshfield doing fundamentally to make sure those things don't happen in the future? What systemic reforms are being made to ensure that Marshfield can provide sustainable health care for the communities it serves, not just for us but for our children and grand- children?
There's another troubling aspect to Marshfield's internal improvement plan. We see that, in attempting to land the plane safely, Marshfield established all sorts of work teams to see what needed to be done. There was a creature called the Workforce Utilization Steering Council, and another called the Patient Access Council.
All well and good, but it suggests that, prior to these teams being set up, there was no existing managerial system to ensure accountability and to monitor those metrics like those teams proceeded to do.
Again, it's one thing to cut staff numbers and reassign schedules and fix specific things - you know, turn right instead of left - but what will the System be doing to ensure ongoing monitoring of productivity, revenue management, and patient care? A car service can fix your flat tire but what is your plan for monitoring and maintaining the vehicle over time?
The same goes for the problems that arose unexpectedly in implementing a health records systems. Those problems were costly, apparently, but why did such unforeseen problems happen in the first place?
Problems do happen, of course, and many can't be predicted or foreseen. The question is whether that was the case here, or whether this was another instance of a management lapse that shouldn't have happened.
Marshfield may know the answer, but the community doesn't. We deserve to know and Marshfield owes a full public explanation.
All of this leads to the most important aspect of this situation - the quality and adequacy of health care in the Northwoods. Our population is growing, and it is aging. That means the demand for ever more health care services is increasing. Already the demand for services is strained across the board, and health care is no exception.
If the System is unable to navigate a course correction and stabilize, what does that mean for its customers in our communities? What does it mean for the delivery of daily health care services that we all depend upon? Already for some services and doctors people have to travel lengthy distances.
When Marshfield first proposed a hospital in the area, many people asked questions about long-term sustainability and profitability, what with so many health care systems in the area, and many questioned the rapidity of Marshfield's rapid expansion throughout north-central Wisconsin. Those were valid questions then and they are valid questions now.
And even if Marshfield successfully gets back on track and saves $185 million in costs, what will that mean for patient care? The question is just as relevant whether the plan is successful or not.
We all want the system to be efficient and productive. We all want lower system costs. But will that mean lower patient costs, or just fewer doctors and longer waits? What will the elimination of 346 positions mean for patients in the coming year?
Will Marshfield be able to retain the doctors and professionals it has now, and it will it be able to recruit for the future? Are employee pensions secure? Who is going to make sure that prudent pruning does not become careless corner-cutting?
So far, and we acknowledge that this is natural, all we read in the financial documents and in the consultants' assessments is what this or that strategy will mean for the system itself. But we would rather Marshfield tell us what those strategies will mean for those living here in the Northwoods.
Bluntly: We know that if the System doesn't turn around there will be cuts in care in local communities as the System retreats and centralizes. But just what will those planned $185 millions in savings mean for service in local communities if they are actualized? Can they be achieved without also centralizing and moving services to more distant locations?
Are service cutbacks thus inevitable either way? What is going to happen to primary care? To urgent care?
Finally, as long ago as 2016, we wrote about Marshfield's rapid accumulation of debt through bonding, both to refinance old debt and for new debt with which to expand. In 2016, Marshfield proposed to borrow $1.11 billion through tax-exempt, low-interest bonds for expansion and improvements, but only secured a portion of that, with about $103 million used to finance acquisition, renovation, construction, and equipment costs.
A year later, WHEFA issued $314,315,000 to re-finance a portion of debt incurred with the System's purchase of St. Joseph's Hospital, as well as certain other capital expenditures. As we reported then, that increased the system's annual debt service requirements from about $23 million a year, or $716.6 million through 2046, to approximately $45 million a year.
In the latest report, accumulated long-term debt is now more than $1.4 billion and its maximum annual debt service requirement is about $82 million for 2023, 82 percent more than in 2017. Debt to capitalization - long-term debt as a percent of total unrestricted assets - has grown from 46.7 percent in 2020 to 58.4 percent in 2022.
And the system hasn't been able to maintain the available cash it needs to meet its debt covenants.
Yet Marshfield continues to build and expand. Again, is it sustainable?
All these are merely questions. But we believe Marshfield owes the communities it serves answers to them all. The questions will only grow more critical as our population grows, especially our aging population, and as demand for health care services becomes ever more pressurized.
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