Randy Oostra 0:03
We feel a lot of healthcare, even though our history was acute care base is really going to be outside of the hospital in increasing amounts. We’ll always rely on our acute care backbone in this country. But I think more and more coming out of COVID we’re going to see this whole home care model get developed more and more.
Gary Bisbee 0:21
That was Randy Oostra, President and CEO at ProMedica Health System, discussing how ProMedica as an acute care backbone anchors the delivery of a broader set of community-based services, such as home care, hospice and assisted living care. I’m Gary Bisbee. And this is Fireside Chat. This interesting conversation explored why the nonprofit ProMedica acquired the investor-owned HCR manor care, a collection of skilled nursing assisted living home care and hospice facilities and services, how the acquisition changed ProMedica and how the shared learnings have benefited both companies. We discussed why social determinants have been underfunded in the US by the COVID experience will increase interest in them. By television, this will remain a key part of the health system, and how COVID is affected ProMedica has financials with its diverse business model. Randy reviewed data from Pro America’s Health Plan that documents how social determinants have lowered health care costs by nearly 40%. Let’s listen.
Randy Oostra 1:22
We do food interventions when people that are food insecure, and their healthcare costs go down 38%. When we do the same with financial opportunity counselors, people counseling on finances, we see almost a similar reduction in health care expenses when we do that intervention. So if we were serious about reducing health care costs, these social interventions are as important many times as anything that we’re doing in a medical environment.
Gary Bisbee 1:55
You’ll find Randy’s view of the new normal to be both interesting and creative. I’m delighted to welcome Randy Oostra to the microphone.
Well, good morning Randy and welcome.
Randy Oostra 2:08
Glad to be with you.
Gary Bisbee 2:09
Excellent. Well, we’re pleased to have you at this microphone Coronavirus entered into our lives abruptly and it’s certainly variable by region. What’s the status of the surge in ProMedica’s primary inpatient service areas?
Randy Oostra 2:22
Yes, we run hospitals in Northwest Ohio, Southeast Michigan, and 13 hospitals. That picture versus our health plan and a senior division is different. What’s happened is Michigan especially we’re in the county just south of Detroit. So we see some larger impact there. But Ohio we have gone from a peak of about 150 admissions census COVID. From early March to probably about a month ago hit our peak, and we’ve been on a downward path over the last several days. We’re down in the 40s. So gone fairly methodically. And so now we’re on both sides of the fence, we still have COVID patients to take care of… less than less every day and of course, like everyone, thinking about how we get back to a new level of normal and beginning to get back to the outpatient testing and elective surgeries that really are the mainstay for acute care hospitals.
Gary Bisbee 3:20
How do you think about the surge for HCR Manor care, your senior division, which is basically national?
Randy Oostra 3:28
Yes. So we’re in 20 different states. And of course, we have skilled nursing facilities, assisted living, and then a home care and hospice. So each area is different. Each business line is really different. And then again, depending on where we are in the country, we have more hotspots than others. So we have facilities in Washington State, California, New York, New Jersey, Pennsylvania, and some of the largest cities that have gotten hit hard. And overall, we’re starting to see the same thing that we’ve seen on the kidcare side. Of course, it’s much slower, and it’s going to be a much more slower way to get out of it. We still see a fairly large number of COVID positive patients, especially in our skilled nursing facilities, some pockets more than others. Some states have better testing. We’ve had facilities that we thought had no COVID patients. And then when we tested them, we found out as much as 50% of the residents were COVID positive. They had antibodies for COVID. It’s been a really interesting study. And I think the whole industry has learned an awful lot about COVID. But by and large, we’ve got impacted from a census status just like everyone else’s, because we depend a lot on patients coming from the acute care setting. So that’s gone down. It’s gone down for us as well. Skilled Nursing, probably today, overall about 70% of what we had been running and it’s going to take some time for that to bounce back. And then again, some of the limiting factors on PPE and others are now at least starting to get addressed and we’ll talk more about that. But finally, we’re looking at that a little bit more. Now homecare and hospice stayed strong early, but we need to see that we are expecting especially on the hospital side, perhaps that we’ll see a little dip there. So that census in those three areas, still nursing assisted home care, and Hospice is down originally home care and hospice was up. And I think what we’re going to do, again, what part of the country it is in which business line, some of them will start to gradually come back up, some of them will take a little bit longer. And I think that’s a whole fear in the entire industry is how quickly that’s going to come back. probably less predictable than you would expect to hospitals.
Gary Bisbee 5:46
Well, many of us are generally familiar with Pro Medica and you’ve done a terrific job in growing Pro Medica. Can you give us a description of Pro Medica at the current time?
Randy Oostra 5:58
Sure. Seven or eight years ago we would have said we’re a regional integrated delivery system. And a couple things happened. We have 13 hospitals, we’ve had a health plan for over 30 years, and we’ve been employing physicians for 30 years. So even when people got out of the health plan business got out of the position, employment business, we always stayed in, depending on the cycle either looks smarter, we look dumb, you know, depending on how you want to look at it. But we stayed in it, we have a nice baseline and acute care. And then a couple things probably had a major impact on us. One of them was just some work that we had done in obesity, which led us to hunger. And this idea that hunger is a major health issue. And probably over a decade ago, launched us into believing the social determinants out to be a much larger part of our organization, the communities we serve, and part of acute care. And then the more we dealt with social determinants, the more that we began to look outside of our walls, including some of the work we’ve done with those that pursue anchor institution strategies and think about themselves as anchor institutions, this notion of working in the community. And so that really changed our focus, probably a much more external focus than we had traditionally had. We also have some discussions with some folks about potential partnerships and joining together. And after going through that, realizing how important we were, as a community citizen, but also a major employer, to our area of the country that we live in. We went back to say, you know, we have to augment and really create another path for ourselves to really grow to be the type of company that can survive and thrive. And as we looked outside of our walls and demographics, we really approached HCR Manor care a number of years ago about a variety of partnerships. So we did some things initially with one of our hospitals. But what it led to is a whole variety of discussions with them, relative to us working together and it was a little foreign at first because they were, you know, publicly traded for profit company at one point, then owned by private equity. And to convert a for profit to a nonprofit was a bit of a path. But we were successful in doing that. And so what happens is we take what we do historically, we add in this focus on the social determinants, which we feel are critical. And now we think about aging and the services that we can provide an aging And oh, by the way, we go from being based in Toledo, Ohio, in kind of our original footprint, to having now facilities and 20 different states. We had 70,000 employees and now it’s 55,000. It just really changed the nature of our company in very dramatic sort of ways. But I think it’s still around that same mission that’s really taking care of people and it’s just in a larger footprint. And really, we feel a lot of healthcare, even though our history was acute care base is really going to be outside of the hospital in increasing amounts. We’ll always rely on our acute care backbone in this country. But I think more and more coming out of COVID. We’re going to see this whole home care model get developed more and more.
Gary Bisbee 9:08
Yeah, well, you’re leading right into the question, which is what lessons have been learned from your senior division that you can apply to the inpatient hospitals?
Randy Oostra 9:19
There’s a lot of things, you take a for-profit company and a not for profit company. And as we contrast after you’re into it for a year or so, and talking to their leadership and what they brought to the table and what we brought to the table. So you know, they’re a publicly-traded company, they used their quarterly calls with investors and were very focused on numbers and metrics, and really intensely focused on data and modeling and reporting. And simplifying people in the senior world. They know what a scoop of mashed potato costs to the fraction of a penny and you take that for systems in pursuit of operations. And then what they would say about us is we swung for the fences a little bit more, we were a little, maybe a little broader thinkers, strategic thinkers. And so when we put the two together, it was a very nice marriage. And then we found, there were things that they did that were applicable to us. And then things that we have part of our historic company, especially with a physician, backbone, the ability to now take that position backbone and make it available to their company, and especially now with telemedicine, our focus on social determinants, which is incredibly important in the senior world. And somehow with that business development acumen, our clinical, their side and our clinical world. When we put those two together, I think what we created is something unique and quite figured it all out yet, but definitely we put it in the blender. It’s really kind of a nice mix, and we think it really helps position us to do some non traditional things in the future.
Gary Bisbee 10:57
Well, if I could pursue social determinants of health for a moment, you’ve certainly been an advocate of social determinants of health through the years. Currently coming out of COVID. We’re seeing this massive unemployment, which seems to make even more sense for commitment to social determinants. Are you hearing from your colleagues and other health systems that there’s a renewed focus on social determinants of health?
Randy Oostra 11:24
We’re starting to see it. I can’t say it’s coming out of the hospital sector yet. I think they’ve all been so focused on COVID. But I think everyone knows about social traumas. I think what’s happened now it’s public officials have all of a sudden discovered it. And so now we see states talking about social determinants, we see a lot more interest in social determinants and a lot of more government and probably media attention to it. And I think for people that are outside of healthcare that have been doing this work for decades, if not their entire careers, I think they’re probably rolling their eyes saying what took y’all so long? It’s great that we’re now acknowledging that social determinants are a factor, especially as we look at what COVID impacted and didn’t. And I think the challenge here and the interesting thing to think about it to see what’s really going to happen is we’re going to do anything about it. We’re doing lots of talk about it. But clearly for all this, does it make any sense to take care of somebody clinically when you don’t look at all these social factors in people’s lives, but you think you don’t have to read too much to figure out what has a bigger impact on an individual’s health. And it’s interesting that we haven’t done that before in clinical care. And I think it’s just the way it evolved. But some of the things we’re finding is fascinating. So when we do food interventions and health plans, we can look at data around this, but we do food interventions. When people are food secure, their healthcare costs go down 38%. When we do the same with financial opportunity, counselors, people counseling on finances, we see almost a similar reduction in health care expenses when we do that intervention. So if we’re serious about reducing health care costs then these social interventions are as important many times as anything that we’re doing in a medical environment.
Gary Bisbee 13:09
Well, for sure. One of the problems you know better than most with social determinants is we just never had anybody take responsibility for paying for them or financing them. Do you see any sense among policymakers that there’s a renewed focus on how can we allocate more resources to the social determinants area?
Randy Oostra 13:31
Well, I think there’s one more political push around it now because you look at the impacts on especially African Americans, people living in areas where they have a lot of social challenges relative to various people’s lives. So I think there’s a lot more political immediate interest in it. What we are seeing is insurers are starting to step up and pay for Buddha discharge and things like that. The reason is for the stats we were talking about, it’s lowering health care costs. So we’re seeing a little more interest out of our insurers willing to pay for these sorts of things, and we’re starting to see more impetus relative to the government looking at it. We’ve always advocated and most hospitals may not want to say this. But we would firmly believe that if you do Medicaid, Medicare, you should be required to do it. And not that you would have to provide all the social needs, but just create a community plan to address those in our experiences. We just aren’t helping people connect the dots. And sometimes we think people should be able to do that on their own and they can’t. So we’re saying yes, it’s probably the best and highest level of discussion and activity ever. And I think what’s going to be interesting to see is what do we do with it?
Gary Bisbee 14:43
Well keep up the great work and your leadership in this space. It’s certainly needed. Back to ProMedica and COVID. What’s been Pro Medica’s policy on remote working?
Randy Oostra 14:54
Yes. So like a lot of organizations we sent our workforces, home. We are slowly bringing people back. Our executive group came back a couple of weeks ago, our leadership group is increasingly coming back. And we’ll bring back our clinical folks as well. And so just in broad terms, our corporate offices, we’re bringing back probably about 4000 people. And of that 4000, probably somewhere around 500 will continue to work from home. What we’re finding as we’ve been consolidating our offices over the last several years into a couple buildings in downtown Toledo, Ohio as part of a commitment to the community. We thought we were short buildings. So we were thinking about one other building, we’d have to require a bow because of figuring out how to work from home. And in some of our cases, actually, productivity went up at home, that now we’re thinking like there are a number of employees probably around 500 that we won’t bring back into our office setting and we’re going to be able to use our current offices to be able to house the people that will continue to move downtown. So yes, so a big push toward letting more and more people work from home. And again, for all the right reasons,
Gary Bisbee 16:07
Let’s turn to elective surgery, which has been a huge issue for all of our health systems. When did ProMedica postpone elective surgeries? And when did you begin to reinstitute them?
Randy Oostra 16:19
Early March when we basically stopped all activity, including testing and elective surgeries. And we all know the financial impact of that, but also, the clinical impact. I saw some statistics for ProMedica, about the huge decrease we had cancer cases. Well, it’s not because they’re not there. It’s because we weren’t doing any of the testing to find out the cancer cases. And I think that’s true in a whole variety of areas. And then we have a lot of people that without these elective surgeries, it’s a quality of life issue well, and so now, the governor in Ohio and hospitals in Michigan, we have to work with both different states. We’re slowly bringing back elective surgeries. And I think as I mentioned, we’re probably in the next week or so probably going to get back to that 60% to 70% range. And our goal at this point is to be as close as we can in early June to be back close to 100%. So I know our offices are quickly filling back up, we’re having to do all the social distancing, waiting in cars, temperature taking, that everyone else was doing. But I think very, very quickly, we’re starting to see people come back in, get our offices and everything back online. And again, I think just from a safety standpoint, and a clinical standpoint, a lot of us in the hospital world saw people avoid the hospital and people avoid emergency rooms, and even number of heart attacks that normally we would say went down because people were letting the hospital so creating that again and getting back open is bigger, important to the aspects of daily health and well being.
Gary Bisbee 17:51
Have you done anything special in communicating with the community to try to assure them that it’s safe to come back to the hospital or the surgery center?
Randy Oostra 18:00
Yes, we’ve done a variety of things and are doing some media campaigns. We’ve done a variety of your typical social media, sending out newsletters and information to anybody that we have emails for. And then we’ve done a series of commercials relative to acknowledging caregivers and acknowledging what we’re doing to bring people back to work. Then even on the senior side, we’ve got a whole campaign that we’ve planned and rolling out, again, just to explain to people the crossings we’ve taken, why it’s safe to come back into our residences and institutions, the steps that we’re taking to what we do for a living. So yeah, we’ve got a whole variety of strategies that they like a lot of people are. And again, that’s the concern is getting people to feel comfortable to come back. And what we need to do to convey that and then again, just like many just making our staff available to do a lot of media throughout this whole process in trying to convey to people. So yeah, a lot of opportunities there and I think we’re gonna have to do a lot of work and I’m sure we’re gonna have to do more than we originally planned.
Gary Bisbee 19:05
If another wave comes in the fall or next year, will you discontinue elective surgery?
Randy Oostra 19:10
Well, I think that’s what we’ll find out. We’ve seen some areas across the world that have really gone back to normal and then reinstituted lockdowns. So hopefully everyone is smart about social distancing, wearing masks, those sorts of things. Hopefully, we’ll be able to avoid any flare-ups that will just be able to keep doing the sort of things that we’re doing and keep the clinical volumes going. I was on a call just yesterday, and somebody was pointing out that we’re not allowing people to do hospital work, but yet you can go to a gym or get a tattoo and do all these things. But, we’re not allowing people to walk back into hospitals, which is, hopefully, one of the more safer places they could be. So yeah, I think we’ll just have to monitor what happens this fall and see what sort of regulations that governors may put in place or the feds and then also just to make sure that we have supply chain stuff that we need in order to be able to respond.
Gary Bisbee 20:04
Well, you mentioned telemedicine earlier, what’s been the usage of telemedicine at ProMedica?
Randy Oostra 20:09
Like everyone, I think it’s the same story for everyone. We had fairly significant use of telemedicine in the past, nothing great, but it was starting to build. And then again, we started to see the number of visits that we’re now doing. Some of the stats that I saw, we might have been doing 30 visits a day. And then within literally two weeks, I know we were like doing six to 700 a day. And I was looking at a list of doctors who were doing telemedicine actively before. And it was a nice list but a small list. And then the list I saw just a couple days ago, probably was 10 pages single space with the numbers of tele visits that each one of those positions had done. I had a really interesting discussion with one of our family practice physicians who pointed out he goes you know, I trained to see people in person and that was the way I was trained and now that I’m doing visits virtually, I can do it faster. I can actually spend a little more time with the patients, it’s a really much more easy, convenient way to do it. The patients like it, I like it, I want to make sure it’s part of my practice on a go forward basis. And oh, by the way, it might allow me to be more effective, more efficient and actually see more patients. So I think that’s probably what everybody has seen. And we’ve seen all these dramatic increases. And so now I think all of a sudden, we needed this critical amount of doctors to be able to do telehealth and more and more hospitals and health systems going to be able to build infrastructure that they don’t need to rely on others they can rely on their own medical staff to deliver 24/7 telehealth services.
Gary Bisbee 21:46
Patients were more or less forced to use telemedicine being concerned about COVID infection. How do you see going forward the staying power? Do you think patients will continue to use telemedicine at the rate they have?
Randy Oostra 22:02
Yeah, that’s a really interesting question. I’d love to say it’s going to stay at that high point. And I think it’s really going to be interesting to see how that plays out relative to patients. I think from a provider standpoint, the breakthrough here has been the providers like to do it. So they’re able to impact on patients that received a phone visit or virtual visit instead, I think that would give us staying power. The concern here is that we built it because we had to, but now everyone will want to go back to the normal way of doing things which was more impatient based. The reason it might have some staying power is I think people are still concerned about sitting in waiting rooms, going to a doctor’s office. So I think there’s a potential you’d be surprised if it stayed at the amount of visits that we’ve seen with COVID just human nature of you’d kind of expect that it might go down a bit. But I do think that horse has left the barn and we’re off and running. And I think it’ll continue to build and enjoy generationally as we start to see, based on demographics that younger folks would want to do it anyway. So I think it will continue to build and I think we’ll look back at this and this will be the pivotal time where it really all changes.
Gary Bisbee 23:11
I certainly hope so. You mentioned physical distancing. How do you think about that with ambulatory care waiting rooms, and other places where patients and staff have been collecting?
Randy Oostra 23:24
A couple things, our office staff is very robust. We’re taking temperatures, there’s a lot of automation in our building. We’re doing ceiling-mounted cameras that take temperatures, so we’re able to do things quickly there. We’re doing social distancing, studies, putting up plexiglass. We spent a whole bunch of money to build an open office environment in our headquarters and now we’re putting a plexiglass everywhere. So that’s kind of interesting. But we’re going through directing flows of people in offices and this thing’s in the offices, virtual waiting rooms, having people waiting in their cars, trying to create this paperless registration process. So, you register online, you’re waiting in your car, or you’re waiting in a very large public area where you can have social distancing. You’re basically alerted when it’s time to go to the office, you go directly to the office, you don’t touch papers, they don’t sit in a waiting room. So our team has done a really, really nice job of that you start to read a lot about the virtual waiting room. And I think that’s a really nice way to be able to do it. I think it’s convenient for patients. It’s health-wise, better than sitting in a waiting room. So again, I think hopefully, that just becomes part of healthcare as DNA and that we operate at a very, very different level in the future. So those are all the things we’re doing and I think we’re learning a lot relative to other things we’re doing and we’ll expect to continue to do those.
Gary Bisbee 24:51
Well, let’s turn to economics for a moment, which is not a pretty picture for any of our health systems. How are you thinking about economics for ProMedica in 2020, Randy?
Randy Oostra 25:02
Depends on when you ask the question. So we actually had a great couple first months of the year, which helped us. So as we closed March, even though the last two weeks of March were a bit of a train wreck, we at the end of March looked like, okay, we were hanging in there. April was the worst train wreck in the state of Ohio, I think. So like we’re losing $1.3 or $1.4 billion per month, that clearly hit us really, really hard in the month of April. So on an acute care basis, of course, we lost a tremendous amount of money in the month of April, though we did get some CARES Act money. We’re going to plug through that in April and May very, very quickly. And then in the senior division. It’s the same sort of thing. Again, some of the home care and hospice types lasted for a while so there was a little longer trail so both economics were good. We took a major hit in skilled nursing. So we are expecting to lose significant money in skilled labor and then we give out health plans. So that’s kind of been bolstering us a little bit right now. And again, what we don’t know with the health plan is, again, what people are concerned about is, are we going to see this big influx of patients over the remainder of the year and catch up for lost volume? Or is that volume out of the system. And do you roll that all up to here today? We are when we booked the CARES money, barely profitable today. And really, the way our year is going to work is really what happens in probably the next 30 days, how quickly we can get back to some normal revenue situation where we were able to kind of get back to normal. If we do that we originally thought across the system, we’d be looking at a loss in excess of $200 million. That was a few weeks ago. Actually, I just ran into my CFO before this call and he said they were getting new forecasts today. I thought they might be better than that. So we’ll tell you how our business line sandbag is turned out but we’re expecting it to be a little better. That’s for us at this point, if you had to pick a number out of the sky, I would say probably that $200 million loss is probably what we’re looking at right now. But again, if we bounce back quickly, and if the end of the year is anything like the beginning, we could be better than that. So I think that’s probably the answer you can get from a lot of people.
Gary Bisbee 27:21
Well, 200 million sounds like a pretty good number compared to some of the others. Does that include the senior division?
Randy Oostra 27:27
Yeah, that’s a roll up. So again, we’ve got the profitability coming in from our health plan. So this is where sometimes people who have criticized this are wondering about our diverse model. And the beauty of this diverse model is really what’s helping us right now, because we’re playing in all segments. So right now, that’s better than most. So we’re hoping that that exactly plays out like we’re thinking it is. So if we can get that we’d be, I would say please, but we’ll come out of it a lot better than others have
Gary Bisbee 27:57
A diversification strategy does look really good now. So congratulations. How about your cap-ex budget? Is that going to be significantly influenced later this year?
Randy Oostra 28:08
At this point, no. A couple things happen to us. And we had done a number of divestitures. At the end of last year, we got rid of some real estate, we divested some of our skilled nursing facilities. And we were fortunate in that as this whole thing hit, we had a much larger percent of our investment portfolio in cash. So we’re very, very fortunate in that we actually cash position-wise, we’re actually exactly where we were at year at. So from a cash position. Up to now we’ve been in really good shape, and we haven’t seen any problems there. Like everyone we pull back on our capital at this point, we’re making investments in our HCR footprint and our hospital footprint. And so we pull all that back, and we’ll kind of see how this all plays out when we reinstitute capital and we think about it. And I think it’s all hinges on how we come back in the month of May in June.
Gary Bisbee 29:06
This has been a terrific interview. Randy, thanks a lot. Let me ask one final question. We’re all talking about a new normal in healthcare delivery. And you’ve made reference to that on and off over this interview. How would you summarize your thinking in terms of what will be a new normal?
Randy Oostra 29:23
A couple things are going to come out of this. So I think some of the things that we already know about, I think it’s just how we think about infection control and deciding the way in the past to work in China was still talked a lot to the Chinese about various projects and things. When you’re in China, a lot of people wear masks. So I think we’re going to see some practical things like that. I think some of the social distancing and things I think that’s not going away anytime soon, I think we’ll be much more cautious with those sort of things. You think about how the models change, much more consumer-based model, we talk about it. It’s one of those buzzwords, but clearly when you begin to think about making services more available to people at all. From the telehealth keys, some of the service providers that are providing services at home, we think this whole home base model, including hospital at home type of services, are really going to see a major, major push as we go forward. I think the whole work environment with working from home is going to be radically different. And I think we’re going to see a lot rise in social determinants and public health. I think those are the sort of things that come out of this as well. So I think what we’re gonna look at is a much more holistic consumer base model. That’s what we’ve been talking about. But we haven’t done it. It’s been a lot of rhetoric. And I think a lot of the things that we’ve all said that we want to do and we see as the teacher, they got thrust upon us. So I think this idea of a much more consumer base model thinking about individuals keeping them out of the hospital, keeping them healthy, providing services to them in that model, is really our fuel. And I think as you listen to people talk about what they’re going to double down on health systems that previously didn’t think a lot about the home and those services now you hear them talking about it. So I think that’s our new normal, and it’ll be interesting to see how that plays out.
Gary Bisbee 31:14
Well said, Randy, thanks so much for your thinking this morning. It was terrific. Best of luck to you and your ProMedica team and all of your communities.
Randy Oostra 31:23
Great to be with you Gary, and have a great day.
Gary Bisbee 31:25
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