Doylestown (Pa.) Health celebrates the system's centennial in October. The health system, located about 40 miles north of Philadelphia, is not alone in facing severe financial challenges, but measures taken in an ongoing review of its operations will continue to bear fruit and allow it to focus on another 100 years of care for the community it serves, says President and CEO Jim Brexler.
In late December, Doylestown Health said it would take a "comprehensive look" at its existing operations in the face of "extraordinary and unprecedented financial hardship." The move followed a ratings downgrade from S&P Global because of concern about its inability to meet debt covenants and a "steep decline in operating performance."
Doylestown Health operates its flagship 247-bed hospital plus multiple care sites in its community including outpatient facilities and urgent care locations. It also owns and operates a retirement community and an early learning school on the hospital grounds while employing more than 435 physicians in over 50 specialties.
Question: What are some of the biggest financial challenges Doylestown Health has faced in recent times and continues to face? And how are you mitigating them?
Jim Brexler: The last two years of COVID have eaten away at our reserves. There have been elevated salary expenses and, with the omicron surge we had, it's almost been a perfect storm of circumstances. We've also had issues with Medicare where we have seen the government do nothing to increase their payment rates. While our costs have increased 27 percent, there's been a corresponding zero percent improvement in payment from the government. Some of the long-term contracts we agreed with private payers in late 2019 also don't even come close to our costs today, and we are talking with them about that. What we are doing [about this] is a full court press to address costs and get more efficiency into our program.
Q: As you try to battle expenses, are there any job cuts on the horizon?
JB: Our market share remains strong, as does patient demand. The challenge is getting the staff to improve throughput and to meet that demand. We are continuing to spend a lot on overtime and we still have some agency staff and we are actually bringing folks in to fill critical spots, including support positions. There is a comprehensive review to make sure we are staffing correctly, and so I'd say we are rearranging the decks so that people are working the most efficiently.
Q: Can you give an update on the decision to sell off the Pine Run retirement community?
JB: We are evaluating responses now to Pine Run. It's going to have to be a well capitalized group with expertise [in the sector]. And we would want a long-term contract to deliver our medical services to the villagers we serve there. They are very much part of our community. The challenge we are facing now — we wouldn't have thought about [such a move] before.
Q: Grand View Health recently revealed an alliance with Doylestown to "deepen" the relationship between the two systems. Could this be a precursor to a full-blown merger?
JB: The collaboration agreement focuses on clinical and back office support as we try and find ways to reduce our spend and create scale. We are all trying to find a way the mission we have can carry on. At Doylestown, we have a very strong medical staff and a sense of independence which has been very powerful, but we are not isolationist. There are other models that can add value. It is hard to have long-term plans these days given the escalating variables out there, but we are constantly evaluating our strategic options. We will find a way to get the equilibrium back in terms of our P&L. What I can guarantee is that Doylestown will be delivering care well into its next century of care.