Springfield, Mass.-based Baystate Health has been through a lot over the last few years. The system experienced steep financial losses, a CEO change and layoffs. But new President and CEO Peter Banko has a plan.
Mr. Banko, who joined the system in June, spent his first 100 days as CEO listening to teammates throughout the organization, trying to understand the culture and context of how things get done. He wasn't surprised by what he heard: everyone takes care of one another and can rely on each other for support. They view each other as family in a tight-knit community.
"The board and physicians and leadership did a great job preparing me to hit the ground running. There is an incredible sense of mission and purpose and community," said Mr. Banko. "There is a very strong relationship between everyone in the organization, in the community, and that's fostered an intense pride and loyalty that I've not experienced at any other time in my career."
But Baystate was also facing the challenging realities of a tough financial situation. This year, around 40% of hospitals across the U.S. lost money, according to Kaufman Hall, and the situation is more dire in Massachusetts. The state hospital association released a report in May showing 75% of health systems reported losses in 2023, and Baystate was one of those organizations.
"We had significant operating losses for over four years, and it's impacted our balance sheet, our flexibility in our ability to grow, and there are some dynamics that you don't have control over," said Mr. Banko.
Mr. Banko, his board and executive team have taken their conversations with the broader organization to heart and developed a plan to "start marching forward."
"We've got two main goals and the first is to create a bridge that readies the organization for change in our future," said Mr. Banko. "We're trying to create a sense of momentum in the organization, leveraging our brand and that pride, streamlining and being more transparent with our communications and building a sense of team because a new CEO creates anxiety in the organization."
The previous CEO, Mark Keroack, MD, spent a decade in the role before retiring earlier this year. Baystate had just four CEOs in its 140 year history before Mr. Banko joined, leaving a legacy of stability and growth. Mr. Banko aims to keep the legacy alive while also working with the leadership team to redesign and optimize the organizational structure.
"We streamlined decision-making so it wasn't confusing and how to get things done, especially for those at the bedside," said Mr. Banko. "We launched, as part of that bridge, a strategic planning process in early October. We're engaging the entire organization and talking about why have we historically been successful, what is our view of the world over the next five years through 2030, and then how do we create a clear financial and strategic plan to map out how to get there."
Baystate did a workforce reduction in mid-November, cutting 134 leadership roles. The health system is still hiring in key clinical areas to provide access to care. Baystate's executive team has also changed considerably in the last few months.
What's in store for the future?
"Our population is aging in Western Massachusetts. More than 70% of our patients are now on Medicare or Medicaid. Our service area, like most in the Northeast, is not growing, so inpatient growth is stagnant over the next five years. So we strategically have to look at how do we grow in the outpatient patient ambulatory, virtual space and digital space," said Mr. Banko. "We'll continue to face cost pressures, workforce challenges with recruitment, retention, engagement, inflation on medical supplies and pharmaceuticals."
It would be easy to take a self-pity approach to these macro challenges, but instead the team at Baystate has buckled down and spent time creating a path forward based on their community, which is a majority non-Caucasian. The health system also wants to remain an independent safety net system for Western Massachusetts and the surrounding area.
The team also identified more than $225 million of core operations improvements to make in the next two years, with half being revenue.
"[We are] identifying core places, geographies and services where we can win and compete effectively," said Mr. Banko. "Then the other half of the plan is expenses. We're looking at corporate overhead management, spans and layers, external spend like supply chain and pharmacy, and then like every organization, our labor management. How are we effectively recruiting, retaining and engaging staff? How are we staffing on a daily basis so that we're meeting the needs of our community?"
Mr. Banko said the system will make services more accessible and ensure the community doesn't leave Western Massachusetts for care in Boston or Hartford, Conn., at larger regional medical centers. He also aims to improve patient throughput at the system's hospitals and clinics, and has incorporated revenue cycle, billing and collections into the plan.
"We've developed that improvement plan to enable us, when executed, to invest $1.2 billion over a five- to six-year period, reinvest in our people, reinvest in services and programs that our community needs, investing in technology, including digital, engaging partnerships with other healthcare organizations where we've got a truly remarkable community health center plan for Springfield," said Mr. Banko. "We've got a lot of opportunities to reinvest, and that's our goal: to take the headwinds head-on and be there for our community over the next 140 years."