With only three months remaining in 2024, hospital and health systems are formulating their strategies for 2025 and beyond. Stephen Jones, MD, president and CEO of Falls Church, Va.-based Inova Health, recently spoke with Becker's about the system's strategies on topics from capital investments to partnerships with community organizations.
Editor's note: Responses have been lightly edited for length and clarity.
Question: What do you expect to be the biggest financial challenge facing health systems in the coming year, and how are you preparing to address it?
Dr. Stephen Jones: Healthcare has, I think, been for years the one category most under pressure from costs in every direction. And it's not just labor, not just supplies; drugs, especially, continue to escalate. Our own costs, our benefits (which, of course, tie to labor), continue to go up far beyond inflation. So we have all those combinations together that just make this an extremely difficult industry. And then again, we're a capital-intensive industry, so the cost of capital going up has added to that. But it's nothing new — just one more thing on our well-rehearsed backs of dealing with the kind of relentless cost pressures. And I don't think that will end in 2025 by any stretch of the imagination.
Q: Given the current economic climate, how are you prioritizing capital investments for the upcoming year? In what specific areas do you see the highest ROI?
SJ: We are having to replace one aged hospital: Inova Alexandria (Va.) Hospital. That building, certainly over 60 years old, is a very aged and no longer adequate asset for us to take care of patients in the way that we expect and that they expect from us. We are in the process of replacing it on two separate sites: one in Alexandria and the other a little bit further away in a community called Franconia-Springfield. And that's, of course, a major capital investment. Why would Inova invest in that? We have a responsibility to take care of our patients, and right now, we are seeing more patients than we've got physical capacity to take care of, so we feel a responsibility to use our capital in that manner.
We're also expanding our ambulatory footprint significantly. We've got a large new type of health center for Inova. It's not going to be the traditional medical office building, and whoever wants to lease space come, it's going to be us intentionally having a care model specific to that community, and it happens to be in the city of Alexandria as well — different location, of course — but geared to the fact that, if you take an example, in that specific area, you've got lots of families, so you have a need for women and children's services. You've also got a number of elderly, so you need things like cardiology and urology.
We've seen this also expand our Inova Cares clinics, our clinics intended to serve the underserved. These are places where you know that you're taking care of people who don't have resources. You're doing it solely because you have a responsibility.
I have, for the long term, had a disregard for revenue diversification because it sounds easy to say, "Well, if it's hard to make successful business in my business, let's go try another one." Well, then you're actually being against people who are already better than you by the time you get there. And so we've intentionally closed our accelerator, closed our investment arm, dropped our drug discovery program — a number of these other things that were "revenue diversification." We've stopped those so we can focus our capital investments and our operating costs toward patient care.
Q: How is your M&A strategy evolving to support your organization's long-term goals, and how do you determine which acquisitions will add the most value to your health system both operationally and culturally?
SJ: We tend to be less involved in big M&A than many of our counterparts across the country, and that goes back to our focus on what we think we do best. We are not big fans of the concept that big is automatically better. We also vehemently oppose the concept that big is bad. But we do believe that growth is critical. The growth that we've had is largely organic or through very targeted acquisitions, alignments or joint ventures. We strongly support having an independent, aligned medical ecosystem here as part of Inova. We feel they're part of Inova without being employed or "owned by Inova." That's a different model that works in our environment. I don't know if it works for everybody, but it works for us. We've got some of our, for example, medical practices that I have to stop and think, are they employed by us? Are they independent? Because they're truly tied to the work that we do, and that's been a better success for us than "gobbling up everything that we can gobble up."
Having said that, I'm a deep believer that growth is vital. People want to be part of growing, driving organizations. So we absolutely are growing. We've seen 10% to 12% revenue growth for the last five or six years, some of that, of course, during some bumps in COVID. But we've seen that as a pretty consistent line, most of that being through growing the services we have, becoming more efficient at those, making our patients see the value of getting that care — that's been the bigger focus for us. So not that we would never consider "huge M&A," but it is not the thing that I spend my time focusing on.
Q: What specific strategies will your health system deploy in the coming year to improve employee retention, particularly in critical front-line roles?
SJ: At the end of the day, a health system is not its hospitals, it's not its MRI. In fact, I sometimes ask people, do you think that we've got a better MRI than someone else does? No, but we can have better people than others can. And so we focus the majority of our effort toward making sure we get the right workforce to take care of our patients.
Our workforce is the most important thing for our patients. So that's why we focus so much on that. We believe that it starts like our patient journey. In fact, we liken it to: How do patients know about Inova and trust Inova? And how do they access Inova in a way that works for them, not that works automatically for us? And how do they engage with us in a way that they see is so valuable to them that they want that to be part of their healthcare life always?
If you translate that to the employee, how do they know about Inova being a place to work? How do they access us and others? How easy do we make it to get that job? We've had a complete transformation in our talent acquisition function.
I don't record a video to let people hear some talking head say how great their company is. I let them see who they're going to be working with, and hopefully get them to see the value in why they chose to be here. I always thank those who come back to Inova because we onboard, on average, probably 100 to 150 every Monday morning. Inevitably, there's someone who had chosen to go work somewhere else and is now coming back. And I thank them for one thing, so that people see those coming back to Inova. It tells others, "I've looked somewhere else, and I see that Inova is the place to work."
We focus on making sure our compensation is market competitive. We certainly don't want to ever be trying to drive that market up because those cost pressures are really not sustainable if we did that. We want to be market competitive. We want to know when the market moves. We try to immediately make sure that we're assuring that our team members have not only the right compensation but the right benefits for them. And so we have a specific benefits survey to try to ask people what really brings value to you. I know I think it might bring value to you, but I may not understand you like you do, of course. And so we try to make sure that we understand even our benefits and what's going to do that.
And then the last thing is my big bet on success at Inova is on our culture. People say that often; it's a code word, "Our culture is great." Well, we really focus on that. We put specific bodies of work, and we make a commitment to it. By making this a place that, regardless of who you are, you believe this is the place where you'll have your best day and your best career, you'll be around people you want to be around. We believe that that's our competitive advantage, and so far, it's working out well. Our voluntary turnover rate is 13.7% at this point. Our first-year nursing turnover rate is 14.4%. It's still way higher than I would like to see. But when it's some fraction of what we're seeing in other places, what it tells me is that focusing on this being the place where people see they will have their best career is a differentiator.
Q: How are strategic partnerships with community organizations and other healthcare institutions shaping your efforts to address key challenges within your health system and drive long-term success?
SJ: We're relatively fortunate here in our community to have some strong relationships with community organizations. We know there are things that others do better than us, and so we, for example, have given millions of dollars in health equity opportunities to support other organizations that have health-related activities in our community, and we believe help our community be healthier and have better healthcare.
As far as the social drivers of health, we know that there are tons of people in the community; they're going to have more influence on those than we are. So we try to make sure that we gather data on it, we address those when they're within our care, but we don't try to be the ones who are going to make water quality better or make decisions on certain other things.
And then I would also say that we're fortunate here to have really strong relationships with most of our county and city governments, and that includes their agencies, of course. So the fact that we can work with the community governance of where we are can solve real problems. During COVID, that was obviously a time that gave us lots of opportunities to do that.
But even in the current settings, we've done some scenario planning. We brought in county government officials to be part of that. So doing that in conjunction with our community governance partners helps us, and it helps them. When you talk to each other, you figure out that both of you are trying to solve the same thing. It's amazing how suddenly you get a lot more done than when you silo off.