The pandemic changed so much about life that it’s no surprise it also fundamentally remade health care, leaving North Carolina’s hospital systems to adapt to rapid change.
“Last year was a tough year for the nation and for North Carolina,” said Dr. Craig Albanese, CEO of Duke University Health System. “We are feeling the persistent effects of the long tail of Covid from the great resignation, which has hit health care. People are leaving the field, burned out and losing joy in work. Health-care organizations are taking on more expensive contract labor in order to keep our beds and procedural areas open. And then there’s inflation. The cost of supplies and medications has skyrocketed.”
Albanese’s concise description of what ails the industry was shared by leaders of the state’s five largest health-care providers during a discussion hosted by the Charlotte Business Journal, Triad Business Journal and Triangle Business Journal. Joining Albanese in the conversation were Dr. Mary Jo Cagle, president and CEO of Cone Health in Greensboro, Ken Haynes, president of the Southeast region for Advocate Health in Charlotte, Dr. Wesley Burks, CEO of UNC Health Care, and Jeff Lindsay, chief operating officer for Winston-Salem-based Novant Health. Zac Ezzone, life-sciences and health-care reporter for the Triangle Business Journal, moderated the conversation.
The leaders of the health-care systems addressed the changes they need to make, including significant investments in their digital platforms, to serve highly diverse customers. The need for those investments comes as the hospital systems deal with intense competitive pressures from disruptors outside the industry. Meanwhile, three years of extreme on-the-job stress has depleted nursing and other ranks, driving up labor costs.
There are bright spots. Health-care leaders applauded the N.C. General Assembly’s recent vote to expand Medicaid, becoming the 40th state to do so after 13 years of resistance. The move will provide health-care coverage to thousands more in the state and ease some burden on hospitals.
“It makes all the difference in the world,” said Dr. Cagle.
What operational challenges do NC hospitals face?
Burdened by the financial challenges of operating during the Covid-19 pandemic, more than half of the country’s hospitals finished 2022 with a negative operating margin. Hospitals have faced challenges on multiple fronts, from increased staffing costs as nurses and others left the stress of the profession, to the impact of inflation.
“Rebuilding that workforce is going to be critically important,” Haynes said. It’s necessary, he said, because the state is growing, which means demand for health care is increasing at a time when staffing levels have been declining.
While teams have been challenged, there are hopeful signs, Lindsay said. Novant conducts a resilience survey of employees twice a year. Throughout Covid, stress, burnout and compassion fatigue increased significantly, especially among direct-care providers. In December, the survey showed improvement.
“That’s very fragile, we recognize,” Lindsay said. “We are spending a lot of time thinking about how we create an environment that people want to stay in.”
Dr. Cagle said the hospitals’ financial challenges reflect the economic impact of Covid and inflation on communities. North Carolina hospitals bore the brunt of patients’ inability to pay for the medical care they needed.
“Our financial burden has been because we don’t turn people away,” Dr. Cagle said. “This has been a compounding economic hit to our communities, and we are a reflection of what’s been going on in our communities.”
How are shifting consumer preferences changing health care?
The pandemic accelerated the use of virtual doctors’ visits as millions saw their doctor from a video camera instead of driving to a medical office. Now that they’ve had that choice, patients are demanding services in new ways.
“I call it the Netflix phenomenon,” Dr. Burks said. “My wife and I watched a little bit of TV prior to Covid. But during Covid, we discovered Netflix and Apple TV, and we watched what show we wanted to, when we wanted to, how many times we wanted to on whatever device.”
Particularly younger patients now have that expectation of health care.
“We have to meet expectations, which are good,” Dr. Burks said, “but it’s the challenge of going from an old way to a new way.”
Dr. Albanese agrees that more patients want access, convenience and a good experience and many want those services from a distance. “No one wants to call for appointments. No one wants to wait in waiting rooms. No one wants to drive,” he said. “Consumers are really driving this new normal from online scheduling for return visits, labs and radiology and it’s changing the industry.”
Illustration by Jake Stevens | ACBJ; Getty Images
The good news, Lindsay said, is there are enabling factors that make it possible to meet those patient experience expectations, particularly in the digital space.
“We are seeing lots of new capabilities being adopted by health systems that really enable a much more flexible way of engaging with our patients,” Lindsay said. “It’s an exciting time in health care to see those technologies proliferating.”
Dr. Cagle said the changing expectations mean health-care systems need to better understand who needs care and their expectations.
“Different people want different things from us,” Dr. Cagle said. “Some want it in their home, some want it virtually, and some folks still want to come to the doctors’ offices. It truly is the age of the consumer, and it’s time that we catch up with the times.”
What investments are hospitals making to meet new demands?
Haynes said health-care systems are seeking balance between the competing demands.
“Certainly, there’s a lot of capital demand on bricks and mortar, but there are digital components as well,” Haynes said. “Both are part of our future, but it’s growing more toward outpatient services, for sure.”
Lindsay agrees that growth was once viewed as dots on a map that represent physical medical offices. “Really, we are trying to balance thinking about not just facilities but new capabilities and new relationships that provide a new way to engage with the communities we serve.”
Melissa Key/CBJ
Given that North Carolina has over 3.5 million people who live in rural areas, new capabilities with digital platforms can bring access for those patients, Dr. Burks said. The challenge will be the necessary investment.
“We are guided by the mantra that we want the right patient to see the right provider at the right time in the right location,” Dr. Albanese said. “What that looks like with the term ‘right’ is now varied from virtual to inpatient to outpatient. That’s quickly evolving. And it’s the right thing to do.”
How are health systems building capabilities amid financial pressure?
Times of significant change require planning. Dr. Burks said most health-care organizations are likely going through significant strategic planning for what will happen in the next three to five years.
“Our teammates’ expectations and the expectations of the people we serve in urban and rural areas are really different,” Dr. Burks said. “As we think about our planning, what’s the sweet spot for each one of us to provide that right care as close to home as we can.”
Building out new capabilities doesn’t have to be the health-care system’s burden alone, Lindsay said. Partnerships with other organizations and businesses can deliver to patients the services they need without placing the full cost on the health-care system.
“We can create partnerships that help with that investment or scale up a capability more rapidly, and we see that as positive,” Lindsay said. “We are thinking of partnering with organizations that we might have thought of as competitors in the past. We don’t have to own or architect the whole thing ourselves.”
Charlotte-based Atrium Health, which combined with Midwest-anchored Advocate Aurora Health last year to form Advocate Health, is building an innovation district called The Pearl as part of its partnership with Wake Forest University School of Medicine. Haynes said that center will increase skills within the health system. Atrium intends to bring surgeons from around the world to The Pearl for a simulation training program to share their knowledge with surgeons here.
Atrium Health
“We have to think bigger so we can drive economies of scale, but also economies of skill,” Haynes said. “There’s a scarcity of physicians and nurses. So, internationally, we are trying to look for those economies of skill.”
Dr. Cagle pointed out that it’s not health-care providers that are the big spenders but disruptors such as Walmart Inc., Amazon.com Inc. and UnitedHealthcare Inc.
“We’ve got some big competitors out there going after our business, really spending big money in the state and federally to go up against us,” Dr. Cagle said. “We have to think about how to not make health care just a commodity. We know how to provide care on a continuum to keep a family healthy. It would be a great loss to our community to not continue to do that.”
Daniel Finnegan
Dr. Albanese said health-care organizations have an obligation to lower the cost curve and stay sustainable and relevant for the citizens.
“We are becoming less insular as an industry and looking outside our four walls,” Dr. Albanese said. He said hospitals will use artificial intelligence to provide predictive analytics in their work to increase efficiency. “We can do anything, but we can’t do everything to stay relevant and provide care throughout the state.”
Dr. Burks pointed out that health-care financing is complicated and makes everyone’s job harder. Some patients are unable to pay at all, while others are paid for by the government — but at a rate that doesn’t cover costs. Paying customers are left to make up the difference.
“None of us created the health-care financing system that we live with,” Dr. Burks said. “We walk into a system, and we have to deal with it as it is. It’s really not a normal, free-market economy.”
How are hospitals dealing with low staffing levels?
Nearly 90,000 nurses have left the profession since early 2020. Hospitals have had to pay more expensive contract workers to serve patients. People are still leaving the field in higher numbers than in the past, though it has slowed since the peak of the pandemic.
C/O UNC Health
Dr. Albanese predicted North Carolina hospital systems will never employ the number of doctors, nurses and technicians they had in the past.
“We are losing our talent, and I’m not sure they are coming back in the numbers we need,” Dr. Albanese said. “We can’t close beds or sites, so we have to take administrative tasks off our folks. We have to retain folks at higher rates and bring joy back to their work.”
Haynes said people need to be reminded that health-care heroes are still health-care heroes. “If we can get that message out, people will come back to the industry. It is a calling. They make a good living. And they are able to impact people’s lives,” Haynes said.
How do health-care leaders decide which investments to make?
The health-care leaders say their top priority for investment is their workforce.
“We are investing more and more in our people and the environment we ask them to come to work in every day,” Lindsay said. “Our health-care workers across the state of North Carolina are heroes, and we would not have had a chance of getting through what we went through during the past few years without the heroic contribution they made every single day. The reality is, we need to be investing more in them, and we are investing more in the them.”
Dr. Albanese said Duke is investing in workforce recruitment, retention and finding ways to decrease burnout and ensure workers are safe from patient abuse. “On the flip side, we are being very parsimonious with capital spending,” he said. “We have to be in order to bring people back to work.”
Dr. Cagle said Cone’s focus is on front-line workers. Cone has cut from its leadership ranks, where it determined it was top-heavy.
Haynes said Atrium’s recent combination with Advocate Aurora — which created a $27 billion, 67-hospital network that is now the fifth-largest nonprofit health system in the U.S. — creates an opportunity to find synergies so that care can be made more affordable.
“We are reinvesting in our teammates with an additional $271 million last year in additional contributions to their compensation,” Haynes said.
Joe McCloskey
What do health-care leaders think about NC Medicaid expansion?
In March, after 13 years of advocacy, Gov. Roy Cooper signed a bill making North Carolina the 40th state to expand Medicaid. An estimated 600,000 North Carolinians will benefit by having health-care coverage.
“The first thing we can do to lower the cost of care is to get people primary care physicians,” Dr. Cagle said. “What Medicaid expansion does is give people coverage so they have the hope of having a primary care physician.”
A primary provider can help people control chronic conditions, such as diabetes, before they have a health crisis and access care through an expensive emergency room visit. Also, hospitals will receive reimbursem*nt for treating patients with Medicaid, which will lower the hospitals’ unpaid debt.
Lindsay said Medicaid expansion will make life better for people. “When you think about those people and those lives and their families and the path to a better life that creates for them, it’s where we need to be. And it’s quite remarkable we’ve gotten here,” Lindsay said.
Dr. Albanese agrees. “It’s one of the most consequential things that has happened in health care in North Carolina in many years.”
Laura Williams-Tracy is a Charlotte-based freelance writer who can be reached at laura@lwtcommunications.bz.
Licensed beds
| Rank | Prior Rank | Business name/Prior rank |
|---|---|---|
1 | 1 | Atrium Health Wake Forest Baptist Medical Center |
2 | 2 | Novant Health Forsyth Medical Center |
3 | 3 | The Moses H. Cone Memorial Hospital |
No. of licensed beds
| Rank | Prior Rank | Business name/prior rank |
|---|---|---|
1 | 1 | Duke University Hospital |
2 | 2 | Atrium Health’s Carolinas Medical Center |
3 | 3 | UNC Medical Center |
