Hospital of Choice
A big year for The MED's big plans.
For the Regional Medical Center at Memphis, 2012 was a watershed year. The MED made several announcements about significant investments in the hospital’s future. In light of how financially troubled the medical center was as recently as a few years ago, the indications of where the hospital is headed are borderline startling.
If ever there was a place that needed a change, it was The MED in the first decade of the twenty-first century. The public hospital with a Level 1 Trauma Center is the safety net facility in a 150-mile radius. That means the most dire medical cases in a multistate region wind up at The MED. It also means that The MED will treat those patients regardless of insurance coverage.
Because it receives funds from a number of state and local governments, and those entities were going through budgetary crises, The MED wasn’t getting the cash it needed to operate effectively. At an alarming rate, it was losing patients and money (more than $30 million in three years), and making negative headlines on a regular basis. Talk rumbled of shuttering The MED.
The low point might have been when The MED ran through five CEOs in 18 months and there was considerable turnover on the board of directors. Tammie Ritchey knows because she was there. Ritchey became executive director of The MED Foundation in 2004; when she was hired, it was a small foundation staff, but hospital leadership was stable, and good grant money was coming in.
That was before the economic realities hit, changes in insurance and TennCare meant seismic changes in the influx of patients, and a rash of executive turnover plagued the hospital. The MED was eating million-dollar medical bills from uninsured patients. To Ritchey, the biggest challenge was the vacuum left by a lack of leadership. “The staff, physicians, and nurses banded together and did the best we could with what we had,” Ritchey says. “But when you start losing people at the top you lose them at the bottom, too. We were still able to deliver quality care, but you can’t plan for the future.”
Most of the rest of the decade was characterized by damage and damage control. The MED had become a bad word. “It reached a critical financial state — days on cash in single digits,” says CEO of The MED Reginald Coopwood, who took over the hospital in 2010. “What was in the press was real.”
New revenue streams have been created by expanding services and, crucially, revenue was protected by improving customer service and making sure that patients who came to The MED who could afford to transfer when they recovered, didn’t. “When I came here,” says Coopwood, “the statement was, ‘If you’re in a bad wreck, go to The MED, but when you wake up, get out of there.’ By not managing that, the organization lost millions of dollars. When we can discharge, we can bill and collect for the full amount. Just that alone changes the revenue picture.”
The MED’s payer mix (revenue coming from private insurance, government insurance, or individuals) in 2010 was more than 30 percent uninsured. Today it’s about 26 percent. “That doesn’t mean we kicked anybody out of the hospital. We just grew the end with more government and commercial insurance. When you exchange 1 percent of uninsured with 1 percent of commercial, the revenue swing is 200 percent.”
The four years prior to Coopwood’s arrival, The MED lost money — $20 million in 2009. His first full fiscal year The MED made $17 million from operations.
Coopwood deflects credit. “The best asset The MED had was the people. I didn’t have to convince people that The MED is great. I had to convince them that we can be great if we change how we do things.”
The MED Foundation has seen the bump. From fiscal year 2010 to 2012, there was a 70 percent increase in total contributions.
In July, the board of directors at The MED approved two major capital improvement projects totaling $32.4 million. The MED’s Elvis Presley Memorial Trauma Center and Turner Tower will be expanded, which will add capacity and new services to the hospital’s menu of healthcare offerings. The Turner Tower project includes the expansion of the Firefighters Regional Burn Center and the renovation and occupation of three floors, previously empty but planned to hold a relocated inpatient rehabilitation hospital, an outpatient ambulatory surgery unit, and acute care patient rooms.
The expansion is but stage one of a much larger, visionary plan that will see the complete replacement of The MED’s campus.
Where Coopwood wants to take The MED next may surprise Mid-Southerners used to the notion that it’s struggling or maybe just happy it’s not in the news anymore. After all, he acknowledges, “The beauty of low expectation is that it isn’t hard to beat it.”
The MED’s leadership has very high goals. For starters, they want to be a hospital of choice, competing with other health systems in Memphis, such as Baptist, Methodist, and Saint Francis. “We’re not a step below the other hospitals here, and we can’t be or see ourselves as second class to them,” Coopwood says. “In 10 years would I expect people to drive from East Memphis past some very nice hospitals to come down here to get care?
Absolutely. What we plan to deliver here is something that will make them want to drive past other hospitals, not because they’re bad but because what we’re offering here is worth it.”
The MED is replacing its campus — a notion much larger and more significant than is suggested by six little words. It’s a big endeavor and leadership is currently implementing its strategic plan to get there. “It will be state of the art, second to none in the region,” Coopwood says.
Part of the vision is expanding geographically as well, a plan underlined when The MED purchased a total of 54.5 acres in East Memphis at Quince Road and Highway 385. An outpatient hospital is in the works for the property.
It’s a huge goal, and will be realized in installments and over the next decade or more. “I can’t dream about building a campus I can’t pay for,” Coopwood says. The MED is starting the transition with new and upgraded facilities it is paying for out of its own operating funds, a kind of earnest money statement to the community.
Ritchey says The MED didn’t solicit funding for the Turner Tower project because the hospital saw it as something like a down payment on the bigger campaign. “As we consider the whole facility that needs to be replaced, we’ll look strategically at what part of the replacement is The MED’s responsibility and what part would philanthropists be interested in being involved with,” Ritchey says.
Coopwood says, “All of these things are lining up: creating a sustainable model; creating an environment where philanthropically they can start looking at it as [ultimately] a $450 million endeavor, what percent of that can we expect the public to participate in because of the importance of The MED to this community; and what are the sources of revenue we need to tap into to make it happen. We are paying for the Turner Tower project out of reserves, and it’s step one of the campus redevelopment.”
Ritchey adds, “We have many philanthropists who find it attractive to get in on the ground floor right now, who like the very ambitious vision, who understand it and want it for the City of Memphis and Shelby County and the region.”