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R1 is the leader in healthcare revenue management, helping providers achieve new levels of performance through smart orchestration. With more than 20 years of experience, R1 partners with 1,000 providers, including 95 of the top 100 US health systems and handles over 270 million payer transactions annually. If you want to learn more about how you can transform your revenue cycle operations, Visit us at www. R1RCM.
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Hello and welcome to the Becker's Healthcare podcast. My name is Will Riley. I'm joined today on the podcast by David Dunkle. David is CEO of Johnson Memorial Health. Welcome to the podcast, David.
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C
Hey Will, thanks for having me.
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B
It's great to be talking to you again. So David, start off, tell us a little bit about yourself. Tell us about Johnson Memorial and, and what's going on.
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C
Yeah, so a little bit about myself. So I started out healthcare as a family physician. Practiced for 18 years. Actually went to college in the town where my work now where my hospital is, I, I'm kind of lifer stuck around. So I practiced for about 18 years. Was involved in different medical staff positions, chief of staff a couple times and moved into vice president medical affairs. In 2019, became CEO of the organization. So really, really enjoy it, love the community. We're in a growing suburb just south of Indianapolis. But John Moral health, it's a one hospital system, about 900 employees, about $120 million in net patient revenue. But really we, we really stress quality and safety. Again, we really look at that strategically as a differentiator and when you, when you're county hospital, you fight that. Is it a band aid station moniker? And you always worry about that. So we, we always said we're never going to skimp on safety and quality and it shows. We're CMS five star organization though it's embargoed. We're very happy with our leapfrog score that will be publicized very shortly. So again, just a great organization. We always put, you know, we say everything we do is put the patient first. We mean it because when you're a community hospital, that's what you have to do. And patients have to know that when they come to your hospital they're getting as good a care as anywhere else in the state.
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B
Yeah. Okay, tell us a little bit about that community. Is it urban, suburban, rural and what's the kind of pay A mix.
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C
So it's, you know, it's a mix because we're just south Indianapolis, so suburban away. But it's also, if you go a little more south and from our location it gets Pretty rural. And you do have people that, you know, I still remember as a family doctor, you know, someone saying, yeah, I come in to go to the mall one time a year and get my physical. So I mean, you know, that, that, that's the kind of thing. But unfortunately, our payer mix is not advantageous at all. It's, we are just, it's a, it's a mix of. There's a lot of nursing facilities, large ones in our community. So large Medicare mix, large Medicaid makes. Overall, we have 70% governmental payer.
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B
Okay.
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C
So it, that puts a lot of pressure on, on that. I think, you know, when you, when I start conversation, the community, a lot of people don't realize in Indiana, Medic, Indiana Medicaid, 57 cents on the dollar, total cost of care. And I think nationally we know Medicare is about 82 cents on the dollar. So it's hard for people to understand. But 70% of our business, we're losing money, you know, and, you know, and that puts more pressure on that 30%, the commercial payers. And, you know, and it's kind of, you know, you call them payers, but they don't pay. So that puts a lot of more pressure on community hospitals like ours. And again, like lots of hospitals, we want to stay independent, but it gets harder and harder every year to really, when you look at the landscape of what's happening and you look nationally at how many rural hospitals are closing, and it's disappointing because, you know, that's a lifeblood of a lot of communities. Not only, you know, do rural hospitals tend to be the largest employer in the county, but again, that's where those people go for care. And you wonder, as you see these hospital closures, are, are people going to travel to that medical center that's 35, 40, 50 minutes away, how long are they going to put off their chronic condition before they have a much worse health outcome? And again, that, that as a family physician especially, even though obviously I don't see patients anymore, I'm administered, you never stop being a physician. You never stop caring about patients.
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B
Yeah, right. And I can imagine then the current legislative agenda has some concerns for you. Yeah, it's rough, you know, understatement, but.
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C
Yeah, I mean, especially we're just continuously being asked to do more with less. And we're already seeing our charity care already going up. Indiana, like many states is, you know, they've tightened the Medicaid enrollment. We have more people coming to our ERs that do not have insurance, though we try everything we can to obviously get them signed up. You know, that is, that's a strain the organization. Then what happens again is people put off the care that they need until now they have a worse health outcome. Now they're being admitted because they're in kidney failure or, you know, they have a bad pneumonia when they couldn't treat with antibiotics, you know, a couple weeks earlier. So it puts a strain on the system. We're definitely seeing that though. We, you know, we work hard, we work hard to get people signed up who are eligible for Medicaid. We get, you know, we try to get people benefits. We obviously work with payment plans, that type of thing because yeah, again, we wanted, we want to, we want to provide care to everybody.
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B
Yeah, yeah. Okay. So that's the environment. And then one of the narratives we've been exploring on the podcast over the, the last few days here has been around the rise of technology and the rise of artificial intelligence and talking about that as a new wave of technology where healthcare has been pretty conservative about investing in technology in the past. But actually that seems to be a little flipped when it comes to artificial intelligence and people are really enthusiastically adopting it in clinical and administrative workflows. So before we get into like the practicalities of it for you, do you agree with that? Are you seeing that too? Is there like real enthusiasm for this technology in a way you haven't seen before?
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C
Yeah, definitely. And then, and the thing is too, because, you know, with the AI versus some other, you know, technology, you're actually looking at long term cost savings, you know, and again, there's always that upfront cost, which for organizations like ours that have very thin margins, if margins at all, you always have to worry about it. But when you have the opportunity, you know, you look at like rev cycle and fighting denials, that kind of stuff. Well, AI works 24 7, it works on weekends, it doesn't take vacation, it doesn't get sick. And so long term that can pay off. And again, you're taking human error out of it. So, you know, that's really where there is a lot of potential roi. And again, so you have. But for us, it's like, it's like deploying any type of, you know, capital. It's does, is there roi? Is it, what's implementation? How long does it take? How long until you see the benefits? Everyone. Because when you talk about things like ambient listening technology, I mean everyone sees those, you know, again, physicians love it, you know, and you talk about decrease in pajama time, that kind of stuff. But again, that has a cost. And again, I still joke and, you know, I'm old school family doc who you see 35, 40 people every day with the Dictaphone, right? You dictate, you know, you put in a couple batteries and guess what? You know, the next day, amazingly, your notes are on your chart at, you know, $9 an hour. And you know what? You don't have to worry about any cyber attack happening into your Dictaphone. So that was because, again, you know, that's, you know, that's a big cost too, cyber security, that type of thing. But, but AI and for patients, they don't realize too, when you go in, you get, you're having a hip replacement. And AI has been utilized to make that perfect cut. So the surgeon makes a perfect cut to navigate, you know, the best approach. And that's, and we're seeing great clinical outcomes. So I think the growth of AI, the sky's the limit. And it is. And I'm enthused about it because I do. Again, I think it will ultimately result in one, better patient care, but two, hopefully better reimbursement for organizations who utilize it correctly.
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B
But how do you think about making those investments? Because you've, you've painted a picture that's quite difficult, right? From an operating perspective, like you said, all this stuff costs money. So how do you decide how to allocate that, those resources?
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C
Well, it's difficult, and I think for organizations like us, it's really finding partners who you trust, you know, and again, when you're a smaller organization like us, you're never going to be the first to adopt the latest technology. And again, a lot of that is just affordability. We can't afford to make a mistake. We can't afford to make an investment that doesn't pay off because capital is so limited. You know, I joke because I've been at conferences and I've heard, you know, CEOs a big organization, say, boy, I could just make a list of all the big mistakes I've made and, you know, where I've deployed capital, the wrong areas, I can't do that. You know, I joke with my executive team, like every, you know, it's, it's a lot of pressure when every hit has to be a home run. And so I think it's, you know, really, you have to trust your partners and trust that things have been properly vetted. And then you do look at things. And again, you have to talk to your stakeholders. Who's IT affect? Is it affecting your rev cycle? Team. Well, let's talk to the CFO rev cycle director, let's talk to those frontline people. And you got to get them enthused about it. You know, that's the, the biggest problem you've seen in other organizations is when they roll things out too quickly or you don't explain it again. As a family physician, you know, you always explain things so people know, they get, they get, you know, they get on board of what the treatment plan is. It's the same with AI, I think. You know, education is, is, is, is top of the top of mind for all, all that.
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B
Yeah. Okay. You've talked about the payer environment a couple of times, talked about the promise of some of this technology in terms of revenue cycle application you mentioned, I think 30% of your payer mix is commercial. So it sounds like the dynamic there is difficult. Can you tell us more about that?
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C
Yeah, it's very difficult. As I said, we have so much pressure to optimize our contracts with payers and it's very disappointing. Me again being a clinician and we, and we had, we had a CFO leave. So in the interim process, I had to get a lot more involved in the day to day work with the revenue cycle director, work with him. And really looking at some of these denials that we were receiving and it's just egregious when you know, you have a inpatient stay and they ask for the same chart notes eight times on the same patient and you know, things like that. And again, you're talking about timely filing, slowing, slowing things down. And I, I just don't understand how we have to fight so hard to get paid for the care that we've already delivered. And a lot of people don't realize some of the other practices, you know, now we, you'll have, you'll get a letter from a payer that says, hey, you know that hospitalization a year and a half ago for Mrs. Smith? Well, now we think we overpaid you and you owe us this amount.
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B
Right.
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C
And you have 30 days to respond. You know, it's, it's just the, you feel like you're getting bullied.
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B
Right.
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C
And, and that is really, it's disheartening because when you have thin margins and the payers are allowed to do everything they can not to pay you for the care that you've already delivered. You've already paid the physician, you're paying the nursing, you're paying for the equipment they've had. Everything's paid for. And then you just have to constantly try to get paid what you deserve. And that's difficult. And then for a small organization like ours, I tell people that I, one of the problems with medicine is, you know, again, we're a five star CMS hospital. Great leap frog scores. If you come to my hospital, I guarantee you, you know, your risk of a fall, a catheter associate infection, a central line infection are slim to none. And we haven't had a cat. I mean I don't want to jinx it, but we haven't had a central line infection in three years.
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B
Right.
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C
So you can come to me and say you need procedure X, you can go to another hospital, big system hospital not far. Cms, two star bad safety scores, same procedure, same everything. They get X plus something. They're getting paid more. When your environment, as a patient, you're in a less, statistically less safe environment. How is that? Right. You know, and, and that's why there needs to be more parity, there needs to be more parody. A gallbladder here, you get paid this, a gallbladder there you get paid the same. And but unfortunately I think without, the only way that will ever occur is legislatively, you know and it's we hospitals being pushed so much and it's a monopoly, it's monopoly behavior on the, on the payers. I mean in Indiana, you look at the largest five hospital systems in the state, I think they, they control 49% of all commercial beds. The four largest payers control 97% of commercial beds. So that's where the monopoly is. And, but they, but I give the payers credit. You know, they win, they win the public opinion poll. Oh, hospital prices are crazy. Your health insurance is so high because hospitals just, they're greedy. Well look who's making the money. You know, look at the payers. And again and you have to break it down to they have. And where's the fiduciary responsibility? If you are a leader at a payer, you're fiduciary responsible responsibilities to maximize profit for your shareholders. My responsibilities take care of patients. That is misalignment.
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B
Yeah.
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C
And until there's more pressure for those things to be aligned, patient care to be at the forefront of everything we do that you're going to continue to see small hospital closures all across the country. And that again just makes me sick.
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B
Yeah. Do you think that, I mean I wonder if how can technology help with that? Because we've talked about automation of revenue cycle. Right. So theoretically it's now much easier to create a perfect claim than it ever has been. Right. And get that process happening much faster than it's ever happened. Is that, is that a, is that a promise?
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C
It's promising. But there you can get a perfect claim. It doesn't mean the perfect claim is going to be reimbursed. That is the issue. You know, and honestly I think, I think that payers should be fined if you have a perfect claim denied. And I think that's where technology, to your point, you have a perfect claim, it could be proved it's a perfect claim. The, the payer knows it's a perfect claim, they've denied it, they should be penalized just like we can get penalized or you know, get called back and that type of thing. So yes, I think that's a great point. You know that that'd be a great use of the technology. And the thing is we have the technology. We have the technology approve, it's a clean claim. But you know the other thing you always have to be aware of, payers change the rules all the time. Right. They post something on their website or oh you know, we're not paying for readmissions anymore just like cms. Right. Just, just a little posting. So you, you get, you know they can make, they can make decisions. You know, like in Indiana you can make a decision that affects every hospital in the state. But I can't call my friend another hospital and say hey, what are you getting reimbursed for a cold cystectomy? What are you getting reimbursed for this? That's collusion, you know, and that gets back to monopolistic behaviors of the payers. Yeah. And again it's. The small hospitals are getting squeezed and you have to ask yourself again, do we really just want big systems? Because that's what's going to happen. And so small hospitals are dying breed especially hospitals that aren't rural enough to qualify for 340B or you know, rural health payments, that type of thing. That is, that's a dying breed.
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B
Yeah. So okay, how do you let's, let's end maybe with a, with a thought on, on leadership. Right. Because it's quite a difficult environment that you're describing. How do you keep your team motivated, engaged?
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C
I think when you healthcare again it, there's pressures but honestly when you can take sick people, make them better. When you see, when you can do a surgery on someone who can hardly walk and you see the improvement when you deliver babies, it's joyous. I mean and you know it's, and it is, it's culture and I'm lucky organization. It just has a fantastic culture. We wouldn't be a CMS five star hospital without that culture, without that dedication. The patient, that's, you know, that's, that's what you do. So I think when you stay focused on the patient and the rest is noise, right? That's why are we in healthcare. It's for outcomes. It's for the people that we serve. And as long as you keep that the forefront of what you do, the culture will be there. Awesome.
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B
David, thank you so much for sharing your thoughts with us today. It's been really interesting talking to you. Thank you.
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C
Thank you. I really appreciate being here.
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B
Thanks.