May 4, 2023

Podcast - Hospital Restructuring and Strategic Partnerships

Hospitals at a Crossroads, a Counsel That Cares Podcast Mini-Series

This episode was previously recorded and released by Waller on October 11, 2022, and has been rebranded and relaunched now that Waller is a part of Holland & Knight. 

In this episode of Counsel That Cares, we are launching a new mini-series called "Hospitals at a Crossroads" where our attorneys discuss the current status, challenges and opportunities in the hospital and health systems sector with various industry professionals.

In this episode, Holland & Knight healthcare attorneys Jesse Neil and Tyler Layne are joined by former physician and hospital executive Dr. Mike Schatzlein, who now advises on hospital operations. They discuss the current healthcare mergers and acquisitions (M&A) landscape and how it has changed in the wake of the COVID-19 pandemic while reviewing case studies about how hospitals and hospital systems have been navigating these shifts. 

More Episodes in This Series

Part 1: Hospital Restructuring and Strategic Partnerships (You are currently viewing Part 1)

Part 2: Increasing Hospital Profitability Through Transformative Integrations

Part 3: Critical Access to Care in Rural Communities

Part 4: Rising Chapter 11 Bankruptcies in Healthcare



Morgan Ribeiro: This is Morgan Ribeiro, the host of the podcast. We are launching a new series where I will be joined by several of our attorneys, advisors and consultants who are working with hospitals and hospital operators. We'll hear from these individuals about the current status of the hospital and health system sector, where we are seeing acute challenges, what opportunities lie ahead for facilities and more.

On today's episode, I am thrilled to be joined by Jesse Neil, a partner in the firm’s Healthcare and Compliance Group; Tyler Layne, a partner in the firm's finance and restructuring group; and last but not least, Dr. Mike Schatzlein, a physician turned hospital executive who has led multiple not-for-profit and for-profit health systems, and now serves as an advisor and speaker on the topic of hospital operations.

So thank you all for being here today with me.

Dr. Mike Schatzlein: Thank you, Morgan.

Morgan Ribeiro: So we have a lot to cover today and to unpack. I want to go ahead and really just jump right in. There is no question that hospitals have experienced unprecedented challenges over the last three or so years. And even before the pandemic, the industry was faced with many challenges and regulatory shifts.

I recently read a report that said that the hospital industry faces challenges that are structural in nature, not just cyclical, such as the economy, or situational as with the pandemic. I find that to be really true, and so I want to dig deeper into that and better understand why this is happening right now and what hospitals should do in order to find solutions and plan for their future.

So maybe first what we can do is just rewind five years or so back pre-pandemic. We think about the push that has been ongoing towards value-based care, and there's the shift from inpatient to outpatient setting that we hear a lot about. Can we take a step back to better understand the operating environment for hospitals pre-pandemic?

Say roughly five or so years back in time. Dr. Schatzlein, I'll start with you.

Dr. Mike Schatzlein: Five years ago, Morgan, the belief was still that we could maybe do something with value-based care. I've become less enthusiastic about that as we move forward. We'll see why, but value-based care doesn't get reimbursed at its costs in most cases, and the opportunities to assume risk are less and less. We were still trying five years ago, I think, to make that move. Now people are saying we have to keep a toe in that water, but it's not moving as fast as it could be, which is sad because it's the only way we’re going to get control of costs and quality.

So I'm sad about that, but I — people we're thinking about that then and are not thinking about that so much today. Another area you talk about inpatient, outpatient. My good friend and the former board chair at Ascension Tennessee just had his hip replaced as an outpatient, was out playing golf the next week.

Years ago, St. Thomas was doing a thousand inpatient total joints a year. So that's a big change. 

Morgan Ribeiro: And what about, as I'm thinking about it, five years or so ago, a lot of mergers and acquisitions were taking. In the hospital space, I would say a lot of those were systems that were really trying to position themselves for what's to come.

I would say most of those are better positioned, right, than the ones who decided to go it alone or to maintain their independence. Any thoughts on that? You know, a lot of that somewhat is driven by regulatory pressures and expansion or no expansion of Medicaid, but just curious to get some thoughts on what we were seeing five or so years ago and how that may impact where we are today.

Dr. Mike Schatzlein: The regional integrated system of care is the delivery mechanism for healthcare in the current environment as it was five years ago. Folks trying to go it alone are going to increasingly have difficulties. If you don't have the scale scope of, let's say, a $2 million regional system that's able to take care of 98, 99 percent of what your patients need, it's just going to be very difficult to survive.

I think our attorney friends who work in this have better insight into how the intervening time has changed the appetite for mergers and acquisitions. But it's not any easier for the independence now than it was then, and arguably quite a bit harder.

Jesse Neil: My thought is that I'm hearing much more around the concept of our mission is still our mission, but the biggest danger to it is the status quo.

I'm starting to hear that thought process as a baseline for a lot of the small to medium, even semi-regional health systems, the approach that they have undertaken. It started with that premise, and so what is the best way for us to maintain and support the mission in today's environment? And the process is what has been, I think, started in a lot of these different communities and you tailor it to the community.

But I think that the systems that I've seen that have been able to find collaborative partners become part of a larger system that has similar history, similar goals, similar culture, they found some success and they found some community buy-in too, which is really, to me, very promising. There's some communities in Tennessee alone, I've seen that the community leaders and the community as a whole have really bought into the idea that what are we going to do to preserve this precious asset of ours, this community hospital.

It doesn't have to look the same as it did 10 years ago. That alone isn’t going to solve a problem, but that is a lot of progress in my mind. The perspective that the community leaders have shifted a bit. I sense that they are open to different ways to collaborate and there's a lot of plays in the playbook, and they'd be unique to the community and what they're wanting to do and what they can bring to the table.

But the fact that those kind of questions are being posed, I think is a promising development.

Morgan Ribeiro: Yeah, and I certainly don’t want to suggest too late, but looking at some of what's going on with the FTC right now, and systems like HCA and LifePoint, I mean, they're really not focused on hospital acquisitions right now.

They're looking at expanding into other areas like home health and hospice, and other areas of outpatient care. So if you're a standalone hospital in say Florida, and you're looking at potential acquirers, I would imagine you may be in a different situation than you were five years ago.

Tyler Layne: Yeah, I think that's definitely correct.

Five years ago, the hope for every standalone hospital that was having difficulty was that they'd be able to partner with a for-profit in some meaningful way, whether that was being acquired by a for-profit or joint venture. Now you're seeing even the big for-profit systems are having their own difficulties.

The supply chain issues, the labor costs hurt everybody. Now they have the cash to deal. But at the same time, they might not be in the most acquisitive mood when you're in an environment where it's just very hard to run a hospital and very hard to make money running a hospital. And so I completely agree that the M&A landscape has changed, and I think that the larger for-profit systems and even some of the larger regional systems are certainly looking for creative ways to add to their bottom line and to add to their EBITDA, but that's not really taking the form, in my opinion, of widespread one-off hospital acquisitions.

Jesse Neil: I'm seeing a little more prior to a sale or an acquisition. Hospitals are looking for ways to update their operations where they will find a service line, maybe physical therapy for example, and find an outside partner collaborator, whether it's a local group or a national group of providers to come in and deleverage some of those assets, bring some clinical expertise and some scale.

Having the CEO focus on what the hospital CEOs do day in and day out as opposed to managing a sprawling physical therapy line is just an example of one of the tools in the tool belt that I think a lot of the more sophisticated systems have done and tried, and so it's baked in, but there are a lot of small to medium size hospitals and systems that might not have gone down that path just yet.

And so that's, I think, an option. You could spend a whole podcast on that topic alone, but that's an example of ways that hospitals can pivot a bit double down on what they're good at, deleverage and monetize some of their operations, and depending on their community and what the expectations are, that could be something that's really helpful in the medium term.

Morgan Ribeiro: I completely agree. We talked back in time a little now, more recently, over the last 30 to 36 months, everyone’s had to really press pause on their strategic efforts and initiatives for the most part, and really focus on the pandemic and all that came with that. So I would like to get your assessment on what occurred over that timeframe, really from a operational and financial standpoint, and how that impacted hospitals and led us to where we are today.

Dr. Mike Schatzlein: The pandemic was ghastly for healthcare providers. There’s never been anything like it in my experience. I’ve been in this for 40-plus years. The stresses and strains on caregivers were just unbelievable, caused many to leave the profession. Ultimately, the hospitals in Nashville all had armed guards stationed around the hospital to protect providers from irate families of patients who had possibly ignored advice about masks or vaccines and ended up in the hospital and then took their anger out on the providers. I could go forever with anecdotes about providers burned out, providers stressed, and that’s from doctors down to the environmental service workers.

It’s stressed the healthcare system as nothing before.

Jesse Neil: I echo that completely. I interact with hospital boards, chief executives, chief nursing officers. It’s just inhuman the amount of stress that they have endured and the accomplishments they've been able to bring to bear. They've done amazing work over the last few years to get the communities through the challenges of COVID.

It's just been tremendous. But from a policy perspective, a couple things come to mind. I’ve heard it referred to as the COVID camouflage. You think about the federal government and the bureaucracy and the process that they have yet to go through in rulemaking. It’s just a really cumbersome, slow process. To the government’s credit, I think that they recognized that we were on the precipice of something potentially, I mean, like horror movie-type, catastrophic. And they pushed out an unprecedented timeframe, an unprecedented amount of money to an unprecedented number of providers. Providers around the country, small, medium and large, woke up with millions of dollars in their bank account. And for better or for worse, they needed to call a lawyer to figure out what they could do with it.

And the flip side of that is, what they could do with it changed a lot over time and unfortunately what came as no strings attached — I think that was the press release — ended up being a lot of strings attached at the end. But frankly, from my perspective, better to take that approach than the opposite.

Waiting until you have a fully developed protocol manual and then pushing out the money, communities would've collapsed. Hospital systems would've collapsed, and so the policy objective, I think basically hit the bull’s eye. There might not have been the oversight people would hope for and want, but it came as soon as the government could get it there, and that's still in process.

That's my take on it. I think it was successful in the sense that it was an incredibly difficult thing to do and they averted a disaster, but the COVID camouflage doesn't last forever. And you've got the advanced payments that are being returned, most of which has been returned, but not all. Through the end of the year, I think the vast majority of it will have been repaid and the cash on hand that you hear from nonprofits in particular public hospitals has really, in the last year to year and a half gone down to what you would've expected, frankly, coming out of a pandemic or another catastrophic headwind like we've had.

There is an issue of coming home to roost now on the operations and finance side of things, that I don't know that there's a clear playbook, 1, 2, 3, 4 for every hospital on what to do now, but I think more than ever, the status quo probably is the biggest risk to their mission today as it was before the pandemic.

Tyler Layne: And without a doubt, you have this have and have not with respect to the government stimulus. Every provider was faced with a level of financial uncertainty in terms of the care that they’re going to have to be providing that I don't think any of the providers had faced before. So a lot of healthcare providers, the government stimulus was a great thing and buoyed them financially and they're coming out the other side strong.

To a lot of community hospitals, safety net hospitals, they spent every last dime of that COVID stimulus because of the level of care that they had to provide, the level of PPE they had to buy and increased cost with respect to nursing and things of that nature. And so now you're coming out the other side, and what's unfortunate about it is you have some providers who you know are in a good situation and some who may be in a worse situation than they were pre-pandemic because they're dealing with those new financial pressures of supply chain issues, labor shortages and inflationary pressure that may just be the sort of new normal that we're facing for a while in terms of hospital finances and provider finances.

Morgan Ribeiro: Yeah, and I think that's a good segue into the next topic, which is now we're here at present day in 2022, and I was reading a recent report from Kaufman Hall.

They issued these monthly flash hospital reports and provide a lot of data in them. And their most recent one, they said that 2022 will be the worst financial year for U.S. hospitals since the COVID-19 pandemic, which is probably surprising for those that don't live and breathe the hospital world every day.

But you would've thought maybe 2020 would've been worse. But in their most recent report, they stated, and I’m going to quote from this, “Our optimistic projections are for a 37 percent drop in operating margins relative to pre-pandemic.” Brace yourselves. “Our pessimistic projections show margins falling off a cliff, with a possible 133 percent decline, and a growing number of hospitals are feeling the pain.”

More than half of all hospitals are projected to experience negative margins this year, up from 36 percent in 2021. Several other advisory firms and consulting firms have issued similar research and reports over the last few months, and they're highlighting similar findings. They're all noting that margins are still in the red.

I'd like for us to talk about why that is. I think you all have touched on some of that, right? With the rising cost of labor and a number of workforce issues, workforce shortages, supply chain, etc. But we'd love to talk more about why we're seeing that and the causes for these massive dips and margins.

Dr. Mike Schatzlein: Sure. It's the worst it's been from a financial standpoint in my career, and supply chain is definitely part of it, but nurses particularly, were so damaged and traumatized by COVID that they just fled the workforce. And so during COVID, we got into this cycle of nurses would go work for these agencies, these traveling agencies, and they'd go take a gig in another city for three months, earn three times what they were earning at their prior hospital, and then take six months off and then take another three-month gig.

And they learned that they didn't have to beat their heads against the wall dealing with angry families and the sickest of the sick patients. And I would just inject parenthetically that inpatient bedside nursing is both psychologically and physically extraordinarily demanding, and the model for the way nursing care is delivered has to be totally red.

I was moderating a conference where Larry Van Horn spoke earlier this year. He's the healthcare economist at Vanderbilt, and he didn't even answer the first question, just started screaming. Cost and healthcare was already far too expensive. In the United States, there's very little ability to raise prices even more and get paid that way. And as costs go up, there's just a horrendous squeeze on margins. And I would agree with Kaufman Hall, and all the health systems with which I work are under tremendous pressure at the margin level — if they can even get nurses. I know Ascension Tennessee had a thousand nursing not so long ago, and they would've gladly hired 700 of them the day I talked to them.

It's not only the cost, but the availability.

Tyler Layne: Nurses aren't just getting made every day. That's the issue. Rewind to 2019 real quick. And there was already a nursing shortage and now it's just even worse. So I think it all goes to the creative solutions though, that management teams and boards need to undertake to confront these issues.

Because when you're in these unprecedented times, they hear somebody like Dr. Schatzlein say that this is the worst it's been in his entire career can be a scary financial prospect. Out of management and boards and even the finance and restructuring lawyer in the room. It's, it's scary.

I'd love to hear Jesse and Dr. Schatzlein talk about the creative solutions that they think that management and boards can undertake to confront these issues.

Jesse Neil: I'm just the lawyer. I'll defer to the seasoned hospital leader, Dr. Schatzlein, but I will say there is a playbook that I'll call a process playbook where these are assessments, frankly, that boards not only can do as fiduciaries, they really have an obligation to be constantly evaluating operations metrics, developing ways to track and trend, and then developing potential solutions just to at least explore and then execute on if they think that the risk warrants that the investment that we talked a little bit about a joint venturing service line.

That's something that has been talked about at a lot of hospitals around the country, and there was some hesitation in some communities, but in others they embrace it and I think they're probably getting some dividends from that adopting consumer perspective. It's hard to quantify the benefit of that, but it's probably easier to quantify not doing it.

If the patient experience and access points are decreasing and not increasing and the experience is delayed and difficult with getting your bills processed, then that just inflames the issue and there are people in a lot of communities who are finding easier ways to access care over time, and the ones that have pivoted and invested in that technology are having a better way at it.

But maybe Dr. Schatzlein has some ideas there too.

Dr. Mike Schatzlein: Yeah, Jesse, that was right on. And I would say even the big guys are joint venturing. All this continuum stuff, whether it's a behavioral health, physical therapy lab, pharmacy imaging is another big one, and also outpatient. We could go down the list. There are lots of opportunities for folks like Jesse and Tyler to help with structures that bring in the expertise that a provider needs, while also allowing them to share in the revenues from things that hospitals don't traditionally think of as revenue sources. So I think that point is right on. I would go on to say I work at and for some very good operators and I work for two HCA spinoffs and for CHS, and they both operate about as well as you can operate. I don't think you can just traditionally operate your way out of the current situation.

So it’s going to take the kinds of things that I just mentioned and it's also going to take, in my view, restructuring of the way care is delivered in any other industry where labor costs did what they did in healthcare over the past 24 months, there would be a massive push toward automation to eliminate labor because a hundred dollars an hour nurse is unsustainable.

So you just have to re-engineer the way care is delivered and use nurses at the highest level of their license. And that's a cliche, but I'm not talking about cliches, I'm talking about a total redesign in the way care is. Eight-hour shift and the head nurse does this under aid, does that, all that sort of thing needs to be looked at freshly, and I wonder if some of the standalones might be in a better situation to trial some of that stuff.

Certainly no worse situation than say in Ascension or an HCA that may try it in a market. It's not for the faint of heart, but I think if I were at a hospital board seat and I'm in a board meeting, I would asl do we have the expertise or can we bring in the expertise to re-engineering patient care?

Jesse Neil: I agree completely with every aspect of that one transformative type of steps that a board can consider.

There are still a lot of public hospitals in this country and they have some unique challenges. They have some unique opportunities. They have some unique reimbursement opportunities, but they also have some unique headwinds and structural challenges, that we're seeing more and more are considering restructuring from a governmental and public hospital into a private not-for-profit standalone or as part of a broader system.

It gives them some flexibility in terms of governance. It kinda declogs a little bit of the political process that naturally comes with a hospital that's created by statute. It gives them additional capital in terms of local fundraising. There's an appetite for engaging with the community when you're a standalone, not-for-profit.

The bond rating, it doesn't seem to be adversely affected. It's a tried-and-true model, and that's a big step for any community, but there are communities who are stepping up and doing it. They believe it's the right direction for the system, and it won't solve all your ills, but it does give you additional options and addresses some of the underlying issues that you've got.

It's not a one-size-fits all, but it's on the table for sure.

Morgan Ribeiro: So we've talked about some specific solutions or tactics to consider before even acting. Though it seems like hospital management teams and boards really need to have tough conversations and reflect on things and have some key considerations.

I know all of you, having worked with hospitals and health systems, certainly have even worked inside them, have some thoughts and suggestions, either at a macro level or a micro level. Things that hospital boards, management teams, and even community leaders for those particularly governmental hospitals need to consider as they may head into this next stage.

So, Tyler, maybe I'll start with you.

Tyler Layne: Yeah, I think the name of the game is proactivity. I think that getting out ahead of the issues with creative solutions is what’s going to be important going forward. And to Jesse's point, if your bond rating might look good, you might not be in an immediate liquidity crunch, but planning not just for what’s going to happen six months down the road, but what's going to happen three to five years down the road.

It is of important, especially with community hospitals and safety net hospitals whose boards are facing issues that they've probably never faced before. I think realizing that the level of engagement that’s going to be required is going to far outstrip what's been required before, and what they're really going to need to think about is what process do they want to run to get to the best solution for a particular community. We're all aligned here in trying to ensure that every community has high-quality care that it needs. But how you get there is going to differ for every community. And so realizing, you know, with respect to community hospitals, the playbook for so long has been we need to severely trim back the level of care.

We need to shut everything down to our emergency department. We need to close the — we need to file for Chapter 11. Those are just the first three pages of a much longer playbook that the boards need to consider. So I'm sure Jesse and Dr. Schatzlein have specific things that they think that boards and management need to consider.

But I think that being proactive in getting out ahead of these problems, even if they're not readily apparent, gives you a lot more options.

Jesse Neil: I'll say a hospital leader is a community leader. They hold a unique position of trust in their community and beyond. And if they are going to lead an organization through a time where there's this much change, it won't be a simple announcement where the first thing that the community hears is we've got to drastically change what we do.

It seems to be more effective. There's a process where the community gives some insight into what's being discussed and why, and here's what we have learned, and here's what we thought we knew, but we don't. Here's some things that we didn't know and now we do. And let the community leaders in the community as a whole know what's going on and giving them a chance to engage on it.

And then ultimately, when the decision is, all right, we're going to collaborate with this out-of-state, not-for-profit, or we're going to convert to a standalone, not-for-profit, or we're going to convert our services into a different model that addresses these priorities, but you don't want to announce those things out of the blue.

There has to be some kind of lead up to, in terms of communication, engagement, recommendations. And I would say that's a big component of it too.

Dr. Mike Schatzlein: I would just suggest that kind of the last place you want to be is progressively dialing back services in a death spiral toward the end by thinking proactively.

As Tyler mentioned, I still believe that the community hospital is where the citizenry in, say that county or wherever, are conditioned to look for care. The trick is helping them understand that most of healthcare doesn't require an inpatient hospital stay. You want to have the glass. We're not going to have inpatient census that we want to have, but we're still the headquarters in X County for healthcare.

And the lawyers can think of ways to structure that, but there are all sorts of options for, again, collaborating with others for expanding services. But hunting for ways to get more inpatient surgery is probably not going to work for the standalone. And if you get in this spiral — we're going to stop doing this — we're going to stop doing that — but don't think about what we can do and should be doing for our community, for the health of our community, you're heading in the wrong direction.

Morgan Ribeiro: Right. I agree with all of that, and I think, you know, I always kind of start with the first thing, which is just remember what your role is. If you're the CEO, what your role is and what your responsibilities are.

As a board member, why you've been asked to be a board member. And I think sometimes that gets lost, right? There's a lot of emotion involved, and particularly if you're a standalone community hospital and you got to go to the grocery store and answer to the folks that are asking about what's happening with the hospital.

But I think ultimately, what have you been tasked with and making some sometimes very hard decisions that ultimately you feel like will best position the hospital for many years as opposed to just that immediate. I think Tyler, you had said it, it's not just about what's a few months down the road, it's about what’s three, five years from now, and feeling like they've got the information readily available to them as well. So I think that intersection of management and the board really working well together and collaborating, because we have seen some situations in our times where management was not fully sharing information with the board and allowing them to make those decisions.

And we've worked on several matters with clients recently, over the past year or so where we had clients come to us and say, we're looking for a solution, “We're considering X, Y, or Z, and what other options are out there?” And these are hospitals that got pretty creative and looking at what they could do to prepare them for the future.

So I'd love Jesse or Tyler in particular, if you want to talk about any recent case studies that really reflect on some of the topics that we've covered today.

Jesse Neil: Sure. I'm glad to kick that off. We did have a really, I think, successful engagement in Lincoln County, Tennessee. There was a community hospital that had been operating there for a hundred years, and the CEO and the board and the elected officials recognized that the healthcare universe was changing dramatically and this was probably the right time to explore different ways to maintain care in the community. The mission had been to provide access to care for their neighbors, for people in Lincoln County and around the outside of the region of the service area. And it was important enough to them that they found a way to do that if they could continue to do that.

And so we worked closely with the hospital board and the chief executive and the county commissioners and found collaborators and other systems out of state that they had worked with on a number of initiatives. It was a loose affiliation, contractual, but it was a player who was already in the market and there was good cultural rapport, overlapping services and complementary expertise. And at the end of the day, it was a positive conversation that led to a willingness on the part of a multi-state or an out-of-state, not-for-profit, willing to invest in the community and the infrastructure around access to care and in exchange, find ways to collaborate with the system and in the end, focus on what they were doing well. And now there's care that's going to be provided for decades to come with capital support that would not have been there but for this collaboration that was able to be struck.

And so it's a real win for the community in Lincoln County. It won't be the same for every county. It might be different for every county, but it's something that the process they followed in the end. It's hard to overstate people living there now, their kids and grandkids are going to have different access to care in a positive way than they would have otherwise.

And that's just a really big win. And we talk a lot about the headwinds, the challenges, the difficulties, the frustrations, but there are wins to be had. And I can tell you, a CEO of a hospital that brings that kind of opportunity to a community is really special. And there are things that you can do to really change for the better if you're leading a hospital, if you go through that process and you can find a way to extend that.

And so it is a really great experience all involved.

Tyler Layne: I think that Lincoln County is a great example of finding the right fit for a particular community, and I think that this conversation can be a lot of doom and gloom, and in some ways it is, but with a lot of uncertainty and with a lot of pressure comes a lot of opportunity.

And so coming up with creative solutions, that and really resetting the expectations of, to Dr. Schatzlein's earlier point, what care looks like in a community and what care needs to look like in a community is really an exciting opportunity for a lot of smaller hospitals and regional healthcare systems.

And we recently represented in a larger capacity, Erlanger — or I believe it's the 10th largest public hospital system in the country — and they're a conversion from public hospital into a private nonprofit. And that was another example of board and management team that saw the need to get out ahead of potential issues down the road in order to preserve the financial stability and operational stability of what really is a pillar in its community and a complete necessity for its community.

When you really look at the level of care that it provides in Chattanooga and as a restructuring lawyer, I don't think many lawyers would think of converting from a public hospital to a nonprofit as a traditional part of your restructuring playbook. But it really was, and it was only an option because the board and the management team and Jesse, frankly, were able to get so far out ahead of potential issues down the road that they had that option. And so that was a real win for that community and a real win for Waller, being able to help them do it.

Dr. Mike Schatzlein: And Jesse, coming in, when I was at Ascension, Tennessee, we looked hard at Lincoln County and we had an interim administrator in there when they fired their management company.

And we looked hard at what Ascension could offer in Lincoln County, and we meet their needs, and I love the doctors down there. We love the community. We couldn't do it. Jesse came in and put together a totally different way of doing it that has worked great. I think people think of people in communities such as Lincoln County, they'll think it's somebody coming in from the outside and buying their hospital and taking dirt over and eliminating the local control.

And there are just so many options beyond that, different from that, that it's important for, and especially for CEOs who are protective of their jobs and they hold on the information more than maybe they should. And I've been one. So I know to realize that exploring options and being proactive about that is, it's not like we're going to sell it to some barbarian at the gate and lose control or die.

There are other options.

Jesse Neil: I'll just add in my mind the secret sauce in I think both Lincoln County and for Erlanger were the board leadership, the chief executive leadership, and the community buy-in that both of them were able to marshal. Now you look at the media coverage in either of those markets, and it wasn't as if no questions were posed, that no questions were asked.

It was a board that was willing and frankly eager to go through a process to assess itself, decide what it wanted to be and wanted some help, some guidance on how to get there. And that's where we came in. Not to tell them what to do, but to ask them, where do you want to go? And with that, we can develop approaches and ideas and things to consider and decide the list of things that they don't want to do.

And that's progress sometimes. And then effective communication to the community buy-in, and ultimately excitement about the change. It can't be kicking and screaming back there to be an overwhelmingly patient experience if the community isn't excited about where they're going. So it really does take a group and a community that is eager and willing.

It is a risk to change, but if you accept that the biggest risk that you've got is the status quo and can embrace that as a community, and you have a leader, a CEO, or a board that's willing to walk the walk with the community and lead the community through it and answer tough questions, I don't know of a way that you can have a bigger positive impact as a leader in any industry than you can as a leader in that context. It's generations of people will be impacted positively. There's a testament to the clients, the boards, the CEOs.

Morgan Ribeiro: I think that is a wonderful place for us to wrap up on that positive note because it is tough and it is really challenging and I think it's easy to really harp on the negative, but there's also a lot of positive that can come out of this.

And I think I've heard the word proactive several times in this discussion. And even with everything that's going on around us, it's still a lot of opportunity to be proactive and to really push forward and come up with some creative ways to continue to ultimately deliver the services in good quality care.

Whether or not you're in a rural area or an urban center, I think there's that opportunity there. So really looking forward to continuing this series with you all. Dr. Schatzlein, thank you for joining us today and look forward to continuing the conversations. So thank you.

Jesse Neil: Thank you, Morgan. Thank you, Dr. Schatzlein.

Dr. Mike Schatzlein: Thank you both.


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