 Chuck Adams discusses this healthcare system’s streamlined commitment to staying healthy.
For the folks at Georgia-based Ty Cobb Healthcare System, enlisting a back-to-basics approach means reevaluating how business has been done for more than half a century. Throughout 2006, the nonprofit healthcare system reassessed its core market from a cost-effective and patient-satisfaction perspective. The results: a new direction for the system, a healthier workforce, and the jumpstart to a healthier community.
 Chuck Adams, CEO
“Our board structure includes committed members who understand rural healthcare, are committed to management’s focus and direction to that, and rely on us to be involved and engaged in what’s happening in the industry,” he said. “We have one mission: to provide quality healthcare to the region we serve within our resource capabilities.”
A new direction
The organization entered 2007 understanding it was in competition with itself. Having two acute care hospitals within 15 miles (one is in Royston while the other is in Hartwell) of each other meant service duplication and competition for resources. A strategic planning session told the board and the management it was time to align Ty Cobb’s care delivery model with its mission.
They first developed a detailed financial analysis of both 50-year-old facilities reviewing all details, from human and equipment resources to physician recruitment. It quickly became apparent the facilities had been built for extended lengths of stay despite 70% of Ty Cobb’s business being outpatient. “We spent a lot of time on our detailed financials to say, okay, let’s put ourselves in a box and merge two facilities into one new facility,” Adams said. “To convert either of those facilities would be more costly than closing them and building a new consolidated facility.”
By reviewing each hospital’s expense lines and adjusting for efficiencies and savings that would result by merging the two hospitals, the board and management team found roughly $6 million in possible savings—just from reducing duplication, not from increasing revenue. Once the board and management agreed that consolidation was the best direction to move Ty Cobb, community meetings began.
“We wanted to ensure we communicated our new strategy of consolidation,” Adams said. “We invited all local county authorities, physicians, business leaders, and chamber of commerce leaders and explained the reason we felt this was the right direction. We then received letters of support from all attendees.”
In September 2007, the board and management teams held a strategic planning retreat with financial and data consultants to review the facts and figures supporting the consolidation. As of January 2008, consultants were testing the market to see what potential partners, affiliates, joint partners, or even purchasers might be interested in participating. “We want to do what’s best for our region, and we’re convinced one brand new, consolidated, acute care hospital is what’s best,” Adams said. “We’re not tied to doing it alone.” Since the strategic planning retreat, additional market related data has been gathered and analyzed to help determine the optimal size and best possible location for the new hospital to be constructed.
Uncharted territory
In Georgia, Medicaid pays roughly 85.6% of healthcare costs. Along with an increase in a self-insured and uninsured populations and a decreasing commercial payor mix, it’s clear that Ty Cobb’s market has a reimbursement challenge. Although Georgia is a CON (certificate of need) state, an impending bill change could prompt an even more competitive market as the possibility of altering the CON designation looms.
“You have to be competitive and offer the best, but the best costs a lot of money,” Adams said. “If Georgia’s designation changes, it will open the market for more competition, which means hospitals will need to be prepared to respond to the challenges associated with this competitive market.”
To proactively combat the CON designation change, Adams and his team are developing a model of regionalized healthcare. With Ty Cobb’s back-to-basics approach already working to transform its business model, the team decided to apply the same philosophy to wellness, starting with its employees.
As with many employers with self-insured insurance plans, Ty Cobb strives to keep its premiums down while continuing to provide the best possible coverage. In 2007, the system told its employees that, starting January 2008, it was raising deductibles from $500 to $2,500 per employee. At the same time, it installed a wellness incentive plan to give employees the ability to earn five $500 credits for healthy lifestyles.
Ty Cobb screened its employees for diabetes, cholesterol, blood pressure, smoking, and body mass index. A pre-screening was held in June 2007, at which time all employees received their scores, as well as the resources they needed—for free—to get those five areas under control. A final screening, held in December 2007, found 85% of the workforce earned at least four of the five-$500 deductible credits. Many of them were eligible for all five. With the inhouse success of the program, Adams and his team decided to roll out the opportunities to the community.
“We had success with these classes and sessions with our employees, and we wanted to provide community members and other businesses access as well,” Adams said. “We use an online newsletter, as well as the local newspaper and other media, to promote community access to any of our programs free of charge. We’re living our mission like we mean it by going back to basics.”
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