Kosair Children’s Hospital: Shelter From the Storm - Health Executive - RedCoat Publishing - Inside Healthcare

A rapidly growing market, shrinking reimbursement, and an aging facility have formed the perfect storm over Kosair Children’s Hospital in Louisville, Ky. Thankfully, CAO Doug Eighmey and his executive team read the forecast well in advance.

In 2002, the 263-bed pediatric hospital began penning a long-term growth plan focused on updating and expanding the facility and its services to meet the needs of the rapidly growing communities in the greater Louisville area.

Doug Eighmey, CAO and President

“The hospital opened in 1986 with five floors, and it was basically an inpatient facility with an ED and radiology capabilities,” said Eighmey, who has been president and CAO at Kosair Children’s since 1989. “Since then our volume has continued to grow to the point where we’re 100% occupied roughly 40% of the time.”

A $55 million addition completed in 1997 helped stem the tide, adding three floors to the hospital and an OR, but Kosair Children’s—the region’s only pediatric hospital—quickly filled the extra beds. When the hospital’s leadership team began planning for the future in 2002, it recognized the challenges went far beyond space. The executives saw that government reforms would lead to lower reimbursement, and the demand for outpatient services was growing substantially.

These elements made the growth plan more tricky than most: aging Kosair Children’s would have to update and expand while creating new revenue opportunities and meeting outpatient demand. And it would have to do so while maintaining patient volumes and a Magnet-certified level of service its communities have come to expect.

Adults, too
One of the areas where Kosair Children’s was experiencing rapid growth was in cardiology. After hiring a pediatric specialist in interventional cardiology, the hospital was able to perform roughly 35% of what were once open-heart procedures in a non-invasive way.

For many families, open-heart procedures that once put their children in the hospital for a minimum of three days became in-and-out cath lab procedures that had them home in roughly six hours. As Eighmey says, “demand for those services went through the roof.” In response, Kosair Children’s created a Congenital Heart Center and recruited an electrophysiologist to further expand services.

The new center, completed two years ago, not only helped the hospital meet the growing demand for outpatient services, it also helped to create a new revenue stream. “There is a generation of children growing up with repairs to the heart that need to be checked on and repaired as they grow,” Eighmey explained. “Today, many of those children have become adults. We discovered that adult cardiovascular surgeons aren’t trained to do those types of repairs; the pediatric guys are. So now, we’re also treating adults at our center.”

The influx of adult patients couldn’t have come at a better time. The volume of patients covered by Medicaid that receive care at Kosair Children’s has surged to more than 55%. In the past year alone, Eighmey said there was a shift of nearly 11% from commercially insured patients to Medicaid. And with Medicaid in Kentucky covering only 82% of cost, the hospital’s revenue has been slashed.

By providing CHF services for adults, the nonprofit hospital is able to shift more of the load back to commercially insured patients. “We do hope to continue to attract more commercially insured patients, but we’re not just doing it to raise more money,” Eighmey said. “We’re doing it to provide the services our community needs.”

Lean on me
As the only pediatric hospital in its region, Kosair Children’s can’t just shut units and interrupt services to renovate—the community’s need is simply too great. Thankfully, the hospital is able to lean on one of its sister hospitals in the four-hospital Norton Healthcare network for support.

For example, the children’s hospital expanded and updated its 97-bed neonatal intensive care unit by first opening an NICU in the neighboring Norton Healthcare adult hospital, which is connected to Kosair Children’s via an enclosed walkway. The added space allows Kosair Children’s to continue to provide quality services while performing renovations in its own facility.

“We’ve always worked closely with our adult sister hospital, and now we’re sharing expansion so we can provide the best service for all of our patients,” Eighmey said. And expansion continues. The children’s hospital is spending $9 million to expand its imaging center, and the long-term growth plan calls for the construction of a free-standing ambulatory services center to begin in three years. It’s a center that will expand services to meet outpatient demand and allow the hospital to adeptly weather the perfect storm created by an evolving and tumultuous healthcare system.

“We’ll have the facilities and the technology to not just meet the demands of our patients, but to also attract more pediatric specialists to our hospital,” Eighmey said. “And that’s a key component of why the growth plan was established. We want to have the best possible people so we can offer our communities the best possible services.”

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