Russ Johnson explains how this nonprofit hospital is celebrating 80 years of success with partnerships and collaboration.

The 8,000 square miles of San Luis Valley that boasts magnificent sand dunes has also, for many years, boasted a disjointed medical community. Four years ago, that changed, and Colorado-based San Luis Valley Regional Medical Center was at the center of it all.

Russ Johnson, CEO

“You can’t come to the San Luis Valley and refuse to take Medicare or Medicaid,” said Johnson. “You are essentially rejecting 70% of the market. It’s not realistic.”

Although SLVRMC’s history of being adversarial with its physicians and providers originally pushed the constituents of PC to start their own practice, SLVRMC’s Partners of Choice for Healthcare Solutions strategy changed that perception. The organization developed this community-connection initiative to demonstrate a changed attitude to its own staff and to new healthcare professionals moving into the community.

“We no longer want to run any potential competition into the ground and out-compete them,” said Johnson. “We’re all in this together. The valley is a tough market, and we’re better off collaborating rather than competing.”

Cultural Petri dish
This year, San Luis Valley Regional Medical Center celebrates its 80th year of operation. The organization is licensed for 59 beds, 49 of which are acute-care focused. The hospital serves a six-county area, known as the valley, and handles roughly 50,000 people. It’s located in one of the highest alpine valleys in the world and is surrounded by two mountain ranges of about 14,000 feet.

The location of the organization creates what Johnson calls a Petri dish in which the community, culture, and healthcare system bubble away. The full-circle relationship turnaround between the medical center and PC came about because of SLVRMC’s attention to the benefits of developing interdependent relationships with other healthcare organizations in the valley.

“We conducted ourselves in an open manner and changed the way we did business,” said Johnson. “If you want to be considered a partner of choice, you need to demonstrate you can be trusted. We spent four years changing the way we ran the medical staff and how we pursued outside opportunities. As a result, PC came to
us when they needed help.”

Because SLVRMC was already at full capacity, bringing the physicians at PC inhouse was not an option. The medical center struck an intermediate balance by assigning a work group of four physicians, a clinic administrator, a consultant, and an attorney to explore business models and physician payment options.

“At the time, PC had 48 employees. We took 42 of those positions over because of redundancies and closed PC’s surgi-center the first day we were affiliated. As a result, in one day, our facility jumped from 100 cases a month to 185 cases a month,” said Johnson. “We virtually doubled our surgery volume and improved our payer mix. Those economic engines allowed the affiliation to work.”

The existing physicians were put on 100% production, meaning the number of completed RVUs (relative value units) was directly reflected in the physician’s salary. Because the RVU for a Medicaid office visit is the same for a Blue Cross patient, this system removed the concern PC physicians had regarding servicing the valley’s low-income demographic and focused them on servicing every patient who walked through the doors.

“We told them if they took the risk for working hard, we would take the risk for the payer mix,” said Johnson. “PC was 20% the revenue size of our entire hospital. The affiliation represented a lot of risk but gave us a lot of opportunity.”

Expansion and development
The administration at SLVRMC told the owners of PC’s 42,000-square-foot facility they were not interested in buying the building at the time. The medical center believed purchasing the PC building would convolute the focus on physician relationships and heighten the strained relationship PC had with the third healthcare provider in the region, Valley Wide Health Systems.

“We wanted to get those groups closer together because they were all good doctors and good people,” said Johnson. “We built an expansion onto our facility, moved 80% of our physicians and providers in, and sold the third floor to Valley Wide Health Systems. Subsequently, we maintained a lease on half of the PC building for the services we couldn’t accommodate in the new structure.”

With the expansion, SLVRMC focused on developing services not previously located in the valley. The medical center took an idle wing and developed it into a 10-bed inpatient rehab unit. The organization also started medical oncology and infusion therapy units and a full service women’s imaging center.

“We created a stable business unit from which to provide primary and specialty physicians,” said Johnson. “We’ve also shown we can attract candidates better than independent practices because they see a stable organization, a good business model, and an 80-year history of success.”