Wellmont Needs Financial Order, Cohesion in 2009

After years of rapid growth through mergers and acquisitions, Wellmont Health System is going to spend the rest of 2009, and possibly longer, getting its financial house in order and striving to become a true health system.

Mike Snow, who became Wellmont’s interim CEO last summer and took the permanent position in February, told the Bristol Herald Courier editorial board that the health system needs to do a better job of working as a system, rather than a collection of hospitals and health care facilities. Snow has hospital management experience in other states and came to Wellmont from Houston.

After two layoffs this year and financial audit irregularities, we agree that Wellmont should focus inward on guaranteeing its own financial health and that proper auditing methods are in place.

Wellmont was created by the merger of Bristol Regional Medical Center in Bristol, Tenn., and Holston Valley Medical Center in Kingsport, Tenn. The chain also owns health care facilities in Wise County, Lee County and Norton, Va., and Hancock County, Tenn.

Snow noted that the health system has about $440 million in bond debt, but about $255 million of that debt is attributable to debt from mergers and acquisitions, including the initial merger that formed the health system.

During Thursday’s editorial board meeting, he said he is comfortable with Wellmont’s existing debt and its ability to repay it. “We can easily manage our debt obligations and have the self-funding ability to handle it,” Snow said. But he also said the hospital chain is staking a more conservative stance and does not plan to take on more debt in the short run, a decision that will make it more competitive and be a business advantage.

Wellmont recognizes that it must continuously find ways to save costs, Snow said. Only 20 percent to 25 percent of local patients have private insurance, he noted. The rest are covered by Medicaid, Medicare, TennCare or have no form of insurance. There is an obvious need for some type of universal health care, Snow said, but the biggest question is how to pay for it.

“In an ideal world, absolutely universal care is where we need to go,” Snow said. “But what is the funding mechanism? How will there be competition in the system? That is critical to keep costs low. I support universal care if we can figure out a way to pay for it and add some measure of self-responsibility for individuals to pay into it.”

Snow also responded to last week’s layoffs at Wellmont, but still refused to specify what departments were affected. The health chain did announce that 40 people were laid off. This follows 86 layoffs in January.

A company statement regarding the layoffs said the announcement was made to “dispel rumors” and provide “transparency.” In that vein, we encourage specifying what departments were affected. Snow said the public can be “confident that they will be well cared for in one of our hospitals, but it is not relevant, in my view, to give that level of detail. We gave the public the number and we told our employees what they needed to know. That’s the best balance as we see it.”

Obviously, we disagree on this point. But we should keep the layoffs in context. Wellmont employs about 6,900 people and the recent cuts amount to less than 2 percent of its workforce. Snow noted that Wellmont is not cutting pay across the board or suspending matching contributions to employees’ retirement accounts, as many other companies have done during this recession.

We also support the direct approach Wellmont took with the layoffs. The hospital system announced the cuts, gave severance to the affected staff and has told remaining employees that – at least for now – the reorganization and cuts are over. Layoffs are always painful, but death by a thousand cuts is certainly worse.

Overall employee morale is strong, Snow said, and they are staying focused on Wellmont’s mission: “To provide superior care with compassion.” Snow said employees routinely offer him unsolicited suggestions for improvement and cost-savings.

We urge him to listen to those voices and to do all he can to make Wellmont a company that encourages employees to share their concerns and ideas. There are many Wellmont employees who have great ideas to improve their jobs and the care they provide to their neighbors.

Listen to them.