• The Bottom Line on Community Buy In

    Dec 13, 2010

    By Quintin Harris

    Several years of physician and community outreach have improved the transparency of Beatrice Community Hospital's care delivery and finances, directly contributing to an improved reputation and measureable savings.

    The Nebraska critical access hospital's recent outreach efforts have been part of a methodical, conscious effort to better prepare it for the future of healthcare delivery. These efforts culminated most recently in a replacement facility that was built with physician input, responds to community demands, and has so much buy-in that residents and staff have actually invested in the bonds issued to fund it.

    Building the reputation has been about a six-year process that started with listening, grew into talking, and became a two-way conversation that has so far resulted in a lower interest rate on the hospital's debt, an easier time recruiting, more satisfied patients, and a long-term strategy for strength.

    Getting Physicians and the Board On Board

    Beatrice Community Hospital used to suffer from a lack of mutual understanding between its board and its physicians. It took CEO Thomas W. Sommers two years to recruit, at the community's request, the hospital's first female obstetrician.

    So with a new facility in the long-term plan, Sommers started surveying physicians and the community to determine and integrate their needs and demands, and he relied on physician input in the new hospital's design.

    Sommers also started bringing both physicians and board members to hospital governance institutes. He tasked the board members with listening to physicians' insights on how they function within Beatrice, and the physicians with attending education sessions to better understand the implications and intricacies of operating as a not-for-profit.

    "This hospital is the most complex organization in the community, and revenues are really large," Sommers said. "If you're going to ask local people to manage it, they need to understand how. And the physicians need to be the ones who set the direction of where we go, but once they do that, they can't micromanage."

    Five physicians attend board meetings; four have a vote. The feeling of empowerment and Beatrice's reputation for physician inclusion has spread. Beatrice recently hired its second female pediatrician, fulfilling the community's request for more female obstetricians and pediatricians. It took 60 days.

    Listening, Talking, Conversing

    Coinciding with in-depth community surveys and identification of service priorities, Sommers lifted the curtain on Beatrice's plans, its finances, and its pricing. An eight-page annual report details Beatrice's income statement, and the report is explained in-depth on the hospital's bimonthly radio show, "To Your Health," prior to its distribution.

    "If we are ashamed of the bottom line, then we are making too much money," Sommers said. "We are a not-for-profit organization. We're really owned by the community, and we have to provide our dividends in service to the community."

    Sommers explains on the radio, in person, and in the local media why a hospital needs liquidity to issue debt, how that relates to pricing, and how Beatrice's pricing compares to national averages. He also explains his recruitment efforts and how they respond to community demands for female obstetricians, pediatricians, and hospitalists.

    He shared pictures at community meetings, rotary clubs, the Chamber of Commerce, and other public events, explaining the new facility's design in terms of more modern hospitals familiar to the community (for example, a women's hospital outside Omaha known for its all-private rooms and comfortable atmosphere). He thereby put forth a vision stakeholders could relate to. He detailed the thinking behind building the new hospital on the north side of town, on the way to Lincoln, Neb., where it could absorb projected growth from the capital city.

    And when the time came for the hospital to issue $45 million to build the replacement facility, it was the community that literally bought in: Nebraska banks and residents literally invested in the hospital by purchasing 38 percent of the bonds.

    Community Buy-In Buys In

    Beatrice Community Hospital went into its financing with the intention of involving the community in the process. The hospital requested that local banks and individuals have the opportunity to purchase the bonds.

    "We've constantly hit this theme that the members of community are the shareholders of the organization," Sommers said. "That's as close as we could get to having common stock or preferred stock."

    The hospital's underwriters carved out a separate series of bonds with shorter maturities to appeal to local investors; thus, 38 percent of the $45 million was sold via retail distribution rather than to institutional investors. The entire amount was issued as bank-qualified bonds, which, along with the community's support as a key element of the hospital's credit profile, helped reduce the interest rate.

    The community outreach continued with the help of the Beatrice Area Chamber of Commerce, which helped connect local contractors with the hospital. One local counter and cabinet company will be hiring new employees partly because of the hospital project. Electrical work went to another local business within the community of 13,000 people.

    "When I came here six years ago, I didn't hear a lot about the hospital," Chamber President Lori Warner said. "Now, we have more people locally that are willing to come to our hospital. Residents say the quality is better.

    "Tom and his staff have really been proactive. They're listening to the community."

    Quintin Harris is a vice president with Lancaster Pollard (qharris@lancasterpollard.com). Reprinted with permission from The Capital Issue published by Lancaster Pollard.


    Starting a Community Conversation

    Conscious effort fosters the community dialogue Beatrice Community Hospital started:

    • "To Your Health," a half-hour radio show featuring hospital staff and health care topics, airs bimonthly.
    • Hospital representatives, including board members, attend community events in person.
    • An 8-page annual report publicly outlines the hospital's bottom line, pricing explanations, staffing efforts and future plans.
    • Chamber of Commerce new-family welcome packets include hospital information.
    • Physicians and board members attend governance events together to get a better idea of one another's responsibilities.
    • Community meetings are held to explain future plans, pricing and other updates.