COEUR d’ALENE — Kootenai Health is not for sale and is not on the brink of financial ruin.

But hospitals and healthcare systems are facing significant financial challenges caused by the nationwide healthcare staff crisis that Kootenai Health CEO Jon Ness has been warning communities about for months.

At the same time, a change in Idaho law enacted on July 1 will move hospital districts like Kootenay Health from government-owned organizations with locally elected boards and tax authorities to non-profit organizations. The way has opened.

Because this legislation update provided hospital districts with the same options that county-owned hospitals had long had available, Kootenai health leaders were encouraged to assess the potential pros and cons of such a move. Now to start.

“It’s just an opportunity to make sure what we’re doing is right for our community,” said Katie Brody, chair of the Kootenai Hospital District Board of Trustees, on Thursday.

Ness said he would go one step further, and Brody agreed.

“I think our board has a duty to evaluate whether this is a good idea,” Ness said.

Nurse Shortage and COVID-19

In a guest column published by The Press in June, Ness said there is a growing shortage of available medical professionals, mainly nurses, leading to significant increases in labor costs across the hospital industry. in detail.

“Hospitals will experience both service and financial challenges,” Ness wrote last spring. “You can’t keep doing things the way they’ve always been.”

That hospital’s understaffing, exacerbated by the COVID-19 pandemic, had escalated years before anyone in the United States had heard of the coronavirus.

A widely shared national pre-pandemic survey published in the American Journal of Medical Quality in 2018 predicted that the shortage of registered nurses would continue to widen across the country through 2030. Shortages were projected to be most severe in the South and West.

Then came the novel coronavirus disease (COVID-19), straining an already precarious hospital staffing situation.

“This is an extraordinary once-in-a-century challenge for a hospital, and Kootenai Health has truly been impacted by COVID-19, which has created a great deal of stress and fatigue, not just in terms of the number of patients treated. ‘ said Ness on Thursday. “A lot of people wondered why I was working in this industry…people left the healthcare industry in droves.”

Vaccine and mask mandates had less of an impact on industry turnover for healthcare workers in 2020 and 2021 than other factors such as burnout.

At Kootenai Health, nearly all employees complied with vaccination requirements and 99% of employee requests for medical or religious exemptions were approved. Of his approximately 3,700 Kootenai health workers, only 18 remain as a result of needing a vaccine.

The hospital board’s decision to implement the vaccine policy was prompted by the federal Centers for Medicare and Medicaid Services updating the terms under which hospitals are reimbursed for services covered by Medicare and Medicaid.

“Failure to comply … could disqualify us from receiving Medicare and Medicaid equal to 60% of all Kootenay Health revenues,” Ness said. “Like all other hospitals in the country. So we had to make that decision, and I don’t know of any hospital that didn’t comply.”

Had the Kootenai Health Board rejected the vaccination policy, the economic impact and local health care implications would have been severe.

“Koutenay Health would have been closed,” Ness said.

Economic Impact of Traveling Nurses

As more nurses were needed amid the COVID-19 surge, hospitals across the country turned to a long-used resource (contract staffing firms that provide traveling nurses) to fill the temporary staffing gap. ) has become more dependent on

The American Hospital Association reported in April that 95% of medical facilities hired nurses from contract labor firms during the pandemic. At the same time, from January 2019 to January 2022, the hiring of contract or traveling nurses by these companies increased nearly 120% from pre-pandemic levels. Meanwhile, the hourly rates charged to hospitals by staffing agencies for travel nurses have risen. It increased by 213% over the same timeframe.

“To get the big picture, let’s say the average traveler can make $150-$200 an hour and the average nurse can make $42-$60 an hour. said Ness. “So if she’s making $200 an hour as a nurse traveler, annualized that’s the same as making $400,000 per nurse traveler per year.”

Kootenai Health now spends an average of $6 million a month on contract travelers, according to Ness. In 2019, before the pandemic hit, hospitals spent $7.5 million on these workers in one year.

“The only source of our financial problems is not our strategy or our financial management. It’s the cost of labor and the use of contract traveling nurses,” Ness said. “That’s one problem.”

He pointed out that all of this is happening at the same time baby boomers are retiring and leaving the workforce. The average age of American nurses is 50.

“And all these new residents have moved into Kootenai County, 75 percent of whom are 65 and older,” Ness said.

These new residents are largely out of work and have increased health care needs.

Each year, from 2010 to 2021, Kootenai Health met or exceeded budget targets and the hospital maintained an A rating from Standard & Poor’s, Ness said.

This year is different.

“As with nearly all hospitals of similar size in the United States, budget shortfalls are expected. The hospital industry as a whole faces the same problem,” Ness said.

With the financial restructuring plan in place, the hospital has identified $35 million in savings and additional revenue to offset the losses. The number one priority is to reduce contract labor costs and fill the workforce with full-time employees. This includes other work strategies such as hiring freezes and providing additional time off to help reduce burnout, as well as increasing salaries for hard-to-fill positions to help keep and recruit employees. includes efforts.

“We want to get growth back, but it will take some time. So this is a recovery, not a financial collapse,” Ness said. “We want to rebuild, we want to recover, and then we want to go back to our original strategic plan. We never changed our vision. We never changed our mission. ”

As a hospital district with taxing powers, the Kootenai Health Board has powers to collect taxes to help with fiscal consolidation, but it is unlikely.

“The composition of this board is very conservative, and taxation spends very little time on the agenda,” said Brodie. “Even in the worst of times, it’s not discussed.”

From public to private, new options

Addressing the financial situation is everyone’s top priority at Kootenai Health, but another issue has emerged for hospital management to consider.

For the first time, the Idaho Legislature and Governor paved the way for public hospital districts like Kootenay Health to transition to private nonprofits.

When considered during the last legislative session, the bill’s purpose statement, now in law, was: For the continuation of service in the community. Provides options to help community hospitals meet future financial challenges. ”

Detractors of the hospital have called Kootenai Health’s review of the updated law an attempt by liberals to “steal” the hospital. However, the law change was approved by some of the state’s most staunch Republican Conservative MPs, including Dorothy Moon, Chad Christensen, Priscilla Giddings and Ron Nate, and was voted into office in Boise in February and March. was passed almost unanimously by Republican legislators who voted yes included Jim Addis, Paul Amador, Vito Barbieri, Ron Mendive, Doug Ochniewitz, Tony Wisniewski, Heather Scott, Peter Riggs, and Mary Sousa, Steve Vick included.

Kootenai Health and Evergreen Health in Kirkland, Washington are the only two large hospitals in the Pacific Northwest with 300 or more beds in public hospital districts.

“And Kirkland, Washington, and Evergreen Health maintain hospital districts because they maximize taxing authority. Last year they received $28 million from residents in tax revenue,” Ness said. Told. “Kootenai Health has not used its taxing powers since 1995. No revenue has been received from it.”

Kootenai Health is unusual and unique in that it remains a public hospital district, he said. Only 8 out of 50 hospitals in Idaho have the same situation, and they are mostly very small rural critical care facilities. According to Ness, the main model for US hospitals is his 501(c)3 nonprofit corporation.

Brodie said he sees it as an exciting opportunity for Kootenai Health to explore. She said she doesn’t think moving to a nonprofit model means losing local control, as the elected board remains in place and future members are appointed by the board.

“All this time I’ve said this doesn’t bode well for a hospital sale,” Brody said. “…I’m lying. I don’t have any plans at the moment.”