Oregon hospital leader Becky Hultberg talks unions, finances and emerging from COVID

We also have to look at reimbursements. Does Medicaid cover the cost of care? We know the answer to that is no. The last thing that we need to do is address barriers that we’re seeing to patient care and how they are affecting hospitals. Prior authorization, denial of coverage are all part of this equation.

TLR: The Oregon Association of Hospitals and Health Systems and labor groups reached a deal last legislative session on the hospital staffing bill. Have relations between the hospital association and the Oregon Nurses Association, as well as other unions, gotten better or worse since then?

Hultberg: We think success in the future will look like more collaboration and more engagement. On a host of issues — from the cost of health care, to patient access to care, to Medicaid reimbursement — we hope that we will continue to work in partnership with labor and other stakeholders.

TLR: Have Oregon hospitals gained any momentum from being able to strike that staffing deal?

Hultberg: That collaboration and partnership is continuing. Those same stakeholders continue to meet as we work on implementing this law, which is going to take several years. I think the momentum is continuing through that effort. We’re looking at what else in the future might we be able to collaborate on with other partners to improve the health care system.

TLR: Anything in particular?

Hultberg: I think we’re internally talking about things like future workforce investments and workplace violence.

TLR: Workers recently engaged in a five-day strike at three Providence workplaces. Strikes at hospitals almost never happened in the past. Do you see that changing?

Hultberg: I think we’re seeing an increased number of strikes now or threats of strikes. What that looks like in the future, I don’t know. 

But if you look at what we’ve just been through with COVID-19, I think it’s not a surprise. We asked a lot of frontline caregivers. It was really hard work. It was work that was physically demanding. It was emotionally demanding. It was mentally exhausting. I think there’s a moment now where workers are saying, “It’s time for you to take care of us and hospitals.” We’re working to do that. I think we’re going to see for this time period, probably an increase in that activity. I don’t know if it will continue.

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TLR: As part of the deal around the staffing bill, the Legislature exempted frontline medical worker wages from the state’s plan to cap health care costs growth 3.4% annually. Is that target now achievable from the hospitals’ perspective?

Hultberg: In an inflationary environment, it will be exceedingly difficult to achieve a cost-growth target. When we talk about cost, that is often conflated with price. In fact, costs are the expenses that go into delivering care. What are those expenses? They’re labor, supplies, utilities, pharmaceuticals. The cost of all of those things is growing rapidly, far beyond the cost-growth target. 

TLR: Do you think the Legislature should scrap this target altogether and have something different? Or maybe really revise it?

Hultberg: We’re trying to understand what the lasting impacts of the pandemic will be. Is this inflationary environment transitory or is it permanent? Until we answer that question, it is probably premature to suggest any significant changes beyond the one that was passed in the last session. 

We’re still committed to addressing cost growth, which is a significant issue. Hospitals are one part of that. Insurers are another part of it. Other providers are also a component of total cost. We do need to address the cost of health care. But it’s also important to recognize the pandemic and its direct impacts on the cost of delivering care.

TLR: To meet this 3.4% cap, what would need to happen from the hospitals’ viewpoint?

Hultberg: That’s a really complicated question. I can’t think of an expense that’s growing less than 3.4% at the moment. Some of those factors are within hospitals control, but many of those things are not within a hospital’s control. 

We have to get out of an inflationary environment back to some normal level of expense growth. Then we need to continue to look at how to take care of people out of the hospital before they get sick enough to need hospitalization. There are certainly things that we can do around utilization and around prevention. But fundamentally, until expense growth goes down, it is going to be very hard to meet that target.

TLR: The vast majority of hospitals in Oregon enjoy hefty tax breaks from the government thanks to their nonprofit status. Lately, we’ve increasingly seen hospitals here and elsewhere in the country cut services their communities rely on. To what extent do you think state officials have the right to tell community hospitals what services they must preserve?

Hultberg: I think nonprofit hospitals are not-for-profit because they provide a community benefit. Hospitals are stewards of a community asset. Many organizational leaders view themselves that way. We are stewarding this community asset. We also are responsible for ensuring that it is here in the future. 

When you look at things like service reductions, those are wrenching decisions for hospital leaders because they involve the loss of a service that the community relies on. But they’re thinking about serving people today, cognizant of the fact that they need to ensure that their hospital is there in the future. 

TLR: Should Oregonians expect to see more dramatic moves like PeaceHealth’s announcement it is closing most of the services at its Eugene University District hospital?

Hultberg: I don’t have any inside information about anything that might happen in the future. But what I can say is that for two years, we’ve been pointing to the chronic financial instability that hospitals are experiencing.

It’s very predictable and logical that we have seen service reductions and a hospital closure. We’ve been predicting that that could happen for two years. I think the question now is, will we see financial recovery to the point where those kinds of things are not necessary in the future?

The fundamental problem is that expenses have gone up dramatically, and revenue has not. That’s a really simple equation with a lot of complications underneath it.

TLR: OHSU and Legacy are seeking to merge. What do you say to critics who say that mergers and consolidations drive up prices?

Hultberg: I know there are studies saying that mergers drive up prices. There are other studies that I think show the benefits of scale. 

One of the challenges in our complex environment with lots of different payers is that things like value-based payment require scale. There are benefits to scale, both from the ability to manage risk and from the ability to manage expenses. It’s not a surprise that we’re seeing consolidation in a time of financial instability. Organizations sometimes need partners in order to do the things they know they need to do to be successful in the future.

TLR: As you mentioned earlier, there’s concerns about declining revenues for hospitals. But many hospitals still have pretty big reserves. Aren’t those reserves big enough to preserve services?

Hultberg: Many hospitals have dipped into their reserves during this period of financial instability. One of the reasons organizations have reserves is to use them to sustain themselves during difficult financial times. I think what we’re seeing now that’s different is that some organizations have gone fairly deep into their reserves to the point where there is concern about what that means for the future. 

Reserves are a rainy day fund. How long does it have to be raining before you decide this is the new normal, and make decisions to ensure your organization can survive into the future? When we see service reductions I think those are the kinds of things that are weighing on hospital leaders.

TLR: Are we in a new normal?

Hultberg: I hope that this is not the new normal. We will see through our next quarter’s data a slight improvement in the financial position of hospitals. I think instead of two-thirds of hospitals having negative margins, it will be like 57%. 

But I think COVID has fundamentally changed some underlying drivers of the health care system. I do think we’re at a point where we need to be careful in analyzing which of these factors will persist. 

As an example, we have a chronic workforce shortage. Will our workforce recover? If it does not, how do we take care of the same number of patients with fewer people? That's a really big question right now. 

We need to think about what happens if this is the new normal. What will it require for organizations to stabilize? I don’t know if there’s a clear answer yet.

TLR: St. Charles Health has recently been exploring pulling out of Medicare Advantage plans that many seniors rely on following the footsteps of the prestigious Mayo Clinic and other hospitals. Do you see more hospitals taking this route? If so, how can vulnerable seniors on limited incomes be protected from disruption, stress and additional costs?

Hultberg: I think health insurance should be a bridge to care, not a barrier. Unfortunately, what we see with some insurers is health insurance are administrative processes that create barriers to care. I think that is what some of these organizations are responding to. 

This creates concern and confusion in communities, especially with respect to Medicare Advantage plans. But organizations have to put patient care first and ensure that they are able to deliver the care to patients when they need it. I think their response to some of these insurance practices is coming from a place of ensuring that patients have access to care.

TLR: It seems like there’s been quite a few closures of maternity units, or planned closures.

Hultberg: It is a particularly vulnerable services environment, especially in rural communities. Maternity care is particularly vulnerable because it’s low volume. Very often, it’s a high percentage of Medicaid patients, which means the reimbursement is very low. Liability costs are very, very high. 

When you put all those three things together, that creates a difficult situation. You layer on top of that staffing shortages and the need to have specialized providers to provide that care. 

TLR: What can be done about that?

Hultberg: Ensuring that we have qualified trained providers and a sufficient supply of them to provide maternity services is key. We can look at addressing malpractice and liability. Those two things probably are the things we have direct control over. The other challenging part of the equation is simply the low volume of births in some hospitals.

You can reach Jake Thomas at [email protected] or via Twitter @jakethomas2009.