It’s no secret one of the toughest jobs in corporate America is hospital administration. Whether politically posturing, fighting for funding, serving the needs of the sick and indigent, or maintaining an acceptable level of profitability, a headache lurks around every corner.
So what is a publicly funded healthcare system to do? Carolinas HealthCare System (CHS) chose to recruit plainspoken, impassioned and seasoned veterans to lead the charge in creating top-rated care to sustain the growing population of the Carolinas.
Humble But Auspicious Origins
Carolinas HealthCare System has its origin in a four-story, 300-bed hospital in Dilworth built on land purchased by the Board of St. Peter’s Hospital. The need for its existence was due largely to the dearth of Charlotte’s hospital beds relative to the city’s growing population in the 1930s. Its construction was the product of a broad collaborative civic effort led by the Mecklenburg Medical Society involving St. Peter’s Hospital, St. Peter’s Episcopal Church, the Chamber of Commerce, the city and county governments, the federal government, the Duke Endowment, over $135,000 in voluntary contributions and a $350,000 bond issuance, all totaling $1,250,000. Dedicated as Charlotte Memorial Hospital in 1940, the entire property was deeded to the newly established Charlotte Memorial Hospital Authority in 1943, by which legal entity it still operates.
Enlarged with additions and expansions over the decades, Charlotte Memorial Hospital has since been renamed Carolinas Medical Center (CMC), and has over 795 beds. Today, CMC, in conjunction with 14 other hospitals and numerous other healthcare operations, is the flagship facility of the Carolinas HealthCare System, which itself comprises nearly 5,000 beds and serves patients across both North and South Carolina.
Since the time of its creation, the hospital has provided a certain refuge for the disenfranchised, poverty-stricken populations of Charlotte, as it was and is one of the few places where these patients would not be turned away. This dedication to equally available health care has not been without cost, though, and by 1980, the hospital lacked adequate facilities, was low on morale and was barely getting by financially. It was losing funds so rapidly that it became very problematic to help the underprivileged patients to which it was committed.
Enter Harry Nurkin and Michael Tarwater. Both arriving from the University of Alabama in 1981, they chartered a course for change that would forever alter the Queen City’s medical landscape. As CEO, Nurkin had a dynamic, charismatic persona credited with raising Carolina’s Medical Center from third to first position in a three-system town. For over 20 years, working with management structure, improving facilities and morale, and fusing the structure of university hospital and community hospital as one, Nurkin and Tarwater, his chief executive of operations, worked side by side to create what has become the largest public hospital system in the Carolinas, and one of the largest in the nation.
Changing of the Guard
In September 2002, Tarwater assumed the reins as the CEO of Carolinas HealthCare System following Nurkin’s retirement. Tarwater’s familiarity with the system, his contribution to CHS’s success, not to mention his style and vision, made him a shoo-in for the job. In fact, he was the only candidate nominated for the position, and quickly moved to implement the next steps towards the system’s evolution.
Like Nurkin, Tarwater got into the administration game at a young age, and so carries a youthful smile, a football player’s physique, and a schoolboy’s passion for airplanes. Nonetheless, he tackles the day-to-day chores of the huge operation with an air of imposing knowledge and ample gravitas. Now 22 years into his service with the facility, Tarwater says the initial challenges he faced are still the most formidable: “We have the same problems, they are just getting bigger. The financing of health care, collections and insurance continue to be our biggest battles.”
“The financing of health care is eroding in a number of ways. There is more clamoring for dollars, especially since there are more niche players seeking to improve their financial lot,” explains Tarwater. By niche players, Tarwater refers to the increasing number of private facilities focusing on the more profitable segments of health care, rather than full-scale treatment offerings. “Outpatient care and upscale technology such as MRI’s are perfect examples. These are areas from which a medical facility can maintain profitability. However, many practices believe that they should be able to pull these services out of the hospital environment and offer them in an office environment.”
In fact, there has been much debate over free enterprise and whether or not large healthcare systems like CHS are monopolizing the rights to provide these services. Tarwater fiercely rejects this assertion. “If you remove the profitable mechanisms in a hospital’s operation, you are completely removing the underpinnings of a system created to take care of all people, not just the ones who are able to pay for it.”
For example, Carolinas Medical Center has an MRI machine set up and staffed to run 24 hours a day, 7 days a week. Says Tarwater, “This involves a huge expense. However, anyone who needs an MRI at any hour can receive it. Contrast that to a private office that staffs only from 7 a.m. until 6 p.m. to manage costs. The patient who needs care in the small hours of the night after a car accident is out of luck and ends up at the hospital. Despite serving patient needs only a portion of the day, the private office pulls the mainstay of regularly scheduled use of the MRI from the hospital, significantly diminishing hospital revenues while leaving necessary emergency procedures to be performed by the hospital.”
The increasing unaffordability and unavailability of health care are also impacting the system. Elaborates Tarwater, “Consider the number of medically indigent individuals, without insurance or the money to pay for services independently, who wait until the last minute for care. Not being able to pay a clinic to be treated for a low grade infection, the patient waits until he or she has full-fledged pneumonia and has to make a very expensive emergency room visit. These are services that we most often do not get paid for. If you remove the profitable segments of care, you become unable to provide the unprofitable segments of care, thus freezing out an entire population from wellness.”
Competition from private offices is not the only hurdle endemic to the financial spectrum of hospital administration. Too, there is the ever-expanding role of technology, its subsequent costs, and the role of managed care companies that muddy the equation.
Says Tarwater, “We as a society are constantly striving to do things better, faster, less invasively and with shorter recovery times. There is no doubt that this is better for the patient, but it all comes with a cost. For example, patients are now opting for laparoscopic appendectomies. We have to pay four times as much for the technology to provide this procedure but we are currently reimbursed for only the traditional cost. In addition, due to antiquated pay structures, if the patient leaves the hospital in one day, rather than the traditional four days, we are only reimbursed for 25 percent of the original fee.”
With respect to managed care companies, Tarwater offers a metaphor for the ramifications of condoning these types of alternative healthcare providers: “I consider mental health (MH) services to be ‘the canary in the mine.’ The general exclusion of MH services from many companies’ insurance coverage has led numerous MH facilities to close their doors. If the canary stops singing, there is something bad in the air and you know its time to get out of the mine. We need to learn from this misfortune, and begin addressing these issues now to minimize the impact on the community and the patient.”
In the meantime, Tarwater continues to keep CHS on top of the problem. “We are scrambling to make sure we know ‘the how, the when and the what’ coming down the technology pipeline. This way we can address the issues with managed care companies and assure the best treatment for the patients needing certain procedures.”
The Greater Good
Since the days of Charlotte Memorial, Carolinas HealthCare has been rooted in the philosophy that the community good and overall welfare of the population is
its greatest concern. Tarwater champions the CHS traditional hospital facility over the up-and-comers and advocates the Certificate of Need legislation from the mid-'90s to keep technology in the hospital environment, and most importantly, to share its offerings with the community for the broadest possible access for patients and medical professionals.
As an example of broadening access, Tarwater points out CHS’s expansions: “We’ve implemented an experiment to redirect patient traffic to less-crowded facilities, and set up a number of clinics in less-advantaged communities such as Biddlepoint and Northpark. In so doing, we’ve decreased wait times, decompressed the busier facilities, improved work flow, and increased patient satisfaction.” The good news is also bad news. According to Tarwater, those facilities have hit capacity very early, but they set a precedent for future plans to address the needs of the expanding Charlotte population.
Tarwater has led CHS in an expansion project designed to attract the best physicians by creating new office buildings adjacent to CMC to enhance accessibility between their practices and the hospital. CMC is also undertaking a new addition to its surgical tower, which will host Neurosurgical Intensive Care, Trauma Intensive Care, and Surgical Intensive Care. Tarwater alludes to undisclosed plans also forthcoming in addition to the $70 million expansion, while noting that the fastest growing areas for the healthcare system are in the University area, Pineville and Mercy locations.
Despite these new facilities and improved conditions, hospital administrations still must deal with increasing scarcity of qualified health professionals to fill them. Whether it involves physicians retiring due to increasing insurance premiums, insufficient pay for allied health professionals, or the increasing age of physicians in certain specialties that aren’t attracting a new host of prodigies, the drive to attract the best and the brightest must continue.
Says Tarwater, “CHS is addressing these needs through our own training facilities and in a concerted effort with area universities. We have two schools of nursing at CHS, as well as schools for radiologic technology, certified nurse anesthetists, and medical technologists. We serve as clinical training sites for nurses from UNCC, CPCC and other programs. We also conduct residency training programs.” By creating the vehicles for training, as well as providing attractive options for the deep well of talent Charlotte has fostered in health care, we are attacking this issue head-on.”
Fighting the Good Fight
Tarwater’s mission is clearly that of patient advocacy. He says that one of Carolina HealthCare System’s greatest accomplishments is that, in the exponential growth and success the system of healthcare facilities has experienced, it has not sacrificed access or the quality of care for the patient. With conviction, he maintains, “We have never abandoned our commitment to the community to get where we are. I don’t think that many players in this industry can claim that to the same degree we can.”
Tarwater is in an excellent position to witness the effects of the changes in healthcare delivery, and sees a number of significant hurdles to surmount in maintaining affordability and equal access to health care. He says that the most important message he has for the medical, legislative and local community is twofold:
“One, don’t be deceived by those who would have you think that free enterprise can work for health care the way we have grown to expect it. With an average of 50 percent of patient revenues coming from federal and state government through Medicaid and Medicare, we are very tightly regulated. These agencies only pay a percentage of costs, however, they require that we abide by strict policies or get closed down.”
He proffers an example. “Try to compare health care to retail. Let’s say you go into the store to buy three bags of groceries. You tell me you are going to pay for half of the groceries, and I don’t have a choice. Now how long can I do that? Does that sound like I will be able to ‘go out and compete’?”
“Free enterprise only works in health care if you don’t care about those who cannot pay,” he elaborates. “If you refuse the regulations, you cannot treat these underprivileged people. That is not consistent with our mission, and is not consistent with what Americans expect from their healthcare system.”
“In addition,” Tarwater continues, “we need to realize that Medicare and Medicaid, while providing finite assistance, are integral to community health. If you eliminate or reduce these services, the need for treatment doesn’t go away. So, by subtracting support from these programs, you are taking funding needs that have been provided for by a large (state and national) constituency, and placing them in the laps of the local communities. To compensate for the things that don’t and can’t get paid for, the businesses that are paying end up paying more in premiums. This functions to handicap an already faltering economy further by increasing benefit costs expenses to area businesses.”
While the handholds seem few, and the pinnacle insurmountable in the healthcare arena, Tarwater is steadfastly dedicated to achieving his mission. “Say what you will about health care in this country; I have not met very many Americans who do not want the best, newest and fastest equipment and the brightest, most talented professionals treating them or their loved ones. And, by the way, they want it now. Look around the globe and you’ll find the best right here at home. Of course, all that has a cost. We are determined to provide the best possible health care and, at the same time, will continue to focus our creative healthcare team on the many challenges of managing healthcare costs.”