Changes touch bottom line

October 5, 2008
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When he arrived in 2006 to take the helm at Spectrum Health Continuing Care, President Jeffery Lemon found a disorganized subsidiary that was running a deficit.

Now, the corners are getting tucked in, the organization is on the mend, and new identities have been unveiled for the subsidiary’s business units, including Kent Community Campus.

SHCC now generates $150 million in gross revenue, or $100 million net, for the $2.6 billion Spectrum Health system, said Lemon, who was trained as a registered nurse.

“When I came on board two and half years ago, it was a failing book of business,” Lemon said. “From the year 2000 through 2007, these business lines collectively had lost $31.2 million. All of the business lines on a stand-alone should be expected to operate profitably, not solely for the sake of profit, but for the ability to re-invest in infrastructure, technology, people and process. We were able to right-size these organizations and erase our operating deficit in the first 14 months, and we’ve enjoyed a positive operating margin every month since then.”

SHCC serves 1,100 patients and residents daily through six lines of business, including skilled nursing, long-term care, an infusion pharmacy and hospice. Services and facilities include:

Spectrum Health Neuro Rehabilitation Services, which includes services formerly known as Worth Rehabilitation, Worth Home Care and Worth Residential Services. It provides nursing, therapy and support services in outpatient, residential and home-based or community-based settings for people recovering from spinal cord or traumatic brain injury, multiple trauma or orthopedic injury, many from auto accidents and a few war veterans returning from the Middle East. This encompasses six adult foster care homes for people with brain and spinal injuries on the Kalamazoo Avenue campus.

Spectrum Health Visiting Nurse Association, which provides nursing, therapy, infusion, chronic disease management, telehealth and care transition services. The former name was Spectrum Health Continuing Care Visiting Nurse Association.

Spectrum Health Rehab and Nursing Centers include skilled nursing, subacute rehabilitation and long-term care for traumatic brain injury and stroke at 4118 Kalamazoo Ave. SE and at 750 Fuller Ave. SE, which previously was known as the Kent Community Campus. Kent Community carries a caseload that is 85 percent on Medicaid, Lemon said.

Spectrum Health Special Care Hospital provides acute care services for patients with a length of stay of 25 days or more at the former Kent Community Campus. Lemon said the patients may have multiple diagnoses or need help in being weaned off a ventilator.

Spectrum Health Hospice provides palliative care and hospice services for patients and families coping with end-of-life conditions.

A new unit, Spectrum Health Infusion Pharmacy Services serves patients on long-term intravenous or tube feeding.

Some of the services pit SHCC against for-profit companies in a highly competitive environment, Lemon added.

“Very complex businesses, each business unique, not a lot in common with the other ones, very different competitive markets, highly competitive markets in some of these arenas,” Lemon said.

“Interestingly enough, hospice is one of the most sought-after acquisitions for post-acute businesses. I have a number of competitors in the marketplace that are publicly traded and for-profit. There are new providers coming into the market almost on a monthly basis, so it is a highly competitive business.”

Lemon, who had been CEO of Select Specialty Hospital at Sinai-Grace in Detroit and COO of Trinity Continuing Care Services in Farmington Hills, said he brought four guiding principles from his 15 years in health care administration: quality leadership, competitive business structures with names that leverage the parent brand, reorganizing administrative support to serve the unique needs of SHCC’s non-acute care businesses, and alignment around clinical service and business imperatives.

“We did a fairly dramatic and far-reaching housecleaning and installed new leadership in almost every one of our lines of business,” Lemon said.

He noted that the Visiting Nurse unit had been known as Visiting Nurses Association of Western Michigan and by its acronym, VNAWM. Nowhere in the name or on its Web site was there a reference to Spectrum Health.

“Consequently, it was not structured in the best manner possible. Folks did not identify it with Spectrum Health,” Lemon said. “So we restructured, not only renamed and rebranded Spectrum Health with the VNA, but we also pulled out hospice and created a separate subsidiary to give it some legs in the community.”

Lemon said some synergy has emerged between SHCC and Spectrum Health’s other units. For example, SHCC worked with Priority Health to identify congestive heart failure patients being released from the hospital. Those patients tend to have a high rate of emergency room visits and rehospitalization. But with referrals to Spectrum Health Visiting Nurse Association for home care, emergency room visits and rehospitalization rates were reduced by 80 percent over the three months studied, Lemon said. The result is a cheaper way to care for patients, and more satisfied patients who prefer to remain home rather than in the hospital.

SHCC has 1,500 employees, with registered nurses and VNA nurses represented by the Michigan Nurses Association.

Lemon said SHCC is in the process of strategic planning for long-term residential care services, with the expected surge in demand as baby boomers reach their senior years.

He said he often takes calls from hospitals around the country interested in establishing a foothold in the post-acute arena as they anticipate belt-tightening changes in reimbursements, particularly from Medicare.

“These businesses are really becoming positioned to become essential adjuncts to delivery systems’ profitability and performance,” Lemon said.

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