For Troy Wells to become head of the $700 million Baptist Health in the midst of the tumultuous overhaul of the nation's health-care system might seem a daunting task.
But Wells, who became president and chief executive of Baptist Health on July 1, says the timing suits him fine.
He became chief operating officer of the 86-bed Newport Hospital in 1999, when the effects of the federal Balanced Budget Act were being felt.
That meant deep cuts in government insurance reimbursement.
So the Patient Protection and Affordable Care Act of 2010 is nothing new to him in that regard.
Wells received a bachelor's degree in microbiology at the University of Arkansas at Fayetteville and followed that with a master's degree in health services administration at the University of Arkansas at Little Rock.
Then he found himself 26 years old "and running my first hospital and ... I was a bit overwhelmed. From Day One, it seems like it's been just one thing after another," he said last week in the Baptist Health corporate offices in west Little Rock. "And so today it feels pretty normal."
Yet Wells, now 42, acknowledged that "it's really difficult to try to predict one or two years out anymore. We used to do strategic planning for five years."
He joined Baptist in 2006 and started moving up in the ranks.
Board chairman Jim Jones said Baptist had the luxury of a two-year hiring process leading up to Russ Harrington's retirement -- and the good fortune to have a "deep bench" in its administration.
That process began after the board considered whether to carry out a national search or choose from within. "It quickly became apparent that we didn't have to go outside," said Jones, president of Crews & Associates, a Little Rock investment-banking firm.
Jones said that Harrington, who publicly announced March 3 that he would retire July 1, was an "icon" in the organization. His tenure started in 1984 and he was just the second to hold that position at Baptist in the modern era, following John Gilbreath, who was named president in 1946. Baptist Health began as Baptist State Hospital in Little Rock in 1920.
Immediate future
The health-care industry may not know what the government has in store in the long run, but Baptist Health knows its immediate future in terms of what it can control.
Construction of a 100-bed acute-care hospital has begun in Conway and will be completed next year, adding 425 employees and raising the Baptist Health payroll to 7,600.
That will be the third hospital added in the past five years to the growing state chain, which will stand at nine.
Baptist established a campus in Stuttgart in 2009 and agreed in 2012 to operate the Hot Spring County Medical Center in Malvern. The other hospitals are in Arkadelphia, Heber Springs and North Little Rock, with an acute-care hospital, an extended-care hospital and a rehabilitation facility in Little Rock.
Wells repeated Baptist's position that it does not aggressively seek to expand, but when approached and it's a good fit, things can be worked out.
He said he is "a free-market guy" who believes in competition because it benefits everyone, from providers to patients.
Yet he said he preferred not to address competition with CHI St. Vincent, whose acquisition earlier this year of Mercy Hot Springs hospital in Hot Springs puts its annual revenue in line with Baptist. CHI St. Vincent has the advantage of being part of a national chain, Denver-based Catholic Health Initiatives, whose revenue in fiscal 2012 was $12 billion, derived from 89 hospitals in 18 states.
CHI St. Vincent President and Chief Executive Peter Banko has said those deep pockets are an advantage in a competitive market. Catholic Health also bought the state's second-largest health insurer this year, QualChoice.
Ray Hanley, president and chief executive of the Arkansas Foundation for Medical Care, has said that Baptist and St. Vincent "compete against each other with a vengeance."
Look no further than the heavy advertising by each organization on billboards, television and newspapers, he said.
2013 'not great'
All nonprofit hospitals must file what is called a Form 990 with the Internal Revenue Service, and while the filing for 2013 won't be made till near the end of the year, Wells said that last year "was not great."
The system had a $2.4 million deficit in 2012.
"Acute-care admissions at hospitals have continued to decline around the country, and Arkansas is no different." Admissions at Baptist Health have been modest, maybe up 2 percent or 3 percent, he said. Combined with rising costs, that makes for a "tough" combination, he said.
So-called sequestration, or automatic federal budget cuts, and reductions in Medicare reimbursement will continue to get worse, Wells said.
Things have taken a turn for the better thus far this year, he said, thanks to the effects of the "private option" whereby Arkansans who qualify for Medicaid use that money to buy private coverage. "Our uncompensated-care numbers are roughly half of what they were a year ago" for the first six months of the year.
Uncompensated care in 2013 for Baptist Health was roughly $50 million, and if the private option remains in place -- it was narrowly approved by the Legislature this year -- Wells said he thinks that figure could be reduced by a third.
Enrollment in the private option program reached 157,183 as of the end of June.
Quality is the other half of the health-care equation.
Baptist is participating in a pilot program overseen by the Centers for Medicare & Medicaid Services designed to measure cost and effectiveness.
Sixteen of Baptist's roughly 25 primary clinics are in the program, out of 63 clinics in seven markets. The Comprehensive Primary Care Initiative is about 18 months old.
Results so far show a drop in costs and an improvement in results, he said.
Wells said he is heartened to see physicians and hospitals working on how to change the system. "And that's been hard to come by."
"The spirit of collaboration is really high right now," said Wells, who smiled as he said that, for him, the challenge is "fun."
SundayMonday Business on 07/20/2014