Compared to the same time period for 2022, the health system had a negative operating margin of $18.9 million, or a loss of 3.2% of total revenue for the last three months of 2022.
The COVID-19 pandemic had a huge impact on Premier Health and other area hospital systems.
Premier Health said it operated at a loss of $78.9 million in 2023, though it was an improvement over 2022 when it had a loss of $165.5 million.
Some areas are looking up for the health system. Premier Health experienced a 5.6% growth in inpatient volume during the first nine months of 2023, the most recent data available shows, compared to the same period in 2019.
In addition to financial recovery, for 2024 and beyond, Premier Health has two main focuses: its new partnership with Wright State University and employee retention.
Riordan expects the partnership with Wright State will be “transformational,” he said.
Late last year, Wright State’s Boonshoft School of Medicine and Premier Health announced a partnership establishing Miami Valley Hospital as an academic medical center, which the health system is anticipating a lasting impact for years to come.
Premier Health employs approximately 11,685 people and its five hospitals include Miami Valley Hospital in Dayton, the region’s only level 1 trauma center. In addition, Premier Health provides care at its seven emergency departments, eight urgent care locations and more than 130 outpatient locations.
Premier Health hopes to serve patients closer to home who may have previously been leaving the Dayton region to seek help at facilities in Columbus or Cincinnati. The health system also aspires to build the region’s medical workforce through this partnership, Riordan said.
The hospital system is anticipating new opportunities for growth and access to additional federal funding to bring physician residency programs to Upper Valley Medical Center in Troy and Atrium Medical Center in Middletown as part of this updated affiliation.
Riordan recently sat down with the Dayton Daily News to speak about long-term priorities for Premier Health. Some of the answers were edited for length.
Credit: JIM NOELKER
Credit: JIM NOELKER
What are some of Premier Health’s accomplishments in recent years and/or goals that your health system has seen come to fruition?
I always start with our vision, our mission, and our values.
Our vision is pretty simple. It’s to inspire better health.
Then our mission…We start our mission statement with the patient, we say, “We care.” The new part that we added was then we say, “We teach.”
So, “We care, we teach, we innovate,” so the research, and then, “We serve.”
The thing on the mission statement that came out loud and clear was this notion of, “We teach.” There was not a recognition of that in our prior mission statement.
The biggest accomplishment, or one of the things I’m most excited about, I can start with reorienting our vision, mission and values, but strategically, it’s the relationship with Wright State.
What are some of Premier Health’s goals or initiatives for 2024 and beyond this year?
I do believe it’s important to lead with the employee. Employee engagement is going to continue to be foremost.
We have two measures that we’re looking at this year...The first measure is retention, and what we’ve discovered is the biggest population that’s at risk for leaving our organization are employees who have been there less than two years.
First thing we do, you measure it, and then the second thing is, what are the processes we can put around that. How can we work with managers to better engage their employees, see what their needs are, so that we can make that intervention and see if it works.
The second one is employee engagement, so we do a survey. We use Gallup.
The first year, we had maybe 7,100-7,200 employees (participate). I think we may have gotten over 10,000 — close to 11,000 — the next time in terms of participation. I think that happened because when we got the results, we reported them out, and employees said, “Okay, they’re not just burying it.”
The other thing that we can do is, with these surveys…we know our class rank. So Gallup does polls for health care organizations throughout this country, so we can see, how do our employees compare nationally, how do they compare regionally.
We’re a health care organization. We’re always going to measure quality, we’re going to measure safety and we’re going to want to know what our patients think.
Then financially, we’ve got to sort of turn it around. We haven’t had a positive operating margin since 2014. We think we are moving in a great direction, and we will break that trend this year.
To what do you attribute the improvements or increases in revenue?
The first thing is I’ll say is a rigor and a focus on the operations, but I think a lot of it is our physician alignment. We created a chief clinical officer role with Keith Bricking, and our chief operating officer, Chad Whelan, is also a physician. So we’re bringing sort of that clinical expertise into it.
(Another thing) I think is a lot of hard work, a lot of hard decisions. If one role left, we wound up combining at a senior level and even frontline.
And, we started seeing it last year and we’re seeing now, some of the incremental high cost for labor is coming down. It’s not at a pre-pandemic level by any means, but it started reducing.
Early on when I was here, it was right as Omicron (hit)...We made a decision, and I just remember, it was April of two years ago as we were sitting in the leadership meeting, and our decision was, do we cut staff and close beds, or do we sort of bite the bullet and just bring in as many agency (workers) as we can to keep the beds open. And we decided to keep the beds open.
That cost us a tremendous amount, but our fear was if we―as the regional resource for this entire area and even other states of even Kentucky or Indiana―if we started constricting, we would not be able to get anybody in from our larger region.
And then our fear was that we would then be bypassed when things got back to normal.
We made a decision. We’re going to stick with this. We’re going to keep our beds open. We’re going to accept referrals in.
That was a big leap of faith because our budget from two years ago did not predict the impact of Omicron.
So our next big step for the board―we lost that $165 million―is we said, “All right, we’re going to cut that loss in half,” and they said, “Okay.”
It was another courageous move, and not only did we cut that in half...we did that without including that $30 million (receivable from FEMA that Premier is still waiting for due to the cost of being a crisis hospital during COVID).
Do you think that will be this year (for a positive operating margin)?
I do...We don’t have the first quarter numbers, but it looks to be sort of on target. We’re going to be very attentive to this as we go forward. I’ll be optimistic.
It won’t be for lack of effort.
It’s not that I’m overly focused on money making it, but they all understand the need for us to have a positive operating margin so that we can invest in the future.
Do you think you’ll be able to maintain that in the future?
I do. Momentum is created. You can invest differently. You can make bigger bets.
We’ve got our strategic plan vision 2035. We have our plan on what we think is going to look like, what we’re going to spend from a capital standpoint over the next 10 years. We have a plan on if things go as we believe they will that we’re going to have a positive operating margin moving forward.
And something always happens, and you adjust, but there’s nothing that tells me we can’t have a positive operating margin.
Jumping back to COVID and the pandemic, what were some of the lessons learned from that you’ll be taking forward?
There’s always going to be the preparation part. How do we prepare for these in the future.
The other thing that I’ll say is…For me, you have to be present with employees, and I don’t want to minimize, I want to acknowledge the trauma of all that occurred with COVID.
But it didn’t make me say, “Now I have to have a different leadership style.” You still engage. You meet employees where they are.
People will ask, what’s your biggest leadership lesson. You just show up.
What are you plans for the corporate location downtown, what’s your setup right now, and will that change in the future?
Stratacache has a vision for downtown. We looked at, is this a building (located on Main Street) that we need to have long term? As I mentioned, in Greenville (Greenville Health System/Prisma Health in Greenville, South Carolina), we never owned our corporate space. We always leased it.
For us to not have to put dollars into that building is great. That means we can put dollars into a clinical spot post COVID.
You know, 99% of our employees even during COVID had to show up for work. It’s just that it was next to a patient. A small portion downtown where there’s the support, administrative staff, they didn’t. We’re going to get maybe a quarter of that group back. We’ve consolidated to four floors, and I think that’s good. That will be enough for a good social fabric.
We’re going to be the anchor tenant...The blue roof, the blue logo will be there, so we’ll still have a presence, but I think if someone can figure a higher and better use for that, we’ll be very supportive of that economic development.
Credit: JIM NOELKER
Credit: JIM NOELKER
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