Published on March 08, 2013

Shands new CEO has big plans to lure commercially insured patients

Ashley Gurbal Kritzer, Jacksonville Business Journal

Shands Jacksonville Medical Center lost $23 million last year and faces a headwind of uncertainty under health reform, but new CEO Russell Armistead isn’t deterred. He has a plan for bringing the hospital back into the black, and he knows he has it better than his predecessor, Jim Burkhart.

His plan is hardly unique: Renovate and upgrade the hospital to improve the patient experience to lure in the commercially insured, health care’s holy grail.

But Shands is in a unique place, as an academic medical center that doesn’t enjoy the same reputation others of its kind tend to have, because it’s also the city’s indigent care provider.

To bolster the reputation, Armistead’s first step will be to look at renovating the hospital’s emergency room to improve patient flow, an endeavor that he said will cost at least $8 million.

At the same time, Shands and all other hospitals are waiting to see how the Affordable Care Act’s new payment models will affect them, and, most critically, whether the state of Florida will expand its Medicaid eligibility. If Florida doesn’t expand Medicaid, it will lose other federal dollars that are being taken away to finance the Medicaid expansion nationwide.

“We have cash, frankly, and I have some additional debt capacity,” said Armistead, who took the helm at Shands on Jan. 7. “I have some capital to work with, but I’ve got to right-size the ship because I can spend this, and if I haven’t turned the place around, I’m out of cash and out of capital, and you’re against the wall.”

A CEO who almost wasn’t

Armistead was previously associate vice president for finance and planning for the University of Florida Health Science Center and had been at Shands Jacksonville for the last half of 2012 as a project manager.

But in December, he was recruited to another position in Augusta, Ga., and was within days of moving there when he got the call: Burkhart had resigned, and would he be willing to take the helm?

“I think we’re extraordinarily fortunate,” said Dr. Daniel Wilson, dean of UF’s College of Medicine, Jacksonville. “If Jim Burkhart and Russ Armistead had left within the same month, it would have been essentially a calamity.

“But Russ is a superb guy who is known throughout the University of Florida and Shands systems from the president of the university down to the janitors. He’s a very seasoned health executive, and most importantly, I think he’s just a very honest, sensible, smart guy, a very down-to-earth fellow who appreciates the precarious situation we’re in but also is excited about moving things forward.”

Making progress

Wilson said Armistead has already made strides in improving the efficiency of Shands, to better align the UF faculty with the hospital staff.

“More and more, there’s less of the differentiation between hospital and faculty,” he said.

The idea of bolstering Shands’ reputation as an academic medical center, Wilson said, is long overdue.

“Very few people realize we have 700 UF faculty and resident physicians in Jacksonville,” he said, “and just terrific services in cardiovascular care, cancer, neurology, neurosurgery, orthopedics.”

Headwinds of uncertainty

The Affordable Care Act has pros and cons for any health care organization. If Medicaid is expanded, it would mean a reduction in uncompensated care for hospitals, and while Medicaid reimbursement rates are often only a fraction of the actual cost of care, some payment is better than no payment.

But other health reform changes are troubling for some hospitals and Shands in particular, Armistead said. On July 1, Medicaid is to move to a diagnosis-related group billing method, which moves the program from a traditional fee-for-service model to a payment system based on the quality of care administered.

“My biggest concern is that they will try to ramp it up too quickly, and the intermediary won’t be prepared,” said Moody Chisholm, president and CEO of St. Vincent’s HealthCare. “The government, both state and federal, have a habit of setting start dates on things they’re not actually prepared for.”

View the article in the Jacksonville Business Journal.