Jamie Lewis (Host): Like all hospitals, Jefferson Healthcare has seen a lot of changes over time. And the year 2023 was a great example of how extreme those changes can be, not just for Jefferson Healthcare, but for hospitals across Washington and the nation. Today, CEO Mike Glenn will take a look back at Jefferson Healthcare's successes and challenges last year, and most importantly, how they're laying the groundwork for serving more patients with cutting edge technology and skilled medical personnel in the year to come.

This is To Your Health, a podcast from Jefferson Healthcare. I'm Jamie Lewis. So, Mr. Glenn, it's been a big year for Jefferson Healthcare. Looking back at 2023, what are you most proud of?

Mike Glenn: Well, I think I am most proud of the fact that we made it through the year and got to the other side. And I recall at the beginning of the year hospital systems and beds throughout the entire state we're still overwhelmed. That there was a lot of pressure being placed upon Jefferson Healthcare Services just because of the spike in patients needing care. So, we were in this day-to-day mode of trying to take care of our community both locally and making sure that they could get the care in Seattle or wherever that they needed. So, that sort of set the stage for a transition year where we tried to put all things COVID behind us, and then began to focus on the issues going forward that are most pressing.

In addition to the operational challenges throughout the state, there were significant financial challenges for hospitals. Hospitals kind of got in the mode during the early years of the pandemic to just do whatever it takes to meet community need. So, there wasn't a whole lot of regard for expense management during that period as we struggled to find staff, struggled to find supplies. You might remember when the big N95 mask shortage was underway. But basically, we were in this frame of mind where we're going to get through this and do whatever it takes to make sure that our community doesn't go without. And at the time, there were support dollars from the federal and state governments to sort of backstop us. That ended towards the end of 2022. So 2023, we had to transition from that do-whatever-it-takes-to-get-through-this-year mode to begin to manage financially. And I think a lot of hospitals really struggled with that transition, and to this day, they are still struggling.

Host: And that's a great segue. We're talking about being reactive versus proactive and planning. And if anybody's been on the campus of the hospital, they will see you're working on a huge project. What has that looked like and where is that going?

Mike Glenn: Well, if you were to come by the hospital today, you would see about a third of the standing buildings have been demolished, and now they are piles of carefully separated for the purpose of recycling rubble. But during the course of the pandemic, to make things, I think, even a little more exciting for us. We began a master site plan to figure out a plan on how we were going to replace buildings on the campus that have used up their useful life and develop new buildings so that we can expand services. So, that culminated in the design of a new medical office building attached directly to the hospital that is going to introduce several exciting new services to the community.

So, we've been working on that actively for about a year and a half, finally finished the design and completed a pretty complicated financing plan and began demolition about two weeks ago. It's about a $95 million project. So, it's the largest project that we have ever done before. And based on the services that we will be introducing to the community, we are not going to the community to ask for tax support in order to pay for it. So, I think we felt pretty good about continuing to rely on the hospital's business plan to pay for new buildings and necessary services. But it will certainly be a stretch for the next 18 months or so while we continue to operate a hospital while we are dismantling the middle section of the hospital.

Host: And why expand? Why exactly do you feel that Jefferson Healthcare needs more services? Is there any particular reason?

Mike Glenn: So, we have just grown to the point where we have overwhelmed the existing buildings and facilities. That is the main driver. We started with what we call the '65 Building because it was built in 1965, and It was actually designed for inpatient service needs. And we long since moved inpatient services from that portion of the building, and we were using it for administrative purposes. But we needed to develop new space to either expand existing services here at the hospital and introduce new services.

In the last decade or so, we have doubled or in some cases tripled nearly every service that we provide. So, we've been in this intense growth mode mostly by making it easier for community members to seek specialty care here and not travel to Silverdale or Seattle. So, as a result of that growth in surgery and in primary care and in specialty care and in diagnostic imaging, we have just overwhelmed the existing space that we had. So, what is going into this building is combination of space for new services and space to expand services.

A couple of examples, an exciting new service is we are introducing radiation therapy to Port Townsend. And if you've ever worked through a cancer treatment protocol or helped a family member through a cancer treatment journey, there are two primary modes of treatment. The first is chemotherapy provided by medical oncologists. And the second is radiation therapy provided by radiation oncologists. We have been providing medical oncology or chemotherapy for quite some time, and that service has grown and grown and grown. However, we didn't provide radiation therapy. And you know, as many as half of the cancer cases that we see require both medical oncology and radiation therapy. So, our feeling was if we were going to truly meet the needs of our community, we needed to be able to provide both therapies at our campus. So, we are really excited to introduce that treatment mode to Jefferson Healthcare.

And in addition to that, we are expanding space for our OB-GYN program for our dermatology program, for our medical oncology program as well as developing new space for a neurologist, an ear, nose, and throat specialist, and a pulmonologist to continue to meet growing community need.

Host: How exciting. That's fantastic for those rural communities around you. So, you mentioned something about financial hardship that hospitals are experiencing across Washington state. Can you tell me more about that?

Mike Glenn: I sort of mentioned the mode that hospitals went into as early as '21, and certainly 2022, and that is just do whatever it takes to help your community get through this pandemic, which certainly was unique and challenging for everyone, and it certainly was unique and challenging for healthcare providers.

So, during that time, there truly was very little regard at how much it costs to set up a vaccination clinic, for instance, or how much it costs to be the primary testing center for your community, or how much it costs to set up a COVID specialty clinic for just COVID patients or even a 1-800 nurse consult line, which we set up. We just set up all of those things, relied on federal and state funding to backfill whatever they cost, because that's what we needed to do to help our community get through it. And there were dollars in 2021 and 2022, so most organizations were underwater operationally. But with the CARES money or the federal dollars that came in, we were able to balance our books. That stopped in the second part of 2022 and there was zero dollars in 2023, but the pandemic didn't go away. So, we were still operating, still doing vaccines, we were still providing access to testing centers and still doing all of these other services in addition to really being challenged by this chronic staffing shortage. So, we saw our costs begin to grow and increase at a time where volumes were just catching up to where they were before the pandemic. Just as many listeners' household expenses went up during the pandemic due to inflation, our expenses went up. All of the supplies that we purchased, all the drugs that we purchased, all the food that we purchased all went up significantly higher than we have seen in years past.

So, what hospitals across the country and in Washington State saw is that this increasing inflation on the expense side at a time where there was slow recovery on the volume side and continued pressure on reimbursement levels for the services that you did provide. So, for instance, in Washington State probably 85 of the 100 or so hospitals in 2022 and in 2023 lost money operationally, significant dollars. In 2022, the Washington State hospitals collectively lost $2.2 billion. And I think in 2023, that number is going to be about 1.5 billion. So, a significant financial hardship that hospitals are trying to climb out of. We managed to be one of the 15 hospitals in the state that have managed to avoid operating losses. But it still has been a strain to find that sort of financial balance here at Jefferson Healthcare. And further, it's been a strain transferring patients who need tertiary care to facilities that are trying to find a financial model that works for them, which in many cases means a reduction of services.

Host: All right. Well, let's look forward a bit. What are you most excited about for 2024?

Mike Glenn: I'm most excited about the advances that we are making with our staff and with the organizational culture work that we are doing for lots of reasons. And I think in every industry, there was a labor pool reckoning in 2021, shortly after the pandemic, I think was really starting to hit where industries across the country were challenged with resignations or individuals just taking time off. Healthcare is no exception. In fact, we were probably hit harder, because of how challenging it was to work during that period, emotionally, but also physically. We have about 900 total employees. And we saw high watermark, if you will, of open positions. A year and a half ago, it was like 165. So, we had 165 open positions that we needed to fill in order to be fully staffed. And that was a real grind. It resulted in us bringing in more, expensive temporary labor and it resulted in nearly every department of the hospital from time to time just running short. And our feeling was it's impossible to drive and cultivate the type of culture and be the workplace that we want to be if you are working short almost on a day to day basis.

So, our biggest priority in 2023 was fill these unfilled positions. And I'm happy to report today that number is below 50. The last time I looked, it was 45 open positions. And frankly, for an organization with 900 employees, that's about where we were running prior to COVID. So, we have made tremendous progress in our recruitment efforts. And last year, we turned our focus to retention and really doubling down on the workplace culture here and reminding our employees why they got into healthcare in the first place, and also what a special place Jefferson Healthcare is. So, I'm excited to continue that work and continue to do the things that we need to do to make Jefferson Healthcare stand out as an employer.

I'm clearly excited about the state of the construction project, but I have to tell you, I'm probably more excited about the shiny new building that will come out of this at the end. I think that the next year or so, it's going to be very interesting work, but it's going to be challenging work as we build on 60,000 new square feet and attach it to the existing buildings and existing services that we are providing. We've done that before. We know how to do that. But it's a challenging project for sure. And we look forward to getting through it and opening up the new building, which will be middle of '25.

And lastly, I think I'm excited about re-engaging with the community in a more meaningful and robust way. We were visible in our population health work and sponsoring the roadie run, you know, participants in the roadie parade and just doing all those things that I think builds bridges between the hospital on the hill and the people we serve. During the pandemic, a lot of those events were suspended or minimized. And our ability to interface in a meaningful way was as well. We look forward to really having a more robust presence in the community and the different activities that make Port Townsend, I think, really special.

Host: Well, thank you, Mr. Glenn, for looking back and for looking forward with us, and here's to 2024.

Mike Glenn: Yes, we are excited about where the future may lead us.

Host: I'm Jamie Lewis, and this is To Your Health, a podcast from Jefferson Healthcare. To learn more about what to expect in the coming year at Jefferson Healthcare, visit jeffersonhealthcare.org.