St. Mark’s: Strategies for an Innovative Future

This is a recurring column sharing public information and insight on St Mark’s Medical Center, the needs for health care in Fayette County, and a path forward researched by local resident Sam Wilson.

A review of over 30 articles and research papers are rife with how hard it is to run a rural hospital and the challenges they face, yet scant on strategies for actually addressing the challenges. There are, however, a few strategies worth considering. Why is it so hard to operate a profitable rural hospital? Almost 20 percent of Texas hospitals are considered small rural hospitals. These hospitals have struggled with profitability for a decade or more. The pandemic increased pressure on these hospitals, yet also brought much needed financial support that buoyed many of these hospitals, including SMMC. However, that funding is drying up. With lower population density, rural hospitals face a continuing challenge addressing lower patient volume with fixed operating costs like mortgages, utilities, physician on-call mandates and executive salaries. Without access to good and timely primary care, patients postpone addressing health issues, and that equates to lower patient volumes who are older, in worse condition and often times with difficulty paying for services. Reduced access to care also forces patients to access their health care needs through the much more expensive emergency departments. Smaller hospitals also have difficulties procuring medical supplies and equipment at larger volume discounts, and recruiting qualified staff. While roughly 20 percent of America lives in rural settings, an estimated 10 percent of physicians practice in them, resulting in a nationwide shortage of physicians in rural areas. What can be done?

One strategy that may now have somewhat past, is conducting a third-party service line analysis. There are generally two ways to return to profitability, cut costs, or increase sales. Any business in a tight market knows there are limits to the notion of cutting your way to prosperity. There are fewer limits to increasing products and services. Preston Gee, SVP of Strategic Marketing at Trinity Health, believes service line analysis should be a high priority for decision makers, identifying areas of operation critical to long term viability, and ensuring those lines get the investment and management attention they need. Modern Healthcare Research Insight, identifies ten service lines that include pediatrics, obstetrics, orthopedics, oncology, cardiovascular services, neurosurgery/ neurology, behavioral St. Mark’s, health, bariatric surgery, wound care, and sleep study. Some of these service lines have been a part of the SMMC service line offering, but not all. Conducting this kind of deep analysis is a challenge and requires solid revenue and expense data from each department, patient accounting, demographic data, and cost accounting data. It also requires a willingness to pushback on physicians who have a vested interest in the outcome of the analysis. SMMC is somewhat past this point at this stage in the transition to an ER based Rural Emergency Hospital. Yet resurrecting SMMC as a short-term acute care hospital serving Fayette and Lee County will take objective analysis on the community need, patent demography, and profitable service line offerings.

Another strategy would identify (and secure) new revenue stream partnerships. Inpatient surgeries at SMMC declined 62 percent from 552 in 2017, to 210 in 2021, and zero now. Outpatient surgeries for some unidentified reason declined dramatically from 2017 to 2018 falling 63 percent in one year from 1,655 to 617 surgeries, yet experienced growth over that number in the four following years ending with almost 800surgeriesin2021.One strategy to create new revenue streams is to increase partnerships with outpatient healthcare providers making underutilized hospital facilities available with a revenue sharing arrangement. Behavioral health is just one example of a new service line now that Medicare and Medicaid cover behavioral health services. Another example is supporting human clinical trials. The global clinical trials market is expected to reach $52 billion in 2026 in part due to the investment in pharmaceutical R&D. The renown Memorial Sloan Kettering Cancer Center and Duke University Hospital are the number one and two ranked clinical trials hospital. Cancer Treatment has the highest clinical trial volume with St Jude ranked as the number one ranked pediatric cancer research hospital. The research and development nature of the industry drives pharma research to outsource clinical trials. La Grange has substantial R&D located just 25 miles away in Bastrop. The Bastrop Economic Development Corporation (EDC) promotes their biotechnology and life science center featuring MD Anderson Cancer Science Park, the University of Texas MD Anderson Cancer Center, Agilent Technologies, the Coghlan Group, and ARQ Genetics. Perhaps there are innovative ways SMMC hospital as an underutilized 65-bed facility, can leverage our proximity and our need for health care in this lucrative and growing market that already uses outsourced providers.

Another strategy might consider medical tourism. The United States is the third most popular healthcare destination in the world and medical tourism is expected to grow 19.2 percent by 2027. With advanced medical technology and experience, North America is projected to be the primary host of medical tourists from around the world. Cardiovascular treatment leads the market. Bariatric surgery, performed on the stomach or intestines to induce weight loss, is projected to grow with the rising prevalence of obesity. These minimally invasive and low-cost procedures combined with healthcare administration is in part behind the growth. Other sought-after treatment includes orthopedic, fertility, neurological, dental, cancer, and cosmetic treatment.