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Detailed overview

HOMEABOUT SKIFFHISTORYDETAILED OVERVIEW

An overview of Skiff Medical Center's history
by former Skiff CEO Steve Long
(written between late 2013-mid 2014)

Part one

It was 12:15 in the morning, Sunday, March 25, 2013 (I will never forget the day).  I was sound asleep in bed when, suddenly, our bedroom door flew open and my wife shouted, “Wake up!  Brian was just taken to the emergency room in Iowa City and we need to go now!”

Brian, our son, is a senior at the University of Iowa and has been living away from home for a few years now.  As we have learned, you never quit worrying about your kids, and, in some cases, not having them at home only causes your worry to increase.  Even so, this was an unexpected call.

As I quickly dressed, I asked my wife what happened.  “I’m not sure,” she replied, “but it has something to do with his peanut allergy.”

Our son was diagnosed with a fatal allergy to peanuts when he was a toddler and we were ever so careful with him as he was growing up.  He matured in this area quickly and has always been extremely careful as well.  There had been a few close calls while he was younger, but nothing like this.

My wife and I, along with our two teenage daughters still living at home, jumped in the car and began the trek to Iowa City.  We drove as fast as we could, but it was one of those snowy, icy nights that made traveling precarious.  While on the way, we called our son’s friends who had taken him to the hospital and learned more of the story.  Apparently it had something to do with a cookie.  While we were talking, the ER doctor took the phone from them to speak with us.  “Brian is stable now,” he said, “but he has been intubated and is on a ventilator.  When you get here, go straight to the medical ICU, that is where he will be.”  Intubated? On a ventilator? It just didn’t fit.  Our son is a health and fitness nut.  He is in great shape; how could this be?

When we arrived at the University Hospital, we hurried to the ICU and found his room.  There he was, hooked up to every line and hose and wire you can imagine.  We were devastated.  We spoke to the nurses taking care of him and were much relieved to learn that Brian had arrived at the ER in the nick of time, his throat having been nearly closed when the doctors placed the tube.  He was sedated now and it was just a matter of time as we waited for the swelling in his throat to go down.  A couple of days in the ICU, then a few more on an inpatient unit and he should be ready to leave.

My parents were already there (we had called them from the road) and we exchanged hugs and tears.  We talked to our son’s friends, filled in more of the details (“He was losing his voice, and by the time we got to the ER, he wasn’t making any sense…”).  After his friends departed, we stood by the bed and just gazed at our son, thinking of how much we loved him.  And then he woke up.  He first had a blank stare, then, as he slowly realized where he was, began to panic as he felt the tube in his throat.  He began to reach for the tubes to tear them out, but his restraints kept him from succeeding.  “It’s always hardest with the strong young ones,” his nurse said.  Thankfully they sedated him and he fell back to sleep.  I can honestly say that watching that look in his eyes was one of the hardest moments of my life.  Knowing that we could do nothing, and that doing what he wanted would be the very worst thing for him.

To make a long story short, our son had a remarkable recovery.  He was off the vent in only 14 hours, discharged to home on Tuesday, and back to “normal,” using only Benadryl, by Wednesday.  By Friday, I was back in the office and it was like it had never happened.  But it did …

As I sat next to my son’s bed that week, pondering so many different things, one of the thoughts that came to mind was this: What if this had happened in a community without a hospital and an emergency room? Sure, 911 can be called and paramedics will respond, but my son and his friends didn’t call the ambulance, they drove their car. Either way, that takes time. When a hospital is far enough away, that time can make all the difference … life-or-death difference.

At that moment, the validity of our single, overarching goal here at Skiff was solidified in my mind – we need to be here!  We need to make sure that Newton and Jasper County always have a hospital.  We need to ensure that our community does not become a statistic, a name on the list of towns that “used to” have a hospital.

As the health-care environment continues to change quickly and dramatically, we will need to adapt.  No one knows what the health-care system in America, or in Iowa, will look like in the future. We do know,  though, that it will likely be very different than the one we know today.  But here at Skiff we will be doing whatever it takes to make sure that this hospital is here and providing care to the people of our community.  That’s a promise.

This article is the first in a series I will be writing about the history of our community hospital, the changing health-care environment, and the work we are doing at Skiff to adapt to it all.  I hope you will come with me on this journey as we explore the past, the present and the future of Skiff Medical Center.

 

Part two

The history of medical care in the Newton area begins long before that of our hospital.  The first medical practice in Jasper County was established in 1847 when Dr. Henry Rodgers relocated to our city from his home in Pendleton, Ind.  Additional physicians came to the Jasper County area during the ensuing decade and the first county medical society was formed in 1858, with five founding members.  These early physicians were truly extraordinary, practicing much of the time as “saddle-bag” doctors, braving the elements to reach the home of the sick and injured.  Though medicine in those days was much more art than science, they carried out with their best efforts what they believed to be best for their patients. 

The late 1800s saw the institution of laws in the state of Iowa regarding the practice of medicine, an area in which Iowa was a national leader.  The cause of improving medical practice was enhanced in the early 1900s when the American Medical Association created their Council on Medical Education and commissioned the Flexner Report, a study of American medical colleges.  In 1910, this study was published and led to extensive changes in medical college admission standards and the implementation of science-based curriculum focused on physiology and biochemistry.  It also led to the institution of hospital-based training for physicians and the strengthening of medical licensure standards across the states.   These changes resulted in significant improvements in the quality of those practicing medicine, as well as advancements in the outcomes experienced by their patients.

During this period of intense change in the medical profession nationally, the profession in Jasper County was changing as well.  Between 1850 and 1910, the population of the county increased from less than 1,500 to more than 27,000.  As the county grew, so did the number of physicians, with 25 practicing here by 1912.  The growth of the county, the number of physicians and the increasing use of hospitals by physicians to treat the sick led to a desperate need in the Jasper County area for a modern hospital.

To address this need, the Newton Commercial Association created a hospital committee in March 1917.  This committee was chaired by F.L. Maytag (the founder of the Maytag Corporation) and included several local businessmen, as well as several physicians.  The first order of business for the committee was the creation of the Newton Hospital Association, the rental of a house (the Caleb Lamb home), and the establishment of a fund to support the expenses of running this first hospital.  The budget in 1917 was $350 per month – quite a bit less than the current budget of $100,000 per day!

The second order of business was to design and build a state-of-the-art hospital in Newton to replace the temporary and tiny nine-bed hospital.  The need for a larger hospital was heightened when the state of Iowa was plunged into an outbreak of the Spanish Flu in 1918 and early 1919.  Things were so bad during this time that “loafing and congregating” were forbidden.  Picture shows, auctions and even church services were suspended.  The homes of those who contracted the flu were quarantined by order of the mayor and the quarantine of your house was lifted only by the recovery or death of the afflicted person!  The epidemic became so bad that a local hotel was converted into a temporary hospital for the sick.

In 1919, the Newton Hospital Association asked the city for permission to build a new hospital, and voters quickly approved the measure.  All that was needed now was funding.  The group knew exactly where to seek this financial support and approached Vernon Skiff, a resident of Chicago at the time, but originally from Newton.  Vernon Skiff had amassed great wealth through his Jewel Tea Company (known today as the Jewel Food Store / Osco Drug Company).  His wife, Mary Frances, had passed away in December 1918 and been laid to rest in her hometown of Newton. 

Vernon was keen to assist in providing Newton a modern hospital and pledged $50,000 in support of construction costs.  In addition to Skiff’s generous support, the city provided land to the Newton Hospital Association as a building site and pledged to pay all equipment costs and ongoing maintenance of the building via a tax levy.  This required the formation of a municipal hospital board of trustees.  Following an election, the board of trustees was established in April 1919.  With financial support, a building site and a city commitment in place, an architect was immediately commissioned and plans were drawn up.  By the time the plans were complete in late 1919, the estimated cost of the hospital had risen to $100,000, but Skiff remained supportive of the cause and pledged to support this entire amount.  Due to his generosity, the hospital would be known as Mary Frances Skiff Memorial Hospital, remaining under that name until 1984.

In 1920, construction of the new hospital began, but by October of that year it was clear that rising labor and material costs would increase the total amount needed to $170,000.  The additional amount was raised during the next year in the form of pledges and gifts.  Even during construction, the hospital building was becoming known regionally and nationally for its modern design.  It was covered in an extensive article published in the September issue of Modern Hospital magazine, where it was described as “one of the finest and most modern hospitals in the country.”  During the open house following completion of the building, one Des Moines physician noted that it was “better equipped than any hospital in Des Moines.” 

With these accolades already in place, on Jan. 15, 1921, the hospital admitted its first patient, Mrs. Lavina Lint of Mingo.  Three days later, the first baby was born at the hospital, Max Dodge of Newton.  In May 1921, at the dedication ceremony, those who had made the hospital possible, along with a large crowd, listened as F.L. Maytag gave honors to Vernon Skiff for his support of the project: “Without any possible personal gain or advantage to yourself, you have given liberally of your substance to found your wife this splendid hospital.  Your sacrifices … will ever honor the memory of her who has been dearest to you.”

All seemed well on that beautiful spring day in 1921, but a problem was brewing, one that could destroy everything …

Stay tuned for the next installment in a few weeks!

 

Part three

It was a beautiful spring day in May 1921 when Mary Frances Skiff Memorial Hospital was dedicated.  The hospital had already been hailed in a national health-care journal as “one of the finest and most modern in the country.”  In keeping with this reputation, the hospital board made additional investments in the facility, including the purchase of an X-ray machine in early 1925, making Skiff one of the first small hospitals in Iowa to have this technology.  All seemed well at the time, but a problem was brewing just beneath the surface.

The total cost to open the hospital had been $170,000 and Vernon Skiff had pledged $100,000 of this amount, with the remainder supported by pledges from local citizens.  The city of Newton provided the land and agreed to support ongoing facility maintenance expenses via tax collections.  While Mr. Skiff had immediately made good on his pledge, and some local residents had paid as well, a $40,000 debt remained unpaid due to the lack of follow-through by many others, likely due to the impacts of the Great Depression.  Incredibly, the board members of the Newton Hospital Association carried responsibility for this debt personally while waiting for community members to honor their pledges.  The future of the hospital hung in the balance for several years as creditors demanded repayment of the principal.  In late 1926, F.L. Maytag came to the rescue and pledged $250,000 to build a YMCA in Newton in exchange for community members raising sufficient funds to pay off the remaining hospital debt. 

The Chamber of Commerce recognized this as a prime opportunity to improve the community and kicked off a fund drive which collected more than $54,000 in just one week.  The debt of the hospital was quickly repaid and the headline of the Newton Daily News on April 17, 1928 declared “Skiff Hospital is Out of Debt!”  The debts of the Newton Hospital Association were retired and all assets of the hospital were transferred to the city hospital Board of Trustees in 1928.  At this point the public-private partnership ended and the hospital became a solely municipal hospital supported by revenues gained from medical services provided to patients, ongoing gifts from individuals (including a $50,000 endowment from the Skiff family), and taxes collected by the city for the support of building maintenance (12 percent of the annual budget in 1928).

As a side note, Skiff hospital was fortunate to be located in a supportive community with benefactors capable of providing significant financial support.  Other hospitals were not as fortunate, with nearly 800 closing across America between 1928 and 1938.

With the financial difficulties resolved, the hospital was able to again focus on the still quickly changing face of medicine in America.  Perhaps the biggest change was related to how physicians worked in the hospital environment.  During the late 1800s, the American Medical Association (AMA) had worked to establish guidelines for the practice of medicine, resulting in physician licensing requirements in many states, including Iowa in 1886.  During the early 1900s, the AMA turned its attention to medical education, establishing guidelines for the training of physicians including their work in hospitals.  The intent was to ensure only the most competent and well-trained individuals were recognized as medical doctors. 

These changes worked their way into the formal organization structures of hospitals in the early 1900s with the development of an official “medical staff” for each hospital.  At Skiff, this standardization of medical practice began in 1929 when the hospital board accepted the following recommendations from the Jasper County Medical Society regarding physician practice in the hospital:
1. Doctors must apply to be a member of the medical staff of the hospital
2. Membership on the medical staff was to be restricted to doctors who 1) graduated from a medical school, 2) were competent in their specialty, and 3) were worthy in character and ethics
3. The medical staff would develop rules and regulation governing their work in the hospital including requirements for regular meetings and regular review of each others’ work by looking at the written medical records
4. That all doctors, in conjunction with hospital staff, were required to write accurate and complete medical records on the care they provided to each patient
5. That the doctors needed the laboratory and X-ray departments of the hospital to support their diagnostic and therapeutic treatment of patients admitted in the hospital

Interestingly, these essential components remain in place, relatively unchanged, 84 years later.

While the hospital and physicians were in agreement on most issues, such as developing the formal medical staff, it was not so with all issues.  For example, in 1933, the medical staff requested that the hospital pay for the rubber gloves and the suture they used when treating patients in the hospital.  The board agreed to purchase gloves but insisted that the physicians continue to bring their own suture!  Present-day hospitals would not even allow a physician to bring their own suture, let alone require them to do so.  In another example of how times have changed, the first superintendent (administrator) of the hospital, Miss Stoddard, resigned from her duties in May 1933 when the hospital board learned that “she had been married for some time and intended to join her husband.”  In those early days, nurses were not allowed to be married and were required to live in the hospital or in the nurses’ dorm next to the hospital.  When the board learned that she had been married, her continued employment was no longer acceptable.

Though social advancements in medicine may have been slow, technology was rapidly changing during this time.  By the 1930s, vaccines had been developed for tetanus and typhoid, insulin had been discovered as a treatment for diabetes, blood transfusions were becoming commonplace, and penicillin was widely used in the treatment of infections.  X-ray machines were installed in most hospitals, electrocardiographs (EKG) were beginning to be used, blood pressure meters had been developed, and clinical laboratories were providing ever deeper insights into the chemistry and anatomy of the body.

These advancements, along with increasingly skilled physicians and well-equipped hospitals, transformed the face of medicine in America, leading to ever-increasing use of medical services and, not surprisingly, increased costs. As individuals found it increasingly difficult to afford medical care, the concept of health insurance began to arise.  Can you guess the role that Newton and Skiff Medical Center played in the development of health insurance?  Look for the answer in the next story in a few short weeks!

 

Part four

Physician training, hospital facilities and medical technology were in a period of rapid transformation when Skiff Medical Center was formed in the 1920s.  By the 1930s, vaccines had been developed for tetanus and typhoid, insulin had been discovered as a treatment for diabetes, blood transfusions were becoming commonplace, and penicillin was widely used in the treatment of infections.  X-ray machines were installed in most hospitals, electrocardiographs (EKG) were beginning to be used, blood pressure meters had been developed, and clinical laboratories were providing ever deeper insights into the chemistry and anatomy of the body.

These advancements led to an increasing use of medical services and, not surprisingly, increased costs. As individuals found it ever more difficult to afford medical care, the concept of health insurance began to develop.

The first recorded health insurance plan in America was developed in 1929 by Baylor University Hospital in Dallas, Texas; less well known is that in 1930, the Maytag Corporation developed the “Maytag Relief and Benefit Association.”  This program paid the hospital bills for Maytag employees who received their hospital care at Skiff.  In exchange for guaranteed payment, Skiff agreed to a 25 percent price reduction.  This program became one of the first employer-based health insurance plans in America.  That’s right, our community was at the forefront in health insurance!

Due to the proliferation of hospital insurance plans in the 1930s, in 1939 the American Hospital Association created the “Blue Cross” designation for health-care plans meeting certain criteria and providing coverage of hospital care.  Several years later, similar plans were developed to cover physician services and were designated as “Blue Shield” plans.  These organizations merged in 1971 to form what we now know as “Blue Cross and Blue Shield,” or “Blues” plans.  While these organizations were considered non-profit, other for-profit commercial health insurance plans began to develop as well.  From the 1930s to the 1950s, the “Blues” charged the same premium rates to all who applied.  In contrast, commercial plans developed the idea of charging premiums according to relative risk, thus older people and those with a history of a medical condition were charged more, while younger, healthier people were charged less.  This led to young, healthy people purchasing insurance from commercial plans, leaving the “Blues” plans with a more expensive population of older and sicker beneficiaries.  In order to remain viable, the Blues eventually moved to the risk-based premium system which has existed relatively unchanged until the implementation of the Affordable Care Act.

In the midst of all this change came the war.  World War II was all-consuming for our state with more than 225,000 Iowans serving our country in the military.  The war saw a transformation in Iowa in the area of food production where increased mechanization and the use of hybrid seed corn resulted in production values more than doubling from 1940 to 1945 and the manufacturing base tripling during the same period.  When the war ended, service men and women returned home to a very different society and set of circumstances than they had left.  Urban jobs now outnumbered farm jobs, the GI bill made a college education more accessible than ever before, and the baby boom began.  At Skiff, 152 babies were born in 1940.  By 1952, this had increased to 537 babies!

The baby boom, the increasing size of the city (Newton’s population tripled between 1920 and 1960), and long lengths of hospital stays, led to frequent overcrowding at Skiff by the early 1950s.  The hospital, which had not expanded since its construction in 1921, had a capacity of 56 adults and 12 newborns, but patients were frequently kept in beds in corridors, leading to significant difficulties, especially in times of widespread sickness.

In late 1953, Dr. R.W. Wood led a campaign to raise funds for a 45-bed expansion of the hospital.  The fundraising efforts resulted in the collection of $307,000, due in no small part to the members of the Skiff Auxiliary, a group formed in 1951 to provide volunteer services and funds to the hospital.  A 50 percent match to these funds was provided from the federal government’s Hill-Burton program.  This program had been established by the Hill-Burton Act of 1946 and was intended to improve and expand access to medical care in America by building more and bigger hospitals.  Interestingly, the Hill-Burton program was one of two potential plans under consideration nationally at the time with a goal of improving access to health care.  The other was the Truman administration’s proposal for a national health insurance program.  And we think health-care reform is something new …

The nearly half-million dollars which had been raised from contributions and the Hill-Burton program provided for the construction of the 45-bed east wing.  Concurrently, the 1921 hospital building was renovated with funds provided by the city per the original 1919 agreement.  When construction was finished in 1956, Skiff had a capacity of 101 patients served by 65 employees and 16 physicians.  Of interest is that prior to beginning construction, the hospital Board of Trustees learned that the transfer of the real estate and other assets from the Newton Hospital Association board to the city hospital board back in 1928 had been flawed, thus, the Newton Hospital Association was resurrected for one day and the correct paperwork was completed for the transfer.

The 1950s was an era of increasing prosperity in America and in Iowa.  Medicine was advancing quickly and saw the introduction of acetaminophen and chemotherapy in the late 1940s and the use of ultrasound machines, heart-lung machines and pacemakers in the 1950s.  Jonas Salk developed the first vaccine for polio in 1952 and the first kidney transplant was completed in 1954.  These advancements were welcomed by a population increasingly insured for medical expenses through their employers.

Employer-based health insurance had begun in the 1930s but gained speed during the years of WWII when the government passed legislation resulting in price and wage controls.  The inability of employers to compete on wages led to the development of ever more comprehensive health plans that served as an incentive to hire workers.  The employer-based structure for American health care was firmly established in 1954 when congress reformed the tax code to exclude employer contributions to health insurance from taxes, essentially providing a government subsidy for these plans.

At Mary Frances Skiff Memorial Hospital, the 1950s were a decade of continued growth, the east wing was open and the front entrance of the hospital had moved from the west side to the south side.  The first dictation machine for doctors was installed in 1957 and the labor and delivery area was the first section benefiting from air conditioning.  In 1958, the physical therapy department was established and the first non-emergent outpatient services were offered at the hospital.

Interestingly, board minutes from 1959 note continued support from the city for maintenance and upgrade to the original building, as well as significant discussion by the administrator, Mr. Koss, of legislative issues pending before congress that could have an impact on the hospital.  Though they could not have known it at the time, a move was on at the federal level to introduce legislation that would impact the health-care industry in ways no one could have predicted …

 

Part five

Legislative updates are a regular item on the agenda for the Skiff Medical Center Board of Trustees these days.  The implementation of health-care reform and the innumerable related regulations have enormous impacts on our hospital, making current information on the changes absolutely essential.  I tend to think of our current time as unique in the history of health care, and in many ways it is.  But I recently read a set of board minutes from 1959 in which Mr. Koss, the hospital administrator at the time, was recorded as presenting information to the board on important legislative issues impacting the hospital.  As I read these documents, I chuckled to myself as I was reminded that, while our current situation is certainly challenging, it is not unique.  Skiff has had to adapt to several periods of intense change during its 95-plus-year history and we will adapt again as they did in the 1960s … which is where we left our story last time.

It was 1962 and the federal government had been part and parcel of the health-care funding equation for many years, primarily through the passage of the Hill-Burton Act (Hospital Survey and Construction Act) in 1946.  This act provided money to hospitals for the expansion of existing facilities and the construction of new facilities with the goal being increased access to health-care services across the country.  In addition to providing greater access to health-care facilities, the law also prohibited hospitals accepting those funds from discriminating against patients on the basis of race, color, national origin or creed.  In addition, the law required those facilities to provide a reasonable volume of free care for patients who could not afford their care.  This bill was seen as a compromise to the National Health Insurance legislation supported by President Truman at the time.

By 1959, Skiff Memorial Hospital (as it had now become known), had already received federal Hill-Burton money for one expansion project, so this was no doubt one topic of legislative discussion by the board.  Another topic that was likely on the list was the potential passage of the Forand Bill.  In 1957, Congressman Aime Forand from Rhode Island, with the support of the AFL-CIO, introduced legislation that would create a program of national health insurance for beneficiaries of social security, the income safety net program for seniors that was introduced in 1935.  The American Hospital Association supported the Forand bill because hospitals were increasingly impacted by the growing elderly population who were predominantly low-income and had little access to health insurance.  Interestingly, the bill was opposed by the American Medical Association and a variety of business groups.

A pitched battle around the Forand Bill was waged in congress for several years with a compromise passing in 1961 called the Kerr-Mills Act. It created the forerunner of the Medicaid program but was restricted to covering only the elderly poor and gave states the choice of opting-out, which many did.  President Kennedy’s administration was dissatisfied with this outcome and continued to push for a more comprehensive plan for which they had coined the name “Medicare.”  Kennedy’s untimely death interrupted the process, and it was not until late 1965 that the bill, with support from the Johnson administration, was finally passed, and only after more than 500 amendments had been attached.  The result was the creation of Title 18 (Medicare), and Title 19 (Medicaid).  These two bills would forever change the face of health care in America not only by providing insurance coverage, but by requiring hospitals and doctors accepting payment from these programs to participate in racial desegregation.  The days of segregated clinic waiting rooms and hospitals inpatient wards was coming to an end.

On July 1, 1966, poor and elderly Americans became eligible for comprehensive medical insurance coverage.  Skiff, like most hospitals in America, applied to be an approved provider of services to Medicare beneficiaries.  In those early days, most commercial insurance companies paid hospitals either by reimbursing the hospital for the reasonable costs of care provided or through a negotiated charge (price).  Medicare’s payment process for hospitals followed essentially the same model but required hospitals to submit a report of all their costs at the end of each year.  Medicare then calculated the ratio of costs to charges and in the following year paid the bills submitted by the hospital using this percentage.  Interestingly, Medicare paid physicians the entire amount they charged for their services.

This cost-based payment system was a boon to hospitals as it effectively shielded them from the financial risk associated with their high fixed costs and made success in health care a volume-based proposition.  The system also offered flexibility because hospitals had the option to keep charges (prices) low, while ensuring their costs would still be covered.  Unfortunately, this payment mechanism also fostered large differences in the cost of hospital care around the country as there was little incentive to improve efficiency.  This resulted in some parts of the country (primarily the east and south) experiencing profoundly higher costs than others (primarily in the upper midwest).

With improved access to insurance payments and government funding, hospitals were able to dramatically improve facilities and equipment for their patients.   While many of these investments were in advanced medical technology (pacemakers in 1957, hip replacements in 1962, and Valium in 1963), there were also improvements in other areas.  At Skiff, for example, obstetrics became the first part of the hospital to be air-conditioned in 1957, although fans blowing across blocks of ice continued to be used in other areas!  Televisions were installed in the hospital in 1964 and a nurse/patient intercom was operational in 1965.  For hospital staff, life became easier with the introduction of a spectrophotometer in the lab in 1961, an automated X-ray film processing unit in 1964, and an NCR 395 punch-card data processing machine in the business office in 1967.

The introduction of Medicare not only changed the way hospitals were paid, it also required hospitals to achieve compliance with quality standards.  These standards became known as “Medicare Conditions of Participation” and are still in place today.  In addition to meeting quality standards, hospitals began to think more critically about the health of the community.  One result was the elimination of cigarette vending machines from the Skiff lobby in 1967.  Another result was the growth in options along the continuum of care.  At Skiff, this took the form of the construction of the Hunter Addition in 1964.  Thanks to a generous gift of $400,000 from the estate of Charles Hunter, the expansion project was completed and the hospital had a bed complement of 126, with more than 40 of those being for extended care patients.  At the other end of the spectrum, Skiff had begun to provide for outpatient services in 1958, including X-ray and physical therapy, though outpatient areas remained small due to the inpatient-focus of most health-care services.

An interesting side note from this period in history is in relation to the ambulance service.  It appears that prior to 1962, the ambulance service in Newton was managed by the local funeral directors, with hearses and ambulances being the same vehicles!  This changed in the mid 1960s when the funeral directors approached the city and stated they could no longer afford the program and would be ending their participation.  After much debate, the city of Newton eventually took on responsibility for the ambulance service, and it remains there today. 

In the last few years of the 1960s and the first few years of the 1970s, hospitals were experiencing a period of growth in volume, facilities and funding.  Financial performance was strong as Medicare and Medicaid grew and health insurance benefits were offered to more and more people through their place of work.  However, at the federal level, issues were appearing in the relatively new government health insurance programs.  By 1973, these issues had come to a head and Medicare “tweaked” their program in such a way that an immediate response by Skiff Memorial Hospital would be needed.

To be continued …

 

Part six

In the last few years of the 1960s and the first few years of the 1970s, hospitals were experiencing a period of growth in volume, facilities and funding.  Financial performance was strong as the Medicare and Medicaid programs grew and health insurance benefits were offered to more and more people through their place of work.  Increasing insurance coverage led to increasing utilization of health-care services and dramatic increases in health-care costs.  By the early 1970s, skyrocketing health-care costs was front page news across the country.  In 1973, Congress responded to the pressure to “do something” to reign in costs by passing legislation requiring every employer with more than 25 employees to include a Health Maintenance Organization (HMO) as an alternative to traditional insurance coverage. 

Interestingly, in that same year Congress also expanded the Medicare program to cover additional services including outpatient therapy, treatment for patients with end-stage kidney failure, and people younger than 65 with permanent disabilities.  As a way to offset the costs of these additional programs, Medicare began to decrease their payments to hospitals by moving to a “lower of cost or charges” system and eliminating some elements from the equation of calculating cost.  The impact on Skiff Memorial Hospital was significant.  Prior to 1973, if a hospital had an extended care facility, Medicare would cover any excess financial loss associated with these patients.  This allowance ended in 1973, leaving Skiff with no choice but to reduce the number of extended care beds to 20, cutting the size of the program located in the Hunter Wing in half.

The 1970s were a difficult time for America, with unrest regarding the end of the Vietnam War, uncertainty associated with the impeachment of a president, and a middle-eastern oil embargo to cap it off.  But the 1970s were also a time of innovation.  In the 1960s and years prior, it was common for patients to be admitted to the hospital for simple procedures, like cataract surgery, and to be kept immobile in their beds for such extended periods of time that they would develop pneumonia due to lack of activity.  It was rare for patients to be told their diagnosis, let alone be informed about medication or treatment options.  The lessons learned in the 1960s, along with the evidence learned from clinical studies, began to be put in practice in the 1970s and processes of care were influenced in very positive ways.

Advancements in medical technology continued forward and included the development of MRI and CT scanning systems.  Vaccines for most major diseases had been in place for many years and the last fatal case of smallpox was recorded in 1976.   Immunosuppressive drugs allowed organ transplants to become a reality for ever more people, and the first antiviral drugs were created.

Skiff kept pace with the changing technology by purchasing a blood gas analyzer for the laboratory in 1971, opening a new wing of the hospital dedicated to radiology and laboratory functions as well as a new emergency room in 1973, installing an automated pacemaker checking system in 1975, and purchasing a laparoscope for the operating room in 1976.  In that same year, an east addition was constructed on the hospital campus and included a four-bed coronary care unit. 

The facility additions and technology acquisitions in the 1970s were funded by a combination of federal Hill-Burton funds and hospital resources, as well as a gift of 16,000 shares of Maytag common stock from the Maytag Family Foundation.  Though some past renovation projects had also been funded in small ways by city tax levies, this support had ended by the mid 1970s.  In 1979, the hospital’s capacity had grown to 124 beds and an annual budget of $3.1M.  Who would have thought 60 years earlier that a simple nine-room hospital with a $350 monthly budget would become this large and complex?

Unfortunately, the end of the 1970s brought with it an end to several years of relative tranquility in health-care reimbursement.  Fears were growing in the health-care community nationally that Medicare was considering significant changes to their reimbursement programs to slow down the rate of growth in hospital spending.  These fears were founded on other changes in the mid-1970s, including Medicare’s ruling to cap the rate of physician payment growth in 1975 and a decision by Medicaid to cap the length of a paid hospital stay at seven days in 1976.  By 1977, the Skiff Board of Trustees was so concerned about these changes, and additional ones being proposed by the federal government, that a letter was sent to Senator Culver expressing their apprehension.  Specifically, the Board was concerned about changes being proposed for the Medicare program that would cap hospital payments at current cost-based rates.  Their conclusion was that such a move would effectively lock low cost providers like Skiff into permanently low payment rates.

In 1978, the hospital community in Iowa responded to these fears by creating the Iowa Voluntary Cost Containment Committee to identify ways to reduce local health-care costs.  In 1981, a front-page article appeared in the Des Moines Tribune regarding the high cost of health care in our state.  Because most health-care services were provided on an inpatient basis, this was the focus of effort in most hospitals, and the focus of insurance companies as well, as evidenced by the implementation of a plan by Blue Cross/Blue Shield of Iowa in 1981 to reduce inpatient admissions.  As hospital admissions declined, so did the need for inpatient capacity and, in 1982, the capacity at Skiff was voluntarily reduced to 98 beds.

In 1982, the federal government passed the Tax Equity and Fiscal Responsibility Act (TEFRA).  TEFRA placed several limits on the way in which Medicare reimbursed hospitals.  The act introduced targets for the average cost of care for each hospital and limited annual increases in these targets.  No longer would Medicare pay actual costs of care provide; payments to hospitals would be capped.  Skiff Board of Trustee minutes in December of 1982 noted the current “crisis in reimbursement” and just a few months later, in 1983, the decision was made to permanently close the extended care facility located in the Hunter Wing.

But this was not the end.  In 1984, another change would be implemented that would cut the inpatient capacity of Skiff Memorial Hospital in half, would refocus the hospital in a very different direction and even result in changing the name.  In July 1984, Ron Ross, the hospital administrator, would pen the following words in a letter: “As you are acutely aware, we are presently faced with the most dramatic and rapid changes ever seen affecting the delivery of health services.”

Truer words had never been spoken …

 

Part seven

In 1977, the hospital Board of Trustees sent a letter to Senator Culver, expressing their apprehension about new payment models being considered by the federal government to reduce the cost of hospital services.  Specifically, the board was concerned that changes being proposed for the Medicare program would cap hospital payments at rates based on then-current costs of providing care.  Their conclusion was that such a move would effectively lock low-cost providers in states like Iowa into permanently low payment rates compared to other parts of the country.  One looks back at this letter now and finds it to be prophetic. 

Beginning in 1982, Medicare experimented with a formula that capped the level of allowable costs, but this was just a warm-up for 1984 when Medicare implemented a system of payments which no longer paid the actual cost of providing care, but rather paid what Medicare thought the cost of care “should” be for a particular diagnosis in a particular part of the country.  This new system was based on paying for a limited number of days in the hospital for each diagnoses – patients were classified into a “diagnosis related group” (DRG) when admitted as an inpatient and the hospital would know up front how many days Medicare would allow the patient to remain there.  Interestingly, Medicare did not cap the number of days a patient could stay in the hospital; it just indicated that if a patient stayed longer than allowed, the hospital itself would be “liable for paying the costs” of any extra days. 

For the first time in the history of the Medicare program, hospitals were at risk for the cost of taking care of patients.  This created a strong incentive for hospitals to ensure that patients did not “overstay” their allotted time in the hospital and programs were quickly put in place throughout the country to ensure all efforts were focused on achieving the quickest recovery possible for every patient.  Suddenly, patients who would have been admitted for a week or more were being pushed through the system in three or four days.  Patients who needed surgery and who had been admitted for preoperative testing in the past now found all this testing being done on an outpatient basis.  Medicare supported this movement toward outpatient care by allowing payment for more and more procedures only on an outpatient basis. 

In addition to capping the allowed length of stay for different diagnoses, Medicare created a standard payment amount for each DRG and then applied a regional factor to account for cost difference in different regions across the country.  These regional factors were pegged to the historical costs of providing care in each part of the country and resulted in states with the most efficient hospitals (those in the upper midwest) being paid far less than hospitals in other parts of the country (the south  and northeast) for providing exactly the same care.  This new payment system was called the “Prospective Payment System” (PPS) because hospitals would know on the day a patient was admitted how much they could expect to be paid.

The face of hospital care in America was changed dramatically in 1984 and this was the impetus behind the crafting of the following words by Ron Ross, Skiff’s administrator at the time: “We are presently faced with the most dramatic and rapid changes ever seen affecting the delivery of health services.” 

Sensing big changes coming in the future, leadership at Skiff had begun the progress of reconfiguring operations in advance.  In 1982, the Hunter Wing extended care facility was closed permanently and a nine-bed psychiatric unit was opened in a portion of the space.  Though the hospital could no longer afford to provide senior care in the hospital setting, it supported the development of a local senior health center across the street (which later affiliated with Wesley Life in 1992 and became Park Centre).  The first clinic for visiting specialists was opened at Skiff in 1983; by 1985, 16 providers in a variety of specialties were providing their services locally.  In a truly visionary step, in 1984 the Jasper County public health nursing service merged with Skiff in the creation of a home health department and a local hospice organization was developed with the support of the hospital and would eventually merge with the hospital in 1988. 

The key to ensuring a successful shift to outpatient care was providing much greater amounts of patient education and far more transparency on the part of health-care providers.  For the first time, patients were informed of their diagnosis and nurses were allowed to tell patients what medications they were administering.  Health prevention education was implemented in the late 1980s and patients’ individual accountability for their health has been increasing ever since.

The operational transition from an inpatient to an outpatient focus did not come easily to hospitals anywhere, and Skiff was no exception.  Simple procedures, such as obtaining a series of GI X-rays, took three days (because the different views could not be done on one day) and patients had historically been admitted because it was felt that patients could not complete the “prep” on their own.  If you have ever had a colonoscopy, you know that “prep” is something that is easily done in the privacy of your own home.  The first outpatient surgery at Skiff was for a procedure we would never consider an inpatient stay for today, but the surgeon took significant convincing before he would agree to have the patient not come in until the morning of surgery.  Everything went well for this patient and the precedent was set.

Medical technology continued its rapid advance during this time, as well.  In 1980, the lithotripter was developed to break up kidney stones with sound waves, eliminating the need for surgery.  In 1981, the first human heart-lung transplant was completed.  In 1985, automated DNA sequencing was developed, as was the first surgical robot.  Intravascular stents were developed in 1988 and led to the rapid development of cardiac catheterization labs in the 1990s.

Skiff kept pace with these developments, implementing the use of echocardiography, CT scanning and mammography in the mid-1980s by utilizing mobile equipment shared with other rural hospitals via a company founded in 1983 called Health Enterprises of Iowa (yes, the very same company investing in Newton right now with the construction of a new medical laboratory).  Skiff also invested in an automated unit-dose medication system in the pharmacy department in 1982 and a computerized admission system in 1985.

The sweeping changes in health-care payment, advances in medical technology, and the intense push for moving care out of inpatient units and into the outpatient environment led to additional difficult, and far-reaching, decisions at Skiff.  Mary Frances Skiff Memorial Hospital had reached a peak of 124 beds in 1973.  Sensing the impending changes, the bed count was reduced to 98 in 1982.  In 1984, following the massive changes for inpatient reimbursement, the inpatient bed count was reduced again, to 69, where it remained until 2010.  One can only imagine the difficulty the hospital leadership team must have had in coming to terms with reducing the number of beds to a level just about half as large as in the heyday.

In addition to reducing the inpatient capacity of the hospital, Ron Ross made an even more difficult recommendation: changing the name of the organization from “Mary Francis Skiff Memorial Hospital,” a name that had been in place for 65 years, to “Skiff Medical Center.”  The days of inpatient-focused hospitals had come to an end, and the leadership team realized that the new focus would need to be squarely on growing outpatient health care capacity in Newton; the new name would help ensure this transition.  Thus in 1986, the new name and a new logo were presented to the community.

A reduction in inpatient capacity and a change in name were just the beginning of Skiff’s transition to the new world of medicine.  A bold vision was needed that would ensure residents of Newton and Jasper County would have access to the very best care close to home in the future.  In 1988, a “strategic and facility planning” program was initiated and resulted in a 1989 video presentation titled “Skiff Medical Center – A Treasured Community Asset.” 

Enthusiasm in the community was high as Skiff unveiled its plans for the next step in its evolution – a $9.3 million addition and renovation program which would culminate in the construction of a new medical arts building attached to the hospital, renovations of most of the existing spaces in the hospital, construction of new additions to house emergency services, radiology equipment, and surgery suites.  New laboratory and imaging equipment was purchased, including a $600,000 CT scanner. 

To ensure the widest use of these new facilities, the Newton Healthcare Development Corporation was founded with the sole purpose of recruiting additional physicians to the community.  In a two-year period, six physicians moved to Newton and began practicing at the hospital.  The new facilities, equipment and physicians resulted in an increase in hospital revenue of $2 million in 1992 alone!

Thanks to visionary leadership and exceptional community support, all was well at Skiff by the mid-1990’s.  But Skiff Medical Center was not typical of rural hospitals in America at this time, and unexpected changes were coming to Newton as well.

 

Part eight

Thanks to visionary leadership and exceptional community support, all was well at Skiff in the mid-1990s.  But Newton was not typical of other rural hospitals in America at this time.

When Medicare changed its payment structure from one focused on ensuring all the costs of providing care to Medicare patients was reimbursed to hospitals and implemented a new system focused on paying what Medicare believed the cost “should” be, hospitals across the country immediately felt the pinch.  Our hospital responded in many ways, including reducing the number of hospital beds dramatically and focusing operations on outpatient services.  This included changing our name from Mary Francis Skiff Memorial Hospital to a name with a much broader perspective: Skiff Medical Center.  Because it was located in a town with a solid base of high-paying jobs with great health insurance benefits, Skiff was able to re-engineer itself to withstand the significant reduction in Medicare payments.

Unfortunately, most rural hospitals were not located in towns as large as Newton, nor did they have the strong base of patients with private insurance to support them.  These small hospitals began losing money and quickly dipped into their financial reserves to cover the mounting losses associated with caring for Medicare patients.  The problem was most desperate in small frontier communities that were located a significant distance away from larger population centers.  In these areas, the local hospital was typically the largest employer in town and provided the only access to local emergency medical care.  As more and more hospitals teetered on the edge of closure, states like Montana and Wyoming began experimenting with ways to keep their hospitals alive.

In 1990, the state of Montana partnered with Medicare to begin a demonstration program which allowed small hospitals to revert back to the previous, cost-based system of hospital payment.  This demonstration program was successful and congressmen from small rural states attempted to expand this program nationally via legislation … but with little success.  As each year went by, more and more small hospitals across the country were closing, until the total reached into the hundreds.  Finally, in the Balanced Budget Act of 1997, the Medicare Rural Hospital Flexibility Program was established.  Though this program had several goals, protecting small rural hospitals was the focus.  It became known as the Critical Access Hospital program.

Though the program was modified slightly during intervening years, the essential requirements for a hospital to gain critical access designation were that it have fewer than 25 licensed inpatient beds, that it keep patients no longer than four days on average (and have an agreement with a larger hospital for patients needing additional care), and that it be in a remote location more than 35 miles from another hospital.  If a hospital could meet these criteria, then it reverted to a cost-based payment model whereby it would be reimbursed the cost (plus 1 percent) of caring for Medicare beneficiaries for both inpatient and outpatient care.

The bill passed in 1997.  By 2001, 460 hospitals had enrolled in the program.  In addition to hospitals that were truly remote, for the first 10 years of the program, each state had the ability to provide a waiver of the 35-mile requirement by declaring a hospital a “necessary provider” for their community.  This ability ended in 2006.  By that time, more than 1,300 hospitals had enrolled in the Critical Access Hospital program, accounting for more than 25 percent of all hospitals in America.  In the state of Iowa today, there are 119 community hospitals and 82 of these are critical access.  Yes, more than 70 percent of hospitals in Iowa are in this program!

Though it was clear that rural hospitals required additional funding to keep their doors open, this did nothing to help reduce the ever-increasing cost of health care in America.  Even with the extraordinary reductions to hospital payments made by Medicare in the mid-1980s, health care costs continued to grow much faster than inflation.  This led to an ill-fated attempt at health-care reform by the Clinton administration in the early 1990s.  “Hillary Care,” as it was known at the time, was met with great resistance from the insurance industry and conservative groups.  The bill was easy for opponents to disparage due to its complex series of control mechanisms, national boards, and rules aimed at achieving universal coverage.  The public backlash to the reform bill was intense and was a factor in the GOP taking control of both houses of Congress in 1994 for the first time since the 1950s.

Though broad-based health care reform failed in the 1990s, a number of programs that are well known today were established during this period, including the S-CHIP program insuring children, the Health Insurance Portability and Accountability Act (HIPAA), which became most well known for its privacy requirements, and the creation of Medicare Advantage programs which allowed seniors to receive insurance coverage through subsidized private insurance instead of traditional Medicare.

The mid-1990s in Newton, and at Skiff, remained a time of growth and hope.  The renovation and expansion of the facility which began in 1991 was completed in 1994.  An ambulance service staffed by paramedics began operation during this time.  The percent of patients from Jasper County utilizing Skiff for their inpatient care had increased from 27 percent in 1987 to 40 percent by 1994.  In that same year, Lois Vogel was named the “Outstanding Nurse Executive” in Iowa.  In 1995, Ron Ross was named the “Iowa Hospital Administrator of the Year.” 

Then, in 1996, Ron Ross, the engineer of the transformation of Skiff, was diagnosed with cancer and passed away only five months later.

Fortunately, Eric Lothe, a rising young star who had worked under the tutelage of Ron for several years and had only recently taken the position of hospital administrator in another town, accepted the request to return to his hometown and take the helm.  Though the 75th anniversary celebration in 1996 was dimmed by Ron’s passing, things were still on track for a bright future at Skiff. 

The new leadership team picked up right where the old one had left off and began responding to the constantly changing health-care environment.  The Balanced Budget Act of 1997, which was saving so many rural hospitals, actually had a very negative impact on those which were too large for the new Critical Access designation.  In order to reduce Medicare spending, the bill cut payments to hospitals and doctors by $112 billion.  The reduction in reimbursement for some services, psychiatric units for example, was so severe that many hospitals, including Skiff, closed their inpatient psychiatric facilities.  The bill also implemented the Sustainable Growth Rate (SGR) formula for paying physicians.  The intent of the SGR was to limit growth in physician payments to no more than the cost of inflation, and if the prior year growth was greater than inflation, a decrease would automatically be triggered the following year.  Because of the way the formula worked, the SGR triggered a decrease each year of 1-2 percent.  Congress was never willing to let the physician payments actually go down, so each year they postponed the cut to the next year.  The impact is that the automatic decrease for each subsequent year adds to decreases from prior years that were never implemented, making the cumulative reduction bigger and bigger each year.  Because of this, on Jan. 1, 2014, the automatic decrease in physician payments was calculated to be 24.1 percent, but – you guessed it – Congress postponed it again.  When you watch the news and you hear that Congress is struggling with the “doc fix,” the SGR program is what they are talking about.

Medicare wasn’t the only insurer cutting their payments at this time.  In 1998, Wellmark BC/BS changed their payment system from the traditional percentage of charge, to a set fee schedule.  Medicare, Medicaid and BC/BS covered the vast majority of patients in Iowa, and with none of them paying hospitals based on the price the hospital charged, hospitals no longer had the ability to increase their revenue by increasing their prices.  At this point, the only way to increase revenue in a hospital became increasing the volume of services provided. 

Skiff responded to these changes very well by focusing on cost reduction, physician recruitment and a $2.3 million facility expansion plan.  These were impressive responses to difficult situations and, later in 1998, Eric Lothe was named the “Young Executive of the Year” by the Iowa Hospital Association.  In 1999, Skiff was designated a level III trauma center and was named one of the top 50 hospitals in the U.S. for quality as measured by the Center for Healthcare Industry Performance Studies.

Hospital payments took a hit again in the year 2000 when Medicare transitioned their reimbursement for outpatient services from one based on cost, to one based, again, on what Medicare believed the costs should be.  Fortunately, these large cuts to hospital outpatient payment for rural hospitals were reduced by the implementation of a program which delayed their implementation.  There were some bright spots in 2000, though, with the implementation of new payment programs targeted to mid-size rural hospitals like Skiff.  The Medicare Dependent Hospital designation was enhanced and provided additional payments to hospitals with fewer than 100 beds.  These same hospitals were allowed to keep patients in the hospital who would otherwise have been transferred to a skilled nursing facility.  Essentially, these patients would “swing” from a payment status of inpatient into a payment status of skilled nursing without leaving the hospital.

Skiff continued to find innovative ways to respond to this unpredictable environment.  In the year 2000, an assisted living unit was opened in space previously occupied by the psychiatric unit and, prior to that, by the extended care program.  The outpatient kidney dialysis unit was opened in 2001 in a partnership with Davita, and a hospital-wide implementation of an electronic medical record system began that same year.  In 2002, a $1.5 million project to enlarge the outpatient surgery area was undertaken, a new CT scanner was installed, and 24/7 coverage of the emergency room began in early 2003.  In 2004, an extensive upgrade of the original 1922 building was initiated, including upgrades of the first and second floor, development of a beautiful hospice house on the third floor, and reopening of the original west lobby entrance. 

By 2005, things were even better.  The month of July set a new record for revenue, and market share for inpatient services jumped to nearly 60 percent.  Two hundred and seventy-four babies were born at Skiff, the highest since 1978.  Employee satisfaction was in the top 4 percent of all hospitals in America.  Major construction ended with the opening of Memorial Hall in the original hospital lobby and the placement of the cartwheeling kids sculpture in front of the hospital.  The Iowa Hospital Association recognized Eric Lothe with an “Excellence in Leadership Award” and Gary Kahn was named the first non-hospital executive to chair of the Iowa Hospital Association Board. 

2006 was a year of even more exceptional volume, patient satisfaction and quality at Skiff Medical Center.  With nearly 15 years of growth in the books and high hopes for the future, the passing of the deadline for hospitals to enter the Critical Access Hospital program by gaining “necessary provider” status from the state passed by quietly.  Who would have thought at the time that things were going to change so radically, and so quickly, not just for Skiff but for the entire community?

 

Part nine

The years 2005 and 2006 were great ones for Skiff Medical Center.  Revenues were high, employee morale was exceptional, and the satisfaction of patients with the hospital had never been higher.  Skiff had experienced more than a decade of growth and was recognized throughout the Iowa health-care community as one of the best rural hospitals in the state.

Skiff had evaluated the idea of gaining Critical Access Hospital (CAH) designation prior to the final deadline for application in January 2006, but limiting the inpatient capacity of the hospital was an unpopular idea with the medical staff as the number of patients in-house at times exceeded the limit of 25 associated with the CAH designation.  This decision, combined with the strong growth trend of prior years, no doubt seemed like a good one at the time, and the CAH application deadline passed quietly by.

Skiff had successfully navigated the ever-changing currents of the health-care industry for nearly 90 years, and the modern version of the organization bore little resemblance to its humble beginnings in the small house with a $350 per month budget in 1917.  To be sure, the mid-2000s were not without challenges at Skiff.  Payment for health-care services had been getting tougher for quite some time as private insurance companies continually reduced their reimbursements to hospitals.  The Maytag Corporation had fallen on hard times in recent years, and by 2006 the acquisition by Whirlpool was complete and the plants and headquarters in Newton had begun to close.  While the changes associated with Maytag were projected to have an impact on Skiff, it was thought to be something to which the hospital could adapt. 

Fiscal year 2007 continued the long-term trend with another great year of volumes and financial performance.  It was marred only by the departure of Eric Lothe, Skiff’s long-time CEO, who had accepted the position of President with Health Enterprises of Iowa in Cedar Rapids (the company that is now investing in the new medical laboratory in Newton).  The fiscal year ended with positive performance as the search for a new CEO was undertaken.

Newton had undergone a considerable change since the departure of Maytag.  Some employees of the plant and the headquarters relocated to other Whirlpool sites out of state, leaving Newton for good.  Those who elected not to relocate went in search of jobs, only to find that the high pay and great benefits of Maytag were nearly impossible to match locally and difficult to match even when commuting to employers in the greater Des Moines area.  Newspapers from around the country chronicled the devastation wrought to the local economy and focused many articles on the problem of health insurance coverage.

Maytag had provided exceptional health-care benefits and Skiff had benefited from this extraordinary coverage for many years, but as people migrated to less supportive insurance plans, or lost their coverage entirely, the costs of health care forced many to forego seeing their doctor and limit visits to the hospital to only emergencies.  A free clinic hosted at Skiff was started by the physicians in town at this time, and it immediately became the only source of health care for many individuals in the community.

By early 2008, about the time the new CEO started, it had become clear that the long-term growth trend had ended and, in many departments of the hospital, volumes actually began to decline.  Unfortunately, as is the case with many organizations, long-term growth trends create cultures in which the expectation is that those trends will continue.  Add to this the effects of increasing expenses associated with inflation, and a serious disconnect appears in which expenses continue to grow while revenues begin to decline and mounting financial losses inevitably result.

At about this same time, key physicians began to depart due to retirement or personal reasons, reducing volumes even further.  The escalating financial issues began to cause divisions at Skiff.  Many were in disbelief that a hospital that had done so well for so long could suddenly be experiencing such an extreme downturn.

In early 2009, the situation had become dire, marked by the departure of many individuals in leadership capacities in the hospital.  An outside health-care operations firm was engaged in 2009 to fill the gap in leadership and develop a path toward restoration.  Intense analysis revealed that a two-fold approach of volume growth and expense reduction were needed.  Due to the severity of the situation, the interim leadership implemented a significant reduction in force.  Unfortunately, the process was handled poorly by the outside firm and it only fanned the flames of division already in place in the hospital.

Late in 2009, the board made the decision to appoint Brett Altman, then Director of Physical Medicine and Rehabilitation, to the post of interim CEO while the search for a permanent CEO was completed.  The appointment of a talented internal person to the position was a huge stride forward, and one of the first tasks Brett completed was sending a letter to the US Department of Health and Human Services (the department in which Medicare is included) for inclusion in the Critical Access Hospital program.  By this time, there was no question that the hospital was small enough to operate under the 25-bed limitations of the program and that the significant financial benefit associated with its cost-based reimbursement model would go a long way toward ensuring the long-term viability of Skiff.

Unfortunately a response was received a few months later recognizing that, though Skiff would benefit from the Critical Access Hospital designation, other hospitals were located within 35 miles, and the state no longer had the ability to waive the mileage limit by designating the hospital a “necessary provider.”  Sadly, Skiff was no longer eligible for the program.

Shortly after this, in January 2010, I had the privilege of joining the Skiff Medical Center family and got right to work with the Skiff team.  Then, on March 30, 2010, President Obama signed the Affordable Care Act into law and the future of the entire health-care system in America changed …

 

Part 10

I did not have the pleasure of witnessing the 90-plus years of Skiff’s history we have relived together during the past few months, as I did not arrive at Skiff until January 2010.  Just a few months after my family’s arrival in Newton, what I believe to be a fundamental transformation of health care in America began with the signing of the Patient Protection and Affordable Care Act, or the “health care reform law” as it is now known.  I don’t believe that this transformation began with health-care reform; rather, this law took many ideas and trends already in place in America, and vastly accelerated them.

Perhaps the best picture one can draw of just how fundamental the change may be comes from a story told by Dr. Donald Berwick, Director of the Centers for Medicare and Medicaid Services (CMS) for the federal government, during the initial years of health-care reform implementation.  Dr. Berwick tells the story of a bridge over a river in Honduras that was built specifically to withstand hurricanes and floods.  Following construction of the bridge, a brutal hurricane hit the area with devastating effects.  Following the hurricane, the bridge was still standing strong, but the flooding caused by the hurricane had changed the course of the river and the bridge was now over dry land, next to one bank of the river! 

Dr. Berwick used this example to draw a parallel to the American health-care system.  While our system works very well, it was designed to take care of people after they become sick, but what is needed now is a health-care system whose focus is preventing people from becoming sick in the first place.  Our health-care system is the equivalent of the bridge which no longer spans the river.

While Dr. Berwick has a more utopian outlook than others, there is no doubt that our health-care system nationally was, and still is, badly in need of change.  In 1970, seven cents out of every dollar spent in America was for health care.  By 2010, this had increased to nearly 18 cents out of every dollar.  In 1987, the average family health insurance plan required 7 percent of the family budget.  In 2012, it had increased to 17 percent.  In 1999, the premium for an employer-provided health plan with family coverage averaged about $6,000 per year, with the employee responsible for about $1,500 of the total.  In 2011, the average employer-based health plan premium had risen to a whopping $15,000 with the employee responsible for more than $4,000 of the cost!  In the 10 years between 2002 and 2012, inflation had caused prices in our economy to increase by 27 percent.  During that same time period, health care costs rose 45 percent. 

In comparison to other western countries, Americans spend twice as much money per capita on health care each year.  In the later years of life, Americans spend four to six times more than countries like Germany and Great Britain.  Unfortunately, this huge outlay of money has not resulted in better health outcomes.  America routinely ranks at the bottom of comparisons with other western countries in many measures of health.  In addition, in 2011 there were 48 million Americans without health insurance and this number was expected to exceed 60 million in just 10 years.

Reform of the American health-care system was not a new idea.  Various attempts at reform had been tried since the 1930s and had resulted in mostly incremental change.  Why was this time any different?  Though there were great differences of opinion in the political world regarding the “how” of reforming health care, everyone agreed on the “why.”  With $2.7 trillion being spent every year on health care, costs rising rapidly, and retiring baby boomers set to begin dropping into the Medicare program, it was widely understood that the confluence of an aging population and a deteriorating lifestyle (mainly obesity) leading to huge increases in chronic diseases would bankrupt the government if no changes were made.

President Obama ran on a platform of social change with reform of the health-care system being his top priority.  His election to an environment in which the Democratic Party also controlled the House of Representatives and the Senate created an opportunity to push through a law to reform the health-care industry.  Unfortunately, the rancor associated with the process led to an outcome that was, and remains today, highly partisan and unwieldy.  During the initial few years of implementation, the law was met with great resistance by many states and culminated in a lawsuit which made its way to the Supreme Court.  On June 28, 2012, the court ruled to uphold the law with a few relatively minor changes.

The timeline for the implementation of health-care reform was to span more than six years.  The early years were focused primarily on providing access to insurance for a broad section of people through a variety of mechanisms.  These included allowing children up to age 26 to remain on their parents’ plans, prohibiting the denial of insurance coverage to individuals due to pre-existing conditions, prohibiting insurance companies from cancelling policies based on errors in the application process, and ending annual and lifetime coverage limits so insurance could not be cancelled due to high utilization.  Other changes were aimed at providing expanded coverage, including requiring insurance companies to pay for preventive care without copays and deductibles applying, and the establishment of “Healthcare.gov” for the future implementation of the health insurance marketplace.

While these early changes were greeted with enthusiasm by many people, other changes laid the foundation for the underlying transformation of the system.  In 2011, the Medicare Innovation Center was created to experiment with new ways to pay for and deliver health care to patients covered by government insurance programs, and the Independent Payment Advisory Board was created to implement those changes.  Also in 2011, the total cost of employer-based health insurance programs was included on the W-2 (take a look at box 12 on your own W-2 – it’s really there).  This reporting requirement not only provides government with access to data on the cost of employer based insurance, it also makes it just a bit easier to tax those contributions as income in the future.

In 2012, Medicare began experimenting with new payment mechanisms for hospitals and instituted the first “value-based” payment program.  Essentially, Medicare removed 2 percent of the payment for all hospital inpatient care provided to Medicare patients and placed it in a pool.  Hospitals are required to report quality data to the government and those hospitals which perform worse than average lose some (or all) of the money that was held back, while those that perform above average are paid more.  In addition, Medicare instituted deadlines for implementing electronic health records and has begun to levy penalties against hospitals and doctors who do not meet the deadlines.

Also in 2012, Medicare began experimenting with payment concepts that went beyond placing hospitals and doctors at risk for the quality of their services and began placing them at risk for the amount (and therefore cost) of the health-care services patients used.  These pilot projects included “bundling” payments for hospitals and doctors for episodes of care.  For example, if a patient is hospitalized for congestive heart failure, instead of the doctor and hospital sending multiple bills for the clinic, hospital outpatient and hospital inpatient services provided, Medicare would pay one amount for everything that was done for a patient during that entire episode of care.  The idea being that bundling everything together would cause the doctors and hospitals to be more judicious in their use of resources.

The bigger experiment, and one that has been embraced here in central Iowa, was called the Medicare Shared Savings Program and created “Accountable Care Organizations” (ACO).  The idea behind an ACO is that Medicare would contract with a group of hospitals, doctors and other health-care providers to take care of a pool of patients (usually more than 5,000 in a pool).  Medicare would analyze the past amount it paid for individuals in this pool and would provide incentives for the group to reduce that cost.  Essentially, the health-care providers would be placed at risk for ensuring the population became healthier, thus lowering the amount of care provided, or moving that care from expensive inpatient environments to more efficient outpatient environments.  If this sounds like the “health maintenance organization” (HMO) concept from the 1990s, that’s because it is, with a few big exceptions.  The current model comes along with targets for quality and for patient satisfaction, and is also supported by much better information systems to help identify individuals with high utilization rates for whom interventions will result in better outcomes and lower costs.  In addition, technology in the way of mobile devices has been developed and is easing the transition of many diagnostics and treatments to non-hospital environments.

In 2013, additional funding was provided to experiment with these new structures, and the tax increases required to pay for health-care reform were becoming clear.  These included a new tax on companies that manufacture medical devices and a reduction in the amount of money that can be placed in flexible spending plans (essentially making more of your income taxable).  High-income Americans now pay more for their Medicare contribution.  Other taxes apply to high-cost employer-provided health insurance plans (the “Cadillac” tax), an excise tax on indoor tanning services, and fees that insurance providers must pay to the federal government. 

Perhaps the most well-known tax is called the “individual mandate.”  This penalty/tax was the primary driver behind the Supreme Court case in 2012.  Many states insisted that the requirement that a person obtain insurance coverage or pay money to the federal government was a “fine” and the government had no right to implement this “penalty.”  The Supreme Court ultimately held that this was not a fine, but rather a tax, since it was to be implemented by the IRS. 

The individual mandate went into effect on Jan. 1, 2014, with the tax for this year set at $95 per person or 1 percent of a family’s income, whichever is greater.  This amount increases dramatically in 2016 to $695 per person ($2,085 for a family) or 2.5 percent of the family income, whichever is greater.

To satisfy the individual mandate, you must show evidence of insurance coverage either through your employer, through a government program or through a plan you purchase privately.  To provide access to insurance, the health-care reform law mandated an expansion of Medicaid programs for individuals up to 138 percent of the federal poverty level.  The Supreme Court did not uphold this requirement in the law, stating that it amounted to extortion of the states by the federal government since the federal government could remove its contribution to a state’s Medicaid program if the state did not agree to the expansion.  Because of this finding, many states elected not to expand their Medicaid programs, thus leaving lower income residents of their states subject to paying the individual mandate tax.

In Iowa, a novel approach to expanding Medicaid was developed that takes advantage of the health insurance marketplace by paying the full cost of all health care costs of a plan chosen by the person/family via the Healthcare.gov website for those earning between 100 percent and 138 percent of the federal poverty level In addition to expanding Medicaid, the health-care reform law provides for federal subsidies to help families earning more than 138 percent, but less than 400 percent of the federal poverty level ($94,000 for a family of four) by providing subsidies to help offset the cost of health insurance premiums.  Additional support of other out-of-pocket costs (co-pays, deductibles, etc.) is available for families earning less than 250 percent of the federal poverty level.  Of importance, these subsidies and additional financial support are only available if the insurance plan is purchased via the government’s online health insurance marketplace (Healthcare.gov). 

Finally, the health-care reform law requires employers with more than 50 employees to provide health insurance or pay a fine of $2,000 per employee.  This requirement was to be enforced in 2014 but it was delayed until 2015 for businesses with more than 100 employees and until 2016 for those with 50 to 100 employees.  The employer mandate will be the last piece of the puzzle for ensuring broad-based access to health insurance.  In the future, Americans will either be covered by their employer, will be able to purchase their own policy on the open market, or will be eligible for government-sponsored insurance.  If they do not gain access to coverage in one of these three ways, they will pay the tax.

There are many more details that I could provide on what was in the health-care reform law and how it impacts individuals, families, employers and health-care providers.  From a hospital point of view, what is certain is: 1) More people will have insurance in the future, but those plans will tend to have very high deductibles or will be government plans that pay hospitals the least.  2) Payments to health-care providers, including hospitals, will be increasingly tied to the quality of the care provided and less tied to the volume of services provided. 3) The health-care system is moving toward a future that is focused on preventing illness rather than curing it, via payments tied to the health of the population of patients served, rather than the amount of services provided to the population.  4) Health care will be increasingly provided in primary care physician offices and in patients’ homes and less will be provided in a hospital or a specialist’s office.  5) Integration of information from doctors’ offices, hospitals, long-term care providers, pharmacies and mobile devices in our homes will be required to achieve all this.

These changes are already happening in health care nationally, and even right here in central Iowa.  The health-care reform law has impacted our own hospital in a variety of ways in the three years since it was passed.  In fact, one element of health-care reform is directly responsible for our doors remaining open.  But it is not the only government program that affects us.  Another program is responsible for some of the incredible improvements we have made.  But there is one other program, the result of our bickering congress, which may result in the demise of many small hospitals in America …

 

Part 11

The last article on the history of Skiff Medical Center delved into the events of 2009 and 2010 that brought about the implement of health-care reform.  Though there are many, many details in the legislation and the subsequent rules developed by the government to implement it, following are the five basic ways hospitals are already changing, and are expected to change in the next several years:

1. More people will have insurance plans in the future, but those plans will tend to have very high deductibles or will be government plans that pay hospitals the least. 
2. Payments to health-care providers, including hospitals, will be decreasingly tied to the volume of services provided and increasingly tied to the value of the care provided.  Value is defined as quality of care provided in the hospital, as well as outcomes after discharge, patient satisfaction with their hospital care and decreased cost of care (collectively called the “Triple Aim” by Medicare).
3. Though payment for value will be an increasing reality, the ultimate goal is a payment system for health care that is focused on preventing illness (before it happens) rather than curing illness (after it happens) by tying payments for hospitals and other health-care organizations primarily to the health of the population of patients served, and secondarily to the value of the care provided to those patients.
4. Health care will be increasingly provided in primary care physicians’ offices and in patients’ homes, with case managers and navigators connecting the patients with the resources available to keep them healthy and prevent disease.  Only the sickest and most complicated patients will be admitted to the hospital or seen in a specialist’s office.
5. Information from doctors’ offices, hospitals, long-term care providers, pharmacies, etc., will be integrated, and mobile devices in our homes will help to provide a seamless view of our health status.  Predictive analytics will utilize this integrated information to identify those of us with health risks and interventions will be devised to help prevent major medical events from occurring in our lives.

These changes are already happening in health care nationally, and even right here in central Iowa, with the formation of large integrated networks of care including the University of Iowa Health Alliance and Unity Point Health.  These large networks include hospitals, physicians, long-term care facilities, and other health-care providers who are engaged in sharing information systems and data, and are becoming clinically integrated through referral relationships.  Additionally, many members of these organizations have integrated themselves operationally.  Interestingly, 70 percent of hospitals in Iowa that are the size of Skiff Medical Center or larger have already integrated into official health system partnerships and more are in the process of doing so.  To say that things are changing in major ways in the health-care field would be an understatement.

Our own hospital has been impacted in significant ways by the implementation of health-care reform during the past few years.  For example, health-care reform accelerated the process of moving Medicare payments from merely being reimbursement for providing care (payment for services provided), to having a portion of that reimbursement placed at risk based on quality and patient satisfaction scores associated with services provided at Skiff.  Essentially, Medicare reduced reimbursement to all hospitals nationally and placed the equivalent amount into a central fund which is used to reward (or penalize) hospitals based on their clinical performance.  Essentially, if a hospital is above average, they get back more than Medicare took away.  If they are average, they get back exactly what Medicare took away.  If they are below average, they do not get as much back as Medicare took away, thus being paid less for delivering that particular service than in the past.  Fortunately, quality scores at Skiff are good, and are getting better, so we have been rewarded by this program.

In addition, health-care reform extended a program already in place in other states called the Rural Community Hospital (RCH) Demonstration program.  This program was originally focused on the lowest 10 states in America in terms of population (Alaska, Montana, the Dakotas, etc.).  Hospitals in those states that were too large to qualify as a critical access hospital (CAH), had less than 50 beds, and were truly rural, qualified for a payment system that provided reimbursement based on the cost of inpatient care provided to Medicare beneficiaries.  This program was extended to the next 10 lowest states in terms of population via the health-care reform law, and Iowa hospitals were eligible for inclusion.  Since only 25 hospitals would be allowed to enter the program, it was with a bit of apprehension that we submitted our application.  We were thrilled to be notified several months later that we had been selected.  To maximize the benefit of this program, we fundamentally revised our operations to focus on inpatient and skilled nursing care.  This required major changes in our hospital, but the result has been dramatically increased payment for inpatient services.  Unfortunately, this program is temporary and is set to expire in June of 2016, thus we are working hard with our legislators to introduce legislation that would extend it another five years at the least, or make it permanent at best.

The health-care reform law also has provided access to insurance coverage for many residents of Jasper County.  The expansion of the Medicaid program allowed some patients with no insurance to have coverage for the first time.  Since Skiff labored to become certified to work directly with the Medicaid program to help patients enroll in coverage, we have new tools at our disposal to minimize the number of patients who are left with no insurance and a large hospital bill to pay.  In addition, some patients who were once covered under a state program that allowed them to only seek care from the University of Iowa, or Broadlawns county hospital in Des Moines, now have their own insurance via the health-care marketplace and are allowed to use our hospital. 

On balance, health-care reform has been positive for Skiff, but it has only stemmed the decreases in payment from other government programs.  While the RCH demonstration program has been a boon to Skiff, it does not apply to patients who obtain their coverage from Medicare Advantage plans.  Fully one-quarter of all Medicare patients at Skiff are now covered by those plans.  In addition, Medicare has changed their payment policies such that many patients who are “admitted” and stay overnight in the hospital for their care are actually classified as outpatients by Medicare and are also excluded from the RCH demonstration program.  On any given day, 15-20 percent of the patients staying overnight at Skiff are classified as outpatients.

In an effort to trim its expenditures, Medicare has taken many cost-cutting steps.  For example, they have imposed limits on the amount of outpatient physical therapy a Medicare beneficiary can use during the course of a year, and have also attempted to allow several “extender” programs that provide additional reimbursement to rural hospitals to end.  These include one program that provided extra inpatient payments for hospitals (including Skiff) considered to be “Medicare Dependent,” and another program that provides additional inpatient payments for low-volume hospitals (like Skiff).  Congress has been successful at offering one-year extensions for a few of these two programs, because they have both expired at the end of each of the last two years, only to be reborn a few months later through legislation.  Congress has not been successful with all the programs, though, as one that provided additional payments for outpatient services expired two years ago and was not renewed, and a program that provided payment for pathologist services to rural hospitals was also allowed to end.  It is difficult making long-term plans when major sources of revenue end each year, only to be resurrected a few months later!

Health-care reform is not the only government program that has affected Skiff during the last few years, though.  Another was born out the American Reinvestment and Recovery Act of 2009, also known as the “stimulus” program.  You may recall that the intent of this program was to deliver nearly $1 trillion in spending from the government to stimulate the economic recovery.  Of this, more than $20 billion was set aside for hospitals and other health-care providers to invest in electronic health records.  In order to be eligible for these funds, hospitals were required to achieve goals to achieve “meaningful use” of these electronic systems.  Because Skiff had invested heavily in electronic patient records in the early 2000s, the additional funding from meeting these meaningful use goals was essentially repayment of investments which had already been made.  This gave the hospital the ability to invest these additional funds in other areas.

The combination of meaningful use funds, along with additional revenue from the RCH demonstration program and a strategic partnership with the Philips Corporation, allowed for the development of the Philips Imaging Center at Skiff.  This center provides state-of-the-art imaging technology in the areas of Magnetic Resonance Imaging (MRI), Computed Tomography Scanning (CT scanner), and digital radiology (X-ray).  The result was a world-class imaging department which is virtually unrivaled in the Midwest.

Other positive changes to Skiff and the local health-care community have included the ongoing recruitment of physicians and the development of new outpatient clinic alternatives with NewCare Health Services, the development of a state-of-the-art medical laboratory in a portion of the old Maytag headquarters which will serve Skiff and several other hospitals in Iowa, and extensive investments in equipment and facility updates which have been supported by the generosity of our community via gifts to the Skiff Auxiliary and the Skiff Foundation.  The extraordinary team of physicians and hospital staff has worked hard to ensure ever-improving quality and were recognized with an “A” patient safety score by the Leapfrog group this spring and one of our extraordinary nurses, Veronica Mangrich, was noted as one of the top 100 nurses in the state of Iowa for 2014.

All the changes at Skiff during the past few years have not been as notable or enjoyable as these.  Although we have been handed a lifeline from a few new government and private programs, there are others which have had a very limiting impact as well.  The sequester of late 2011, which was meant to be so terrible that it was thought congress would never allow it to become law, actually did become law and has removed 2 percent of Medicare reimbursement for all hospitals for two years now.  With another 11 years to go, the cumulative reduction of more than 25 percent of payments from hospitals is devastating.  This is coupled with payment reductions from private insurance companies as they seek to adapt to new requirements under health-care reform.  These companies are bundling their payments for different procedures together; thus paying us one fee for two procedures where in the past we were paid for each separately.  They have implemented new payment mechanisms for outpatient services such that only one company relates their payments to the amount we charge.  For all the rest, we are paid based on what the insurance company is willing to pay, not based on our costs of providing the care, or on the amount we bill.  This is why the “discount” or “adjustment” line on the explanation of benefits forms from your insurance company is getting larger and larger. 

The impact of decreasing payments from government insurance plans (Medicare and Medicaid), decreasing payments from private insurance companies, and the imposition of the sequester is expected to result in a net reduction in payments to hospitals of 30-50 percent during the next 10 years.  Like hospitals everywhere, we have responded to this expectation and are continually decreasing our costs through a number of measures.  Some of these include not replacing retiring staff, reducing benefit plans for our employees, delaying or foregoing salary increases, using less expensive supplies, postponing major infrastructure replacement projects, and relying more and more on gifts from the community to fund improvements.  We have made painful decisions in regards to closing some services and significantly changing other services, while still attempting to invest in areas that can help support us financially in the future.

The past three years have been a time of highs and lows, much of it associated with changes in government programs.  It has been a mixed bag of excitement associated with investments in new technology and services, as well as sadness when difficult decisions affecting our hospital and community needed to made.  In reality, though, it has been a microcosm of the history of Skiff’s 90-plus years. 

Since 1917, the only thing constant at Skiff has been change.  Who would have thought that the small house leased from Caleb Lamb and operated with a budget of $350 per month would someday become the third largest organization in Jasper County, employing more than 350 people with a community impact of more than $30 million per year!

What began as the Newton Hospital Association, and then later became Mary Francis Skiff Memorial Hospital, then Skiff Memorial Hospital, and finally Skiff Medical Center in 1984 is still here today.  Though the name, and many, many other things, may have changed during the years, one thing has remained – our commitment to being in Newton and providing absolutely the best care close to home!

Speaking of names, perhaps you heard that it might be changing again.  It is, but it isn’t!  Read the final installment in just a few weeks of this 11-part series on the “history of Skiff” to learn more!

 

 

Part 12

The history of Skiff Medical Center is a story of change.  Thanks to the vision of F.L. Maytag, a hospital was born in Newton in a nine-room house leased from the Caleb Lamb family in 1917.  It was soon replaced by a state-of-the-art facility funded by Vernon Skiff and named after his late wife, Mary Francis Skiff.  Persevering through cost overruns during construction and financial woes that nearly closed the hospital during its early years, the hospital survived to become a city-owned entity in mid-1920s.

Along with the Maytag Company, the hospital was a pioneer in the area of health insurance, adapting to the changing environment of reimbursement for hospital care.  It also adapted to the changing needs of the community – for instance, in the way it moved from caring for 152 moms giving birth in 1940, to 537 just 12 years later.  In 1956, the hospital opened a new wing to meet the needs of a growing community and routinely had an inpatient census of more than 100 with 24/7 care provided by a staff of only 65!  The construction of the addition was partially funded by a government program, the Hill-Burton program, which was the result of health-care reform legislation signed into law way back in 1946.

In 1964, Skiff built a second addition known as the Hunter Wing, funded by a large gift from the estate of Mr. Charles Hunter, as well as additional funding from the Hill-Burton program.  This new wing increased the bed complement to 126 and the number of patients in-house at any given time far exceeded the total number of staff employed by the hospital.  In 1966, the implementation of the Medicare and Medicaid programs transformed the face of hospital care in America.  For the first time, a significant proportion of patients had guaranteed insurance that paid hospitals for the entire cost of the care they provided, effectively shielding them from financial risk. 

The 1970s were a decade of innovation in medicine, as well as skyrocketing health-care costs thanks to advancing technology and the exceptional insurance coverage provided by government programs.  Skiff took advantage of this environment and constructed a wing devoted to emergency and diagnostic services, funded by a gift of 16,000 shares of stock from the Maytag family and, once again, Hill-Burton money from the federal government. 

By the late 1970s and early 1980s, escalating health-care costs were front page news across the country.  The federal government responded by radically changing the payment mechanism for inpatient hospitals, moving from one based on reimbursing hospitals for the cost of the care provided, to one based on a much different formula which no longer covered the cost of providing inpatient care.  This situation caused Ron Ross, hospital administrator at the time, to state, “We are presently faced with the most dramatic and rapid changes ever seen affecting the delivery of health services.” Skiff responded to these changes by slashing the number of inpatient beds in half, beginning a massive renovation and construction program focused on developing outpatient capacity and, in 1984, renaming the hospital to “Skiff Medical Center.”

In the 1990s, Skiff invested heavily in its program to develop outpatient capacity by recruiting many new primary care providers, increasing the number of visiting specialists, expanding outpatient facilities, and purchasing state-of-the-art technology.  Skiff’s success in developing its outpatient capacity, and the strength of having a Fortune 500 company headquartered four blocks away, sheltered it from the ravages of changing reimbursement that caused hundreds of other rural hospitals to close during the 1980s and 1990s.  The changing rural health-care environment led to the development of a new type of funding for rural hospitals, but the window for entering this program permanently closed in 2006.

Unfortunately, in 2007, Maytag closed and sent shockwaves through the community and the hospital.  The number of patients using the hospital declined, insurance coverage changed dramatically, and there was a coincidental decline in physicians practicing in the community.  It was too late to apply for the new government program and large financial losses began to accumulate.  These losses were intensified by the national economic recession and led to the subsequent departure of the hospital leadership team and culminated in a large reduction in force in 2009 with bad feelings on all fronts.

The last four years have been devoted to rebuilding the hospital’s culture, vision and operations.  Advanced technology in the areas of diagnostic imaging, laboratory, surgical services and physiologic monitoring have been acquired and the medical record is nearly paperless.  New providers are practicing in town and more are on their way.  Many areas of the hospital have been given a facelift and new equipment items have been replaced thanks to donations from the Skiff Auxiliary and the Skiff Foundation.  New funding streams have been acquired and have served to offset reductions in payment from traditional sources, while efforts aimed at improving efficiency and decreasing costs have continued all the while.

In the midst of this work, health-care reform was passed and, quite literally, everything has begun to change across the entire health-care industry, with hospitals large and small facing a great deal of uncertainty.  Huge cuts in payment for health-care services to offset enormous increases in federal debt, combined with large scale movement of services to non-hospital environments, are projected.  To paraphrase Mr. Ross in 1984, health care is in the midst of a transformation not equaled in the history of modern medicine.

So where does Skiff go from here?  One thing is certain, Newton and Jasper County must have a hospital, so a future without Skiff is out of the question.  This is the lesson I learned when my son was emergently admitted to another hospital more than a year ago, an event which I documented in the opening article of this series.  Since that time, I have had another child emergently admitted, only this time it was one of my daughters and it was here at Skiff.  Suffice it to say, ensuring our continued existence is my top priority!

But just existing is not enough.  The future of our community hinges on having a robust hospital, but the future of our hospital hinges on having a robust community.  This is why I, personally, along with other Skiff employees, am so involved in many community organizations and community development projects.  We have a responsibility to support the growth of our community and we also benefit as a hospital from that community growth.  But growth takes a long time, and we may not have time to wait.  This is why we approached our friends in the city to see if that ownership relationship could be of help.  Unfortunately, some elements of Iowa law limit the assistance a city can provide to its affiliated hospital and explains why none of the 14 municipal hospitals in Iowa (including Skiff) receive any tax support.  Interestingly, all 42 county hospitals in Iowa receive tax support, but a county-wide referendum would be required for Skiff to take this path.

This is why we are taking the time right now, while we still have resources and retain control of our destiny, to do a check-up with some outside help.  We are working with a firm called Clifton|Larson|Allen from Minneapolis who specialize in helping hospitals, especially rural ones, find their way through a changing and exceptionally murky health-care landscape.  Many of our physicians, employees and community members have been participating in this process and we hope to have it wrapped up in early June.  The outcome of this check-up will help us understand our best path forward.

Given the level of integration of hospitals that is currently happening in Iowa, and around the country, it is likely that our future path will involve coordinated efforts with other hospitals, although the tightness of those potential relationships is a question to be answered in the future.  What I do know is that, while we consider that option, we need to continue our work to be absolutely the best hospital our community could ever hope for. 

This will include recruiting more physicians.  We have several considering offers and a few already committed to coming to Newton (Dr. Rachel Knudson, a general surgeon who will be arriving in August, and Dr. Jennifer Paisley, a pediatrician coming in October).  It will include investments in technology, including the new endoscopy suite that has been the focus of our fundraising efforts for the last year, the new telephone system we are about to install, and continued renovation projects to create an even more focused healing atmosphere.  It will include more efforts at improving the efficiency of our processes and programs.  It will include additional improvements in our quality scores and in our patient experiences.  It will include providing our employees with the tools they need to make the best possible difference in your care, as well as a clear vision for our future path.

It will also include a change in the name of the current city-owned hospital to Newton Municipal Hospital.  But we will still be Skiff Medical Center!  You see, we are developing a new not-for-profit hospital organization that will work side by side with the current city-owned hospital.  While together these two entities will be known as “Skiff Medical Center,” only one can legally have the name, so that will go to the new organization.  The development of this new structure is required to allow us to better adapt to a future that may include partnerships with other hospitals and is also required for us to begin to transition to a lower cost retirement system for our newer employees, our future employees, and those current employees who want to take advantage of a new retirement plan.

I am enthusiastic about the future of Skiff Medical Center!  There has never been a more challenging, or exciting, time to be working in the health-care field.  We are standing on the cusp of a fundamental transformation of the American health-care system that will see us become focused on ensuring the residents of our community live the healthiest, happiest and longest lives possible.  Technology and information science will allow doctors and hospitals to work together to improve the lives of our patients in ways we never dreamed possible!

What began as the Newton Hospital Association in 1917, then became Mary Francis Skiff Memorial Hospital in 1921, then Skiff Memorial Hospital in the 1960s, and finally Skiff Medical Center in 1984, with a new logo in 2010, is still here today.  Though the name may have changed through the years, one thing will always remain – our commitment to being in Newton and providing absolutely the best care close to home!

It has been a pleasure writing this series on the history of Skiff Medical Center.  If you have any questions or thoughts on the information I have provided during the last several months, please contact me at slong@skiffmed.com.

Skiff Medical Center
204 N. 4th Ave E.
Newton, Iowa 50208
Phone: (641) 792-1273
Toll-free: (888) 792-1273

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At Skiff, the best care is close to home.
Skiff Medical Center, a member of Mercy Health Network, is located in Newton, Iowa. We provide services to Jasper County residents in all major health areas, including general surgery, orthopedic surgery, radiology, obstetrics, emergency medicine, hospice, home care, laboratory, respiratory, audiology, physical therapy, occupational therapy and speech therapy. The Skiff Specialty Clinic hosts more than 20 physicians specializing in cardiology, dermatology, ENT, gastroenterology, nephrology, neurology, oncology, pulmonology and urology.
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