3 Ways To Supercharge Your Employee Reviews

Employee reviews can be a powerful tool for engaging and motivating your team. Here are three rules to help supercharge your employee reviews.

By David Schreiner

Employee reviews can be fraught with tension on both sides of the table. But it doesn’t have to be that way.

At your place of business, are reviews a rote exercise met with dread from both parties? Or is it an inspirational opportunity for you as a leader to meaningfully engage with the people who matter most to you – people who play a key role in achieving organizational goals?

Here are three ways to supercharge your employee reviews.

Rule 1: No surprises

Regular one-to-one meetings throughout the year are a best practice that allows the leader and the employee to ensure priorities and actions are aligned. If something comes up for the first time during the employee review, especially something negative, that’s on the manager.

These one-to-one meetings should have an agenda that includes:

  • A catch-up on personal items the employee chooses to share (think kids sports or a new job for their partner)
  • Personal development
  • A review of key performance indicators
  • A discussion of obstacles to success the leader might be able to mitigate
  • Dreaming for the next period

These one-to-ones can be accomplished in 30 minutes or less. If the scope of control for the leader doesn’t allow time for these conferences due to the number of direct reports, I suggest you look at your organizational chart.

Rule 2: What’s the one thing?

I love to ask colleagues this question as a component of our annual review: What’s the one thing you could learn, change, or develop to make everything else easier?

My experience is that much like the resolution of a customer service complaint, the ask is much easier to deliver than you might expect. This question often leads to a discussion of a task the employee performs that does not allow them to operate at the top of their license. Could this person be freed up to thrive if you as the leader took that task off their hands and assigned it to someone at a lower level of the workplace?

Think about how you would feel if you could give away something you do not enjoy doing, but someone has to do that job. By listening to your employee during the review and following through, removing an obstacle that’s hindering their growth, that employee might deliver a new and exciting performance.

Are there tools your employees need to increase their performance? Software, technology, and devices in the marketplace might lead to greater productivity and enjoyment of the work. Microsoft Copilot has revolutionized the way I communicate. Artificial intelligence is changing the way we work.

Leaders should ask themselves, What is the core role of this individual, and what could be added to their toolbelt? The key here is not to offer suggestions but to ask for their thoughts. As discussed above, the cost might have a positive return on investment.

Rule 3: Dream

This is my favorite part of the annual employee review. Ask your colleagues to imagine themselves in their lives one year from now. The past year has exceeded everyone’s and, most importantly, their own expectations.

They met and exceeded every key performance indicator. Leadership recognized them as making a meaningful contribution towards the company’s success. And their professional satisfaction and feeling of success exceeded their wildest expectations.

Here is the critical component to this challenge: encourage them to describe that moment one year from now in vivid detail.

  • What happened?
  • How did it feel?
  • Who was instrumental in making them so successful?
  • How did their family and friends react to their success?
  • How did this level of astonishing success change their life?

I want them to feel it, breathe it, soak in it. To thrive as human beings, we have to dream. We must imagine a state that makes us feel fulfilled on multiple levels.

In conclusion, employee reviews can be a powerful tool for engaging and motivating your team. By following the three rules of no surprises, focusing on the one thing that can make everything else easier, and dreaming about the future, you can supercharge your employee reviews and help your team members achieve their full potential. Take the time to invest in your team and see the results in increased productivity, satisfaction, and success … for you and them!

From good to great, how to strengthen the CEO-CFO relationship

Beckers – May 2024

Even when the going gets tough, Dixon, Ill.-based Katherine Shaw Bethea Hospital CEO David Schreiner, PhD, and CFO Austin B. Frazier Jr. have successfully collaborated to evolve and develop strategies, with a little bit of laughter, to strengthen their working relationship.

“I think that for these two people to be on the same team and aligned is highly important for organizations,” Dr. Schreiner told Becker’s

KSB Hospital recently shared plans to merge with Peoria, Ill.-based OSF HealthCare by the end of the fourth quarter, a move that would strengthen and grow the services that the hospital provides to the community. 

“I think that gives us a chance from a culture perspective to continue what we think is a pretty vibrant culture here at KSB with an affiliate partner,” Dr. Schreiner said.

A culture that both Dr. Schreiner and Mr. Frazier continuously work hard to improve. 

While some CEOs employ a top-down approach to management, a shift in leadership to open communication and dedication to building trust with employees will mitigate challenges and diversions faced in the changing healthcare atmosphere. 

“Dave is my mentor but also is a friend,” Mr. Frazier told Becker’s. “When I personally have a challenge or issue, I can bring those things to him and we can talk about it in an open conversation as opposed to it being a dictatorship to a certain degree.”

It’s this type of empathy and communication that Dr. Schreiner would love to see expand across the entire CEO role. 

“We can always be better in executive communication,” Dr. Schreiner said. “The way that we interact with the people that matter the most to us, how we listen, how we express gratitude, how we do things that make them know that we care about them.”

The CFO role has also evolved, and is no longer thought of as behind the scenes, crunching numbers in an office all day, but instead a more visible and strategic position, working to educate colleagues on the financial and strategic happenings across the organization.

“CFO as a teacher is really important,” Dr. Schreiner said on what he looks for in a CFO. “The CFO has that ability to see things happening outside of our organization and within the industry, and he or she can bring those best practices back to our place, and we need that desperately.”

Moving forward, Mr. Frazier would like to see CFOs become more generalists instead of specialists.

“I think a lot of the CFOs come with that accounting background,” Mr. Frazier said. “They’re CPAs to a tee but they don’t have those other additional duties as assigned skill sets. Becoming more generalist in all topics that include revenue as well as strategy are going to be front and center to help complement the CEO.”

As both the world of healthcare and the CEO and CFO relationship continues to evolve, Mr. Frazier and Dr. Schreiner agree that even in the most difficult of times, laughter is the best medicine.

“We laugh either at each other, at my golf swing,” Mr. Frazier said. “We laugh a lot. I think that that helps to resonate and disarm the conversations, when especially some challenging moments that go through budgeting, processing, forecasting. Those are not fun topics to do, so if you can add some humor and color into that. It goes a long way.”

Principles And Practices To Supercharge

Communications In Your Work Culture

By David L. Schreiner, Ph.D., FACHE

The room grew quiet. All of the executive team members had shared their thoughts on the topic. The only person not to speak was the CEO.

“He always encourages us to speak first, and then, and only then, will he share his perspective”, says one of the vice presidents. “By going last, he chooses to not initially sway the discussion in a particular direction.”

While studying CEO engagement in five different hospitals from around the country, I found three engagement core principles, which are central to my supercharged communications concept. Each contains five practices that, when used in combination, resulted in increasing communication with the people that matter the most: the board chairman or owner, the people that report to us, and entry-level employees. These principles can be applied to any business in any industry.

The first supercharged engagement principle: Engage and connect at a personal level

It’s easy for CEOs to get stuck in their office, dealing with various issues. That was me. But you’ve got to get out and connect with your people in order to supercharge your culture, and it starts with this principle.

The five practices for this principle:

  1. Ask great questions and generate positivity. The example above in the introduction is one of those practices taken from my first supercharged engagement principle. The same CEO typically asks great questions and generates positivity. He says, “Tell me more about your opinion on this topic. Help me to understand exactly where you are coming from, and tell me not only what your perspective is, but why you feel the way you do.”

Specific, targeted, open-ended questions encourage team members to understand their perspectives at a deeper level and improve their ability to convey those opinions. Do you give people that report to you the freedom to express their opinions and understand those opinions are being heard?

  • Develop outstanding listening skills and practice them regularly. Do you give people that report to you the freedom to express their opinions and understand those opinions are being heard? This practice generates positive engagement and increases the level of trust.
  • Be accessible and show an interest in member concerns. Consider your personal standards of accessibility, and how you will listen and interact with your stakeholders. What can you do to show your people that you are invested in their concerns? Perhaps you cannot possibly respond to all your emails in a large company, but response time should still reflect your commitment to accessibility, whether that’s via an assistant or delegating the email to the proper department.
  • Find ways to express gratitude. Regardless of the reasons someone works, we all like to be recognized for our efforts. But gratitude goes even beyond that. Gratitude is a mindset. You may think of gratitude as admiration for someone on your team: “I admire the way you thought about that and your unique perspective. Tell me more.” Gratitude should also involve recognition.
  • Find ways to interact through rounding. Rounding is exactly what it sounds like – making rounds. In my case, I walk the hospital (and I also visit our satellite clinics, which entails driving to them off-site). You might walk the factory floor, or through various departments. In a large company you would obviously break it up, perhaps trying to get to each department once or twice a year, or once a quarter. But it’s important to be seen – this is about connecting. No more hiding in the office.

The second supercharged principle: Engage with intent through various mediums

So often as leaders we assume engagement occurs when we hit the “send” button. We worked hard on crafting the message, right? What could possibly occur to minimize the level to which that message was heard?

The answer: Everything. Competing priorities for the recipient, bad timing, technological challenges, etc. Here are some ways to increase the chances of your message being received.

The five practices for this principle:

  1. Find a rhythm of regular communication with key constituents. Who is the intended audience? Are they expecting your communication because it comes out every Friday at noon, or is this a one-off message? Is the message easy to open and view on multiple devices? If the team members try initially without success, they may not give you a second bite at the apple to supercharge your message.
  2. Be transparent with high frequency. Not sure how much to share on a sensitive subject? Err on the side of sharing too much. That line of oversharing is rarely crossed.
  3. Use multiple channels to communicate your messages. Once upon a time, communication was fairly straightforward. That is not the case today. What I have discovered in my supercharged communications research is you need to use multiple channels. You need to meet your people and stakeholders where they are. Those channels include face-to-face (that includes Zoom), broadcast communications, mobile (including texts), phone, Slack and other instant messaging channels, social media, and of course email.
  4. Look for ways to overcome engagement challenges. Employee engagement is the connection an employee feels, both emotionally and mentally, to their team and their workplace/organization, as well as the work they do. Engaged employees demonstrate enthusiasm. They also are more productive and willing to go that extra mile. Be clear on the mission, communicate consistently and don’t overload or repeat information.
  5. In times of crisis be intentional about communicating differently. In crisis, it is important for nonessential communication to decrease for a time. Laser focus needs to be on the matter at hand. In order to communicate effectively in times of crisis, first, as a leader, you must identify your key messaging.

The third supercharged principle: Be mission-focused through united leadership

Leadership – whether by parents or a board of directors or the C-Suite – must offer a united front and lead from that strength. United leadership builds trust from the workforce as the employees learn that all leaders in the company have a shared vision and everyone’s role is aligned with it.

The five practices for this principle:

  1. Keep your focus on the mission and know your audience – be prepared. As a hospital CEO I have learned that my message cannot be delivered in the same way to our medical staff and our housekeepers. Each group’s desire to understand specific items are different, and the amount of time one particular group is willing to allow me to share my message is highly variable. For example, while doctors may subscribe to the suggestion that time is money and sharing less is more, housekeepers are interested in different details that may influence their work, and they are willing to grant me more time.
  2. Vocally support team members and encourage healthy debate. Draw key people into the conversation with great questions, asked in a manner respectful of their interest and free time. Connect the topic of the moment to the organizational mission. When you have trust in your leadership and your teammates, disagreements come from a place of “How can we all do this better?” not accusations or resentments.
  3. Ensure team members feel informed and included. Leadership styles have evolved. Once upon a time, leadership was usually autocratic. It was a hierarchy, fairly linear, and top down.Now, leadership is more people-oriented and collaborative.

We now expect leaders to be inclusive. Instead of barking orders or commands, we inform and use our soft skills, like supercharged communication, to pull people together into a cohesive team.

  • Build a structure to support key leaders. Since I am in the healthcare arena, I look at it a bit like the cardiovascular system. Leadership starts at the heart of what we need to do, and then pumps the principles and actions through the entire corpus of the hospital.

That structural model led to some amazing changes at our hospital. An employee engagement survey showed significant improvements in areas such as working well together as a team, being satisfied with the recognition they receive, different levels of the organization communicating effectively with each other, and feeling supported in work-life balance.

  • The executive is part of the community – get involved. Many leaders are caught up in perception – how their employees perceive them. But I realized along the way that I didn’t need to be so concerned about how I present myself and what I have to say. It’s not about how the workplace community perceived me at all; it’s about me understanding what they have to say.

Leaders, take note: As I have discovered, you don’t have to be interesting; rather, you have to be interested. That’s what executive involvement is – it’s relationship.

Getting involved means being a learner, connecting with the stakeholders and the people most important to you, and being open to what they share.

What if I told you that understanding these supercharged engagement principles and 15 practices will allow you to increase employee and patient engagement, leading to a higher return on investment and a more dedicated workforce?

Take a quick look through the 15 practices I mentioned. How many are you using today, both intentionally and as a matter of how you currently communicate? Commit to trying something different today. Your leadership and your work culture will be better for it.

5 ways to engage at a higher level with colleagues and team members

You own your own practice and the demands on your time leave you wishing you had more than 24 hours in every day. What if you could invest four minutes in reading this article to realize a rate of return that would allow you to engage in a more meaningful way with the people that matter the most?

Then let’s go!

As a physician, you sell the intellectual knowledge developed from your years of training and clinical experience. You are compensated for your time, so gaining the information you need quickly and efficiently will lead to improved clinical outcomes and increased compensation.

My interviews with CEOs at five high-performing rural hospitals and research I designed led to the following practices, which you can add to your daily interactions with your fellow physicians, hospital executive team members, and staff.

Ask great questions and generate positivity.

We gain clarity with improved understanding. You have likely heard of the five whys in clinical improvement. Adopt this method in dealing with others. Ask to understand and listen intently to the responses. By asking great questions, we can more quickly and deeply understand what is being requested of us.

Let’s look at an example. The throughput in your clinic is not as robust as you like. The old method is for you to determine where the bottlenecks exist and suggest solutions. A new approach would be to gather the team and get input from every member. Encourage each person to suggest three things that, if improved, would lead to better patient flow.

The people closest to the work often have the best answers, and if team members are responsible for generating ideas and solutions, the impact is more sustainable with improved results.

Be accessible and show interest in team member concerns

As a physician, you are the quarterback. Make sure you take time to listen to your team members. Carve out one-on-one time for your staff so you can ask how things are going for them. It’s their career, too, and retention of skilled employees is far easier than recruiting and training new staff.

In a busy practice, improvement suggestions often happen between patients at the nurse’s station. Your mind may be a thousand miles away on 20 things dominating your thoughts. A new approach would be to schedule time on a monthly basis for one-to-one meetings with staff members. Being proactive and addressing staff concerns will avoid disruption caused by staff leaving your practice. Find what matters to them and determine if changes implemented based on those issues benefit your practice.

Find ways to express gratitude

Your job as a physician and business owner is tough, and so is the job of your colleagues and staff. Tell them you appreciate them and be specific. Be creative in expressing your appreciation and use detail to describe how their actions positively impact your collective patients and your practice of medicine.
At your next team meeting, focus on one specific thing each staff member does, either large or small, that contributes to the success of your clinic. For example, Sara orders supplies, and Bob takes time to clean the nurses’ station for the benefit of all.

One CEO I interviewed has his executive team serve meals to all hospital employees on a quarterly basis. How much would lunch every three months cost compared to the expense of advertising for new staff, interviewing candidates, and beginning an extensive orientation program?

Be transparent with high frequency

The most effective physicians I work with as a hospital CEO remind me not to be paternal and “blow sunshine” on difficult topics. Physicians are used to complex environments and results that often are not ideal. Don’t sugarcoat the situation. Find reasons to interact frequently with people who are important to you and your practice. Repetition builds trust, and small, sincere interactions build trusting relationships.

Think about that one radiologist whose reports frequently require you to dig deeper, order additional tests that might be questionably appropriate, and cause concern for your patients. The old approach is to grumble and fight through it. The new approach is to request a 15-minute meeting every three months to review specific cases, share perspectives, and be transparent about how the report requires action on your behalf. The first three meetings might not result in improved radiology reports, but over time a symbiotic relationship just might emerge. The radiologist begins to understand what is important to you, and you understand at a higher level the intent of her findings.

In times of crisis, be intentional about communication differently

Whether a complicated clinical issue or a business challenge, make sure the person you are engaging with understands that this is a time of crisis. Through your language and non-verbal communication, leave no doubt that this is important and effective; crisp engagement is required.
The COVID pandemic forced all of us to implement change at the speed of light. Were there lessons learned during high-volume periods of time that you might apply to your practice in those seasons when your volume spike? Talk to team members about what they learned during the pandemic that might have been lost in the ensuing months when things calmed down. Let’s look for best practices we can retain.

Conclusion

Small changes in the way we engage with the people who matter the most, your physician colleagues and team members, can lead to meaningful improvements in your practice. And it might just get you out the door to your kid’s soccer game on time!

Dr. David L. Schreiner is the author of Be the Best Part of Their Day: Supercharging Communication with Values-Driven Leadership. He also is president/CEO of Katherine Shaw Bethea Hospital in Dixon, Ill. He is a passionate advocate for rural hospitals, having spent most of his life in small towns and working in small communities. A values-driven leader, Schreiner aims to be a missionary for excellent health and vibrant communities and spread love through generosity and healing. His research focuses on improving the health of others, with a particular emphasis on rural communities. Schreiner served on the American College of Healthcare Executives’ Board of Governors from 2016-2019. He is also the past chairman of the American Hospital Association Rural Health Task Force. He was the 2007 Dixon, Illinois Citizen of the Year and received the 2022 Distinguished Alumni Award from the University of St. Francis College of Business.

Rural Hospitals Struggle Under Private Equity Ownership

Original article on Electronic Health Reporter

By David L. Schreiner, Ph.D., FACHE

Private equity ownership of rural hospitals is growing, but so are concerns about the effects private equity firms can have on quality of care in small, community hospitals.

A new study reveals that care is riskier for patients at hospitals that are owned by private equity firms. Patients are more likely to fall, get new infections, or experience other forms of harm during their stay at a hospital acquired by a private equity firm. Researchers in the aforementioned study found the findings were alarming because they indicated an inference that financial incentives were deemed more important than patient care. There are at least 130 rural hospitals under the ownership of private equity.

Financial factors

Private equity ownership prioritizes short-term financial returns over long-term community needs. This can threaten services like obstetrics that lose money but are important to access.

When private equity-owned imaging centers and ambulatory surgery centers open near rural hospitals, it creates financial challenges. Private equity may restrict the number of Medicaid patients they accept, taking those patients with commercial insurance away from rural hospitals that accept all patients regardless of insurance status or ability to pay. This is problematic for rural hospitals, as Medicaid patients make up around 30% of their patient population. Examples include outpatient imaging centers and ambulatory surgery centers.

Studies have also found that patients experience worse clinical outcomes at hospitals owned by private equity. This could be due to reduced staffing levels that occur under private equity ownership. Private equity firms are known to cut costs through measures like decreasing nurse-to-patient ratios. For rural hospitals, which already operate on thin margins, competition for talented staff can be challenging.

The value of local relationships

Healthcare, like politics, is local. While many hospitals offer similar services, these offerings are tailored to the local population they serve based on various factors, including religion, culture, key employers and, yes, even weather. And the smaller the hospital and its service area (imagine a map of a rural hospital’s primary service area), the more tailored services are for the population they serve.

The rural hospital where I work, Katherine Shaw Bethea Hospital in Dixon, Ill., prioritizes keeping physicians and providers local. Having doctors and nurses who live in the community allows for personalized care tailored to each patient’s individual needs. This level of personal attention may be lost at larger hospitals with absentee ownership.

Rural patients value the relationships and familiarity they have with providers who are their neighbors. In rural areas, we know our patients on a more personal level. Team members in our clinics often know that Mrs. Smith is a talker and needs a 20-minute appointment, while Mrs. Jones wants to be in and out as quickly as possible. This knowledge might also have a clinical impact when providers see behaviors atypical for that individual.

Independent rural hospitals as economic drivers

Local ownership is often the largest economic driver in the community. Rural hospitals provide jobs and support local businesses, leading to improved living conditions for many in the region.

While private equity can provide needed capital for facility upgrades, I’m concerned about rural hospital independence being threatened. Two U.S. senators have launched investigations finding private equity ownership leads to workforce cuts and reduced quality. Ensuring transparency and accountability is also more difficult with private firms not required to meet the same disclosure standards as non-profit hospitals.

For the future of rural healthcare, fundamental reforms are needed to support small, independent community hospitals financially. I hope policymakers will address how to best care for the “tweener” rural hospitals left out of many conversations. Without changes, more hospitals may be forced to turn to private equity, and the impacts on local access to care could be significant.

The leader of Katherine Shaw Bethea Hospital shares how some implemented ideas have fared.

Orginally posted by HealthLeaders

BY Jay Asser, January 30, 2024

Many rural hospital CEOs are searching for answers in their mission to keep the doors open in the face of financial turmoil.

For David Schreiner, CEO of Katherine Shaw Bethea Hospital, not every strategy his facility has applied has been a home run, but the ideas that didn’t pan out served as lessons learned.

Understanding what has and hasn’t worked has allowed the Dixon, Illinois-based hospital to remain independent and stave off some of the crippling perils that have plagued so many rural operators across the country.

Watch Schreiner describe what’s been successful and not-so-successful during his time at the helm in the video below.

Jay Asser is the contributing editor for strategy at HealthLeaders. 

WHY ONE RURAL HOSPITAL CEO ADVOCATES FOR LOCAL OWNERSHIP OVER PRIVATE EQUITY

Original post on HealthLeaders

By Jay Asser, January 26,2024

When it comes to patient care, the choice is clear, says David Schreiner.


KEY TAKEAWAYS

In the United States, at least 386 hospitals have been acquired by private equity firms, with 34% of all private equity-owned hospitals serving rural areas, according to the Private Equity Stakeholder Project.

A study published in JAMA uncovered that private equity-owned hospitals was associated with increased hospital-acquired adverse events despite having patients that were at lower risk.

Quality of patient care is a major reason why David Schreiner, CEO of Katherine Shaw Bethea Hospital in Dixon, Illinois, is a proponent of staving off private equity ownership in rural communities.

Private equity’s influence in healthcare has grown over time for a reason, but the question of how much it’s helping some of hospitals’ biggest problems remains up for debate.

As more rural hospitals collapse under the weight of financial struggles, private equity firms are stepping in with the aim of turning around these floundering facilities. While investment in rural healthcare is much needed, David Schreiner, CEO of Katherine Shaw Bethea Hospital in Dixon, Illinois, believes locally owned hospitals have the advantage over private equity in the type and quality of care they provide patients.

“The thing that I look at when we look at private equity is the decisions that are made that impact patient care and impact staff,” Schreiner told HealthLeaders. “It’s the financial prioritization versus community health needs.”

A recent study published in JAMA examined that dynamic by investigating how quality of care and patient outcomes change after private equity acquisition of hospitals. Researchers used Medicare claims for more than 4 million hospitalizations between 2009 and 2019 to compare hospital stays at 51 private equity-acquired hospitals against those at 249 non-acquired hospitals.

The findings revealed that private equity acquisition was associated with a 25.4% increase in hospital-acquired conditions, driven by falls and central line-associated bloodstream infections. These results were observed despite the private equity hospitals having a likely lower-risk pool of admitted Medicare beneficiaries, implying worse quality of inpatient care.

According to the Private Equity Stakeholder Project, at least 386 hospitals in the country are owned by private equity firms, which represents 9% of all private hospitals. More than a third (34%) of all private equity-owned hospitals serve rural populations and there’s little reason to believe that won’t continue to grow.

While Schreiner acknowledges the financial hardships rural healthcare is facing, he feels locally-owned hospitals can operate differently when they’re not bound by maximizing profits at every turn.

“We’re an independent rural hospital. We have no ownership, no one is receiving dividends or investment returns from our organization,” he said. “So we’re motivated to meet the needs of the community and we often perform services and have service lines that are intentionally not profitable.”

Schreiner pointed to obstetrical services being abandoned by many rural facilities due to lack of available personnel or diminishing financial returns. Yet there are still those rural hospitals that provide it, even at little to no financial gain.

“PE firms are going to make those decisions very quickly because that’s what they do and that presents a more positive bottom line,” Schreiner said. “Many community hospitals are willing to have a lower compromised bottom line and continue providing services.”

So long as the “financial prioritization” outweighs everything else, patient care will be at risk in rural settings where private equity strengthens its grip.

Jay Asser is the contributing editor for strategy at HealthLeaders. 

Assessing the impact of private equity ownership on rural hospitals

Originally published on DOTmed HealthCare Business News

by Gus Iversen, Editor in Chief, January 25, 2024

For better or worse, private equity investment is playing an increasingly central role in healthcare. Dr. David L. Schreiner president of Katherine Shaw Bethea Hospital in Dixon, IL, and author of Be the Best Part of Their Day: Supercharging Communication with Values-Driven Leadership, has had a front row seat to observe how private equity is impacting rural providers.

Having spent most of his life in small towns and working in small communities, Schreiner is a passionate advocate for rural hospitals. He sat down with HealthCare Business News to talk through some of the ways private equity investment is shaping care.

HCB News:Private equity investment is a huge trend in healthcare. How have your own experiences in healthcare been shaped by private equity?
Dr. David Schreiner: Our area has not had the introduction of private equity in acute-care hospitals. However, an outpatient imaging center has been added to our service area within the last year. This center disproportionately accepts paying patients, leaving Medicaid patients to area hospitals.

HCB News: What are some of the overlooked risks associated with private equity investment for healthcare providers?
DS: PE firms may be focused on short-term financial returns that could be misaligned with the health needs of the region. At KSB Hospital, we work through three-year strategic plans that evaluate the needs of the population we serve and adjust our business plans accordingly. If PE firms aggressively seek high margins for their investors, this could come through decreased staffing levels, resulting in additional adverse hospital events, such as those described in the article. If PE ownership results in the closing of service lines (like obstetrics or inpatient behavioral health) or even the merger of facilities, this logically increases travel times for patients and extends the time to seek crucial services. Think of the “golden hour” from the onset of a cardiac event or stroke. If patients have to travel further, crucial minutes are lost.

A focus by PE firms on efficiency and cost-cutting may lead to staff reductions and increased workloads for those team members left behind, potentially affecting the quality of care. Loss of talent in our organizations during the current war for talent is disruptive to patient care and might lead to a downward spiral in a facility’s ability to offer a wide-range of services.

HCB News: Advocates for private equity investment often point to the financial boost it can provide. Would you agree the financial backing can be a life saver for a facility on the verge of shutting down?
DS: Many rural hospitals, and ours is no exception, are struggling to maintain daily cash, and this limits our ability to recapitalize. We have gone from investing $7M annually on capital projects to a break-fix mentality. PE can provide an infusion of much-needed capital into our organizations.

HCB News: From a big picture, do we know *why* private equity investors are so drawn to healthcare?
DS: Rural populations represent a target demographic for PE firms. While trending older, these patients are loyal to their hospitals and doctors. The ability to cross-sell other products is enticing. PE firms may feel as if their proven business practices can “correct” the sins independent hospitals have made. With the renewed efficiency, a financially struggling rural hospital might prove to be a good PE play.

HCB News: For hospitals struggling financially, what are alternatives to private equity that may boost their viability?
DS: Partnerships with other NFPs and even geographically near competitors might be an alternative to PE investment and control for rural hospitals. Anything rural hospitals can do to spread costs among a greater service area, such as partnerships with home care providers, wound care centers, and urgent care clinics, might increase the financial viability of rural hospitals.

HCB News: Are there any other important aspects to private equity in healthcare we haven’t discussed?
DS: The economic ripple effects of a community losing its rural hospital or undergoing a change of ownership can be extreme. Rural hospitals are often the largest employer in their community, and when hospitals close or downsize, including losing jobs, the economic downturn for the entire community is significant. A prime example of a community losing its hospital and the subsequent impact on the area can be seen in Fr. Scott, Kansas.

The current reimbursement model for independent “tweener” hospitals, defined as those systems bigger than critical access hospitals and smaller than academic medical centers, is unsustainable. Federal and State elected officials need to reinvent how health care is paid for in smaller, remote communities.

The Impact of Private Equity Firms on Rural Hospitals: A Call for Reform

Originally published on Medriva

By Mason Walker

Recent studies have sparked discussions around the role of private equity firms in the acquisition of hospitals and the subsequent impact on patient outcomes. These findings have particularly underscored the potential threat to the independence of rural hospitals and their ability to provide meaningful patient care. The president and CEO of Katherine Shaw Bethea Hospital, Dr. David Schreiner, has expressed significant concerns about the situation, emphasizing the need for fundamental reform in supporting these rural hospitals.

Private Equity Acquisition and Adverse Patient Outcomes

Several news articles and studies have been shedding light on the consequences of hospital acquisition by private equity firms. A major study found an alarming increase in serious medical complications when hospitals were bought by investors. Specifically, there was a 25 percent increase in adverse events among Medicare patients, including surgical infections, bed sores, central line infections, and falls. The same study, published in JAMA, compared the data from hundreds of thousands of hospitalizations at private equity-owned hospitals to millions of hospitalizations at non-private equity-owned control hospitals from 2009 to 2019.

Rising Concerns: Reduced Care Quality and Workforce Cuts

These findings have intensified concerns about the impact of private equity firms on healthcare delivery. The data suggests that patients receiving care at private equity-owned hospitals are more susceptible to hospital-acquired adverse events than patients at hospitals not owned by private equity firms. This has led to apprehensions about reduced care quality and potential workforce cuts. Private equity firms currently own at least 130 hospitals in the country’s rural areas.

The Debate: Access to Capital vs Personal Attention

While private equity firms do provide access to capital, a critical factor in sustaining and expanding healthcare services, there are increasing worries about the impact on personal attention and patient experience. Many believe that private equity-owned hospitals prioritize profit over provider retention and patient safety. In contrast, some argue that private equity investments improve care and expand access to it, especially in low-income, rural communities.

Steps Towards Reform

In the wake of these findings, a Senate investigation has been launched to examine the effects of private equity hospital ownership. The Biden administration has also moved to cut down on private equity’s consolidation in the healthcare industry, announcing initiatives aimed at scrutinizing acquisitions and increasing transparency. However, the conversation around the role of private equity in healthcare is far from over.

The Importance of Local Healthcare

Dr. David Schreiner has particularly emphasized the importance of local healthcare and the role of rural hospitals as economic drivers in their communities. He stresses that rural hospitals must retain their independence to continue providing meaningful care to patients. With the potential threat posed by private equity firms in the form of reduced care quality and workforce cuts, there is a clear need for fundamental reform to support rural hospitals.

The challenges faced by rural hospitals in considering acquisition by private equity companies highlight the pressing need for a balanced approach, one that ensures the sustainability and quality of healthcare services while preserving the vital role of rural hospitals in their communities.

‘The current model doesn’t work’: Illinois hospital CEO on private equity hospital acquisition

Originally published on Becker’s Hospital Review.

Written By: Madeline Ashley

As more hospitals continue to be picked up by private equity firms, recent studies have tied these acquisitions to adverse patient outcomes. 

“I’m concerned by rural hospitals that are scooped up by anyone that threatens their independence and their ability to continue to treat their patients in a meaningful way,” David Schreiner, PhD, president and CEO of Dixon, Ill.-based Katherine Shaw Bethea Hospital, told Becker’s.  

KSB is an 80-bed independent hospital with 950 employees. The hospital also has a family medicine residency program with the University of Illinois.  

“The thing that I think of is that healthcare is best provided locally,” Dr. Schreiner said. “In many times, the rural hospitals are the economic driver in the communities that we live in. I think that allows us to tailor to patients both broadly and individually. And that’s more difficult to do when you have absentee owners.”

Dr. Schreiner said that while quality of care is important, one positive aspect that comes from private equity firm hospital acquisitions is access to capital. 

“That’s something that I know for our organization and many rural hospitals since the pandemic began. We’ve had a very difficult time capitalizing and that leads to lack of new equipment and even improvement to our existing facilities. PE can help with that,” he said. 

In early December, Sen. Chuck Grassley of Iowa and Sen. Sheldon Whitehouse of Rhode Island, ranking member and chair of the Senate Budget Committee, launched an investigation together into the effects of private equity hospital ownership. The senators argue that many hospitals have experienced reduced care quality and workforce cuts under private equity ownership. 

Even though rural hospitals are under financial duress, Dr. Schreiner said personal attention is more present than in other places run by larger organizations. 

“Several of the business office functions are taken out of the community. I think that also impacts healing, because part of the entire patient experience starts when they decide to see a caregiver, and it ends with the billing process. If they don’t have the ability to call and have personal touch from someone often that lives in their community in rural hospitals, then I think that’s not as positive,” he said.

To combat rural hospitals feeling the pressure to consider being acquired by private equity companies, Dr. Schreiner said there needs to be fundamental reform.

“The current model doesn’t work. I think throughout the United States, we have to look at how we support our rural hospitals. I think many people think about rural hospitals as critical access hospitals. There are many of us that are the tweeners, so to speak. We’re larger than 25 beds and we’re smaller than academic medical centers or academic hospitals. The tweeners need to be taken care of and they often get lost in the conversation. I think private equity can make that worse.”