Hay: Small Gains Add Up to Big Improvements - Interview

Healthcare Financial Management, May, 2001

William Morgan Hay, FHFMA, MBA, is CFO of Valley Baptist Medical Center, a 540-bed acute care facility providing services in south Texas. The medical center is part of Valley Baptist Health System, which includes a retirement facility, home care services, three rural health clinics, an eye surgery center, two PHOs, a family practice clinic, a residency program, a durable medical equipment company, and an HMO.

Hay began his career in health care as a staff accountant at Fort Worth, Texas-based St. Joseph Hospital in 1989, and within a year, he was promoted to accounting supervisor. In 1990, he became the business manager at a skilled nursing facility. In 1991, Hay was hired as director of accounting at Valley Baptist. He was promoted to controller in 1994 and to CFO in 1998.

HFM: Can you tell us about Valley Baptist Medical Center and your responsibilities as CFO?

Hay: Valley Baptist is an acute care facility with 540 licensed beds, including an 18-bed inpatient rehabilitation unit, in Harlingen, Texas. We also provide home care services, including home health, home infusion, and hospice. We have an outpatient dialysis unit, an outpatient rehabilitation unit, and an outpatient psychiatric center. As part of Valley Baptist Health System, the medical center has several "sister" companies and business units, including a life care retirement facility with apartment living, assisted living, and a skilled nursing facility; three rural health clinics; an eye surgery center; two PHOs; a family practice clinic; a residency program; a durable medical equipment company; and an HMO.

My responsibilities cover accounting (including payroll, payables, general), patient accounts, guest registration, materials management, medical records, coding, reimbursement (including government reporting), and decision support (including budget and cost accounting) for the health system.

HFM: What is your service area and patient mix?

Hay: We are located on the southern tip of Texas. Harlingen is in northern Cameron County, and our primary service area includes that and all of Willacy County. Our secondary market includes all of the Rio Grande Valley Because of our southern location and mild winter weather, we have a large Medicare population, and much of that population consists of "snowbirds"--what we call "winter Texans." We also are in a region of the country that is very low on the socioeconomic scale. Consequently, we have a high Medicaid mix.

Our payer mix is approximately 50 percent Medicare, 18 percent Medicaid, 12 percent managed care, 10 percent commercial, and 10 percent private pay.

HFM: Are there any special challenges you face in your region?

Hay: Yes. From a health standpoint, a big challenge is the high rate of diabetes, which, as a comorbid condition, complicates numerous other health problems. We have a large Hispanic population that has an associated hereditary incidence of diabetes.

A big challenge for nursing and clinical staff is staffing. Because of the winter Texans, our census in the winter often is more than double that in the summer. From roughly September to April, our staff is run ragged. The difficulty is staffing for the high census in winter and trying to contain costs in the slimmer, You cannot lay off nurses in the summer and expect them to be available in the winter when you need them back.

An economic challenge we face is being in an area of high unemployment and poverty. There are a lot of hard-working people down here, but the region largely has been ignored by big business, in part because of a current Jack of transportation.

A challenge we face as a hospital and as a community also is one of the best opportunities we have ever had. Harlingen was chosen as the site for a regional academic health center (RAHC) that is to be part of the University of Texas Health Science Center at San Antonio. Construction already has begun on the school and administration building, and the first class of residents and third-year medical students should begin by July 1, 2002. Physicians in the community have been extremely supportive of the RAHC, anti we are excited about the opportunity to attract new physicians to what is an underserved area. The RAHC will include residency programs in internal medicine, general surgery pediatrics, and obstetrics, which will add to a family practice residency program we have already in place. Once the RAHC is completed, third- and fourth-year medical students from the Health Science Center will train in Harlingen.

HFM: Valley Baptist is in the heart of Harlingen, which currently is experiencing a lot of growth. Can you elaborate on that and what impact this growth is having on Valley Baptist?

Hay: According to the recent census, Harlingen grew more than 18 percent from 48,746 in 1990 to 57,564 in 2000. This number does not include the additional 30,000 individuals living in communities whose city limits connect to Harlingen. The four-county area has grown 40 percent, from 700,000 to nearly 1 million. In my opinion, Valley Baptist has done an admirable job of staying ahead of the curve. Our CEO, Ben M. McKibbens, came to Valley Baptist in 1977 when it was a 190-bed hospital. As I mentioned before, we are now at 540 beds. I think that shows a lot of vision on the part of the CEO and the board of trustees.