"Newsmaker of the Week" is presented by the SCV Press Club and Time Warner Cable, and hosted by Signal Senior Editor Leon Worden. The program premieres every Wednesday at 9:30 p.m. on SCVTV Channel 20, repeating Sundays at 8:30 a.m.
This week's newsmaker is Roger Seaver, president and chief executive officer of Henry Mayo Newhall Memorial Hospital in Valencia.
Questions are paraphrased and answers may be abbreviated for length.
Signal: It has been an interesting few months. You've had picketers outside your hospital lately, whenever you've held a board meeting and they haven't been union members picketing. They've been community activists. Have you ever been with a hospital that had picketers like that?
Seaver: I've had a couple of examples, but not in the same material or the same numbers, so it's a little different.
Signal: The material issue here is the Transitional Care Unit, and the idea that the hospital might eliminate it. What is going on?
Seaver: We went to our employees in the Transitional Care Unit in June, I believe it was, to let them know that we were going to begin our analysis to determine when and if we would be transitioning the TCU ... to acute care services. When we did that, some misunderstandings developed, and the "Close the TCU" phrase came into the lexicon around the hospital.
Signal: Tell us what the TCU is.
Seaver: The Transitional Care Unit is highly misunderstood, even, I think, by those who care a lot about what happens. Our Transitional Care Unit is the name given to the skilled nursing facility that's housed within the hospital. That is a separately licensed facility, similar to a community nursing home, as far as license and categories, but housed on the hospital campus. So it takes care of people after their acute-care stay, if they're not able to go home or to their residence and can benefit from a skilled level of care, whether it be nursing or therapies or medications, but they're no longer in acute care. They're at a nursing home level of care in that environment.
Signal: Like the name says, "transitional" they've been in the hospital and they're too sick to go home, but they're not sick enough to be in the hospital?
Signal: Isn't it also the case that if somebody is terminally ill and the hospital can't help them, they might go there also?
Seaver: Well, we do provide some hospice services in the unit. As it turns out, that's another area of misunderstanding. That was by convenience on our part; we use that unit because it generally has open beds. It's an appropriate level of care because the hospice is no longer providing acute medical care, either. Most hospices try to do most of their care and comfort in the home. But there are periods of time, or perhaps transitioning out of acute care as well, where the patients who are enrolled at hospice benefit from a few days in the facility.
We've had fewer than 100 patients per year use the facility for hospice. That service will continue, irrespective of any decision around the transitional care.
Signal: How many transitional care beds are there?
Seaver: We have 27 beds licensed at the skilled nursing level.
Signal: Are they always full?
Seaver: No. Historically we've run about 60 (to) 65 percent occupancy, a little lower than most of our other units, and it has been trending downward a little bit over the years although in the last year we've had another increase in the use of that, but still (around) 65 percent occupancy.
Signal: What alternatives are there in the Santa Clarita Valley for skilled nursing and for hospice?
Seaver: We work with three different hospices, and we provide in-patient beds as needed. So the hospice opportunities, at least that we're aware of in the Santa Clarita Valley, are three different hospices, and again most of those work on basis of doing it in the home if at all possible. But they would go to a nursing home or other facility if that's what is needed by the family or the patient. So there are three separate agencies that work in the community.
On the skilled nursing facility, there's only one licensed skilled nursing facility in the community. But many patients from the Santa Clarita Valley, including discharges from our hospital and including discharges from transitional care, do go on to other nursing homes for a longer period of time. Our unit is primarily short-term in nature, immediately after acute care but not necessarily long-term rehab, that some of the community nursing homes do provide.
Signal: When you say one licensed skilled nursing facility in this valley, do you mean Newhall (Santa Clarita) Convalescent Hospital?
Seaver: (Yes.) One in addition to ours. (It is) a 99-bed facility here in the community.
Signal: Do they provide the same kinds of services you provide?
Seaver: They do in part, and there has been a change of ownership in that facility. ... I've spoken to the new owner and he has begun some improvements at the facility. (He) plans to upgrade the level of care and wants to work with us if we transition out over the next year or so.
Signal: When we're talking about possibly "taking away the TCU," you're talking about needing those 27 beds for acute care, which means what?
Seaver: Well, acute care of course we have different levels within acute care, from intensive care down to a post-intensive care unit, our definitive observation unit, and then our regular medical or surgical beds. But from a license category, those are all acute care. Those are medically driven; that is, every patient is seen by a physician every day, as opposed to a nursing home, which is primarily nursing-driven, and the physician involvement is much less intense and not as required.
The demand here in the community of course is consistently increasing, along with population and aging of the valley's population, for increased use of acute care. That's what is driving this analysis, discussion, and ultimate conversion.
Signal: As you say, the population is aging; won't we actually we need more transitional care beds in the future?
Seaver: I think that's the consensus of many people who live here. I'm not sure that's accurate, because it's an area that, as an industry, skilled nursing facilities actually have a declining use. And that's because there are many other alternatives available for what historically was done in nursing homes.
Within our community, we have assisted-living facilities that aren't health-care facilities. On the other hand, they have some limited nurse on-site. We have home health agencies which are indeed health care providers at the nursing level, or physical therapy and other therapies that can be provided in the home, or in the home setting. And there are other outpatient services for people who can commute to and from, that receive very good benefits within this community.
Our community has to be a little larger, in this case, than the Santa Clarita Valley always has been. Health care in the nearby San Fernando Valley is also a part of that community.
Signal: Well how many acute care beds do you have right now?
Seaver: We have in total 190, although part of that is the acute behavioral health and the acute rehab units, which are specialty units not really for acute medical needs; they're for either behavioral health or acute rehab.
Signal: So if you're running about 65 percent occupancy for the transitional care beds, what's your occupancy rate for the acute care beds?
Seaver: We run usually over 85 percent occupancy on all of our beds, and because of the configuration of beds and the types of hospitalizations, 85 percent is actually considered full. We have one unit, actually the unit we converted from transitional care in 2004, which doesn't run quite that high. We still have capacity for more admissions into our hospital in that unit.
Signal: We've often heard about the hospital's plans for expanding the emergency room, but what kind of plans do you have other than perhaps converting the transitional care beds for adding to the number of acute care beds?
Seaver: Let me try to cover our planning horizon and how we're looking at that. Our most recent planning cycle ended last year with projecting the rest of this decade as far as the demand for our services. Then we have a longer-term projection which is less certain, of course, but nevertheless very important, that's driving our master plan for campus development of new facilities and things like that.
Within our five-year period, we've estimated the demand on acute care beds to increase (by more than) 50 beds before the end of this decade. In our plans to accomplish that, it is working within existing facilities and either converting, like we're discussing about the Transitional Care Unit, which is 27 beds; we have another plan to add four beds, before we do the conversion, to an existing unit that was originally designed for patient rooms but had been converted to other uses over the years.
And we have plans later in this decade, before 2010, to add a new 20-bed critical care unit in space that's currently occupied for administrative purposes; however the facility meets all of the code requirements by the state of California for an acute care facility.
So with those combinations of additions we also have one other five-bed addition that may be possible, if needed, although it's a fairly high-cost option and may or may not be feasible.
Signal: How is all of this funded?
Seaver: Our primary funding, as a nonprofit, is our own operations; we have to run a business and delivery of health care. The good news about being a community hospital is, the money stays in the community. There are no stockholders, there are no dividends to be paid, there is no corporate office like many of our nonprofit cousins (which) have evolved into large corporations that send a substantial amount of money to the corporate office for redeployment in other communities. We don't have that, either, so to the extent that we're successful in business, it's all for reinvesting here locally.
In the last five years, we've been doing quite well in business so ... the vast majority of the funds will be our reinvestment dollars. We've benefited, of course, from the philanthropic community, and our emergency room, the new heart cath(eterization) lab that's coming online over the next year has already been paid for through philanthropy.
And as a nonprofit, we do access the capital markets using debt, so our earnings picture is both for reinvestment and for the acquisition of new mortgage, if you will, on the hospital. We'll be looking at that as one of the sources, as well, for funding much of this expansion.
Signal: Do you receive federal money?
Seaver: We have been active in the past couple of years in seeking some special funding for special projects, and thanks to our congressman and his staff, we're very optimistic on receiving continued funding this year for some of our infrastructure needs in and about the hospital.
Signal: Where does the county's obligation to provide health and human services come into play? Is there federal money that's accessed through the county?
Seaver: Not too much federal money. There is, in the complicated formulas for matching of MediCal and local funds, but there is a local county obligation that they try to meet with the county hospitals.
The area we come into contact with this is operating as one of the 11 private trauma centers. Indigent care for trauma victims is funded, in a sense, even though the individuals have no insurance or don't qualify for government programs. Within Los Angeles County, the trauma network has accessed state and federal funds to try to patch together a reimbursement system to keep the trauma system whole and in good stead. So we do have some funding in that, strictly related to the number of patients we take care of.
Signal: One thing we've heard from folks at the SCV Senior Center is that transitional care isn't as fully funded by the federal government as some other things.
Seaver: Right. The reimbursement formula basically all of the Medicare funds, which is of course federal funding for patients, whether it be our acute hospital or now the skilled nursing level, the transitional care has gone to a payment system that has a fixed amount of money per patient, or per patient day, for the skilled nursing facility. In a national rate-setting concept, California falls short, so we're always falling on the short end of federal funding, and we have to make that up through the charges and payments we negotiate with private payers.
As it relates to the Transitional Care Unit, our hospital, because the foresighted nature of the board and management of the ‘80s when they built the area that houses the Transitional Care Unit it was built to the state code requirements to transition, as we're talking about, to acute care. That's a much higher-cost facility than most nursing homes, so the federal reimbursement for transitional care in our unit is inadequate and ultimately what causes (us) to close the unit simply on a financial basis.
That's not what's driving our discussion, because we have the demand needs that are outstripping the financial issue at this point.
Signal: How is competition affecting you? We've got Kaiser here, we see Providence coming on strong and now, Providence Holy Cross says it's expanding its interventional cardiology program. It almost seems like they're trying to go head-to-head with Henry Mayo. Is that a good thing because the Santa Clarita Valley needs more of everything, or is there a negative impact?
Seaver: I think in health care, it's probably a good thing overall, where the resources are adequate to fund programs and the volumes are adequate so that you can establish good, valuable, high-quality programs and that would be the case in cardiac, I think so I think competition is probably good for the community. And then when you get on the edges, when you need enough volume to make it financially viable, it may or may not be good. It may prevent certain things from developing in the Santa Clarita Valley. But I think by and large, it's probably a good thing overall.
Competitively, Kaiser is really the big health care provider and growing much bigger all the time, not only locally but all through California, and we are just a part of that mix. They're certainly a growing part of that. Providence, of course, being the closest hospital in the San Fernando Valley, benefits the most from the outflow of hospitalizations to their hospital.
Signal: What kinds of unmet needs do you see in this valley?
Seaver: We do some analysis of that on a regular basis not every year to try to see what our role needs to be in the unmet needs. We primarily look at unfunded, unmet needs. In the Santa Clarita Valley, there is a population that accesses care somewhat outside of the valley because of financial reasons; those would be either the unfunded patients or those on MediCal on a permanent basis, or MediCal for pregnancy.
I think one of the unmet needs that's being looked at right now is the unmet need for prenatal care good prenatal care for the low-income or the MediCal-eligible mothers who live in the Santa Clarita Valley but access that care outside the valley. That would be an example of one of those needs.
I know the seniors are quite worried, and it is an issue that has to be looked into more. Post-acute care services for seniors nationally there are a lot of different options, but it's not clear necessarily what role the federal government should play in (getting) the right health care for seniors, as well. And then in general, just access to primary care. If you don't have enough physicians or enough clinics or primary care providers, access can be an issue, and that becomes an increasing issue as the shortage of physicians develops.
Signal: How big an area do you serve?
Seaver: We view the Santa Clarita Valley as our primary service area. In the trauma network, we officially have a bigger area ... it's as large as 680 square miles. That is officially what we serve for trauma only. But the number of trauma victims, and whether or not they get brought to us, has a lot to do with transportation.
Signal: So when you speak of the services you want to provide to the community, you're talking about the Santa Clarita Valley.
Seaver: (Yes.) We plan around the 235,000 or so residents of the Santa Clarita Valley, and about 80 percent of all of our patient activity are residents of this valley. A significant part of the rest probably work here and choose to seek health care here, but may not (live) here; and then, of course, because we're a major emergency provider, anything that happens in the recreation parks or the freeways and so on that transverse the valley, we're the recipient for emergency care, and many times admission and post-emergency care.
Signal: You mentioned a need for prenatal services; in the past, people were calling out for a neonatal care center. But the things you've added recently are the cardiac cath lab, which is geared toward an older population, and a breast imaging center, which isn't exactly geared toward babies. Is the general direction toward older care?
Seaver: No, it's a comprehensive review of the needs of this community. You've mentioned neonatal; that's an area that is in our five-year plan. We don't have an answer to it yet. It's a need. We need to develop it to upgrade and maintain the great OB services, or obstetrics, that we already have and will need for growth shortly after the end of this decade. We're going to need more facilities to expand that type of service.
So no, we're looking cross-section needs, how well we meet the needs of a majority of the residents in Santa Clarita Valley where we fall short. We're developing plans to address that.
Signal: You mentioned a five-year plan, but you've got a 25-year horizon, right?
Signal: You went to the City Council with this plan, and to hear neighbors tell it, you're going to build skyscrapers and block off the Valencia Summit?
Seaver: We went through the first hearing process earlier this year and got a lot of feedback, a lot of concerns, particularly in the neighborhood, and how big, how much, when, and so on. It's a big issue. We're the first one to proceed through the city on a master plan basis, so the master plan we're asking for is a horizon of 25 years.
We're trying to define more clearly what the limits are. We see huge growth needs in our services, and we see it both for inpatient and more appropriately, the specialists who need to work at the hospital, having an outpatient environment on campus for those.
So we're backing that process. It will be going back before the Planning Commission in September. The draft environmental impact report will be out by the end of August for circulation. We've revised our plans to mitigate, or lessen, the impact on the immediate neighborhood where possible. However, we have stayed with the overall plan on capacity, and so we are proposing height limits, modified slightly down to 85 feet, but that would allow us a five-story, above-grade hospital in the middle of the campus. It's certainly higher than what we have now, but it is lower than the Summit, so we believe it's the right compromise overall.
We believe that the overall needs of the community demand this type of master plan, and we think we're getting the right balance. And of course, it will be out for public hearing and comment very soon.
Signal: Clearly you've made the decision that you want to grow in place, instead of establishing a bunch of satellite facilities around town. If a lot of the growth is coming in places such as Canyon Country and northern Saugus, why wouldn't you want to have a network of smaller facilities throughout the valley?
Seaver: It's primarily an economic issue, both short- and long-term. First of all, we're blessed with a great campus and size; while there's certainly room for criticism about the size of our master plan (for) Valencia, the size of our campus would be the dream of most hospitals to have that much physical space. We do need to go up, of course, to make it worthwhile.
Having other facilities is not out of the question. However, you need a critical mass for all of the major specialists to have a large enough hospital so that you can maintain all of the specialists who need to be in the community, and then look at the outlying areas.
Current licensing laws don't allow for free-standing emergency rooms, for example, which may be appropriate, but it's just not allowed. It has to be an entire hospital, and the economics of a new hospital are very difficult to get started. I think that's still a possibility in the future for us or somebody else, but there won't be a lot of hospitals in the Santa Clarita Valley. There may be two, but probably not more than that in the foreseeable 20 to 25 years.
Signal: What is the future for hospitalization in the Santa Clarita Valley? How much longer will Henry Mayo be around as a nonprofit organization?
Seaver: Oh, I think forever. I think we are the best model of American medicine. We happen to be in a great community, and those that maintain the nonprofit community hospital and act responsibly in response to the needs of the community and act responsibly as a business, become the best hospitals in this country.
You can look across the horizon and you see the hospitals that you really want to be associated with, are those dedicated to the community, held as a nonprofit status, with a great board of directors representing the community and making sure that the oversight of planning and execution of the business model of the hospital works for the benefit of the community. We have the right model we're executing today, and with that going forward, this is a perpetuity this hospital is for perpetuity.
Signal: There were buyout offers on the table once or twice in the last few years. There isn't one now that is being considered?
Seaver: The only offers on the table that I was aware (of) was in the late 1990s. I believe they were all rejected or somehow did not come to place. And then when we were in a financial reorganization, there were one or two offers made to the court which were rejected. But in all cases, those were outside people who wanted to come in and take advantage of the community, and either the trustees of the community or the trustees in the financial reorganization acted for the best interest of this community and rejected those offers.
Signal: What would you say to the senior citizens out there in front of your hospital waving signs that read, "Don't close the TCU?"
Seaver: Well, right now we're in an information campaign, if you will. We've completed our analysis; we have a lot to share. I've shared it with three or four audiences of seniors. After they've heard the information, understand the issues, I haven't had one of them come up to me and say, "It's still the wrong thing to do." They understand it, they accept it just like everybody else who looks at the whole issue. We must respond to the growth and demand in this community for emergency and acute care services, and as part of that, the transition of the transitional care to acute care is in our future.
Signal: That is your recommendation to the board.
Seaver: It will be my recommendation unless some unknown facts at this point come to me in the next couple of weeks.
See this interview in its entirety today at 8:30 a.m., and watch for another "Newsmaker of the Week" on Wednesday at 9:30 p.m. on SCVTV Channel 20, available to Time Warner Cable subscribers throughout the Santa Clarita Valley.