Kalispell Regional Healthcare CEO Addresses Financial Challenges, Vision for Future

As Kalispell Regional Healthcare gears up to unveil a series of major infrastructure projects over the next year, administrators are grappling with a multi-faceted financial squeeze, due in part to those capital improvements and other growth-oriented investments, as well as cuts to Medicaid reimbursement rates and what the officials call a changing national and state health-care landscape.

The tightened financial outlook has led KRH, which is Flathead County’s largest employer with more than 4,000 employees, to lay off some employees — officials say less than 1 percent of its workforce — and carefully examine its budgetary approach for the present and future. It has also produced anxiety within hospital ranks, which has prompted a great deal of discussion among both employees and the community at large.

On Wednesday, President and CEO Pamela Robertson sat down with the Beacon to address some of the concerns and questions that have arisen, as well as to outline the nonprofit’s overall state of affairs and vision for the future. Joining Robertson were General Counsel William Gibson and Director of Communications and Marketing Mellody Sharpton.

Even as KRH confronts “financial challenges” and undergoes a period of “realignment,” Robertson is bullish about the institution’s continued emergence as a regional health-care destination, an optimism that has remained strong since she took over nine months ago following the death of her predecessor, Velinda Stevens.

“KRH is a really amazing organization and has really built toward the future,” Robertson said. “I think that’s sometimes what may get lost, because it looks like it’s the here and now, but it’s not. It’s an investment in the future … to ensure people have access close to home and to close care gaps.”

Kalispell Regional Healthcare has experienced swift growth in recent years, building on its cornerstone hospital — Kalispell Regional Medical Center — by bringing a variety of other offices and facilities under its umbrella, including its affiliation with North Valley Hospital in Whitefish. At the same time, it has been adding a substantial amount of new infrastructure and attracting physicians and medical professionals from across the country, often with national name recognition in their fields.

“We have made significant investments in a fairly rapid period of time,” Robertson said.

Chief among those recent investments is the nearly 200,000-square-foot Montana Children’s Medical Center, slated to begin welcoming patients next spring, as well as the Digestive Health Institute of Montana, expected to open this fall, and the new Emergency Services Department. The emergency department has already unveiled some of its modernized features, with full completion anticipated this summer.

“As I think anyone would expect when you have rapid growth, you can stress your financials,” Robertson said. “And you know that when you make investments, what you’re not going to see are the financial dividends immediately. What we are seeing are the clinical benefits immediately. I don’t want to lose sight of that.”

During the wide-ranging June 13 interview, the KRH officials addressed a series of questions and concerns circulating among the public. For one, Gibson confirmed the nonprofit is facing a pending settlement stemming from an Office of Inspector General investigation but said he couldn’t discuss the details.

“We have not yet finalized a settlement but believe that is close,” Gibson said. “The Department of Justice has instructed us that we can’t comment on the specific allegations in the case.”

Regarding the possibility of additional layoffs, Robertson says the hope moving forward is to address any personnel trimming “through attrition.”

“That’s our goal,” she said. “It’s not always possible. They’re never easy decisions to make.”

KRH has also experienced upper-management turnover, with the recent departures and retirement announcements of Chief Financial Officer Charles Pearce, KRMC Senior Executive Director Ted Hirsch, Chief Nursing Officer Karen Lee and Dr. Nicholas Costrini, who had been hired to help start the Digestive Health Institute.

Robertson said in addition to investments in personnel and infrastructure, growth has required technology upgrades, too, “and that all costs money.” She said KRH officials are also dealing with policy decisions and uncertainty at both the state and federal levels, all contributing to “a new reality in the health-care landscape.”

State-imposed cuts to Medicaid reimbursement rates cost the hospital $6.6 million, Robertson said, and if the state’s Medicaid expansion sunsets next year as scheduled, that will lead to another “$13 or $14 million” reduction.

“We are both responding to and preparing for those cuts,” she said. “And we think that’s being good stewards of the mission we have in front of us.”

Robertson said the Montana Children’s Medical Center, an expansive pediatric and women’s health-care facility, was designed to be built in phases, with the first phase — the main floor encompassing “all of the intended patient space” — on track for a spring 2019 opening.

Bozeman Health Deaconess Hospital is in the midst of constructing its own $75 million women and children’s center, but Robertson isn’t worried that Montana can’t accommodate both facilities, as well as Missoula’s pediatric and women’s programs.

“The one thing that’s unique is ours is a comprehensive pediatric program, not only a NICU or high-risk OB program,” she said, explaining that Kalispell will offer pediatric oncology, surgery and neurosurgery. “We are the only full-service pediatric program in the state.”

As a statewide program, Robertson said the center will have a broad patient base from all corners of Montana, not just the Flathead Valley.

“The population of children across the state supports the pediatric program,” she said. “It does require there to be a complementary outreach strategy to support that.”

Although there are numerous irons in the fire, Robertson believes KRH is well-positioned to push through the current challenges, and the community and state will ultimately reap the benefits.

“Have we overextended ourselves? It probably feels that way to some people,” she acknowledged. “What I would tell you is that we realize we need to sort of pause on future investments right now and realize a return on the investments we have right now and optimize those.”

The KRH board is “100 percent” committed to remaining an independent, locally owned health-care system, Robertson said. Overall, she remains “very optimistic” about the institution’s direction, driven by its personnel.

“We have such a talented group of people here, not just clinically but across the board,” she said. “That’s what we’re rooted in, right? That talent. Awesome talent, not just probably the best in the state but some of the best in the nation, that’s a blessing that we want to retain.”

With that said, Robertson understands apprehension among staff and the community as KRH works toward its vision of evolving into an increasingly prominent regional health-care destination.

“I think when you undergo some change, there’s going to be some anxiety,” she said. “Change is never something people readily embrace — even if it’s positive change, it’s still change. I just think change kind of creates anxiety until you understand it or work through it.”

Robertson acknowledges the importance of open communication from the administration in helping people understand the intentions and realities of changes occurring at KRH, and how they fit into a strategy moving forward.

“There’s a positive and sustainable future,” she said.