Facing industry-wide headwinds, Vail Health touts the value of independent hospitals at annual address
CEO addresses community in the 2024 State of Vail Health
Vail Health/Courtesy Photo
Amid industry-wide headwinds and impending regulatory changes, the Vail Health system is continuing to grow and evolve, said Vail Health’s CEO Will Cook at the State of Vail Health address on Tuesday.
At the annual event, Cook gave an overview of the organization’s recent accomplishments and challenges as well as a look ahead to goals and priorities.
Progressing forward
Vail Health’s accomplishments in 2023 included good financial ratings and awards as well as progress and expansion.
It opened a new facility in Summit County, launched an in-home palliative care program at the Shaw Cancer Center and constructed 87–units of employee housing at Fox Hollow in Edwards. When it is completed this year, Fox Hollow will nearly double Vail Health’s inventory of employee housing.
Vail Health’s continued commitment to behavioral health saw the most growth in 2023.
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“We are focusing tremendously on ways that we can solve the crisis of a lifetime, which wasn’t COVID, it’s in fact, mental health and substance use disorders,” Cook said. “We’re on a pathway. We’re not out of it and probably never will be. It’s a disease just like cancer, but I’m so grateful for the progress that’s been made here.”
In 2019, following a $60 million commitment from the Vail Health board of directors to behavioral health, the Vail Health Foundation launched a fundraising effort to raise $100 million toward the same cause. On Tuesday, Cook reported that the foundation has raised $88 million toward that goal. A quarter of this — almost $28 million — has gone to non-Vail Health community nonprofits, he added.
Vail Health Behavioral Health has continued to grow its infrastructure as well. This includes the February 2023 opening of the Wiegers Mental Health Clinic, an outpatient behavioral health clinic in Edwards, while construction continued next door on the Precourt Healing Center, a 28-bed inpatient facility expected to open in 2025. There was also the launch the Vail Health Behavioral Health Innovation Center to study emerging mental health treatments.
Vail Health is also extending its reach to Summit County with behavioral health services and in July 2023 became the official designated community mental health center for the county. Chris Lindley, Vail Health’s chief population officer and executive director of Vail Health Behavioral Health, said that it is working to build a “shared model” with Summit County, Project Building Hope, Summit Community Care Clinic and the Summit County Sheriff’s Department.
Facing challenges
As the organization forges ahead and evolves, Cook said “The thing that’s most important is we are an independent community health care system.”
“We are a nonprofit. We don’t send our margins or resources back to a Front Range system. We don’t send it back to a national system. We don’t send it to shareholders. We are here to serve this community. That’s what our mission is all about. And I think that’s what differentiates us,” Cook added.
However, this independence — while critical — also brings about its challenges, he noted.
Financial headwinds
“I don’t think there is an industry in the world, and definitely health care is one of them, that has not felt post-pandemic struggles,” Cook said, listing an aging population and shrinking workforce, hyperinflation, volatile markets and “very, very difficult financial circumstances.”
“We saw our financial performance fall off the same cliff that everyone else did,” Cook said.
“As a result of the downward pressure on reimbursement, the upward pressure on expenses — mostly from regulatory burden — the Great Resignation and the dependence on very expensive temporary labor, it really made the health care industry, especially in Colorado, struggle,” Cook said.
Cook reported that in Colorado, 70% of hospitals now have unsustainable operating margins, most of which are independent hospitals in rural areas.
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Independent health care systems in smaller communities often “don’t have the revenue to cover the infrastructure necessary to remain independent,” Cook said, listing things like IT, revenue cycle, cybersecurity, human resources and more as the necessary infrastructure.
“All of these things require infrastructure that requires money. And when you’re only so big and you’re running only so much revenue across those expenses, it’s hard to make the numbers work,” he said.
The presentation noted that expenses are significantly up across the board and still trending up. This includes expenses that now exceed revenue by over 10% since pre-pandemic, labor expenses that increased by 6% in 2023 (still less than its 15% increase in 2022), and supply expenses that are up 30% since 2019 and trending higher in 2023.
However, Cook reported that with some tough decisions made last year, “we’re on the right pathway.”
“After our first quarter, we’re actually back into positive operating margins,” Cook noted, adding still that its financial performance has yet to return to pre-pandemic numbers.
“By no means are we out of the woods,” Cook said.
Continuing to tackle these financial challenges will include “making tough decisions this year,” Cook said.
Regulatory changes
Legislation and policy changes also threaten Vail Health’s independence, Cook said.
“In health care, and especially in Colorado, there’s been a lot of legislation aimed at reducing the cost of health care, increasing transparency and making pretty fundamental changes, some of which we earned,” Cook said. “I do not at all pretend to say that there wasn’t an opportunity to improve in health care, but some of which has had some unintended consequences, which actually puts more pressure on independent hospitals.”
Two big pieces of legislation Vail Health is keeping an eye on are site neutrality and facility fees. Specifically, Vail Health expressed concerns about impacts on reimbursements due to site neutrality and a prohibition of facility fees that it says could pose a threat to the long-term viability of offering certain services.
“That’s not actually helping health care in the long run,” he said. “That’s actually hurting it.”
As part of its advocacy efforts, Vail Health recently participated in an economic impact study with several other independent hospitals and health care organizations on the Western Slope. Conducted in partnership with the Western Healthcare Alliance and the Leeds School of Business at the University of Colorado Boulder, Vail Health hoped to show that “there are major economic contributions that are being made by a lot of these health care systems that are in these communities, including ours.”
Rural challenges
Cook noted that as a “rural and independent health system,” some things are “extra challenging for us.”
Part of this, Cook said, is that Vail Health is “geographically distanced from other resources.”
“That forces us to have even a higher level of clinical infrastructure because it doesn’t matter. When something shows up in the emergency department and we can’t transfer it out, we have a responsibility to take care of that patient. And that puts a lot of strain on our providers and staff,” Cook said.
This can also play out in the recruitment and retention of employees, particularly in specialty services.
“It’s really hard to recruit just one surgeon, make sure that he or she has adequate backup so that they can have planned time off and unplanned time off to ensure that they continue to keep their skill set sharpened,” Cook said. “It’s not easy to be able to have every single medical and surgical subspecialty in this valley because we don’t have enough population to ensure competency, which ensures quality, which ensures cost efficiency.”
“If you don’t have enough volume, if you don’t have enough incidences of something and you only have one person, you set yourself up for if that person leaves,” he added. “You set yourself up for if something happens to that person. It’s not fair to that one doctor from a burnout perspective,”
Vail Health is dealing with this currently as it recently announced that Dr. Julie Barone, a breast oncoplastic surgeon and the Medical Director of the Breast Care Center at Shaw Cancer Center, is leaving the valley. Barone accepted a position as the medical director of the breast program at Mission Hope Cancer Center in California. During Tuesday’s presentation, Cook said he received numerous questions regarding her departure, which will be official on May 2.
Currently, Vail Health has “interim and longer-term plans in motion,” he said, adding that it will continue to offer breast surgery in the valley as part of Vail Health and the Shaw Cancer Center.
As it looks at its longer-term plans, collaboration and partnership with other rural, independent entities will be critical, Cook noted.
“I’m talking to anyone we need to talk to figure out ways that we lean in and share precious resources the way we’ve been doing with behavioral health,” Cook said.
“When we talk about the mountain communities we serve, it’s not just the Eagle River Valley, but it’s also Summit County, it’s also the Roaring Fork Valley and we’re hyper-focused on how can we, in the process, make sure we’re collaborating with other providers who are in each of those markets.”
Looking ahead
In addition to enhancing collaboration and partnership among Eagle County and other communities, Cook also gave attendees a look ahead for the organization.
In 2024, this includes continuing progress in behavioral health, completing construction on the Precourt Healing Center and Fox Hollow apartments, and launching its first study as part of the Behavioral Health Innovation Center on psilocybin as a treatment for depression.
“Our vision is to one day be the provider of behavioral health services in the Western Slope; to have a model that’s self-sustainable, to have a model that looks at novel treatments for care, that have a model that has outcomes that are different than what we’ve seen over the last 20 and 30 years,” Cook said.
Additional areas for growth include an ongoing focus on whole-personal health and social determinants of care (and blue zones) as well as growing its health services for older populations.
“Since our demographic is shifting, and that means people who are living here are getting older, we’ve got to figure out what the services that Vail Health can and should provide because it’s within our capabilities as a health care provider,” Cook said. “That’s one area where I think we have opportunity.”
