Just two years after a period of hemorrhaging red ink, job losses, and rumors of its possible demise or sale, Empire Health Services, Spokanes second largest hospital network, is now posting modest profit margins and healthy gains in patient visits, says CEO Jeff A. Nelson.


Empire Health, which operates Deaconess Medical Center and Valley Hospital & Medical Center here, saw nearly 184,000 patients last year, a 5.5 percent increase over 2005, and had revenues of $290 million, up 20 percent from the prior year. Perhaps more telling, it posted a profit margin of 2 percent, following a 1 percent margin in 2005 and a $34 million loss in 2004, Nelson says.


We had a good year, he says of 2006. Patient volume has increased on a daily basis.


Patient volumes at Sacred Heart Medical Center and Holy Family Hospital rose at a similar pace last year, officials at those two hospitals say. Nelson says the growth in the market could be due to a growingand agingpopulation here, as well as greater awareness of Spokane as a medical hub.


There is no reason, other than for a select few services, that anyone should ever leave Spokane for medical care, he says.


Nelson, was brought in to Empire Health as a turnaround specialist in October 2004, in a year in which Empire had already cut 150 employees. Two years earlier, the hospital operator had lost $18 million, had eliminated 117 jobs, and had cut employee pay across the board by 9 percent.


Under Nelson, Empire Health made further cuts in expenses, including by eliminating some pediatric services and another 56 employees.


At its low point, Empire employed 2,317 people in 2004, down from 2,886 employees in 2001.


Since 2004, Empires economic health has improved continually, Nelson says, though he adds that the nonprofit organization isnt where it needs to be financially.


Its not great, but its respectable, he says of Empires 2006 results.


The ideal profit margin would be 4 percent to 5 percent, Nelson says.


He says Empire plans to improve its margin by increasing efficiency, attracting more patients, and encouraging more physicians to bring their business to its hospitals.


Currently, Empire employs about 2,450 people.


Were up by about 130 jobs with increased compensation to staff, he says. We have competitive pay and we treat employees with dignity.


He anticipates further staff increases, although Empire is still trying to identify which services it will expand.


Nelson says Empire also is implementing changes to improve patient experiences at Deaconess and Valley Hospital, and is measuring those improvements. He says the organization did that because patient surveys and community input pointed to a need for such improvement.


Were able to deliver maximum care in better ways, he says. Safety and customer satisfaction continue to rise.


For example, in the last few weeks, Deaconess and Valley hospitals both were able to improve their discharge process, which has a goal of discharging medically able patients by 11 a.m.


That helps people plan their lives, Nelson says.


Also, Valley Hospitals emergency department recently took steps to reduce by a third the amount of time patients wait before receiving care.


Even the hospital food receives scrutiny, he says. A survey by Press Ganey Associates Inc., of South Bend, Ind., found patients reported a 98 percent satisfaction rate with Empire Healths food service.


The hospital operator wont become the best by simply focusing on the bottom line, Nelson says.


The community said it wants Empire Health Services to provide the best care at the most reasonable price and be not less than No. 1 in safety and satisfaction, he says.


That expectation, Nelson asserts, is reflected in what he calls Empires Big Hairy Audacious Goal, which states, By the year 2015, Empire Health Services will be No. 1 in the nation in patient, employee, and physician safety and satisfaction.


The goal is displayed prominently in Nelsons modest office at Deaconess Medical Center.


Specifically, Empire Health is shooting for the prestigious Malcolm Baldrige National Quality Award, which was established by Congress in honor of Malcolm Balridge, who was Secretary of Commerce from 1981 until his death in 1987. The Baldrige Award is bestowed annually by the president of the U.S. in the areas of health care, education, service, small business, and manufacturing.


Nelson says he believes attaining that lofty goal is within the realm of possibility for Empire, which has a combined total of 500 beds at its Deaconess and Valley hospitals.


The hospital that is rated No. 1 isnt necessarily a big university hospital, he says, adding that Baptist Hospital Inc., a 500-bed facility in Pensacola, Fla., received the Baldrige award in 2004.


Meantime, Empire has gathered other awards that show the hospital network is headed in the right direction, Nelson says.


More growth expected


Empires hospitals and other hospitals are seeing a growing demand for inpatient and outpatient surgeries, which Nelson says he expects to continue.


If we can recruit new physicians, they will create new business here, Nelson says.


A shortage of medical personnel now and in the future will provide perhaps the biggest challenge Empire will face in attaining its big goal.


Nelson says theres already a shortage of about 200 physicians in the Inland Northwest, and the number coming through medical schools and in training is insufficient to satisfy demand.


Also, by 2015, there will be a nationwide shortage of 17,000 nurses, and by 2020, the shortage of nurses will reach 30,000, he says.


The community has to come to grips with changes were going to have with a shortage of medical personnel, Nelson says. If it doesnt, there will be longer lines at doctors offices, delays with elective surgery, and more money coming out of peoples pockets.


Another challenge is state and federal reimbursement rates that dont cover the costs of providing health care.


Even Idaho has lower liability costs and higher reimbursement, he says.


Nelson says hes encouraged by proposals in the Washington Legislature aimed at addressing access to health care, but says there may be no painless solution.


I dont see an excess number of people saying, Take more taxes out of my wallet, he says. Were looking to continue to improve efficiency without sacrificing quality and safety.


Empire has joined community hospitals statewide in adopting guidelines for providing free or discounted care to patients whose family income amounts to up to three times the federal poverty level.


Charity care is important, Nelson says. Were trying to figure out a way to provide the right care for a person regardless of the ability to pay.


Contact Mike McLean at (509) 344-1266 or via e-mail at mikem@spokanejournal.com.