McAlester News-Capital, McAlester, OK

November 17, 2013

Hospital CEO vows no employee lay-offs in wake of Obamacare challenges

By James Beaty
Senior Editor

McALESTER — McAlester Regional Health Center Chief Executive Officer David Keith says he’s taking a stand.

Keith is projecting the McAlester hospital will lose nearly  $28 million over the next decade, because of Obamacare, sequestration and other government actions.

With 750 individuals with an average salary of $22 per hour employed at MRHC, the hospital has a huge impact  on the McAlester economy.

While making note of the projected challenges over the next decade, Keith said he doesn’t intend to cover the projected impact by terminating employees.

“There will be no lay-offs,” said Keith, who is also   chairman of the McAlester Chamber of Commerce.

Keith said he intends to maintain employee levels.

“There will be no slash and burn tactics at our hospital,” said Keith.

So how will he make up the difference?

“We believe in creating a better product,” Keith said. “I don’t believe in slash and burn.”

Keith has outlined the challenges in meetings before the McAlester City Council and the McAlester Regional Health Center Trustee Board, as well as in conversations with the News-Capital.

Keith said he plans on reducing labor and supply costs by approximately $4 million annually. He said he plans on achieving his goals by restructuring, finding cost savings and bringing in additional revenue through added services.

For example, the number of administrative positions have been reduced, with those affected assigned to other duties. Keith said he has reduced the number of executive teams leaders from seven to five. He said middle management positions have also been reduced.

“We will rebuild our organization; we won’t tear it down,” Keith said.

He said he believes in “LEAN” instead of RIFs. He cited goals such as labor productivity and supply chain systems,

Keith hopes successful physician recruitment will lead to more services available through the hospital and pointed to the hospital’s new residency program as one way that could  be achieved.

“Today, we have 21 residents who have applied for limited space,” Keith said. Those 21 applied to join the MRHC Family Medicine Resident program for 2013-2014. The internal Medicine Program begins in 2015.

“It’s our hope these individuals will stay in Pittsburg County,” Keith said of those applying for the residency roles.

By successfully recruiting more physicians and specialists at MRHC, medical and patient care dollars that are now going to other hospitals, both  in and out of state, could instead go to the McAlester hospital, according to Keith.

“In 2011, over $63 million in services McAlester could have provided went to other facilities,” he said.

During the Nov. 12 city council meeting, Keith introduced city councilors to the hospital’s new Chief Financial Officer Darryl Linnington, charged with assisting Keith in helping the hospital navigate financial waters of the future.

Linnington said he’s impressed with what he’s seen at MRHC.

“The city has done a good job of building a first rate health center for its populace,” Linnington said.

MRHC — as well as other hospitals —  is facing a triple whammy of circumstances that’s going to cost the McAlester hospital millions of dollars over the next three years, according to Keith.

For starts, Keith projected that Obamacare, officially known as the Affordable Care Act, along with other government actions such as the 2 percent sequester will cost the hospital nearly $28 million over the next decade, as previously noted.

Another factor is fact that the state of Oklahoma refused to accept a Medicaid expansion program tied to Obamacare, officially known as the Affordable Care Act.

On another front, audits by Recovery Audit Contractors — known as RAC — are second-guessing physician decisions and already completed treatments billed to  Medicare. They are also costing the hospital, Keith said.

“Well over a million dollars of our cash flow is tied up in RAC audits,” he  said.

Keith is not the only one criticizing the RAC audits. The American Hospital Association states that RAC audits “subject hospitals to additional administrative burdens and costly payment denials.”

Contact James Beaty at