Issue link: https://beckershealthcare.uberflip.com/i/1514738
33 HEALTHCARE NEWS 33 Hospitals won't see a 'V-shaped recovery' By Alan Condon H ospitals are starting to dig themselves out of a formidable operating trench, but results for the sector still lag far behind pre-pandemic levels, according to Fitch Ratings. However, median operating margins will gradually improve, while a larger expense base is unlikely to see huge gains over the next two years, Fitch said. This year "will not be markedly and certainly not the V-shaped recovery we're hoping for," Kevin Holloran, senior director and sector head at Fitch, said in a Jan. 4 news release. "Nonprofit hospital margins are still below both pre-pandemic levels, but more importantly they will tread below the 'magic number' operating margin of 3%." Nonprofit hospitals continue to battle the "labordemic" with widespread staff shortages, intense wage pressure and heightened inflation. Fitch projects a "trifurcation" of credit quality emerging from these struggles that will become more prominent this year. This translates to a larger risk of downgrades for hospitals already struggling to return to a degree of pre-pandemic normalcy, and follows a 2023 that saw a 3:1 ratio of hospital downgrades to upgrades, according to Fitch. The report noted recent downgrades among hospitals and health systems of smaller size and scale and described Washington and Pennsylvania as challenging states in which to operate. "IT implementation issues, significant capital spending and aggressive expansion initiatives that simply did not work out as intended will further cloud outlooks for smaller hospitals and some providers in Washington and Pennsylvania," Mr. Holloran said. Fitch also raised concern about a "dreaded" second year of debt service covenant violations, which "may intensify the potential for bondholders to declare an event of default and perhaps accelerate bond repayment," according to Mr. Holloran. n cause of why so many cities and towns across the country fall into economic decay and become havens for crime and hotbeds for gun violence, which shamefully is now the leading cause of death for children and adolescents. To revive these underserved communities, many of which are in our own backyards, we have to look at all of the socioeconomic issues they struggle with through the prism of health and use the collective resources of all stakeholders to bring about positive change. Health is how we work together to build a sense of community. Having a healthy community also requires everyone doing what they can to tone down the political rhetoric and social media-fueled anger that is polarizing our society. Health is bringing back a sense of civility and respect in our public discourse, and promoting the values of honesty, decency and integrity. As healthcare providers and respected business leaders, we should all make a New Year's resolution to stay true to our mission and do what we can within our communities to bring oxygen to hope, optimism and a healthier future. Michael Dowling is president and CEO of Northwell Health, the largest healthcare provider and private employer in New York State. Mr. Dowling will speak at Becker's 14th Annual Meeting in Chicago in April. Hospital and health system leaders. Interested in exhibitor or sponsorship opportunities to connect with 3,000+ hospital and health system leaders? n The rise of the dual-role CEO By Alexis Kayser I n recent months, multiple health systems have named executives who already lead a region or facility to a second, dual role within the enterprise. Frequently, the system stacks leadership of a second hospital atop an existing hospital president's or CEO's duties. Milwaukee-based Aurora Health Care named Nkem Iroegbu, MD, president of its Cudahy, Wis.-based St. Luke's South Shore hospital November; he will assume the role in addition to his current responsibilities as president of Milwaukee-based Aurora Sinai Medical Center. Hazard, Ky.-based Appalachian Regional Healthcare made a similar appointment in August, naming West Virginia Region CEO Jeremy Hall to the helm of its Big Sandy region, too. And earlier in 2023, Detroit-based Henry Ford Health chose Steven Kalkanis, MD, to oversee its Henry Ford Hospital on top of his existing responsibilities as CEO of the system's medical group. What's driving this trend? Amid mounting financial challenges, many health systems are looking to streamline operations in top-heavy C-suites and reallocate funds to essential clinical roles and functions. When Renton, Wash.-based Providence eliminated the CEO role at two of its hospitals — passing regional oversight to one executive — the system said the restructuring freed up resources for front-line caregivers. Plus, these dual-role executives are frequently tapped internally. External CEO hiring has been on the decline since 2019 and in 2023 dropped to the lowest recorded level since 2016. Internal duty expansions clear some training and onboarding costs and cut the guesswork of a new addition. If a leader can helm one area successfully, it's oen safe to assume they can be trusted with a second. n