SoutheastHEALTH’s Ken Bateman outlines a path to the future of health care

Rising costs and increased competition are ramping up pressure on health care organizations across the country, including SoutheastHEALTH, which first opened as Southeast Missouri Hospital in 1928, a private not-for-profit hospital located in Cape Girardeau.

In May, president and chief executive officer Ken Bateman announced “Project Forward Vision,” a plan that ultimately could result in the organization merging with another, larger provider.

Describing the need for such a strategic move, Bateman specifically pointed to surging costs — including a $16 million rise in labor costs in the past year — and the possibility of a large health care organization — Mercy — getting a foothold just up Interstate 55 in Perry County, Missouri, in a partnership with Perry County Memorial Hospital. The potential entry of Mercy into the region’s health care landscape arose within the past six months and was part of the impetus for SoutheastHEALTH’s decision to pursue a partnership of its own. Bateman said doing nothing in response is “not an option.”

“I see what’s coming in terms of the economy. I see what is happening with labor, and now, I see what’s happening with Mercy coming into our competitive landscape,” he explained. “When you put the three of them together, I have to make sure I have us positioned for 10 years, 20 years from now. If we do nothing, those forces will start to diminish who we are and the value we bring to this community.”

Bateman said Project Forward Vision will situate SoutheastHEALTH for the long term.

“SoutheastHEALTH cannot narrowly focus on solving the current challenges of today. Project Forward Vision will allow us to focus on creating strength and growth for decades to come. If we are not proactive today, our tomorrow will face challenges from larger, metropolitan health systems that are intent on moving into Southeast Missouri and capturing patients. We are committed to making Southeast Missouri a regional hub for tertiary (highly specialized care that involves complex diagnostics, procedures and treatments) care,” he noted.

The CEO stressed the move is not one of desperation but of expansion.

“I want to make it clear that we are not selling assets. We are joining with a partner to create a win-win situation for both parties. We will ask potential partners why we would be valuable to their organization as well as what benefit they bring to us,” he said. “SoutheastHEALTH is strong financially. We have strong market share and volumes, and we just recorded our two best performance years to date. We maintain a sizable cash position as well. Partnering with a larger system with at least $5 billion in assets will ensure that we remain well capitalized in terms of facilities and equipment while continuing to provide quality, low cost health care, close to home, for decades to come. We anticipate that this partnership also will allow us to secure a strong and long-term market position along the I-55 corridor.”

What does a partner look like?

A potential SoutheastHEALTH partner will be one with the scale necessary to spread costs — labor, technology, support — across many platforms.

Bateman contended SoutheastHEALTH is in a good position to attract suitors.

“SoutheastHEALTH operates two hospitals, multiple ambulatory care sites across Southeast Missouri, two fitness centers, a College of Nursing and Health Sciences and an affiliation with Southeast Behavioral Hospital. We are recognized nationally for providing excellent health care, including being named a Best Maternity Care Hospital by Newsweek for two consecutive years, earning heart failure and heart attack care accolades from the American Heart Association, earning a Grade ‘A’ Safety Rating by Leapfrog for five consecutive years,” he noted. “We also are honored to earn The Joint Commission’s Gold Seal of Approval and the American Heart Association’s Heart-check mark for recertification as a Comprehensive Cardiac Center, the only hospital between St. Louis and Memphis to achieve this distinction.”

Human capital is also a strength, he added.

“A potential partner is coming into an organization staffed by incredibly talented, experienced and skilled people who hold a shared dedication to providing quality, family-centered care,” he said.

Of the staff, Bateman noted Project Forward Vision is a way to offer employment stability to the system’s 2,400 employees.

“When I arrived at SoutheastHEALTH in 2015, we faced significant financial challenges. One of the solutions on the table was to cut an additional 200 jobs. I did not let that happen. Since Day 1, I have been, and remain, totally committed to preserving jobs. We weathered some pretty tough times, without job cuts, and with additional jobs added,” he commented. “SoutheastHEALTH will not partner with a system that does not hold those same values. And, partnering with a larger system also will provide career advancements and opportunities for our employees through multiple site locations.”

Mergers in other industries

In other sectors of the U.S. economy — meatpacking, for example — mergers and acquisitions has resulted in fewer players and higher costs for consumers. Bateman said local health care consolidation will not play out in that manner because competition will remain.

“It is important to understand that Project Forward Vision will result in a partnership, not a monopoly. Partnering with a larger health care system will give us lower cost of capital, greater credit market access, and greater buying/negotiating power. Price increases happen when there is a lack of competition. It’s competition that generates high quality health care at an affordable cost,” he contended.

One of the ways Bateman said he expects to combat increasing costs is through investing in technology and developing health care delivery options. Moving more services to an outpatient setting is one example.

“Hospitals must make substantial investments in technology to connect with patients outside of the walls of our hospital. Remote access through our Patient Portal and through digital platforms are part of care delivery models of the future and will require major investments,” he explained. “The latest technologies also will be incorporated into our new Southeast Orthopedics and Sports Medicine Center and Southeast Women’s Integrated Health Services, now under construction on our West Campus. This is part of a multiphase project that is the largest in the history of SoutheastHEALTH and one that underscores both our commitment to providing excellent health care and our financial strength.”