With major changes in health care on their way to Leelanau County and all northern Michigan, we thought it a good time for a conversation with the president and CEO of Munson Healthcare. Ed Ness has held that position since 2012, and has been an administrator for the largest employer in northern Michigan for 24 years.
He holds master degrees in business administration and health care administration from the University of Minnesota. In Leelanau County, Munson owns the Empire Community Health Center with a full-time staff of one doctor and two nurse practitioners, and an outpatient lab and Bay Shore Pharmacy in Suttons Bay. Its reach includes seven hospitals scattered throughout the region including Munson Medical Center in Traverse City and Paul Oliver Memorial Hospital in Frankfort.
Mr. Ness was interviewed by Alan Campbell in the Munson administrative building, which was once part of the Traverse City State Hospital.
Enterprise: How much money did Munson lose?
Ness: This year our goal is to break even. During COVID, without government support like the CARES Act money, we would have had a negative operating margin of around $50 million.
Enterprise: Munson Healthcare seems to be at an inflection point that takes in the most basic of delivery systems to people. Why now?
Ness: COVID accelerated changes that were always going on in health care. Things that I thought were going to take years to happen occurred in a matter of months, including the progression of virtual care. We started virtual care out of necessity, and once we found that could happen it became more mainstream.
The second reason is that Covid accelerated financial pressure on hospitals. In 2022, the last year for the report, 60% of hospitals in America lost money. That was driven by the labor shortage that has been especially challenging for health dare, and supply costs like pharmaceuticals that are up in double digits year after year.
As hospitals have been forced to look at these deficits, we needed to change how we deliver care so we can be here for the next 100 years to provide care to our communities.
Enterprise: Munson has grown tremendously, swallowing up smaller hospitals and clinics through the years includingLeelanauMemorial in Northport. Why?
Ness: We had some type of relationship with many of those hospitals and clinics. Often it was for purchasing or IT support. Because of the headwinds I talked about, you see local hospitals becoming a part of larger systems. The main parts of that are the complexity of billing and information systems that are difficult to do with a small entity. You need a critical mass to be able to do those things.
Enterprise: When is bigger too big?
Ness: That is a question that is being debated around the country. One of the things I think is beneficial about our size is that we are large enough to have control over billing and those things, yet we understand the culture and needs of northern Michigan. We remain a northern Michigan care center.
Enterprise: Do people still want to talk to you about Leelanau Memorial?
Ness: All of our communities want access to care. I probably hear less about Leelanau Memorial and more about wanting more physicians and providers locally, and more testing so people don’t have to drive to Traverse City. That’s not unique to Leelanau County. It’s something we always have to look at. It’s a balance. You need clinics and access sites with enough volume to be viable … we continue to look at that balance.
Enterprise: In a recent presentation, you mentioned housing as a detriment to attracting and retaining workers. What is Munson’s strategy in this area?
Ness: Finding housing for our workforce is one of our biggest challenges, and frankly it’s not just Munson. Building houses is not our core competency. What we are looking for is partnerships with developers to build transitional housing. And we have a number of staff who are temporary, including doctors, who need short term housing, It’s difficult to rent a place in the summer. And the third is finding ways to help our entry level workers with housing. We’ve offered trial housing programs for certain positions (in which) we would pay for their housing for a year until they get settled. We’ll keep trying those things. Munson can’t solve it on its own, the college can’t solve it on its own, and businesses can’t solve it on their own. Part of the answer will be in providing reliable transportation …
Enterprise: Because the Munson business model is non-profit, are efforts to attract workers helped through federal college loan forgiveness?
Ness: Both on a physician’s side and with other providers, there are programs that help students repay loans and get grants. One thing we continue to look at with recruitment challenges are ways to provide tuition reimbursement. We are having many conversations with local school districts, having conversations with kids in high school, and then trying to get them connected with local programs and universities. We tell them that if you take this path (and) if we have a relationship, we will help pay for those classes.
Enterprise: Most services offered to Leelanau residents come through locations in Traverse City. Are more satellite facilities planned here?
Ness: There is nothing imminent. It’s something we can continue to look at if communities change, if populations change. It’s something we will continue to look at in the future …
Enterprise: Munson has expanded its reach throughout northern Michigan, often by buying established community hospitals. As Munson grows, is that a better business model than partnering with local health care providers that remain independent?
Ness: Within our northern Michigan communities we have a number of strong, independent practices. Our philosophy is we respect those private practices, support them, but for others employment (directly with Munson) is the best option. Both can be very successful, and from a patient’s position provide great care. Both are good models.
Enterprise: Is competition good for the medical field?
Ness: Yes. I think competition helps improve accessibility and lower costs.
Enterprise: Medicare and Medicaid programs keep growing. Is that good for the medical industry? For patients?
Ness: Government programs now represent 70 to 75% of services, including state and federal sources. The biggest are Medicare and Medicaid … We don’t negotiate their rates. So if you have inflationary pressures our payments increase at lesser percentages. Most Medicare and Medicaid (reimbursements) have gone up 2%. That’s a gap that has to be made up some place else.
Enterprise: Is that the major challenge facing Munson, having inflationary pressure go up faster than reimbursements?
Munson: It’s a challenge. Our obligation now is to redesign how we deliver care, to provide lower costs in providing that care, perhaps in an outpatient center, to better coordinate care, and to become more efficient as a system. That’s one reason hospitals come together.
Enterprise: Will call-in medicine and virtual care have a negative affect?
Ness: I don’t ‘think so at all. For many of our rural communities, it will provide better access. Virtual access helps local physicians deliver care, and doesn’t take away from them at all.
Enterprise: What is the overall goal of the redesign of Munson?
Ness: The redesign is to make Munson the regional referral center for this part of the state. Referral means that whether you are in Gaylord or Sault Ste. Marie, your physician refers you to Munson. Another word that could be used is regional specialty center.
