Ballad Health Reports FY20 Second Quarter Results

Results mark increased access to new providers, cost savings for patients, taxpayers and employers and continued stable financial performance, despite difficulty for rural and non-urban health systems

Ballad Health today announced second quarter results from its 2020 fiscal year. The results underscore investment in enhanced access to services, a focus on quality of care and reduction in the total cost of care for the region.

“Ballad Health was pleased the nation’s largest insurer, in partnership with Harvard University, recognized our efforts as one of four health systems making a difference in the move toward value-based care,” said Ballad Health Chairman and CEO Alan Levine. “Experts throughout the nation are beginning to see how Ballad Health is making a difference, despite the increased pressure on rural and non-urban hospitals.”

Levine pointed to a recent report by iVantage Health Analytics, which predicted 600 rural hospitals are vulnerable to closure on top of the more than 120 that have already closed.

“In our region, we continue to financially support several rural hospitals and move toward reopening a previously closed hospital,” Levine said. “Our model is built to preserve access, invest in new doctors and providers and serve our communities through regional services recognized by highly respected independent publications as among the best hospitals in Tennessee and Virginia.  These steps are designed to help our health care system navigate the serious headwinds faced by non-urban and rural hospitals.”

And recently, Ballad Health was recognized as one of the top 30 employers in the nation for diversity and inclusion on Forbes’ Best Employers for Diversity 2020 list, just months after one of Ballad Health’s flagship hospitals was named by Forbes as one of the 10 best places to work overall in Tennessee.

Some examples of investment and activity during the quarter that led to increased access to high-quality and more affordable care include:

• Ballad Health is leading the way with investment into increased access to telehealth.  For example:
  • Ballad Health has partnered with 108 schools in Tennessee and Virginia to bring urgent care services into the school via telemedicine link.
  • A partnership has developed with Bristol City Schools and Frontier Health to provide tele-behavioral health services to the schools. Our hope is to expand this to every school in the region based upon what is learned from this pilot.
  • Tele-Stroke/Neurology Services are offered in 7 facilities, serving Johnson City, Wise County VA, Kingsport, Abingdon VA, Greeneville TN, and Elizabethton.
  • Tele-ICU services are available in Greeneville TN.
  • A Tele-hospital program has begun in Hancock County, TN.
  • Every Ballad Hospital has a telehealth cart connected to Niswonger Children’s Hospital for ED/Trauma support and behavioral health services.
  • Telehealth technology is utilized to provide diabetes education at several hospitals.
• A new policy for reducing out-of-pocket costs for low-income people, increasing the uninsured discount to 85% and adopting presumed eligibility for charity care
• A reduction in pricing for all physician entities, including urgent care, by an average of 17%, while increasing the uninsured discount to 85%
• A reduction in total cost of care for area employers, as data begins to demonstrate employer costs related to services provided by Ballad Health is decreasing
• Ballad Health’s focus on recruiting additional healthcare providers throughout the Appalachian Highlands has led to the addition of nearly 200 new providers through December 2019, with 80 new providers recruited this fiscal year.
• New providers recruited include more than 12 cardiology providers, 27 family practice professionals and dozens of others in specialties such as endocrinology, hematology/oncology, maternal/fetal medicine, nephrology, neurology/neurosurgery/neuroendovascular, OB/GYN, orthopedics and multiple pediatric specialties.
• The health system’s nursing turnover is now below the national average, thanks to a $100 million commitment in nursing retention and hiring. This effort is the beginning of a multi-pronged approach to deal with the national nursing shortage.
• The announced addition of two new urgent care sites in Banner Elk, North Carolina, and Kingsport, Tennessee
• As part of its Zero Harm culture, Ballad Health implemented daily tiered safety huddles, providing team members the opportunity to engage management each morning in areas of patient care and improvement in outcomes.
• Ballad Health saved taxpayers more than $54 million by being one of only 18 partners in the federal Medicare Shared Savings Program throughout the nation to achieve savings for Medicare in each year of the existence of the program. Ballad Health’s quality scores are at 94.4%, the highest in the history of the health system’s collaboration with Medicare.
• Ballad Health continues to be recognized as a great place to work. Forbes named one Ballad Health hospital as among the 10 best employers to work for in Tennessee.
• Forbes also ranked Ballad Health 29th in its Best Employers for Diversity awards – making Ballad Health the top-ranked employer for diversity in both Tennessee and Virginia.
• Ballad Health’s hospitals are ranked by U.S. News & World Report among the top seven in Tennessee, and Ballad Health’s four largest hospitals are among the top 30% in Tennessee and Virginia recognized for having high-performing programs in multiple specialties.
• Ballad Health donated $238,175 in equipment and funds to install a full body scanner at the Sullivan County Main Jail Facility. The new equipment will detect contraband and potential security risks before they enter the correction facility.
• Holston Valley Medical Center was chosen as one of two demonstration sites in the United States for the prestigious Leipzig Interventional Course (LINC) 2020 conference.  
• Ballad Health’s Health Resources Center announced a new initiative to bring its health and wellness class offerings directly to any community in the Appalachian Highlands.
• Greeneville Community Hospital opened its new progressive care unit (PCU) and implemented Tele-ICU in its intensive care unit, making it possible for 24/7/365 monitoring of the hospital’s 10 ICU beds.
• Smyth County Community Hospital donated 10 sports medicine bags to area schools to help equip their sports programs with the necessary supplies to provide aid when sports injuries occur.
• Ballad Health will invest in the opening of a new Ballad Health Medical Associates urgent care center, including the addition of primary care and diagnostics, in Kingsport, as well as a new urgent care center in Banner Elk, North Carolina.
• Bristol Regional Medical Center and Franklin Woods Community Hospital earned the Tennessee Department of Health’s BEST for Babies award for their efforts to improve infant care and reduce infant mortality.
• Ballad Health team members donated more than $2 million in 2019 through the annual team member giving campaign to support various causes and initiatives across the Appalachian Highlands.
• Ballad Health and Lee County Public Schools in Southwest Virginia are partnering for a school-based telehealth program, enabling a school nurse to use live video technology to connect students and school staff to a doctor, physician assistant or nurse practitioner from Ballad Health Medical Associates Urgent Care.
• Holston Valley Medical Center was named one of the nation’s 50 Top Cardiovascular Hospitals by IBM Watson HealthTM, making it the only hospital in Tennessee to achieve that honor.
• S&P Global Ratings affirmed its upgraded A- rating with a stable outlook for Ballad Health.

“Our physicians and clinical team are focused on helping deliver on the value equation,” said Dr. Amit Vashist, M.D., Chief Clinical Officer of Ballad Health.   “High value means better quality at a lower cost.   This cannot be achieved without partnerships with physicians and patients, and we are committed to this culture.”

Capital and Provider Investment

During the quarter, Ballad Health continued to make investments in infrastructure, investing $34 million into a variety of capital projects ranging from information technology infrastructure to diagnostic and treatment equipment.

Examples of investments included:

• Transition to Epic electronic health records system
• Expanded urgent care access
• Diagnostic and treatment equipment
• Replacement of beds
• Expansion of robotic services
• Building improvements

Additionally, during the first six months of the fiscal year, Ballad Health invested in the recruitment of 80 new providers in the region. Since the closing of the merger that created Ballad Health, 198 new providers have been recruited to the region – 93 physicians and 105 advanced practice providers.

This investment into the region’s healthcare provider network means improvements in patient access to important healthcare services.  Some examples of the providers added this fiscal year:

• Twelve cardiologists/cardiovascular surgeon physicians and advanced practice providers to serve in Wythe County, Wise County, Bristol and Abingdon in Virginia, and Johnson City and Kingsport in Tennessee
• Twenty-seven family practice professionals to serve Greeneville, Hancock County, Kingsport, Johnson City, Bristol and Elizabethton in Tennessee, and Abingdon, Wise County and Russell County in Virginia
• Six pediatric specialty care physicians, including specialists in pediatric neurology, pediatric gastroenterology and pediatric critical care intervention, serving Abingdon, Virginia and Johnson City, Tennessee
• Eight urgent care providers, serving Greene County, Bristol, Kingsport and Johnson City in Tennessee
• Five psychiatry providers serving Johnson City, Kingsport and Bristol in Tennessee
• Four OB/Gyn providers serving Abington, Virginia
• Three neurosurgery advanced practice providers at Johnson City Medical Center
• Three trauma surgery providers serving Johnson City and Kingsport in Tennessee

Financial and Operating Results

Ballad Health continues to collaborate with physicians and payers to reduce the total cost of care, reduce low-acuity admissions and provide services in a lower-cost setting. In an environment where population growth is not occurring, this work has the result of reducing traditional revenue streams for Ballad Health and creates the important work of reducing costs to coincide with the revenue impact. Ballad Health continues to see stability in its financial performance against these difficult headwinds. Much of this performance comes from Ballad Health’s movement toward risk-based and value-based relationships with payers, creating alternative payment models advocated for by the federal government.

For the quarter ended Dec. 31, 2019:

• Revenue for the quarter increased by 2.4%, while expenses increased by 2.2%, leading to an improvement in the operating margin of 1.5% compared to 1.3% for the same quarter prior year.
• Ballad Health continued to focus on expense management, improvements in productivity and supply cost management. Ballad Health invested $259.4 million into the region’s labor force.
• Operating Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) or operating cash flow remained relatively flat, generating $54.6 million compared to $54.7 million in the same quarter prior year.
• Total EBITDA decreased to $60.6 million versus $72.8 million in the same quarter prior year, a 16.8% decrease.  Adjusted for minority interest year over year, EBITDA grew 8%.
  • The minority interest adjustment is a required accounting for unrealized gains on investments.  The unrealized gains are recorded although not counted toward EBITDA, and the appropriate adjustment is recorded for minority interest allocation against reported EBITDA.   When removing minority interest year over year, EBITDA grew by 8%.  In the prior year period, Unrealized gains were reported as a $98.7 million loss due to market declines, while in the current year period, unrealized gains were reported as a $32.7 million gain, a significant variation due to market trends.