The success and strain of Ballad Health's first year of operation

Zach Vance • Mar 24, 2019 at 3:56 PM

Ballad Health experienced a fair share of ups and downs during its first full year of operations, as it continues charting its own course in a volatile health care landscape. 

Just days following the merger transaction taking effect on Feb. 1, 2018, Ballad Health was scrutinized for a piece of legislation in the Tennessee General Assembly that shielded some of its proprietary information from the public record. The bill was sponsored by state Sen. Rusty Crowe, who is a paid contractor of Ballad Health. That bill was ultimately amended to narrow the type of information defined as confidential before being passed into law. 

Another hurdle for the Ballad Health merger came in April, when CEO Alan Levine held a press conference to announce the elimination of 150 occupied jobs, and 49 others through attrition. Those layoffs were expected with the merger, but Levine said without the merger, a for-profit entity would have intervened, bought up Wellmont Health System and possibly Mountain States Health Alliance and cut as many as 1,000 jobs. 

Less than a month later, Ballad also announced it was closing four urgent care clinics throughout the region to reduce redundancy and “make better use of its resources,” according to a company statement at the time. 

However, just a month following the job cuts, Ballad Health went on a hiring frenzy when it announced the addition of 365 new nurses, including 265 new graduates. A new partnership between Ballad Health and East Tennessee State University was also forged during the summer of 2018 to create a fellowship program in addiction medicine. 

Other news that flew under the radar was Ballad’s effort in joining 16 other health systems to work on a national effort called The Medicaid Transformation Project, with the goal of addressing the health and social needs of the 75 million Medicaid enrollees. 

By September, when Hurricane Florence tore through the Carolinas, Levine said Ballad was committed to offering refuge to any patients fleeing the storm’s path. 

During the fall of 2018, Ballad cut the ribbon on two new facilities, a new Health Resources Center at Med Tech Parkway and the new 40,000-square-foot Unicoi County Hospital, one of just a few newly constructed rural hospitals in the country. 

Ballad made another announcement in October about its accountable care organization, AnewCare Collaborative, being one of just 21 in the country to generate savings — $46 million to be exact — for the fifth year in a row. 

The next wave of criticism levied against the hospital system came in November, when it announced a significant realignment of trauma and pediatric services. The first part of the plan calls for downgrading Holston Valley Medical Center and Bristol Regional Medical Center’s trauma center status, while maintaining Johnson City Medical Center’s Level I status. 

The trauma realignment was expected, as no other region in the state had two Level I trauma centers located in such close proximity, plus it was costly to maintain the Level I trauma center status. 

Shortly after the trauma changes were announced, Levine said the trauma designations are not relevant.

“The majority of trauma cases will be treated in the trauma center closest to the patient. … Last year more people died from addiction overdoses than people who died from car accidents. … The real discussion is what are the needs of the communities, and how do we match our resources to those needs?”

The state had already granted Ballad the authority to change its regional trauma center, but another proposal to consolidate Level III NICU services at Holston Valley will require state approval. That decision is currently pending. 

Both announcements were met with backlash, with governing bodies in Sullivan County, Church Hill, Hawkins County and Scott County, Virginia, passing resolutions explicitly opposing Ballad’s changes. 

In defense, Ballad has cited numerous studies that show higher patient volumes, particularly in trauma centers and NICUs, result in improved care and outcomes. 

Ballad closed out the year on a high note, announcing a plan to reopen Lee County Regional Medical Center—an endeavor applauded by local officials. 

Financially, Ballad improved its total cash flow from $104.7 million to $125.4 million, when compared the last six months to its previous-year performance. Throughout the entire year, Ballad decreased its readmission rates by 10 percent compared to the previous year, and 25 percent compared to the combined numbers of Mountain States and Wellmont, pre-merger. 

In total, Ballad invested $267.1 million into the local economy through salaries, wages and benefits spending, an increase of $1.5 million compared to the prior year, according to the first annual report submitted to the state. 

“There has been no negative impact on aggregate labor spending resulting from the merger, and there has been an avoidance of massive reductions in work force, which would have resulted had the legacy systems been acquired from outside organizations,” the report stated.

“Ballad Health identified this as one of the key benefits of the merger, and this benefit is being realized. Ballad Health estimates a 1,000-person reduction in the local workforce would have resulted in an annualized decrease in salary, wages and benefits of more than $100 million.” 

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