Claiborne County Hospital: Daniel Colon, CEO

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As a community-owned healthcare organization, Claiborne County Hospital and Nursing Home in rural Tennessee is quite possibly a classic sign of the times. Unfortunately, times are hard. The 66-bed hospital and 100-bed nursing home serves a population of approximately 40,000 with 600 full time employees in Tazewell, Tennessee, about twenty minutes from Cumberland Gap National Park.

Recent improvements to the hospital include a cardiac rehabilitation unit, as well as a 30,000 square foot medical office building. The building was part of the hospital

’s long-range plan to bring a greater variety of care to the residents of the region. In 2008, however, the hospital ended the fiscal year about a million dollars in the red. Daniel Colon was brought in as the hospital administrator to help turn the organization around in May of 2008.

The Keys to a Better Future

Colon says one of the first keys to getting the organization on track was to get control of the $80,000 or so overage in employee time every pay period. He implemented a labor productivity management tool, trained all staff on how to use it, and then held them accountable. “It was a huge savings,” Colon says. “They have been doing a very, very good job.” Employee overtime was shortly reduced to the $10,000-12,000 range per pay period.

While the hospital projected losses for the first three months of the new fiscal year, they actually experienced profits, making them one of the only hospitals in the region making money. Colon says the hospital needed to focus on controlling costs and decrease the number of claims denied by Medicare, but management alone doesn’t fix problems that go well beyond hospital walls.

As the economy continues to head south, the hospital is also faced with a population of patients who are experiencing layoffs and less coverage by commercial insurers. “You have declining reimbursement by certain payers,” says Colon, “And also more stringent efforts by some of these insurance companies to limit some high level procedures.”

As well, general expenses continue to climb year by year and there is always the need to stay competitive as an employer. “You need to be able to pay fairly in the market so you don’t lose anybody to the competition or to another employer,” says Colon. At his urging, the hospital board approved a 2% raise for eligible employees in October of 2008.

Colon says transparency and delivery of services are crucial elements of his philosophy of leadership. “When you have transparency, you create a lot of trust,” he says. “When your middle managers are really able to trust you, and know where you are taking the organization, they step up to the plate in order to achieve these objectives and accomplish the vision that we all have together.”

Capital for Technology in Troubled Times

Fortunately for area residents, Claiborne Hospital continues to benefit from some long range planning put in motion by the board and the hospital’s previous hospital administrator. Claiborne has invested near $20 million in new capital equipment and facility improvements in the last decade.

“We have great technology here–it’s fairly state of the art–but in order to stay competitive and meet the needs of our physicians, we have to make sure that we are investing our capital in an appropriate way,” says Colon. He has created a team to examine the prospect of electronic medical records, is working to improve billing processes, and would like to add a digital mammography unit to the hospital’s arsenal.

The Ups and Downs of Turnarounds

By the October of 2008, three of Claiborne’s five financial cost centers were operating in the black. The nursing home, home health care services and emergency services were all bringing in a profit and the hospital and employed physicians had lost less than what had been expected. By December only one financial cost center was still losing money. The partially self-insured employee benefit program, however, due to a jump in claims, significantly impacted revenue in early 2009. January profits came in much lower than projected and in the following month these claims dropped the hospital back into the red as medical costs for employees and their families exceeded budget by more than $300,000.

As well, the average length of time it was taking the hospital to get paid for services rendered was growing, a budget item that is being met by growing concern from the board. The hospital itself was the only one of five cost centers that was left operating in the black.

“The values here are obviously teamwork and compassion. It is a very customer service oriented organization, and the culture here is obviously very community oriented,” says Colon. “We have some very strong leaders who are really part of the community and they give back to the community. They know a lot of the people who come here because they are neighbors and friends and they are very dedicated to providing great service.”

“They have a mission and commitment to delivering the best care to the members of this community. I’d say that they are very talented and hard working, and would do anything necessary for a cause … I’ve never seen such an effort in trying to raise money for the various things that we are trying to achieve here at this hospital,” says Colon.

Post-Interview Note: Daniel Colon resigned his position at Claiborne County Hospital on March 16, 2009.

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