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The standard-bearer: At Trinitas, Horan's proving single-entity urban hospitals can thrive

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Gary Horan is helping Trinitas remain an industry leader in an era of transformation and consolidation.
Gary Horan is helping Trinitas remain an industry leader in an era of transformation and consolidation. - ()

Gary Horan has been the CEO at Trinitas Regional Medical Center in Elizabeth since 2001. In a state with nearly a hundred hospitals — big and small, urban and suburban, for-profit and nonprofit — Trinitas is carving a unique niche in the industry.

Trinitas is a single hospital (though its recent mergers make it feel like a system), it is a nonprofit (which is becoming a rarity in the urban setting) and it is a Catholic teaching hospital. But perhaps the best way to describe Trinitas is this: It is a success, a hospital that serves its community and does it in a fiscally responsible way.

Horan, who did his undergraduate work at St. Peter’s University (B.S., economics), has been awarded dozens of honors and accolades over the years — including the “Distinguished Service Award” from the American College of Healthcare Executives, New Jersey in 2008 and the “Executive Leadership Service Award” by the New Jersey Hospital Association in 2012. He has had a spot on the NJBIZ Power 50 in Health Care the past two years.

Horan discussed with NJBIZ the challenges of running a hospital in New Jersey in an era of consolidation and transformation with the implementation of the Affordable Care Act:

NJBIZ: You are one of the strongest hospitals in the state; what factors are key to your success?

Gary Horan: We constantly evaluate the needs of our community and work hard to ensure that we are meeting them. A medical center is a complex organization that requires strict fiscal discipline balanced with a strategic vision. I like to say that, as a stand-alone hospital, we can provide great care to a large section of the state; and at the same time we are nimble enough to react swiftly if the strategic landscape changes.

We are fortunate to have an outstanding board of trustees, who give great policy oversight to our organization and keep us focused on our mission, and a strong administrative staff who carry out those objectives.

Our physicians are very innovative, and because we provide them with an environment where they can succeed, they are constantly bringing new procedures and therapies to our institution.

We also have great nurses, who as a group were recognized for excellence by the National League for Nursing.

NJBIZ: Your bond rating from Standard and Poor’s was just raised (BBB- to BBB with “stable” outlook); how important is that to your finances?

GH: It’s a very significant event for us. It reflects our financial stability and improves our access to the capital markets. It also raises the credibility of the organization and shows that, if a financial challenge arises, we can take corrective action sooner rather than later. I think it also helps prove the concept that a stand-alone, independent, Catholic teaching hospital serving an urban area can actually make a go of it in today’s environment.

NJBIZ: Let’s talk about the Affordable Care Act. It’s had a huge impact on the insurance industry. How has it impacted hospitals? How do you see it impacting Trinitas moving forward?

GH: We’re already seeing a change with regard to patients moving from charity care to Medicaid. Since they now have “coverage” through Medicaid, we’re experiencing a pent-up demand for health services from these patients. Unfortunately, physicians receive very low reimbursement from Medicaid — the lowest in the country — resulting in many physicians not accepting the Medicaid insurance product. This results in a double whammy for hospitals as more of these patients are directed to the emergency room, where Medicaid reimbursement for hospitals is only about 70 percent of actual costs. Make that a triple whammy — the ACA charges a tax on the hospital industry to help pay for coverage. This comes right off the bottom line and, in our case, results in a charge of about $250,000.

Reimbursement was reduced for providers, anticipating that they would receive a higher number of patients with insurance, but as of yet it is not quite working out that way.

NBJIZ: What would happen if the ACA were repealed — or dramatically changed?

GH: We would have to see what other options would be put in its place. One of the main problems with the ACA is that too much change is being implemented in too short a period of time.

NJBIZ: Some experts feel the future of health care is to move more patients out of the emergency room and into care centers — it’s a push many hospitals are making. Is Trinitas among that group?

GH: In theory, moving more patients makes sense; however, theory and practice don’t always go hand in hand. With the current lack of access to physicians by poorer patients, the hospital emergency department continues to be a source of care for a very sizeable population. The challenge of increasing the population’s health status is much more difficult in diverse, urban areas.

NJBIZ: Now, about Trinitas itself. In a lot of ways, it is beyond compare in the state: It is an urban hospital, but it is not a for-profit and it stands on its own, rather than being part of a larger system. How is it that you are outside of both worlds?

GH: Trinitas is a very strong, mission-driven institution which had the foresight 15 years ago to merge the existing Elizabeth hospitals into one. That consolidation served as a model that reduced duplication and allowed care to be directed into exciting new areas.

In a sense, Trinitas is already a “system” in terms of the breadth of its services. We have an acute care hospital, a non-acute care hospital facility housing one of the state’s largest behavioral health programs, long-term care, free-standing dialysis and health centers, children’s OT and PT services in over 50 school districts and geropsychiatric services in every county in the state. We also have one of the nation’s largest schools of professional nursing — the Trinitas School of Nursing, which has received national recognition as a Center of Excellence by the National League for Nursing. We also have a diagnostic imaging center, three distinct renal dialysis centers, a renowned wound healing/hyperbaric program, a comprehensive cancer center and we serve nearly half a million outpatient visits. I think all that, together with the fact that we merged the three Elizabeth hospitals into one, makes us a “system” in almost every sense of the word.

But you’re right — we are outside the world of the larger systems — but being a nonprofit, stand-alone hospital hasn’t hurt our ability to keep up and sometimes lead the way. We were the first in Union County to introduce robotic surgery, and we are currently one of the busiest robotic centers in the East for certain GYN procedures. Earlier this year, we unveiled an ambulatory surgery center to accommodate rising volume. We are expanding our emergency department in an $18 million construction/renovation program that will double our treatment areas and streamline care for the 73,000 visits we receive each year.

NJBIZ: The for-profit model, of course, is making huge inroads in urban areas. Some feel they are a harm to the industry; others feel they are operating where so few others are willing to do so — what’s your take on the growth of the for-profit model?

GH: While for-profits can bring access to needed capital, I believe the jury is still out on whether for-profit hospitals are good for New Jersey.

Many of the strategies of the for-profit model are questionable. Aggressive coding is one; others are out-of-network billing and the difficulty some uninsured patients have in gaining access to care.

Nonprofit hospitals turn any surplus operating revenues back into their operations to further support their nonprofit missions; for-profit hospitals return any surpluses to shareholders and investors who are looking for a return on investment.

There is a misconception in the industry that management is stronger at for-profit hospitals. The managers of nonprofit hospitals are just as competent as management of the for-profits, and, given a level playing field, both types of organizations have equal chances of success.

The leaders of the nonprofit hospitals in New Jersey have done very well for their communities under very difficult circumstances.

NJBIZ: Has Trinitas been approached by a for-profit chain, and is that something that would interest you?

GH: Yes, we’ve been approached, and, after careful consideration, decided that our institution and our community would not benefit from such an arrangement at this time.

NJBIZ: OK, then, let’s go the other way. In an era when so many hospitals are joining systems, do you see Trinitas eventually becoming a part of a bigger group?

GH: As I indicated earlier, we already see ourselves as a system. However, I can see us perhaps moving in the direction of programmatically affiliating with a system in order to provide those services where we currently lack expertise. Or we can look at joining with a system to advance certain service lines where we have great expertise. We could combine certain strengths in what could become a best practices model. Everyone benefits in that type of situation.

Less attractive would be a full merger — I think in that case we’d lose a lot of local vision, decision-making would be slowed down and we’d end up competing with the system’s other partners for resources.

NJBIZ: Health care will remain a hot topic in this country for years to come. Let’s look five and 10 years down the road. What do you think will be the biggest differences in the hospital industry then?

GH: Health care is in a constant state of change, and you won’t have to go very far out into the future to see big changes. In the next five years we’re going to see many more physicians aligning with hospitals, either in an employment model or in some other close affiliation. I believe the days of the successful individual practitioner are going to be very limited.

Without a doubt, 10 years from now health care will be far more local than it is currently. More people will be served by ambulatory programs that will be tailored to the population on practically a neighborhood-by-neighborhood basis. For this model to succeed, however, there must be reasonable reimbursement for providers, especially for physicians. Hospitals and emergency departments will remain necessary, but there will be fewer of them. We’ll see more affiliations among hospitals as they work to avoid duplication and strive to gain service lines in areas where they may lack expertise.

I can guarantee that the future of health care is going to be very dynamic. That’s why I favor the independent, stand-alone nature of Trinitas Regional Medical Center. We serve a large region, but we are also very much attuned to our local community and can move swiftly when presented with either challenges or opportunities.

E-mail to: tomb@njbiz.com
On Twitter: @tombergeron5

Gary Horan

TITLE: CEO

AFFILIATION: Trinitas Regional Medical Center (Elizabeth)

ONE MORE THING: Horan has been very involved in the Boy Scouts. In 2012, he was given a “Lifetime Achievement Award” by the Patriots’ Path Council, Boy Scouts of America. He was previously honored with the “Silver Beaver Award” in 2000 and the “Good Scout Award” in 1996.

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