Despite the challenges — and there have been challenges — of the past few years in health care, Vail Health is forging ahead.

“After three years of a pandemic, it’s time to emerge and try to get back to some sense of normalcy,” said Will Cook, Vail Health’s president and CEO, at the annual State of Vail Health on Tuesday, Feb. 7.

In recapping Vail Health’s fiscal 2022, Cook highlighted internal and external obstacles — predominantly regarding its workforce and financial situation — and celebrated some of its achievements as he looked ahead to the future.

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“Despite all the external headwinds and despite all the internal challenges, for all intents and purposes, I think it’s been a better year for us,” Cook said.

Over its last fiscal year, the hospital continued its expansion, particularly with a focus on new facilities and behavioral health.

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Some of the cited accomplishments included the opening of two new facilities (one in Summit County and one in Roaring Fork Valley); receiving the entitlements and breaking ground on the Precourt Healing Center (its 28-bed inpatient facility, expected to open in 2025); putting the finishing touches on the Wiegers Mental Health Clinic (which will offer intensive outpatient behavioral health programming); and starting work on an employee-housing site in Edwards.

In addition to expanding its behavioral health facilities, Vail Health’s wholly owned subsidiary, Eagle Valley Behavioral Health, also became the state’s first new community health center in nearly three decades, a designation that opens up the organization to new funding opportunities.

Additionally, as Vail Health expands its services in neighboring Summit County, Chris Lindley, the executive director of Eagle Valley Behavioral Health and chief population officer for Vail Health, said it is working with the Summit County government to become its community mental health center.

“What that means is we’ll try to provide them with the same level of support, collaboration that we’re doing up here, but working with all of their nonprofits down there,” Lindley said. “It won’t take anything away from here, what we’re doing, but hopefully we can share the lessons we’ve learned here with that community as well.”

People and culture

Building and sustaining its workforce was a primary topic of Tuesday’s presentation, with the challenges being omnipresent and finding solutions being one of Vail Health’s top priorities. As Cook put it, Vail Health’s people and culture “will always be our North Star.”

This, he added, is even more critical given the current workforce environment, both locally and nationally.

“In an environment of great resignation, one in five leaving the health care industry and all the challenges associated with burnout, it really is now more than ever important to focus on your people and your culture,” Cook said, adding on several instances that the pending retirement of the baby boomer generation will also have widespread impacts on health care.

These external pressures manifested internally, creating the “perfect storm,” he added.

Specifically, Cook called out several losses of people in “key positions” from the hospital. This included a spine surgeon, two urologists, three primary care physicians, and an ear, nose and throat surgeon that took a sabbatical. For those that resigned, Cook said the reasons for leaving included daycare challenges, opportunities to sell their homes at a premium, and burnout.

In total, the hospital also had 40% vacancies in key clinical positions, which had an overall financial impact. Combatting workforce challenges, Cook said it had a 26% increase in labor expenses — both toward increased contract labor and benefits and compensation.

“Because we didn’t want to hurt service levels, we had to spend $13 million more in contract labor,” Cook said, adding that historically Vail Health spends around $2 million each year on this, meaning it spent $15 million in the last fiscal year.

Additionally, it spent around $8 million on increased compensation and benefits for its internal staff. And as Vail Health looks ahead, it’s planning to spend $194 million on compensation and benefits, which is a $7.8 million increase year over year.  

One of the outward impacts of this shortage can be doctor availability. And on Tuesday, an attendee asked if the hospital envisioned this improving.

“I don’t see it getting any better anytime soon,” Cook said, highlighting not only the industry-wide workforce challenges (including the looming baby boomer retirement wave) but also local ones.

Not only are there “challenges associated with trying to recruit people to the mountains,” but also the difficulty around recruiting specialized physicians when they can’t promise the breadth and depth of experiences in a rural community like this, Cook said.

“Unfortunately, we can’t provide every single service here. There’s oftentimes not enough volume to ensure quality or enough volume to ensure cost efficiency. And increasingly, because of the shortage of providers, and the one in five who’ve left, we’ve struggled to keep some of our doctors,” Cook said.

But for those employees it does have, Cook advocated for further patience and understanding from the community.

“They have been through the wringer in the last six to 12 months,” Cook said. “They’re working very hard, they’re doing their very best. We just literally have about 20% less of what we used to have. If it was 5% (less), then you wouldn’t feel much of it. But these are significant hits we’re feeling in terms of the lack of people to help us provide the kind of care and the service that we want to. We will get there, though, I assure you.”

While Cook didn’t see this problem disappearing soon, he did mention that Vail Health is working to create more pipelines to the health care industry. This includes an ongoing partnership with Colorado Mountain College as well as finding other ways to offer scholarship and internship opportunities to local high school students.

Aside from compensation and benefits, addressing top issues like housing and child care remain top of mind. 

“We’re talking to a variety of daycare operators to see how we can help them address some of their challenges. We’re working with the Vail Valley Foundation on their task force. We’re all leaning in, but I want to make sure you know we’re really investing in our people,” Cook said.

One of its largest housing projects is Fox Hollow in Edwards. Vail Health has put $20 million toward this to create both short- and long-term housing opportunities for its staff. The parcel — located at 18 and 22 Murray Road, between the EagleVet clinic and the Edwards Interfaith Chapel — is owned by Breckenridge Grand Vacations, but 100% of the 87 units (and 218 bedrooms) will be utilized for Vail Health staff. Currently, it is set to break ground on the property in March.

This project will not only almost double its employee housing — from 93 total units to 180 — but increase the diversity of its long-term rental opportunities for employees.

Financial headwinds

In addition to rising workforce issues, Tuesday’s presentation referred to 2022 as a “perilous year for hospital finances.”

Cook said all the mounting internal and external pressures “really resulted in nationwide and statewide financial difficulties for all the health systems that are out there.”

During the fiscal year, Cook reported that Vail Health saw a 49.3% decrease in its operating margin alongside a 21% increase in total expenses. The latter of which is predominantly related to rising labor costs as well as a 24.1% increase in supply chain expenses.

All in, Cook said Vail Health “broke even in FY 22 ish, just a little bit around there.”

“We had about a $60 million reduction to our reserves based on financial market performance, and we’ve continued to see unprecedented degradation to our own financial performance,” Cook said.

Looking ahead to the upcoming fiscal year, Cook said the hospital was committed to maintaining financial sustainability.

“We have to have the margins in order to carry out our mission, and we need to make sure we’re always on solid financial footing,” he said. “While we currently are in that place because of many years of disciplined work and strategic decisions, like many of you who run your own businesses or work on other boards, this will be a hyper-focus for now as we get through some of these unprecedented external headwinds.”

Prioritizing health, accessibility, affordability

Looking toward the year ahead, Cook listed a number of priorities for the hospital. Those include addressing the aforementioned “external headwinds,” but also a continuation of its growth. Additional priorities included focusing on affordability (with a focus on bringing down health insurance premiums), increasing accessibility of services, expanding orthopedic services and focusing on overall population health.

“We’re trying to get upstream at every turn,” Cook said.

“Your best shot at beating COVID, at beating whatever comes after COVID, at living your fullest life, at beating all the other diseases that ultimately we’re running from as we get older in life, is to really focus on your baseline health,” he added. “Pay attention to your diet, get some exercise, get out in that sunshine, enjoy these beautiful views, see your primary care physician on a regular basis, make sure you hit your screenings for whether or not it’s mammograms or colonoscopies, all the things.”

And as Vail Health looks ahead, it will continue to stay rooted in the community partnerships that have advanced it to where it is today. In its 2022 fiscal year, Vail Health gave around $25 million to local community initiatives and has committed $200 million to behavioral health in the community.

“What makes this valley great — besides the beautiful mountains and the outdoors and all the things that draw us here — it’s this common bond, constantly trying to do what’s right for the valley,” Cook said.

At the end of the day, as it prioritizes affordability, accessibility, population health and sustainability, Vail Health is just focusing on moving ahead.

“We really look forward to, from my perspective anyway, getting over these sort of current external headwinds and this perfect storm that’s brewing and trying to get back to a life that’s less stressful and a life where we’re not constantly navigating, pandemics and dealing with all the things,” Cook said.

This story is from VailDaily.com.