A hospital in transition

Enloe’s expansion means growing pains for Chico’s only hospital

TOP DOG <br>Phil Wolfe, chief executive officer for Enloe Medical Center, came to Chico for the post in November 1995 from a job in San Luis Obispo. At the time, Enloe was in a different kind of financial crunch. Some salary increases were frozen and the hospital was offering early-retirement incentives. Now, Enloe can’t find enough nurses. Wolfe is credited with creating an entity to negotiate with HMOs on behalf of doctors, many of whom had been taking their most profitable surgeries elsewhere.

Phil Wolfe, chief executive officer for Enloe Medical Center, came to Chico for the post in November 1995 from a job in San Luis Obispo. At the time, Enloe was in a different kind of financial crunch. Some salary increases were frozen and the hospital was offering early-retirement incentives. Now, Enloe can’t find enough nurses. Wolfe is credited with creating an entity to negotiate with HMOs on behalf of doctors, many of whom had been taking their most profitable surgeries elsewhere.

Photo by Tom Angel

There are actually three entities comprising “Enloe.” There’s Enloe Health System (which provides management and administrative services), Enloe Foundation (which raises money for charitable purposes) and Enloe Medical Center (the hospital)--all of which are audited by an outside contractor, as required by law.

Chico’s oldest—and only—hospital faces changing timesbyIf Enloe Health System’s relationship with the Chico community were a romance, it would be in the transition phase: still plenty of warm, fuzzy feelings, but neither partner afraid to let criticism creep in.

It’s been a community mainstay since Dr. Newton Thomas Enloe started the hospital in 1913, and there have been few people in Chico who haven’t had a loved one born or treated within its walls. Today, many expansions later, it’s the regional trauma and surgery center for the area.

The hospital is also a study in contrasts. Enloe just unveiled an impressive, new $9 million cancer center at the same time it was slashing millions from its budget. The hospital is a nonprofit, but its leader is one of the highest-paid people in Chico. Administrators say they value nurses but spent lots of money in a contentious and unsuccessful attempt to keep them from unionizing. Enloe Health System owns many acres of land ($136 million worth, according to Butte County tax records) but has steadfastly refused to sell the local school district the parcel of land it wants for a new high school at an affordable price. The hospital wants to expand to serve the community’s needs, but that will mean tearing down houses and antagonizing neighbors. Enloe, as a character, is both hero healer and maligned monopoly.

Enloe is like a family, agreed one nurse, but it’s a dysfunctional family, with hospital administration playing the role of the “very strict, abusive stepfather.” And if workers are unhappy, how healthy can they keep their patients?

The restructuring of the nation’s health care has resulted in a series of blows to hospitals, particularly those in non-urban areas that aren’t well-served by health maintenance organizations. California hospitals are being reimbursed less and less when it comes to patients on Medicare (whose recipients comprise 45 percent of Enloe’s business). State and federal governments are the payers on a full 60 percent of services at Enloe. Meanwhile, patients are sicker than ever, and hospitals statewide are understaffed.

Enloe, administrators agree, had to find a way to remain a player in this new world of managed care, pitiful reimbursement rates and rising costs. The bill for such supplies as blood products and pharmaceuticals went up $3.4 million in one year. The cost of insuring its employees similarly skyrocketed, so Enloe picked up two-thirds of the cost and passed $1 million on to workers, mostly in the form of higher deductibles. In fiscal year 2002, Enloe Medical Center’s budget suffered a deficit of more than $3.7 million, with expenses of nearly $190 million. It couldn’t keep hemorrhaging like that and stay in business.

“We did what we could to anticipate [the deficit], but it was just too big of a number,” said Chief Executive Officer Phil Wolfe. (He deals with outside issues, while Chief Operating Officer Dan Neumeister runs the hospital.)

The hospital had to decide: “What are the needs of the community, and how do we provide that? We know that some of those [services] are going to lose money and some of those are going to make money, and in the end we want it [to work out].”

Administrators called Enloe’s about-50 directors to a “budget retreat” on how to improve operations by increasing revenues and reducing expenses. The first place they looked, said Neumeister, was services that were already being provided elsewhere in the community, such as psychiatric counseling and extended care (skilled nursing for the elderly and infirm). Profitability—even for a nonprofit—was a factor. It’s the nature of the nation’s health care system: Reimbursement rates for nursing homes are abysmal, but cancer centers bring in excess funds. Intensive-care units almost always run in the red.

Glenn Medical Center, in Willows, was draining so much money that Enloe announced in early 2002 that it would turn it into an outpatient center—to great community outrage. Enloe, which bought out its only competitor, Chico Community Hospital, back in 1997 and turned the facility into a subacute center that doesn’t cost a lot to operate, plans to keep that open.

Cuts ranged from closing the Enloe Outpatient Center lab to getting rid of free coffee in the cafeteria and the feel-good Tootsie Pops that workers found attached to their paychecks but were costing the hospital a not-so-sweet $1,000 a year.

All of these decisions aren’t made in a vacuum. “The hospital board is very involved,” said Michael Baird, a doctor who has served on Enloe Medical Center’s board of trustees since 1980.

Enloe officials would just as soon forget about the bad blood drawn during the unsuccessful fight to keep out the California Nurses Association. The hospital hired the Burke Group, a Malibu-based labor relations firm with a reputation for divisive tactics and a history of federal fines for violating labor laws.

Some Enloe nurses resent the money spent to defeat the union—rumors continue to roll around that it was $1 million—especially since it is workers who bear the brunt of increased benefits costs and trimmed-down staffs.

Dennis Sweetland, an RN with 19 years at Enloe, feels that when Enloe changed its paid-time-off (PTO) system, it was hoping to push out nurses who have been there so long they earn close to $30 an hour. The structure reduces the percentage of the workers’ banked PTO. “Some people got 50 cents on the dollar,” Sweetland said.

The change struck some nurses as inconsistent with the industry, coming at the same time hospitals like St. Elizabeth’s in Red Bluff, owned by Catholic Healthcare West (still rebounding from operating losses), were enhancing their benefits packages.

“It’s like we’re funding their war against us,” said Julie Castellano, an RN at Enloe. Instead of seeing the organizing attempt as a chance to realize there were things they needed to work on in terms of work conditions and employee relations, Enloe “went immediately to defense mode,” she said.

The Burke Group’s September 2000 loss in Chico trashed the firm’s previously 96-percent win rate. Bringing up the union battle—especially in light of the deficit and cuts—is like rubbing salt on a wound.

“We made the best decision we could at the time with the information we had,” Wolfe said. “We’re disappointed, [but] that’s behind us and we’re moving on.”

Neumeister said keeping Enloe “union-free” would have been the best thing for everyone. But now that the union is here, he said, Enloe administration is committed to working with its leaders. “This is a democracy. I need to accept this decision,” he said. “I’m sorry that they’ve chosen the union, but I respect each one of them for the decision that they’ve made, and we’re working with them.”

Neither Neumeister nor Wolfe wanted to Monday-morning quarterback the decision to go with the Burke Group. “We try to bring in help wherever we don’t have the expertise,” Neumeister said. (For example, a few years ago, Enloe spent $839,000 to hire Maritz, a Texas-based marketing organization, for a survey and incentive program intended to increase productivity.)

Although nonprofits are usually required to report via IRS forms their spending on outside contracts, Enloe officials have decided it’s legal to avoid letting what it spent on the Burke Group go public. Neumeister said Enloe will never tell, and Chief Financial Officer Christine Sarrico elaborated later that “the Burke Group is not a professional organization and therefore is not reportable. We looked into this pretty thoroughly to be sure.”

Neumeister did settle one lingering rumor: “We haven’t used Burke Group since the night we lost.”

To return to the romantic-relationship metaphor, neither side feels it has “closure.” And neither feels understood.

Now, union supporters at the California Nurses Association tell of Chico nurses choosing to commute to Kaiser or UC Davis Medical Center in Sacramento rather than stick it out with Enloe. Recruiters from other hospitals have come to town dangling big incentives in search of employees, and Enloe knows it will have to fight to keep them.

“We want to make sure they know that they’re appreciated,” said Jan Ellis, vice president of ambulatory services.

Part of the problem, she said, is too-high expectations. “Nurses today are not doing what they envisioned in nursing school.”

“They’re being expected to do a lot more with less time,” agrees Delores Sellers, a nurse at Enloe’s Outpatient Center who also serves on the Professional Performance Committee, which has been working to sort out elements of the new union contract and hear concerns about patient care and other issues. Complaints can range from seemingly minor, such as not being allowed to post union material on Enloe bulletin boards, to severe, such as being forced to work in a specialty they’re not trained in.

Patient loads have gone from three to four at a time to six to seven. “One of the big things you’re hoping to do is do a good job taking care of your patient, to listen to them, to address family concerns, to advocate for them,” said Sellers, who first worked at Enloe in 1976.

The morale and staffing problems bother Sellers, for personal as well as professional reasons. Her children were born there. “My family goes to Enloe, and I want it to be the best.”

She knows Chico nurses who live in Redding two nights a week to work at Mercy Medical Center or work per diem at Feather River Hospital in Paradise. “They drive past Enloe to go to Feather River,” she said. “And they’re good nurses.

“I think a lot of people are looking elsewhere,” Sellers said. “I have a theory that we don’t have a shortage of nurses in Chico. I think we have a shortage of nurses who are willing to work for Enloe—and there’s a big difference.”

To fill the gap, Enloe has been using 33 or 34 traveling nurses, many of whom stay in the old Victorian board and care home near the hospital. It costs Enloe twice as much per nurse to have the travelers, but Ellis said without them the hospital would have had to close beds.

“It’s terrible, because … you’re constantly in a training mode,” admitted board trustee Dr. Baird, even as Wolfe interrupted to say the system is working well and Enloe tries to match the travelers with their areas of expertise. Care at Enloe is better than ever, Wolfe said.

Another thing that makes the idea controversial is that travelers have the privilege of not being “floated” to other units, while Enloe-based nurses have been asked to work outside of their expertise. “It’s just kind of demeaning,” said Sellers, who sees complaints about “assignments against objections” in her role on the committee.

“I was actually expected to run a floor that I know nothing about,” said Charlotte Sweetland, an RN who quit Enloe two years ago.

Castellano said the problem is multiplied by the heavy patient load and 12-hour shifts, sometimes with no lunch break. “To be a diligent nurse, you have to double-double check everything,” she said. “As triage was once something of the ER, now triage is something of the floor. You pick the sickest one and you do it.” Sometimes, she said, patients will call for help and nobody comes. “They’ll wait for hours” for pain medication, she said. “It mortifies us that this is happening. … These people come to us for help.”

The issue, for some nurses, is not pay rates or being too busy to do their jobs; it’s about trust. If things look worse now, post-certification, Enloe’s administration can make the case that the union is no help to nurses and perhaps even call for a recertification vote.

But in the last couple of weeks, Sellers said, “There have been some efforts on the part of management to identify ways that administration and direct patient care nurses can work together.

“The huge, huge issue of the whole contract was the need for nurses to be able to speak up for patients without the fear of retaliation.”

When criticisms surface, the response from hospital brass seems to be twofold: It’s a vocal minority of disgruntled workers, and, furthermore, repeating criticism just hurts the community by dragging down the hospital’s reputation.

“I think the morale of most of our staff is pretty good today,” said Ellis, referencing a survey gauging employee satisfaction in 1997, 1999 and 2001. She said some of the nurses who left for greener pastures came back after realizing they were better off at Enloe.

Baird offered: “Because we are the only act in town, nobody has any place to look at.”

In 2001, the turnover rate for nurses at Enloe was only 6.49 percent, compared to an average of 14.8 percent for nurses statewide, according to the California Healthcare Association. The turnover rate for all Enloe employees was 11.62 percent.

“What we’re concerned about around here is whether people are being treated fairly, and if they want to do something else because they have a different opportunity, it’s not because they’re not being treated fairly,” said Wolfe. California is short thousands of nurses, so opportunities are plentiful. “It’s all relative. We know it’s hard here.”

Baird said, “We have headhunters who have called our employees at work, offered them $6 an hour above what they make plus a sign-on bonus because there’s such a shortage.” The shortage extends to other medical positions, and Baird has heard of doctors “offering new recruits more than they’re making themselves.”

Enloe does marketing surveys to find out exactly what workers earn in comparable markets and fashions raises accordingly. That’s how, Neumeister said, Enloe came to the conclusion that its benefits structure “was probably a little on the generous side. We needed to right-size that and follow the market.”

But there’s $6 million in next year’s budget for wage increases, Wolfe pointed out. A 5 percent increase will take effect Jan. 19, 2003, and union nurses might also get a 3 percent merit raise.

The highest-paid employees are reticent about having their salaries—also set by comparing market rates—printed in the newspaper but concede that they are public record. In 2000, Wolfe earned base compensation of $325,028. If Wolfe and Neumeister (who earned $192,728 in 2000) meet certain productivity goals, they are eligible to earn thousands more in deferred compensation—bonuses, essentially.

Wolfe said his personal goals include lobbying at the government level for better reimbursement rates. More than half of hospitals nationwide—58 percent—lose money on Medicare patients, and 32 percent don’t turn a profit at all, according to the American Hospital Association.

Ellis has been with Enloe for about three decades, much longer than her bosses. “We’ve had financial troubles other times in the past,” she said. It was much more “drastic” back when the leadership was changing, Community Hospital was being purchased, and the Balanced Budget Act raided revenues. “I remember when vendors didn’t want to take our Enloe checks.

“I would characterize us as climbing, and we’re at least halfway up."