Homegrown President

With U.S. hospitals facing an uncertain future from unprecedented federal health care reform, Mercy Hospital Northwest Arkansas’ recent choice for president shows it aims to maintain its current course, albeit with a new sense of urgency.

There may never have been a more daunting time to lead a hospital, admits Eric Pianalto. The Affordable Care Act is expected to spur deep cuts in federal reimbursements, and reshape the mission of health care to emphasize quality of services above quantity.

But Pianalto, 46, said he’s in a sweet spot compared to many U.S. hospital presidents. Mercy is a Catholic, tax-exempt entity that has always prized high-quality, compassionate care above profits, and the Rogers hospital can draw upon support and resources from the entire Mercy system.

“The ACA is an external factor. It changes our payment stream, but it doesn’t change our mission,” Pianalto says.

Pianalto, a Northwest Arkansas native, took over as interim president in July when former president Scott Street moved to a different role within the institution.

Pianalto was offered the permanent position in early November. Wayne Callahan, Mercy NWA board chairman, heralded Pianalto then as “exactly the right leader at this time in our history.”

Pianalto has been with Mercy since 1997, in a variety of diverse roles. Most recently, he was chief operating officer for regional operations in Arkansas and Oklahoma. He says two decades with Mercy have given him a balanced view of health care, which will aid him in keeping perspective during the inevitable shifts and challenges to come.

The ACA takes effect Jan. 1, and various factions of the health care industry are sprinting to transform practices and prepare for revenue cuts. The Act mandates reductions to Medicare reimbursements, and commercial reimbursement rates are expected to drop as well, since states will closely monitor overall health care rates.

The loss in real net revenues for hospitals is likely to reach 10 percent, but worst-case scenarios project reductions at 25 percent or higher, according to advisory groups and the American Hospital Association. To survive, hospitals must reduce readmission rates, shorten lengths of stay for patients, improve quality of services and lower costs overall.

Pianalto said reimbursements at Mercy Hospital NWA have already dropped 2 percent due to this year’s sequestration, and that percentage may increase. He declined to forecast the percentage of losses Mercy is expecting, but says the hospital isn’t planning any major changes in services or staffing.

“We do lots of modeling to prepare for the worst,” he said. “We’ve been on a journey, even before affordable care, to focus on improving health, quality of care and patient satisfaction.”

 

Home Grown

Pianalto’s leadership was cultivated here in Northwest Arkansas. He was born at St. Mary’s Hospital in Rogers, into a family of Italian immigrants and sharecroppers who settled in Tontitown during the 1890s. He graduated from Springdale High School, married a Fayetteville girl and received his undergraduate degree from the University of Arkansas. He later earned a master’s in business administration from Webster University.

Health care is actually Pianalto’s second career. His first job was in manufacturing, which took him to Indianapolis. He and his wife, Dawn, decided within a short time that they prefer the south, so he took a job with a family practice/occupational medicine clinic in Rogers.

“I knew pretty quickly this was a good field for me,” he said. After three years, he accepted a position with St. Edward, a Mercy hospital in Fort Smith, and he’s remained in the Mercy system since. He’s worked in employee relations and operations, billing and collections; he recruited physicians and helped develop and implement strategies in multiple markets.

“Mercy allowed me to do a lot of different jobs, viewing health care from both the hospital’s and physicians’ perspective. I’ve seen it from the bottom up; I literally answered phones, scheduled appointments and changed light bulbs. My path has been winding,” Pianalto said.

Martine Pollard, the hospital’s executive director of communications and community integration, said typically the search for a hospital administrator is made nationally. “Usually you bring in leaders from another state.  Eric is unique in that he’s been able to have multiple career tracks while working for the same employer.”

“I was ready to move the word interim from his title soon after he took the position,” said Dick Trammel, member of the Mercy board. “Eric is the complete package; he has the intellect, a heart truly aligned with the spirit of Mercy, and well, he’s a hometown boy that I’ve enjoyed working with before. I respect him as a leader and mentor to the people of Mercy NWA. What else could we have asked for?”

During his few months as interim president, Pianalto oversaw efforts to improve ambulance entrance and exit from the hospital area. Construction will begin in early 2014 to expand the emergency department and reconfigure existing hospital space for more patient rooms. Administration will move from the third floor of the hospital to an adjacent clinic building.

Under the Mercy structure, each hospital president is partnered with a physician who oversees the clinics. Pianalto’s counterpart is Dr. Stephen Goss, president of Mercy Clinic in NWA. The two collaborate and support each other’s efforts. Pianalto said he is supporting Goss’ passion for behavioral health.

“We want to prevent diseases and impact the overall health of the community. We need to find creative ways to meet behavioral needs, especially those that are underserved,” he said. “For instance, one challenge is how we address obesity and diseases associated with obesity, and support healthy weight management. We don’t receive a lot of payment for that. But if we only focus on cost, we’ll miss on patient satisfaction and outcomes.”

As an example, Pianalto said the Mercy Spine Center in Springfield, Mo., has a team of five spine surgeons and physicians who jointly evaluate, diagnose, and treat spinal injuries.

Those five physicians evaluate all patients, and one of them is a behavioral health specialist.

“We had a patient with back pain, but he was overweight and depressed, and those factors were leading to the back pain,” Pianalto said. “The help he really needed was for those issues; he didn’t need spinal surgery.”

Being part of the larger Mercy system increases opportunities for such collaboration, and for the use of telemedicine to consult specialists in other locales, he said. The Mercy system is the sixth-largest Catholic health care system in the U.S., with 32 hospitals, more than 1,900 physicians, an operating revenue of $4.6 billion and $5.2 billion in assets.

On the clinic side, Mercy NWA is expanding services to downtown Rogers and Centerton. A new clinic also opens this month in Bella Vista, giving patients there access to 17 physicians in both general and specialty care.

A large part of Pianalto’s focus will be on physician recruitment, which is highly competitive nationally. Mercy NWA added 21 physicians during the past year, including two neonatologists, and the addition of 15 to 20 more physicians is expected during the coming year. 

“Arkansas continues to see physician shortages. It’s difficult to recruit in such a rural state,” he said. “Of course, our area has become more metropolitan in the past 10 years. We recruit from a national market, just as Walmart and J.B. Hunt do.”

Recruiting must consider the area’s aging population, Pianalto said. “There’s an increasing focus on senior health.” A $1 million gift this year from the Walmart Foundation is aiding in construction of a senior behavioral center on the hospital’s 7th floor.

 

Comments Welcome

When Pianalto is in public, he often wears a Mercy shirt.

“I love for people to stop me and tell me about their experiences, positive or negative. I get a lot of praise, about how the physicians and nurses treat patients,” he said.

Individuals in the community can support Mercy’s mission by providing feedback about their experiences, he said.

“We’re intentional about how we hire people into this Catholic, Christian-based environment. We make sure they meet standards. We also spend a lot of resources training them to provide compassionate service and ingraining history,” he said. “When you come here, we want you to feel something different; that’s part of the healing process. We want you to experience the healing ministry of Jesus.”

Mercy’s spiritual mission leads to philanthropy from “lots of wonderful, grateful people,” he says. And charity care is intrinsic. The Mercy system provided $131 million in traditional charity care during 2012; Mercy NWA’s portion was $7.2 million. Should the ACA help more patients obtain insurance, this could be an area of savings for the hospital going forward.

More than one-third of Arkansas hospitals lost money this year, Pianalto says, so cuts to reimbursements will “take the money out of an already burdened health care system.”

“If you abolished the health care industry and started over, you wouldn’t design all these stand-alone entities,” he said. “We’ve been asking for 20 years, how do we bring our services together, with less cost to the patient? We started on this journey long before ACA.”

The American Hospital Association did support the passage of the ACA.

“The focus must be to reduce costs: Get the diagnosis right, get rid of unnecessary tests, improve outcomes [and] be more transparent with pricing,” he said. “We will continue on our path for the people who live here, seeking to bring more services and getting to the root of their diseases. We want to be here for the next 200 years, offering compassionate care and a healing ministry. We will grow and meet needs of the community. I’m not afraid of new challenges. It’s exciting to me.”