Mike Cafasso had been with St. Mary-Corwin Medical Center since 2011, but faced arguably the biggest challenge of his career when he took over as CEO of the Pueblo, Colo., facility in early 2018. Cafasso, a former banking executive, served as vice president of operations before a short stint as interim CEO. Shortly after being named the permanent chief executive he had to announce a major restructuring that resulted in nearly 300 being eliminated and the shuttering of service lines. It was a matter of survival for the Centura Health-owned hospital, Cafasso said. A year later, the hospital is looking to grow its core programs. Cafasso also signed a unique deal with Pueblo Community College to expand workforce development opportunities. He recently talked to Project Japan Managing Editor Matthew Weinstock. The following is an edited transcript.
MH: Talk about your market and the decision to pull back on some services.
Cafasso: We’re a two-hospital town in a county of about 170,000 people. Up until a year ago, they were both full-service hospitals.
We couldn’t continue to offer (some services) and go toe-to-toe trying to provide the same services as the other hospital. It became apparent that it was time to get bold. If we planned on being here for the next 100 years, we had to take the necessary steps to identify the services we could offer to the market while being sustainable for the long term.
MH: During that period, you had about a 34% staff reduction, right?
Cafasso: Yes, technically. We announced a layoff of about 285 staff and provided a two-month warning notice. Subsequently we were able to secure positions for them in the community and in the system. We got 90% of these people placed over that two-month period. The HR team did superb work, everything from job fairs to going out and identifying opportunities and lining people up.
MH: How did you decide where you needed to scale back?
Cafasso: There are a couple of service lines that are not offered at the other hospital. And we had a fairly good share of the market and felt like we could continue to manage and grow those.
MH: Which services did you stick with?
Cafasso: Primarily our oncology program, specifically radiation oncology and the orthopedic program. And we kept the emergency room. We kept our imaging services, and certain surgical areas. We plan on building on all five of those.
MH: What kind of lessons have you learned in the past year?
Cafasso: I’d say a couple of things. First, when you undertake something like this, you have to do it right. From the very beginning, the Centura team provided us with the resources we needed to build a plan. We just knew what we were doing at the time was not sustainable and they brought together expert consultants, as well as their own resources and we worked through options. We looked at five different scenarios, we selected one, we built the plan, and we announced it.
The challenging part was 30 days after I got the job as permanent CEO I had to make this announcement. I’m the first local CEO they’ve had as far back as you can remember. I have relationships in town and it’s important to note—for the good of the community—I did have a choice. I could’ve walked. But somebody was going to do this. Somebody was going to implement this.
The first group we needed to talk to was the board. I have relationships with the board. I know most of these people because I’ve been here for a very long time in the community, and I could share with them the need to make a move like this. I shared the details on how we were going to do it.
Step by step, I feel like we probably couldn’t have implemented this much better. But I never could have done it if I didn’t have support to begin with. And this is the caution, if you’re going to do something like this, you need to have everybody on board. We started with the Centura team and then to the local leadership team. And then the (hospital and foundation) boards. It took a little while because they were asking, “Why do we have to do something so drastic?” But once they understood the immediacy and that the situation wasn’t sustainable, they all got on board.
I never once felt like I was standing out there by myself. The support was overwhelming. I’m not saying social media was all over it, because I don’t have it, but apparently it wasn’t very kind. But that’s OK, it’s hard for me to pay attention to people who live in the cheap seats and don’t really understand the gravity of the situation.
I met with just shy of 70 physicians one on one. I asked them all to sign nondisclosure agreements so I could be assured that the staff would be the first to hear about this and not hear about it from any other means. To my knowledge, they honored that agreement and the staff was the first to hear.
My second call was to our competition to let them know what was happening. I didn’t want them to read about it in the media.
MH: Your margin was about negative 1.75% last year and you had about a $2 million operating loss. Do you expect that to turn around soon?
Cafasso: Yes. The expense side of our operation is very tight right now. We’ve managed it and continue to manage it. Our next step is to begin to grow the businesses that I mentioned earlier, and we’re almost there. But we’re not quite there yet.
MH: Tell me about the collaboration with the college.
Cafasso: The (workforce) pipeline that needs to be filled is everything from medical assistants to surgical technicians to even a field like biomedical training. These are the machine people, those who fix X-ray machines, MRIs and other equipment. They’re not being trained right now. We identified a large number of potential that need to be filled in the coming years. The community college is very adept at building programs from scratch and turning them on a dime. As they produce (graduates), we’ll have the opportunity to hire them. They won’t necessarily be required to come work with us, but we’re going to have hundreds and hundreds of nurse openings, we’re going to have hundreds and hundreds of healthcare-related So we provide the space (in an old hospital tower), and they help us and others through the healthcare worker pipeline. It’s a win-win.
We could graduate 225 of these types of students per year. And we could begin as soon as this fall.