Baptist Health Care Corporation

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Baptist Health Care Corporation

1000 West Moreno Street
P.O. Box 17500
Pensacola, Florida 32522
U.S.A.
Telephone: (850) 434-4011
Fax: (850) 469-2307
Web site: http://www.ebaptisthealthcare.org

Not-for-Profit Corporation
Incorporated: 1951 as Baptist Hospital
Employees: 4,000
Sales: $400 million (2004 est.)
NAIC: 621493 Freestanding Ambulatory Surgical and Emergency Centers; 621498 All Other Outpatient Care Centers; 621610 Home Health Care Services; 621999 All Other Miscellaneous Ambulatory Health Care Services; 622110 General Medical and Surgical Hospitals; 623110 Nursing Care Facilities; 623311 Continuing Care Retirement Communities

Baptist Health Care Corporation operates medical facilities in the Florida Panhandle and Gulf Coast and Alabama. The company's flagship Baptist Hospital in Pensacola was a pioneer in controlling costs through incentive programs in the 1960s and 1970s. It grew through acquisitions and new buildings in the 1980s, but emerged with substandard facilities and an abysmal customer service reputation. Its new leader focused the organization on better customer service through employee empowerment, and soon BHC was winning prestigious awards. BHC has leveraged its much-vaunted corporate culture with a side venture that provides customer service presentations to staff from other organizations.

OPENED IN 1951

Pensacola's Baptist Hospital opened in 1951. Its founder was Earl R. Gaston. Funds for the $1.25 million hospital included a federal Hill-Burton grant and $600,000 raised from the local community.

Baptist originally had 95 beds, according to Dr. Pat N. Groner's revealing 1977 tome Cost Containment Through Employee Incentives Program. It was considered large at the time, he later told the Health Care Management Review. Groner served as administrator of the Baptist Hospital in Pensacola for decades. Groner's father and brother had led the Baptist hospitals in New Orleans and Memphis. "We've not been opposed to nepotism in this organization," he explained.

After a couple of additions, by 1963 Baptist's bed count was 325, and the hospital had an outpatient surgery center and an intensive coronary care unit. In the late 1960s, the Hillhaven Convalescent Center across the street from the hospital was acquired and converted into the Specialty Care Center, a facility for mental health and substance abuse treatment.

Baptist's first capital campaign raised money for another addition in 1972, bringing the hospital to 520 beds. There were roughly 900 full-time employees, paid an average annual salary of $6,664, which was relatively generous for Florida but still less than the national average.

According to data in Cost Containment, in 1964 the hospital had operating expenses of $3.1 million and payroll expenses of $2.0 million. Ten years later, these figures had increased to $12.3 million and $7.7 million. Baptist admitted 15,000 patients in 1964 and almost 20,000 in 1974.

CONTAINING COSTS

The hospital's management addressed rising healthcare costs through incentive programs in areas ranging from the operating room to the coffee shop. The program was officially launched in 1965. In a foreshadowing of things to come, in the 1970s the hospital began hosting visiting administrators eager to learn the secrets of their efficiency; this resulted in the development of a three-day workshop to present its principles of incentives. In 1974 Baptist hired consultants from the Medicus Systems Corporation to improve its methods even more.

Capital requirements rose dramatically. The hospital's budget for new equipment had been $8,000 in 1954, according to Cost Containment. In the mid-1970s, the hospital spent $1 million in one year to keep up with improving technology.

Baptist also faced soaring insurance premiums due to a wave of malpractice suits sweeping the industry. To save money, it shifted its coverage to a newly formed offshore carrier called Multi-Hospital Mutual Insurance Company Ltd. In 1981, following several years of growth in its insurance business, Baptist acquired American Continental Insurance Company (ACIC).

Another ancillary venture was the 1975 conversion of an apartment complex (Mallory House) into senior housing. A few years later, this was followed with construction of the Azalea Trace life care facility in 1981.

Baptist Hospital was a charter member in the Voluntary Hospitals of America cooperative which was launched in 1977. Baptist Regional Health Services began leasing the nearly defunct Jay Hospital in Santa Rosa County in 1979.

RESTRUCTURING

The parent company, Baptist Care Incorporated (BCI), was formed in 1983. In the same year Jim Vickery took over the organization from Pat Groner and Mizell Memorial Hospital became an affiliate of the group; Mizell soon underwent a massive renovation. BCI became known as Baptist Health Care Corporation (BHC) in 1989.

BHC grew through mergers and new building projects in the 1980s. It ventured into the home healthcare market and added a standalone urgent care facility. New retirement homes were added in the mid-1980s while the original hospital was expanded yet again and the Gulf Breeze Hospital built. Some of the senior-oriented facilities were expanded towards the end of the decade.

Not all plans came to fruition right away. A plan to add a satellite to BHC affiliate St. Joseph's in Tampa failed to gain the necessary approval from the state in 1986, though it was revived years later.

Originally called Baptist Hospital, the legal name had changed over the years. As the corporate structure evolved, the entity became known as Baptist Hospital Inc. (no comma), Baptist Regional Health Services, Inc., and Baptist Hospital, Inc. (with a comma). The parent Baptist Health Care Corporation was formed in 1989.

The system was reshaped through mergers and downsizing in the early 1990s. BHC teamed with Sacred Heart Hospital to run some programs of University Hospital after it was shut down. However, said future CEO Al Stubblefield, its home market of Pensacola was left with one too many hospitals. BHC then had two local rivals, and was saddled with an inconvenient location next to the worst part of town.

ENGINEERING A TURNAROUND

By the mid-1990s, the system had five hospitals, as well as a nursing home and a mental health center; it employed 5,500 people. It had also expanded its family medicine practice. In 1995, BHC's flagship, the Baptist Hospital in Pensacola, ranked as one of the worst in the country in terms of customer satisfaction.

COMPANY PERSPECTIVES

Baptist Health Care's mission is to provide superior service based on Christian values to improve the quality of life for people and communities served. While quality in health care can be defined in many different ways, at Baptist Health Care quality means recognizing the diverse clinical needs of the customers we serve and aligning our corporate goals and objectives to continually exceed them.

Part of the reason was unhappy employees. Annual turnover was 33 percent. Al Stubblefield, chief operating officer at the time, set out to improve customer satisfaction by raising employee morale and focusing the organization on service excellence. The process included soliciting employees for ideas. BHC also sent groups to benchmark other healthcare institutions across the country.

In 1997, BHC introduced a leadership development program for management dubbed "Baptist University." It used tools such as the Myers-Briggs Type Indicator (MBTI) test to accommodate work style preferences. Two years later it set up the Baptist Healthcare Leadership Institute, through its for-profit Baptist Health Ventures unit, to impart its motivational insights to other healthcare organizations. In its first few years the institute claimed to have assisted staff from 1,600 hospitals.

50TH ANNIVERSARY IN 2001

Meanwhile, Vickery retired as CEO and was replaced by Stubblefield. Also, Mizell Hospital's longstanding affiliation with BHC was terminated in 1999. In 2000, Baptist opened ambulatory care facilities in Escambia and Santa Rosa counties. The next year, the group's celebrated its fiftieth anniversary by having staff perform 50 community service projects.

Following a practice CEO Al Stubblefield observed at New York's famous Ritz-Carlton Hotel, in February 2001 BHC began mandating ten-minute daily meetings for staff. These briefings were considered the equivalent of 40 hours a year in training. Fortune noted BHC's employees averaged 60 hours of professional training a year in all.

BHC began appearing on Fortune 's "100 Best Companies to Work For" list in 2002. In other recognition, the group's Baptist Hospital Inc. unit received a Malcolm Baldrige National Quality Award in 2004.

All was not sunny. The organization was hit with three hurricanes in the space of the year. One of these, Hurricane Ivan, caused a reported $50 million worth of damage to BCH. However, most of this was covered by government and insurance funds.

BHC's revenues were $443 million in 2004, according to Fortune; however, Moody's reported the figure to be about $65 million less. Three facilities—Baptist Hospital, Inc. (which included Gulf Breeze Hospital), Baptist Manor (nursing home), and Lakeview Center, Inc. (mental health and substance abuse)—made up about 60 percent of total system revenues, noted Moody's in its press release. BHC had roughly 19,000 admissions a year.

Nurses were making an average of $53,000 a year. With the staff turnover rate reduced to the low teens, the six jobs BHC created during the year reportedly attracted more than 19,000 applicants, according to Fortune.

In 2005 CEO Al Stubblefield published a book called The Baptist Health Care Journey to Excellence: Creating a Culture That WOWs! At the time, BHC was looking for financing to open a $30 million sports medicine institute.

PRINCIPAL SUBSIDIARIES

Baptist Health Ventures; Baptist Hospital Inc.; Baptist Manor; Baptist Medical Park; Lakeview Center.

KEY DATES

1951:: Baptist Hospital opens in Pensacola, Florida with about 100 beds.
1963:: An addition increases the number of beds to 325.
1969:: A neighboring nursing home is acquired to house a mental health unit.
1972:: The largest expansion to date leaves the hospital with a total of 520 beds.
1975:: Multi-Hospital Mutual Insurance Company is set up in Bermuda to avoid skyrocketing malpractice premiums.
1977:: Baptist Hospital is a charter member of the Voluntary Hospitals of America cooperative.
1981:: American Continental Insurance Company is acquired; the Azalea Trace nursing facility is built.
1992:: BHC partners with Sacred Heart Hospital to run programs of the recently closed University Hospital.
1995:: Baptist Hospital is ranked one of the worst in the country in terms of customer satisfaction.
1997:: "Baptist University" leadership development program for managers is launched.
1999:: The Baptist Healthcare Leadership Institute established.
2002:: BHC begins appearing on Fortune 's annual listing of "Best Companies to Work For."
2004:: BHC gets a Baldrige National Quality Award.
2005:: CEO Al Stubblefield publishes a book of BHC's organizational insights.

PRINCIPAL OPERATING UNITS

Andrews Institute; Atmore Community Hospital; Baptist Hospital; Baptist Leadership Institute; Baptist Manor; Baptist Medical Park-Navarre; Baptist Medical Park-Pensacola; Gulf Breeze Hospital; Jay Hospital; Lakeview Center; Portofino Medical Spa.