The Ballad Merger V: the Pandemic

Ballad Health nursing promotion

by Carol J. Bova

The nursing shortage was a top issue for Ballad Health from the moment the health system was created in 2018 from a merger of Mountain States Health Alliance and Wellmont Health System. The new health system, which served far Southwest Virginia and neighboring parts of Tennessee, laid out a plan in its first annual report to tackle the burgeoning workforce crisis that was afflicting much of rural and small-town America.

The annual report noted the following initiatives:

  • Putting $10 million annually into increasing nursing wages which affects one-third of [the] work force. The first two classes of the ETSU/Holston Valley accelerated BSN program graduated in May and August, 2018, producing a net gain of 34 additional nurse graduates above previous program capacity.
  • Contracting with Northeast State Community College (NESCC) for admission of 20 additional associate degree nursing students each spring semester starting January, 2019. … This provides an additional 20 new graduate nurses annually above current capacity at NESCC program.”

These measures were clearly stop-gap. First, while the $10 million annual increase to nursing wages might have helped retain nurses, it did nothing to train or recruit new nurses. Second, educating 52 new nurses (only 34 in Virginia) over two years was a positive but only a fraction of the number needed— even assuming they all wound up working for Ballad.

Dennis Barry, in his first report as Merger Monitor to the Southwest Virginia Health Authority board wrote:

While Ballad is taking steps to recruit and retain more nurses, the nursing and allied health shortage will not be alleviated in the short-term and is likely to continue to affect Ballad and its patients for at least the near to mid-term future.

Another strategy in the pre-COVID era tackled the nursing shortage from the demand side — reducing the number of hospital admissions. In a press release, the company stated, “Ballad Health worked with physicians and payers to reduce the number of low-acuity hospital admissions by more than 5,000. By avoiding these admissions, Ballad Health has been successful in reducing demand for nurses.” 

From the merger in 2018 through February 29, 2020, annual inpatient admissions actually declined by 14,900 (14.2% percent) and emergency room visits declined by 103,000 (21.7%).

Ballad’s initiatives were heading in the right direction, but they didn’t suffice when the pandemic hit. Official documents have withheld details of the magnitude of the resulting crisis, but news reports indicated that Ballad needed 350 more nurses in November 2020.

Although Ballad reported the data, neither Virginia nor Tennessee regulators would release it because they had agreed that Ballad could determine what would be kept confidential. “Attachment 12, Recruitment and Retention of Nurses,” was marked “Confidential” in Ballad Health’s Annual Report for Fiscal 2020, as was its salary equalization plan, employee engagement survey, staffing ratio, recruitment and retention of physicians and advanced practice providers.

Here is what we do know from Ballad’s Fourth Quarter 2020 Report:

  • Net patient revenue was down $139.1 million below the same period the previous year.
  • Non-operating income was down $10.7 million from the prior year.
  • Operating expenses were $54.3 million lower than the previous year (not including the new electronic health record system and the costs of COVID-19).
  • Employee furloughs, 10-20% pay reductions for executive personnel, and 20% cuts for physicians and advanced practice providers, and the CEO’s cut of 100% of his salary resulted in about $40 million in savings for the quarter.
  • Ballad Health recognized $82.5 million in incremental federal Coronavirus Aid, Relief and Economic Security (CARES) Act funding in fourth quarter.
  • Outstanding debt increased $30.3 million over the prior year.
  • Reserves were down $200 million as a result of stock market declines.

On March 25, 2020, Ballad executives notified the Health Commissioners of Tennessee and Virginia that they considered the pandemic a force majeure event and a resulting Material Adverse Event. They followed on April 3, with a request for suspension of the regulatory terms imposed as a condition of the 2018 merger for the duration of the emergency and a reasonable period to recover thereafter.

On March 31, the Tennessee Department of Health and Tennessee Attorney General’s Office temporarily suspended certain provisions of the COPA in order to allow Ballad to fully focus its staff and resources on responding to the COVID-19 pandemic. (A complete list of the suspended provisions can be found here.)

The TDH Commissioner of Health and the Tennessee Attorney General “stressed that this suspension is only temporary and does not in any way affect Ballad’s commitments and obligations under the COPA, including its overall monetary commitments.”

Suspended Monetary Obligations

  • Financial commitments, but Ballad must update plans. (Timeframes to be determined.)
  • Facility Maintenance and Capital Expenditures
  • Employee Pay/Benefits Equalization
  • Career Development
  • Employee Retention/Termination/Severance

Suspended Non-Monetary Obligations

  • Data Collection: Reports to the Tennessee Department of Health
  • Quality Reporting to the public
  • Deletion or Repurposing of Other Service Lines of Non-Hospital Facilities
  • Bond Issuance and Indebtedness

On April 23, Virginia’s response came in a letter (see pages 25 of 28) in which Virginia Department of Health Director Dr. Norman Oliver likewise suspended some terms of the Virginia Cooperative Agreement Conditions. They appear to mirror the Tennessee suspended terms. However, he said, “The total spending commitment required by each of these conditions is not amended and shall not be reduced.”

Response to the Pandemic. By 2019, Ballad had combined the medical/surgical and ICU units from Mountain View Hospital with Lonesome Pine’s. When the pandemic hit in 2020, Ballad designated Lonesome Pine as the Wise County COVID-19 treatment and quarantine facility. Lonesome Pine has 60 beds and 18 emergency beds. The emergency room stayed open, but all non-COVID-19 acute care, surgical, and obstetric cases were sent 11.5 miles to Norton Community Hospital. If a case was more serious than could be served locally, the patient had to be treated at Holston Valley, Bristol Regional, or Johnson City Medical Center – all in Tennessee and 46 to 69 miles away.

Ballad did not publicize if there were other COVID-19 treatment and quarantine facilities in Virginia.

In June, 2020, Ballad created a public-service campaign for rural hospitals and health systems to download at no charge. The campaign, ”Staying Safe While Staying Healthy and Well,” outlined safety measures taken by healthcare facilities.

Ballad set up a COVID SCORECARD to report on system-wide cases, hospitalizations and deaths to date and for the previous seven days. On April 7, 2021, reported on the positivity rate: “In Virginia, the Cumberland Plateau Health District counties were at 6.1%, LENOWISCO was 6.4%, and the Mount Rogers Health District was at 11.4%, among the highest in the state. Virginia’s statewide average was 6.4%.” The Ballad Scorecard showed 13.9% positivity system-wide due to higher numbers in Tennessee.

Reporting and Plans. Full reporting is one of the COPA and Cooperative Agreement Conditions suspended until the Emergency Declarations for COVID end. It will be some time before it’s possible to see the full financial impacts of lower revenue due to the restrictions on elective and non-emergency procedures and the added costs stemming from the pandemic. Likewise, the reporting of quality measures has been interrupted.

Until the governors of Virginia and Tennessee end the state of emergency, the promised regional plans to improve population health, children’s health and rural health access are on hold. New three-year plans and funding schedules were due April 1, 2021, and Tennessee gave an extension until April 1, 2022 on all plans. Virginia extended all plans for a year.

Ballad’s financial position improved because Medicaid expansion in Virginia is covering more patients, and, so the company wants a reduction in the amount of charity care it agreed to provide. The New York Times reported in December 2019, shortly before the pandemic struck Virginia, Ballad had filed “more than 6,700 medical debt lawsuits against patients last year.” The Tennessean reported in June 2019 that “Ballad attributed increased collection activities to a national trend in high-deductible plans that have had a particularly hard impact on rural areas.”

With all the off-site services that were moved to more expensive in-hospital settings, will Ballad be filing even more lawsuits? Or will it follow the lead of the University of Virginia and forgive some of those debts?

The repurposing and consolidations should make for a stronger operation, but one of the  unanswerable questions is whether telemedicine can replace family doctors and behavioral health in-person visits and still improve health outcomes. It’s too early to tell if Southwest Virginia is on the verge of a new and better paradigm for healthcare or if the changes will bring about a disaster in a region already besieged with health and life problems.

Virginians will have to wait 90 days to a year after the pandemic ends to see what the reports and plans say, and only then might they be able to decide whether the leap of faith that launched the Ballad Health merger was justified.

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24 responses to “The Ballad Merger V: the Pandemic”

  1. LarrytheG Avatar

    Once again, I compliment Carol for her in-depth look into Ballard – and really – the bigger issue of rural health care – at how one approach by Ballard is proceeding.

    Thank you for the informative, non-partisan, non-rant, non-Woke article.

    IMHO and in some of my reading, nurses (and allied positions) are said to be key to healthcare these days – they can and should do everything that they can be trained (and certified) to do and leave the doctor with his/her training and focus. A nurse can staff a clinic when a doctor is not there and triage the patients – treating the ones he/she can and sending the others on to the doctor, perhaps starting with telemedicine. That delivers more cost-effective services.

    And nurses, nurse practitioners, physician assistants, etc are not only something the State can and should help with – it actually provides good paying jobs to the people who live in rural areas. It should be a win-win.

    This is actually where Government CAN help by partnering with the other players in improving the health care of people who live in under-served regions.

  2. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Good articles and analyses. Thanks.

  3. Mary Johnson Avatar
    Mary Johnson

    Levine’s “team” drove all the experienced nurses away. They drove doctors (like me) away. As an ETSU Pediatrician recruited to staff JMH right before the merger – I worked 110 EXTRA shifts over 9 months (to cover the program’s failure to recruit enough MDs – AND a colleague’s maternity leave). I wasn’t paid for 30 of those shifts – AFTER the fact of working them – because Levine/his corporate goons insisted on interpreting my contract addendum in a fashion NO ONE intended when it was negotiated. I stepped up to HELP get a fledgling program up and running – and these people LIED to my face to get me to keep going. What they did was akin to slavery. Meanwhile Levine and his management team got BONUSES for working on the COPA (a jurisdictional nightmare for anyone who might suggest litigation) – and told me I was “unprofessional” for complaining. The COPAs did not address ETSU’s role in Ballad’s schemes. Not at all. And the states did not care – they wanted the candy store that Levine promised. For all of his blather, Levine did not want to pay clinicians fairly for their work. And don’t even get me started on their approach to Quality Assurance. The area has paid for it during the pandemic. It’s not just about recruitment – it’s about RETENTION – and Levine’s corporate culture does not facilitate that – for doctors or nurses.

    1. There is a national physician shortage, and it’s worst in rural areas and small metros. So, this is how it plays out. Your complaints sound very similar to those of Dr. Robert Sease writing about Harrisonburg, Va. here:

      My understanding is that the physician shortage are only getting worse.

    2. CJBova Avatar

      Thank you for posting. The official merger reports on all levels gloss over any problems involving staff retention and the “pay equalization” between the original two companies. From the TN monitor’s report, no complaints on any level have been justified.

      No set of transitions on this scale could possibly be without any issues, but if reported at all, they are concealed in the name of confidentiality. The most obvious indicator that all has not gone well is the lack of press releases on retention or attraction of staff. The Ballad Health p.r. people are masterful in their presentations, and if there had been anything to brag about in that area, they would have. I am not optimistic about what we’ll see in the updated regional plans in 2022. I would like to be proven wrong and find that wonderful plans that improve the health factors in the region will be presented, but I’m afraid that will not be the case.

      1. Mary Johnson Avatar
        Mary Johnson

        I know, I filed one of those complaints – in both states. The state of Tennessee’s process was just a joke – as they were covering for one of their universities. The state of Virginia is just along for the ride – never mind that every shift I worked was in THEIR under-served state. The doctors and nurses of ETSU are plainly and simply SCREWED OVER in this arrangement. The COPAs do not address their status AT ALL (I did point this out to both Tennessee and the FTC before the merger finalized – no one cared).

        All they had to do to keep this Pediatrician was PAY ME a fair market rate for my overtime work. But I’m sure the suits thought they were being clever. I would still be there hauling their water uphill and cleaning up the messes if they had.

        You are not wrong. They cannot use the pandemic to cover tail forever. And that’s when the sad truths of Levine’s folly will out.

    3. LarrytheG Avatar

      Yep. Thank you for the post. It’s not easy to tell from the outside looking in on what’s what!

      But was curious what options are there for rural healthcare if the Ballard model is not viable?

      Or, is the model good but the Corporation executing it not good or is the model bad no matter the corporation?

      I tend to think that small stand-alone hospitals are not a model that will survive or even if they do, the level of service will not be acceptable so a larger entity running the smaller units seems to have promise but as your post show, the devil is surely in the details.

      Healthcare if fundamental to everyone, just like roads, schools, electricity and such, It’s the difference between life expectancy in the 70-80s and 40s-50s and rural America typically is in the lower end.

      Other developed countries seem to “done” healthcare better than us but no idea if they also have rural challenges. “Better” meaning higher life expectancies and lower per capita costs.

      I for one would like to hear more from your direct involvement perspective in rural healthcare.

      1. Mary Johnson Avatar
        Mary Johnson

        Your wish is my command. This post below below has only been up for a few days – I’ve not linked it on Facebook yet.

        Honestly, I can only view Ballad negatively – through the eyes of someone that they literally treated as a slave to purchase over a state line. Seriously, it’s the height of corporate hypocrisy for a state-owned university to SELL one of its own to a state-approved monopoly for far less than “market” value (under terms I NEVER agreed to – enforced only after the fact) – then broadcast to the world how concerned they are about clinical staffing. You have to at least treat your people like HUMANS.

        Levine’s model was faltering before the pandemic. Now he’s hiding behind it – like many private-equity operations.

        I was was recruited to the area (and wanted to retire there) to build a university-affiliated/collaborative Pediatric program – only to watch Levine and his army of smooth-talking goons destroy everything to feed the monster in Johnson City. What they did to Holston Valley was criminal. Our program at JMH got no help or support from the Mothership (none of the young guns who were originally supposed to rotate call/assist with care wanted to cover a Special Care Nursery) – and I did the work of 2 doctors only to be thrown away like garbage two weeks after blowing the whistle on a potential EMTALA violation. The states (particularly Tennessee) and FTC just stood around like lumps on a rotten log – letting Levine do whatever he wanted.

        I even pleaded my case to Scott Niwsonger himself (I was told he was a good man and would listen/help). THAT was a joke. Deaf he was – to the plight of one of his own. And ultimately, he got his 60 million. That’s what mattered to the man with his name on the building in the end.

        Ballad was not my first rodeo as a whistleblower (if you check the law, any “protection” is all about money – NOT quality/care – and those of us in the private sector are toast) – or last. But it was the most disappointing – because for all of the cooks involved in “oversight”, there is no genuine oversight.

        1. LarrytheG Avatar

          So maybe the model was good but the company implementing not so much?

          Ballard certainly does not sound like they would win any awards in their dealings with employees and related.

          What do you think of the model itself?

          Do you have views on what other models might be used?

          1. Mary Johnson Avatar
            Mary Johnson

            The “model” is not unique. It is classic private equity everywhere. HCA. Duke Lifepoint. They all play the same game. They’ve all done the same horrible things – and no one STOPS them (the FTC BLEW IT with Ballad).

            Buy up/monopolize everything in sight – including/especially rural facilities. Divert the money-making services to the Mothership in JC. Give “customers” no other options. Devalue the established physician/nursing staff – DECIMATE long-standing/well-functioning clinical teams – drive them off (to “cut costs”) – and replace them with newbies or travelers (WAY more expensive . . . but pulled from another part of the budget – my old CMO at JMH told me that). Call it “normal attrition”. Starve programs resources to the barest of bones to make money. Promise to keep things as they are for a few years, then anything goes. Suck the government dry in terms of the relief funds they offer – particularly post-pandemic. Divert profits to the pockets of the smooth-talkers at the top.

            The states involved in this mess are in this mess because they wanted someone to come in and miraculously solve all their problems. The “oversight” afforded by these COPAs is just a bad narrow joke.

            My view is not so much about “models” as it is about getting back to basics – giving power/say back to the clinicians providing the care – put some small emphasis on across-the-board quality – and cutting OUT the expensive middle men/managers who siphon untold millions off the top of these operations. The cost of medicine these days is ALL about the administrative overhead.

          2. LarrytheG Avatar

            Okay. Message received. What is a better way to provide rural healthcare than these methods?

            Or is rural healthcare just not something that can be fixed or improved from where it is right now?

            It just appears that right now many, individual stand-alone operations are not really capable of getting better and some are on the financial edge of viability.

            What’s a better path forward?

          3. Mary Johnson Avatar
            Mary Johnson

            Please read my blog link. I pretty much answer the question in the introduction.
            These places are on the brink because they’ve not been supported in any of the government’s noble notions of “reform” – and MANY (including my hometown hospital) were HORRIBLY managed. We’ve got to get back to basics – i.e doctor/provider relationship, simple/uncluttered operations, supportive networks (things I am always promised but NEVER come to fruition). The layer upon layer of expensive, fast-talking middlemen have to GO. Likewise, the government has to VALUE the care provided in these places – and the people providing it. They don’t. They never have. And/so these places are revolving doors.

          4. LarrytheG Avatar

            Okay, I will.

            But in your comment you blame the government and don’t trust the private sector.


            I understand your words about back to basics – but I don’t really know how that gets implemented. It’s a goal but who is responsible for making it happen?

            Is it about individuals and not government or private sector ?

            so , off to read your blog.

          5. LarrytheG Avatar

            so, here is an extract from your blog:

            Is this what you mean by “back to basics”?

            Rural areas could be served – and smaller hospital could thrive – IF we just got back to basics.

            (1) The Federal government needs to STOP KILLING rural facilities with its cheap/low-ball fiscal reimbursement – when everything rural is HARDER and services should be reimbursed at a PREMIUM rate;

            (2) Healthcare systems consumed by merger-mania need to put their money where their mouth is and ACTUALLY SUPPORT the rural facilities they buy – instead of starving them for a fast buck and the CEO/CFO’s salaries/quarterly bonuses;

            (3) CEO compensation should be capped (like tort reform in NC did to malpractice damages) and/or made contingent upon things like QUALITY and physician/program support and retention;

            (4) the state and CMS need to genuinely POLICE QUALITY ASSURANCE and corporate interference with MEDICAL CARE AND GOVERNANCE in these hospitals – and vigorously prosecute deficits/violations;

            (5) Physicians/nurses staffing these facilities (particularly the experienced ones) MUST be able to safely speak out about what is wrong/deficient (medically as opposed to fiscally) – without fear of the kind of gas-lighting and truly VICIOUS retaliation that I have repeatedly endured over the years – starting with/at Randolph Hospital. “

          6. Mary Johnson Avatar
            Mary Johnson

            Yes – it’s a start. Back in the day, these rural facilities had one CEO and maybe a VP – with limited administrative staff. Referral relationships were physician-driven – and that largely based on clinical partnerships/performance/quality (as determined by the MDs). Local boards actually DID police and newspapers reported (that’s all but dead – the JC press only slobbers over Ballad). Staff took a job and stayed forever – their experience only enhancing clinical teams. Now, you’ve got a high-dollar “officer” of everything and institutional relationships are corporately-driven. Staffing is a revolving door of newbies and people who are not invested in the community. I could wax poetic all day long about how the ACA contributed to the mess we currently have – but God forbid I sound “partisan”.

          7. LarrytheG Avatar

            And your experience is in Ashboro – south of Charlotte?

            How are you familiar with Ballard?

          8. Mary Johnson Avatar
            Mary Johnson

            With respect, my first comment alluded to my familiarity with Ballad – as I staffed JMH (as an ETSU Assistant Professor of Pediatrics) in Abingdon from 2015-17. I had intended to retire there. But Levine and his self-described “gang” of corporate goons destroyed that plan. The blogpost I referenced here also alludes to that experience.

            Asheboro is in central NC – northeast of Charlotte.

            From 2018-20, I worked at a Duke Lifepoint facility in NC, and I watched the ground (of a once-glorious LDRP unit) literally collapse under my feet due to these same kinds of tactics.

            It’s shameful.

          9. LarrytheG Avatar

            oops… SOUTH of Greensboro! my bad.

            So you have direct experience at more than one facility and the same type of thing is going on – in both NC and Va?

            I’m trying to see another model – another way of doing this – today – at perhaps othr places OR is this pretty much the current fate of rural healthcare unless the Govt gets more involved ?

            I’m sorry this happened to you but your real world experiences can help inform others and perhaps help us decide what parts we can play in helping to move the govt to do more/better for rural healthcare.

            I sounds like rural healthcare may be following the same path as print newspapers in terms of being targets for equity investors.

          10. Mary Johnson Avatar
            Mary Johnson

            Sorry about being slow to respond. Life happens.

            Yes. I have many years of experience in staffing rural facilities – mostly in NC/VA. Everything is broken – and it got exponentially WORSE after Obamacare.

            The government/politicians do not want to hear from those of us on the front lines. If they did, I would still be at JMH/Abingdon. The state of TN did not care about how I was treated – and the FTC was USELESS.

          11. LarrytheG Avatar

            How did ObamaCare make it worse?

          12. Mary Johnson Avatar
            Mary Johnson

            Why don’t I just leave this here and call it a night?

          13. LarrytheG Avatar

            okay, Thanks!

          14. Another way of putting it — crony capitalism has taken over the health care industry.

          15. Mary Johnson Avatar
            Mary Johnson

            Pretty much. And NO ONE cares. They just keep trying to explain the horrible money-grubbing management away – and find new victims (like advanced-practice nurses to “replace” the doctors the Levines of this world say won’t come to these areas).

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