Baptist Health chief financial officer Carl Herde announced his retirement in July following a 32-year career at Baptist where he began as corporate controller. Herde, who was named vice president and chief financial officer in 1993, will step down on Sept. 30. Baptist Health named Stephen Oglesby CFO, effective Sept. 1.
Herde had a successful run at Baptist, to say the least. During his tenure, Baptist grew from a five-hospital organization to a more than $2 billion system. I spoke with Herde, who is also a prolific volunteer in our community and a guitar wielding member of the band, Remedy, about his long career at Baptist and his plans for the future. Highlights:
Medical News: How did you begin your career in healthcare and your tenure with Baptists Health Systems?
Carl Herde: The position of controller opened in 1984. George Graham, the first system CFO hired me in as controller. In 1993, through a series of changes, the CFO position became available and I had the privilege of stepping into that role at a fairly young age. I felt honored to have been entrusted with that role. Who knows where a career is going, but 23 ½ years later, that chapter is coming to a conclusion.
MN: Why did you decide that now was the appropriate time to retire?
CH: I love Baptist, the mission, the services we provide and the great reputation it has in the community. No matter where I go, I hear wonderful stories about the care that is provided. Working for this company is a real blessing. However, it requires a lot of hours. I’m happy to do it to this point, however, it was time for me to consider what the next chapter would look like.
I started talking to Steve Hanson, the CEO, about a year ago about what that might look like. We both agreed, that for me to have left sooner than now, would have been difficult. We didn’t have the people in place and hadn’t been through the transition long enough with the people we brought on. I had some projects that I was working on that I really needed to push through that weren’t yet complete. It would have been unfair to Baptist if I left last year.
Also came down to the fact that we’ll likely do a bond issue this fall with a refinancing of the old bond. We also have new projects, such as the Floyd purchase and financing. The rating agencies want to know what’s going on from an executive management team perspective. I couldn’t tell them that I had plans to retire in the fall because they wouldn’t value my opinion as much if they knew I was leaving.
MN: How has the financial aspect of healthcare changed during your tenure with Baptist? Has this changed how you approach patient care and dedicate resources?
CH: As a healthcare industry, we’re being asked to expand the scope of care. In the past, we as a hospital organization, provided great care while you are in the hospital. But that’s not management of health of an individual or acute care when you need it. We had a little snapshot while you were with us.
In the old days, if you came back in, no problem, we got paid again. Now we are trying to figure out how to manage the care so they don’t come back, which is better for the patient. Now we are studying the cause of readmits. From a hospital provider, when they don’t come back, there are financial penalties, which is a hit to the bottom line because we don’t have that service coming back in for a second round. The question is–how do you get in a position where you are still funding the mission of the hospital? That’s a rewarding aspect of working for Baptist, or any hospital that is non-profit. We’re not in it to make money. We have to make money, but that’s not the reason we provide healthcare.
MN: How has the growth of Baptist changed your job and changed the way you think of the finance of healthcare. Does Baptist take a different approach to growth in urban vs. rural markets?
CH: We see it as all one system, but with different challenges. We have to determine which specialty should be in a rural market and what one should be in an urban market. We also have to consider what physicians can be recruited in an urban vs. a rural market. Some physicians prefer one over the other. If we have a strong cardiac program in Lexington, should we have the same program in Corbin? Maybe, to a degree. But if you get into subspecialty care within that, maybe you shouldn’t have them at both. We have to analyze the cost to the community and whether that community can afford having that specialty. As opposed to saying, you should just go to our other facilities for that procedure. Decisions have to be made between rural and urban. We have to decide on the appropriate amount of investment to make in the different service lines within each community.
The advantage we have as a system, is that we can look at what works, such as best practices, and determine if there are differences, either in types of services provided, or availability of personnel. If something is working here, we have to analyze whether it will it work there and how we can replicate that and use best practices.
It’s harder for a single, stand-alone facility to compete and to be on the cutting edge. That’s why there is an increased interest in mergers, acquisitions and consolidations. We are transforming the industry. Not sure what it will look like in five to eight years, between that and the political scenes.
MN: Discuss the implementation of expanded Medicaid in Kentucky and the impact on Baptist. More people covered are covered by insurance but some argue that the reimbursement rate is challenging. How do you balance it out?
CH: From an individual perspective, it’s better to have insurance because you have a healthier outcome. From a financial perspective, it is a challenge though because with the expansion, people who were struggling to keep their commercial insurance available through expanded Medicaid, those on a lower rung of wage of annual income, they can now go to the emergency room or even off exchanges get federal subsidies that were better than staying on commercial insurance.
However, the difference in reimbursements is significant. The good side is for the patient who comes in now who was previously un-insured. We are committed, as part of our mission, to take care of all patients, regardless if they have ability to pay or not.
We have taken an interest in the waiver. I like the idea that people have to be engaged in their healthcare. This is still a challenge today. For example, with higher deductibles, people are more engaged in price, cost reimbursement and with services based on whether they have spent the deductible. But really the question is – does the waiver get to enough people to make it a better solution? We also have to ask, ultimately, what can we afford?
BK: Now for the question everyone wants to ask. What are your plans for retirement?
CH: As far as the decision to move on, there’s not longevity in my genetics. I may live to be 100, but I always thought that after working for a long time, I would get refocused back into community service. I have a passion for it. If you look at my life, I’ve been engaged with community service functions throughout my career. I wanted to get back into that in a more significant way.
I had a desire, from a personal faith perspective to give talents to other non-profit organizations and helping people in a more significant way than running finance for Baptist.
After my official retirement, I’m going to take three to six months off to discern where the Good Lord wants me to go next. However, you never know when a door is being opened for the right or wrong reason. One role at Baptist is the Medicaid Technical Advisory Committee (TAC), which advises the Medicaid cabinet on hospital reimbursement issues. I’ve been chairing that committee for about 11 years.
After I announced my retirement, they wanted to hire me as VP of finance on a full time basis. That’s not my intent. I don’t want a full time job. I want to be engaged with the community. They offered a part-time job because of my history with the organization. I decided that I could fulfill it in a part time role. Going from 100 miles an hour to 0 is a concern. Even for a short time. Working part-time made sense because I could still be engaged in community with time for other activities.