Over the past few weeks, several articles and “studies” have been filled with inaccuracies and, at best, incomplete analyses of Parkview Health's financial position, with calls to invest more in the community.
I never expected having to defend what Parkview does for the community, but I will, and I'll also provide some context regarding our financials.
As the only safety net health care provider for our region, Parkview provides more than $300 million a year in charity and uncompensated care.
This is an important part of our mission, and we're honored to provide excellent care for those who come to us – regardless of their ability to pay. To provide that safety net, we need to maintain a strong, stable financial position.
As the largest employer in the region, with more than 13,000 coworkers, Parkview has a corporate citizenship responsibility to not only improve the health and well-being of our patients, but also to invest in transformational organizations and economic development projects.
Each year, we partner with and invest in more than 200 nonprofits, which are doing great work to provide hope and resources to thousands of people. These are organizations such as the Rescue Mission, YMCA, Matthew 25, Fort Wayne Community Schools, Honeywell Foundation and more.
Parkview also invests in key economic development projects. In many, if not most cases, we've provided the first and largest contribution to these projects.
For example, we made a significant investment in Parkview Field because we believed the downtown renaissance would raise the economic tide for all of northeast Indiana.
The most current example is our $10 million commitment to Electric Works – ours was one of the first commitments and remains the largest.
Fulfilling these responsibilities wouldn't be possible without a strong financial position. The most important elements in achieving this goal are a 5% operating margin (we call it “the nickel”) and a strong reserve-to-debt ratio.
A 5% margin on our $2 billion in annual revenue is our primary lifeline to fulfilling our mission. It helps ensure our facilities are up to date, that we are able to attract and retain great physicians and coworkers and, when possible, that we fund future projects.
To provide excellent care to every person every day, reserves and debt also play a vital role. It's been reported that Parkview's reserves are too large at $1.4 billion. What's not been reported is that we also have $1 billion in debt. To achieve the best credit rating and best borrowing rates for capital projects, rating agencies require us to keep 1.5 to 2 times as many reserves as debt.
We plan carefully to keep this ratio in balance so we can serve our patients in good times and in challenging times.
During the Great Recession, we were able to continue building Parkview Regional Medical Center (a $600 million investment) when many other projects in the region were shut down. We kept 1,000 construction workers on the job, and I still remember their many words of gratitude.
And, our community desperately needed the new hospital.
When Parkview Regional opened in 2012, we were full by the third day – and we've been at capacity ever since.
Investing $2 billion in capital projects throughout the region over the past 12 years wouldn't have been possible without the proper balance of reserves and debt.
Over the next 10 years, Parkview will invest at least $2 billion more to meet the community's demand for our physicians and facilities.
As we plan for the future, we know it's necessary to prepare for more recessions or business downturns. As a safety net for our communities, Parkview needs to be in a position of strength, not weakness.
Frankly, I would rather explain why we need a strong level of reserves than why we don't have enough to serve our patients in their most vulnerable times.
While I have focused on numbers, what's most important to all of us at Parkview are the stories that those numbers make possible.
Stories about how a physician, nurse or technician went the extra mile to make sure someone received the best possible care.
I am so proud of what our coworkers do every day, and I know I speak on behalf of everyone at Parkview when I say we are honored to serve northeast Indiana and northwest Ohio.
Mike Packnett is president and CEO of Parkview Health.