Since joining North Kansas City, Mo.-based NKC Health in 2021, Senior Vice President and CFO Austin Jones has steered the organization through a 40% growth in net patient service revenue and he’s not afraid to invest in areas many hospitals are abandoning.

One of those investments is labor and delivery care, loss-leading service for many hospitals, particularly in rural areas, where nearly 40% report losses on obstetrics programs. But at NKC Health, the decision to maintain and strengthen these offerings reflects a broader, community-first mission, and one Mr. Jones says is already yielding returns.

That commitment aligns with a broader transformation: North Kansas City Hospital and Meritas Health recently united under the NKC Health brand to improve care coordination, enhance the patient experience and strengthen the system’s regional presence. NKC Health comprises the 451-bed North Kansas City Hospital, 35 care facilities and a workforce of more than 4,700 — including 600 physicians.

Mr. Jones joined the “Becker’s CFO + Revenue Cycle Podcast” to discuss NKC Health’s recent growth, how the system is navigating workforce and financial pressures, and why investing in loss-leading services can still be the right strategic move. He also shared insights on outpatient expansion, partnering with Mayo Clinic Care Network, and what’s next for the health system over the next 12 to 24 months.

Editor’s note: Responses were lightly edited for length and clarity. Click here to listen to the full episode of the podcast.

Questions: There are many challenges ahead for health systems, but there are also opportunities. What are you most excited about when you think about the future of NKC Health?

Austin Jones: I think there are a number of things, but from a macro perspective, since I arrived in 2021, NKC Health has seen 40% growth in net patient service revenue. We’re growing in the outpatient area, and we’re the second-largest inpatient hospital in the city — second only to the University of Kansas Health System. Our emergency department is by far the busiest. We had 83,000 ER visits last year; the closest competitor was around 65,000. That tremendous outpatient growth gives us a lot of encouragement.

On the inpatient side, we’re kind of maxed out. We run at about 80% capacity, which is ideal. It allows us to flex up during high-volume seasons, such as January, while keeping things efficient and offsetting overhead. Outpatient growth, though, has been tremendous. We’ve invested heavily in our cancer center, interventional radiology, cardiology, outpatient imaging, rehab and lab. We’ve even invested in labor and delivery services, which many hospitals are divesting from, because our community needed it. It’s typically a loss leader, but we are community-focused — from the board of trustees to the front line — and we heard the need. That investment is paying dividends.

We also heard from the community that they wanted top-tier cancer care, so we affiliated with the Mayo Clinic Care Network to give our patients instant access to world-class expertise. If someone needs a really complex procedure, it might require a trip to Rochester (Minn.), but all the testing and consults stay here. It’s a tremendous opportunity for patients to have access without leaving town.

On top of that, for decades our brand was split. North Kansas City Hospital had strong recognition and support, while Meritas Health — our physician enterprise brand — wasn’t as widely recognized. Only 26% of the community knew it was a wholly owned subsidiary. By bringing them together under NKC Health, we’ve had tremendous support.

Q: To what do you attribute that substantial 40% growth in nearly four years?

AJ: There are a few things, and I’ll say upfront this isn’t attributable to my leadership. When I came here during the thick of the pandemic, our hospital did things a little differently. First off, they didn’t lay off or furlough anyone. It cost us dearly: they dipped deep into reserves to take care of their team members. I admired that. When I was interviewing, they told me this, and I thought, ‘wow, the CFO was probably losing his mind because it was such a costly move.’ But they saw it as an investment. They had been in business 65 years, and many employees had been there 30 to 40 years. They said, “We’re not going to abandon you at this time.”

Because they kept employees, when all that volume came back months later, we were ready. Not only that, but you could see — and still do — hospitals realizing they’re losing money on the inpatient side, so they close a unit or two, shrinking capacity. If you look at the stats, a number of hospitals have a gap between staffed beds and licensed beds. We staff all of our licensed beds. That’s costly, sometimes requiring premium pay when there’s a nursing shortage, but it ensured our community had somewhere to go.

By doing that, and by expanding our emergency department, which has grown tremendously — from 60,000 visits a year when I first arrived to 83,000 and growing — we ensured a commitment to the community. They responded, and it created inertia, turning us into more of a hub for our community. So I think that’s it: growth has come from just being there, investing in services, even when they don’t always yield big financial results.

Q: Where are the core areas NKC Health aims to grow over the next 12 to 24 months?

AJ: We’ve found the areas in which we are growing organically. We’ve identified where we do really well — specific service lines where we’ve invested in world-class surgeons and physicians — and we’re doubling down on those efforts. We’re expanding in certain areas and have invested tens of millions in capital. We have five or six service lines we’re focusing on. We can’t grow much more on the inpatient side, but we’re always here for the community, and we’re seeing more shift to outpatient.

Just over the last year, we’ve gone from our business being mostly inpatient to 61% outpatient, so the move is happening. We’re working to build and hire to keep up with it. Over the next 12 to 24 months, we’re focused primarily on growth, and secondarily on improvements like labor management. At our June 30 fiscal year end, I reported to my board with a smile because in one year, we reduced premium pay by 70%. That’s such a wind in our sails as we look to strengthen margins, build the balance sheet and reinvest in the community.

So that’s really what we’re doing: blocking and tackling. That will never go away. We’ve always got to get more efficient, and we’ll use technology where we can. We’re never going to be on the cutting edge of technology as a small system, but we look to our partners like Mayo Clinic to see what works and what doesn’t, and what’s worth our time. We’ve found some neat solutions there, but really, it’s about going back to the basics: serving the community and focusing on internal efficiencies.

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