- March 27, 2024
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Ben Spence appears surprisingly relaxed for someone who oversees the finances for four hospitals and more than 10,000 employees.
Spence was appointed chief financial officer of Lee Memorial Health System in September, capping a nearly 20-year career that began as a clerk in the reimbursement department.
Spence is charged with managing the finances of the sprawling health care system while developing the strategic vision for future growth. At the top of his to-do list: preparing a $100 million bond issue to finance the construction of Golisano Children's Hospital and finding a way to build a $140 million health campus in South Lee County.
Fortunately, Patricia Duquette, the system vice president of finance, handles the day-to-day financial operations. “You can't do it all effectively,” acknowledges Spence, who confides that his email inbox currently has 4,800 messages.
But Lee Memorial's long-term plans are ambitious: finding $700 million in capital to keep up with its growth plans over the next 10 years for its existing facilities. “It's going to be significant dollars,” Spence says.
That doesn't include plans for a new health campus in South Lee County in the fast-growing areas of Bonita Springs and Estero. The $140 million, 172,000-square-foot project will include an emergency department, an ambulatory surgery center and physician offices. Construction could start in a year if a deal can come together.
Already, the system has more than $600 million in bonds and notes as liabilities on its balance sheet, though its 120% cash-to-debt ratio is lower than Moody's industry median 142%. “There are limits to how much debt we can borrow,” Spence says, especially if it wants to keep its high investment-grade credit rating.
Spence says the South Lee County project could be developed as a joint venture with physicians or with real estate companies that specialize in health care buildings. “We may need to explore different options for Bonita,” he says.
Meanwhile, uncertainty in health care reimbursement is making Spence's job that much harder to plan, particularly when it comes to government programs such as Medicare and Medicaid. Still, Spence says Lee Memorial has been on a mission to trim operating expenses, shaving $42 million since 2011, he says.
Ideally, Spence says it's possible to lower expenses by $125 million over five years by controlling costs such as medical supplies and operating with a lean management structure. “Our biggest expense is labor and there are limits to what you can do,” he acknowledges.
But an improving economy has benefited Lee Memorial. So far this year through Sept. 30, operating margins are up 7.3%, significantly better than last year's 2.7%. Meanwhile, adjusted patient admissions are up 7.1% over last year. “We're in an area of high growth,” says Spence.
Spence says he'll be more confident about plans for the future if the hospital can maintain higher operating margins by boosting admissions and lowering expenses. “It's trending in the right direction, but maintaining those trends is going to be critical in the years ahead,” he says. “If we operate at 3% margins, it's going to be a little tight.”
Follow Jean Gruss on Twitter @JeanGruss