Episode 50: Revenues, Match Day & the Cancer Center

Jolene Francis, Vice President and Chief Development Officer, visits with Mike Wiltermood, President and CEO, about rising about rising costs and flat revenue streams facing Enloe Health.

Mike talks about Enloe’s need to manage the financial factors within its control, as well as potential reimbursement changes with H.R. 1, which could result in a dramatic drop in Medicare reimbursements. He also provides an update on Oroville Hospital.

Mike and Jolene share a lighter moment as they talk about Match Day, the March 20 event during which Enloe will introduce six new family medicine residents. They also share some news regarding the great work at the Gonzales Comprehensive Cancer Center as it approaches completion.

Transcript

Jolene Francis: [00:00:00] Enloe’s Senior Team Message is presented in this caregiver-centric podcast, providing an update on what’s new and exciting across the campuses of Enloe Health. Hello, everyone. I’m Jolene Francis, Chief Development Officer. Welcome to the March 2026 episode of Enloe’s Message. Today, we welcome our CEO, Mike Wiltermood, to discuss topics of interest to our caregivers. Hi, Mike. Thanks for being here today.

Mike Wiltermood: Thank you, Jolene. It’s good to be here.

Jolene Francis: Well, we have a couple of topics I was hoping we could touch on today, so let’s just dive right in. We know that with the combination of rising costs and flat revenue streams, the pressure on our net margin is tremendous. And that pressure is not expected to ease any time soon. So, that must mean that we have to remain diligent in managing the financial factors that are within our control. But with that said, what are you watching closely with regard to reimbursement changes that may affect us in the future?

Mike Wiltermood: It’s a good question, Jolene. As many people know, we’re highly dependent on government insurance. About 50% of our patients are Medicare. Another 25% to 30% are Medicaid. And, you know, there's a number of our patients that have trouble paying their co-pays or may be underinsured or uninsured. So, this is a constant pressure for us, but the unpredictability of what the government is going to do is really something that we have to be careful with. We’re constantly monitoring the winds in Washington and California to see how certain types of legislative changes or administrative changes might impact our reimbursement.

We see that difficulty with that, when administrative changes can be made that really impact us. A major example would be the rescission of Glenn Medical’s critical-access hospital status. I mean, that just came out of nowhere and forced them into closure. These are the kind of administrative changes that can be made that would impact us.

Now we have facing us the impact of the Big Beautiful Bill — H.R. 1. There is some real threat there that could impact us, both on the Medicare side and the Medi-Cal side. One of the things that we’re really concerned about is our hospital, like many hospitals in California, participates in what’s called a Hospital Fee Program. This is a program that essentially taxes hospitals to create more money-matching funds for the Medicaid program in our state.

We have benefited from this for many, many years and we had anticipated that the next iteration of that program would be extremely beneficial to us. As it stands, that money is at risk, so we don’t know by how much. We’re hoping that the next program will be at least as beneficial as the previous programs that we’ve anticipated in the past, but we’re just not sure at this point. So, for context, I am not as erudite with respect to our finances as our CFO, obviously. So don’t hold me to some of these numbers.

Jolene Francis: OK.

Mike Wiltermood: I’ll do the best I can. Our organization has about $1 billion in net revenue. Now, to put that into perspective, we only collect about 20% of what we bill. So, we bill about $5 billion a year; we collect about a billion. We really are a break-even organization. We don’t typically make a whole lot of money.

The reason why that’s important, obviously, is we have to repair the roof and repair the parking lot and buy new equipment and things like that. Obviously, after we’ve tried to figure out how we can be fair and equitable with salary and benefits and pay all our other vendors. So, even though we collect $1 billion, we don’t have that much money going, from year to year, to cover our capital expenses, some of which include debt service. Every year we’ve got to pay about $25 million in debt. We typically have $30 million or $40 million in capital requests.

So, we’re trying to figure out a way to come up with $50 million or $60 million a year when we break even. A lot of that comes out of our depreciation fund, but it also comes out of this Hospital Fee Program. We benefit through the Hospital Fee Program about $28 million to $30 million a year, which becomes nearly half of the money that we need to sustain ourselves on the capital side, pay our debts and reinvest in the organization. So, that’s the real stress.

At the beginning of the year, we have a fiscal year that starts in July — we were struggling, and it forced us to revisit what we could spend on capital. Our managers were asked to tighten their belts a little bit. This is the reason why some of our employees may be feeling that we’re wringing our hands over money. But it’s not just the cash that we have now that we have trouble with — it’s what’s going to happen in the future.

Jolene Francis: A follow-up question — actually, two follow-up questions to that. When will we know the impact of H.R. 1? Is this something we should know this year, or is it going to drag out over the next 3-5 years?

Mike Wiltermood: think that’s a fair statement. Some of H.R. 1 is left to the bureaucracy, so the Medicare program is going to have a heavy influence on how H.R. 1 is carried out and what the interpretation is. That’s what’s got everybody on edge. We don’t really know how the law is going to be interpreted, or what latitude the Medicare program is going to have in rearranging payments or actually cutting them.

For us, a rearrangement of the current budget could be as detrimental as an actual cut, depending on where the Medicare program wants to focus its budget. You know, unfortunately, these things take a long time to play out. Often, what will happen is the Medicare program will interpret the law one way, the American Hospital Association interprets it another, and we all go to court. So, sometimes those things can turn out to be beneficial for us.

For example, the hospital association recently sued the Medicare program for some things that happened back in 2019 and 2020 that we felt was a mischaracterization of the law, here in California, and the courts decided in our favor and so hospitals in the state got hundreds of millions of dollars. Now, that’s obviously divided by 400 hospitals in the state. We got about $2 million.

Jolene Francis: OK.

Mike Wiltermood: But those things happen and sometimes they work to our detriment. So, it’s really difficult to forecast what’s actually going to happen with some of these programs.

Jolene Francis: Yeah, and it never happens quickly. My second follow-up question is related to Glenn Medical. We know that there has been recent legislation, I believe, that would allow them to reopen with their previous designation. Let’s talk about what’s the reality there. Once they’ve closed, how difficult and expensive would it really be for them to reopen?

Mike Wiltermood: Well, it is very, very difficult because in order to reopen, they have to start from scratch on their billing and typically that can take two or three months at least. So, you’re forced to have 90 days’ cash on hand just to open the doors, and to reassure physicians and nurses and all the other employees who may have already gotten other jobs to come back to Glenn Medical.

Fortunately, the owner of the organization is very committed to rural care, so we’ll see what he’s able to do. There might be some grants there or some loans that the state might be able to extend, but the reality is, opening a hospital is incredibly expensive versus keeping it open.

Jolene Francis: Even though you may have just been closed for a few months. 

Mike Wiltermood: Yeah, it doesn’t matter. I mean, you’ve lost all those staff — that’s the biggest problem, in regaining the public’s trust that you’re going to be able to make it. It’s another issue.

Jolene Francis: I’m going to have Kevin (Woodward) on in a future podcast and we’ll talk in real detail about this. But from your standpoint, we’ve just completed eight months of our fiscal year. How do you think we’re doing so far this year?

Mike Wiltermood: Well, the good news is that we have recovered from some pretty devastating losses in July and August and we’re doing OK. We’re actually ahead of budget. Part of that is because of our investments. For those who don’t know, hospitals are required — typically by the people who lend the money, bond trustees — to maintain a certain amount of reserves and we measure that in what we call “days of cash on hand” — the cost of daily operations. We have to maintain a pretty conservative profile on those investments, but we do invest in the stock market. We invest in bonds.

Those investments have done quite well this year. I think most people who have a retirement plan or some kind of investment portfolio know that the stock market did pretty well. That’s the real reason that we’re over budget by as much as we are to the positive.

I really have to give credit to our managers and the people who work here for trying to be as efficient and as effective as possible, because, as far as salaries and benefits go, we’re managing. Some of the increases that we’ve experienced that were not anticipated really have to do with supply costs, and to some degree, physician services as well.

Jolene Francis: We’ve discussed the situation over in Oroville a couple of times, with Oroville Hospital navigating their way through a Chapter 11 reorganization bankruptcy. I’m just wondering — what update can you share with us today about that situation?

Mike Wiltermood: As far as we know, right now, the only nonprofit organization that’s expressed an interest in acquiring Oroville is us. We’re participating to a degree in the Chapter 11 bankruptcy as a potential organization that could acquire Oroville Hospital. We’re doing that not because we think it makes necessarily the greatest business sense, but because it’s what our community needs.

We’re concerned that the other interested parties are for-profit. Some might be real estate investment trusts or hedge funds that are only in it to try and squeeze as much money as they can out of the deal, and that would be devastating to our community. On the other hand, we have to be very careful that an acquisition of this nature — which necessarily means helping to satisfy some of the debt that Oroville has — could be more than we can handle.

So, we have to make sure that if, for example, we were to acquire Oroville and we had this successful bid, that the cost of that didn’t sink us. There are some advantages potentially for us to work together, so we’re doing our due diligence to see what that would look like, but we’re being very, very cautious.

If you were to ask me what the odds are of us acquiring Oroville at this point, not knowing who the competition are and how much people are willing to pay, I would say we’re probably 50-50.

But I do want to reassure everybody that, whatever we do, it’s going to be in the best interests of our community — not because we think that there’s going to be some windfall profits as a result. Our goal needs to be to maintain services.

We took a big enough hit during the Camp Fire when Feather River Hospital closed. We can’t afford to have Oroville reduce services as well, so we’re keeping an eye on it. This is a difficult, complex process to make sure we know what we’re getting into. We’ll just keep everybody informed as we move along.

Jolene Francis: So, just to make sure we keep all of the rumors in check, we have not yet submitted a bid. That would be months away before that were to happen. We are following it closely. We’re doing our due diligence, we’re studying everything we need to study, and we’re going to do what’s best for our community and for our organization.

Mike Wiltermood: That’s a great summary.

Jolene Francis: Well, there’s never a dull moment around here. There’s always something going on; that’s for sure. So what else is on your mind today, Mike? Any other topics that you want to share with the organization?

Mike Wiltermood: Well, sure — the things that are going well here. Our inpatient crews did a tremendous job during the flu season. The census was just incredible and people did absolutely outstanding work. The clinics have been packed. Our ancillary services have been very, very busy, and so I just want to thank everybody for doing such a great job.

We’re getting close to Match Day for our residency program. That’s the day these new residents, fresh out of medical school, match up with their residency program. We’re looking forward to the primary-care physicians who will be assigned to our residency program. We’ve also expanded that. We started out with, what — three or four?

Jolene Francis: Four. 

Mike Wiltermood: Now we’re up to six annually, which during the three-year residency program has a great opportunity for us to have 18 residents here at any given time. The odds of us being able to keep those residents are extremely high once they get to Chico, I think, and see the community, get used to us, and have a great experience. I think we’ll be able to rapidly build up our Primary Care cadre in our region. That’s going to be very, very beneficial for our community.

Jolene Francis: What else is going on now at the cancer center? We're moving right along with that project, aren’t we?

Mike Wiltermood: Oh, yeah. Well, many people know that we had the stop-work order temporarily while we kind of got square with the city. I think the construction company, Swinerton, and our project management team — they’re all doing a great job to make up for lost time. It looks like we’re on a path to have the work substantially completed by May or June, which is incredible when we looked at how far behind we got. From there, it’s a couple of months of working with the state to just demonstrate to them that we’re ready for business.

Jolene Francis: A very exciting time. I can’t wait for that building to be open.

That’s really about all the time we have today, Mike. I noticed that the leaf blowers are out in the park today, so we probably ought to wrap this up so that we don’t drown ourselves out here.

Thanks for sharing these updates with us and helping us understand the complexities that we must navigate in order to keep Enloe Health moving forward in a sustainable fashion. We really appreciate your insights into that. And a special thanks to all our caregivers for spending time with us and sharing this program with your colleagues and friends. We’ll talk again in April when we’re joined by another member of the Senior Team to discuss what’s new and exciting across our campuses. Thanks for joining us. Take care, everyone.