Why community hospitals matter more than ever
When David Dunkle, MD, thinks about Johnson Memorial Health, he doesn’t just see a balance sheet or a set of quality metrics. He sees the community where he attended college, the patients he’s cared for as a family physician for 18 years and the hospital he now leads as CEO. We sat down with Dr. Dunkle at the Becker’s CEO + CFO Roundtable to talk about the big changes happening in healthcare.
Johnson Memorial Health is a one-hospital system just south of Indianapolis, with about 900 employees and roughly $120 million in net patient revenue. It serves a mixed suburban–rural community, and Dunkle is crystal clear about what differentiates his hospital in a crowded, often skeptical market.
“We really stress quality and safety,” said Dunkle. “We look at that strategically as a differentiator. We’ve always said we’re never going to skimp on safety and quality. And it shows – we’re a CMS five-star organization.”
That commitment to community and quality underpins everything the organization does. It also creates both urgency and opportunity as Dunkle navigates one of the most challenging financial environments community hospitals have ever faced.
A tough payer mix and thinner margins
Johnson Memorial’s mission is local, but its financial pressures are national. That’s because the hospital’s payer mix is dominated by government programs.
“Overall, we have 70% governmental payer,” Dunkle explained. “In Indiana, Medicaid pays 57 cents on the dollar total cost of care. Nationally, Medicare is about 82 cents on the dollar. So, it’s hard for people to understand, but on 70% of our business we’re losing money.”
Those economics put enormous pressure on the remaining 30% of commercial revenue. At the same time, Medicaid redeterminations and coverage churn are driving more uninsured patients to the emergency department and delaying needed care.
“We’re already seeing our charity care going up,” Dunkle said. “We have more people coming to our ERs that do not have insurance. What happens is people put off the care that they need until they have a worse health outcome. Now they’re being admitted because they’re in kidney failure or they have a bad pneumonia when they could have been treated with antibiotics a couple of weeks earlier.”
As a physician turned CEO, that pattern is particularly difficult for Dunkle. He says even as his role became more administrative, as a doctor he never stopped caring about patients first.
Fighting to get paid for care delivered
If government payers create structural underpayment, commercial payers add a different kind of strain – administrative friction and denials. Dunkle described a period when, after a CFO departure, he became much more involved in day-to-day revenue cycle operations.
“It’s just egregious when you have an inpatient stay, and they ask for the same chart notes eight times on the same patient,” said Dunkle. “I just don’t understand why we have to fight so hard to get paid for the care that we’ve already delivered.”
Retrospective takebacks add another layer of uncertainty that frustrates providers. Dunkle points to the extremely long claim review windows and adjudication times, with scenarios where payers reopen claims months after patient discharge, try to claw back reimbursements and give hospitals just 30 days to respond.
For a small, independent hospital with thin or non-existent margins, those dynamics are destabilizing. It’s also frustrating, Dunkle pointed out, because organizations like his often outperform larger systems on safety and quality – yet are still reimbursed less.
“If you come to my hospital, I guarantee your risk of a fall, a catheter-associated infection, a central line infection are slim to none,” Dunkle explains. “You can come to me and say you need procedure X, or you can go to another big system hospital not far away – CMS two-star, bad safety scores, same procedure, same everything. They’re getting paid more. How is that right?”
Monopolies, misaligned incentives and the risk to community care
Dunkle is direct about the structural imbalance he sees in healthcare, emphasizing the dominance of major hospital systems and payers in Indiana.
“In Indiana, you look at the five largest hospital systems in the state — they control 49% of all commercial beds,” said Dunkle. “The four largest payers control 97% of the commercial beds. That’s where the monopoly is.”
He contrasts the profit-focused objectives of payers with the patient care mission of hospitals, describing this as a misalignment that threatens independent community hospitals. Without policy intervention, he believes small hospitals will continue to close across the country.
AI, revenue cycle and the need for trusted partners
Dunkle believes artificial intelligence and automation offer significant opportunities, especially for revenue cycle management. But he cautions smaller health systems that adoption speed matters less than thoughtful, responsible deployment.
“When you’re a smaller organization like us, you’re never going to be the first to adopt the latest technology,” Dunkle said. “We can’t afford to make a mistake. We can’t afford to make an investment that doesn’t pay off because capital is so limited. I joke with my executive team – it’s a lot of pressure when every hit has to be a home run.”
Dunkle points out that AI operates around the clock and reduces human error, which can result in meaningful savings. However, for smaller organizations like Johnson Memorial, he notes that adopting new technology comes with risks due to limited resources, making careful vetting and stakeholder engagement essential to avoid costly mistakes.
Culture, mission and why community hospitals matter
Reflecting on his work, Dunkle highlights the rewards of helping patients and the strong culture at Johnson Memorial Health.
“When you can take sick people and make them better, when you deliver babies, it’s joyous,” said Dunkle. “I’m lucky, my organization just has a fantastic culture. We wouldn’t be a CMS five-star hospital without that culture, without that dedication to the patient. As long as you keep the patient at the forefront of what you do, the culture will be there. The rest is noise.”
In the end, focusing on patient care, experience and satisfaction is what sustains Johnson Memorial Health – and what Dunkle believes will be essential for the survival of community hospitals nationwide.
In addition to being President and CEO of Johnson Memorial Health, Dr. Dunkle serves as vice president of medical affairs and is vice president of the Johnson Memorial Hospital Foundation Board. He is a specialist in family medicine and is passionate about helping his patients maintain healthy lifestyles. Dr. Dunkle graduated from Indiana University School of Medicine and completed his residency at St. Francis hospital in Indianapolis.
