Alegent CEO's Resignation Illustrates Difficulty of Culture Change

As I was preparing to lead the culture panel at HealthLeaders '09 last Friday in Chicago, I heard about the resignation of Wayne Sensor as CEO at Alegent Health in Omaha.

I've known Wayne for about four years, so the news came as a shock, especially since from every angle I've seen him over that time, it always seemed like he was committed to patient power as the key piece of cutting costs and improving quality in healthcare. He's always been a pioneer—from the drive to make healthcare prices transparent to the consumer to building a staff of employed physicians at the health system. Heck, three of the system's hospitals were recently named among the 100 "best value" hospitals. So what gives?

Well, so far, few are talking, including Sensor himself, but the writing on the wall is pretty obvious. Medical staff at two of Alegent's largest hospitals recently revealed a vote of no confidence against him, and that means dollars, ladies and gentlemen. Essentially, powerful physicians on the medical staff were saying with their no confidence votes that unless he was gone, they would henceforth be taking their business elsewhere. I'm told many of them already did that. Sensor offered his resignation, and the board, faced with a physician revolt that in the short term could have eviscerated the health system in favor of its competitors, accepted.

As I took the stage to moderate a panel on the difficulty of culture change in healthcare, the irony couldn't have been more stark. I talked with a good source on the drama the other day. He says the board insists that Sensor's resignation was not related to his drive to employ physicians at the expense of the affiliated medical staff, but let's be honest here: it couldn't have helped.

Everywhere you look, the old medical staff model of healthcare is breaking down. Hospitals, squeezed by reimbursement struggles, are hitting the financial shoals, and they need patients—especially the high-dollar kind whom specialists treat—to fulfill their mission. Employing physicians means their interests are much better aligned with those of the hospital or health system. But employing specialists is where it gets tricky. Independent physicians still wield tremendous power over patient referrals and most importantly, where they perform their high-margin services, not to mention power over the implants and surgical materials that hospitals must buy. No wonder CEOs feel squeezed at both ends.

When you start moving into specialists' space, you're stepping on toes when there's not a population increase to demand a general increase in the number of specialists in a market, my source says.