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How to Stay (or Become) Independent

Philip Betbeze, for HealthLeaders Magazine, January 8, 2010
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As trends favor hospital consolidation, staying solo is becoming more challenging.

Guy Medaglia prides himself on swimming against the tide. Perhaps that's why his leadership style as president and CEO of Saint Anthony Hospital in Chicago is no different. Personally, he gets his sense of freedom and possibility from his motorcycle hobby. In his career, he's getting a big dose of it by convincing his board and his corporate parent, St. Louis-based Ascension Health, to let his hospital go it alone. On July 1, Ascension officially agreed to that plan after six years of recovery from dire financial straits at the 110-year-old inner-city hospital.

In doing so, Saint Anthony is going the opposite direction of most in the industry, where the growing momentum favors consolidation. Most hospitals leaders predict the future skills and attributes necessary to sustainability for hospitals will require bigger scale, not smaller. Because of the anticipated expensive operating requirements forced by healthcare reform, joining a larger system is far more appealing for most.

"Being part of a system brings value," he says. "Ascension wanted to keep us, but the board had done its homework and this worked best for us, unless they were planning on adding more hospitals to the market."

Many speculate that a move toward healthcare payments based on outcomes will force many small to mid-size community hospitals (generally 300 beds or fewer) to find a merger partner or be marginalized out of existence—they simply won't be able to compete, so the theory goes. Medaglia doesn't dispute that, for the majority of hospitals, consolidating with a better-funded corporate parent that has the scale to implement tough new technology and accountability requirements might be the best option. But he's been there, and he and his board felt independence was the better option.

"People think in order to succeed or even continue, they have to change who they are," says Medaglia, who came to Saint Anthony as part of a consulting arrangement with his firm, FTI Healthcare in Brentwood, TN, where he is a managing director with a track record of turning around troubled inner-city hospitals. "You need to be who you are, but be the best at who you are."

Internal engagement
Saint Anthony has a lot going for it, unlike many inner-city independent hospitals, which are often representative of the troubled aspects of the healthcare system. Generally, they're not reimbursed as well and have a tough time attracting the affluent patient mix that determines financial viability in modern healthcare.

But Medaglia insists that what he, the board, and physicians developed at Saint Anthony can work at a majority of hospitals that fit its profile.

"No matter what inner-city hospital I end up working on, it's about embracing the physicians, the community, and employees to help you solve the problem. These people were here when I got here. Without the efforts of the board, the physicians, the executive team, and the employees, we would not be where we are."

For instance, he says, physicians tend to view hospitals like Saint Anthony as a second or third choice when deciding where to practice.

"Typically that's because they don't get involved in the operations," he says.

At Saint Anthony, the physicians are always involved in operational decisions.

"Before we do anything, I get physician leaders to give their input on what tools are needed, the best way to implement." He credits that level of involvement to a feeling among physicians that Saint Anthony is "their hospital." Further, he showed the hospital's commitment to the physicians and the community by spending money to improve areas of perceived deficiency. He put significant dollars into a new ED, for example, and put special emphasis on improving quality scores and promoting that improvement widely in the community.

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