From HealthLeaders Media '09: Leadership During Disruptive Times

HealthLeaders Media Staff, October 19, 2009

Any major transition between one major business or regulatory model and another is inherently disruptive, as the healthcare industry has learned during a healthcare reform process that has gone on for months and has been coming for years. But during disruptive times, leaders are able to see the future world and prepare for it, while trailers fight the changes and ultimately lag behind.

After a day-and-a-half of in-depth panels and discussions about improving outcomes, design, patient experience, culture, and talent in tomorrow's hospitals, the HealthLeaders Media '09: The Hospital of the Future Now concluded in Chicago on Friday with a leadership luncheon that focused on healthcare finances and the uncertain future of reform.

There was little optimism from the panel of CEOs about the final legislation expected to make it out of Congress. Patricia A. Gabow, MD, CEO of Denver Health, saw some positives in reform—including the potential reduction in uninsured patients, who make up 46% of Denver Health's patient population—but was worried that if the reform was insufficient politicians wouldn't have the stomach to continue the process and learn from mistakes.

Peter S. Fine, FACHE, president and CEO of Banner Health in Phoenix, AZ, echoed concerns that the reform process would be incomplete. Fine had recently met with Arizona Senator Jon Kyl, who told him that the current battle was as much about ideology as improving healthcare or health insurance.

The third panelist was Charlie Baker, Jr., former CEO of Harvard Pilgrim Health Care and current gubernatorial candidate in Massachusetts. Although Baker had a first-hand account of similar healthcare reform efforts in Massachusetts, he said the model couldn't be applied to the rest of the United States. "Massachusetts is really different than Colorado, Arizona, and basically all of the other 49 states," he said. What the healthcare industry could expect, he predicted, was a bigger role for the federal government as a researcher, investigator, and regulator in healthcare.

Healthcare has grown up around misaligned incentives, and Congress has so far missed an opportunity to tackle payment reform, panelists said. Baker offered as an example the gap between primary care physicians and some specialists. An hour with a primary care doctor reimburses about $250, but orthopedic surgeons get about $4,000 and cardiologists $5,000 for the same amount of time, he said. Although healthcare reform legislation includes bonuses and payment increases for primary care, none of the bills address the fundamental flaws of the reimbursement system.

Despite reservations about the future of healthcare, panelists are already preparing for the future world and demonstrating that success can come despite difficult challenges. Denver Health and Banner Health both began months ago and invested millions into physical plants to expand capacity, as well as needed IT projects, for instance.

Their recent financial success has given the systems breathing room to prepare for coming changes. Denver Health won this year's Top Leadership Teams award for large hospitals in part because it has used Lean management approaches to become one of most efficient and highly-integrated systems in the country.

Banner Health has also done well using what Fine called a "common sense" management approach and limiting overhead costs to 7% of revenue. "It's really an attitude within the organization: You've got to live within your means," he said.

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