"It's tough emotionally moving through to an operating company model, but done well, that total system of care should be leaner and more consistent, and drive the triple aim much more effectively with better alignment on strategic goals," says Brooks. "You can't do that in a holding company model, because everyone has their own fiefdom and that doesn't accelerate performance."
Englewood, Colo.–based Catholic Health Initiatives, which owns or operates 87 hospitals in 18 states, has been transforming from a holding company to an operating company model for more than nine years; it's a long process and part of it means that local and regional leaders' roles have changed, says Michael T. Rowan, whose title, until recently, was executive vice president and chief operating officer of the system. He retains the COO title, but he's also now president of health system delivery.
"It used to be that the most applicable skill set was whether they had run a hospital before and how well they did that," he says. "That was the primary driver of the health system. Now, we're not hospital-centric."
Recognizing that new systems of care require new roles for leaders, the system has separated the local or regional CEO responsibilities from the job of the hospital president.
"We're now seeking a broader perspective on health from the CEO, so we're looking for a different kind of person," Rowan says. "For that role, we need someone who can create an entire continuum of care that works in a coordinated fashion."
Conversely, the hospital president's focus is expected to be more operational within the hospital. While CEOs at CHI must be leaders of the market working across the entire continuum of care, the president's primary responsibility is cost-effective care moving through the hospital. Therefore, the roles have widely different success metrics and expectations, he says.
"If you're the president, your goal is to move people through effectively, to lower length-of-stay, and to lower cost per case-mix-adjusted admission while at the same time improving
clinical outcomes. That's a very different job than the CEO who is the market leader and who must improve what percentage of second-graders have had their full course of immunizations or the percentage of seniors who have had their flu vaccine," says Rowan, offering an example of the distinctions.
Rowan's own role has changed as well, most recently in February, as the organization shifted two of its top leaders into more precisely defined roles. Rowan's oversight now includes the organization's core business line—87 hospitals and hundreds of other healthcare facilities in 18 states.
Given CHI's expanding offerings, which include massive investments in the risk side of the business, Dean Swindle, who is the system's chief financial officer, will retain that title but is also president of enterprise business lines. He will oversee finance and accounting, payer strategies, revenue cycle management, supply chain, and clinical engineering, among other areas.
Swindle also will highlight and identify new business ventures, ensuring that they are fully developed and that they have the resources necessary to achieve both growth and operational objectives.
Meanwhile, the system's CEO, Kevin Lofton, drops the president title and will focus on CHI's strategic direction and growth initiatives, including potential partnerships and consolidations with hospitals and health systems and other health-related organizations.
Behind the executive title changes is a conviction that CHI needs to become an integrated system nationally rather than a federation of affiliated organizations, and the reorganization at the top clarifies reporting structures and ensures the system operates as a comprehensive, integrated healthcare system, not a collection of hospitals. Rowan says a renewed push to quickly define the transformation came from the speed at which health reform is progressing from both the government and the commercial side. One reason the operating company model holds appeal is because of reduced variation, but also because the skills it is developing and acquiring through strategic corporate hires will pay off only with systemwide adoption.
"We have to bring in new people, for instance, with a plan development and insurance background," Rowan says. "For the most part, our individual hospitals cannot afford that talent by themselves. So that becomes a shared resource and you see integration there."
To take financial risk, he adds, health systems have to be able to collect rate data on populations as well as individual patients. But collection is only half the battle. Health systems have to analyze and manipulate that data and use it to make decisions. A data repository is expensive and, again, most facilities and even regional markets can't develop them on their own.