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Q&A: Banner CEO on 'Getting the Cost Out'

Philip Betbeze, for HealthLeaders Media, December 13, 2013

Some of the changes we made in our corporate areas, we're asking people to redeploy assets related to work they've become comfortable with and used to doing. Anytime you upset the status quo when people honestly believe what they're doing is logical, it's difficult.

So how can you affect their thinking and cause them to look at things differently? We used Booz & Company as outside consultant to help with that, which is unusual for us; we try to do the work ourselves. But we'd capped out our ability to influence the change processes and needed much harder data than we were producing ourselves. Doing this is less about a magic formula and more about the data.

HLM: Were there any areas where you achieved more than you thought possible? Less?

Fine: There were some things we've talked about where we achieved at a level we didn't expect, but also some things where we went too far and had to pull back. When it came to the issue of recruiting, for example, we strained ourselves rather than enhanced. We've corrected that.

In most cases, we've been smart enough to figure out what didn't work. We've taken hundreds of millions of [dollars of] overhead out by combining back office functions. This is a highly chaotic, ambiguous, and complicated healthcare environment, which I strongly believe will lead to massive consolidation over the next five years.

Because of reduction of resources and revenue, people have no choice but to figure out ways to reduce overhead. And the fastest way to do that is through combinations in an operating company model whose stated purpose is to reduce overhead.

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1 comments on "Q&A: Banner CEO on 'Getting the Cost Out'"


Deborah Kimbell (1/6/2014 at 11:23 AM)
Do you mean $.70 cents on the dollar? The article says it's seven cents on the dollar, but I'm looking at this news report from 2011: "Arizona hospitals will now be paid 70 percent of what it costs to care for a Medicaid patient, said Pete Wertheim, a vice president with the Arizona Hospital and Healthcare Association. "We are very disappointed to learn that they have approved another 5 percent cut," Wertheim said. "The cumulative effect of all of these cuts have really begun to take their toll on hospitals." Read more: http://www.azcentral.com/news/election/azelections/articles/2011/11/25/20111125arizona-medicaid-cut-approved-by-feds.html#ixzz2pdV0RoQT