Lou Galdieri has been named the new COO of Mease Countryside Hospital in Safety Harbor, FL. He was interim COO for eight months before his appointment. Galdieri will also remain as COO of Mease Dunedin Hospital, a position he has held since 2006.
Southwestern Vermont Medical Center has announced that longtime hospital President and CEO Harvey Yorke has retired from his position. The SVMC board of trustees also has named Mark Novotny, MD, CMO, as an interim CEO. In a letter to SVMC employees announcing his retirement, Yorke, who began at the hospital in 1991, said he had advised the hospital board of the decision. He also mentioned the recently revealed fact that the hospital is facing a $1.3 million deficit in the current fiscal year, which ends Sept. 30. The board has not taken steps to find a new CEO.
The University of Maryland Medical System has named Karen Olscamp as CEO of Baltimore Washington Medical Center. Olscamp was named interim president of the Glen Burnie hospital in August and was expected to take the top spot. She replaces James Walker, who retired in August. Olscamp was previously senior vice president and chief operating officer of BWMC.
Charles R. Evans, president and CEO, International Health Services Group in Alpharetta, GA, has assumed the office of chairman of the American College of Healthcare Executives. Evans was installed Saturday at the Council of Regents Meeting during ACHE's 52nd Congress on Healthcare Leadership in Chicago. He received the gavel from MG David A. Rubenstein, FACHE, outgoing ACHE Chairman. As chairman, Evans will serve the second part of a three-year term in ACHE's consecutive chairmanship offices: chairman-elect, chairman, and immediate past chairman.
Healthcare is a trailing indicator of the economy. Mass layoffs and credit tightening have devastated other industries, but hospitals typically show the effects of an economic downturn a little later as people scale back on elective procedures and even preventive care. That means, even though the stock markets and the economic outlook are finally showing some signs of life, the healthcare sector may still be in for a rough short-term ride.
A recent survey by Thomson Reuters backs up that notion, showing cracks in hospitals' generally razor-thin margins. The trouble in this downturn is that hospitals are more exposed than ever to the vagaries of the economy, as more of their revenue dollar comes from consumers and, in recent years, as more hospitals depend on their investment portfolios to pick up the slack. Those two areas are having a pretty drastic effect on hospital margins, the survey says, as about half of hospitals are operating in the red on total margin.
Gary Pickens, chief research officer for the Center for Healthcare Improvement at Thomson Reuters, says that data is unprecedented, historically. "If you go back in the 2001-2002 [dot-com crash], basically their investment income dried up but it didn't impact total margins because there weren't any serious losses or writedowns," he says. "The opposite has happened here and we can all relate personally by looking at any savings or investment returns we have. We've seen not just unrealized but realized losses in those assets."
Cutting construction
Pickens predicts that hospitals will have to cut back on developmental projects and focus on the core business, something that's already happening en masse, even with stronger systems like Atlanta's Emory HealthCare System, which recently mothballed a $1.5 billion expansion and replacement hospital project. Emory is far from being alone in curtailing capital expenditures in these uncertain times.
Pickens says healthcare IT falls into the same category, although cuts in planned expenditures there don't necessarily make the headlines like cancellations of multibillion-dollar construction projects. He suggests that IT money in the American Recovery and Reinvestment Act will help, but hospitals still may have a tough time committing to large investments even if the government is footing a large part of the bill.
Many suggest that hospitals are going to have to focus on their core business—trying to get more out of the people they have now and achieve savings through a reduction in contracting expenses.
"They are going to have to look for the pennies on the margin to get through this," Pickens says.
Trouble is, I've been writing about how hospitals have been looking for those pennies for years. And while focusing on the core business and getting out of business lines that aren't in their core competency has helped many of the hospitals I've profiled, there just isn't a gold mine there. There's no getting away from the fact that all of the operational engineering in the world won't save you from a cratered economy.
Just ask Toyota, the king of operational efficiency and a model that many hospitals have adapted to their own business to great success. Perhaps the world's most respected carmaker, Toyota is cutting back all over the place—even stopping construction on a Mississippi plant that was set to build its vaunted Prius.
Layoffs won't move the needle
Despite the constant drumbeat of news about hospital layoffs, Pickens says cutting staff just doesn't deliver the bang for the buck that many hospitals need, so he doesn't see it as a major way to add to margins.
"The average hospital operates at maybe 3% to 4% total margin, which is life support," he says. "Of course there are some hospitals that do much better and some that do worse. But they are pretty much already running lean and mean. So, I don't think there are a lot of nonessential workers to cut."
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.Note: You can sign up to receiveHealthLeaders Media Finance, a free weekly e-newsletter that reports on the top finance issues facing healthcare leaders.
In naming David Blumenthal, MD, MPP, as his national coordinator for health information technology, President Barack Obama has selected someone with healthcare and policy experience to lead the nearly $20 billion healthcare information technology effort.
Blumenthal, a Harvard Medical School graduate and professor, is an internist and expert in health policy and healthcare delivery systems. He has a lengthy resume in healthcare, including founding director of Partners HealthCare System's Institute for Health Policy (IHP) that "conducts research to support quality and efficiency improvement within Partners HealthCare, to inform and influence health policy on the national level, and more broadly, to improve health and healthcare across America and in other nations worldwide," according to its Web site.
In addition to Blumenthal's work in healthcare, he has served in the political realm as a staff member on Sen. Edward Kennedy's Senate Subcommittee on Health and Scientific Research, served on the White House Health Professional Advisory Group during the Clinton administration, and was a senior health advisor for President Barack Obama's presidential campaign.
Blumenthal's appointment comes a week after HHS created the Office of Recovery Act Coordination, which will oversee the distribution of about $137 billion in stimulus funds. Of the $19 billion in health IT funds Blumenthal will handle, about $17 billion of that sum is slated for incentive payments through Medicare and Medicaid for providers who adopt electronic health records.
In a statement announcing the appointment, Jenny Backus, spokeswoman for HSS, said Blumenthal "has the experience and the vision to help" reform healthcare and is "uniquely qualified" as a practicing physician and leading scholar on health IT. "Dr. Blumenthal shares President Obama's commitment to investing in a health IT infrastructure that will protect patient privacy, and improve both quality and efficiency in our nation's health system."
Blumenthal has already created a blueprint for how the federal government should push for widespread use of interoperable health IT systems. He wrote an article for The Commonwealth Fund in January that suggests four ways the federal government can spark health IT adoption:
Stimulate adoption of electronic health records
Stimulate interoperability
Create incentives to use electronic health records (EHR) to improve quality and efficiency
Stimulate technical progress
With his new position, Blumenthal will need to work on those four areas—and he won't have time to ease into the role. According to the stimulus bill, standards and specifications for the health IT portion of the bill are expected by the end of this year. In the standards, the feds will have to define "certified" EHR products and how physician practices can meet the legislation's "meaningful use" requirement. Practices that meet that requirement are eligible for Medicare and Medicaid incentives starting in 2011.
In addition to his health IT work, Blumenthal has investigated healthcare reform in a historical context. He and his co-author James Morone wrote a book called "The Heart of Power: Health and Politics in the Oval Office" scheduled for release in June that examines the role presidents since Franklin D. Roosevelt have taken in addressing healthcare reform. As part of their research, the authors analyzed President Lyndon Johnson's taped Oval Office conversations and other archival materials concerning the Medicare and Medicaid legislation. They found that the president played a larger role in getting the landmark legislation passed than previously believed by historians.
In a potentially revealing look into what is to come, Blumenthal and Morone wrote that "speed is essential" for healthcare reform, highlighting Johnson's fast action in 1965 compared to President Bill Clinton's slower healthcare reform movement in 1993.
Health IT and healthcare officials praised Blumenthal's appointment as the right person for the job.
Joseph C. Kvedar, MD, director of the Center for Connected Health at Partners HealthCare System, has worked with Blumenthal at Partners. Kvedar says Blumenthal brings experience in both policy and research related to how health IT affects patient care. "I think the Obama administration is sending a very clear signal that [health IT] is a very high priority item. They couldn't have chosen a more talented, qualified individual to head this up," he says.
Vince Kuraitis, principal at Better Health Technologies in Boise, ID, says Blumenthal recognizes the "critical importance of interoperability" and he understands that provider payment reform and health IT reform are "inextricably linked."
"He understands the necessity to get the market to adopt standards for data exchange. Specifying standards are only a first step toward adoption of standards. The federal government can play a critical role as catalyst and market organizer. He recognizes that [electronic medical records] EMRs are a means, not an end in and of themselves. He understands that providers need to be incentivized and rewarded for improving quality and outcomes by using EMRs, not simply rewarded for purchasing EMRs," says Kuraitis.
On his blog, Life as a Healthcare CIO, John D. Halamka, MD, MS, chief information officer of the CareGroup Health System and chief information officer and dean for technology at Harvard Medical School, called Blumenthal an "icon in the Massachusetts community."
"He's created numerous organizations, collaborations, and study groups to better understand the effective use of information technology in healthcare. . . He's advised presidents. He understands the need to create policy and technology in parallel," wrote Halamka.
David C. Kibbe, MD, MBA, principal of The Kibbe Group, LLC, in Pittsboro, N.C., and senior advisor for the Center for Health Information Technology at American Academy of Family Physicians, says he is confident that Blumenthal will find a way to deploy health IT that "makes the outcomes of technology the main objective."
"He brings a background of health services research and policy study to an area of healthcare, the uses of information technology, that has received a great deal of hyperbolic cheerleading from certain quarters, but which has not been well connected to health reform policy objectives, such as improvement in quality, safety, or cost," he adds.