MarinHealth CFO Eric Brettner on Putting Capitation to Use for a Rural Patient Population

Eric Brettner shares the hospital’s approach to value-based care in the California market.

Eric Brettner is a West Coast healthcare veteran, having worked in finance roles at both HCA Healthcare and Dignity Health over the past two decades. 

From 2011 to 2017, Brettner served as a regional chief financial officer (CFO) for Dignity, covering the Bay Area, before joining PeaceHealth as a regional CFO.

At that system, Brettner covered a territory from Bellingham, Washington to Alaska, accounting for one large hospital and three critical access hospitals. In September, he was named CFO at MarinHealth. 

Brettner spoke with HealthLeaders about returning to the California healthcare market and making the transition from working in a large health system to leading a stand-alone facility.

This transcript has been lightly edited for brevity and clarity.

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HealthLeaders: What are some differences from working in a large health system to working in a stand-alone hospital?

Brettner: Some of the challenges are a lot of the same: you still have revenue cycle challenges, you still have contracting challenges, but I think what's different is rather than a team from the corporate office, you're the one dealing directly with the problem. That kind of amps up the challenge, but that's the opportunity I was looking for. I am someone who would much rather be in control of his destiny.

I'm getting to bring some of the learnings I got from [other systems] to MarinHealth. I'm asking my team to look at [challenges] in a way that they hadn't in the past. 

HL: What strategies have you've learned over the years that have been effective when you go into payer contract negotiation?

Brettner: California is a little bit of an unusual area. We have Kaiser [Permanente] and it controls a huge part of the market. What's a little different [compared to] other places, is that Kaiser has hospitals. If [an insurer] were to say, 'How do we work together to reduce the cost and what can you do so we can go out and offer a premium that's more competitive with Kaiser?' I would say, ‘Let's look through the numbers. We can try this for a year or two.’ [However], an insurer has to show what they're going to do on the rates, it's not going to be all on my [organization's] back. We both need to come down on margins.

We've got the opportunity to look at [payer negotiations] a little bit differently and emphasize where we have service lines that are critical, either through geography or market share, to drive higher reimbursement in those areas.

HL: Where do you see the California healthcare industry going?

Brettner: All health systems need to look at how to move to a lower cost of care. That [involves] a variety of things, [such as] reducing length of stay and readmissions. [These are things] people have already been working on and will continue to work on. In California, seismic laws are a real challenge because you have to decide, 'Am I going to rebuild? Am I going to build as big or am I going to rebuild smaller? How do I accommodate lower utilization [rates] at my impatient without building too big?'  

Not being a certificate of need (CON) state, [California] probably has a fair amount of overcapacity. I think you'll see more closures in California as places struggle with that lower capacity and not being able to afford to rebuild. You'll see more consolidation, which you might not see as much of that in states where there are CON states, where the capacity probably hasn't been overbuilt as much.

I think longer term, it's also going to take collaboration with unions in California, or it's going to take the unions making some sacrifices, because the Medicare rates and premium increases from commercial payers aren't going to be enough to cover all the costs. [Health systems] are going to have to get more efficient through a variety of means and cut the cost, or we're going to have a combination of sitting down with labor and saying, 'Here's the long-term economic picture, and you folks need to get clued in.'

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HL: What is your approach to the shift from fee-for-service to value-based care?

Brettner: In a relatively small community, we're heavy into Medicaid capitation and that's been pretty successful for us. We're looking at how do we get into some other capitated arrangements. I think when you do that, you need to have eyes wide open to understand what's your ability to meet [the community’s] needs. [And also consider:] 'What am I going to take capitation for? What do I provide? What would I need to send to a third party?' There's the hospital side to it where you really need to be looking at, 'What do I have on the front end for a physician network? How good are they at managing their cost? Do I have the right alignments there?'

HL: How important is it to be in communication with your clinical operations as it relates to value-based care?

Brettner: I'm not trying to be egotistical; I usually get, 'Wow, you actually understand clinical stuff a lot more than I expected.'

You need to be aligned because you also need to be able to explain to the clinical leaders, 'If this is what we're doing clinically, this is going to be the implication if we want to be successful.'

Using capitation as an example, if we as a leadership team think we can do well by taking another 10,000 capitated lives, we need to make sure we've got the right processes on the clinical side to handle those patients.

Do we have a process to make sure that when someone shows up at another hospital that we know about it, and that we've got a way to get that patient over to our hospital and to provide the care? If somebody came to me and said, 'We want you to take capitation that includes pediatrics.' I'd say I probably need to exclude pediatrics from it or I need to go back and figure out how I get contracts with the children's hospital 15 miles away, because I don't have much of a pediatrics practice. It's understanding what your critical capabilities are but then also explaining to the people these are the competencies and what we need to build on the clinical side to be successful as a business.