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PIH Health CFO: Health Systems Will Not 'Survive' Without Acquiring More Risk

Analysis  |  By Jack O'Brien  
   January 15, 2020

Anita Chou, MHA, discusses the southern California provider market and why taking on more risk-based contracts is 'unavoidable.'

Anita Chou, MHA, has spent the better part of 20 years as an executive in the southern California healthcare market.

While her career began in the Bay Area at El Camino Hospital, Chou has held financial leadership positions at Prospect Medical Holdings, Inc., and St. Vincent Medical Center, both based in Los Angeles, as well as Saint John’s Health Center, based in Santa Monica, among other provider organizations.

Before assuming the CFO position at PIH Health, a Whittier, California–based health system, in November, Chou served as System CFO at Verity Health System, a Redwood City, California–based health system, for nearly four years. PIH Health has more than 700 beds and more than $3.6 billion in total patient revenue, according to the American Hospital Directory.

Related: PIH Health Among IBM Watson's 15 Top Health Systems for 2019

Chou tells HealthLeaders that what appealed to her about joining PIH was its financial stability at a time when both nonprofit and for-profit health systems across the country have suffered from diminishing operating margins.

"PIH Health has withstood the test of time and it's maintained its margins even through these last couple of years," Chou says. "We've also consistently been recognized as one of the nation's top systems for quality; that's what drew me to come here."

This transcript has been lightly edited for brevity and clarity.

HealthLeaders: How has the California healthcare scene changed and where do you see it going?

Chou: It's interesting, now that I've been in this industry for so long, I've seen so much consolidation of not only hospitals but also health systems. Look at Dignity [Health] with their merge with Catholic Health Initiatives; Providence with St. Joseph Health System; and Verity looking to transition over to KPC Health. That is happening around the country right now and you're seeing more and more distress scores for the healthcare industry, which essentially outweighs any other industry. I know that's been happening over the course of time, but we've been seeing a significant increase of this within the last couple of years.

The other thing that we've seen is the emergence of accountable care organizations (ACO). We're seeing a huge emergence of value-based care. Obviously, the [Kaiser Permanente] model kind of started it, but we're seeing notably this [trend] in California with the deeply rooted managed care environment. We're seeing a lot more global risk, on the professional side as well as the institutional side. I believe solidifying partnerships with quality physicians and increasing our risk-based contracts with health plans is going to be the way of the future. You're seeing so much more prevalence of that just in the Southern California area alone.

HL: Can you detail some of the effective strategies to shift to value-based care?

Chou: What you're seeing are health plans pushing over the management of a certain patient population to independent physician associations (IPA) groups or hospitals. What PIH Health has done well and what has secured their success in the market is investing in the PIH Health Physicians Group, which is the IPA arm of our integral delivery system.

Related: PIH Health to Partner With Good Samaritan Hospital

Related: Good Samaritan Hospital Joins PIH Health Network

[This] is not only securing risk-based contracts with health plans, but we're also investing more into physician partnerships with these groups. [This happens] whether it's through physician acquisitions through the medical foundation or investing more into medical equipment, which is improving the quality and patient satisfaction scores of these groups. For any of our risk-based patients that we're managing their population health, we've been able to secure that approximately 92% of these patients come into our own network. That is key to ensuring the success of these ACOs.

HL: Do you get the sense that hospital CFOs are starting to take on more risk as they go forward?

Chou: Health systems are not going to be able to survive if you don't get into [more risk]. So, I'd have to say that health systems in general and CFOs are warming up to [taking on more risk], but obviously, to transition from a fee-for-service model to a risk-based model is a huge transition. You need to know the business well and have a team that manages it well to be able to succeed in it. [Taking on more risk] is unavoidable, in my opinion, so we better hope everybody can get on board.

HL: As a health system leader, how do you respond to the needs of patients that come from different generations in terms of what they expect from a healthcare visit?

Chou: This is an interesting question. I think you need to understand patient population. What we're seeing even with the younger generation is that [millennials] don't necessarily care as much about direct access; meaning, to see a specialist. [Millennials] would rather go to an urgent care center than to have to go to their primary care doc. We're seeing a lot more from a transition perspective to more of that population just visiting urgent care centers instead of trying to go through and have direct access to a specialty care and paying for out-of-pocket. It's more of an on-demand, 'I want that service' approach. You're seeing a huge boom in the urgent care center side of things; PIH Health has several urgent care centers and we're continuing to grow that portion of the population.

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

We still understand that even within our patient demographics, we do have an aging population.  [We need] to be able to satisfy that portion of the patient population as well, to provide access to specialists going through our internal network and make sure that we have all the specialties available so that all patients can still stay within network. You kind of have to do a little bit of both, but it's going to be driven by the patient population that you're serving.

HL: How has your leadership style changed as you've grown in the healthcare industry?

Chou: As I'm getting a little bit older, work-life balance is key. As I speak with my team, I try to drive that as much as I can. Earlier in my career, it was not an easy path to get to my position. I worked hard and spent many hours in the office. I'm trying to [tell] my staff that you don't necessarily need to push that hard. The work is going to be here no matter what … instead of working maybe 12 to 14 hours a day to try to get the work done. There are definitely more efficient ways of [working].

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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