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Incoming Beaumont Health CEO Ready for Integration Challenge

 |  By Philip Betbeze  
   January 16, 2015

John Fox comes from Emory to lead the merger of three Detroit organizations. Having no previous history with any of them, he is seen as a visionary who can meld the cultures into a cohesive whole.

What could prompt a CEO to leave a 15-year career as head of a globally significant health system

  • At which his latest plaudit came from helping other more overwhelmed organizations treat Ebola patients effectively and safely?
  • At which his two largest hospitals were named number 2 and number 3 in the University HealthSystem Consortium Quality and Accountability Study?
  • Which is the largest and most comprehensive academic health system in the state with $2.7 billion in annual revenue?

A challenge, that's what.


John Fox

And a challenge it will be in late March when John Fox takes the lead at Beaumont Health, a recently created entity with $3.8 billion in annual revenue that merges the former Beaumont Health System, Oakwood Health System, and Botsford Health Care in the metro Detroit geographical area.

The merger became final in September only after Beaumont scrapped a planned merger with Henry Ford Health System the year prior that would have created a $6.6 billion health system, one of the largest in the state. The different cultures at the two organizations were seen as reasons that merger was ultimately scuttled.

Fox will face cultural integration issues anyway as he attempts to bring together 33,000 employees, 5,000 physicians, and eight hospitals under one cohesive umbrella.

As a new leader with no previous history with any of the merged entities, Fox is seen as a visionary who can meld the cultures of three very different organizations into a cohesive whole. His predecessor, Gene Michalski, who began a 44-year healthcare career in the lab at Beaumont Hospital, Royal Oak, will retire.

I got the chance to speak with Fox during a 40-minute interview last week, in which we talked about his hopes and the challenges ahead. The following interview has been edited for clarity and brevity.

HLM: To some it may seem as though you were at the pinnacle of healthcare leadership at Emory. Why did you decide to leave?

Fox: I've been here for almost 16 years. There have been a lot of challenges, but overall we've been successful. Beaumont was a special opportunity that appeared. As they contacted me and as I investigated more, it looked more and more attractive as something to take on now, given their position.

I also thought it would be interesting to work again outside the umbrella of a university. Beaumont is an independent healthcare system, and some academic medical centers are owned by a university. There's nothing wrong with that, but it increases the complexity.

HLM: It could be construed as odd that a community health system like Beaumont would turn to someone who has run an academic medical center for 15 years to lead it into a future where it intends to compete on lower costs and higher value. Do you have a sense of why the board decided you were the one?

Fox: My emphasis to [Beaumont's board] was how the environment is changing and my thoughts as to what any healthcare system needs to do to respond to it, university owned or not. Interestingly, Beaumont has more residents and fellows than Emory Healthcare, with a big teaching history, which I like.

The board also wanted someone with experience melding cultures. My experience has been with several mergers both in Indy [as executive vice president at Clarian Health, now IU Health] and Atlanta. The founding systems of Beaumont are great, but the reality is I don't have any history with any of them. The board thought that might be useful in putting together what is essentially a new organization.

HLM: Although I know you weren't involved, certainly you viewed the recent merger with interest. What is most important about what it allows Beaumont to do, other than gain scale and grow its network into a must-have for payers?

Fox: The merger sets up the ability to build a value-driven system that really can perform well. There's a ton of work to do, but they're in a great position to do that going forward and they made the unequivocal commitment to be a single system, not a confederation, and that's critical.

I think that brings clarity to everyone that we'll go forward together and we'll need to figure out the best way to do that based on what will help our performance and patients and families the most. The goal will be best care at an affordable cost, which is not the way the world used to be. To use a Southern expression, that world is gone with the wind.

HLM: What will make Beaumont stand out in that environment?

Fox: They've got a great asset base, most importantly of people, but also facilities. Their commitment, which starts with governance, is clear and laser-focused on improving the value of healthcare services by delivering high quality, well-coordinated patient care at the right time in the right setting at an affordable cost.

All that is critical and they have certain system advantages that will be useful. One example is that by the end of 2015 they'll all be on a common electronic medical records system. They've got great geographic coverage to serve the metro area. They also have a good distribution of assets and a great set of core competencies from each of the founding systems. They're all bringing something to the table that when you add it up, it's powerful synergy.

HLM: The cynic might say that yes, the stated goal is to create a lower cost and higher quality organization, but an unstated goal for many hospital mergers is to maintain leverage over payers. Is that at least part of the math here?

Fox: That discussion is out there [about near-monopolies] and can easily be flipped for the health plan side. What I mean is that if you don't like the price, it's an argument you can always grab. My view is the right thing for an organization to do is to make sure it's affordable for the community it serves.

I'll pick a Beaumont situation as an example. Part of my attraction is that they were thoughtful and disciplined on where they would garner savings that would be translated into value for those they serve. There are obvious savings if they can get everyone on one EMR. And you just have to have the discipline to do that.

The merger issue is complicated, but there's no industry in America that hasn't felt the market pressure to use scale to get more economies or synergies out. And there's price risk around that. You've seen it with airlines, in manufacturing, and in banking, and just look at the payer community.

For some health systems—not Emory, and not Beaumont—that particular health plan near-monopoly forces them to go into the health plan business. That has occurred in both Michigan and Atlanta. That monopoly situation convinces those health systems to say, 'the only way we'll get a fair competitive playing field is if we create it.'

HLM: As a new CEO, what do you think your biggest challenge will be?

Fox: The biggest challenge will be respecting and making sure everyone respects what the founding organizations bring to the table, but also being very clear that we're becoming one new single organization, and that's what we're all committed to.

It's a simple message. By doing that we are working for the patients in helping make their care convenient, higher quality, and affordable. We have a moral obligation to walk down that path and we can't stay rooted to silos.

This will be a fair amount of work and dealing with it will be part of my learning process. One of the biggest things I'll need to do is listen to what people are saying to determine the best way to effect successful change.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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