Let's hope the year we're saying goodbye to in 2008 isn't better than the year we're saying hello to. Because it's hard to imagine how much worse it could get. OK, it's another "year in review" column—something we journalists cooked up for a time when many of you are on extended holiday vacations and tough to reach for comment. But read on anyway, because these are momentous times in finance—not just because the majority of a long and deep recession may still be ahead of us, but also because despite all these headwinds, hospitals and other healthcare organizations made big strides in the finance arena this year. The end of the year gives us a chance to look to see where we've been in order to track where we're going, and viewing things through a wide-angle lens can always be a valuable exercise.
In January, back when we all thought the economy was running pretty well, we read that despite the good times, the government was promising $45 trillion in benefits that it couldn't possibly deliver on given the expected 75-year revenue stream. One wonders how much more that figure has increased, given the taxpayer-funded bailout of the financial industry for which we're all on the hook.
In February, we saw the first inkling that true healthcare reform might not face its usual team of powerful opponents, as the Federation of American Hospitals came out with a plan that is similar to Massachusetts' state plan that requires all people to have some form of health insurance. The jury's still out on the Massachusetts plan as it has cost considerably more than projections. But given the shared sacrifice and rewards it offers, that plan is a hopeful sign that it might align incentives better in healthcare and keep free-riders from eventually wrecking the system. Now that Tom Daschle, who has advocated for a similar nationwide plan, is Obama's choice for Health and Human Services secretary, such a system might have a chance.
March brought news of the auction-rate debt fiasco, which caught many hospitals off guard. The failure of this market presaged the deepening credit crisis and foreshadowed the problems plain vanilla borrowers would face in 2008 with unexpected increases in debt service costs because investors, investment banks, and bond insurers failed to appropriately account for risk in other financial markets.
In April, we talked about the misaligned incentives in healthcare as we depend on a system in which healthcare providers are rewarded not for keeping people healthy, as they ought to be, but for performing procedures on people who are sick. We also talked a bit more about the auction-rate debt crisis, which was rapidly morphing into a broader-based crisis in credit in general. In May, to many readers' collective chagrin, I compared the rapid rise in oil prices to the growing shortage of physicians; in short, comparing physician prices to the rising price of a barrel of oil. The point was that high prices and shortages drive innovation—something we're seeing in healthcare today as people are seeing physicians less and less for routine issues as those matters are delegated to so-called "physician extenders." Whether that's bad or good is a matter of opinion, but it's useful to show that crises and shortages drive innovation, a point I hope I was able to get across.
June brought my musings on the difficult work ahead for proponents of consumer-directed healthcare. With a new administration coming into office, it's difficult to tell whether consumer-driven care will have the backing it needs politically, but there's still a lot of work to do in this, because so-called retail prices for healthcare are meaningless.
In July, we found out that CMS was paying medical equipment providers for equipment supposedly ordered by long-dead doctors. I was speechless, considering the fact that healthcare costs are perhaps the heaviest millstone weighing down our economy's future. At least they were at the time. The full brunt of the credit crisis was still to come, after all.
August brought news that some health plans are starting to put more pressure on physician practices because of the fact that they're encouraging their beneficiaries to visit walk-in clinics?and not requiring a co-pay. You'll probably sees a lot more of this in the coming year for the simple fact that it's cheaper and patients have shown that they will choose a cheaper and just-as-good option for routine care.
September was when the financial crisis really began to shine. I brought you my own story of the strange feeling I got while attending an M&A conference during the week that Lehman Brothers declared bankruptcy. As it turned out, that failure helped the crisis really pick up steam. It's still scary out there.
In October, as the crisis worsened, I talked with several investment bankers about what hospitals could do if they needed to borrow money, and perhaps their balance sheet wasn't in the best of health. The answer: in short, nothing.
In November, on a personal note, I welcomed my twin girls into the world and they welcomed me into the world of insomnia. In healthcare, I wrote about the likely continued influence of some form of consumer-directed healthcare even in an Obama administration. I still feel that way, if only because there are few other prospects for a meaningful reduction in healthcare inflation.
Finally, in December, we're looking at a new administration taking over in a little less than a month. I talked a little bit about value earlier this month?as in the value of making your organization a leader not only by offering low-cost care, but also through demonstrating that your organization's outcomes are better than the competition. Value will be the key as national or even global competition for healthcare dollars heats up.
As we look forward into a new year and new administration, I wish nothing but the best for my readers. I hope you have a happy safe and healthy holiday season, and that like me, you come back rested and ready to tackle the unexpected challenges. Tune in next week, where I'll offer a little prognosticating for you to consider in 2009.
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.Note: You can sign up to receive HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top finance issues facing healthcare leaders.
President-elect Barack Obama's goals for a federal stimulus package will be expanded in an effort to create or preserve at least 3 million jobs over the next two years and to keep up with the increasingly grim economic outlook. According to Obama's economic advisors, the economy is expected to lose as many as 3.5 million jobs over the next year.
A new law that becomes effective in July will prohibit facilities from forcing nurses and certain other healthcare workers to work beyond their scheduled shifts. The legislation aims to improve patient safety, and prevent healthcare facilities from disciplining or discriminating against a caregiver who refuses to work beyond a scheduled shift.
The Memorial Hermann Hospital Health Care System will change the name of the year-old Roger Clemens Institute for Sports Medicine to better reflect its commitment to all sports and athletes. To be renamed the Memorial Hermann Sports Medicine Institute, officials say "the move reflects the desire to promote the broad range of sports medicine services and programs offered by Memorial Hermann."
Starting next year, Kenmore Mercy Hospital will have a new leader. On January 5, 2009, James Millard, current president and CEO of St. Joseph Hospital in Cheektowaga, will become president and CEO of Kenmore Mercy Hospital. Millard will succeed Mary Hoffman, who announced earlier this month that she is leaving Kenmore Mercy Hospital to take a position with Lawley Benefits Group.
Santa Clara Family Health Plan announced that Leona M. Butler, CEO since 1997, will be retiring as of December 31. Butler will continue as "CEO Emerita" for a year after her retirement from her full-time position, to assist the SCFHP board with external and legislative issues.
Sandra Shewry, the former director of the California Department of Health Care Services, has been named to director of the newly created California Center for Connected Health. The CCCH, which begins operations January 2, 2009, was created to expand and coordinate telehealth initiatives across the Golden State.
Edward Sim, vice president of operations at Baptist Medical Center, has been named as incoming administrator of Baptist Medical Center Beaches. On February 1, 2009, Sim will assume the hospital's top administrative leadership position, currently held by Baptist Beaches Administrator Mark Slyter. Sim has been a member of Baptist Health's senior leadership for more than three years. He previously served as chief business development officer at North Fulton Regional, a Tenet Hospital in Roswell, GA.
Christopher Ohman has joined Kaiser Permanente as senior vice president, Health Plan Operations, for the organization's regions outside of California. Ohman begins his new role effective February 2, 2009. He comes to Kaiser Permanente after having served as president and CEO of the California Association of Health Plans, a trade association representing 40 health plans. Ohman replaces Peter Andruszkiewicz, who earlier this year was named president of Kaiser Permanente of Georgia.
On-site back rubs, and keys to the exercise room might make employees relaxed and more physically fit, but one observer says it won't necessarily improve job performance. Those perks might not even be what employees want or value.
Debbie Paller, vice president of the Physician & Employee Business Unit at Press Ganey & Associates, says hospitals need to do a better job understanding what employees want. With that in mind, the healthcare quality monitor this month introduced a new "Employee Partnership" model that focuses less on recruiting gimmicks and more on employee engagement.
"Our historical approach was to focus on satisfaction. We used to measure engagement and improve engagement by leveraging satisfaction," Paller says. "Through our research we found that they are two very different psychological conditions that should be leveraged in their independent states to get the maximum benefits."
The Employee Partnership model centers around what Press Ganey calls "Five Partnership Principles," namely: systems and leadership, resources, teamwork, direct management, and engagement. Systems and leadership, for example, focuses on issues like job security, input on decisions, fair wages, and recognition. Direct management focuses on coaching, trust, communication, and feedback.
At first glance, the Five Partnership Principles appear to be the same old boilerplate and buzzwords we've heard before. Communicate with your employees? Recognize achievement? Of course! But it's more than that, says Paller.
"From a hospital's perspective, they may feel they are already doing this. The question is, Are you bridging that gap to where employees are perceiving it? Perception is realty," she says.
For example, hospitals try to recruit and retain employees with "wow factor" stunts like mortgage assistance or concierge services when they should be concentrating on bread-and-butter issues like wages, professional development, employer relations, and scheduling flexibility.
"What we have found is the basic stuff tends to get lost," Paller says. "The wow factors are great, but employees, especially in these times of economic uncertainty, are looking for things that give them that stable feeling of employment." The best way to find out what employees want is to survey them. "Ask the employees: 'What do you think? Are you receiving communication? Do you have the opportunity to speak up?'" Paller says.
Beyond that, Paller recommends questioning senior management to determine if they're on the same frequency with employees. It's a little tougher for senior management, because they have to determine if they know what employees want, and if they're getting their intended message through to employees.
"'Are we communicating? Are we getting information out, and are we receiving it back? How do we do that systematically?'" Paller says. "If you get to questions you can't answer or you're giving anecdotal answers like 'We've always done it this way,' that's probably a good indication that you don't have a very systematic way to deliver on those five principles."
When you have the employee surveys and senior management feedback in hand, compare them to find gaps between what you think you're providing and what your employees think they're getting. Once you've found the gap, look for bridges.
If your employees aren't getting the message, for example, it could be something as simple as the mode of communication. You may be proud of the reams of job-related data and daily institutional updates on your hospital's intranet. But, what if your employees can't access a computer, or they don't have time to sit down in front of one? Maybe they'd prefer an old-fashioned notice posted on the bulletin board by the time clock.
Paller says improving communication with employees and responding to their needs is an incremental process, as senior leadership gets feedback and adjusts. But she says it is progress that can be measured.
"Create partnerships with your employees and you do get significant organizational outcomes," she says, including improved safety, quality, productivity, and financial measures. "The lagging indication of whether or not you are making an impact is to take a look at those types of indicators," Paller says. "While it is a philanthropic reason that you want to improve employee relationships, ultimately you want to see the results on your bottom line."
John Commins is the human resources and community and rural hospitals editor with HealthLeaders Media. He can be reached at jcommins@healthleadersmedia.com.
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