Recent versions of legislation recognize the existential financial threat many healthcare organizations are under as they fight the COVID-19 outbreak.
The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act has more than $100 billion in aid for healthcare organizations, but in some cases, leaders had better act fast to get it.
While previous versions of the legislation contained less assistance for providers large or small, recent versions recognized the existential financial threat many healthcare organizations are under as they fight the COVID-19 outbreak.
"The intent of the CARES Act is to deliver relief to providers who face the double whammy of the loss of elective procedure revenue and the costs of preparation for the pandemic," says Martie Ross, managing principal, Kansas City Office of Knoxville, Tennessee–based PYA, P.C.
The bill contains provisions that range from payroll-based loans under a Small Business Administration (SBA) Act provision, as well as Medicare payment acceleration for providers already losing elective volume revenue. In certain cases, the funding remains unallocated, so finance teams may need to act fast to get first in line.
According to Ross and David McMillan, CFO and managing principal of PYA’s consulting practice, there are three provisions of the CARES Act that healthcare providers should analyze immediately for their direct financial impact:
1. "Paycheck Protection Program" Loan and Forgiveness Provisions
The SBA has underwritten loans for years to provide relief for companies to meet working capital obligations after a natural disaster. The "Paycheck Protection Program" is an expansion of the SBA Act that may provide up to $10 million in loans at 4% interest for business (including 501(c)(3)s) with fewer than 500 employees. The largest benefit, however, may be the provision that allows borrowers to apply to have all or a portion of the loan forgiven.
"It’s a way to protect and help businesses continue to employ their workforce," McMillan says.
The loan amount is based on a formula that takes the average monthly payroll expenditure for the previous 12 months and multiplies that by a factor of 2.5. Businesses receive loan amounts equal to the lesser of that amount or the $10 million limit, McMillan says.
The unforgiven portions of the loan are repayable over 10 years. While repayment deferrals ranging from six to 12 months are also available, the unique aspect of the program is its forgiveness provision. For businesses that maintain their workforce for an eight-week period after the funds are received, a portion or all the loan may be forgiven. And whatever portion is forgiven is tax free, McMillan says.
2. Public Health and Social Services Emergency Fund
The CARES Act adds $100 billion to the Public Health and Social Services Emergency Fund to reimburse providers for expenses and lost revenue attributable to COVID-19. Presently, this fund is administered by the Assistant Secretary for Preparedness and Response (ASPR) under the U.S. Department of Health and Human Services (HHS). In a single act, this agency goes from administering an annual budget of $2.6 billion to a $100 billion program.
Guidance is still pending, much of it may be on whether parts of the fund are allocated for rural hospitals, or cancer hospitals, or other specific providers, or whether the program is "first-come, first-served," Ross says.
"At this point, my advice would be first to file, until they say something differently," Ross says. "The language in the statute is that there's just no categorization. It's just a hundred billion dollars." The provisions cover not only lost revenue, but also certain capital expenditures that may result from COVID preparedness, Ross says.
As it stands, the program is not rolled out under the usual regulatory review and time frame, but guidance is soon expected from HHS on how the program is to be administered, Ross says. But don’t wait. Get your numbers ready, Ross says.
"The sooner your team can come up with a reliable calculation of the loss you are experiencing because of declining electives or lower ER volume, the better. Also be prepared to quantify any additional expenses incurred due to the pandemic. You will want to have these numbers ready to plug into whatever formula they provide," Ross says.
There are three key provisions of the act that relate to Medicare, Ross and McMillan say:
"The first two are really game changers," Ross says. "Advance payments will allow providers that are losing revenue to apply to CMS to accelerate Medicare payments, essentially as an advance payment on future Medicare billing," Ross says. A more direct boost will be a temporary elimination of the 2% sequestration cut that will go into effect in May and continue for the rest of the year.
"Doing everything I can, everywhere I can, with anyone I can, for as long as I can, to make sure my bedside caregivers have what they will need to keep caring for our community through the unprecedented needs we expect over the coming weeks."
"We are focusing on optimizing our COVID hotline managed by our call center triage nurse that subsequently may lead to an instant telehealth visit from one of our providers. Many times they are treating respiratory infections, and in other instances quarantining patients at home. Our nurses do follow up calls on those patients who are quarantined. Our institute for H.O.P.E.™ checks regularly on patients and assists with essential groceries and food deliveries that our staff shops for and delivers. All items are generously donated by our community partners."
"This is an end-to-end service to make sure suspect COVID patients are staying at home and are well supported and observed for clinical deterioration. We are very excited about that work and we are continuously evolving and optimizing our workflows. The volumes are very high for a system our size, but we are doing well."
While New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio warn that the outbreak could cripple the state’s public hospitals, CEO Michael Dowling has been working to communicate daily with his team and manage capacity while also hoping Northwell’s research arm will contribute to the global rush for effective treatment.
During a rare moment to pause, Dowling spoke with HealthLeaders editor Jim Molpus about the opportunity to lead right now.
HealthLeaders: How do you prioritize at a time like this when the clinical situation changes daily?
Dowling: It's not that hard. Bottom line: one, is making sure you provide the best care you possibly can to the patients who have come to you, even though the clinical criteria sometimes change. The second is taking care of your staff by making sure they have the proper protection. Because if your staff gets sick, then you have a huge problem. The key to all of this is making sure we have the right staff and are doing things the right way.
HL: What is your supply situation right now?
Dowling: The whole supply chain has been disrupted and that's becoming a difficult, difficult thing. A major focus is to make sure we have enough masks, and the right kinds of masks, because we use up thousands of masks a day. When you add up the N95s and all, we use up to 6,000 masks a day. We have an inventory that goes down every day unless you continue to replenish. We are in a lucky position right now to have an adequate supply of masks and more coming on the way.
HL:How are you managing bed capacity?
Dowling: Inside every hospital you can create more beds. Everybody can do it. Any hospital that says they can't do it must be completely chock-full. In New York City, we have identified thousands of thousands of beds that could be collated. And also, we're looking at what outside locations would be available for extra beds. And you focus on communicating, communicating, communicating with your staff and with the public, and making sure the public understands they have a big part in this. If they're not compliant with the public policies, then we're going to prolong it longer than we should.
HL:Let's talk about that because it's inevitable that you start to see some commentary about social distancing being loosened and the president had comments about it last night.
Dowling: This is the tradeoff. I think we've got the social distancing thing for a while. I mean, I understand the other economic side of the equation, but if you don't, and this thing takes off again, you'll have an awful lot of sick people left out. We will have vulnerable people dying and we will completely overwhelm the healthcare system. We can sustain this level of activity for a number of weeks or a month. But if it goes on for months and months, then we've got a big issue. So, it's a difficult tradeoff. I know that we’ve got to get back to work. I don't think anybody disagrees. The question is, when?
HL:Northwell recently announced two clinical trials for COVID treatment. That's pretty exciting. And you know, I think people are looking for any positive signs about treatment. What’s the outlook for those?
Dowling: Northwell is involved in what are called treatment trials. We are taking an approved drug (Gilead’s remdesivir) and giving it to patients on a trial basis to see whether it acts against the virus in COVID patients. So, we're in the midst of that trial. Many other places are doing the same thing. And I do believe that in the next week or two, we will find out if some of these drugs will have an impact. In talking to the scientists or the people who are doing the clinical trials, their perspective is one of reasonable optimism that we would be able to get something that can help the people who are really sick.
HL:As an experienced CEO, you have been through all sorts of challenges, including, of course, 9/11. Some of your team members and those in the community may not have been through a sustained crisis. How do you keep everyone's spirits up?
Dowling: The key to me is communication. You’ve got to be calm. You have to be upbeat. You must also give people data. I just did another video for employees this morning, which is basically saying this is a tough time. But this is why you got into healthcare to begin with. You got in this business because you want to do good. It's not going to be easy every day. It's going to be hard.
And then when the really hard day comes, suck it up more. And just by doing that, they will know we're all in this together, but it's constant, constant communication. My one last caveat, though, is that calm will depend on them being sure they have the protection, the PPE equipment, available to them. If you went to them and said, "By the way, beginning today, I have no masks, that would be a whole other problem."
HL: I hate to say it, but healthcare has an elaborate supply chain and purchasing infrastructure. What went wrong with masks and other protective equipment?
Dowling: Oh, sure. But remember, a lot of that was made in China. Most of our masks come from China. So, all the factories in China shut down and China needed to use up the inventory. Now some of the factories are back to production in China. Some, not all. Some other companies like 3M are ramping up mask production.
HL: Any advice for your fellow CEOs in Dallas, or Atlanta, or New Mexico, wherever; where it's coming someday?
Dowling: I would say, even if you don't think it's coming, prepare as if it was already there. Start doing the inventory. Look at your capacity plans and discard any that are old. Begin to identify the staffing you would need and how you might want to deploy staff. Start giving the message that no matter what happens to us, we will win. Tune out the noise on television that will whiplash you and your team.
You've got to have optimism during a crisis like this. You've got to communicate with your staff on an ongoing basis. You've got to stay calm and you've got to make sure people understand that. Begin to set up your emergency operations center that will manage the situation in a crisis like this. You've got to be creative and adaptable because the way you normally do business goes out the window. Be creative every single day. And that's what leadership does.
You come back from a trade show with a neat stack of business cards, an in-box brimming with LinkedIn invitations, and a sore neck from the red-eye flight home. Was it worth it? Probably not, because you may be using an outdated model of networking that emphasizes volume over value.
Networking has become a multibillion-dollar industry, with PwC estimating that the business-to-business trade show market alone will grow from $14.3 billion in 2017 to $16.8 billion by 2021. Networking activity has also become temptingly easy to access, with LinkedIn’s 260 million active members reachable in the daily workflow.
Yet even business leaders who rigorously measure the ROI of every investment of corporate time may not subject their own networking activity to that same scrutiny. What meaningful relationships have you built through recent networking that have advanced your business or you as a professional? If you’re not sure, then it may be time to rebuild your approach to networking.
HealthLeaders: There seems to be a lot of networking activity today. But do you get the sense that it has a specific purpose, or are a lot of professionals just out there networking because they think it’s what they’re supposed to do?
Derek Coburn: Most people who approach networking are just doing it to check a box. They don't understand why they're doing it. My book is called Networking Is Not Working. Why? Two reasons. One, ask a room full of executives how they define networking, and you may get a different answer from everyone. Some would use the word networking as a verb, some would use it as an adjective, and some would use it as a noun. And your ability to successfully network is directly correlated with engaging others who have a definition of networking that’s like yours.
HealthLeaders: What’s your take on how professionals should approach typical networking events?
Coburn: Well, the second reason that networking is not working is the networking event scene in general. Many networking events are a lot like nightclubs in that most of the people there are looking for a professional “one-night stand.” They’re focused on themselves; they’re just seeing how many business cards they can flick around. When it comes to choosing whom you're going to spend networking time with, find the events with the people you want to meet and want to help. That way, everyone's there for the same reason. If you go to an event and the only qualifier is that you’re going to have free drinks and hors d'oeuvres, you're going to find people who aren’t going to be valuable to you.
HealthLeaders: So, for people who come back from conferences with a bunch of business cards but few memorable connections, how do you break the pattern?
Coburn: If you get good at choosing the right event, you'll likely end up having deeper, more meaningful conversations. The subtitle of my book is “Stop Collecting Business Cards and Start Making Meaningful Connections.” A few years after the book came out, I ran out of cards and decided that making more would not be true to my brand. And I know that sounds harsh, but I am at a phase of my professional life where my focus is on deepening the existing relationships that I do have. If I meet someone interesting, I will ask for their card, or I will find them on social media and connect.
HealthLeaders: Networking doesn’t seem to have evolved much when you really get down to it, has it?
Coburn: There are three ways people move through networking. The first one is networking 1.0. This is the version of networking where most people spend their time. They're just focused on themselves. They want clients, but nobody who goes to a networking event wants a pitch—yet those same attendees who say they don’t want a pitch will still lead with talking about their own business. The people who take this selfish approach to networking are the ones who continue to show up at these events tossing their business cards around.
HealthLeaders: That sounds familiar.
Coburn: Networking 2.0 stems from a movement 10 or 15 years ago where well-intentioned people wrote books and focused on how you can add value for someone else. Their idea was to go to every event leading with what can you do for the other person. But, when you're looking to develop a relationship with somebody new, one thing you should never lead with is, “How can I help you?” When people reach out to me and ask that, they are putting the burden on me. I don't really know much about them. Probably we met and had a five- or 10-minute phone conversation. I don't know how they can help me.
The best form of networking, what I call networking 3.0, is where you're not focused on yourself and you're not focused on this person whom you're meeting for the first time. Instead, you're focused on your existing relationships, your existing clients, your existing colleagues, and you’re looking to find opportunities and solutions for the people in your network via your new contacts.
HealthLeaders: How would that interaction work?
Coburn: For example, I'm a financial advisor, and whenever I say that, everybody wants to run away. Understandably so. But if I keep talking and show interest in a person over time, they may mention that they don’t need financial planning right now because they’re focused on looking for a new home. Most people in that situation would walk away and move on to a person who's more interested in hearing about their financial planning practice right now. Most people don't have a network of great real estate agents that they could refer in that situation. But because I do, I am now able to have a very low-risk, potentially high-reward introduction because I can pass along the names of two terrific real estate agents in town. I'm letting this person know that I'm not just focused on my own business and how I'm going to make money. With this approach, I am also reinforcing to my existing network that I am thinking about them.
HealthLeaders: Social media can really scale up networking activity, but are those relationships a bit thin and perhaps overvalued?
Coburn: Focus on quality over quantity. Don’t try to be all things to all people. It’s effort. Get to know that contact. Spend a little bit of time and energy in their social media profiles to see what they're interested in, understanding what their business is about and how you might be able to add value for them. You can't take this approach with a hundred or a thousand people, for sure. Take steps with 10 to 20 people at a time.
HealthLeaders: What about contacts you meet at an event?
Coburn: If you meet somebody at a networking event who is a good connection for you, and you feel like you both can add value for each other over time, then keep talking to them. Don't end the conversation because you are also trying to come back from the event with 30 business cards. That’s not necessarily a win.
HealthLeaders: So, what is the right size for any one person’s professional network?
Coburn: Are you familiar with Dunbar's Number?
HealthLeaders: I haven’t heard that in a while.
Coburn: Dunbar's Number is a suggested cognitive limit for the number of people whom you can maintain an effective social relationship with at any period of time. Dunbar’s number is 150. Social media can be overwhelming and can make networking relationships shallow. It can be hard to develop and maintain relationships, but technology allows relationship-building to scale somewhat. I think that maybe the number is more like 250 people whom you can actively be thinking about and who are actively thinking about you.
Finance leaders at three independent hospitals in Illinois, New York, and California discuss the opportunities and challenges of operating as a standalone institution.
The era of provider consolidation isn’t going to end anytime soon, as health systems look to gain greater geographic reach and spread risk. But becoming a small cog in a regional system may not be the right choice for every independent or community hospital.
Why? Some independent hospitals may have a community role which they fell would be diluted in consolidation. Others may have a solid clinical and financial position as is and aren’t liking the suitors that are at their door. Still others may just have a vision that consolidation is not the answer, period.
HealthLeaders is committed to telling the story of standalone hospitals that choose to stay that way. In the past few months, HealthLeaders Finance Editor Jack O’ Brien has featured three CFOs with unique challenges and strategies as they look to keep their missions going:
Tate spoke to HealthLeaders about her experiences on both the clinical and financial sides of health systems, as well as giving advice for how smaller hospitals can survive in today's financial landscape.
Wright previously served as the CFO of Oneonta-based A.O. Fox Hospital, part of Bassett Healthcare Network, in addition to executive roles at Hudson Valley Hospital Center in Peekskill and St. Joseph's Hospital in Elmira.
Wright spoke with HealthLeaders about finding ways to remain operational as an independent community hospital and facing the challenges of a reeling economy in upstate New York with a high Medicaid population.
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.
The CFO Exchange is one of six healthcare thought-leadership and networking events that HealthLeaders holds annually. While the events are invitation-only, qualified healthcare executives, senior-level and above, will be considered.
Social determinants of health are the topic that forward-thinking health systems like to discuss in industry forums, but on the ground level, trying to wrap a clinical mission around SDOH has been like trying to hug a cloud of steam. Data analytics may finally be the answer to moving SDOH out of the realm of community altruism into real business strategy.
One firm is trying to push the industry in that direction. Washington, D.C.–based analytics firm Socially Determined blends together clinical, financial, and social data to give health systems a more accurate view of where opportunities are to improve the health of their communities and have a positive impact on the healthcare cost curve.
Earlier this summer, Socially Determined was the winner of the inaugural LifeBridge Health and CareFirst BlueCross BlueShield "Innovation Challenge," receiving $50,000 and the opportunity to partner with LifeBridge Health and CareFirst to use its platform to look at SDOH risk and opportunities in the Baltimore area.
SDOH is not just a buzzword. For many health systems, finally having the tools to spot opportunities could help them in populations where they hold risk. In some cases, "upstream" interventions may be a more effective and less expensive intervention than the clinical interventions that many health systems have tried with inconsistent results.
HealthLeaders recently talked with Socially Determined CEO Trenor Williams, MD, to learn more.
HealthLeaders: Health system leaders are trying to understand social determinants in an actionable way. There is a lot of data coming at them. How do you really translate it to the point where they can align the clinical enterprise in an effective way?
Trenor Williams: Access to data is not the problem. Healthcare organizations are so awash in data that it’s hard to glean insights from it. In most health systems, the internal analytics team is trying to help solve and answer questions for every part of the organization. And while the leadership team may have interest in social determinants, it is rarely somebody’s full-time day job and certainly not a team’s full-time job. We aggregate more than 130 open datasets of commercial data from multiple vendors and combine that with clinical and claims data. It takes domain knowledge and focus in this area, and we aim to become that de facto analytic partner for the organization.
HL: So, you get to scan multiple health systems looking for areas of risk. Any patterns emerge?
Williams: We would say three populations have garnered the most interest. One is managed Medicaid. Depending on the state you're in and the contracts you have for that population, there's a lot of opportunity to thoughtfully evaluate the patients and invest in your organization as well as your community partners. Next would be Medicare Advantage, as it relates to identifying and closing care gaps. And third, those folks who self-insure their own employees have an amazing opportunity to step back and look. Many of those employees may be fragile from a socioeconomic standpoint. They'd have real risks and were just not aware.
HL: I think one of the challenges for a provider executive is how far upstream to go.
Williams: Exactly. A great example from one of our client partners, ProMedica, is their Market on the Green. Before they built the grocery store, the uptown neighborhood of Toledo was considered a food desert. They looked at the financial opportunity of addressing food insecurity for at-risk individuals and found that there was a significant per member per month cost differential. Looking at subsegments of the populations with real risk, it’s in the provider’s best interest—from both a business standpoint and an altruistic perspective—to look at those levers that drive costs and find a way to intervene further upstream. And by building a grocery store and referring at-risk patients, they are making a big impact on the health of the pediatric diabetic population.
HL: How granular do you have to go?
Williams: Looking at the work we do with ProMedica and their managed Medicaid population, we assessed the impact of housing instability in children who had asthma. We found a fourfold increase in costs for children that live in areas of high housing instability versus those that live in low-risk areas. And that intervention strategy did not include finding new housing. Instead it was remediation for upper respiratory disease, which included replacing things like carpets and air conditioning. That's the kind of manageable referrals that work in medical/legal partnerships. We see many similar examples around the country that are right in the scope of work health systems can do. It has a demonstrable impact to the clinical outcomes for those kids as well as a financial impact for the health system.
HL: How does a health system get down to that level of the data?
Williams: We start with an opportunity analysis where we're combining open public data, commercial data, and the health system’s own data. We do a top 20 list of opportunities, so think of housing instability and asthma, or food insecurity and diabetes, or transportation or anxiety. We build this top 20 opportunities [list] across the entire population, and then do an opportunity analysis of different cohorts of patients a health system can act on. And then that becomes a decision the organization makes, based on the other priorities that they are looking at. Maybe the existing programs that they have will work or we’ll need to look at new interventions. Everybody has limited bandwidth, so this now becomes the new data-driven way to look at the entire population and narrow it to a few places.
HL: And you can then narrow it down to a patient level?
Williams: We can feed both the community-risk information and the person-level information into their systems. If you're in an Epic shop, like some of our customer base is, we can feed that into a care management system. So, if you're a care manager now looking at a patient that is in front of you today, having some of that background information about what's going on in their community may help support the conversation.
HL: When you map the areas of risk in a community, how often are the health system leaders surprised by what they see?
Williams: I do think that just visualizing the geospatial maps, it's amazing to me how much that resonates with people because it's sometimes the first time they've ever thought about it. When we lay our patients or members on top of the areas of risk, it's unbelievable to see. We were showing economic risk for a client in South Carolina and then we layered their existing clinics on the map. There were large pockets where their members lived in areas of high economic risks but were more than five miles from clinics. And if they built two new clinics in areas we recommended, almost 100% of that population would be within one to three miles of one of the clinics. That visualization creates the connection.
HL: Are we seeing a shift in how leaders approach social determinants?
Williams: Yes. We are seeing a migration from believing that this is the altruistic part of what the foundation of a health system does to becoming an integral part of how they think about their business. Again, we have more data than we can use today. It is that idea that data is insightful and actionable—it’s what every healthcare organization should expect.
Wright Lassiter III jokes that the only person he really knew in the state of Michigan when he took the job at Detroit's Henry Ford Health System was then–University of Michigan basketball coach John Beilein, who was Lassiter's coach as a player at Le Moyne College in Syracuse, New York in the 1980s.
It's now been five years since Lassiter was recruited from Alameda Health System in California to Henry Ford to serve as president of the health system and successor to retiring CEO Nancy Schlichting. After taking over as CEO in January 2017, Lassiter leapt into a respected health system that had won the 2011 Malcolm Baldrige National Quality Award but was also moving on from a failed merger with neighboring Beaumont Health that broke due to cultural differences. Detroit was also still recovering from the city's 2013 municipal bankruptcy.
Like he did at Alameda, Lassiter is pushing HFHS to be ahead of the industry in areas such as access and value, which he feels will keep HFHS financially healthy as the industry slowly shifts from fee-for-service. Competition in Detroit healthcare today feels a bit like the "Big Three" days of the auto industry, with major players like Trinity and Ascension vying with Henry Ford for market share.
HealthLeaders recently caught up with Lassiter, who has been a member of the HealthLeaders CEO Exchange, on what the future holds:
HealthLeaders: What are your priorities at this point?
Lassiter: We have had strong leaders before me, like Gail Warden and Nancy Schlichting. And even before them, we've had leaders for the past 40 years who started us down the path of ambulatory care. My overarching priority for the organization is to take advantage of a fully integrated healthcare organization because I believe that the industry is finally starting to move in a direction that could reward organizations like ours for the commitment we make to value-based care and the integration with our health plan.
I think for the first time in our history we should cross the $7 billion of revenue threshold this year. That's remarkable for an organization that only has five acute care hospitals and three behavioral health facilities. Normally organizations with that much revenue would probably have a couple dozen hospitals. So, we've been living ahead of our time and haven't been fully rewarded for some of that wisdom. What I'm trying to do is to make sure that we fully live up to the moniker of being an integrated delivery system.
HealthLeaders: How are you looking to grow in a metropolitan area that isn't growing?
Lassiter: As we look at the market that we serve here in Michigan, it's clear we are in a state that doesn't have a lot of population growth except in the Medicare age range. So, the focus for us must be first to make sure that we can grow where the market's growing. We're looking acutely at how we serve a senior population more effectively than any of our competitors. We're doing that through our Health Alliance Plan and our delivery system assets. We're trying to find growth with our Medicare Advantage population.
HealthLeaders: How are you creating new access points for consumers?
Lassiter: We all know that consumers want a more evolved and more user-friendly digital experience. We're focusing heavily on how we make ourselves one of the most digitally adept organizations for consumers to access. We're trying to do that in lots of different ways. Last year, we had about 3.5 million digital encounters. That includes patients and health plan members utilizing our electronic health records, or the MyChart tool to see lab results. We're using Apple Health to consolidate electronic records. And we recently went live with [Amazon] Alexa to allow users in our markets to find links to the nearest walk-in clinic or urgent care facility.
HealthLeaders: Have you created access points outside of the digital ones?
Lassiter: We opened Henry Ford QuickCare in 2015. Inside of the organization, we call it our "millennial clinic" because it has no parking spaces. Our customers can do everything online. They use a tool called Clockwork MD to schedule an appointment, much like you would use OpenTable for a restaurant reservation. You get a text message when the doctor is 10 or 15 minutes away from being ready to see you. We've got bike share stations out in front of the clinic as opposed to a parking lot. We're trying to do things to create a customer-friendly, visually engaging environment for our patients and our members.
HealthLeaders: Last August you announced an agreement with General Motors to create a direct-to-employer plan for their active employees. Other health systems have tried direct contracting before with mixed results (e.g., Providence St. Joseph Health and Boeing, 2017). What made you think the time was right for Henry Ford?
Lassiter: I'll go back to the first answer I [mentioned], which is that having the ambulatory infrastructure in the game that we're playing in healthcare today means we can take on risk and do it at a decent dollar. I have been talking to other health system CEOs for years who've been ahead of the curve trying to create that infrastructure for the day when someone's going to pay for it. Finally, it looks like we've got some people to pay for it. GM included.
HealthLeaders: And so far?
Lassiter: Right now, we have only been in a few months, but so far, so good. We have a reasonable enrollment. The enrollment was a little bit softer than we expected. I think the [subsequent] announcement that GM was shedding some staff may have factored in a little bit. I would just say that we have about 300,000 patients already enrolled in significant risk arrangements across the system, whether it's our NextGen ACO or our MSSP ACO with our Jackson Health Network, and full risk arrangements with our own health plan. We have done extremely well since we started the NextGen ACO with shared savings every year. So, we understand the patients that we're caring for and we understand what needs they bring to us.
HealthLeaders: How are you using data, especially analytics, to make sure you really know about those populations?
Lassiter: When President Obama put forward the ACA mandate that everyone has an EHR, what folks didn't fully anticipate then was that the EHR is just the beginning of the journey, right? It gives you the platform, the foundation, but if you're really trying to deal with intervention and more aggressive public health strategies, you need something far more than just an Epic or Cerner system. You need analytics that are both predictive and prescriptive. That helps us know what's the right intervention for a community in Southwest Detroit that is primarily Latino versus a community in East Detroit that is primarily African American.
HealthLeaders: Even with a good electronic health record and data infrastructure, how do you make sure you are still connecting with the community?
Lassiter: Sometimes the digital interfaces aren't the right solution. It may be doing things as simple as sending some caseworkers out to churches and barbershops. We had a short-time pilot that utilized postal workers to extend the healthcare community to check for social isolation for seniors. It was based on a program in the U.K. It got canceled around some concerns over labor issues. Still, you can't ever presume that one size fits all. In some cases, you can use slick digital enhancements and digital interfaces. In other cases, we need to go back to the old ways with face-to-face intervention.
The HealthLeaders CEO Exchange annually gathers leading hospital and health system CEOs for a custom dialogue on only the critical issues facing the future of their organizations. The 2019 HealthLeadersCEO Exchange will be September 25–27 in Park City, Utah. For more information, please email firstname.lastname@example.org.
Disruption to the way hospitals make money is not just a looming threat anymore. It's here. And hospital chief financial officers know that their organizations must face a changing industry with some brutal honesty and careful strategy.
HealthLeaders will gather an invited group of 50 hospital and health system chief financial officers for the HealthLeaders CFO Exchange August 7–9 in Kohler, Wisconsin. Here are some of the trends the CFOs will discuss:
1. Disruption = dollars flowing out of hospitals
Hospitals have for years balanced the ledgers with profitable services like lab, imaging, and outpatient, making the margins pay for inpatient services that have lower returns. That imbalance left prices for those procedures high, and the government has stepped in to even out certain payments for hospital-based services and innovators who are undercutting hospitals with lower prices and easier technology.
"The way our financial model has worked isn't working anymore," says Jim Wentz, chief financial officer at Ochsner Medical Center in New Orleans. "That's what disruptors are coming after—things they can easily do, making it easier and less expensive for patients."
One example is in imaging, which has been a profitable sector of inpatient volume, Wentz says. "Imaging is becoming commoditized. Hospital-based imaging centers get reimbursed at 2–3 times higher (than non-hospital-based imaging). Employers are paying for this and don't want to anymore."
Rick Hinds, chief financial officer of UC Health in Cincinnati, also sees disruptors coming, but as a tertiary referral center, the disruptors aren't the same.
"We are seeing incursions on our core book of business, which is complex care," Hinds says. "They are disruptors, if you will, but more from inside the industry than outside. This is being driven by economics; usually the higher-end services are more lucrative under today's payment methodologies."
Many health systems are investing in new revenue streams and backing their own innovation ventures, Wentz says. "We're doing a lot of innovative stuff, but the investments we're making in innovation pale in comparison to (such disruptors as) Amazon or UnitedHealthcare. Their artificial intelligence is so good."
These disruptions aren't just nipping at the fringes of healthcare finance; they are going straight to a balancing point.
"Inpatient—quaternary and tertiary services—for most of us are not the profitable ones," Wentz says. "We achieve some margin, but those really are being supported by outpatient. This—along with the push to have more transparent pricing and the discounts we accept off that pricing—will cause big problems. From a financial point of view, how do you make that work organizationally when that's the way our business works?"
2. Technology = questions about ROI
At a time when there is more pressure than ever for health systems to adopt both information and clinical technology, hospital finance leaders are pushing executive teams to be mindful of the overall cost curve and prioritize technology investments that deliver maximum dollar and clinical value.
"Information technology is expensive, and trying to decide how much and what type is needed can be challenging," says Bernadette Spong, chief financial officer at Orlando Health. "How much to spend on cybersecurity, AI, EHR and ERP hardware, and other applications is a topic of discussion for our senior leaders, led by our CIO."
Healthcare economics are quirky because, in many cases, hospital and health systems do not see returns in efficiency or cost from investments in technology.
"We do a fair amount of telemedicine," says Wentz, "and the reimbursement is just not there. We're the only industry that gets penalized for new technology such as robotics. [New] noninvasive spine procedures costs are covered the old way, so we don't get properly reimbursed or there's a lag time."
3. Talent = new skills and burnout
All members of the hospital executive team are looking to manage a new labor dynamic in which high-value skills demand ever higher salaries, while provider burnout and mobility make the loyal healthcare workforce harder to achieve. For the CFO, these talent issues have real dollar implications.
"Clinician burnout and resulting turnover are a big issue, both on the physician front as well as frontline caregivers," Hinds says. "This is being driven by lifestyle changes of our younger workforce, as well as the demands of EHRs and increasing regulatory burden."
That regulatory burden can show up in staffing levels, adds Wentz. "The acuity is increasing in hospitals. Most of our case-mix index has gone up dramatically over the past few years. Our nursing ratios used to be around 6:1, and now we're seeing acuity of patients driving more stringent nursing ratios of 4:1 or 3:1."
The CFO Exchange is one of six healthcare thought-leadership and networking events that HealthLeaders holds annually. While the events are invitation-only, qualified healthcare executives, director-level and above, will be considered. To inquire about the HealthLeaders Exchange program, email us at email@example.com.
The CEO of the Seattle-based system discusses C-suite longevity, business strategy, and Amazon.
For almost two decades under Chairman and CEO Gary S. Kaplan’s leadership, Seattle’s Virginia Mason Medical Center has been that hospital that others in the industry look at with a mix of envy and appreciation that someone else is gutsy enough to try what they don’t dare. Every industry needs that player who is willing to risk trying something that must be done and sometimes getting their nose whacked for it.
Kaplan believes in the long game, which is why he and the team at Virginia Mason have been diligently deploying and perfecting principles of the Toyota Production System to eliminate waste in healthcare processes. Kaplan is among a rare few in the industry who is not only embracing disruption, he is counting on it.
He believes it is far past time for those health systems who have been pushing for value to be rewarded with a system that pays for it. Major industry players like the new Amazon/Berkshire Hathaway/JP Morgan healthcare entity could push employers to demand more for their healthcare dollar. And industry players like CVS and Aetna who were once satisfied to play in their own sandbox are now joining to take on providers.
The chess board is lining up for Virginia Mason. And if that happens and they succeed, others in the industry will have a better roadmap. HealthLeaders Editor Jim Molpus recently chatted with Dr. Kaplan to get his take on the balance of disruption and opportunity the industry sees in 2019.
HealthLeaders: Let me, start with a classic Virginia Mason question. Over a decade ago, you and others were estimating 40 percent in waste in healthcare processes. Can we at least hope a decade later it's gotten better? What's your overall assessment?
Kaplan: I'm disappointed in many ways. There are islands of excellence, pockets where you can point to improvements focused on eliminating waste and non-value-added variation. We've made progress at Virginia Mason. We're now more than 17 years into this journey of consistently and continuously employing what we call the Virginia Mason Production System as a management system. My disappointment stems from the lack of sustainability and the lack of adoption of a management system that permeates healthcare delivery organizations across this country.
There are so many people who will tell you they're doing lean, and what they really mean is they have some point improvements. They've done some projects here and there. Those things are good. That's better than not doing it at all. But what's lacking is the adoption of a system that really permeates all of healthcare delivery. One of the things that I'm most proud of is that we've created this system and we've stuck to it. We've trained all our team members. And in doing so we've gotten a significant amount of traction.
HL: How hard is it to sustain that consistent adoption of process improvement when there are leadership changes?
Kaplan: It saddens me to see the unraveling of a management system in some of those few places that have adopted them. And so, for us at Virginia Mason, we invest heavily in talent development and training. I would say most importantly from the very first trip to Japan in June of 2002, we had a board member with us. Today it's a requirement for our board members during their first three-year term that they are part of our two-week study mission in Japan.
That's not my career preservation strategy as some people joke, but it is part of engaging and aligning from the boardroom to the front lines. Our community owns Virginia Mason. We're a 501-c3, like much of American healthcare is today. And our health system board holds the organization in trust for the community. I could drop off the face of the earth tomorrow and this work would continue. I've had these conversations with our board because what our teams and our board have built here at Virginia Mason is worth fighting for. So I think there are ways to increase the likelihood of sustainability of these types of efforts but not without very deliberate engagement beyond those who are actively leading the work.
HL: The amount of dialogue from hospital CEOs about what outside competitors like CVS, Amazon, Walgreens are doing is reaching a chorus. Do you get the sense that your peers really appreciate the potential for disruption?
Kaplan: Disruption very much needs to be on our radar as an industry. This disruption is happening with unprecedented speed, whether it’s by startups or the aggregations of the large technology companies. This disruption is going to continue, and we need to determine how we are going to respond. In my way of thinking, a better term might be how we embrace that disruption, because if we don't focus to some extent on disrupting ourselves, others will disrupt us.
Healthcare is particularly ripe for disruption because, frankly, we're still training people the same way that I was trained decades ago. There are islands of excellence and progress, but it's far too slow for those who come from backgrounds in other industries. There's a tremendous opportunity in front of us if we can learn from the best practices in technology.
HL: Are you feeling real pressure from consumers to evolve?
Kaplan: As we used to say in the old days, the longer you wait to see a doctor, the better they must be. That's no longer the case. People today expect to be seen when, where, and how they want to be seen. So how do we learn from technology? How do we focus on the user experience? How do we consider creative partnering? I think there will be a need for doctors and hospitals, but it's changing. And I think that if anything, it's going to accelerate what is the biggest shift we need to see, which is the transformation to a value-driven system that stops incentivizing bad behavior, inappropriate care, and over-utilization of resources.
We've got to be responsive here in Seattle; Amazon's in our backyard. How do we find ways to help better serve Amazon’s workforce and potentially help them add value to the healthcare system as opposed to just being a threat where we need to throw up every kind of barrier, regulatory and otherwise to their entry into what has been all our space?
HL:I think the challenge many hospital CEOs feel is that their systems are too big, and the industry is too regulated, for them to move quickly. Take the auto industry, for example. Do you appreciate the massive shifts that General Motors recently announced away from making internal-combustion cars?
Kaplan: I grew up Detroit long before my engagement with Toyota. That's actually a great point because we can't do this by ourselves. We've never been able to do it by ourselves. So I think that for Virginia Mason, my philosophy has been let's impact those things that we can control: things like the user experience, like quality and safety, or taking waste out of processes. We're going to need to consider far more strategic partnerships that focus on core competencies, things we do well, partnerships with companies like those we've been talking about, but also with the social services industry, and safety net organizations.
We must think about – and I'm playing to our strengths -- partnering in new ways and also being willing to disrupt and reinvent ourselves. One of the things I'm particularly interested in is what's going to happen as more care is delivered in the home. Now that doesn't mean jumping on every technology bandwagon, or every new wearable. But how we can go beyond our own four walls, because our mission is really focused on care delivery.
HL:You talk about partnering with Amazon. How do you view the work that Dr. Atul Gawande is doing so far?
Kaplan: I had the pleasure of spending some time with Atul and his team at Ariadne and they're working hard at it. They are trying to figure it out. They don't have the answers either, but what they have is the motivation, the impetus to look broadly at our delivery system. And we need more of that.
HL:You talk about partnerships, and in any partnership there’s leverage that brings them together. It's going to be interesting to see what levers that an employer of that massive scale is going to play. Are they going to try to force the issue on some of the consistent problems in healthcare once and for all?
Kaplan: I think employers have been woefully slow to use their market power to buy value. We've made this huge investment in creating value, and in some ways, we’re still stuck in a system that under-appreciates, under-funds or under-incents more value. So, I see that as one of the things that I'm hopeful this next period we'll bring forward, which is accelerating the transition to value. That will play to the strength of those organizations like Virginia Mason that have invested in eliminating waste.
HL:These new partnerships bring the power to disrupt that providers have not seen before. If you view CVS-Aetna as just a payer and pharmaceutical industry play, you might miss the fact that they now have a massive amount of real estate in almost every community.
Kaplan: Yes, a distribution system in every market. I heard (former Aetna CEO) Mark Bertolini talking about the rationale for moving Aetna together with CVS--with CVS really, I believe, being the more dominant partner. It's about a distribution system. So how do we deal with that? I think in some markets we're seeing a little bit of oversaturation and blurring of immediate care clinics and pharmacy-based outlets staffed by nurse practitioners. Those are part of the delivery system. So, we're going to have to find a way to partner and compete. They're going to all have a distribution system, but they will also need specialty care. They'll need longitudinal primary care for chronic disease management amongst other things. So let’s not view this as something that's going to steal business, but perhaps it’s a new channel of distribution. It may also be an accelerant for buying value. Let's close on that note of hope. It's a good thing.
Editor's note: This story was updated Wednesday, February 13, 2019.
Without an investment in improving nurse culture, hospitals will struggle to recruit and retain from an increasingly competitive pool of candidates.
Nurses need to start taking better care of themselves and each other. That's the only proven, cost-effective way that nurses will thrive through the generational, technological, and market changes that are coming to nursing, said the chief nursing officers gathered for the annual HealthLeaders CNO Exchange this week in Charleston, South Carolina.
Hospital and health system leaders recognize that nursing remains healthcare's largest workforce, and without an investment in improving nurse culture, hospitals will struggle to recruit and retain from an increasingly competitive pool of candidates.
The CNO Exchange members emphasized in a series of roundtable discussions that nurse executives must take some easily ignored workplace truisms—like "improve communications"—and make them urgent and real.
1. Emphasize actual human interaction
The modern hospital is a disconnected workplace like any other, where managers and coworkers try to communicate via text or workflow tools. In healthcare, that can create misinterpretation, which can lead to resentment at a time when teams need to work close together.
Many of the health systems represented at the CNO Exchange have created "tiered huddles," a series of daily or regular groups calls where challenges are presented to the group. A "unit huddle" of a floor or department might be followed by a managerial huddle where the concerns raised are elevated.
Linda Hofler, PhD, RN, chief nursing officer for Vidant Health in Greenville, North Carolina, says that calls instead of emails literally give a voice to concerns so that nurses know that their concerns are not going into a file to be ignored.
"Nothing can replace good human conversation," Hofler says. "Technology can be a blessing and a curse."
One of the care team goals is to "get the doctor and nurse to have a conversation, and then engage the patient."
2. Be nice and mean it
The stress on the nursing environment in enormous. Staffing ratios and workplace issues create a hectic pace. Increasing numbers of patients with behavioral issues can create a volatile environment. And hospitals still suffer from tension between doctors and nurses. Being "nice," in the face of tension or disagreement is a coping skill that can solve a lot of problems.
"I think the biggest part of enhancing the environment is civility," Tammy Daniel, DNP, MA, RN, NEA-BC, vice president, patient care services at Baptist Medical Center in Jacksonville, Florida.
For example, Daniel says, de-escalation training for medical center staff gives them the tools to help manage tense situations before they become dangerous.
3. Support the types of leaders you want
Nurses face a fundamental shift in the healthcare teamwork paradigm. Nurses are now expected to lead complex care teams, often with members of the medical staff included. Beth Houlahan, DNP, RB, senior vice president and chief nurse executive of UW Health in Madison, WI, says she will be leading a retreat of nurse managers with one theme: "The leadership behaviors that got us to where we are today will not sustain us in the future," Houlahan says.
"We need for them to be leading us toward success, so we're covering attributes that will move us forward: emotional intelligence, creating a sense of urgency, leading with optimism, being vulnerable and working out a solution together, and creating good teams that are focused on the patient experience."
The nurses won't just be listening to each other, Houlahan says. It's important that nurse leaders listen to a variety of stakeholders, most critically the patient.
"We have over 100 patient/family advisors on councils in our system," Houlahan says. "That's helped with our communications and process improvement. We learn what their expectations are and how can we address those."
HealthLeaders team members Jennifer Thew, Julie Auton, and Jim Molpus contributed to this story. For more information about membership in the 2019 CNO Exchange, Nov. 13-15 in Ojai, CA., please email Exchange@healthleadersmedia.com.