You don't have any control over whether it happens or not, but you might have to plan for a contingency that almost everyone said last year would never happen: the fiscal cliff. Of course, no one called it the fiscal cliff then. That term was coined as we edged closer and closer to the ticking time bomb that legislators settled on after failing to come to agreement on a package of federal spending cuts and tax increases in 2011. There are other big, possibly economy-damaging spending cuts that will go into effect Jan. 1, 2013, if Congress cannot agree on a budget deal, but the one that should concern healthcare executives is a 2% cut in Medicare reimbursements to hospitals.
I get it: It's almost Christmas, the holidays are here, and yet here's one more thing you have to pay attention to, and yes, plan for. And it's not good. Already faced with PPACA provisions that will force cost cuts over the next couple of years between 15% and 30%, senior executives at hospitals and health systems now have to worry about what will happen to their Medicare payments if Congress can't come to agreement on how to resolve the fiscal cliff.
Doug Fenstermaker, who was CFO of HealthEast in St. Paul, MN, for 10 years before becoming a consultant, says failure to resolve the fiscal cliff could be a serious problem in the short term for healthcare organizations, where the average margin is only 2-3% annually. Some do better and some do worse, of course, but that margin level has been pretty standard for about 25 years or more, since DRGs came into place.
"So if in 2013, starting January 1, they face a 2% cut, that could wipe out the calendar year budgets," Fenstermaker says. "The only way they can deal with that in the short term is make significant across-the-board cuts."
Now managing director and executive vice president of healthcare at Warbird Consulting Partners, Fenstermaker says it's understandable that many senior executives are ignoring the fiscal cliff negotiations because they have no control over them.
"But if the economy goes over the fiscal cliff, all of it goes over, including healthcare," he says.
Most hospitals would not face the Medicare cuts immediately, but would have to immediately plan for how to deal with them—even though Congress could reach a deal after sequestration has taken effect, and could retroactively deal with any cuts made to Medicare hospital payments, for example.
"They wouldn't act in a panic mode," Fenstermaker says of executives, "but they would have to take the loss and use 2013 to plan for dealing with it going forward."
That's because Fenstermaker says hospitals and healthcare systems shouldn't count on getting those Medicare funds back in a post-cliff deal.
"Let's assume for the sake of argument that they go over [the cliff] and Medicare gets cut by 2%," he says. "When they cut a deal, I don't believe hospitals will be compensated for that. It's an easy cut, Medicare payments to the hospital. The hospitals eat the cost, just like they will eat the $500 billion in costs from the ACA [Patient Protection and Affordable Care Act]."
No one believed this could occur. But now that it's pretty clear that Congress can't negotiate itself out of a wet paper bag, reality should be starting to sink in for those in charge of multimillion-dollar budgets.
"Even if they cut a deal, I have to believe if the Republicans are holding out for cost reductions, [thus] more is going to come out of Medicare," Fenstermaker says. "Maybe it was naïve that nobody was paying attention to it, but it could be their entire bottom line for next year."
So, what should you do?
Fenstermaker recommends putting on hold all capital expenditures in the near term that are already planned, and starting an aggressive operating expense planning process that has 90 days run time, beginning January 1.
Wait longer—say, until spring—and "because of severance and layoffs, at best, you'll only get six months' benefit out of it."
"If you have a budget that says you'll make a bottom line of 2%, you have to cut 4% by the middle of the year to retain that 2% margin," he says. "For planning purposes, there's a much more aggressive impact the longer you delay."
A deal before January 1 would remove the urgency, but cuts associated with the PPACA, set to be implemented in 2013–2014 are in effect already here for planning purposes. Many big systems have been working for quite a while on the conundrum of how they will restructure and maintain quality, but if the fiscal cliff stalemate isn't resolved, they will have to look even more aggressively at dropping overhead expenses.
"If it comes to a choice between a clinical staff person or nurse, and an administrative support person, it's a no-brainer on what job goes first," Fenstermaker says. Hard choices may have to be made soon.
This article appears in the December 2012 issue of HealthLeaders magazine.
Small systems and standalone hospitals are frequently in the news announcing a new affiliation agreement. Typically, these agreements are about seeking partners with deep pockets and strong reputations. That's nothing new in healthcare, where a merger and acquisition market has always existed. But any link to previous eras of consolidation is difficult because the creativity surrounding partnerships among hospitals and health systems is expanding rapidly.
"What really exists is a long spectrum of affiliations," says Joseph R. Lupica, chairman of Newpoint Healthcare Advisors, who works out of the Phoenix office of the Denver-based company that has locations across the country. "A lot of that is motivated by local hospitals getting smart and realizing they don't have to give up control entirely—they can do the least necessary to accomplish their goals and keep the most possible control."
Even so, that's easier said than done. As healthcare incentives slowly turn toward a focus on keeping groups of populations healthy rather than treating their immediate illness, a host of forces is applying partnership pressure. The good news is that the strategic and operational tie-up options are endless. A few recent examples are extremely different, and can prove illuminating for leaders seeking the best partnership option to ensure their organization's long-term viability.
Know your advantages
First, dispense with the contention that the smaller entity is necessarily at a disadvantage in negotiations with a bigger system. For one, smaller facilities often can deliver care at lower costs.
"If you're a community hospital, the variable costs of providing care can be a lot lower in that local setting," Lupica says.
Second, they're often better at patient engagement.
"A patient might feel more engaged because his or her sister-in-law works there," Lupica says, by way of example. "Or patients remember that their primary care physician is right down the street."
Third, their quality scores may be just as good as the larger system that's courting them. They may have worse quality as well, and in that case, resources at a system level can bring value, but meeting two of the three categories of the Institute for Healthcare Improvement's so-called "triple aim" isn't a bad place to start.
In most cases, the smaller system is suffering from a lack of capital resources. Capital feeds some capabilities that, generally, bigger systems are good at, including depth of clinical knowledge, rate negotiations, quality monitoring regimes that utilize technology, and high-level specialized labor. Otherwise, hospitals or small systems may be thriving, but unsure of how they fit in to narrowing commercial networks, for example, especially if a local competitor already has scale.
Sometimes, it makes sense to start slowly, as MidMichigan Health did with a cancer partnership with the University of Michigan Health System.
"We actually started in an affiliation for cancer as part of the UM cancer consortium," says Richard Reynolds, president and CEO of the four-hospital system based in Midland. "That's a loose affiliation where we have access to some of their clinical protocols and some of their other resources as one of the major cancer centers in the country."
But it quickly became apparent that as health reform matured, the amount MidMichigan was going to have to increase revenues or decrease costs to get to profitability under the Medicare program (what many CEOs consider a good proxy for all future reimbursement rates) was unrealistic. The cancer collaboration would have to be built upon, if possible.
"We concluded with many other regional peers around the state that the critical mass and the competencies required are going to be different," Reynolds says. MidMichigan, which also owns urgent care centers, home care, nursing homes, and medical offices, was "very financially strong (300 days cash on hand), so we could go on just like we were and would have been fine, but as we looked at how we could gain competitive advantage, a collaborative partnership with a larger organization made sense," Reynolds says.
The process of working collaboratively with other regional health systems instead of UM, while attractive in various ways, would require a much slower and laborious process to develop the kind of clout Reynolds and his board were seeking.
"So we looked at UM," he says. "They are the preferred referral destination for physicians on our medical staff by a long shot, and were the biggest visible presence in our part of the state."
Reynolds says concerns about continuing independently centered on costs, how well MidMichigan could recruit physicians, and most important, how it could develop the expensive infrastructure surrounding management of populations. Reynolds, who will retire in early 2013, says he discussed with the board whether a full merger, which was an option, was the smartest move.
"We looked at the range of opportunities," he says. "We could continue programmatic collaboration. We took a look at a minority position. We could have gone anywhere up to full affiliation. We concluded that we're strong, well regarded, with a strong balance sheet, so we didn't have to give up local control. Give us access to needed tools for the future."
As part of the clinical and business affiliation, MidMichigan agreed to a deal that should close by the end of the year that would grant a 9% ownership stake to UM and retain local control. More important than any financial transaction was the agreement to provide preferred referral and coordination among physicians at both systems. The affiliation also enhances MidMichigan's ability to recruit physicians to the region, but most important, it allows for clinical collaborations among groups of physicians affiliated with either system to design new models of care that incorporate populations of patients.
Such clinical collaborations are most importantly addressed in the new world of affiliation agreements, says Newpoint's Lupica.
"Whether they own or don't own each other doesn't matter as much as coming up with a structure for sharing those value-based purchasing points together," he says. "What matters is you win or lose together."
That's a sea change compared to prior affiliations or mergers. In the past, such deals were driven by traditional aims around increasing market share and increasing bargaining power, which is very different, for example, from the July announcement of a partnership between Minnesota's prestigious Mayo Clinic and Dartmouth-Hitchcock, a highly regarded New Hampshire system whose flagship, Dartmouth-Hitchcock Medical Center, has 371 beds. In the past, any collaboration between the two would have made little sense, says Gregg Meyer, MD, Dartmouth-Hitchcock's chief clinical officer.
"The old iron triangle of running a healthcare enterprise had three levers: volume, rates, and the ability to decrease unit costs," says Meyer.
By contrast, the new model, announced in late July, is really much more about influencing—you guessed it—the care of populations. Under the agreement, Dartmouth-Hitchcock (which will remain independent) is a member of the Mayo Clinic Care Network. This type of arrangement involves no ownership changes, and Dartmouth-Hitchcock is the latest among several top regional health systems that have joined Mayo's network.
So why did a health system more than a thousand miles away, with a great reputation of its own, partner with Mayo?
"Not because it's going to gain us market share," Meyer says. "Not for higher rates, because there's no consolidation of vendors. And not because we need to control the marketplace. It's about our ability to improve our value and help us take care of populations."
But why Mayo?
"Because we know that patients who come to us for care will often seek a second opinion," says Meyer. "In the past, that meant going to Boston or New York, and we lost out on that because we lost the ability to keep that care local. Now we can have a virtual second opinion with arguably the most famous health system in the world."
Know your disadvantages, too
New York is the 49th most profitable state in the country for hospitals, says Jonathan Lawrence, president and CEO of Lake Erie Regional Health System of New York, a two-hospital system located in Irving and Dunkirk, N.Y., about halfway between Buffalo and Erie, Pa. Only about half of New York's hospitals are breaking even or better. The state's population, especially in rural areas outside New York City, is declining and aging.
"Those are margins that are insufficient given our aging infrastructure and medical staff and difficulty in physician recruitment, where 90% of new residents are seeking to be employed and the investment needed to employ them outpaces the revenue they can generate in most models," Lawrence says. That's why LERHSNY is trying a new model with UPMC Hamot in Erie. Announced last May, it's not a merger, but it assures the two systems will work collaboratively to determine the service needs of the area.
Lawrence says at $90 million in annual revenues, and with about 1,000 employees, LERHSNY had no choice but to affiliate somewhere, because bigger institutions, at half a billion dollars in annual revenue, are forming relationships with insurers, investing in EMRs and increasing transparency to compete in the intermediate- and long-term. The agreement will improve his staff's ability to recruit physicians, invest in equipment and new technology, and provide clinical and operational expertise, Lawrence says.
"From a strategic standpoint, you need to leverage scale," he says. "In this environment, size is really important. You need volume to drive quality and efficiencies and that is leading this train."
Business reality is also a reason behind the affiliation, he says, adding that he needs more leverage in negotiations for third-party payment contracts.
"Every year as a purchaser, we experience anywhere from 10% to 35% increases in premiums," he says. "Practically in the same breath, insurers are saying we're only going to see a 4% increase in our rates."
Through Hamot's relationship to UPMC (which owns it), LERHSNY can eliminate red tape that put limits on the number of foreign physicians it can recruit, for example.
Take charge of your destiny
The pressure is ratcheting up, but the deal with UPMC Hamot shows local control is highly negotiable, even though Hamot, which is four times as large as LERHSNY, gave up that control when UPMC bought it in 2010.
Time is of the essence, Lawrence says he tells fellow CEOs. Being halfway between Buffalo and Erie makes LERHSNY highly desirable, which allowed the system to take its time to craft a deal, he says, but others may not have such advantages.
"Because we're almost equidistant, we're something of a battleground area," he says. "We're essentially like the independent voters. We're who the candidates are fighting over."
Still, don't move in desperation, he says.
"You need to come at this from a position of relative strength—not that you don't have problems, maybe some serious ones," he says. "If you don't have an effective, credible leadership team, and you're not able to bring something unique to the table, there's no reason for a larger, more capable entity to partner with you. They'll just come in and take the volume away and let chips fall where they may."
Newpoint's Lupica says small hospitals and health systems need to take charge of their own destiny in the same way that people are in charge of their own careers.
"I had an old boss tell me that once and it shocked me," he says. "The hospital is in the same place. They need to define themselves for the next decade. What do you want to be outside the deals? Put a face on it."
One chief concern from smaller hospital and health system chief executives is that affiliation will eventually kill their hospital as the larger parent exerts increasing levels of control and removes volume locally.
"I'm not worried about all the patients going to the mother ship," says Reynolds of MidMichigan. "We send a fair amount of business to them anyway. In fact, their problem is they are trying to push business back to local organizations because they have more than they can deal with. For example, they would like to keep more cancer business up here and expand our expertise."
Smaller hospitals often can treat patients at lower cost, too, a fact not lost on Reynolds. He hopes to improve his system's already strong financial profile through the affiliation with UM.
"This was opportunistic. I was looking to gain competitive advantage. Certainly the market is moving so we wouldn't have waited forever to do it, but we have 300 days cash on hand," he says. "This is not a move made out of desperation."
Typical of such agreements, both MidMichigan and LERHSNY have joint operating committees with their bigger partners that meet on a regular basis on projects they have agreed to at a higher executive level, but they maintain local board control.
"If the 'mother ship' sees the smaller affiliate as a way to suck volume out of the community, the relationship is doomed from the start," Lawrence says. "The only way the smaller entity will survive and the way the larger one will gain support is by demonstrating that patients can be kept locally and making sure that the smaller entity has the resources necessary to accomplish that."
Dartmouth-Hitchcock's Meyer is looking into other innovative partnerships locally: for instance, with retail clinics that are springing up. For some people, such clinics are their only point of contact in healthcare. By developing a partnership, Meyer thinks Dartmouth-Hitchcock can develop an opportunity where patients will come in with their sore throat, and the clinic will recognize that patient has no medical home. Their blood sugar may be out of control, for example—something for which the retail clinic is poorly equipped to treat, but for which Dartmouth-Hitchcock has many resources.
"What's changing is the conditions and drivers are very different," he says. "Finance people used to get behind closed doors to see if a partnership made financial sense. In accountable care, and taking risk for large populations, health systems are looking at things from a different lens. Clinicians will decide whether an intervention is going to improve access to the population we ought to be serving, and whether it will improve value and leverage new population risk reimbursement models."
Meyer says the pace of deals will only get more frenetic before it levels off.
"I've been involved in healthcare for about three decades," he says. "Partnerships that in the past took months to evaluate and consummate are now moving along at much greater pace. In some ways a lot of things that have made sense for many years are now finally actually happening."
Philip Betbeze is senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com.
Reprint HLR1212-5
This article appears in the December 2012 issue of HealthLeaders magazine.
There's no way around it. While your organization may still find nuggets of savings in the supply chain and the revenue cycle, the big savings going forward in cutting costs are probably going to come from utilization.
That's not an intuitive place to look for savings for hospital and health system CEOs. In fact, it's a complete departure from healthcare leadership intuition. After all, for so long, the equation was, increased utilization=increased revenues=increased profits.
But that's rapidly changing. Some of you probably think I'm looking for new ways to harp on "change" each week. But it's very true and perhaps even more important to get a head start, while your organization's success isn't totally dependent on cutting utilization and ultimately, improving outcomes.
We talked quite a lot about this trend of eliminating waste, and marrying the clinical and financial at our CEO Exchange in October. I thought I would share some of the insights as to why finding a way to begin to incorporate utilization management into the daily operation of your hospital or health system is so important.
Crouse Hospital in Syracuse, NY, led by a physician, has been quick to embrace the notion that decreased utilization will lead to increased margin, and the first step toward managing utilization to maximize patient care and minimize waste, for them, involved hiring senior quality officers, who are physicians themselves.
One of these senior quality officers recently sent an email to the entire medical staff reminding them to try to do their best to follow clinical and evidence based protocols for care because "did you know that if every doc ordered one less laboratory test per day on their patients, that it would save the hospital one million dollars?"
But his work goes beyond simple exhortation of his fellow physicians, says Paul Kronenberg, Crouse's chief executive officer.
"There's nothing more elegant than that simple statement, although we've now put in place through his leadership different ways of blocking ordering of tests in our system."
There's no way around it. While your organization may still find nuggets of savings in the supply chain and the revenue cycle, the big savings going forward in cutting costs are probably going to come from utilization.
That's not an intuitive place to look for savings for hospital and health system CEOs. In fact, it's a complete departure from healthcare leadership intuition. After all, for so long, the equation was, increased utilization=increased revenues=increased profits.
But that's rapidly changing. Some of you probably think I'm looking for new ways to harp on "change" each week. But it's very true and perhaps even more important to get a head start, while your organization's success isn't totally dependent on cutting utilization and ultimately, improving outcomes.
We talked quite a lot about this trend of eliminating waste, and marrying the clinical and financial at our CEO Exchange in October. I thought I would share some of the insights as to why finding a way to begin to incorporate utilization management into the daily operation of your hospital or health system is so important.
Crouse Hospital in Syracuse, NY, led by a physician, has been quick to embrace the notion that decreased utilization will lead to increased margin, and the first step toward managing utilization to maximize patient care and minimize waste, for them, involved hiring senior quality officers, who are physicians themselves.
One of these senior quality officers recently sent an email to the entire medical staff reminding them to try to do their best to follow clinical and evidence based protocols for care because "did you know that if every doc ordered one less laboratory test per day on their patients, that it would save the hospital one million dollars?"
But his work goes beyond simple exhortation of his fellow physicians, says Paul Kronenberg, Crouse's chief executive officer.
"There's nothing more elegant than that simple statement, although we've now put in place through his leadership different ways of blocking ordering of tests in our system."
"I don't think the public understands the sea changes that are happening with hospitalists," he says. "I'm a big advocate of standardization where it makes sense."
In Seligman's self-described "little community hospital," he has two adult medical hospitalist groups, a pediatric hospitalist group, and neurological and surgical hospitalists.
"Most important, they're experts in using our IT," he says. "That is the vehicle for so much of the standardization of process."
He says the hospitalists focus on order sets, and as part of a four-hospital system whose physicians have agreed on clinical standards, "we're able to say, as a network, that this is the way that the physicians have agreed to treat this particular problem. We're not depriving a physician of the right to deviate from that, but we're establishing a standard and most of these orders are being written by a small group of people who work for the hospitals. That has changed dramatically the amount of variability in practice."
The beauty of the process, says Seligman, is that not only does it drive out waste, it also drives out unexplainable variability over time, a key metric in clinical quality.
Neither of these CEOs would claim that they are close to a finished product in making this transformation, but they're implementing real change to the way they do business. If you're looking for somewhere to start, you could certainly do worse than focusing on variability and waste in the utilization chain.
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of the Supreme Court.
This profile was published in the December, 2012 issue of HealthLeaders magazine.
"Reform is going to occur one way or another and we would rather have planning and thoughtful preparation to deal with it."
When, like the unseen men in the instant replay booth of the NFL, the Supreme Court decided to weigh in on healthcare reform legislation, many would like you to believe that a hush fell over the crowd as the players stood on the sidelines and waited for the decision. But the replay of healthcare reform legislation before the highest court in the land was anything but instant. Hospitals, health systems, employers, and payers had to muddle through. What kept them driving is not only the relentless march of ever-higher healthcare costs, and the persistent questions about the quality of that care, but also the hope that a confluence of technological and evidence-based treatment protocols is ready to finally deliver improvement on both fronts. Still, the justices' decision to review the Patient Protection and Affordable Care Act led to widespread uncertainty about how hospitals, health systems, and indeed, any entity associated with the business of healthcare, should alter its strategic plans. And that waiting game went on for many months. Because the ultimate decision clarified what the law is able to do—namely, to force people to obtain health insurance or pay a penalty—and what it is not able to do—namely, to force states to expand their Medicaid eligibility rules—the decision deserves a mention as the most impactful of the year, if not the decade.
Clearly, there is no unanimity of opinion on the matter—among the justices themselves or the members of the healthcare industry itself—but the fact that the decision allows reform to proceed under some certainty is why many hospital and health system leaders are grateful.
"The need for reform and the reform process had begun even before the passage of ACA," says Michael Schnieders, president and CEO of Good Samaritan Hospital in Kearney, Neb. "The ACA accelerated that rate of change. The Supreme Court came out with its ruling giving direction on the federal level, and we can continue our reform. Uncertainty remains at the state level regarding Medicaid expansion."
When the decision finally was announced in June, it gave senior leaders at least a modicum of solid ground upon which to begin making decisions about how to position their organizations strategically for the intermediate and long-term future.
"We know there's a need for radical change," Schnieders says. "It wasn't going to stop the train if they came back and ruled it unconstitutional, but it would have slowed down reform and it would have had to restart at some point in the future. Reform is going to occur one way or another and we would rather have planning and thoughtful preparation to deal with it. That said, even today, we're not really sure what the regulations are going to be, so there's still a lot of uncertainty about what will be required."
The two key decisions the Court handed down went in seemingly opposite philosophical directions. While the court affirmed the federal government's right to compel the purchase of health insurance, it said the feds were unable to force states to commensurately expand their Medicaid eligibility guidelines and set up "health insurance exchanges," that is, state-regulated, standardized health insurance plans from a variety of insurers available for purchase. While the federal government has promised to pick up 100% of the tab for the expansion for the first three years (2014–2017), it does ratchet down the feds' share to 90% by 2020 and future funding, given the national debt and deficit levels, is far from assured from future Congresses. For his part, Schnieders understands both sides of the argument regarding the Medicaid expansion. His state, Nebraska, is squarely on the fence from the legislative standpoint, but Republican Gov. Dave Heineman has vowed to oppose it, saying the state cannot afford to expand Medicaid.
"Clearly, I understand both sides on the concern with funding," says Schnieders. "Essentially, will the funding commitment remain for the long term? We all know the federal budget, so adding additional expense to that is risky. However, from our organizational philosophy, it's always better for people to have access to planned healthcare—not emergency-only. If we did expand, the most vulnerable would have access to primary care, and all things being equal, it's better care and lower costs."
Whatever Nebraska and other states decide about the expansion, the impact will likely have a pronounced effect on hospital and health system finances—but not necessarily in the way one might think.
"Last year we had about $5 million in traditional charity care," says Schnieders. "We would see that decreasing if there were an expansion, but on the other hand, Medicaid doesn't cover the cost of our care and in that same year we had unreimbursed costs of $9 million, and that would probably increase under a Medicaid expansion."
Despite all that the Court's decision makes clear however, CEOs are not fooled into thinking they can simply adapt to the law's provisions and continue to prosper. In fact, the toughest part of healthcare remains its stubbornly high cost, which continues to rise much faster than the rate of inflation or GDP growth.
"No matter what happens with the state decision on expansion, hospitals in this country, and physicians as well, all know we need to reduce our cost of business," says Schnieders. "How do we increase efficiency and improve quality? We know the financial commitments of the government, and just like in our home budgets, we've met the problem and it's us. We've got to reduce our costs. Our movement toward a new way of providing well care as opposed to sick care after the fact—that moves us to a new cost structure, not laws."
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Douglas Dieterich, MD.
This profile was published in the December, 2012 issue of HealthLeaders magazine.
"It was a time of great uncertainty about [hepatitis C] and how it was spread and many were refusing to take care of people with this or HIV, which I really thought was unethical."
Ask why Douglas Dieterich, MD, decided he wanted to become a doctor, and he searches for answers.
"It's hard to know," says the professor of medicine at Mount Sinai Medical Center in New York. "I've never really figured it out. I've always wanted to do this, even though no one in my family is a doctor."
Asked why he picked his specialty (gastroenterology) after contracting a then-fatal disease from an accidental needlestick, and the answers come much more easily.
"Even though I could have gone into something much more lucrative, this became a grudge match in trying to go into the field to do battle with this thing," he says.
The "thing" Dieterich mentions is hepatitis C, about which he is not only a victim but is a nationally recognized expert—thanks not only to his own determination, but also to an accidental needlestick he experienced as a resident in 1977, which left him with the then-incurable form of hepatitis. Until then, he had nearly decided that he was headed toward becoming an ophthalmologist. In fact, he had already gotten a second job in an ophthalmology lab during his medical education, and had secured his residency to begin studying in his chosen specialty.
"So I went into GI and then GI-liver to try to do something about my own disease," he says. "At the time, there still wasn't anything that could be done."
Unlike many people who have the disease and do not know it, Dieterich knew immediately that he was infected, and also unlike many victims, he began experiencing debilitating symptoms nearly immediately.
Though many people have no symptoms "until it's almost too late," (which is one reason he advocates that everyone be tested for the disease), he became severely ill only about six weeks following the initial needlestick, which he says happens in only about 10% of cases. It's a good thing Dieterich had such determination about fighting this particular disease, because at the very beginning, when it would have been so easy to give up, he persevered, ultimately struggling with the disease for 20 years until he was cured, thanks in no small part to his own research.
"There were definitely low points when I was training and kept getting sick and relapsing, but when you work 100 hours a week I guess it doesn't help," he says. "That was frustrating. At that point they weren't even doing liver transplants."
A lot of medical professionals avoided hepatitis C patients back then, he says, thanks to the ease of which the disease could potentially be passed along. Dieterich not only worked hard on helping patients such as himself, but he also was often one of the few physicians who would work with AIDS patients when that disease was new and not well-understood.
"When they asked for volunteers to take care of these people, only the naïve or deeply committed remained," he says. "But I did feel a duty. It was a time of great uncertainty about the disease and how it was spread and many were refusing to take care of people with this or HIV, which I really thought was unethical."
Dieterich has spent most of his time in research on clinical trials of drugs aimed at hepatitis C, which has led to better treatments—all have some level of personal customization. Dieterich himself was treated twice with drug regimens for the disease, which he says cured him the second time. New drugs are in the pipeline, and are desperately needed, he says, adding that up to 50,000 people per year will likely die in the United States from hepatitis C by 2020 "if we don't intervene." At this point, even though cures are possible and new and better drugs are still being developed, the likely deaths will occur largely because half of those with the disease don't even know they have it.
"It's a really good time to have this, but lots of people don't know they have it," he quips.
Ask Dieterich how it feels to have made such a difference in healthcare and he avoids the question, instead drawing on his own personal experience with the cure.
"It feels fantastic to be back to normal," he says. "Ask any of my patients who have been cured and they'll tell you."
Still, treatment for the disease is difficult and trying for patients who sometimes want to give up, as he once did. Dieterich says his experience on "both sides of the bed rail" has helped him practice medicine differently, and with more compassion. For instance, patients undergoing treatment regularly need liver biopsies, which can be very painful. That's why he always uses sedation for patients undergoing one, which is not always the standard of practice.
Otherwise, he generally tries to avoid anything that would clue patients in to his own struggles unless he really needs it, calling his experience his "trump card."
"I had it for 20 years before I was cured," he says. "When I really need it, I can use my experience and tell patients, 'suck it up. I did this, too.' "
Stop me if you've heard this before: Hospitals have to embrace a new era of accountability. They need to be bold leaders in changing our sick care system into a true healthcare system.
I could go on and on, but I sense you tuning me out already, because that's what everyone tells you your organization must do. These infuriatingly broad platitudes attempt to make simple the massive changes facing you and your team.
It's far from simple.
Sure, it's easy for consultants and column-writers to tell you that you need to think innovatively, that you have to treat patients as customers, and on and on. They (we) don't have to do the work.
But maybe the task of transforming isn't accomplished in big, far-reaching initiatives, necessarily. They are nice, and they have their place, but innovations don't always have to be revolutionary.
If you've been reading HealthLeaders' analysis over the years, you know we focus on how to help you lead your hospital better. It's not because we necessarily know how to do it, but because the best of your peers in the industry do, and are willing to share.
Let me tell you a story about a large hospital system in New York that is doing something pretty simple and low-risk, but could offer potentially big returns down the road.
Beginning last month, Continuum Health Partners, a partnership of three hospitals that includes the flagship Beth Israel Medical Center, started offering 24/7 access to its physicians through Teladoc, a subscription service targeted toward New York City residents for consultation on minor medical conditions.
They see the service as a way to broaden access and to serve as an alternative to ER visits or for when patients are unable to get in to see their physician in person. Spoiler alert: I know what you're thinking, but Continuum physicians did not show up at Harris Nagler's doorstep with pitchforks and torches.
In fact, they welcomed the move. Why? It's a new revenue stream, for starters.
Nagler, Beth Israel's president, and an MD himself, says Teladoc is not a competitor for Continuum's physicians. Actually, they'll take many of the calls or video consultations. The service is a variation on the concierge healthcare trend that until now, has been slow to pick up steam. But that doesn't mean there aren't plenty of people who will take advantage, Nagler says.
"Coming to the physician office under the best of circumstances is time consuming," he says. "Many ailments people might have don't require that time commitment. This is easier and less expensive and it works within a media that is become so familiar to so many people."
Here are the details:
For a $30 annual membership fee, and a flat $38 charge for any one physician consultation, patients can connect with physicians pretty much immediately either by phone or video.
It's all run by partner Teladoc, which, Nagler says, has an excellent track record in developing and implementing telehealth services for health insurers and employers. It currently covers more than four million beneficiaries and employees in the U.S. Depending on when they need care, patients using the service may not always get a Continuum physician, but those physicians have first right of refusal. If no Continuum physicians are available, the call will roll to a physician in Teladoc's national database.
Nagler's not worried the service will siphon patients from physicians at Continuum.
"This specifically precludes a patient from developing a relationship through Teladoc," he says. "You get assigned to whoever is in the queue, so this is not a surrogate for routine primary care, but is a way of expanding primary care by removing some of the barriers."
But with a service like this, obviously some barriers have to be put into place. For instance, the "tele-docs" will not be able to prescribe narcotics, and patients, as previously mentioned, do not have a choice of practitioners.
"This is not primary care, it's just an add-on," Nagler says, adding, without being specific, that patients identified as using the system too often will be "curtailed from doing that."
On the surface, I'll admit, it may not seem like a big, innovative step, and maybe it's not. But it does open up new revenue streams and new sources for patient interactions for the physicians that call Continuum home in some way.
It's a way to expand office hours without a physician revolt, and it keeps patients in the hospital's ecosystem. Perhaps it will bring more patients who don't have a primary care physician into Continuum's sphere. It does cater to some degree to concierge crowd, who don't want to wait, and best of all, it's an all-cash or credit business. No waiting around for reimbursements and patient billing.
"We're going to measure the volume of calls and activity and the economics and referrals that come into our system as well as satisfaction rates," says Nagler, who adds that at some point, Continuum docs may be available to patients in an expanded geographical area, that is, outside New York City.
"I think it has the potential to bring in a younger population initially who may not need the services of a traditional hospital environment," he says. "As we gain acceptance, it has the potential to percolate up through the family, if you will."
This article appears in the November 2012 issue of HealthLeaders magazine.
Healthcare leaders are inundated with pleas and demands from payers, the government, their boards, and even their patients to be more accountable to them in cost, quality, and patient safety. Frontline staffers are the focus of the day-to-day evaluation, but senior leaders are charged with developing strategies that will help the organization adapt to new roles. Senior leaders have no playbook from which to evaluate how well they and their most senior deputies are doing, but some innovative senior leaders are keeping it simple.
Nancy Schlichting, CEO at Henry Ford Health System, a Detroit-based organization with $4.22 billion in revenue, says much of her leadership style is rooted in seeking out common values and providing constant feedback on how well her team is meeting its self-imposed targets. She boils it all down to transparency of information, culture development, and engagement of people.
"It's critical to attract talented leaders with common values," she says, adding that senior leaders must work together as a team, which is not as simple as it sounds. "I can set a tone at the top, but if you don't have the team who is able to execute on that—managing change and taking risk in an effective way—you won't make it work."
Schlichting's style, she says, tends less toward the autocratic and more toward allowing her senior deputies to take risks under their areas of expertise.
As examples of that risk, she notes that Henry Ford, in an attempt to
diversify its revenue streams and its scope of care, has acquired ownership of a Medicaid HMO and majority ownership in a third-party administrator in recent years, as well as more targeted acquisitions, such as this summer's purchase of the Detroit Institute of Ophthalmology, which will become a research education arm of Henry Ford's ophthalmology department, which treats about 55,000 patients annually. She's also busy developing a new physician network that will integrate group practices, employed physicians, and private practices, as well as a complex and expensive installation of Epic, an integrated suite of healthcare software, across the system—in other words, much of the same work that many CEOs across the country are navigating.
Henry Ford has a nice track record of success, with 10 straight years of revenue and net income growth in an economically challenged area, and was one of only four organizations nationwide to receive the prestigious Malcolm Baldrige National Quality Award for 2011.
"Leadership is a great privilege, and it's really about having thousands of eyes looking at you," she says. "We're all under the spotlight every day and everything we do is judged. It's the behavior we exhibit that creates that culture, and everything counts; there's nothing off the table."
A strong leader must constantly be evaluating senior leaders, she says, based on their ability to think comprehensively about the impact of their decisions, "because people can get pretty myopic. I like to see leaders who have a particular focus, but I want them to be operationally sensitive and thinking about the impact of their work on many stakeholders."
In evaluating how senior leaders are doing, she focuses on their ability to build a cooperative team and to execute and drive change effectively.
"There's a whole list of those competencies, and then there's others related to the strategic elements of the organization. The metrics we're using measure outcomes across a variety of categories," she says, including quality, financial performance, and community mindedness, among others. Those are the common ones, but she evaluates leaders regularly—that is, many times a year—on seven strategic categories that are specific to their business units. She's careful to constantly evaluate and be available personally for course corrections because she wants leaders to be confident and aware of where they stand at any particular time.
"A lot of collegiality and teamwork is necessary," she says. "That means telling stories and confronting issues at the moment you see them."
She says if CEOs are consistent in their standards, there will be some natural attrition, but she doesn't put much stock in any rote suggestion that, for example, 10% of the bottom performers in an organization should be culled every year. Some people can perform well for years and then get burned out and need to do something else. Sometimes it's time for people to move on to new roles, and that's healthy.
"The main thing is we have discipline on maintaining high standards of performance and behavior," she says, adding that she's careful to keep the evaluations professional—equating people's worth with how effective they are at their jobs happens more than CEOs like to admit.
"Over the years I have seen enough change that I've seen people who are completely ineffective move to other organizations and be very effective."
So sometimes it's not the people, but perhaps the fact that they are in the wrong place with the wrong people surrounding them.
"I still get Christmas cards from people I've fired because I never diminish them as people even if their performance wasn't as effective as we needed," she says.
Mastering communications
C.J. Bolster says healthcare organizations and their leaders sometimes don't give themselves enough credit for managing the huge volume of changes they've already been through in recent years, as healthcare has changed so dramatically.
Bolster is the national director of U.S. industries with Hay Group, a global management consulting firm that specializes in helping organizations translate strategy into results. He has extensive experience in healthcare.
"If you ask a nurse how they're doing their job compared to four years ago, it's an enormous amount of change," he says. "They have different relationships with physicians, with the electronic medical record."
He says CEOs need to manage the intricacies of developing a systemic way to help deputies understand how much they've already gone through and how they've coped.
"A core competency of a future leadership team is how to master internal communications," he says. Bolster , like Schlichting, says a combination of regular reviews along with constant communication is what he recommends to leaders hoping to get the most from their senior deputies. That and constant reminders of why they are in these jobs in the first place.
"That's where some of the faith-based organizations do such a great job—anchoring people in why they do what they do. Doing so provides a rationale so that the changes you're asking them to make are all about providing better service to the patient."
The best senior leaders do a good job of articulating what's central and unchanging versus what's changing—the processes to get there.
The past seven or eight years in healthcare have been very operationally focused, he says. What senior leaders were evaluated on has had large dollops of efficiency, quality, and satisfaction themes. But he's starting to see that, while those are still important, strategic implementation is critical. That may mean getting a new EMR system installed on time and on budget or being able to work out new relationships with physicians. For the vice president level, for example, effective CEOs have recognized and implemented process measures around strategic execution. For many of the larger organizations, healthcare is becoming more like running a professional service firm than running a hospital.
"Every organization we work with has a clear set of strategic initiatives for that year and for multiyear execution," he says. "Translating those into outcomes or process measures is critical."
Staying on message
Dealing with the new in healthcare is a constant concern for senior leaders. New terms are often understood in theory by senior leaders, but how they translate them into plans of action makes the difference between success and failure. Consistency in communicating goals and expectations is more critical than ever, says Marlon Priest, MD, executive vice president and chief medical officer at Bon Secours Health System Inc., a Marriottsville, Md.–based multistate system with FY 2011 total net revenue of $3.3 billion.
"I lead a weekly clinical operations call with my CEO that involves chief nursing officers, CFOs, regional CEOs and CMOs every Wednesday at 7 a.m., focused on items that create value," he says. "We talk about the things that are important to do now and we stay on the subject for two to three weeks, so that the operators, and the finance and clinical leaders are having the same conversation. That way, we know the message and can hear the challenges they're facing."
He says constant evaluation of senior leaders can be a big challenge, even though there are many "hardcore metrics" that can easily be obtained from proprietary organizations such as the Gallup Organization.
Those are the objective metrics, but Priest spends a lot of time and focus on other success factors. For instance, are people contributing in the room? Are they smiling? He spends a lot of time making sure his direct reports are effectively communicating with each other, or in some cases, even communicating at all. He calls his subordinates and makes sure that, for instance, "one of my staff people is having a conversation with another staff person that they need to have a good working relationship with to solve challenges."
He also checks to see that email does not have a "gotcha" or otherwise nasty tone.
"I use that in addition to the traditional Gallup measures," he says.
It's a collegial atmosphere, and "they do occasionally say that I'm micromanaging. But if you aren't talking to each other between staff meetings, I need to know why. If you were, we could possibly achieve a goal much faster."
He keeps goals big in scope but few in number. For instance, he and his group agreed to meet one performance objective for the group around readmissions.
"All 11 agreed and all would be responsible for some piece, which forced them to have conversations among each other."
He argues that senior leaders need to create "stretch" metrics that subordinates don't hit every year. When they don't hit them, they also need to know you're not planning on firing them. He says while clinical people have some transformation of work practices, to deal with that can be quite challenging; it's the administrative staff that has the toughest bridge to cross as healthcare incorporates vast changes.
"The leaders under the most pressure are traditional C-suite people because they cannot achieve anymore without their clinical people being at the table," he says, adding that 70%–80% of what physician senior leaders have to deal with are not necessarily tied to the organization—that is, the independent medical staff. As CMO, Priest tries to bridge that gap and own a goal, but it's his responsibility to make sure his team members can help him achieve it.
"I'm going to be the owner of the goal. If they don't get it right, maybe you can laugh about it and find ways to improve. It's not perceived as an organizational failure, but you have to hold people accountable. I might have a conversation that goes like, ‘We've been at this 18 months. Tell me what you need to do different.' If they're blaming someone else and they don't bring solutions, that's a red flag."
For what it's worth, Priest also doesn't buy into prescriptive culling of the leadership ranks for the
bottom performers.
"You have to deal with the fact that at times people are ill-suited for their job." Leadership skills or their lack are quickly evident in an industry that is undergoing such constant change. But Priest is convinced that his hands-on style means that people are rarely surprised when he has to arrange for them to exit the company, as he puts it.
"If they're surprised," Priest says, "either I didn't do my job, or they have self-deception. I have to feel comfortable in both a verbal and written manner that I have been very clear about my expectations. They're often happy you've helped arrange for them to exit the company because it's miserable for them, too. People don't like to fail."
Reprint HLR1112-5
This article appears in the November 2012 issue of HealthLeaders magazine.
The healthcare industry convention of price opacity came under fire just before Thanksgiving, when the business-and-labor-backed Catalyst for Payment Reform issued what a "call to action" aimed at health plans and providers, asking them to "make healthcare price information more readily available to their employees and consumers."
That's right: a coalition of healthcare purchasers from both business and labor is calling for reform, starting with price transparency. Here's betting they'll get it—eventually. When these historically antagonistic groups unite in a cause, you know you've got a tough fight on your hands.
Several large employers, such as Boeing, Dow Chemical, and Wal-Mart, have joined the AFL-CIO, AARP, and other groups to trumpet this unified message. Last I checked, unions were picketing Wal-Mart on Black Friday, so even though these groups differ on big issues, this is one under which they can unite.
Many healthcare providers prevent health plans from sharing information (and health plans are complicit in this too) about the prices the health plan pays that organization for certain services. At one time, that might have made actual sense.
Providers traditionally have funded money-losing programs, and even Medicare and Medicaid access, through margin on their commercial contracts. CPR Executive Director Suzanne Delbanco, PhD, says that as provider consolidation has continued, they have amassed more market power, and thus, there's less competition for their services to health plans and employers. As a result, prices may have increased exponentially to fund these money-losing services.
But that's only one scenario. Certainly, some providers out there charge prices that bear no relation to market reality. Whether the extra dollars are necessary to fund money-losing services that would otherwise be absent is a matter of how much and to what degree they do so. Determining how that equation is resolved is impossible without transparency.
Also, Delbanco says, in the past providers may have been afraid to show price information without also showing quality information, implying that higher cost begets better quality. With numerous quality rating systems now coming on line, providers may have an additional weapon to show that their prices are indeed based on higher quality. And if they're not, you, as a leader in your organization, may have some adjusting to do.
Catalyst for Payment Reform seems to have modeled itself in some ways on the strategy of the Leapfrog Group, which has a somewhat controversial record as a proponent—and arbitrator of—quality scoring for hospitals. It's also Delbanco's previous employer.
"Everyone's initial focus was on quality, because we were learning more and more about how quality varies so much," she says. "When I was at Leapfrog, that was a big focus, but I don't think there was that much awareness of the different prices we paid to providers for the same service."
If Delbanco has anything to do with it, that will soon change.
As consumers are being asked to foot more of the bill for their own healthcare, calls for this type of price transparency will only get louder until they reach the point of deafening.
"The writing is on the wall," she says. "When you imagine a future healthcare system, it's virtually impossible to envision one without price transparency. We're putting more on consumers to share in the cost, and they cannot make good decisions if they don't have this information."
She makes an excellent point. The price murkiness that has long overshadowed the business of healthcare is part of the reason that healthcare consumes ever more of our annual GDP. It's part of why wages have stagnated. It's a big reason why waste and harm in healthcare has historically been a backseat concern. It's why the notion of value for healthcare services has been impossible to measure for ages.
But CPR doesn't just ask for transparency, it is ready to help those who are interested in pursuing it. CPR has model contract provisions that would allow for transparency, for example, and it's currently holding quarterly meetings with the four largest national health plans on progress toward price transparency.
"Every quarter we check in with them on their progress on in-house tools and what proportion of providers are suppressing price information," Delbanco says.
After a year of such discussions, she says significant progress has been made on transparency tools.
"We have seen some of the health plans becoming more flexible, but there are some holdouts," she says. "We're hoping this attention to what employers and consumers need will convince those remaining holdouts."
If not, pressure will also come from elsewhere. Though Delbanco says CPR has not modeled the shift, the creation of state-level insurance exchanges under the Patient Protection and Affordable Care Act should create a more structured marketplace for consumers to shop for health plans. She contends that health plans that support strong tools to help consumers be good stewards of their own dollars will have a competitive advantage.
CPR has released a set of specifications that employers can look at when comparing consumer transparency tools among health plans. The specifications represent the best of the best.
Meanwhile, the price secrecy clauses need to be eliminated. "The truth is that it's only a small proportion of providers who have these clauses, but tends to be the ones that matter a lot," Delbanco says. That means the biggest systems with the biggest market power in their community are often those who are standing in the way.
Given how rapidly consumers are being asked to pick up the cost of healthcare and given benefit design in how those dollars are spent, there will be increasing pressure to be price-transparent.
Providers "can be a player or not," she warns. "But as consumers get wiser about the connection between cost and quality, and as we reveal the facts that price has no bearing on quality, we'll work toward a marketplace where providers compete on value in terms of quality and cost, not just one or the other."
The long-term survival of safety net hospitals hinges less on reimbursement rates and more on questions of access, says Wright Lassiter, chief executive officer at Alameda County Medical Center in Oakland, CA. That's one reason why the safety net hospital he runs has recently agreed to buy the 136-bed San Leandro Hospital, which current owner Sutter Health had wanted to turn into a rehab center, shutting an emergency room with 25,000 annual visits.
Lassiter envisions the now money-losing San Leandro Hospital as a way to curb the impact of a changing business landscape in healthcare, which he perceives will lead to the shutdown or takeover of many local hospitals that are not owned by a bigger, better capitalized parent. Though many forces are at work as healthcare transitions to being measured on value and patient satisfaction as well as services rendered, he's worried safety net hospitals will lose out as patients get more options for care through insurance exchanges being created as part of the Patient Protection and Affordable Care Act. That's why he feels the need to expand geographically, as ACMC will in the San Leandro deal.
Safety net hospital as acquirer is a new twist in the ongoing consolidation of the healthcare industry. Lassiter says that while the PPACA is positive in general because more people will have healthcare coverage, it's a significant risk for safety nets.
"Some of us aren't as focused or as good at patient experience as others might be, or aren't as good with access because we take care of folks who are not attractive to the rest of the community," he says. Because patients who previously did not have coverage will soon have a choice on where to access care, ACMC has been tracking wait times for everything from ED access to wait times to see a specialist. The focus is on how to best decrease those.
That's because the access issue "could be our Achilles heel even more than patient experience," Lassiter says.
ACMC does well in quality indicators. In the local market, where the big competitors are Kaiser and Sutter, "our results are equal in many areas to Kaiser. But the wait to see specialist [at ACMC] is a lot longer and because of this, if you have a choice as a patient, I will lose. If [safety nets] can't deliver on the access side, we'll see volumes decrease."
Many of ACMC's patients don't enjoy their experience because of those time lags. "That will be significant for safety nets," Lassiter says. "For others who might be interested in the expanded market, if you can't deliver on access, you will lose."
He doesn't want that to happen, which is why he's staking so much of ACMC's long-term strategy on acquisitions of facilities that don't have the size or scale to survive healthcare reform. If integrated into the local safety net, Lassiter believes they could offer more varied and quicker access points than ACMC is currently able to provide.
He calls the deal with San Leandro and Sutter, which will leave ACMC as the owner, a "hybrid" model of delivery. The lines are going to blur between safety nets and other hospitals more and more, he argues. "Communities will be stronger if they move to hybrid models. There will be a number of communities where safety nets will not be stable without a partnership."
For that matter, some traditional nonprofit standalones will not be stable without a deep-pocketed partner, whether that partner is a safety net hospital or not.
"In our area, when you [take out] Kaiser and Sutter, what's left are standalones that don't have the financial wherewithal to exist on their own," Lassiter says. Meanwhile, "we need broader geographic coverage and we both need larger scale and presence."
That means if Lassiter's vision is to be realized, ACMC will need to do at least a couple of other similar acquisitions, he says.
"It's to our advantage to have greater access points where we don't serve people today," he says. "We are $600 million [in annual revenue], and the others are $50-$100 million and unaffiliated with anyone else. They have zero chance of being successful without affiliation with other facilities."
The safety net squeeze
That Alameda County Medical Center is in position to even consider so forward-thinking and ambitious a strategic plan is almost miraculous given the perilous financial state of so many of the nation's safety net hospitals. For many years, many public safety nets have relied on calcified and political board governance, a revolving door of executives, labor problems and lack of accountability, and perhaps most damaging, service to a large class of patients whose treatment has been classified as either charity, bad debt, or reimbursed at Medicaid rates. That unrealized revenue leaves most safety net hospitals in poor shape to replicate anything close to Alameda County's level of business maneuvering.
But ACMC's top leader has a couple of financial turnarounds under his belt that have put it in the position to expand in anticipation of a significantly altered financial equation for hospitals and health systems in coming years.
ACMC lost as much as $65 million just before a local sales tax initiative was enacted in 2004, prior to Lassiter's arrival. But soon, even that additional funding was not enough to keep it out of the red. When he arrived in 2006, the organization had lost $4 million just in the first quarter.
Lassiter walked into a crisis. "Not one of the more pleasant surprises that I'd received in my life," he deadpans.
He and his new COO set out to do something drastic, starting with a margin audit. That exercise made clear that the organization's department heads lacked financialsophistication.
So Lassiter and the COO educated. They called the process a "margin improvement boot camp," and gathered 90 leaders and directors to lay out the revenue problem.
"We agreed that this is not the new CEO's problem, this is our collective problem, and collectively we will solve it," he says. "Some of you think you don't know enough, so we're going to give you some training over the next few weeks, and beginning in January, you are going to be placed on cross-functional teams, and given a goal for which you'll have 16 weeks to come up with ideas to solve the problem," he says, recalling his words.
The goal was to save $21 million for the year. Every Friday for 16 weeks, the group met for discussions in which reports on progress for cost-saving ideas were tallied. The group debated ideas for cost improvement, including reduced contract expenses, increased revenue, contract evaluation, better processes and practices, and lastly, salary reductions.
"That really helped drive culture change and ownership culture," he says. "Some had ideas for years, but no one ever asked them, or the idea never went anywhere."
By the end of that year, ACMC ended up with a positive margin of $3 million.
By 2008–2009, in the depths of the recession, Lassiter and his team were faced with a similar shortfall, as the sales tax revenue subsidy fell sharply with the economic downturn.
"We lost that tax subsidy by about $20 million over a single year, and needed more belt-tightening," he says. This time he involved the physicians, who wanted in on the process. That effort yielded $17-$18 million in savings.
Texas-bound?
ACMC's effort to enlarge its geographic footprintis a fascinating test, but Lassiter may not be around to follow up. He is one of four finalists for the open CEO job at Dallas's Parkland Health & Hospital System, where he worked prior to joining ACMC,.
He notes that he has not sought the Parkland job, but he was encouraged to apply when the job came open at the beleaguered but promising health system, which will get an essentially brand-new hospital in the near future. Such jobs are not filled without announcing candidates, or at least finalists, publicly.
"That was particularly difficult because I'm not unhappy and I'm not looking [for a job]," says Lassiter, who has family in Dallas. "My board chair knew about it, but I'm still not talking broadly about it. The fact is, it does create some instability and the last thing I'd like is to create that. I'm haven't been comfortable sharing about it, but I have talked openly with medical staff and leadership team."
A decision will be made in middle of December on who will lead Parkland into the future. It's not a foregone conclusion that he'd accept that job if offered, Lassiter says, joking that at least he could decline the job privately even if he can't pursue it that way. Either way, he'll be carefully watching how this vision of expansion for his safety net plays out.
As previous successes at ACMC have, the outcome will rest not on him but on employees. "Employees do the work every day," he says. "I can have a grand vision and put some things in place to create some of this, but it really all comes down to execution at the front line."
Let's begin with what we all should know about strokes. They can be deadly. They can be difficult to diagnose. Time is of the essence for effective treatment.
What we all should also know is that hospitals haven't traditionally done the best job caring for stroke patients. That's because many of them, especially small ones and those in rural areas, may not see very many of them in the course of a year. And recognizing stroke symptoms can be difficult.
Perhaps this is why the Centers for Medicare & Medicaid Services is putting an emphasis on quality metrics. Beginning Jan. 1, 2013, hospitals must begin reporting on 17 areas and 76 new measures under CMS's Hospital Inpatient Quality Reporting Program. Eight of those measures evaluate the care of stroke patients.
Providing those metrics will not be much of a challenge for big regional health systems such as the Bon Secours Virginia Health System, where Timothy Shephard, PhD, is vice president of the Bon Secours Neuroscience Institute, a primary stroke center.
But others will have difficulty, and that's where Shephard sees opportunity not only to educate about better stroke care, but to improve compliance at smaller hospitals.
As one of the founding chairs of the Virginia Stroke Systems Task Force, he has helped bring together all the stakeholders in the state on acute stroke and rehab services, which helps hospitals, even small ones, develop as primary stroke centers.
"When I talk about organizing this in a hospital system, the most challenging and most rewarding is the orchestration of the ED services," he says. "They see everyone who is critical and if the staff isn't highly trained to notice subtle signs of stroke, they may take a victim who has more painful injury before they take a stroke victim."
That lost time counts in stroke more than anywhere else, simply because the symptoms can be so subtle, and damage from strokes can be minimized with early intervention.
"Once you recognize, the steps are protocol-driven just like trauma and MI (heart attack)," he says. "But that takes skill and training. Training takes time. And that's one thing they don't have a lot of, is time."
In a system full of large and small hospitals, the challenge, ultimately, is to bring all of them up to the speed of diagnosis of the big tertiary center. That's something on which Shephard spends a considerable amount of time and effort.
Systemwide, "the key is to have a neuroscience coordinator and stroke educator—people who are dedicated to providing that service to everyone who gives care in the hospital," says Shephard.
Another one of the chief enablers of that effort is technology, predominantly through telemedicine.
For smaller hospitals that may be independent and cannot afford the investment in a neuroscience coordinator, a stroke educator, and a vice president like Shephard, or for whom stroke may not be the educational priority at that moment, developing certified stroke centers may be an option.
Virginia, thanks to efforts from Bon Secours and others to share their expertise, now has 36 stroke centers. When the task force was started, it had six. Bon Secours has also expanded its teleneurology capabilities to offer smaller hospitals expertise in their emergency departments 24-7. That's where smaller hospitals, not owned by Bon Secours, fit into the equation.
"That's one of the components of our success," says Shephard. "We're developing certified stroke centers in hospitals as small as 75 beds."
Rappahannock General, which has 75 beds and a clinical affiliation agreement with Bon Secours Virginia Health System, now has teleneurology with 24-7 backup and is on track to becoming a certified stroke center by next year.
Leaders shouldn't neglect the business case, which is also important, cautions Shepard.
"It's not the size of the hospital, but a limiting factor to developing stroke care is having the expertise on the campus," he says. "You need an administrator who can do the appropriate business analysis on what it will cost and the benefit to the patient and to train your staff to monitor and prepare for certification by the Joint Commission."
With significantly smaller volumes than heart attack, neurology is challenging for smaller hospitals, he says, because it's difficult to find experienced administrators.
"From a clinical expertise standpoint, teleneurology helps there, but not necessarily from the business case side. What is the ROI for patient and the hospital?"
More important is dealing with care protocols regardless of stroke center designation, he admits.
"The hospitals that are not certified stroke centers and who have not paid attention to these metrics are going to be challenged if they haven't already started training their quality team," he says.
"While most are already submitting core measures, the stroke stuff is new. You may be able to abstract, but you may not have expertise to be able to improve it. That will be challenging for hospitals that don't specialize in neurosciences."