Listen to HealthLeaders Media senior leadership editor Philip Betbeze as he talks with Jeffrey Wiese, MD, about the future of the quickly growing hospitalist movement. Indeed, says the president of the Society of Hospital Medicine, the trend is spreading to other specialties, and today's new hospital-based docs are fully on the clinical technology bandwagon. [Sponsored by Emdeon]
Making your physician practice into a patient-centered medical home can seem like a daunting proposition. There's investment involved, sure, in technology and in staffing. Depending on a lot of factors, it could be a big investment for a business that likely doesn't generate a whole lot of margin. And I'll concede that the return on that possible investment is murky at best. But if you're not trying to develop a medical home out of your primary care practice, don't let being "too small" be your excuse.
Why? Practices don't get much smaller than that of Joseph Mambu, MD. And he's doing it.
Mambu is one of only two full-time physicians at Family Medicine, Geriatrics and Wellness in Lower Gwynedd, PA, although he also employs another part time. He also has three part-time nurse practitioners. He's an early adopter of the medical home concept, however, and he is certain there will still be a place for the small physician office under healthcare reform, provided they make some very big changes, as he has, over the past five years.
The medical home, also known as the patient-centered medical home, briefly, is a largely theoretical concept that envisions a location where patients can obtain their primary, preventive, and acute medical services at the same location and through the same physician. When they need inpatient or specialty care, the primary care physician's care team coordinates it and works to stamp out unnecessary duplication of tests and services.
In its most evolved state, the medical home physician uses decision-support tools created through evidence-based medicine protocols, quantitative indicators of quality, health information technology, and feedback on physician performance. The problem: reimbursement doesn't necessarily encourage their growth—at least not yet.
Mambu was lucky in some respects. Having spent 22 years in a group practice environment, he despaired of ever being able to care for his patients with chronic conditions properly.
"My interest in chronic care began back in medical school," he says. "It's a very tough part of medicine and I never thought we did a great job with chronic care, even though it's been my career-long ambition."
But it was an ambition that lay dormant for years, as technology and payment incentives never encouraged the creation of a true patient-centered medical home. Even in a large health system, which bought the practice where Mambu spent 22 years.
"I thought being part of a large health system would be a model to help patients get this type of coordinated care," he says, explaining the sale.
In short, it wasn't.
He complains that the health system wasn't interested in the medical home, only the profitability of the practice.
"I left after 2 1/2 years," he says.
10 years ago, at the age of 52, he thought, "if I don't do it now, it'll never happen."
"It," was starting his own practice by hanging a shingle, putting an ad in the paper, hiring a scheduler and a nurse practitioner, and doing house calls. That happened in 2005.
He got involved with the American Academy of Family Physicians, which was planning a demonstration project on how to revamp primary care as a way to show the viability and value of the primary care physician in an era in which most young doctors were eschewing that career track in favor of specialization.
His was the only practice in the state to be selected. It's how he got his practice's electronic medical record, and it's where he developed a holistic method for treating chronic conditions among his patient population. After that demonstration ended in 2008, he got into a state-level medical home and chronic care initiative. The chronic care model backs into the patient centered medical home construct, he says.
"Patient centeredness doesn't mean doing what the patient wants. It's about having the time to reestablish a relationship and understand what's going on through the patient's eyes, and seeing the patient in the context of community and support systems," he says. "It means having the time to get to know the patient the way we used to do it before it became a volume business where it was necessary to see 40-50 patients a day."
He's hired two RNs who are "case managers slash health coaches slash office-based experts," he says. In addition, there is now a practice administrator and medical assistants.
In hindsight, he's glad the experiment with the hospital-owned practice didn't work out.
"Had they not mistreated me, I wouldn't have had the gumption to start my own practice and would have never gotten involved with this movement," he says. "It was expensive to do what we did, and there's no real reimbursement. Salaries haven't gone up, but we're not in it for making lots of money. I've always wanted to do this--it just took me 25 years."
Here's a news flash. Healthcare can be lucrative. Based on recent stock market action, you'd think most of the money is in raw materials such as oil, minerals, and metals. China, after all, needs them badly, and those companies have been going gangbusters for the past several years, with little pause for the great global economic crisis. But materials is old news, apparently. The new gold is being mined in healthcare.
I know what you're thinking. You might be struggling to keep your head above water with declining reimbursements, and for now, treating the uninsured is as big a problem as ever. Meanwhile, salaries for doctors and other medical talent aren't shrinking, and neither are your other fixed costs.
But if you look closely, Big Investment Money sees huge profit potential in this space. In fact, I doubt if there is any other industry that has this much potential. Why? Put simply, healthcare is behind other industries in rooting out inefficiency and waste. We all know that. But it's significantly behind. Technology could make a greater impact on efficiency in healthcare than any other industry it's tackled in a generation. It's complicated, sure, but the returns could be stratospheric.
My personal epiphany came when I noticed that Stanley Black & Decker, yes, that's right, the hand- and power-tool company, has decided that it can bring its expertise to healthcare. It's willing to spend big on acquisitions to go after that high return. Why should I be surprised? Microsoft and Google jumped in with both feet a couple of years ago. Who thought healthcare would be a profit center for them? Other nontraditional companies have entered the space in recent years as well, mainly on the consulting side. What does that tell you?
Many people are down on healthcare right now. Costs are astronomical, and patients are having to pay more out of their own pockets for services, leading to revenue problems at hospitals and physician practices. I could go on and on. In fact, finding problems to fix in healthcare is as easy as finding January snow in Minnesota. That's exactly why Big Investment Money sees opportunity.
Back to Stanley Black & Decker, which, incidentally, has had a healthcare solutions division since 2007 (who knew?). Anyway, it announced in December it will be spending $61.2 million to buy InfoLogix, a company that focuses on software and consulting solutions to help wring better prices on supplies for healthcare providers. For a Fortune 500 company, $61 million and change is a relative pittance, but it shows that even a company that has made its name in hand and power tools sees its future growth tied to a business in which it has historically had little presence.
At first glance, I didn't know if I wanted the same company that made the rechargeable hedge trimmer I got for Christmas handling my healthcare, but that's not really what they're doing. I'll bet they're experts at getting the waste out of their own production and parts sourcing. Healthcare could use a dose of that scrutiny.
And that's the bottom line. Companies that have long paid through the nose for healthcare costs that they thought were outrageously out of line with the rate of inflation probably figured there was some expertise that was lacking in the business, and that there was no reason they couldn't provide it. After a little thinking, I agree with them.
Stanley is hardly alone. Things are moving fast in healthcare, and the big money is flowing. As I wrote a couple of weeks ago, Community Health Systems is very interested in buying Tenet, though their offering price seems a little low, and a recent survey by Pepperdine University shows that private equity investments in healthcare will take off significantly in 2011.
It might seem strange that in a time where people are cutting back on healthcare expenditures because more is coming out of their own pockets, companies are itching to get in, but I'd follow the money in this case. It's usually right.
It's the beginning of a new year, and if you're like me, you're glad to put the past one well behind you. Personally, my family and I had a move, a flood, and a bunch of other crazy stuff happen to us this year, so we're turning the page. I'm sure you're doing that as well.
Now that you've had a few months to digest some of the big changes coming to the industry, you've probably got at least an idea of the key strategies on which your organization's success will depend this year and in the long-term future. But just in case you hadn't considered some of the following broad themes, here are a few ideas at some resolutions you might want to make for the new year.
1. Bring risk back into your financial equations
At least since the days of capitation in the middle of the last decade, many healthcare providers (and I use that term to include any entity that provides a healthcare service) haven't had to worry about risk. There are exceptions, of course, but by and large, you've negotiated prices for certain services with major commercial payers and you got what you got from Medicare and Medicaid. But for the most part, you haven't been responsible for quality or outcomes.
As healthcare reform legislation matures, that's changing rapidly not only for government payers, but also for commercial payers, who are placing ever more conditions on payment for services, depending on how well the patient does following the service. It's the reason for the word "accountable" in the latest buzz term that's scaring everyone to death—the accountable care organization. Speaking of which…
2. Learn from the best (and from their mistakes)
Keep a close eye on the accountable care pilot programs and demonstration projects going on at health systems across the country.
Even if you're not participating, these systems can offer broad opportunities for learning what works and what doesn't in the new reimbursement environment. If your organization is not involved in one of those programs, it might not be a bad idea to run through your Rolodex (or Outlook contact list or Blackberry, if you prefer) for professional contacts at those institutions who may be involved with creating the structures of the future.
Place a quick call to renew ties and talk a little bit about the strategies they're testing. Where are they having success, and where are the challenges? Best of all, you don't have to invest the dollars right now until best practices start to shake out. But again, don't wait too long. While others are experimenting, your organization can also do some experimentation on ways to redesign care and realign economic incentives.
3. Investigate how consolidation might help you
This doesn't have to be a full financial merger. But given the fact that reimbursement will be increasingly tied to efficiency and quality, a merger might not be the worst thing to investigate in the new year. Scale will matter, even if it seems it doesn't right now. In one recent conversation I had with a CEO, he mentioned that in the very near future, all healthcare providers, whether they be clinics, hospitals or health systems, will be either buyers or sellers. In many cases recently, that future is now.
Which will you be? If neither, perhaps you are ignoring reality. Perhaps you're a wallflower as the dance begins, looking for the perfect partner. Just be sure that you're not left on that wall waiting for the hottest prospect in the room while perfectly good matches go ignored.
4. Look at rearranging your leadership structure
We've seen lots of organizations—especially multi-hospital health systems—looking at reorganizing their leadership structures in a way that will focus on moving patients more efficiently through the system. For example, many are doing away with titles at individual hospitals within the system, such as the CEO, CFO, COO. Instead, they are appointing senior vice presidents (in some cases, these might be the very same people who were removed from individual hospital leadership functions) of business units, such as imaging, cancer care, physician practices, etc. Hospitals operate differently than physician practices, which many health systems and hospitals now own.
Why should someone with expertise running a hospital be in charge of running the physician practice? While there's still a CEO, CFO, and COO for the whole system, of course, it's a way to capture that sense of "systemness" that is elusive, but that leaders are always talking about. The hospital, after all, is no longer the center of the healthcare experience. Yes, it's a way of breaking down silos but it's also a smarter way to establish that better helps accomplish the goals of the kingdom rather than the fiefdom.
If you were out Christmas shopping the week before the big day, you might've easily missed the latest salvo in a fight that doesn't come to healthcare too often. Of course I'm referring to the increasingly hostile attempt by Community Health Systems, based just down the road from where I write in Franklin, TN, to take over previously troubled but now well-rehabbed Tenet Healthcare Corp., headquartered in Dallas.
This thing's a shooting war now, and there's a lot of money at stake as the two for-profit hospital chains battle for market share.
Community went public with its bid to acquire Tenet on Dec. 10, a move that proved an immediate shock to the market. Community has consistently worked under the radar nationally. It usually acquires hospitals in the ones, twos and threes, although it has been known to do a large deal or two over the years—Triad comes to mind. It also generally makes acquisitions in markets it can dominate—the markets it covets are usually rural, but not rural enough to be critical access. The markets they're interested in are also usually growing. But if this $3.3 billion acquisition were to go through, they'll get those markets, but also others in big cities and in declining population markets. However, there is precedent for how Community would divest some of those Tenet hospitals. It did the same when it digested Triad a few years back.
It would be no small acquisition. The proposed deal, which Tenet management wholeheartedly advises against, sent Tenet shares up 55% on the first day after it was announced. Giving credence to Tenet management's contention that the deal significantly undervalues the company, Community's shares rose more than 13% that same day. Further, the deal would make Community the nation's largest hospital operator in terms of number of hospitals. The combined Tenet/Community would have 176 hospitals to HCA's 150.
Make no mistake. Tenet's attractive. It's recovered nicely since a Medicare scandal in the early part of the decade, and its much publicized poor handling of the situation at its hospitals in New Orleans following the Hurricane Katrina disaster.
Outside of public relations, Tenet's CEO, Trevor Fetter, has Tenet humming. It's about to turn free-cash-flow positive for the first time in a long time, and has made huge progress in cost cutting and quality.
Remember, the company's current board has already said "no thanks" to Community. It was revealed after the public announcement that the two companies had at least had private conversations about an acquisition as far back as Nov. 12, but obviously did not make any progress, as Community decided to let the market weigh in by publicly announcing the bid at the original price it offered to Tenet a month prior. It was the first step in a hostile takeover bid.
Here's the next step. We don't know how many shares of Tenet Community has been able to buy on the open market prior to now, but they intend to use them to try to nominate friendly people to Tenet's board at the company's next annual meeting. They'll encourage other large shareholders who hold Tenet shares to vote for those folks too in the hopes that they'll get the votes necessary.
As the new year is upon us, the fight is getting more spirited. On Dec. 20, Tenet issued its latest response to the offer, below:
"We believe that Community Health intends to nominate candidates for election to the Tenet Board of Directors solely to help advance its inadequate and opportunistic proposal to acquire Tenet. As announced on December 9, 2010, the Tenet Board, after consultation with its financial and legal advisors, unanimously determined that the Community Health proposal to acquire Tenet for $6.00 per share in cash and stock grossly undervalued Tenet and was not in the best interests of Tenet or its shareholders. Tenet shareholders – not Community Health – deserve to benefit from Tenet's growth as we continue to expand margins and benefit from the strategic investments we are making in our business. We are confident that the continued execution of our plan will deliver significantly more value to our shareholders than Community Health's inadequate proposal."
I can't remember a hostile takeover attempt in healthcare before, yet we have one now. What's changed? Well, to start, very many of the previously uninsured are going to get coverage, albeit at a low rate of reimbursement. The way to make that work if you're a hospital operator: scale—plain and simple.
Here's something all of this excitement tells me. Don't believe what all the naysayers say about healthcare reform transforming the industry it regulates into a profitless backwater in the American economy. That's clearly not the case, as these smart people on both sides of this proposed deal already know.
Here's something else. This deal is far from being dead. Others are likely to offer Tenet a deal, including private equity. And don't rule out Community. They may still be able to get the deal done-- it'll probably just get done at a higher price.
Same as your next artificial hip, pacemaker or stent.
Athletes with millions of dollars resting on the outcome of their surgeries trust him, and have for a couple of decades now. And though he made his money and fame in surgery, in recent years, and as the end of his career approaches, Andrews is spending an awful lot of time, money, and effort on prevention.[Read more]
"We're all for sports—they're the greatest thing in the world for our kids—but the motto is to keep kids on the playing field and out of the operating room."
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 James Andrews' story.
He's arguably the godfather of a subspecialty in healthcare that pioneered minimally invasive surgical techniques for shoulders, elbows, and knees using the arthroscope and magnetic resonance imaging that are now frequently used in surgeries far outside the orthopedic sphere.
He's also world-famous for being the go-to guy for injured super-athletes with multimillion-dollar contracts.
You'd think that man would be a little more self-aggrandizing, and, well, egotistical. But you'd be very wrong.
In fact, you get the feeling that Andrews talks to the media because he knows it's necessary to help achieve his goals on sports injury prevention, but what he's really interested in is the next case. In fact, HealthLeaders caught up with him between two surgeries.
Athletes with millions of dollars resting on the outcome of their surgeries trust him, and have for a couple of decades now. James Andrews, MD, whose name is almost always mentioned in association with surgeries on franchise athletes such as Washington Redskins quarterback Donovan McNabb, New Orleans Saints quarterback Drew Brees, or St. Louis Cardinals slugger Albert Pujols, has become a celebrity himself.
"You have to take the celebrity in stride. I've never let that interfere with my basic core values to take care of people at all levels," he says. "In fact, it's added pressure to my life and added extra workload."
Sucked into the spotlight, Andrews is content to give a lot of the credit for his success to his team, which he compares to a NASCAR pit crew. It consists of his physician partners in his two practices in Birmingham, AL, and Gulf Breeze, FL, his PR man, the chief of his charitable foundation, the 11 fellows he takes on at his two practices each year. Soon, he's talking about the importance of the secretaries and the maintenance personnel before a reporter is able to return to the focus of the interview—him and his work.
Despite the obvious value of his service to high-paid athletes, none of that is why Andrews is on the HealthLeaders 20 list for 2010. Though he made his money and fame in surgery, in recent years, and as the end of his career approaches, Andrews is spending an awful lot of time, money, and effort on prevention. It's the sort of work that provides a good example for hospitals that are struggling to find ways to integrate prevention into their processes as reimbursement begins to shift away from the fee-for-service model.
"For years we've spent most of our efforts in developing surgical techniques to fix athletic injuries, but we've been neglecting the prevention area," he says. "But prevention is more important than treatment."
Truthfully, this isn't a recent shift for Andrews. He's been working to prevent injuries in youth sports for about 10 years, ever since the founding of the American Sports Medicine Institute in Andrews' adopted hometown of Birmingham, AL. The difference now is, he says, "finally, it seems people are really ready to get involved in prevention of injuries for our young kids."
The problem, he says, is reflected in a five- to sevenfold increase in youth sports injuries since 2000.
"Prevention is common sense if you understand the risk factors, but that education is a massive job," he says. "We'll never prevent all injuries, but it'll take us 10 years to get the injury rates back down where they're acceptable. We're all for sports—they're the greatest thing in the world for our kids—but the motto is to keep kids on the playing field and out of the operating room."
ASMI offers education, training programs, and conferences for parents, nurses, coaches, and athletes to help get the information out. Last year, as president of the American Orthopedic Society of Sports Medicine, Andrews initiated a national program called the STOP (Sports Trauma and Overuse Prevention) campaign, and pediatricians, nurses, physical therapists, and others have gotten behind this campaign to try to educate parents, grandparents, national media, coaches, and athletes about the statistics surrounding sports injuries. As its name suggests, overuse has become a significant concern as kids move increasingly toward playing one sport year-round. Its website, offers loads of educational information about injuries attributed to activities particular to specific sports, and offers guidelines for guardians about preventing injuries that require surgery—an outcome that can end a kid's athletic dreams much too early.
"We have to change the system in some 20 sports that are involved in this campaign. It's a massive job," Andrews says.
Some of his admittedly little time away from the OR is spent helping to recruit medical talent to STOP's scientific advisory board. Those people add to the information and learning opportunities about sports injuries and how they develop.
"That's my passion and really what I'm proud of," he says.
Asked how he manages to treat all his patients the same regardless of their celebrity, Andrews has a simple credo that should work whether one is an accomplished surgeon or, for example, a hospital senior leader.
"Show a lot of confidence, don't make it too complicated, and don't beat around the bush," he declares. "People can read between the lines if you don't act like you know what you're doing."
Listen to a conversation with Kerry Shannon, senior managing director with FTI Healthcare, about changing board constructs in healthcare. She contends that many healthcare boards need to re-engineer themselves not only so that they understand their fiduciary responsibility, but also so that they increasingly take on responsibility for the strategic direction and parameters of the organization. She has some fascinating ideas on how that might be done without intruding on management’s turf. [Sponsored by FTI Healthcare]
Experts have been predicting consolidation in the healthcare industry for years, but it's never really happened on the scale the soothsayers anticipated. But now, they may finally be right. I know, it's a little like the boy who cried "wolf" to say that it's different this time, but I believe it, for a variety of reasons. Two announcements that came blowing out of Kentucky last month have convinced me it's for real this time.
Maybe you missed the early signs of a wave of consolidation in healthcare, brought about in large part because of the healthcare reform legislation that passed earlier in the year. I know I missed it initially. During all the craziness surrounding the November elections, it was easy to get distracted.
In this case, it happened in Kentucky, in two separate moves that basically divide the state into two large regional health systems, each with an academic side. Some would take issue with that characterization, but here are the particulars:
Lexington-based UK HealthCare and Norton Healthcare, the Commonwealth's largest health system, have announced their intent to formalize a longstanding working relationship through an "alliance" to bolstering teaching and clinical programs.
The nonprofit companies that operate three of Kentucky's largest hospital networks—Saint Joseph Health Systems, University of Louisville Hospital, and Jewish Hospital—intend to merge under an agreement approved by U of L trustees in November. They hope to complete the merger within a year.
Apparently, the state's hospital systems aren't waiting for new guidelines from the Federal Trade Commission to partner up in combinations that certainly would have raised antennas at the agency in the recent past. The Patient Protection and Affordable Care Act apparently has changed everything.
The Jewish-Louisville-St. Joseph merger brings together systems that control 42% of the market share in Louisville and 21.8% of the of the market share in Lexington, according to a story in the Lexington Herald-Leader. Not only does such a potential combination hold a powerful negotiating stance with state payers, but more importantly, it sends a message that system-ness, going forward, also means market share within a state or region within that state (they've only signed letters of intent to this point).
How do I come to that conclusion? Well, St. Joseph and its two locations in Lexington are currently part of Catholic Health Initiatives, a multi-state, Denver-based system that includes 73 hospitals. So they're not doing the merger primarily to gain access to capital or talent, one of many reasons hospitals have joined with larger systems in the past.
It's a market share play for Louisville to acquire Jewish, which lost money in 2009, and St. Joseph. CHI will add $300 million to the merged systems on top of contributing the assets of the two St. Joseph hospitals in Lexington, which shows why Louisville would be willing to take on those hospitals as well. When complete, the Herald-Leader says, the combined system will be within the geographic reach of two thirds of Kentuckians.
On the other side, and happening almost simultaneously, is the clinical "merger" between Louisville's Norton and UK Healthcare, based in Lexington. Though it's not a financial merger, at least not yet, the two systems will work together clinically to develop a "statewide system of care."
These events are touted as ways to improve healthcare in the state, but why now? Of course, the kicker is that now there's a financial incentive as well. Effectively, the federal government has forced these actions, for better or for worse. It's why the FTC has announced it's reforming the guidelines by which they will evaluate mergers.
The new law has forced collaborations that will provide high quality care while emphasizing efficiency and limiting duplication of services, and the FTC has gotten the message that it's to back off. These moves signal that the dance floor is apparently open, the band is tuning up, and organizations are finding dance partners…quickly.
Listen to HealthLeaders Media's Philip Betbeze's conversation with Paul Hanson, president and CEO of North Country Health Services in Minnesota, about the smaller system's recent decision to merge with South Dakota's Sanford Health. It's a fascinating discussion about a trend—consolidation—that's slowly picking up steam. [Sponsored by FTI Healthcare]