The challenges many community hospitals face have become so unrelenting as to threaten long-term financial viability. It’s important that this threat be met with prompt action and operational changes that can improve the immediate situation as well as sustainability. A formal turnaround plan includes analyses and actions, and becomes a roadmap to redirect hospitals and help them stay on track to serve as community resources for years to come.
JK: Leaders from ailing community hospitals sometimes don’t recognize the severity of their problems or that certain indicators call for quick, corrective action. Some common alarm signals that leaders may tune out at first include a downward trend of days cash on hand, shifts in patient volume across the delivery spectrum, medical staff dissatisfaction or defection, and even bond covenant concerns. Recognizing that problems need to be addressed and changes must be made is the first step toward improvement.
JK: Typically, the process starts with an operational assessment to evaluate strategy, operations, supply chain, revenue cycle and leadership with the aim of reducing costs and increasing revenue—the tried-and-true formula for financial solvency. The analysis includes a review of data and documents, as well as interviews with board, executive and physician leaders. The process reveals any organizational problems or vulnerabilities that aren’t immediately apparent, and it forms the basis for a turnaround plan, including a detailed action plan. An open mind and fresh perspective are important to be able to see options to go beyond operations as they have always been.
JK: Almost every hospital has room to improve staff productivity. Labor is a hospital’s greatest expense, so optimizing productivity by having the right number and mix of staff can make a big impact. Community hospitals that do not have a productivity tool to achieve and maintain the right staffing levels can typically find savings of 15 to 20 percent in salaries and benefits by implementing a tool. In those hospitals where there’s already some productivity monitoring, implementing a more effective tool or improving processes can result in 5 to 10 percent savings. After labor, supply costs are the second highest expense for a hospital, so that’s another key focus area for cost reduction and savings. Industry benchmarks show that many community hospitals have an opportunity to reduce supply costs by as much as 20 percent.
Assessing revenue cycle is also imperative to help identify, monitor and collect every dollar a hospital is due. Gains can be made in this area by renegotiating health plan contracts, streamlining billing for faster payment, auditing medical record coding and reviewing the chargemaster.
JK: Hospitals can potentially identify significant cost-saving opportunities by comparing themselves to hospitals of similar size and volume. Comparing clinical, operational and financial data also identifies areas for improvement and where to allocate time and money for improvement initiatives. For example, a CHC-managed hospital that recently underwent a successful turnaround had discovered through benchmarking that its staff ratios were higher and its benefits were more expensive compared to similar hospitals. This information prompted leaders to take a closer look at the hospital’s situation, and they found it made sense from a sustainability perspective to downsize staff and bring benefit packages to competitive levels. These actions slashed the hospital’s annual expenses by $5.3 million.
JK: It’s a collaborative process requiring the participation of the board of trustees, executive leaders, physician leaders, and in many cases an outside management firm to evaluate the situation and develop a specific plan of action. As we discussed, leaders of struggling hospitals usually see the need for improvement but don’t recognize the severity of their situation. Because of that blind spot, it’s often external stakeholders or bondholders who set corrective action in motion by seeking outside assistance.
The top executive of Erlanger Health System, based in Chattanooga, Tennessee, has left the organization after months of smoldering conflict with some of the nonprofit’s physicians.
President and CEO Kevin Spiegel’s departure was immediate, according to a statement released Wednesday by board chairman Mike Griffin, who offered his well-wishes to the departing leader.
Spiegel, who had been on the job more than six years, reportedly said his separation from the organization was a mutual decision.
“We’re still working out the details, and hopefully that’ll be complete by the board meeting in two weeks,” Spiegel told the Times Free Press‘ Elizabeth Fite. “This is a great hospital, and it’s a great organization, and it’s only going to do better and better things.”
Erlanger’s board is expected to pick Spiegel’s successor in two weeks, at its regularly scheduled board meeting, according to Griffin’s statement.
Spiegel’s exit comes less than two weeks after the board held a special public meeting to talk about physicians’ concerns and criticism of Erlanger’s senior leadership team.
Spiegel is the third high-ranking Erlanger executive to leave since Fite reported in June on a letter from the Medical Executive Committee explaining its reasons for a unanimous vote of “no confidence” in the current executive leadership team. The other two were Executive Vice President and Chief Operating Officer Rob Brooks and Vice President of Patient Safety and Quality Pam Gordon.
Spiegel has been credited with leading Erlanger out of choppy financial waters, but he has also been caught up in a number of controversies, as the Times Free Press reported.
In part 1 of an executive interview series, CEO and physician Wyatt Decker discusses his perspectives on today’s challenges and opportunities for reinventing health care.
IMAGINE THIS SCENARIO: there are 200 people in a room and each person has a serious health condition. Cost is not a barrier to each of these people receiving their prescribed treatment. A question is asked — how many of you would book a flight to a different country to get your care? You guessed it. No hands go up.
Dr. Wyatt Decker is chief executive officer of OptumHealth and an emergency medicine physician who brings more than two decades of service within the Mayo Clinic. He held dual roles as chief medical information officer for Mayo Clinic and CEO of Mayo Clinic in Arizona. Dr. Decker often conducts this experiment with audiences to underscore the quality of care delivered in the United States. We often hear about the problems of health care. No doubt, there are deep and serious problems. However, in scenarios like the one above, we understand that the quality of care delivered by our nation’s physicians is among the finest available. So why do we hear so much about what’s wrong?
According to Dr. Decker, the real opportunities for reinventing health care lie in improving system access, increasing affordability and meeting consumer preferences. “ All of these things really require us to think deeply about how health care is delivered and how can we do it better,” he says. In part 1 of a recent conversation, Dr. Decker shares lessons learned and offers his perspective on where today’s health care executives and clinical leaders should focus.
What is your take on the state of the health care industry today? What challenges are driving the need to rethink health care systems and delivery?
THE CHALLENGE OF HEALTH CARE ACCESS: “ People want to get to a doctor or a health care team and they can’t. Either because they are underinsured or they don’t have the financial resources. They don’t know where to go or sometimes there just aren’t enough doctors or the right type of doctor, whether it’s primary care or a specialist available in their area to see.”
THE CHALLENGE OF HEALTH CARE AFFORDABILITY:
“ We hear a lot about affordability of health care and outof-pocket cost can be very high, but also the health care system itself is very expensive. So how do we make it more affordable for large employers, individuals, consumers and even the government itself? Can we get on a more sustainable path?”
THE CHALLENGE OF CONSUMER PREFERENCES: “ Most people who’ve experienced the health care system feel that it isn’t focused around their needs, schedules or preferences. We’re entering an era where in most other industries there’s lots of personalization and consumer focus. Health care has been very slow to evolve. We need to make it an experience where people feel appreciated, valued and respected. Not just that they’re getting great quality care, but also that their preferences and needs are being met.”
“ Our nation’s care providers are deeply committed and among the best-trained in the world. But I also see them in a system that is struggling. Emergency departments are, at times, the last resort for people who lack resources and access to care. I’ve seen patients struggle to manage chronic conditions without the right support and how the absence of good guidance can create confusion.”
Clearly, the need to reinvent in all aspects of health care is top of mind for many. But it can be difficult to figure out where to start. Can you discuss where you think it’s smart for leaders to focus?
“ We should all be thinking about how we drive towards a health care system that really creates and adds value to people’s lives,” says Dr. Decker. Here’s his advice on key areas of focus.
PAYMENT MODELS: “ Move towards payment models that actually reward the correct behaviors in health care. What do I mean by that? The pay-per-value model — rewarding groups of providers to keep people well and healthy — is far more powerful than the traditional fee-for-service model.”
LOCAL ECOSYSTEMS: “ Recognize that health care is local. It’s important to create ecosystems that deliver great, connected care for individuals throughout the health spectrum. This means the patient and their health data move seamlessly between specialists, hospitals, ambulatory care centers, and so on. These kinds of networks and interoperability of data is crucial to create a successful health care system.”
SOCIAL DETERMINANTS OF HEALTH: “ Health care outcomes are driven not only by the quality and capabilities of the health care provider, but also by social determinants of health. Good health care addresses things like access to good nutrition, social connections, transportation and more that can limit the ability for a person to get and stay healthy. For example, in-home health visits to help patients who have difficulty traveling or easily obtained referrals to social and community services can really enable success.”
From your perspective, what could health care reinvention mean to a patient, provider or health plan?
TO PATIENTS: “ It means a health care system where instead of waiting for something to go wrong, there is a team helping you proactively flourish and be healthy. It means a simple phone call or an app or a video chat could advise you on when you might be at risk of developing a serious condition before you develop it. It means a system that is always there for you, almost like a guardian angel. It helps you navigate the system and your journey towards health and wellness. It means all of this in a health care system that is easy to access, affordable, high-quality and compassionate.”
TO PROVIDERS: “ Providers have high rates of frustration and even burnout with their own profession. Reinvention looks to reduce the very heavy clerical burden driving these trends. Doctors today spend about two hours of clerical and non-visit care for every hour of direct patient care that they provide. However, when you talk to doctors, they find the most fulfillment in engaging directly with patients and making a difference in their care. Reinvention means relieving exhausted providers of administrative and clerical duties that don’t bring enjoyment or result in improved care and outcomes.”
TO HEALTH PLANS: “ Health plans are frustrated because they pay for a lot of care that evidence shows doesn’t improve outcomes or help patients on their journey to health and wellness. Payers are happy to pay for health care if it’s necessary. But it doesn’t make sense to pay for care that doesn’t add value. Reinvention means reducing this financial waste to bring down the cost of coverage for everyone.”
“ We have an opportunity now to make the health care system work better for everyone. Improve access and affordability for patients, allow doctors to spend more time with patients, and increase efficiencies within health plans. There’s an opportunity to help people connect the dots and get everyone working together.”
You’ve been a practicing physician and a business leader. Tell us the lessons learned from this unique vantage point.
“ I have spent most of my career as a practicing physician in busy, level 1 trauma centers and emergency departments. In that environment, you see health care at its finest and also how the health system can be challenging. I think in amazement of the times I’ve seen teams of people — multiple physicians, nurses and technicians — come together as one unit to save someone from a major trauma. I also have great admiration for the persistence of doctors who save lives by diagnosing life-threatening conditions through nuanced symptoms.
I’m a deep believer that in health care, we need to place the patient at the center of everything we do. I always remind young doctors and medical students…imagine for a moment that your patient is you or a loved one. You’d want the doctor to listen and explain things in a compassionate and thoughtful manner. You’d want them to be focused. You’d want them to recognize your unique history and what’s important to you. The notion of putting the patient at the center of everything is something that I have carried with me throughout my career. I have also dedicated myself to developing better models of care and systems that allow doctors and care teams to function seamlessly, be high-performing and deliver great outcomes for patients.”
“ I have an appreciation for how powerful it can be when you work to reduce waste, create care that’s efficient and care that is patient-focused. Today I’m focused on an interesting juxtaposition — creating the right mix of scalable innovations that help our whole nation succeed in health care while also improving the personal and individual patient health care experience.”
STAY TUNED FOR PART 2 of this executive interview series to learn more about Dr. Wyatt Decker’s perspectives on the intersection of technology and health care, the human impact of transformation and physician burn-out.
‘All of us have allowed this crisis to grow,’ he wrote in a letter published Thursday in The New York Times.
Healthcare CEOs should put pressure on politicians without resorting to ‘blatant partisanship,’ he said.
Northwell Health President and CEO Michael J. Dowling isn’t done pushing fellow leaders of healthcare provider organizations to take political action in the aftermath of deadly mass shootings.
Dowling addressed healthcare CEOs in a “call to action“ published online last week by the Great Neck, New York–based nonprofit health system. Now he’s published a full-page print version of that letter in Thursday’s national edition of The New York Times, while reaching out directly to peers who could join him in a to-be-determined collective action plan to curb gun violence.
“To me, it’s an obligation of people who are in leadership positions to take some action, speak out, and prepare their organizations to address this as a public health issue,” Dowling tells HealthLeaders.
Wading into such a politically charged topic is sure to give some healthcare CEOs pause. Even if they keep their advocacy within all legal and ethical bounds, they could face rising distrust from community members who oppose further restrictions on firearms. But leaders have a responsibility to thread that needle for the sake of community health, Dowling says.
“I do anticipate that there’ll be criticism about this, but then again, if you’re in a leadership role, criticism is what you’ve got to deal with,” he says.
Dowling argues that healthcare leaders have successfully spoken out about other public health crises, such as smoking and drug use. But they have largely failed to respond adequately as gun violence inflicts considerable harm—both physical and emotional—on the communities they serve, he says.
“It is easy to point fingers at members of Congress for their inaction, the vile rhetoric of some politicians who stoke the flames of hatred, the lax laws that provide far-too-easy access to firearms, or the NRA’s intractable opposition to common sense legislation,” Dowling wrote in the print version of his letter. “It is far more difficult to look in the mirror and see what we have or haven’t done. All of us have allowed this crisis to grow. Sadly, as a nation, we have become numb to the bloodshed.”
His letter proposes a four-part agenda for healthcare leaders to tackle together:
The letter notes that the U.S. has nearly 40,000 firearms-related deaths each year and that several dozen people have died in mass shootings thus far in 2019, including 31 earlier this month in separate shootings in El Paso, Texas, and Dayton, Ohio.
The way for-profit companies think about their relationship with the communities in which they operate has been shifting for some time. The most recent evidence of that shift came earlier this week, when the influential Business Roundtable released a revised statement on the principles of corporate governance, responding to criticism over the so-called “primacy of shareholders.”
The 181 CEOs who signed onto the new statement said they would run their business not just for the good of their shareholders but also for the good of customers, employees, suppliers, and communities. There’s some similarity between that updated notion of corporate responsibility and the sort of advocacy work Dowling wants to see from his for-profit and nonprofit peers alike.
Every single organization has a social mission, and large organizations that have sway in a local community have a responsibility to the community’s health, Dowling says.
“A healthy community helps and creates a healthy organization,” he says.
One major factor that may be pushing more CEOs to take a public stance on politically sensitive issues—or at least giving them the cover to do so confidently—is the generational shift in the U.S. workforce. Although most Americans overall say CEOs shouldn’t speak out, younger workers overwhelmingly support such action, as Fortune‘s Alan Murray reported, citing the magazine’s own polling.
Dowling says he has received hundreds of letters, emails, and phone calls from members of Northwell Health’s 70,000-person workforce expressing support in light of his original letter published online last week.
“The feedback has been absolutely universal in support,” he says.
Even among healthcare professionals who agree it’s appropriate to speak out on politically charged topics, there’s sharp disagreement over which policies lawmakers should enact and whether those policies would infringe on the public’s Second Amendment rights.
The group Doctors for Responsible Gun Ownership (DRGO) rejects the premise of Dowling’s argument: “Firearms are not a public health issue,” the DRGO website states, arguing that responsible gun ownership has been shown to benefit the public health by preventing violent crime.
Dennis Petrocelli, MD, a psychiatrist in Virginia, wrote a DRGO article that called Virginia’s proposed red flag law “misguided” and perhaps “the single greatest threat to our constitutional freedoms ever introduced in the Commonwealth of Virginia.” His concern is that the government might be able to take guns away without any real evidence of a threat.
While gun rights advocates may see Dowling as merely their latest political foe, Dowling contends that he’s pushing for a cause that can peaceably coexist with the constitutional right to bear arms.
“You can have effective, reasonable legislative action around guns that still protects the essence of what many people believe to be the core of the Second Amendment,” Dowling says. “It’s not an either/or situation.”
Dowling isn’t, of course, the only healthcare leader speaking out about gun violence.
On the same day last week that Northwell Health published Dowling’s online call to action, Ascension published a similar letter from President and CEO Joseph R. Impicciche, JD, MHA, who referred to gun violence in American society as a “burgeoning public health crisis.”
“Silence in the face of such tragedy and wrongdoing falls short of our mission to advocate for a compassionate and just society,” Impicciche wrote, citing the health system’s Catholic commitment to defend human dignity.
The American Medical Association (AMA) and American College of Emergency Physicians (ACEP) each issued statements this month calling for public policy changes in response to these recent shootings, continuing their long-running advocacy work on the topic.
American Hospital Association 2019 Chairman Brian Gragnolati, who is president and CEO of Atlantic Health System in Morristown, New Jersey, said in a statement this month that hospitals and health systems “play a role in the larger conversation and are determined to use our collective voice to prevent more senseless tragedies.”
On his first day as CEO of the Carlsberg Group, a global brewery and beverage company, Cees ‘t Hart was given a key card by his assistant. The card locked out all the other floors for the elevator so that he could go directly to his corner office on the 20th floor. And with its picture windows, his office offered a stunning view of Copenhagen. These were the perks of his new position, ones that spoke to his power and importance within the company.
Cees spent the next two months acclimating to his new responsibilities. But during those two months, he noticed that he saw very few people throughout the day. Since the elevator didn’t stop at other floors and only a select group of executives worked on the 20th floor, he rarely interacted with other Carlsberg employees. Cees decided to switch from his corner office on the 20th floor to an empty desk in an open-floor plan on a lower floor.
When asked about the changes, Cees explained, “If I don’t meet people, I won’t get to know what they think. And if I don’t have a finger on the pulse of the organization, I can’t lead effectively.”
This story is a good example of how one leader actively worked to avoid the risk of insularity that comes with holding senior positions. And this risk is a real problem for senior leaders. In short, the higher leaders rise in the ranks, the more they are at risk of getting an inflated ego. And the bigger their ego grows, the more they are at risk of ending up in an insulated bubble, losing touch with their colleagues, the culture, and ultimately their clients. Let’s analyze this dynamic step by step.
As we rise in the ranks, we acquire more power. And with that, people are more likely to want to please us by listening more attentively, agreeing more, and laughing at our jokes. All of these tickle the ego. And when the ego is tickled, it grows. David Owen, the former British Foreign Secretary and a neurologist, and Jonathan Davidson, a professor of psychiatry and behavioral sciences at Duke University, call this the “hubris syndrome,” which they define as a “disorder of the possession of power, particularly power which has been associated with overwhelming success, held for a period of years.”
An unchecked ego can warp our perspective or twist our values. In the words of Jennifer Woo, CEO and chair of The Lane Crawford Joyce Group, Asia’s largest luxury retailer, “Managing our ego’s craving for fortune, fame, and influence is the prime responsibility of any leader.” When we’re caught in the grip of the ego’s craving for more power, we lose control. Ego makes us susceptible to manipulation; it narrows our field of vision; and it corrupts our behavior, often causing us to act against our values.
Our ego is like a target we carry with us. And like any target, the bigger it is, the more vulnerable it is to being hit. In this way, an inflated ego makes it easier for others to take advantage of us. Because our ego craves positive attention, it can make us susceptible to manipulation. It makes us predictable. When people know this, they can play to our ego. When we’re a victim of our own need to be seen as great, we end up being led into making decisions that may be detrimental to ourselves, our people, and our organization.
An inflated ego also corrupts our behavior. When we believe we’re the sole architects of our success, we tend to be ruder, more selfish, and more likely to interrupt others. This is especially true in the face of setbacks and criticism. In this way, an inflated ego prevents us from learning from our mistakes and creates a defensive wall that makes it difficult to appreciate the rich lessons we glean from failure.
Finally, an inflated ego narrows our vision. The ego always looks for information that confirms what it wants to believe. Basically, a big ego makes us have a strong confirmation bias. Because of this, we lose perspective and end up in a leadership bubble where we only see and hear what we want to. As a result, we lose touch with the people we lead, the culture we are a part of, and ultimately our clients and stakeholders.
Breaking free of an overly protective or inflated ego and avoiding the leadership bubble is an important and challenging job. It requires selflessness, reflection, and courage. Here are a few tips that will help you:
Michael Drobot, former owner and CEO of Pacific Hospital in Long Beach, Calif., is currently imprisoned for his role in a kickback scheme, and prosecutors say he has now agreed to plead guilty to new charges.
Mr. Drobot pleaded guilty to charges of conspiracy and paying illegal kickbacks in 2014. He admitted paying millions of dollars in bribes to physicians in exchange for referring thousands of patients to his hospital for spinal surgeries. He was one of several defendants charged for their roles in the kickback scheme, which resulted in the submission of more than $950 million in fraudulent claims.
In January 2018, Mr. Drobot was sentenced to more than five years in prison and ordered to forfeit $10 million to the government, which included the profits from the sale of a 1965 Aston Martin, a 1958 Porsche and a 1971 Mercedes-Benz. Federal prosecutors allege Mr. Drobot violated the order by transferring the Aston Martin to an auction company. Profits from the sale of the vehicle were allegedly transferred to Mr. Drobot’s personal bank account and used for personal expenses, according to MyNewsLA.com.
Prosecutors charged Mr. Drobot with wire fraud, engaging in monetary transactions in property derived from unlawful activity and criminal contempt of court. He is expected to plead guilty to the new charges, which carry a maximum sentence of 50 years, in coming weeks, according to the report.