Alignment between CEOs and CFOs has become even more essential during the pandemic.
Many health systems halted elective surgeries earlier this year at the height of the pandemic to conserve resources while caring for COVID-19 patients. Now, in many areas, those procedures are returning and hospitals are slowly resuming more normal operations. But damage has been done to the hospital’s bottom line. Moving forward, the relationship between top executives will be crucial to make the right decisions for patients and the overall health of their organizations.
During the Becker’s Healthcare CEO+CFO Virtual Forum on Aug. 11, CEOs and CFOs for top hospitals and health systems gathered virtually to share insights and strategies as well as discuss the biggest challenges ahead for their institutions. Click here to view the panels on-demand.
Here are six takeaways from the event:
1. The three keys to a strong CEO and CFO partnership are trust, transparency and communication.
2. It’s common for a health system CEO and CFO to have different priorities and different opinions about where investments should be made. To help come to an agreement, they should look at every decision as if it’s a decision being made by the organization as a whole and not an individual executive. For example, there are no decisions by the CFO. There are only decisions by the health system. The CFOs said it’s important to remember that the patient comes first and that health systems don’t exist to make money.
3. Technology has of course been paramount during the pandemic in terms of telehealth. But so are nontraditional partnerships with other health systems that have allowed providers to share research and education.
4. When it comes to evaluating technology, there’s a difference between being on the cutting edge versus the bleeding edge. Investing in new technology requires firm exit strategies. If warning signs show an investment is not going to give the return a health system hoped for, they need to let go of ideals and stick to the exit strategy.
5. Communication and transparency with staff and the public is key while making challenging decisions. Many hard decisions, including furloughs or personnel reductions, were made this spring to protect the financial viability of healthcare organizations. These decisions, which were not made lightly, were critiqued highly by the public. One of the best ways to ensure the message was not getting lost in translation and to help navigate the criticism included creating a communication plan and sharing that with employees, physicians and the public.
6. The pandemic required hospitals to think on their feet and innovate quickly. Many of the usual ways to solve a problem could not be used during that time. For example, large systems had to rethink how to acquire personal protective gear. Typically, in a large health system amid a disaster, when a supply item is running low, organizations can call up another hospital in the network and ask them to send some supplies. However, everyone in the pandemic was running low on the same items, which required innovation and problem-solving that is outside of the norm.
As Warren Buffett turns 90, the story of one of America’s most influential and wealthy business leaders is a study in the logic and discipline of understanding future value.
Patience, caution, and consistency. In volatile times such as these, it may be difficult for executives to keep those attributes in mind when making decisions. But there are immense advantages to doing so. For proof, just look at the steady genius of now-nonagenarian Warren Buffett. The legendary investor and Berkshire Hathaway founder and CEO has earned millions of dollars for investors over several decades (exhibit). But very few of Buffett’s investment decisions have been reactionary; instead, his choices and communications have been—and remain—grounded in logic and value.
Buffett learned his craft from “the father of value investing,” Columbia University professor and British economist Benjamin Graham. Perhaps as a result, Buffett typically doesn’t invest in opportunities in which he can’t reasonably estimate future value—there are no social-media companies, for instance, or cryptocurrency ventures in his portfolio. Instead, he banks on businesses that have steady cash flows and will generate high returns and low risk. And he lets those businesses stick to their knitting. Ever since Buffett bought See’s Candy Shops in 1972, for instance, the company has generated an ROI of more than 160 percent per year —and not because of significant changes to operations, target customer base, or product mix. The company didn’t stop doing what it did well just so it could grow faster. Instead, it sends excess cash flows back to the parent company for reinvestment—which points to a lesson for many listed companies: it’s OK to grow in line with your product markets if you aren’t confident that you can redeploy the cash flows you’re generating any better than your investor can.
As Peter Kunhardt, director of the HBO documentary Becoming Warren Buffett, said in a 2017 interview, Buffett understands that “you don’t have to trade things all the time; you can sit on things, too. You don’t have to make many decisions in life to make a lot of money.” And Buffett’s theory (roughly paraphrased) that the quality of a company’s senior leadership can signal whether the business would be a good investment or not has been proved time and time again. “See how [managers] treat themselves versus how they treat the shareholders .…The poor managers also turn out to be the ones that really don’t think that much about the shareholders. The two often go hand in hand,” Buffett explains.
Every few years or so, critics will poke holes in Buffett’s approach to investing. It’s outdated, they say, not proactive enough in a world in which digital business and economic uncertainty reign. For instance, during the 2008 credit crisis, pundits suggested that his portfolio moves were mistimed, he held on to some assets for far too long, and he released others too early, not getting enough in return. And it’s true that Buffett has made some mistakes; his decision making is not infallible. His approach to technology investments works for him, but that doesn’t mean other investors shouldn’t seize opportunities to back digital tools, platforms, and start-ups—particularly now that the COVID-19 pandemic has accelerated global companies’ digital transformations.
Still, many of Buffett’s theories continue to win the day. A good number of the so-called inadvisable deals he pursued in the wake of the 2008 downturn ended paying off in the longer term. And press reports suggest that Berkshire Hathaway’s profits are rebounding in the midst of the current economic downturn prompted by the global pandemic.
At age 90, Buffett is still waging campaigns—for instance, speaking out against eliminating the estate tax and against the release of quarterly earnings guidance. Of the latter, he has said that it promotes an unhealthy focus on short-term profits at the expense of long-term performance.
“Clear communication of a company’s strategic goals—along with metrics that can be evaluated over time—will always be critical to shareholders. But this information … should be provided on a timeline deemed appropriate for the needs of each specific company and its investors, whether annual or otherwise,” he and Jamie Dimon wrote in the Wall Street Journal.
Yes, volatile times call for quick responses and fast action. But as Warren Buffett has shown, there are also significant advantages to keeping the long term in mind, as well. Specifically, there is value in consistency, caution, and patience and in simply trusting the math—in good times and bad.
Problems with the government’s rationale for authorizing use of convalescent plasma in COVID-19 patients go far beyond the dustup over the purported 35% survival benefit cited by top officials on Sunday, numerous researchers say.
That figure quickly came under fire, leading to an apology from Commissioner Stephen Hahn, MD — but that’s not the only criticism leveled at the FDA’s analysis of the available data.
Much of it came from the Mayo Clinic and FDA expanded access program (EAP), at this point published only as a preprint manuscript. Although a large number of patients were included, the study was observational only, with no untreated control group. That makes the findings merely hypothesis-generating, and can’t offer any firm conclusions.
That’s fine for issuing an emergency use authorization (EUA), but not so much for making claims about survival benefit, independent researchers said.
“It’s not even a question of overstating,” Adam Gaffney, MD, MPH, a critical care doctor and health policy researcher at Harvard Medical School, told MedPage Today. “You can’t state much at all when you don’t have a randomized controlled trial.”
“People have made a big deal of Hahn referring to relative versus absolute risk reduction, but I think that’s less of a big deal,” Gaffney said. “The biggest problem is that the data they are citing … is not randomized. That’s the source of all the problems.”
Hahn took heat for saying that a “35% improvement in survival is a pretty substantial clinical benefit” further explaining that of “100 people who are sick with COVID-19, 35 would have been saved because of the administration of plasma.”
Critics rapidly took to Twitter, stating that the interpretation was incorrect. Hahn was referring to relative risk reduction, not absolute risk reduction. Thus, calculating the number of lives saved — which isn’t something experts recommend doing based on observational data in the first place — would have translated to somewhere more in the ballpark of 5 out of 100.
Moreover, the “risk reduction” came from a comparison of patients treated with high-titer plasma versus those receiving lower-titer preparations. The study offered no basis for concluding how many patients may have been “saved” relative to standard care.
And the 35% reduction in that analysis was for 7-day mortality; the relative reduction at 30 days was only 23%.
Hahn’s recital of the 35% figure “was just PART of the error,” tweeted Vinay Prasad, MD, MPH, of the University of California San Francisco. “The entire comparison is flawed. It is not a suitable control. The data don’t show anything useful.”
“The much broader problem here is the lack of commitment to performing large, national randomized controlled trials,” Gaffney said. “We could have done it for convalescent plasma. Instead, we did the EAP. I understand why people wanted it, but now we don’t know [if convalescent plasma works]. We have a question mark instead of a period.”
Undermining Trust in FDA?
Critics have charged that serious mistakes like Hahn’s misstatement could undermine FDA’s credibility, especially as it faces challenging decisions about potentially approving a vaccine this fall.
“This is playing out in the context of a hyper-politicized moment,” Gaffney said. “It behooves everyone to be extremely cautious in speaking about these things to avoid the appearance of politicization.”
On CBS This Morning on Tuesday, Hahn addressed concerns about politicization by offering reassurance to the “American people that this decision was made based upon sound science and data.”
In response to questions about the timing of the EUA announcement — it came just a day after President Donald Trump tweeted allegations that the “deep state” was holding back access to COVID-19 treatments with Hahn’s Twitter handle cited, and a day before the Republican National Convention got underway — Hahn said the agency had been working on the application for 3 or 4 weeks and was waiting on additional validation data, which were received at the end of last week and over the weekend.
“We’re going to continue to get data and as we’ve done with any other authorization, we will update that decision as new data come,” Hahn said on the news program. His agency initially issued an EUA for hydroxychloroquine, for instance, but later revoked it when the negative randomized trial data became available.
Lack of Access to FDA’s Data Review
Whether the public will ever see the full convalescent plasma data underlying the EUA is another matter. The “Clinical Memorandum” issued as the evidence behind the FDA’s decision glossed over the statistical analysis conducted by the agency; in particular, it made no mention of the 35% relative reduction in deaths.
Another problem with that is the 35% figure’s source isn’t fully clear. Although the EAP preprint manuscript is the most obvious source, Gaffney noted that HHS Secretary Alex Azar said it referred to a subgroup of patients under age 80 who were not on a ventilator. That is not found in the publicly available data. He also pointed to a tweet by FDA spokesperson Emily Miller that contains an agency slide showing a 37% reduction in mortality for non-intubated patients age 80 or under treated within 72 hours who got high-titer convalescent plasma, compared with low-titer product. Neither of those figures is reflected in the EAP manuscript.
The FDA did not return a request by MedPage Today for the full summary of data reviewed by FDA and any independent statistical analysis done by the agency.
Shmuel Shoham, MD, of Johns Hopkins University in Baltimore, said during a press briefing organized by the Infectious Diseases Society of America that “enormous amounts of data have been generated” from the EAP, in which more than 70,000 patients have been treated.
“Some data have been reported in articles and at meetings, but that’s only part of what the FDA — this is their program — has access to,” he said. “The stuff in the public domain is only a fraction of the data they have collected.”
Shoham is on the scientific advisory board of the EAP and is involved in two convalescent plasma clinical trials at Johns Hopkins.
Gaffney said Mayo researchers and FDA reviewers have noted that physicians were blinded to the dose of antibody given in plasma infusions, which he described as a “pseudo-randomization effect. We could use that to make more causal inferences about the effectiveness of antibody titers.”
However, he said there were some significant differences between those who received high-titer versus low-titer antibody, including differences in P-to-F ratio (a measure of inhaled oxygen to blood oxygen) and in those with five or more severe risk factors, suggesting the low-titer group was sicker to begin with than the high-titer group.
Also, patients in the EAP received a variety of other treatments: about half got steroids and 40% were given remdesivir.
“This is why we do randomized controlled trials,” Gaffney said. “Without them it’s very difficult to ensure that the effect you see is the result of the drug, and not the result of patient characteristics.”
Is an Answer Forthcoming?
Several randomized controlled trials of convalescent plasma are underway in the U.S., but the big concern is that wider access to convalescent plasma will limit enrollment. Will clinicians recommend that their patients enroll in a trial in which they might receive placebo? Will patients agree?
For the Hopkins studies, the prevention trial has enrolled 25 people out of a goal of 500, and its outpatient trial has enrolled 50 people of its 600-patient goal.
Liise-anne Pirofski, MD, of Montefiore Medical Center in New York, started a study at the end of April, looking to enroll 300 people. She said the team enrolled the first 150 people quickly, but “then the pandemic began to wane in New York.” With subsequent funding from the NIH, the trial has managed to enroll 190 patients, and has now expanded to four additional sites: New York University, Yale, the University of Miami, and the University of Texas Houston.
Clifton Callaway, MD, PhD, of the University of Pittsburgh Medical Center and lead investigator on the C3PO trial looking at outpatient convalescent plasma, said he hopes the EUA doesn’t discourage participation.
“To the contrary, I believe it should reassure persons considering participation that the FDA feels that convalescent plasma is safe and potentially useful and that the FDA specifically comments: ‘Current data suggest the largest clinical benefit is associated with high-titer units of CCP administered early in the course of disease.’ Giving high-titer convalescent plasma earlier (before you are sick enough to be in the hospital) is exactly what C3PO is testing.”
In addition to determining whether earlier or prophylactic treatment works, Shoham said other unanswered questions include identifying whether other components in plasma are useful therapies and whether low-titer plasma can work at all.
“What everyone agrees on is that the gaps in knowledge that exist can best be addressed by high-quality randomized controlled trials,” he said.
Pirofski said the science and data should be the focus, “rather than the decision and what drove the decision…. I don’t think anyone knows what drove that decision other than the people in that room. Hopefully they know.”
IS YOUR CULTURE holding you back? Are the signals you are broadcasting as a leader, creating the culture you want—you need?
Culture experts Jeff Grimshaw, Tanya Mann, Lynne Viscio, and Jennifer Landis say in Five Frequencies that to make a good culture great, leaders must deliberately transmit strong and steady signals. Leaders create culture for better or worse, through the signals they are consciously or unconsciously broadcasting over five frequencies. To change a culture, you need to broadcast a strong, steady signal on each of these frequencies:
Their Decisions and Actions
Example is everything—especially when it is inconvenient and costs you something. If it is truly a “value,” what are you willing to pay for it? Think in the long-term. “Go long-term greedy.” “This can mean avoiding ethical shortcuts, hiring people smarter than you, delegating more, and helping prepare high performers for success beyond your team.”
What They Reward and Recognize
Reward the behaviors you want to see more of. “You are responsible for the dysfunctional behaviors that so bother you.” Everyone brings their emotions to work. “Understand and leverage the emotional algorithms that motivate your people.” Understand that it is all relative, scarcity and timing matter, and everyone appreciates being appreciated.
What They Tolerate (Or Don’t)
“Leaders are ultimately defined by what they tolerate.” Be sure the boundaries are clearly defined as well as the consequences. And don’t make excuses because you don’t want to feel bad or you can’t hold a particular star performer accountable, or because it’s really no big deal. It’s all-important, and consistency is vital.
What you tolerate or don’t tolerate is a balance. “When you decide to become more tolerant of some things (like where people work), you must become, if anything, less tolerant of other things (like the work not getting done). As Harvard professor Gary P. Pisano puts it:”
A tolerance for failure requires an intolerance for incompetence. A willingness to experiment requires rigorous discipline. Psychological safety requires comfort with brutal candor. Collaboration must be balanced with individual accountability.
How They Show Up Informally
When you show up, you “bring the weather.” People notice a leader’s tone, mood, and focus. They are weather in any organization. What do kind of weather do you bring?
When considering how you show up, the authors advise you to relinquish your raft. They introduce the concept with a story:
A traveler on an important journey comes to a raging river. It seems there’s no way to cross. And that’s terrible news because this is an important journey. Fortunately, she spots a rickety old raft on the bank, off in the brush. With trepidation, she pushes the raft into the water, hops on, and amazingly, uses it to reach the other side. She’s able to continue her important journey. She thinks: I may encounter other raging rivers down the path, so I must keep this raft. So she carries the raft on her back as she continues her journey. It’s a heavy raft, and it slows her down. When fellow travelers point this out, she’s incredulous: “You don’t understand,” she says. “If it wasn’t for this raft, I wouldn’t be where I am today!” And she’s right. That’s literally true. The problem is: If she doesn’t put down the raft, she may not get to where she needs to go on her important journey.
It’s your baggage. It’s your reactive tendencies that may have worked for you in the past that are no longer getting you where you need to be. Reactive tendencies like going with the flow, control, the need to be the hero, or being overly protective of your ego, eventually bring you diminishing returns.
Their Formal Communications
Formal communications don’t work on their own, but they serve to reinforce the other four frequencies. Approach your communications as a story to make it memorable. And say it over and over. “Go past the puke point because that’s often the turning point where employees are just starting to truly get it.”
Have a backstory. Know where you came from. “Look for stories of people demonstrating the behavior you want to see more of, especially when it’s not easy for them to do so.” Fill the communication vacuums. “Don’t push your people to the black market.”
Know, Feel, Do
To establish a reliable culture, you need to measure where you are and where you need to go. The authors call it Know, Feel, Do: what employees know, what they feel, and what they do.
The authors advise us to work backward and forwards. Looking forward, they ask, “What is the culture that makes this outcome possible and probable? What will employees consistently KNOW? FEEL? DO?” Looking at each of the five signals, what will you need to broadcast to your employees in each of the five signal areas?
It is also necessary to look backward and see where your current culture came from. What did each of the signals contribute to your current culture? It will help you to know what to change in order to close the gap from where to are to where you want to be.
The image of scientists standing beside governors, mayors or the president has become common during the pandemic. Even the most cynical politician knows this public health emergency cannot be properly addressed without relying on the scientific knowledge possessed by these experts.
Yet, ultimately, U.S. government health experts have limited power. They work at the discretion of the White House, leaving their guidance subject to the whims of politicians and them less able to take urgent action to contain the pandemic.
The Centers for Disease Control and Prevention has issued guidelines only to later revise them after the White House intervened. The administration has also undermined its top infectious disease expert, Dr. Anthony Fauci, over his blunt warnings that the pandemic is getting worse – a view that contradicts White House talking points.
And most recently, the White House stripped the CDC of control of coronavirus data, alarming health experts who fear it will be politicized or withheld.
In the realm of monetary policy, however, there is an agency with experts trusted to make decisions on their own in the best interests of the U.S. economy: the Federal Reserve. As I describe in my recent book, “Stewards of the Market,” the Fed’s independence allowed it to take politically risky actions that helped rescue the economy during the financial crisis of 2008.
That’s why I believe we should give the CDC the same type of authority as the Fed so that it can effectively guide the public through health emergencies without fear of running afoul of politicians.
There is a paradox inherent in the relationship between political leaders and technical experts in government.
Experts have the training and skill to apply scientific knowledge in complex biological and economic systems, yet democratically elected political leaders may overrule or ignore their advice for ill or good.
This happened in May when the CDC, the federal agency charged with controlling the spread of disease, removed advice regarding the dangers of singing in church choirs from its website. It did not do so because of new evidence. Rather, it was because of political pressure from the White House to water down the guidance for religious groups.
The ability of elected leaders to ignore scientists – or the scientists’ acquiescence to policies they believe are detrimental to public welfare – is facilitated by many politicians’ penchant for confident assertion of knowledge and the scientist’s trained reluctance to do so.
Given these constraints on technical expertise, the performance of the Fed in the financial crisis of 2008 offers an informative example that may be usefully applied to the CDC today.
The Federal Reserve is not an executive agency under the president, though it is chartered and overseen by Congress. It was created in 1913 to provide economic stability, and its powers have expanded to guard against both depression and crippling inflation.
At its founding, the structure of the Fed was a political compromise designed make it independent within the government in order to de-politicize its economic policy decisions. Today its decisions are made by a seven-member board of governors and a 12-member Federal Open Market Committee. The members, almost all Ph.D. economists, have had careers in academia, business and government. They come together to analyze economic data, develop a common understanding of what they believe is happening and create policy that matches their shared analysis. This group policymaking is optimal when circumstances are highly uncertain, such as in 2008 when the global financial system was melting down.
The Fed was the lead actor in preventing the system’s collapse and spent several trillion dollars buying risky financial assets and lending to foreign central banks – decisions that were pivotal in calming financial markets but would have been much harder or may not have happened at all without its independent authority.
A health crisis needs trusted experts to guide decision-making no less than an economic one does. This suggests the CDC or some re-imagined version of it should be made into an independent agency.
Like the Fed, the CDC is run by technical experts who are often among the best minds in their fields. Like the Fed, the CDC is responsible for both analysis and crisis response. Like the Fed, the domain of the CDC is prone to politicization that may interfere with rational response. And like the Fed, the CDC is responsible for decisions that affect fundamental aspects of the quality of life in the United States.
Were the CDC independent right now, we would likely see a centralized crisis management effort that relies on the best science, as opposed to the current patchwork approach that has failed to contain the outbreak nationally. We would also likely see stronger and consistent recommendations on masks, social distancing and the safest way to reopen the economy and schools.
Independence will not eliminate the paradox of technical expertise in government. The Fed itself has at times succumbed to political pressure. And Trump would likely try to undermine an independent CDC’s legitimacy if its policies conflicted with his political agenda – as he has tried to do with the central bank.
But independence provides a strong shield that would make it much more likely that when political calculations are at odds with science, science wins.