Dr. Patrick Soon-Shiong failed to turn around Verity Health: 7 things to know about where the system stands now

https://www.beckershospitalreview.com/finance/dr-patrick-soon-shiong-failed-to-turn-around-verity-health-7-things-to-know-about-where-the-system-stands-now.html

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El Segundo, Calif.-based Verity Health filed for bankruptcy in August, just 13 months after billionaire entrepreneur Patrick Soon-Shiong, MD, bought a majority stake in its management company with a promise to revitalize the health system.

Here are seven things to know about Verity Health’s financial situation.

1. The health system filed for bankruptcy Aug. 31. It secured a $185 million loan to remain operational during the bankruptcy, which CEO Richard Adcock told Reuters could last at least a few years.

2. Verity is still seeking a buyer for all or some of the hospitals. Mr. Adcock told Reuters the system has been contacted by more than 100 potential buyers since July 9, when it announced it was exploring strategic options due to nearly $500 million in long-term debt. “We are exploring a number of options to deleverage our balance sheet and address challenges our hospitals face after a decade of deferred maintenance, poor payer contracts and increasing costs,” said Mr. Adcock.

3. The system’s financial issues pre-date Dr. Soon-Shiong’s investment but have not improved since. Mr. Adcock told Reuters that Verity has been hemorrhaging $175 million per year on cash flow basis. Verity has operated at a loss for at the least the past three years. Executives had planned to break even in the 12 months ended June 2018, however, the system reported its operating performance compared to the budget was unfavorable by $116 million, according to a report from Politico. In the 12 months ended June 2017, the system saw losses of $37 million, and the year prior marked nearly $200 million in operating losses.

4. Prior to filing for bankruptcy, Verity stopped all capital improvement projectsPolitico reported in the same article. However, the system needs millions of dollars in updates to meet California’s seismic standards by 2019. Approximately 94 percent of California’s hospitals already comply with this major legal requirement, according to the report. Verity Health needed an estimated $66 million in improvements. Since November, the system has put $5.1 million toward compliance. If Verity does not meet deadlines for compliance in 2019, its hospitals can no longer be used for patient care.

5. The health system’s spending on charity care declined 28 percent at five of its six hospitals in the first quarter of 2018, compared to the same period the year prior. The sixth hospital reported an error in its financials. Dr. Soon-Shiong updated the health system’s financial assistance policy in December to exclude services from more than 50 hospital departments, according to Politico. Preliminary data from the second quarter of 2018 suggests this trend has continued.

6. The health system is spending millions on an Allscripts EHR implementation. Dr. Soon-Shiong served as interim CEO of Verity in 2017, during which the system signed a contract to implement a new Allscripts Sunrise EHR by 2019. Verity spent $12.8 million on the EHR through June, according to Politico. Sources told Politico the final cost could range from $20 million to $100 million.

7. The EHR investment faces scrutiny due to Dr. Soon-Shiong’s close ties to Allscripts. Dr. Soon-Shiong bought a $100 million stake in Allscripts in 2015, and Allscripts had a $200 million stake in NantHealth, his precision medicine company, Politico reported. Allscripts and NantHealth also had an agreement to work together to promote precision medicine technology. This agreement was restructured in 2017, when the value of NantHealth’s stock was down, according to the report. Allscripts returned NantHealth’s stock, and in return, NantHealth transferred ownership of some of its software to Allscripts and agreed to deliver $95 million worth of business to the EHR vendor. Allscripts President Rick Poulton told Politico the Verity Health EHR deal does not count against the $95 million in promised business, and the health system had already been considering Allscripts before Dr. Soon-Shiong assumed leadership.

 

 

ARE YOU BRAVE ENOUGH TO BE DUMB

Are you Brave Enough to Be Dumb

The courage to ‘not know’ may be the greatest leadership courage of all.

Mark Miller, the VP of High Performance Leadership at Chic-fil-A, told me that he would tell his younger self, “Stop trying to have all the answers.”

Not-knowing seems weak. Ego hides behind a facade of knowledge and competence.

Don’t pretend you know when you don’t. Most people know you’re faking it anyway.

Double benefit:

Humility enables leaders to not-know and makes space for others TO know.

Everyone waits for instructions from the all-knowing leader. Can you afford to have people waiting?

Courage to not-know instills boldness in others.

If you always know, they’ll stop offering suggestions.

Courage to not-know honors the skill and creativity of the people around the table.

Brave enough to seek advice:

Greg Dyke, Director of the BBC from 2000 to 2004 asked two questions when he took the helm of the struggling company.

  1. What is the one thing I should do to make things better for you?
  2. What is the one thing I should do to make things better for our viewers and listeners?

Francesca Gino observes that new leaders often feel a need to have answers (Like Mark Miller) and explain THEIR vision. It might seem weak to ask questions before establishing your competence as a leader.

Gino’s research indicates the opposite, “… asking for advice increases rather than decreases how competent you are perceived to be.” (Rebel Talent)

Tip: The use of “could” is better than “should”. There’s more space to answer openly if you ask, “What’s one thing I COULD do to make things better for you?”

Action steps for today:

  1. Ask a dumb question. “This might be a dumb question but I’m wondering …?”
  2. Ask your team, “What one thing could I do to make things better for you?”

Where might leaders need to practice not-knowing a little more?

How might leaders not-know in a leaderly manner?

 

 

 

 

6 things wrong with hospital medicine

https://www.kevinmd.com/blog/2018/09/6-things-wrong-with-hospital-medicine.html

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In 2002, when I began my first hospitalist job, I was a dyed-in-the-wool hospital medicine convert, convinced that the transfer of inpatient care to true specialists in hospital medicine (hospitalists) would dramatically improve the quality and efficiency of inpatient care, increase patient satisfaction and decrease costs.

By 2008, I had developed serious doubts, which prompted me to publish an editorial in the Journal of Hospital Medicine, entitled “The Expanding or Shrinking Universe of the Hospitalist” (2008) that attempted to raise a red flag of concern about hospitalists, in general, failing to become “hospital medicine specialists” and instead accepting the inferior role of “triage shift workers.”

Now, in 2018, I believe it is more appropriate to raise a white flag of surrender. I could write a book on the topic, but briefly, here are the six pillars of what went wrong with hospital medicine, in my opinion.

 

First pillar. In the first decade of the hospitalist movement, private hospitalist management groups (and hospital-employed hospitalist groups) popped up quickly all over the country, jockeying aggressively for market share, and working with a simple equation: a hospitalist physician was a fixed cost, and his/her patient load (primarily) was revenue. So the larger the patient load per hospitalist, the greater the profit. Young hospitalist applicants — almost all fresh out of training, in debt, hungry for income and already accustomed to long hours of work — were easily lured to the hospitalist positions offering the highest salaries, which were logically accompanied by the highest patient loads. Rising salaries were repeatedly celebrated by hospitalist leaders as evidence of the growing value of hospitalists, whereas they were more likely a result of the above market forces.

 

Second pillar. The high workloads resulted, quite naturally, in hospitalists aligning themselves in ways that increased patient encounters but minimized effort, which largely meant deferring responsibility for patient care and clinical decisions to others; that is, primarily, a liberal use of specialist consultations. In my experience, hospitalist progress notes quickly evolved into something like this: “Acute kidney injury, per nephrology; Chest pain, per cardiology; Cellulitis, per infectious disease.” Next patient. Time-consuming tasks, like end-of-life care discussions, were whittled down to a single line: “Consult palliative care.” (One hospitalist colleague actually explained to me once how he strategically avoided patients whose families were currently in the room, since he had to see over 30 patients a day on weekends and couldn’t spare the time for any family discussions.) Obviously, this short-sighted approach to a new medical specialty was a death blow to almost all of the claimed benefits of the hospital medicine movement.

 

Third pillar. With hospitalists increasingly dominating inpatient care, hospital administrators found that they could use this captive group of young doctors to increase hospital revenue by raising the case-mix index with “proper documentation.” Whereas comprehensive documentation of one’s clinical findings and decision making is certainly an essential part of quality inpatient care, the unspoken goal of the hospitals was to push the case-mix index higher and higher. A troponin of 0.05 became an NSTEMI. A cough and temperature of 99.5 became sepsis or severe sepsis (if there was a slight creatinine bump or relative hypotension) — and why not add acute respiratory failure, if someone happened to catch a low oxygen saturation reading (from a malpositioned pulse oximeter). In a darkly comical twist, the risk management mantra that “if you don’t document it, it didn’t happen” was tragically flipped into its false corollary: “If you do document it, it did happen”; that is, “oxygen saturation dropped to 85 percent on room air,” “patient was in severe respiratory distress,” etc. Unfortunately, this gray area of potentially exaggerated documentation muddies the clinical communication between clinicians, not to mention issues of ethics and law.

 

Fourth pillar. In much the same way, hospitalists were placed in the center of “level of care” assignments; that is, observation status versus inpatient status. Specifically, if an inpatient stay could be justified, by a “good” hospitalist’s “improved” documentation, the hospital could increase revenue by two to three times over an observation stay. Hospitalists were given subtle encouragement to transform things like atypical chest pain, UTI, or tingling fingers into life-threatening conditions, requiring complex decision making, and fraught with numerous potentially serious complications, and absolutely requiring more than two midnights to evaluate and treat properly. Once again, the ideal of a careful and proper diagnosis, with an appropriate plan of care in an appropriate setting, was profaned. Clinical decision making often blurred into a form of hospitalist doublespeak which obscured the actual severity of illness to achieve desirable metrics, earn a bonus or negotiate a better contract next cycle.

 

Fifth pillar. In addition, utilization review nurses were pressing hospitalists to get fixed-DRG patients out of the hospital as quickly as possible, to increase profit margins and make room for more patients and more revenue. This rapid-fire inpatient management r encouraged “good” hospitalists to order a shotgun round of tests and consultations up front on their admitted patients, and ultimately led to a lot of unnecessary testing, and a lost reliance on a proper history and exam, serial assessments and a cognitive, algorithmic approach to diagnosis and treatment — all further diminishing the clinical acumen of highly-trained individuals who truly could have been, in a different world, hospital medicine “specialists.”

 

Sixth pillar. Quality measures, supposedly aimed at improving patient outcomes, were an additional blow, as they unfortunately led physicians to do things that were not consistent with good clinical judgment. For example, in a case I saw, a patient presented with an acute tonic-clonic seizure, and their lactic acid level was markedly elevated (of course, from the seizure); but they were treated for sepsis with a fluid bolus and broad-spectrum antibiotics, because if someone saw the lactate level, the case would “fall out.” Similarly, triple antibiotic regimens were inappropriately used for viral bronchitis because of a stated concern for health care-associated pneumonia. Basically, non-thinking was being promoted in the service of higher quality scores — not higher quality.

 

Although these pillars are surely not generalizable to all hospitalist programs, especially academic ones, the hospitalist movement as a whole is a perfect example of how administrative and market forces in health care can largely extinguish the incredible potential of a new specialty. And that’s sad.

 

 

 

California health system’s bankruptcy challenged by employee union

https://www.beckershospitalreview.com/finance/california-health-system-s-bankruptcy-challenged-by-employee-union.html

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El Segundo, Calif.-based Verity Health System, the nonprofit operator of six hospitals, filed for bankruptcy protection Aug. 31. The bankruptcy proceedings are being challenged by SEIU-UHW, a union representing 2,000 workers at Verity Health hospitals.

The hospitals were originally owned by Los Altos, Calif.-based Daughters of Charity Health System. The financially troubled system began seeking a buyer for the hospitals in 2014, and Integrity Healthcare, a company created by BlueMountain Capital Managementtook over the facilities in 2015 and renamed them Verity Health System. Billionaire Patrick Soon-Shiong, MD, bought Integrity in July 2017, according to the Los Angeles Times.

Dave Regan, president of SEIU-UHW, expressed concern about Verity entering bankruptcy.

“When Verity bought these hospitals from Daughters of Charity four years ago, they made promises to these communities that they would not lose access to the care they needed,” he said in a press release. “Now it looks like Verity’s billionaire owner wants to go back on those commitments.”

In the bankruptcy filing, Verity seeks court permission to sell the hospitals from any liens and encumbrances. SEIU-UHW contends this shows Verity’s “intent to nullify their obligations both to their union collective bargaining agreements and the conditions of sale imposed by former Attorney General Kamala Harris when Verity purchased the hospitals.”

By challenging the bankruptcy filing, SEIU-UHW intends to ensure the hospitals are kept open and continue to meet pension obligations and maintain current services and levels of employment.