12 takeaways from the 2018 JP Morgan Healthcare Conference

https://www.beckershospitalreview.com/hospital-management-administration/12-things-you-need-to-know-from-the-2018-jp-morgan-healthcare-conference-while-the-destination-is-uncertain-the-direction-is-clear.html

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The recent breathtaking flurry of mega-mergers coupled with increasingly challenging market forces and an ever shifting political landscape has cast a cloud of confusion regarding where the U.S. healthcare delivery system is heading.

So, where do you go to find the map?

Every year, the JP Morgan Healthcare Conference provides an incredibly efficient snapshot of the strategies for large healthcare delivery systems, the hub for healthcare in the U.S. Most of these organizations are also the largest employers in their respective states. The conference took place this week in San Francisco with over 20 healthcare systems presenting, including Advocate Health Care, Aurora Health Care, Baylor Scott & White Health, Catholic Health Initiatives, Cleveland Clinic, Geisinger Health System, Hospital for Special Surgery, Intermountain Healthcare, Mercy Health in Ohio, Northwell Health, Northwestern Medicine, Partners HealthCare System, WakeMed Health & Hospitals and many of the other big name brands in the market. Each provided their strategic roadmap in a series of 25-minute presentations from their “C” suite. If you’re looking for the GPS on strategy and a gauge on the health of healthcare, this is it.

How do their strategies differ? What direction are they heading in? There is a great line from Alice in Wonderland that goes, “If you don’t know where you’re going, any road will take you there.” You would think that line applies perfectly to the U.S healthcare system, but the good news is it actually doesn’t.

While the exact destination for everyone is TBD, the direction they are heading in is actually pretty clear and consistent. It turns out that they are all using a very similar compass, which is sending them down a similar path.

So, what are the roadside stops health systems consider absolutely necessary to be part of their journey to creating a more viable and sustainable value-based business model?

Based on the travel plans for over 20 of the largest and most prestigious healthcare delivery systems in the country, here’s your GPS and list of 12 things you “must do” on your journey.

1. You Must Scale

Clearly the headline at #JPM18 was the flurry of major announcements regarding major mergers. With that said, two of the mergers were front and center: teams were there to present from Downers Grove, Ill.-based Advocate and Milwaukee-based Aurora, which will be a $10 billion organization with 70,000 employees, as well as San Francisco-based Dignity Health and Englewood, Colo.-based Catholic Health Initiatives, which will be a $28 billion organization with 160,000 employees. The size and scale of these mergers is pretty stunning. While the announcement of these and the other recent mega-mergers has forced many into their board room to determine what the deals mean to them, the consensus at the conference was this: There are a number of different paths forward to achieve scale. Some, like Baylor Scott & White in Texas, have aggressive regional expansion plans. Others are betting on partnerships to provide the same or even more value. Taking a pulse of the room, two things were clear. The first is there is no definition of scale any more in this market. The second is that, despite this flurry of mergers, “getting really big” is not the only destination.

2. You Must Pursue “Smart Growth” and Find New Revenue Streams

Running counter to the merger narrative in the market, Salt Lake City-based Intermountain provided a good overview of the movement to what is called an “asset light” strategy of “smart growth.” This is a radically contrarian approach to the industry norm, which is the capital intensive bricks and mortar playbook of buying and building. As part of their strategy, Intermountain will open a “virtual hospital” delivering provider consultations and remote patient monitoring via telehealth. The system will also launch a number of healthcare companies every year, leveraging their considerable resources in a manner they believe will produce a higher yield. Other health systems outlined a similar stream of initiatives they have in motion to diversify their revenue streams and expand their business model into higher margin, higher growth businesses. One example is Cincinnati-based Mercy Health, which achieved strong growth and leverage via their investment in a revenue cycle management company. Advocate in Illinois formed a partnership with Walgreens. Together, they now operating 56 retail clinics and Advocate has made a significant impact on driving new patients and downstream revenue to their system. The bottom line is all now recognize that they must think and act differently to be able to continue to fund their clinical mission and serve their community.

3. You Must Measure and Manage Cost and Margins

While some are moving aggressively to get scale, everyone is looking to more effectively use the resources they have and get more operating leverage. Margin compression was a consistent theme, with many systems now moving into consistent, stable operating models around managing margins versus launching reactionary initiatives when they find a budget gap. What is emerging is a new discipline and continuous process around managing cost and margins that is starting to look similar to the level of sophistication we have seen in the past for revenue cycle management. To that end, there has been major movement in the market to implement advanced cost accounting systems, often referred to as financial decision support, which provide accurate and actionable information on cost and help organizations understand their true margins as they take on risk-based, capitated contracts. Some during the conference referred to it as the “killer app” for the financial side of driving value. Regardless of what you call it, all are moving aggressively to understand the denominator of their value equation.

4. You Must Become a Brand

Investing in and better leveraging their brand has become a strategic must for health systems. The level of sophistication is growing here as providers shift their mental model to viewing patients as “consumers.” Aurorain Wisconsin cited their dedicated Consumer Insights Group and outlined their “best people, best brand, best value” approach that has been incredibly effective both internally and externally. At the same time, the bigger investments for many health systems relative to brand are more on brand experience than brand image, with a focus on understanding and radically rethinking the consumer experience. As an example, at Danville, Pa.-based Geisinger, close to 50 percent of ambulatory appointments are scheduled and seen on the same day. And every health system is making meaningful investments in their “digital handshake” with consumer, creating and leveraging it via telehealth as well as mobile applications to enhance the customer experience.

5. You Must Operate as a System, Not Just Call Yourself One

One clear theme at #JPM18 is different organizations were at different points along the continuum of truly operating as a system vs. merely sharing a name and a logo. There are a number of reasons for this, but you are increasingly seeing tough decisions actually being made vs. just kicking the can down the road. There has been a great deal of acquisitions over the last few years coupled with a new wave of thinking relative to integration that is more aggressive and more forward-looking. This mental shift is actually a very big deal and perhaps the most important new trend. Many health systems are heavily investing in leadership development deep into their organization to drive changes much faster.

6. You Must Act Small

The word “agile” is quickly becoming part of everyone’s narrative with health systems looking to adopt the principles and processes leveraged in high tech. Chicago-based Northwestern Medicine is an example of an organization that has grown dramatically in the last five years, now approaching $5 billion in revenue. At the same time, they have still found a way to operate small, leveraging daily huddles across the organization to drive their results. The team at Raleigh, N.C.-based WakeMed has achieved a dramatic financial turnaround over the last few years, applying a similar level of rigor yielding major operational improvements in surgical, pharmacy and emergency services that have translated into better bottom line results.

7. You Must Engage Your Physicians

Employee engagement was a major theme in many of the presentations. With the level of change required both now and in the future, a true focus on culture is now clearly top of mind and a strategic must for high-performing health systems. That said, only a handful articulated a focus on monitoring and measuring physician engagement. This appears to be a major miss, given that physicians make roughly 80 percent of the decisions on care that take place and, therefore, control 80 percent of the spend. One data point that stood out was a 117 percent improvement in physician engagement at Northwestern. Major improvements will require clinical leadership and a true partnership with physicians.

8. You Must Leverage Analytics

Many have reached their initial destination of deploying a single clinical record, only to find that their journey isn’t over. While health systems have made major investments big data, machine learning and artificial intelligence, there was a consistent theme regarding the need to bring clinical and financial data together to truly understand value. Part of this path is the consolidation of systems that is now needed on the financial side of the house with a focus on deploying a single platform for financial planning, analytics and performance. The primary focus is to translate analytics not just into insights, but action.

9. You Must Protect Yourself

As organizations move deeper into data, there is increased recognition that cybersecurity is a major risk. Over 40 percent of all data breaches that occur happen in healthcare. During the keynote, JP Morgan Chase CEO Jamie Dimon shared that his organization will spend $700 million protecting itself and their customers this year. Investments in cybersecurity will continue to ramp up due to both the operational and reputational risk involved. Cybersecurity has become a board room issue and a top-of-mind initiative for executive teams at every health delivery system.

10. You Must Manage Social Determinants of Health in the Communities You Serve

Perhaps the most encouraging theme for healthcare provider organizations was the need to engage the community they serve and focus on social determinants of health. As Intermountain shared: “Zip code is more important than genetic code.” To that end, Geisinger refers to their focus on “ZNA.” They have deployed community health assistants, non-licensed workers who work on social determinants of health and have implemented a “Fresh Food Farmacy,” yielding a 20 percent decrease in hemoglobin A1c levels along with a 78 percent decrease in cost. Organizations like ProMedica Health System in Ohio have seen similar results with their focus on hunger in Toledo. WakeMed has an initiative focused on vulnerable populations in underserved communities that has resulted in a significant decrease in ER visits and admissions and over $6 million in savings.

11. You Must Help Solve the Opioid Epidemic

The opioid issue is one that healthcare professionals take very personally and feel responsible for solving. It came up in virtually in every presentation, and it’s an emotional issue for the leaders of each organization. This is good news, but the better news is that they are taking action. As an example, Geisinger invested in a CleanState Medicaid member pilot that resulted in a 23 percent decrease in ER visits and 35 percent decrease in medical spending, breaking even on their investment in less than 10 months. While many would rightly argue that the economic rationalization isn’t needed for something this important, the fact that it’s there should eliminate any excuse for anyone not taking action.

12. You Must Deliver Value

The Hospital for Special Surgery in New York is the largest orthopedics shop in the U.S. and a great example of how value-based care delivery is taking shape. Perhaps the most revealing stat they shared is that 36 percent of the time, patients receive a non-surgical recommendation when they are referred to one of their providers for a second opinion. This is exactly the type of value-based counseling and decision-making that will help flip the model of healthcare. Some systems are farther along than others. Northwestern currently has 25 percent of its patients in value-based agreements, but other systems have less. As the team from Intermountain re-stated to this audience this year, “You can’t time the market on value, you should always do the right thing, right now.” Well said.

It’s time to get started or get moving even faster.

As the saying goes, “It’s the journey, not the destination.”

Happy trails.

Hospital CEOs could face new taxes 

The Republican tax overhaul bill also includes a small section that would levy a 20% excise tax on any wages of more $1 million for executives who work at tax-exempt organizations. Guess who’s not thrilled about that? Hospitals.

What they’re saying: The American Hospital Association said it was “concerned” about that provision because “there is already a rigorous process prescribed by the Internal Revenue Service for setting up executive compensation.”

Go deeper: As Axios’ Bob Herman has reported, hospital and health system CEOs command some of the highest salaries in the not-for-profit world.

How do you ‘hire’ (and manage) an interim executive?

https://interimcfo.wordpress.com/2017/10/29/how-do-you-hire-and-manage-an-interim-executive/

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Abstract:  This article is about the optimum relationship between an interim executive and their client.  It has been a while since I wrote on Interim Executive Services.  In this article,  I  return to the primary topic of this blog.

What is the difference between interviewing and hiring an interim vs. an employee?

First of all, it is not in your best interest to ‘hire’ an interim.

If the interim is furnished though a firm, they are more than likely paid on a W-2 and you are not technically ‘hiring’ the interim, you are engaging or entering a contact with their firm.  The interim is ’employed’ by the firm and not you.  Employed is loosely used in this case because while the interim may be on a W-2 program with their firm, the only time they are paid is if they’re producing billable revenue. Sadly for the interim, they get to bear all of the disadvantages of being paid by W-2 while consulting without having the ability to reap any of the benefits of being an independent expert.

Now assume that you are smart enough and lucky enough to source the perfect independent or free lance interim directly, what then?

Congratulations, you are probably well on your way to having a far superior resource that will  be highly motivated to address your situation without the interference of a third party that in my experience, adds little if any value beyond sourcing the interim.  If you have experience with this, you know what I’m talking about.  When was the last time you saw anyone from the interim firm you engaged other your interim?

With a free agent, you will be contracting with the Interim or a company (LLC or S-4 Corporation) they own.  Legally, you are dealing with a sole proprietor in most cases regardless of whether their corporate entity is involved or not.  For this reason and depending upon the circumstances, you might want to get their personal guarantee of their firm’s performance.

I have a S-4 Corporation that I can use for contracting.  The problem for me is that if I bill though my corporation, I am obliged to pay the federal government 9% of my earnings in the form of federal unemployment tax or FUTA that I can never claim because as an independent consultant, I cannot be ‘laid off’ so I am ineligible to receive FUTA.  Don’t get me started.  I have been fortunate that my clients have agreed to engage me directly and individually.  A corporate structure when dealing with a sole provider affords disproportionate list to the provider.

What about insurance?  Increasingly, client firms are requesting or requiring professional liability insurance.  Setting aside the fact that I have never seen a claim against a professional liability policy for interim services, I have been successful in convincing my clients to name me under their Directors and Officer’s Insurance (D&O) coverage if I as an interim am going to be authorized to execute documents and take actions on behalf of my client.  To me, this makes more sense for the client because if I am required to obtain insurance that will most likely be less robust than the organization’s D&O coverage, that cost is going to be passed along and in effect, the client will be paying twice for the same coverage.  Not only that, in the event of a problem, you are more than likely going to be drawn into a subrogation fight.  If I have no authority and I am not going to be executing documents, i.e., I am engaged to do project work, then liability insurance should be a non-issue.

In another article, I talk about how to find interim executives.

If you have found the ‘perfect’ interim for your transition or challenge, good for you.  If the interim is experienced and sophisticated, you should not have any reservation about engaging them directly and putting them to work in your organization immediately.

Once the interim is aboard, do not lose sight and do not allow your organization to lose site of the purpose of the interim engagement which is usually to help an organization work through a transition usually while beginning the process of addressing major challenges or problems.  The scope of the work to be performed should be mutually understood and memorialized in the contract with the Interim Executive.  Subsequent departures from the agreed scope represent sub-optimization of the engagement at best and a useless waste of resources at worst.

An interim is not an employee and the more you treat them like an employee, the less effective they will be and the higher risk you will bear with respect to their status as an independent contractor.

A number of requirements must be met before your interim reaches reach the threshold of independent contractor status.  To name a few:

  • You cannot set the interim’s hours
  • You cannot dictate when and how the interim does their work
  • You cannot require the interim to use your facilities and equipment to do their job
  • You cannot subject the interim to your personnel policies and procedures like travel policies, etc.
  • You should not require the interim to participate in employee related activities like employee health, computer system training, etc., unless their specific responsibilities require patient contact or hands-on operation of hospital systems which should be very rarely.
  • You should never require interims to record time on your organization’s timekeeping system

The more you require your interims to engage in the actives of employees; things like requiring them to attend out of scope meetings, the higher your risk that the IRS may subsequently find that they were not independent contractors and subject your organization to payroll tax liability and overtime claims that you did not anticipate.

Time and again, I have been required by hospital personnel departments to go through all of the clearances and sometimes orientation of employees.  Then I get invited to every meeting in the organization.  All of this increases the client’s risk while wasting my time.  I have asked the person that executed my contract to screen and approve meeting requests to insure that I am able to stay on task and that the rest of the organization understands my roles and its limitations from their perspective.

I tell clients that regardless of the number of hours they pay for, they receive 100% of my mental capacity virtually 100% of the time.  I find it difficult if not impossible to mentally divorce myself from the needs and issues of my client whether I am ‘on the clock’ or not.  Because of this, flexibility of hours should not be an issue because when I am engaged, I am always working for the benefit of my client.  That said, I assure my client that regardless of the ‘normal’ schedule we agree to, I endeavor to make myself available on-site as needed.  This means spending weekends in the client’s city and/or traveling on behalf of the client for matters not related to Interim services commuting.

Take another look at my article about how to find an interim.  The effort you expend to locate a ‘free agent’ Interim Executive is worth the trouble.  My prediction is that you will thank yourself for taking charge of what should be expected to be one of the most important decisions you may ever make because of the potential of a well conceived Interim Engagement to be favorably transformative in your organization.

If you are a Board member or a CEO and you do not know where to start or how to go about finding an Independent Interim, get in touch with me and I will give you some pointers.

Contact me to discuss any questions or observations you might have about these articles, leadership, transitions or interim  services.  I might have an idea or two that might be valuable to you.  An observation from my experience is that we need better leadership at every level in organizations.  Some of my feedback is coming from people that are demonstrating interest in advancing their careers and I am writing content to address those inquiries.
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I encourage you to use the comment section at the bottom of each article to provide feedback and stimulate discussion.  I welcome input and feedback that will help me to improve the quality and relevance of this work.
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If you would like to discuss any of this content, provide private feedback or ask questions, I may be reached at ras2@me.com.

More Memorial Hermann execs to depart

https://www.bizjournals.com/houston/news/2017/07/31/more-memorial-hermann-execs-to-depart.html?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3B5bILEwnxSM%2BkK22A0oNGSA%3D%3D

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Three more executives plan to leave Memorial Hermann Health System, Houston’s largest nonprofit health care system, according to multiple reports.

Last week, Arizona-based Banner Health announced it hired Dennis Laraway as CFO, effective Sept. 29. Laraway has been CFO of Memorial Hermann since 2011.

Following the announcement, Modern HealthcareHealthcare Finance and others reported that two other executives plan to step down. Memorial Hermann spokeswoman Alex Loessin confirmed to the publications that Christopher Lloyd, CEO of Memorial Hermann’s physician network, and Jim Garman, chief human resources officer, also plan to leave. That’s in addition to Craig Cordola, president of Memorial Hermann Health System’s west region, whose departure was announced earlier this month.

The reports did not specify when Lloyd and Garman will step down or what their next positions will be. Cordola, however, will become senior vice president of St. Louis-based Ascension Healthcare and ministry market executive of Ascension Texas, effective Sept. 1. Memorial Hermann is evaluating a successor for Cordola internally, Loessin previously told the Houston Business Journal.

“Career moves by top leaders to other signature health systems speak volumes about the caliber of talent we have at Memorial Hermann,” CEO Chuck Stokessaid in a statement to the publications last week. “While we will miss the contributions of these individuals to the organization, I’m incredibly proud of all they accomplished, and I wish each of them the very best. We have a strong management team at Memorial Hermann and excellent support from our board.”

Stokes was named CEO for Memorial Hermann in early July. He had served in an interim capacity for a few weeks after Dr. Benjamin Chu abruptly stepped down from the position June 19.

As Healthcare Changes, So Must its CEOs, CFOs, COOs…

http://www.healthleadersmedia.com/leadership/healthcare-changes-so-must-its-ceos-cfos-coos%E2%80%A6?spMailingID=11163372&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1180078976&spReportId=MTE4MDA3ODk3NgS2

To keep up with big changes in how healthcare is administered, financed, and organized, top leaders are finding a need for new talents and organizational structures.

To keep up with big changes in how healthcare is administered, financed, and organized, top leaders are finding a need for new talents and organizational structures.

Healthcare reform as a term has become so ubiquitous that it is almost indefinable. At first, and broadly, it meant removing the waste in an excessively expensive healthcare system that too often added to the problems of the people whose health it aimed to improve. Then it became legislative and regulatory, in the form of the Patient Protection and Affordable Care Act and its incentives aimed at improving the continuum of care and expanding the pool of those covered by health insurance.

Now, for many in the industry, healthcare reform has matured into a business imperative: the process of ingraining tactics, strategies, and reimbursement changes so that health systems improve quality and efficiency with the parallel goal of weaning us all off a system in which incentives have been so misaligned that neither quality nor efficiency was rewarded.

That leaders finally are able to translate healthcare reform into action is welcome, but to many health systems trying to survive and thrive in a rapidly changing business environment, the old maxim that all healthcare is local is being proved true. Making sense of healthcare reform is up to individual organizations and their unique local circumstances. Fortunately, there are some broad themes and organizational principles that are helpful for all that are trying to make this transition. What works in one place won’t necessarily work in another, but the innovation level is off the charts as healthcare organization leaders reshape what being a leading healthcare organization means as well as what it requires.

Turning Healthcare Big Data into Actionable Clinical Intelligence

http://healthitanalytics.com/features/turning-healthcare-big-data-into-actionable-clinical-intelligence?elqTrackId=4e2f8dd332d144279084da58c9623c84&elq=ff9dcb339dd14c5e807c6af05a723d2f&elqaid=2665&elqat=1&elqCampaignId=2463

How can healthcare organizations turn their big data assets into actionable clinical intelligence?

Healthcare organizations on the hunt for lower costs, better outcomes, and value-based care bonuses have invested heavily in hoarding as much big data as they can get their hands on.

From customer service call logs and clinical documentation to satisfaction surveys and patient-generated health data from the Internet of Things, providers of every size and specialty have fully accepted the notion that no scrap of information will go to waste in the era of machine learning, artificial intelligence, and semantic data lakes.

This may be true in the very near future. In just the past few years, the healthcare industry has made huge leaps forward in clinical decision support and predictive analytics.

The use cases for big data are proliferating rapidly as organizations move deeper into population health management and accountable care, and consumers are keeping pace with their growing demand for cost-effective services that leverage the convenience of their favorite apps and devices.

But despite the data-driven promises looming just over the horizon, the majority of healthcare organizations still have a great deal of work to do before they can turn their budding big data analytics competencies into truly actionable clinical intelligence.

A chronic lack of direction, exacerbated by deeply entrenched interoperability issues and a widespread inability to secure a qualified data science team, have left organizations in something of a slump.  A series of industry surveys from recent months point out significant staffing gaps, frustrating health data exchange roadblocks, and organizational planning deficiencies that are keeping providers from breaking through their data doldrums.

“The point of analytics is to help make better decisions on a timelier basis,” says Dr. Danyal Ibrahim, Chief Data and Analytics Officer at Saint Francis Care.  “But as we all know, there are so many times when our data ends up siloed. One component goes to the finance department, another to IT, and another to the quality improvement team.”

“So even though the data is supposed to be connected around a single patient’s story, ultimately it lands in different siloes all around the organization, and that can be a big barrier to using data to improve care.”

In order to develop a successful big data analytics initiative that can overcome every obstacle from data collection to point-of-care reporting, providers must not only understand where the challenges lie, but also what lies ahead once they overcome their issues.

What does it mean to achieve success with big data analytics, and how can healthcare providers reach their ultimate goal of extracting valuable insights from their rapidly expanding data stores?