“Healthcare is always going through a lot of change, and sometimes employees, managers and even physicians think we are making those changes because somebody in administration decided it’s the right thing to do. The reality is, we’re reacting to what’s changing in the marketplace or what we believe will be coming in the marketplace. If we don’t adjust fast enough then it will negatively affect our organization and employees.”
From police officer to healthcare executive, Chris Van Gorder’s career trajectory is far from ordinary.
Mr. Van Gorder began his career as a police officer in a town bordering Los Angeles. After being injured on the job and retiring from the police force, Mr. Van Gorder had to reinvent himself.
He eventually took a job as a hospital security director for the facility where he received care for his injury. This job, unbeknownst to him at the time, would shape the rest of his work life.
After spending time in the hospital as a guard and observing leadership, Mr. Van Gorder decided to return to school to get a degree in healthcare administration.
Since, Mr. Van Gorder has held several prominent healthcare leadership positions, including vice president, COO and CEO of Anaheim Memorial Hospital and CEO of Long Beach (Calif.) Memorial, the flagship facility of MemorialCare Health System in Fountain Valley, Calif.
Now Mr. Van Gorder serves as CEO of one of the top medical institutions in the U.S., San Diego-based Scripps Health, a $3.1 billion integrated network with 15,000 employees and 3,000 physicians. He has held the role since 1999.
Here, Mr. Van Gorder spoke with Becker’s Hospital Review for our “Living like a leader” series, which examines influential decision-maker’s daily routines to offer readers an idea of how they manage their energy, teams and time.
Question: What is the first thing that you do when you wake up?
Chris Van Gorder: Get a cup of coffee. Then I go to my home office and prepare what I call “market news.” I do this every day of the year, including holidays, vacations and weekends. The market news is a summary of all the major healthcare and business articles that I think may have an impact on Scripps Health. I’ll scour several websites, including The San Diego Union Tribune, The Los Angeles Times, The New York Times, The Washington Post and Becker’s, among other healthcare publications. I’ll put those links into a document and send them to my senior leadership team, most doctors and the alumni of our leadership academies. It takes me about an hour.
My rationale for sending the relevant links to my team is that healthcare is always going through a lot of change, and sometimes employees, managers and even physicians think we are making those changes because somebody in administration decided it’s the right thing to do. The reality is, we’re reacting to what’s changing in the marketplace or what we believe will be coming in the marketplace. If we don’t adjust fast enough then it will negatively affect our organization and employees.
Q: What is the first thing you do when you arrive at work?
CVG: I will grab another cup of coffee. Then I log onto the computer and start answering emails. Daily, I will answer every email that comes to me. I don’t go to bed at night without looking at my iPhone and making sure I’ve responded to every email that came to me during the day. So the first thing I do when I get to work is respond to any emails that came during the middle of the night. One of our core values is respect, and I think it is a sign of respect when I am responsive to the people who work in this organization and people outside of it.
Q: Is there any work that you like to get done before lunch or work that you save for the afternoon?
CVG: Unless it’s a lunch meeting, I never eat lunch. What I usually do is read my own market news, because when I put it together, I don’t have enough time to thoroughly read the articles. But my daily routine is so variable. Sometimes we have board meetings that start at 7:00 a.m. It’s rare if I don’t have something that starts very early in the morning. From there, my schedule is packed, but it is always different.
Q: Is there anything that makes your physical office setup unique?
CVG: I have a Microsoft hub on the wall that allows me to have video meetings with anybody in leadership across the system. In the case of a natural disaster, the hub also allows me to monitor what’s going on inside and outside of Scripps.
I also have a picture of a patient’s heart hanging on my wall. I was working in trauma with our physicians one night and a younger patient came to the hospital with a stab wound to the heart. We cracked this patient’s chest open, stapled the heart shut and took the patient upstairs to heal. The patient came into our hospital almost dead, but the patient went home a week later. I have a picture of that heart on my wall to remind me of the work that we do every single day — the most important work we do.
I also have a few awards and about 100 challenge coins that law enforcement, fire and military units have given me. I also have my own challenge coin that I give out to employees when they’ve done something extraordinary outside their normal work responsibilities.
Q: How often do you meet with clinical staff or perform rounds?
CVG: Several times a week. I’m in a corporate office but not far from the hospitals, so I spend a lot of time with them. I also teach our leadership academies and most of the people in attendance are clinical staff. Usually rounds are on Fridays.
Q: How much of your time is spent with direct reports?
CVG: I do not have standing regular meetings with my direct reports. They are all on the same floor as me and I have an open-door policy. Some of them will schedule meetings with me to brief me on certain items, but I’m a big believer in not having redundant meetings that are just happening because they’re scheduled. I want people to meet with me when they need to meet with me. My staff are in and out of my office all day long. I see all of them daily. I have one scheduled meeting with all of them as a group once a week, but the rest of the meetings are ad hoc.
Q: How do you think your routine is different from that of other healthcare executives?
CVG: I spend a lot of time with management and employees. I suspect more than most CEOs do, because I’ve made it a personal commitment since joining Scripps. I spend a lot of time with the front-line staff and our front-line management team. The key leaders in an organization are those front-line supervisors and managers. Because of that belief, I created the Scripps Leadership Academy 18 years ago, the Front-Line Leader Academy in 2015 and The Employee 100 in 2010. These academies help develop leaders at every level.
I also spend a lot of time teaching. And after I teach, I stay. I don’t teach, make a presentation and leave. My understanding of most CEOs is that they’re very busy, and I don’t blame them, but most would depart to make it to the next meeting on time. I will never leave right at the end of the class. The reason for that is it builds trust and gives employees who may have been too shy in the lecture a chance to ask questions.
Additionally, things are constantly changing in healthcare. The “whats” and “whys” this year will likely be different next year, so I also make a point to meet with the alumni of the leadership academies once a month where we just do a Q&A about leadership and any changes.
Q: What is the hardest part of your day?
CVG: Running a big organization like Scripps is like running a city. There are great things that are happening all the time, and there are bad things that happen occasionally. That burden falls on me, and that’s probably the worst part of the job. Fortunately, those bad things don’t happen often, but when something happens to a patient that shouldn’t have happened or if one of my employees is attacked by a patient, those days are difficult. At Scripps, we’re trying to push forward legislation on workplace violence, because I’m very concerned that workplace violence is on the rise in hospitals. CMS has very strict rules about what we’re allowed to do to protect our staff, because they’re looking out for the wellbeing of the patients, as are we, but we have an obligation to protect both. That’s a very difficult thing to do.
Q: What is the most rewarding part of your day?
CVG: Any time the organization succeeds, one of our employees thrives or I get a chance to award a challenge coin — those are the rewarding moments. A few weeks ago, one of our environmental service workers broke up a fight where one patient was choking another. He broke it up and called the police. He could have very easily stood back and done nothing. He would not have been in trouble, because he’s not trained to intervene in situations like this, but he did and in a safe way. He prevented people from getting hurt or killed. That was one of our environmental service employees, who is phenomenal. So, when our employees excel and go beyond what was expected of them, it is extraordinarily rewarding. Additionally, I’m going to go visit a patient who struggled and was very sick but is now getting better. This patient and the family are thrilled with the care they received and they asked to see me. Obviously, those moments with patients are also highlights.
Q: What is the last thing you do before you leave the office?
CVG: Mother Mary Michael Cummings started the Catholic side of the health system in 1890. Ellen Browning Scripps founded the Scripps side of the system in 1924. Today, we are one system. One of the funny things I do when I get in the car at the end of the day is pause for a minute I and just ask myself, “Would Mother Mary Michael Cummings and Ellen Browning Scripps be proud of what we did today?” And the answer is almost always, “Yes.” When I answer that question, I feel good about that day. Then I drive home and start my post-work routine.
Q: Do you do any work at home?
CVG: Yes. Beyond checking emails and creating the market news reports, I also take home longer reports if I didn’t have time to read them at work. So often, I’ll just take those home and read and study those at night when I have more time.
Q: How do you unwind at the end of the day?
CVG: I volunteer with the sheriff’s department. A lot of that work is done in the evenings and on weekends. I’m a reserve assistant sheriff, which means I’m in charge of the reserves and the search and rescue team. I’m also an instructor of first aid and CPR at the search and rescue academy. My volunteer work is a complete diversion because I’m very often the caregiver, not the supervisor. It’s a great mental change from what I do on a day-to-day basis. I think that creates some balance. I also have family time. I have two boys and a wife. I always consider the weekends my family time.
The recent bankruptcy announcement by Verity Health System should worry CEOs and boards at hospitals all over the country that share some of the same characteristics, because they could be the next to fall, one analyst says.
The financial troubles of Verity are part of a trend in healthcare, and the health system’s experience shows that the dramatic arrival of a savior with deep pockets doesn’t guarantee organizational health and stability.
Verity operates six nonprofit hospitals in California, and citing growing losses and debts for the facilities, it filed for bankruptcy. The hospitals will remain open during the bankruptcy, Verity said.
The bankruptcy filing is a public failure for biotech billionaire Patrick Soon-Shiong, MD, a physician and entrepreneur whose privately owned umbrella company NantWorks in 2017 acquired Integrity Healthcare, the company that manages the Verity health system. Soon-Shiong said at the time that his goal was to revitalize the hospitals and improve the care they provided to mostly lower-income neighborhoods.
Though a surgeon and entrepreneur, Soon-Shiong had never operated hospitals before, as reported by STAT. The Verity system’s woes apparently were more than he could fix, with more than $1 billion of debt from bonds and unfunded pension liabilities.
The Verity CEO said at the time Soon-Shiong entered the picture that the system also needed cash to make seismic repairs to aging facilities and also needed hundreds of millions of dollars’ worth of new equipment such as imaging machines and neonatal intensive care units.
Verity’s overall experience is part of a trend in U.S. hospitals, says Ilyse Homer, JD, a partner at the Berger Singerman law firm with experience in hospital bankruptcies.
“There are hospitals all over the country that are not dissimilar in what happened to Verity—large debt, an aging infrastructure, an inability to negotiate contracts,” Homer says. “They have trouble with maintaining pensions and that is very typical in filings in other districts. There are some commonalities throughout the industry, and I can’t say I’m surprised that Verity came to this.”
Nantworks provided more than $300 million in unsecured and secured loans and investments, the Los Angeles Times reported. The money went to operational costs, pension obligations, and capital improvements, and only a third of it was secured by property.
The management company deferred most of the $60 million in management fees Verity was expected to pay over the last year.
Some criticism has been directed at financial decisions by Soon-Shiong’s team, such as providing millions of dollars to health IT vendor Allscripts rather than spending that money on capital improvements. Soon-Shiong has a financial stake in Allscripts. Fully implementing a new Allscripts health IT system could cost from $20 million to more than $100 million, according to estimates from different sources, as reported by POLITICO.
Even without any questions over Soon-Shiong’s strategy, saving Verity would have been a tall order for any investor, Homer says. The challenges were so great that it might have been too late to simply infuse cash and hope for the best, she says.
Once a hospital or system becomes weak in so many areas, it is hard to recover and gain strength again, Homer says.
“What happened to Verity is happening, to some extent, to a significant number of hospitals in the country. They have costs that are rising faster than revenues, and they’re being downgraded by financial analysts,” Homer says. Moody’s recently downgraded the entire hospital sector to negative, which suggests that there could be more bankruptcy in the future, she says.
“I absolutely expect to see more of this down the road,” Homer says.
The healthcare industry, in general, is in flux and the insurance industry uncertainty plays a part in that, Homer says. Struggling hospitals and systems are looking for ways to survive and the siren song of a billionaire like Soon-Shiong can be irresistible.
“I think this case shows that while you will have individuals and groups that want to come in and save or fix these hospitals, particularly nonprofits, it’s not necessarily as easy as adding a flush of cash when you have all these other issues that aren’t going away,” Homer says.
Healthcare CEOs should look at Verity for lessons in how much financial pressures can mount up, Homer says.
“My hope would be that they are looking at these issues as early as possible – renegotiating contracts, upgrading systems, ensuring pensions are funded – before they get to a crisis point,” Homer says. “Clearly this case is a reminder that this can happen, this can be the end result for your hospital system. [CEOS] need to be cautious and act on these issues before they get so far that even a huge influx of cash won’t solve their problems.”
The longtime CEO signaled in 2017, after a push for his ouster, that his likely successor would be recruited to the health system so he could retire.
The board decided keeping the same leader in place for another two years would be ‘our greatest advantage’ in the midst of change.
Eighteen months have passed since the medical executive committee of Willis-Knighton Health System in Shreveport, Louisiana, urged the board to force President and CEO James K. Elrod to either step out of his longtime leadership position voluntarily or be pushed.
The committee’s statement of no confidence in a letter to the trustees complained that Elrod failed to tolerate dissent and hadn’t responded appropriately to changes in the healthcare industry, as the Shreveport Times reported, describing the incident as “an attempted coup.”
Elrod was 80 at the time. He had worked for the organization more than 50 years and turned what was an 80-bed hospital into what became Louisiana’s largest health system. He weathered the criticism with backing from the board. Then he signaled in a letter to hospital staff that a succession planning process for his likely successor was underway.
Despite the controversy, the board announced Friday that it asked Elrod, now 81, to stay at his post for another two years.
“After taking some time to consider our vote, Mr. Elrod graciously agreed to delay his retirement plans,” board president Frank Hughes, MD, said in a statement describing Elrod as “our greatest advantage” in the face of uncertainty and change.
“This is a clear indication of his ongoing dedication and commitment to Willis-Knighton, and we are grateful for this decision,” Hughes added. “While we are pleased with the current senior leadership team assembled during the past 18 months, we felt that the greatest gift we could give them is additional time for mentoring and guidance. We made this decision in support of our physicians, our employees and the larger community.”
The workers, who are represented by Service Employees International Union-United Healthcare Workers West, announced the billboards April 2 amid contract negotiations. The billboards are scheduled to appear throughout April at seven locations that are all within 1.5 miles of the hospital.
A union news release says the billboards aim to draw attention to “excessive profits and CEO compensation,” as well as the amount of charity care the nonprofit hospital provides.
“The public deserves to know that this elite hospital with huge profits and obscene CEO compensation, isn’t acting in the public’s best interests,” Dave Regan, president of SEIU-UHW, said in the release. “On top of paying no income or property taxes, Cedars-Sinai skimps when it comes time to care for the poorest people in our community.”
The hospital addressed the union’s claims.
“The Cedars-Sinai Board of Directors believes in providing every one of our employees with compensation that is based upon merit of their individual performance, a rigorous review of each position’s responsibilities, and comparisons with other organizations for positions with similar responsibilities. For the president and CEO, the review process is even more extensive,” the statement said.
“[CEO]Tom Priselac’s compensation appropriately reflects his more than two-decade tenure of successfully presiding over the western United States’ largest nonprofit hospital. Under his leadership, Cedars-Sinai has earned national recognition for delivering the highest quality care to patients and has been ranked among the top medical centers in the country.
“Over the last 10 years alone, Cedars-Sinai has invested nearly $6 billion to benefit the local community by, among other things, providing free or part-pay care for patients who cannot afford treatment; by losses caring for Medicare and Medi-Cal patients; and by providing a wide range of free health programs and clinics in neighborhoods as well as education, health and fitness services in dozens of local schools.”
SEIU-UHW represents more than 1,800 service and technical workers at the hospital. The last contract with Cedars-Sinai expired March 31.
Scale can smooth out quality variation and assuage providers’ fears of taking on risk. But it’s not a catch-all solution.
A handful of accountable care organizations are moving to cover an entire state, but not everyone thinks bigger is better when it comes to population health management.
Caravan Health, a company that works with ACOs, last week announced the launch of its second statewide program, this time in Florida. In the model, any of the 200-some Florida Hospital Association facilities that want to participate can join together to provide coordinated care.
The bid is meant to bolster care quality for Medicare beneficiaries while lowering costs and risk for participating facilities. But some experts say the larger scale, like rampant consolidation, could be more like an anchor weighing down an ACO instead of a beam propping it up.
“At the end of the day, success or failure is based on success in managing the quality of care,” Michael Abrams, partner at Numerof & Associates told Healthcare Dive. “While there may be some bigger numbers involved, I think the safety angle that they’re selling may not be all it’s cracked up to be.”
Caravan has no plans to back down on the model, however, and plans to roll out two more statewide ACOs in the next couple of weeks.
ACOs existed before the Affordable Care Act, but in 2011 HHS released new rules under the landmark law aimed at helping providers coordinate care through the population health management programs. Since then, the number of ACOs have grown dramatically, from an estimated 32 to more than 1,000 in 2018, according to Leavitt Partners.
A statewide all-payer ACO in Vermont has seen some success, but Caravan’s model and its efforts are some of the first to leverage the programs over a much larger population.
The Florida ACO, created in partnership with the FHA, is the second from Kansas City-based Caravan. The first, in Mississippi, was launched in January. Under the program, hospitals have access to Caravan’s population health management model to build primary care capacity and monitor quality results.
Mississippi currently has 29 providers participating in the program, managing care for roughly 130,000 Medicare patients in 22 locations. Its operations include hiring and training population health nurses throughout the state, annual wellness visits, chronic care management and more.
It’s potentially a good business playbook for both parties. The hospital association captures a revenue stream that’s not dependent on their membership — increasingly important in these days of sharp provider headwinds — and Caravan is granted access to the Medicare lives of a couple hundred hospitals in the state.
The need for population health management is especially acute in Mississippi, which ranks last or close to last in every leading health outcome, according to the state Department of Health. Florida and Mississippi couldn’t be farther apart when it comes to their primary care infrastructure, a factor linked to ACO success. According to the NCQA database, Florida has 894 patient-centered medical homes. Mississippi has 74.
“With population health, we improve the health of our state so it’s a win-win all the way around,” Paul Gardner, the director of rural health at the Mississippi Hospital Association told Healthcare Dive.
And Caravan, which currently works with more than 225 health systems and 14,000 providers, touts its track record with its programs. In 2017, its ACOs beat nationwide ACO performance with savings of $54 million and quality scores of 94%, a spokesperson said.
By comparison, studies have yielded mixed results when it comes to ACO success elsewhere.
An April report from Avalere found the Medicare Shared Savings Program, a CMS model to foster ACOs in Medicare, missed federal cost-savings projections from 2010 by a wide margin and raised federal spend by $384 million.
But a National Association of ACOs analysis retorted that MSSP ACOs saved $849 million in 2016 alone, and a whopping $2.66 billion since 2013 (higher than CMS’ $1.6 billion estimate). And an early 2017 JAMA Internal Medicine analysis found ACO savings only increase with time.
The threat of financial loss is a leading obstacle to participation in ACOs. Smaller ACOs are more likely to experience widely variable savings and losses simply due to change, Caravan representatives say, while larger ACOs deliver more predictable and sustainable results.
“The only way we can create certainty around our income is to have processes and accountability and the infrastructure, but you’ve also got to have to scale,” Caravan CEO Lynn Barr told Healthcare Dive. Barr said that since Caravan’s 2014 inception, the company has found having 100,000 Medicare lives or more in an ACO yields larger savings than the roughly 80-85% of ACOs with only 20,000 lives or fewer.
As the owner of the ACOs, Caravan assumes 75% of the financial risk for providers. Barr said that evens out to a maximum risk of $100 per patient.
By comparison, in the basic track of the Medicare Shared Savings Program, the maximum risk for providers is $400 per patient. In the enhanced model it’s $1,500. “With our model, if people follow it and have 100,000 lives, there’s no reason they would ever write a check,” Barr said.
That is one of the selling features of the statewide ACO: It can be a mitigating factor for hospitals that might feel too exposed on their own, Abrams said.
But the threat of risk could still prove too much. CMS finalized new rules for shared savings ACOs in December, shaving down the amount of time they had before they were forced to assume downside risk from six year to two years for new ACO participants or three years for new, low-revenue ACOs.
And some critics say it’s a safe bet that the losses incurred by any one organization are not going to be spread across the other parties in the ACO, especially given the shortened timeline. As the deadline for assuming more risk approaches, Caravan could see attrition among providers who don’t feel ready.
“I think this is very, very, very challenging,” nonprofit primary care advocacy Patient-Centered Primary Care Collaborative Director Ann Greiner told Healthcare Dive. “Most of the hospital leadership has not been working under these kinds of conditions.”
And ACOs are all about a connection to the community, which might prove difficult to foster across an entire state.
“You’ve got to leverage people at the community level and have those relationships with the patient and, in the ideal world, know where to refer,” Greiner said. “At the state level, that’s pretty far removed.”
The scale of large ACOs makes them much more difficult to manage, experts say. ACOs have a single set of policies that, in an organization involving more parties, needs to be adopted in one form or another that’s acceptable to all participating providers.
That’s done by majority, Barr said. Each participating provider has a single vote and the overall vote binds the ACO board’s decision on waiver approval, discharge standards, shared savings distribution plans and more.
But in an ACO with a lot of differently cultured and structured providers — academic hospitals, teaching hospitals, acute care, research, small, medium, large etc. — it can get a lot more complicated, Abrams said. For example, if 100 FHA hospitals opt into the new Caravan Health model, that’s 100 variations in acute care policy, physician compensation and all else involved in managing cost and quality operations, and 100 different voices strongly advocating to keep doing things the way they’ve always done them.
“Some issues are just working through the details,” Gardner from the Mississippi Hospital Association said. “In some of your larger systems, that’s getting the medical staff all pulled together and singing off the same sheet of music.”
The more homogeneous the ACO organizations are, the easier it will be to get them to buy in to the various policies and procedures that need to be put in place for operations to flow smoothly. “You can’t outsource that,” Abrams said. “The most you can do is get guidance from someone who’s perhaps been around this block about how to handle it.”
Barr maintains Caravan standardizes the most important factors.
“Nurses are critical to this model,” Barr said. “That’s what everyone’s doing the same.” Caravan has found that after nurses are trained in population health management over three to six months, each dollar the company spends on that provider produces two dollars in savings.
And, after Caravan puts the population health management infrastructure in place, the providers themselves helm the ship with a steering committee, leveraging data to see what differentiates them from the next community and making slight adjustments to course-correct.
Hospitals will face two challenges: taking in the coordinated framework given to them by Caravan and translating it into behavioral change, Abrams said. The success of the overall ACO will depend on the latter as “those who can’t do that successfully will probably self-select out when it comes time to take on risk.”
The question is whether Caravan can really deliver on some of the promises it’s explicitly making.
“The truth is that hospitals who haven’t had the infrastructure to manage their cost and quality are not better off in terms of consolidation and a position in a larger ACO,” Abrams said. “So an ACO comprised of multiple small hospitals and independent hospitals can’t expect savings proportionate to their aggregate size.”
With more statewide ACOs on the way, it’s important Caravan (and partnering providers) work out any kinks in the model sooner rather than later.
“This is not like bringing in a plumber to fix your faucet,” Abrams said. “At the end of the day, an organization stands on its own.”