The noble aim of being a great subcontractor

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Earlier this month I was at a health system board meeting in which we were discussing the transition from volume to value, and the shift to a population health model. One board member had the courage to ask a tough question: “What if we never get there?” Covering just a small slice of a large metropolitan area, this system has consistently ranked third in market share behind two larger competitors—and now they feel they are lagging those systems in moving toward risk. The most recent challenge: a large—and until recently, loyal—independent primary care group had just been acquired by one of their competitors. Yet the system prides itself, justifiably, on delivering low-cost hospital care and outstanding quality.

I raised a heretical notion: suppose the system pursued a strategy focused solely on being the highest-performing inpatient and specialty care provider in the market, and abandoned the goal of bearing population risk? Could the system shift their focus to simply being the best “subcontractor” to other risk-bearing networks in the market?

The ensuing conversation was uncomfortable, to say the least. The notion challenged the system’s assumptions of the role they wanted to play in the market, and whether they could be a leader in population health. I encouraged them to think of being a “subcontractor” to other risk-bearing organizations not as a defeat, but as fulfillment of a vital role—healthcare in their community would be better if more hospital care were delivered at their level of cost and quality.

Our view: for many smaller systems who are driven by a desire to remain independent, becoming a high-performing care subcontractor may be the best path forward, and the most realistic. (It will be interesting to watch the successful investor-owned chains on this front—organizations whose strategic advantage lies in running highly-efficient, low-cost hospitals.) It’s not as sexy as “population health”, but as any builder will tell you, there’s no substitute for a great subcontractor.

Where is Dr. King now? A Civility Emergency

As the well-known, dramatic story unfolds, “Humpty Dumpty sat on the wall, Humpty Dumpty had a great fall. All the king’s horses, and all the king’s men, couldn’t put Humpty Dumpty together again.” Coincidentally, this nursery rhyme has me thinking about an important leadership issue.

During this Independence Day season, I’m concerned that our freedom is being threatened. Now is the time for honorable patriots to speak up and do our part on this issue. We must take a stand for civility in our culture, and it’s a basic responsibility as fellow colleagues and citizens.

What is Civility and why is it important?  

The word “civil” ties back to the Latin word for citizen, and the core meaning is the idea of people living together as a society under a government. The other well-known and related definition of the word civil is being courteous, respectful and considerate of others. To have and maintain freedom requires a degree of civility and tolerance for each other.

Just over fifty years ago Dr. Martin Luther King set the standard for civility when debating highly contested issues. Out of that era, our society learned a lot about respectful tolerance for others—it has been a foundational ethos over the past 30 years in the issues of race, gender, and religion, and it’s made us a better nation because of it. We had our differences in the past, but there was a general attitude of civility in debating them.

Today though, the tragic change is tolerance for being intolerant of others who have different ideas and views.

“When people reach a point of hate for each other because they have different perspectives, then you have a serious problem.”

Emotions are Contagious

From my past work in human behavior and performance, I know that emotions are contagious. Positive emotions give positive energy and make it easy to live and work together. Negative emotions bring negative energy and make it difficult to work together. We all know this principle from time spent with our work teams as well as relationships with family and friends. And the same thing applies to our culture.

Now we’re seeing intolerant and rude conversation on a mass scale. Some media outlets and politicians ignore the boundaries of civility, aggressively promoting disrespectful personal attacks on others who don’t share their views on politics or social issues. And social media has provided a layer of protection, allowing individuals to lash out in vicious ways at people they don’t even know. These actions aren’t illegal, but they are certainly anti-social and attack the civility needed to maintain a free society where we can live and work together.

Another Civil War?

A recent Rasmussen Poll showed that “thirty-one percent (31%) of U.S. voters say it’s ‘Likely’ that the United States will experience a second civil war sometime in the next five years, with 11 percent saying it’s ‘Very Likely.’[i]” This poll seems to confirm what I’m feeling—that we’re crashing over the boundaries needed in a civil society.

Underneath this breakdown in civility is the subtle mindset that “the ends justify the means”.

This is the bone-chilling Communist manifesto that we experienced in the POW camps, so I’m highly sensitive to this type of attack on freedom and independence. This abandonment of truth and civility can happen in our American culture, a business boardroom, a dysfunctional family relationship, or a dispute with a neighbor. No one can escape it, but we have an opportunity to do our part in arresting it.

What can we do?

If you’re agreeing with this article, then you’re part of the tribe that has decided to live and lead with honor! Regardless of your personal and professional perspectives or your allegiance to your like-minded group of people, you know that the true essence of influence and courage is taking a stand in a civil way regardless if that civility is returned in kind.  For more on this challenge, see my coaching video this month and hear my personal story.

Here are four things that we can do –

  1. Guard your own character first. Avoid using uncivil tactics to advance your arguments.
  2. Be direct and honest, but keep strong boundaries on your words and actions. Set an example of someone who can disagree politely and factually with those with whom you disagree.
  3. Speak up when you experience the intolerance of others, those who resort to negative name-calling that is hateful and viscous. Consider how we can respectfully not tolerate those who use incivility as a weapon to advance their ideology.
  4. Get a free copy of the Honor Code and share it with others. Pay special attention to Articles 2, 6, and 7.

If Humpty Dumpty takes a fall, it will be very difficult to put him back together again. Take a stand for our freedom and independence, stand and advocate for civility…in a civil way.





Independence Is Not a Strategy for Health Systems

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There are ways to keep going it alone in the face of massive consolidation, says one health system’s CEO. It’s not a strategy, but a means to end, he says.

Afraid your hospital or health system can’t compete because you lack size and scale?

A merger might help, but it’s not the only possible answer to your problems. Freehold, NJ-based CentraState Healthcare System’s top leader is certain it’s not the best solution for his organization.

Consolidation continues to upend the acute and post-acute healthcare industry. In fact, in a recent HealthLeaders Media survey, some 87% of respondents said that their organization is exploring potential deals, completing deals already under way, or both.

But CentraState isn’t among them, says John Gribbin, its president and CEO.

On a continuum basis, CentraState is already diversified. That’s one of the potential selling points of an M&A deal.

Anchored by the 248-bed CentraState Medical Center in Freehold, NJ, the 2,300-employee organization also contains three senior care facilities—one assisted living, one skilled-nursing facility, and a continuing care retirement community.

It can be argued that CentraState may not possess the scale to compete with multifacility, multistate large health systems that can take advantage of a hub-and-spoke strategy for referrals. Nor may it be able to afford expensive interconnected IT systems.

But there ways other than mergers to achieve scale and collaboration, says Gribbin.

Means to an End

Gribbin insists that he and CentraState’s board, which supports and encourages independence, are not dogmatic about it.

“Independence is not a strategy,” he says. “It’s a means to an end. The moment that ceases to be worthwhile is the moment we’ll consider another way to achieve our mission.”

Change is part of that strategy, he says, adding that healthcare in 2017 needs to be far more collaborative, not only with patients and family, but with other healthcare organizations. That’s a big difference from previous generations.

“Our real strategy is scale and relevancy,” he says.

And there are ways to create scale short of taking on all the legacy costs and “baggage,” as Gribbin calls it, inherent in any merger.

“There’s a lot of costs involved in merging… and while mergers work in some instances, they don’t work in all, and in many communities, they are increasing costs to the consumer,” he says.

In addition to the commonly stated goals of improving the community’s health and wellness, patient costs are extremely important in fulfilling CentraState’s mission, Gribbin argues.

Many mergers involve replacing hospitals and adding patient towers and high-cost equipment. That adds to their cost structure means they have to extract higher pricing, says Gribben.

“That’s the vicious circle you find yourself in. I prefer to create scale in a different manner.”

Focus on the Mission

Gribbin, who has led CentraState for 17 years, prefers to solve that challenge in part through a strong network of physicians unburdened by excessive administrative overhead.

He says the health system has to increasingly take on value-based contracting and financial risk. To be successful under such value-based reimbursement, partnerships with physicians are increasingly important, as is a redefinition of the relationship with the patient.

“We used to look at our relationship with the patient as a typical hospital stay,” says Gribbin. “What we’re preaching now is that hospital stay is a temporary interruption in our relationship. What happens before or after defines the relationship’s success.”

With its physician alliance and clinically integrated network in place, CentraState, unlike many hospitals, has been able to avoid, in large part, expensive physician practice acquisitions that can be a financial challenge.

“I’ve done it in the past, and may do it again, but we’ve tried to avoid it,” he says. Instead, contracts define the relationships and incentives.

As an example of those relationships, CentraState partners with a major patient-centered medical home primary care practice on four performance and three utilization measures.

As a result of the shared savings generated in the first year, which came largely from hospital-based savings, the physicians in that group referred 59% of their patients to CentraState.

This year they’ve referred 71% of their patients to CentraState because of its low costs, which help drive financial reward for both parties under the contract.

“On one hand, we’re keeping people appropriately out of acute care, but on the other hand, they’re sending [more] people here. So we’re experiencing higher but more appropriate volume. In this scenario, everyone wins,” Gribbin says.

A New Deal with Physicians

In order to avoid the need to acquire physician practices, Gribbin says it helps to have a suite of services to offer them as a starting point.

“Most don’t want to sell their practice, but they feel like they have to, he says. “If you give them the opportunity to stay independent, they’ll take it.”

Helping them with access to better revenue cycle management, malpractice insurance, and risk management, and helping them create the ability to enter into risk-based contracts is another big help with defining a new relationship based on shared goals with physicians that ultimately benefit the patient, he says.

Physicians can establish a relationship with CentraState through its independent practice association, or a physician hospital association, and avoid surrendering their autonomy, he says.

“The physicians got paid better, the payer saved money even including the bonus, the hospital won because it’s high value care, and the patient’s winning too,” he says. “It’s a microcosm of what we’re trying to accomplish.”

As a small organization, both Gribbin and the board worry about being frozen out of narrow networks. Much of the energy they’ve expended in being a low-cost organization is wasted, he says, if they can’t get the big payers to include them in contracting.

“As long as the market isn’t rigged against us, we’re OK, because we’re a high-value organization.”

How To Lead By Using The 10 Elements Of Dignity

In their book, Millennials Who Manage, authors Chip Espinoza and Joel Schwarzbart, quote Donna Hicks‘s explanation about how dignity is different from respect.

  • Dignity is different from respect in that it is not based on how people perform, what they can do for us, or their likability. Dignity is a feeling of inherent value and worth.

Therefore, Espinoza and Schwarzbart recommend that leaders treat those they are leading with dignity and follow Hick’s 10 Essential Elements of Dignity:

Organizational Independence: Mission Impossible?

independence-day-64dMission Impossible

Adherence to a strict interpretation of the goal of independence can be a critical barrier to positioning the organization for a value-based environment.