Monday, June 4, 2007

Future - Hospital CEO in 2020

Old hospitals CEOs never die, they just lose their facilities.


January 1, 2020, Anywhere U.S.A. – Back in 2007, the world was your oyster. You presided over everything in the hospital. In your community, your hospital was everything to everybody who needed care 24 hours a day. You were the center of their health care universe.

Your facility was the only game in town. In 2005, your hospital had merged with the hospital across town, effectively ending local hospital competition. The merger made it easier to negotiate with health plans. They had nowhere to go.

The U.S. government had imposed a moratorium on doctor-owned specialty hospitals, thus eliminated another source of competition. But government intervention was not really necessary. Your hospital had acquired most primary care doctors in town, and you had forbidden them to refer to the a local specialty heart hospital, thereby depriving it of referrals and killing it before it got off the ground.

Your bottom-line was healthy – so you pretty much had your way with the governing board. You worked well with other members of the “C-suite” – the chief operating officer, the chief information officer, the chief medical officer, and the risk manager. With your record of success, they have no reason to question your judgment or to quibble with your leadership.

The locals flocked to your hospital's various “centers of excellence” – the heart center, the cancer center, the hospital-owned ambulatory care center, and the newly minted orthopedic and endoscopy centers, which you owned and controlled.

The emergency room was crowded with long waiting lines, but there was no where else for people to go, so the ER was breaking even and serving as a “loss leader” for other hospital departments. Besides, you were in an affluent growing community, and unpaid care was not yet a burden.

At first slowly but then swiftly things began to change.

External Affairs
– What was happening outside the hospital grounds suddenly became more important than what was going on inside. You began to realize that inside there were always problems, outside there were the opportunities – and dangers that threatened your control.

•The citizens of your state became concerned about high health costs and the high rate of the uninsured. From 2007 to 2011, the state introduced a universal coverage plan, which imposed a 4% tax on his facility.

•More and more, business and community groups asked you to speak on the issues of universal coverage and the uninsured. You started to spend more and more time on preparing for those events. You were forced to give up some of your internal duties to other members of the C-suite.

•Lawyers across the nation and the state began to question whether non-profit hospitals like yours should retain your tax-free status. One lawyer had the gall to bring suit against you for your bill for an uninsured person and for pursuing the collection of that bill. One lawyer, Dickie Scruggs in Mississippi was threatening to bring a civil action against all not-for-profits, thereby threatening their charitable tax=free status. This troublesome lawyering intensified when the public learned that the rates charged the uninsured were much higher than rates of Medicare, Medicaid, and health plans.

•Consumers, many of whom had joined high deductible health plans linked to HSAs began to demand to know in advance what the costs of procedures would be in your hospital. Why, they asked, couldn’t they know in advance what the bundled bill – the combined bill of doctors and hospitals – would be for joint replacements, heart bypasses, and a variety of other high tech procedures? Why, they pressed, couldn’t the bill be more “patient-friendly,” i.e. comprehensive to the ordinary layman?

•Demands for “transparency” data on costs, outcomes, and other quality measures grew. The hospital was forced to make public its death rates from cardiac surgery. The infection rates of the hospital also became mandatory public information. Legislation on public safety became a state and federal issue. You were compelled to spend more time. to divert more resources, and to explain your policies towards drug safety and infection safety issues.

Strategic Concerns -Then matters of increasing strategic importance began to surface, one after another.

•How was your centralized facility going to handle the consumer demand for decentralization? For placing your facilities where the patients were? For turning your hospital inside out to serve the greater public – particularly those assertive baby boomers? The public was asking for ambulatory care units where they worked, played, and paid their bills – in the suburbs and beyond. They wanted your hospital and your doctors, who weren’t “yours” at all and over whom you had scant control, to operate as an integrated entity – with one reception area, one bill, and one-stop shopping facility.

•Physician specialists, pressured by dropping reimbursement and mounting regulation, sought to own and operate their own facilities, or failing that, to enter into a partnership status with the hospital. They wanted to control the clinical care, they wanted equity, and they wanted a percent of the profit. To make matters worse, the moratorium against physician-owned specialty hospitals and ambulatory care facilities was dropped. It became apparent that specialty owned facilities had better outcomes and more satisfied customers. Your moral high ground – that you had a God-given right to serve the community, to control care because only you served the common good – began to erode. Consumers armed with HSAs began to change allegiance from the hospital to more convenient ambulatory centers with better parking, more amenities, better service, and more options.“Decentralization,” getting closer geographically to patients, became a rapidly expanding movement. And doctors were quick to capitalize on better anesthesia, less invasive procedures, quicker recovery time, and rapid turnaround times making overnight stays unnecessary.

•The shift to alternative sites was aided, abetted, and facilitated by great leaps forward in information technologies. Google, other search engines, and the Internet in general, began to impact how you did business. The costs of EHRs dropped, more doctors installed them, electronic diagnostic support at the point of care became the rule, personal health records became the order of the day, and duplicate tests at hospitals became unnecessary. You were being asked to join with other hospitals, and with your own doctors – with whom you competed – into RHIOs (Regional Health Information Organizations – to pool and compare your data. For you, this was a tough sell. You were not eagar to share your results and your secrets with your competitors.

•Because many high-tech specialists were abandoning the hospital to perform procedures at their own facilities, your hospital began to suffer profit losses. You adjusted in various ways – by becoming business partners with physicians, specializing in acute and critical care for the desperately ill, hiring more hospitalists and proceduralists to become more efficient, expanding into such areas as alternative, cancer and hospice care, and becoming more “green,” holistic, and experiential. You became aware of the “total patient experience.” You hired focus groups to study what patients really felt and did. You outsourced “customer management relationship.” You began to use predictive modeling and artificial intelligence techniques to shape your management decisions.

•From 2005 to 2010, hospitals underwent an unprecedented building boom to prepare for aging and demanding babyboomers. The boom featured hospitals with greater safety, green rooftop gardens for peace and healing, more and softer lighting, exclusive dining for patients with ordering from high-end menus, rooms for visiting relatives. While this was occurring, there were increasing demands for “green energy” with hospitals requiring less energy to heat and operate, and for “socialized networking” and “virtual visits, “ whereby prospective patients could visit online with previous patients and could visit and view the hospital over the Internet. There was also a movement to “engage” patients by showing them videos of exactly what to expect from a surgical or any other invasive procedure or from treatment for a chronic disease episode. The demand for transparency had extended to clinical care itself.

Governance Changes
– The changing environment required new skills for the CEO.

•You began to recruit experts from outside the usual hospital fields – from the financial, marketing, information technology, and retail sectors. Many in the retail sector had learned to innovate to survive by offering consumers more choices, more convenience, more bundled and packaged service, and more control over their health care as it applied to their everday lives. This required intensive consumer research, as well as ATM-like data entry by health consujmers, card swiping, card containing health and financial information, more buying options, and more credit opportunities. Health care was becoming more open, more transparent, and more scrutinized by consumer, government, and Internet-based rating agencies. It was if you were operating under a data microscope.

•You had to transform the whole nature and content of the hospital board. Running a hospital was no longer a low risk enterprise, it no longer involved just managing a centralized facility, it required multiple experts from other fields, it offered previously unthought of opportunities, it had become an innovative and creative enterprise, more complex but also more exciting and more satisfying than other purely commercial ventures – for it involved life and death, and sickness and health decisions. In some ways, it was less fun than it used to be, for the tail seemed to waving the dog, and it was no fun going from a big dog to a lap dog. But you were up to it. You had come a long way since 2007, and you knew what you had to do in the brave new world outside your old facilities.

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