September 4, 2013


Mark Bethel

We all have a calling.

Ours as Hospital and Health System leaders is to take care of people and to make the delivery of care in our organizations better than when we found it. We work hard to create high quality outcomes and strong financial bottom lines! Right? Wrong! Too many hospitals are realizing that these two concepts are at competing odds with each other.

If you don’t believe me, just jump in your car and go visit five of your colleagues. Be fair about it, and divide your visits up to visit your colleague in a rural setting (ideally a sole community provider, even better if they are community owned), visit your colleague in an urban market who is competing with 1-3 competitors, and lastly, visit your colleague in an inner city hospital (ideally one who runs the regional trauma center). Each struggle to make the quality and the financial outcomes work; they just do it differently, based on ownership, access to capital, and payor mix. The truth is reimbursement is tight, and getting tighter, which means Capital is getting harder to get, and quality is beholden to competency of caregivers and technology, all of which cost money.

The industry is making a not-so-slow transition from “volume based” reimbursement to “value based” reimbursement, without a very clear path for how this transition will go. This means that each year more and more reimbursement will be tied to quality outcomes, but capital will still be based on bottom line financial performance; bond ratings or Wall Street all want strong bottom lines if you want money for capital projects. So if you are behind the ball on quality, then you are already way behind the ball on reimbursement, and if you are behind on reimbursement, then you are behind on capital. The cycle will go on and on until the organization is sold or closes down. It is just that simple.

So where do you start? I believe we start with what we know will not change in the coming years. We know that quality outcomes are still the goal of every Board of Trustees, physician, patient, and caregiver. The best CFOs in the industry have always acknowledged that Quality Healthcare is Cost Effective Healthcare. Value Based Purchasing is pushing this to be the forefront for how we are and will be reimbursed in the future. Chief Quality Officers are becoming the CEO’s new best friend. In fact, the CEO needs to evaluate all of his/her relationships in the organization. We need to be looking for partnerships. The people who will help carry the water with those partnerships and us must extend beyond the C-Suite.

The most important relationship that any CEO will need is the relationship that they have with their Medical Staff. By design, the C-Suite has positions that very effectively cover all aspects of the organization. CNO, CFO, COO, and CQO are all positions that are well defined and assure the CEO that the bases are covered. But the Medical Staff….that is the CEO’s baby and can’t be delegated. Those of us who have been fortunate enough to have CMOs know that this position can greatly help manage the relationship, but the relationship is still ours. As we position ourselves to embrace the future, our relationship with our medical staffs needs to change. We have to look to our doctors as partners and get away from the notion that they are customers.

Stay tuned for Part 3 of Mark Bethel’s “Fear.”

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