Remarks for a corporate executive upon joining a hospital or health system Board

Today’s Managing Health Care Costs Indicator is 10

Top corporate executives sit on the boards of directors or trustees of nonprofit hospitals and health care delivery systems in many communities.  It’s natural that health care providers want the best minds in business to participate in their governance.  It’s also natural that executives want to ‘give back’ to the community, and it’s an honor to serve on a hospital or health system board.

However, it’s a tough position to be in.  The rise in health care costs is a major headache for the corporate executive, but hospitals seek to increase their revenue.  A hospital that has not increased its revenue is likely to have trouble borrowing money to make capital investments that will keep it successful.

I’ve been talking to a few colleagues about this, and I offer theoretical maiden remarks for a corporate CFO who has just joined the board of a health care delivery system.

Thanks for the opportunity to serve on this board.   This health care delivery system is a pillar of our community.  It delivers health care to many of my company’s employees, and my family has benefited from the excellent quality of health care within this system.

I know I’m joining this board at a time of great change.  Health care costs have skyrocketed over the last decade, and insurance premiums are increasingly unaffordable to companies and to our employees.  My own company has only been able to continue to offer health care coverage and maintain our bottom line through converting our employees to high deductible health plans – so I’m well aware of the impact of rising health care costs.  At the same time, we’ve learned more about the mistakes patients suffer within the health care system, and we know that the system is rarely designed with patients in mind.

Health care reform promises to increase the portion of Americans with health insurance; however, many will have Medicaid, which I know has low payment rates.  It won’t be possible for providers to simply shift extra costs to employer-sponsored health insurance to make up for poor Medicaid payment rates.  

I intend to use my expertise to push this health care system retool itself to succeed in this new world. I hope my fellow Board members will join me.   I don’t underestimate the challenge, and I know that many of this health care system’s constituents would rather things remain as they were.  The current state, though, is not sustainable. We can meet our community mission through delivering higher value in health care, and we cannot meet our community mission if our costs continue to escalate unchecked.

I know that some good transformation work is already underway here, and I’ll be listening to our executives and our staff because I know many of the best ideas will come from those practicing within this system.   As I start my term, I’d like to suggest ten steps this health care delivery system should start working on tomorrow morning to start down the road toward being more accountable, and to deliver better quality, more affordable health care to this community.

1.      Be fully transparent
I’d like to see us make public all of the data we collect on quality, patient service, and patient satisfaction.    That especially means reporting on our performance where we don’t look as good as our reputation and our self-image.  I know our clinicians are intensely committed to being the best – and I suspect that we’ll make things better more quickly when everyone knows that our quality scores will be readily available to anyone through our web site.

2.      Put together bundled prices for various service lines
We need our entire medical staff to function as a team – and we need to have the right incentives to take steps out of our processes that will allow us to deliver the best treatment for a lower price.   As long as we are paid more for delivering more units of service, it will be hard for us to figure out how to make our patients better with fewer units of service.

3.      Fully disclose any medical error or bad outcome, apologize, and offer restitution when we make errors
Harvard Medical School hospitals adopted this policy a few years ago, and the Veterans Administration and the University of Michigan have showed that this can lower the overall cost of health care.  It’s also the right thing to do, and the way all of us would want ourselves and our families treated when we get care within this system.

4.      Consider the community’s real medical needs, rather than revenue potential, when we make capital decisions.
Many hospitals purchase new fancy technology which adds little to patient benefit, but allows for much larger bills and revenue.  Some hospital CEOs have complained about this, but haven’t had the fortitude to obey their own rhetoric.  We want technology that will be the best for our patients and allow us to deliver the highest quality care that is cost-effective. We don’t just want the latest gizmo.

5.      Get rid of sample closets for pharmaceuticals in practices owned by the health care system, and prohibit pharmaceutical representatives from our campuses
Our physicians are making purchasing decisions on behalf of their patients.  Let’s give them access to nonbiased sources of information, and let’s not entice them to prescribe the latest brand name medicine for which there are plenty of generic equivalents at a fraction of the price.

6.      Drive a hard bargain with suppliers
Medical devices are expensive – and often drive up the cost of medical care unnecessarily.  Limit the number of different implantable devices available, and get the best price on behalf of our patients.  The same goes for all supplies.  First, be sure we need the supply.  If we need it, get the supply at the most advantageous price – as if it were our money we were spending.  We will be spending our own money on supplies in a future world of bundled payments.

7.      Improve the health habits of our own employees
Our employees serve as an example to the entire community, and preventable chronic diseases take up too much of our medical resources.  Let’s fully cover counseling and medications to help them quit smoking, and offer healthy food alternatives in our cafeterias.  Let’s make it easy for our employees to walk or cycle to work where that’s safe, and let’s set up employee competitions for exercise to drive the social network here to promote healthy lifestyles.

8.      Give our patients better tools to help them make better decisions
Patients often don’t have the best available information to help them make difficult choices, especially where there is no single “right” medical answer.  Examples include back surgery, hysterectomies, heart surgery, and mastectomy and prostatectomy for cancer.  Patients given access to objective information on treatment alternatives often choose less invasive therapy and have lower costs.  Hospitals have not been enthusiastic about this in the past, as more invasive therapy is often more profitable.  I’d like us to focus on helping our patients make the best decisions for themselves and their families, not merely focus on promoting decisions that might be better for our bottom line

9.      Support efforts to improve the health of the entire community
Our mission is to improve the health of the community – not just those who see us as patients.  I know in the past we’ve done cancer screenings which can increase our own volume. I’d like to see us do much more.  I’d like to see this health care system as at the hub of ‘information therapy’ in the community, and I’d like to see us helping more members of our community avoid chronic disease, and avert preventable emergency department visits and preventable hospital admissions.  We should publish an annual stewardship report showing what we have done to improve the health of the entire community.

10.   Reach out to community employers to see what their real needs are, and to get feedback on how we’re doing. 
Employers purchase health care for their employees because it’s genuinely important. Employees value their health insurance, and the certainty of this insurance means that they can focus on their jobs.  Better health also leads to increased worker productivity.  I’d like to see us regularly interview executives from other companies in our community to assess their needs and how we’re meeting those needs.   When I talk to my colleagues I hear that they would like more primary care access to prevent avoidable emergency department visits and better musculoskeletal care to help patients with back injuries return to work more quickly. I’m sure we’ll learn a lot from talking to other employers, and we’ll help improve our own processes here.

None of what I’m suggesting here is easy, and much of it will be very disruptive. I’ve already talked to the CEO about this, and she’s supportive, but aware that she’ll face opposition from some clinicians and others within the organization.  To succeed, we will need this transformation to be the focus of this Board over the coming months and years.   

I think as a Board we’ll be up to this challenge, and I’m glad to have to opportunity to join you.