Following up on last week’s blog on key resources for hospital executives, the Agency for Healthcare Research and Quality (AHRQ) offers valuable information on transformation and other improvement initiatives. Their website (link below) provides insight into topics that should be top-of-mind in today’s environment.

The Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys are a case in point. The results of CAHPS surveys, which ask patients to report on and evaluate their experiences with providers, are in the public domain. The data is not only accessible to healthcare consumers but is also used by public and private purchasers of healthcare, regulators, quality monitors and community groups. Organizations and consumers will increasingly use the survey results to inform their decisions about healthcare services.

Other topics addressed include AHRQ Quality Indicators (QIs), which are metrics of hospital quality and safety derived from readily available hospital inpatient administrative data. Hospitals across the country use the QIs to track their performance over time as well as identify potential problems related to quality and safety.

Hospital construction is another key topic. Approximately $200 billion will be invested over the next ten years to build new hospitals. As noted by the agency, “the United States is embarking upon one of the largest hospital building booms in the nation's history… this new construction is being undertaken to replace aging hospitals, incorporate new technologies and medical practices, and respond to external market factors, including America's growing and aging population.”

To learn more, visit: http://www.ahrq.gov/index.html

“Hospitals in Pursuit of Excellence” is a key resource offered by the American Hospital Association. It’s a web-based platform that provides executives in the healthcare industry with comprehensive information about how to “accelerate performance improvement and support delivery system transformation in the nation's hospitals and health systems.”

At the website (link below) you can find information on hospital best practices, guides about evidence-based medicine, and briefings on national projects being undertaken to improve hospitals. In their Resource Library, you can sort through available materials by categories such as:

Care Coordination
Care Delivery Transformation
Operational Excellence
Patient Safety and Quality

Additionally, you can easily locate resources that pertain to your particular type of hospital, such as Children’s, Community, Critical Access, Health System, Public, Rural, Small, Teaching and Urban.

You can visit the Hospitals in Pursuit of Excellence website at: http://www.hpoe.org/

In a report released last month by the American Hospital Association, a survey of 1,100 healthcare executives revealed emerging “talent gaps” in hospital management. In the report, titled, “Building a Leadership Team for the Healthcare Organization of the Future,” the executives cited key gaps in their organization’s capabilities. Pinpointing the areas where more skills are needed:

54% said their management teams needed more experience leading nontraditional health partnerships, including strategic partnerships with payers and retailers

48% cited a need for greater talent in the areas of community and population health management

41% indicated a lack of experience in change management and transformational change

37% noted a deficit in advanced financial expertise

34% said their management staff lacked key skills in innovation and creativity

29% pointed to a shortfall in data analytics experience

In the AHA report (link below), healthcare organizations indicated they were actively working to close these talent gaps in a variety of ways. Many organizations said they planned to address these deficits “through the addition of new executive team positions to lead and galvanize support for initiatives in top strategic areas.” Evidence of this trend was noted in the report, which stated that “60 percent of survey respondents said the senior management team of their organization is larger today than it was three years ago.”

Other topics addressed in this informative report include:

Challenges to Achieving Strategic Priorities
New Leadership Roles, New Capabilities: The Emerging Health Care Organization
Traditional Roles Evolving
Broad Leadership Skills Needed
Overcoming Organizational Barriers
Building the Leadership Team for the Future Health Care Organization
Evaluating Board Composition

To learn more, the report can be accessed via the AHA website at: http://www.hpoe.org/Reports-HPOE/leadership-team-future-2014.pdf

At its annual conference held May 15-17 in Chicago, Becker's Hospital Review sponsored a presentation by three healthcare executives on the key attributes of successful health systems. The panel was moderated by Chuck Lauer, previous publisher of Modern Healthcare.

During the discussion, four essential themes emerged as the leading attributes of great health systems:

1. Crystal clear visions and missions.
2. Engaged, energetic leaders who are comfortable with ambiguity.
3. Having a “wide lens” when defining who they serve.
4. Board members and executives who aren't hospital-centric.

On the topic of leadership, the panel pointed to the need for executives to perceive difficult challenges as opportunities for growth and innovation. Raising the issue of “old school” versus “new school” ways of approaching problems, Deborah Proctor, president and CEO of St. Joseph Health in Irvine, California, and chairperson of the Catholic Health Association, remarked that today’s leaders need to “live in ambiguity and live in it comfortably.”

For more information on the key points raised in this panel discussion, visit: http://www.beckershospitalreview.com/leadership-management/4-signs-of-great-health-systems.html

Executives of hospitals and health systems need an effective strategy when moving from volume-based to value-based business models. To help you develop the right strategy for your organization, the American Hospital Association (AHA) has published an informative 40-page report (link below). In the report, five strategic approaches to transformation are described along with ten “guiding questions” to consider.

Last week at the AHA’s annual meeting in Washington DC, a key presentation featured panelists who discussed their different approaches to implementing value-based models. Executives from WellPoint, Billings Clinic, and Presbyterian Healthcare Services in New Mexico shared their strategies.

The three facets of the presentation showed how each organization took a different path to success: CareMore, a division within WellPoint, developed greater specialization in a market niche; Glendive Medical Center, a previously independent facility in Montana, chose to affiliate with Billings; and Presbyterian of New Mexico redefined its operations by starting a health plan that covers 435,000 members and includes 600 healthcare providers.

Jason Barker, President at CareMore, discussed solidifying its position in a niche market by focusing entirely on caring for patients who are older and frailer. Their keys to success involved accuracy in predictive modeling and earlier interventions with patients.

Scott Duke, VP of regional operations at Billings and former CEO of Glendive, talked about affiliations and emphasized several key factors when evaluating a partnership: alignment of missions, values and care models; strategic planning that involves extensive research; and consistent communications with stakeholders.

Jim Hinton, President and CEO of Presbyterian Healthcare Services, cited several critical success factors for health systems and care coordination programs: effective collaboration among all entities; aligned financial incentives; rapid cycle improvements; and clinical leadership.

You can access the AHA report on moving toward value-based models in the “Resources” section at: http://www.aha.org/research/cor/paths/index.shtml

Last week Texas Health Resources set a good example of how to use strategic communications as a means to differentiate itself within the environment of healthcare reform. Texas Health Resources is a not-for-profit health system comprised of 26 hospitals, 58 outpatient facilities, and 560 MDs in a physicians group.

In an April 30 press release titled “Texas Health Advances Transparency and Accountability with Public Quality and Safety Report,” the health system released a series of reports comparing their numbers with cumulative data aggregated across other hospitals in Texas and the U.S. The CEO of Texas Health Resources, Doug Hawthorne, stated, “We are stepping out ahead of every other health system in North Texas and ahead of most other systems across the nation.”

Proactive communications are going to play an increasingly vital role over the coming years as data about the quality of care becomes more visible to healthcare consumers. For example, at the CMS “Hospital Compare” website (link below), consumers can compare their local hospitals’ performance in areas such as:

● Consumer experiences at the hospitals
● Timeliness of care in areas such as heart attack, surgeries and preventive care
● Unplanned readmissions and death rates
● Use of medical imaging
● Medicare spending per beneficiary

Hospitals and health systems that proactively position their performance data will gain competitive advantages in the markets they serve, and the key to success in that effort is strategic communications. CEOs and other executives will need to develop and implement a communications plan to position their data in the most favorable light. The “silver lining” here is that no single hospital or health system will be dominant across a majority of data points, which presents opportunities to competitively position and promote your hospital’s greatest areas of performance.

To view how Texas Health positioned its data and to review the current data points available at “Hospital Compare,” see the web resources below.

Texas Health Resources Quality Reports:
http://www.texashealth.org/Quality-Reports

CMS “Hospital Compare” Website:
http://www.medicare.gov/hospitalcompare/search.html

As a representative example of nationwide developments, Community Memorial Healthcenter (CMH) in South Hill, Virginia, is merging with a large partner, Virginia Commonwealth University Health System. The merger, which was announced earlier this month, reflects a growing trend.

Prior to this year, CMH managed to operate for 60 years without a budget deficit in all but one of those years. When the hospital releases numbers for its current fiscal year which ends June 30, the CEO, W. Scott Burnette, is quoted as saying, “It’s not going to be pretty.”

Burnette’s sentiments and comments by other executives and analysts are included in an article published in the April 20 edition of the Richmond Times-Dispatch. A link to the article is provided below.

As noted in the article, the key factors driving consolidation for smaller community hospitals include the following:

1) The hospitals need access to capital to survive
2) Economies of scale are needed to control costs
3) The complexity of government regulations are straining resources
4) Technology requirements are growing in complexity
5) Hospitals are increasingly accountable for the quality of healthcare services
6) Business models are shifting from fee-based to value-based

In a report released by Standard & Poor’s at the end of 2013, the outlook for non-profit healthcare providers was downgraded from “stable” to “negative.” According to the report, “the sector is finally at the tipping point – where an increasing number of organizations will find themselves weighed down by issues that outstrip their ability to implement sufficiently robust positive countermeasures.”

To learn more about these and other issues influencing mergers and acquisitions, including key factors related to Medicare, Medicaid and the Affordable Care Act, see the Richmond Times-Dispatch article at:
http://www.timesdispatch.com/business/health/community-hospitals-on-front-line-of-medicaid-battle/article_51338dc8-3a96-556f-a306-7298f40f7742.html

In a report released April 10, consulting firm Kaufman Hall indicated that M&A activity among hospitals and health systems continues to increase. During 2013, there were 98 mergers and acquisitions, up three percent over 2012, but up 51% compared to 2010. In their analysis, Kaufman Hall stated, “The level of activity shows consolidation continuing to occur among not-for-profit hospitals and health systems as they position themselves for value-based payment and population health management.”

The numbers are even more substantial when taking into consideration other healthcare entities such as physician groups, labs, MRI, dialysis, home health, behavioral health and hospice. The most recent figures available indicate that there were 267 mergers and acquisitions during the third quarter of 2013 alone. That was an increase of 16% over the second quarter of 2013, and a 35% increase compared to the third quarter of 2012. Those numbers were reported by Irving Levin Associates, a business intelligence firm that specializes in healthcare finance.

Commenting on the data released by Irving Levin, Lisa Phillips, editor of Health Care M&A News, said, “Health systems that have made strategic acquisitions such as physician medical groups will now turn their attention to long-term care, home health care and rehabilitation to fill out their care continuum requirements. We still expect a fluid market in physician medical groups and continued consolidation among hospitals.”

Ernst & Young’s senior managing director for U.S. healthcare mergers and acquisitions, Gregory Park, indicated last month that the Affordable Care Act was causing a “tectonic shift” in hospital operations. Michael Finnerty, Managing Director at Kaufman Hall, commented, “Our analysis confirms that hospitals and health systems are continuing to pursue partnership arrangements as one approach to accessing the enhanced infrastructure necessary to provide care successfully in the changing environment.”

This changing landscape in our industry presents unique opportunities for healthcare executives to differentiate themselves among their peers. There’s no better time than now to evaluate how you can position your leadership skills and accomplishments to take advantage of the transformation that’s occurring in the healthcare industry.

Numerous firms are in the business of ranking hospitals (U.S. News & World Report, Healthgrades, Truven Health Analytics, LeapFrog Group, American Nurses Credentialing Center, etc.). Recently, Becker’s Hospital Review analyzed all of these sources and other data to develop its annual list of “100 Great Hospitals in America.”

Becker’s data isn’t a ranking – it presents a list of 100 hospitals in alphabetical order. The value of this list is that it identifies key trends and activities that executives can use to improve the position of their hospitals in today’s rapidly changing landscape. If you’re in a career transition phase, you can use this information to acquire valuable knowledge and help differentiate yourself among your peers.

The information is an “easy read” – just three paragraphs per hospital – so you can scan through the list, review some of the data, and perhaps gain some inspiration about how you can evolve your hospital’s clinical and business practices to increase performance in one or more areas.

Becker’s report also serves as a reminder of the importance of communicating the accomplishments of your hospital. No matter how great a job you’re doing, if you don’t get the word out there – both to your community and to your internal personnel – you increase the risk of placing your hospital at a competitive disadvantage. If you haven’t yet implemented or strengthened your hospital’s strategic communication plan, it’s important to begin to evaluate how proactive communications can:

(1) Improve the perception of your hospital by industry analysts and the board
(2) Improve awareness of the value and quality of your hospital within the community
(3) Improve the alignment of your staff with clinical and business goals

To view Becker’s data on “100 Great Hospitals” and discover how they’re differentiating themselves, you can access the report at:
http://www.beckershospitalreview.com/100-great-hospitals-2014/full-list.html

At the ACHE “Congress on Healthcare Leadership” this week, a key presentation discussed the issues surrounding increased scrutiny of executive compensation. The presenters, F. Kenneth Ackerman Jr. and David A. Bjork, chairman and senior vice president at Integrated Health Strategies, stressed the growing importance of establishing a compensation committee to improve governance. The speakers referred to a report (link below), issued by the Alliance for Advancing Nonprofit Health Care, which helps healthcare executives answer a simple question: “Among all of the 50–100 ‘best practices’ that permeate the literature, which are the ones that are likely to make the most difference in achieving excellence in governance?”

In the concise report, titled “Great Governance,” the authors provide recommendations on how to establish and improve compensation committees and other governance practices. Seven benchmarks are listed in the report, along with “key action steps” to consider when addressing the benchmarks.

Appendices in the report provide checklists to evaluate board meeting practices and other governance activities. It’s a great document that will help CEOs and other executives address hospital compensation plans. The proactive planning discussed in the report will also help executives respond to challenges from board members as well as from the media regarding executive compensation.

The bottom line is that it’s important to educate board members before questions arise—and by strengthening the compensation committee, the board will help protect the hospital, the CEO and the board itself.

You can access the “Great Governance” report at http://www.integratedhealthcarestrategies.com/documents/articles/378.pdf

According to a 2013 survey co-sponsored by the American Society for Healthcare Human Resources Administration, CEOs of independent health systems earned a median salary of $750,000, while CEOs at subsidiary health systems earned a median figure of $539,000. CFOs at hospitals and health systems earned median compensation that ranged from about $200,000 at subsidiary hospitals to about $400,000 at independent systems. Median salaries for COOs at health systems ranged from approximately $350,000 to $450,000 depending on the type of ownership. At independent and subsidiary hospitals, COO compensation averaged about $300,000.

This data and additional details are found in an article published by Becker’s Hospital Review (link below). The article also discusses five trends in hospital executive compensation to watch in 2014:

1. Expect modest increases, generally between two percent and four percent.

2. Nonprofit hospital executives need to address the public perception that compensation is not tied to healthcare quality.

3. Compensation plans will be more closely linked to value-based outcomes and physician engagement and alignment.

4. Advocacy groups are pushing hospitals to align compensation with attaining goals.

5. Hospital executives who are physicians are in high demand and receiving greater pay increases.

The bottom line is that there are new factors coming into play with hospital executive compensation – and the more you know, the better you will be able to navigate the changing landscape. To see the article in Becker's Hospital Review, visit
http://www.beckershospitalreview.com/compensation-issues/the-great-pay-debate-5-hospital-executive-compensation-trends-for-2014.html

In a March 10 press release, ACHE reported that CEO turnover occurred at one out of every five hospitals in the US during 2013. The 20% figure is the highest turnover rate recorded by ACHE since they started reporting the annual data in 1981. For 2013, ACHE reported 4,546 total hospitals in the US, which included general medical, short-term and non-federal hospitals.

President and CEO of ACHE, Deborah J. Bowen, said, “The increase in the turnover rate may be indicative of a combination of factors, including an increased number of baby boomers seeking retirement, the emerging trend toward consolidation in our industry and the complexity and amount of change going on in healthcare today.”

On its website (link below), ACHE provides a state-by-state list showing the percent of CEO turnover. States are ranked by high-turnover, medium turnover, and low-turnover. Among states with the highest turnover rates are Oklahoma (33%), Arkansas (30%), Virginia (29%), Florida (27%) and Louisiana (27%). States with the lowest rates include New Jersey (10%), Oregon (13%), Pennsylvania (14%), Wisconsin (14%) and Minnesota (15%).

In 2013, Black Book Market Research reported that the average tenure of a hospital CEO is less than 3.5 years, and that involuntary termination accounted for 56% of that turnover. Other findings reported by Black Book include the following:

A) 87% of Chief Medical Officers are replaced within two months after a change in CEO.

B) 94% of new CEOs who come into their position without extensive hospital experience say they don’t think healthcare expertise is needed when replacing other senior executives during an overhaul of management staff.

C) 89% of board members involved in hiring an “outsider” indicate that “broad business operational expertise and singular vision pays off with fresh perspectives on efficiencies, value, cost savings, and the goodwill to the community.”

Commenting on the accelerated rate of hospital CEO turnover, Ms. Bowen remarked, “The increase in the rate reinforces the need for healthcare leaders to work with their boards to ensure appropriate succession plans are in place.”

The complete list of state-by-state CEO turnover rates is available at:
http://www.ache.org/pubs/Releases/2014/hospital_ceo_turnover_rate14.cfm

Historically, hospitals have experienced difficulties managing physicians. But with the new healthcare reform initiatives, employing physicians is seen as critical to reaping new revenue streams tied to greater coordination of healthcare. As a result, health systems have been acquiring physician groups at an accelerating pace.

In the article linked below, “Making Physicians Pay Off,” Beth Kutscher of Modern Healthcare does a great job explaining the cost-benefit factors that hospitals are reviewing when trying to balance the “current costs” versus “future benefits” of employing physicians.

Here’s a key takeaway offered in the article: “Given a median loss of $176,463 for employing a doctor, some analysts are predicting a pullback on physician buys this year.”

However, many hospital executives continue to say that these acquisitions are critical because their current balance sheet numbers don’t reflect the future reality: capitalizing on new revenue opportunities will require much greater coordination of healthcare for patient populations, and having doctors and hospitals tightly integrated is essential in that regard.

Dr. Alan Kaplan, president and CEO of a 12-hospital system based in Iowa, is quoted in the article, saying, “You have to bring them in—and then you have to bring them in as efficiently as you can. It's really a strategic asset that requires investment.”

To learn more about the pros and cons of acquiring physician groups, you can read the article in its entirety by copying this link into your web browser:
http://www.modernhealthcare.com/article/20140222/MAGAZINE/302229986/making-physicians-pay-off?AllowView=VXQ0UnpwZTVDUGFjL1I3TkErT1lBajNja0U4VUNPUmZFQk1JQWc9PQ==#

Key trends for 2014 have been identified by PricewaterhouseCoopers (PwC) as well as Premier, which is a healthcare improvement alliance of 2,800 hospitals and health systems and more than 93,000 non-acute care sites. Both firms analyzed data during late 2013 and have recently announced their findings.

“Top 10” List from PwC:
1. Companies are rethinking their roles in the new health economy
2. Corporate funds are invading the healthcare venture capital space
3. Employers are exploring the use of private exchanges
4. Healthcare industry accelerates the pace of price transparency
5. Social, mobile, analytics and cloud are converging
6. Technology is the new workforce multiplier
7. Advances in scientific tools are transforming clinical trials
8. To truly innovate, be ready to fail fast, frequently and frugally
9. States are pursuing Medicaid managed long-term care
10. New rules are combating the counterfeit drugs

Premier’s “Big 8” List:

1. Chronic Care—more healthcare providers will get involved in ambulatory care to improve management of chronic conditions.

2. Health Coaches—the key to managing chronic conditions is having health coaches who know patients on a one-on-one basis.

3. Home-Based Care—technology improvements are increasing opportunities for patients to receive medical treatments outside of the hospital.

4. Employer Health Incentives—employers are increasingly motivating employees to remain healthy through the use of free online tools and financial incentives.

5. Private Health Insurance Exchanges—employers are increasingly using these exchanges, which allow people to have more options and customize their insurance coverage.

6. CMS Policy Changes—more healthcare policy changes from CMS will address the growth rate in Medicare and Medicaid.

7. Open-Source Software for Big Data—to help drive innovation, healthcare providers will push for “big data” applications that allow more customization by independent, third-party software vendors.

8. Expanding Healthcare Partnerships—these partnerships will increasingly expand to include social service agencies and other non-healthcare service providers such as community-based groups and even fitness centers.

Also noteworthy is news out of CMS… The number of Americans age 85 and older is accelerating and will increase by 300% to 18 million by 2050. As a result, according to an analysis conducted by Truven Health Analytics for CMS, the expansion of long-term care support programs offered by Medicaid is accelerating. The number of states with these programs grew on average by one per year between 2004 and 2012 (from 8 to 16), but the pace is now five per year (growing from 16 states to 26 states in the last two years alone.

Navigating Your Career Path

Over the past 20 years, we have all witnessed significant change in the healthcare industry, as well as the advent of the flavor of the month/week mentality. We react quickly to changes in thought without truly exploring the consequences of the change or reflecting on our current course. What’s more, we often don’t give that current course the time it needs to develop in order for us to know whether or not it will be successful. It has, at times, seemed as if so many found themselves looking and acting like a deer in the headlights or the boat floating wherever the wind or current would take it. Why? Are people trying to keep up with the changes/reform? Are they struggling to figure out how to comply? Regardless of how you view healthcare reform, the boats have found a sense of direction and the deer have scattered.

Read the full article as published by the Healthcare Executive.

This article from Healthleaders Media says "From all indications, the nation is emerging—however slowly—from the worst recession since the Great Depression. Although the brightening economic outlook will be welcomed, it also creates a new set of challenges as nonprofit hospitals and health system struggle to retain top-level executives."

http://www.healthleadersmedia.com/content_redirect.cfm?content_id=253944

Healthleaders Media is a magazine and online resource for health leadership news and information. You can visit us at www.healthleadersmedia.com.