Editor's note: A year ago, in our cover story "Leaders of the Renaissance," Modern Physician reported on a bold pilot program for physician executives then under way at Catholic Heath East. Leaders of the 31-hospital, not-for-profit chain challenged three seasoned physician executives to combine the traditional role of CMO with many of the duties of top financial and operations officers in directing nine CHE hospitals. The experiment was guided by the vision of Richard Afable, M.D., executive vice president and CMO of CHE, headquartered in Newton Square, Pa. Elizabeth Thompson Beckley, who wrote the original cover story, re-interviewed the four physician leaders to bring you this update.
Leaders of the 31-hospital, not-for-profit chain challenged three seasoned physician executives to combine the traditional role of CMO with many of the duties of top financial and operations officers in directing nine CHE hospitals.
The experiment was guided by the vision of Richard Afable, M.D., executive vice president and CMO of CHE, headquartered in Newton Square, Pa.
Elizabeth Thompson Beckley, who wrote the original cover story, re-interviewed the four physician leaders to bring you this update.
Two jobs proved to be too much, even for doctors trained to do it all. The doctors who volunteered for the physician executive pilot project undertaken by Newton Square, Pa.-based Catholic Health East could not endure the combined duties of medical and financial management. Outside financial pressures and days just 24 hours long exacerbated the problem.
Two of the three regional health corporations attempting the change have returned to a more traditional administrative structure because the physician executives were overburdened in their hybrid posts. The physician at the third, multihospital site has persevered with all of his duties intact, although they included fewer direct-line operational responsibilities from the start.
"It wasn't evident that continuation of the full scope of integrated care management would deliver (expected results)," says Richard Afable, M.D., who persuaded the CHE board to create the three hybrid positions. "Elements had to be withdrawn, primarily because we needed short-term financial results."
One financial problem surfaced suddenly in Fort Lauderdale, Fla., in the wake of the Sept. 11 terrorist attacks, as tourist-season volume plummeted at 587-bed Holy Cross Hospital. That created a need for immediate intervention and the reassignment of certain activities from Jay Pomerantz, M.D., senior vice president and CMO, to finance personnel, Afable says.
"Part of the learning is the reality that healthcare is not a static process," Afable says. "Payment from government programs and insurers and slowdowns of accounts receivable are hard to account for within the context of that changeability. If a steady state can exist, then the model could be brought forward in its full implementation."
Afable says CHE remains committed to the concept of integrated executive leadership as a viable concept, and he encourages other physician leaders to try elements that make intuitive sense (see page 20). For example, the successful principle of linking denials management to contract management and payment reconciliation, led by Mark Baumel, M.D., at the six-hospital Mercy Health System, is now commonplace across CHE.
But the stretch to integrate large hospital systems under physician leadership was greater than the pioneers or their facilities could bear.
"As healthcare evolves and it is becoming more challenging for organizations to stay profitable, to have a nonfinancial leader does not make sense for patient finance," Pomerantz says. "Where it did succeed was bringing a physician perspective to a process that had been distanced from the clinical side."
Only 24 hours in a day
"I don't think any of us recognized the time demands," says Manuel Anton III, M.D., of his duties at 512-bed Mercy of Miami.
For almost 10 months in 2001, Anton, senior vice president and medical director at Mercy, was in charge of patient accounts. As chair of the managed care steering committee, he also was directly responsible for a major component of managed care strategy while overseeing the sale of Mercy's last physician group, directing its home health enterprise and managing the medical staff.
Anton says many of his responsibilities as medical director-such as quality and peer review, trend analysis and clinical decisions about outcomes-were almost impossible to delegate to nonphysician administrators.
"All of us were trying to stretch ourselves as far as possible," Anton says of his peers in the project. "Some of the financial functions required very experienced and dedicated focus. Particularly things like patient accounts are very technical and require a lot of information technology, regulation and training."
Despite the hindrances, Anton was able to keep all the balls in the air for a time. But, he admits, "it was difficult to sustain."
When a new CEO, John Matuska, arrived last August at Mercy, Anton says the former CFO wanted his medical director more involved in traditional clinical issues. Matuska included Anton in the decision to focus the leadership's talents along more conventional lines.
While Anton still manages the successful appeals denials unit and is engaged in patient accounts on a dotted-line basis, Matuska now is responsible for the bulk of financial operations.
Would Anton try it again?
"Although I would hesitate, I would," he says. "It was a very demanding, taxing time. I had to do a lot of self-education. That's what we learn from."
He says the idea of integrated management still could work, but at a smaller hospital, with fewer than 200 beds.
"The traditional duties of physician leaders are such that I think the specialization for cash management is going to be precluded," Anton says. "I won't say I feel qualified to be the front person, but I feel very comfortable having reporting responsibilites."
Refocusing on resource management
Pomerantz and Holy Cross adopted the integrated model most completely, according to Afable, and therefore had to make the biggest change.
Pomerantz says he was able to achieve an important revenue redesign during the year he directed cash management functions. He streamlined the scheduling and admitting processes; on the managed care side, he helped bring denials down to 6% from 25%.
But as the organization evolved, Pomerantz, like Anton, discovered he needed more time for medical management issues such as examining medical resource consumption and practice patterns.
"To do both was a feat where either one would suffer," he says.
Exacerbating the issue was a 15% to 20% decline in hotel-business volume in Fort Lauderdale after the events of Sept. 11. The doubling of hospital volume that Holy Cross typically experiences during tourist season did not materialize.
Pomerantz discussed conditions with Holy Cross CEO John Johnson, an early and enthusiastic volunteer for the integration pilot. After further weekly meetings, the entire senior management team decided to re-deploy areas of responsibility in a way they felt made more sense.
"One never enjoys having something taken away, but I was handed an area of significant importance-development of a medical resource management program-that I would not have been able to manage unless time was freed up," Pomerantz says.
Afable says, "It had nothing to do with his capability, but his inability and inexperience in emergency cash management."
The CFO resumed responsibility for the business office. Pomerantz remains peripherally involved with case management, directing case managers and denials, but devotes the bulk of his time to clinical issues.
"Even if the volume didn't change, to do the rest of what we needed to do probably would have required another year," Pomerantz says. "The pressures did not significantly affect personal time, but the added stress of the responsibilities was apparent."
Pomerantz insists much was accomplished and says he does not consider the effort a failure. He credits that in part to the early support of his CFO, Linda Wilford, and her continued involvement during the time Pomerantz had primary responsibility.
"Not having a financial background, it was critical for me to use her advice," he says. "What we learned was that to not have a matrix-type of model would destine (the process) to failure."
Managing cases, not cash
From the beginning at Mercy Health System, Baumel, CMO and senior vice president of medical management, took up activities that were less finance-oriented and more focused on case management and managed care.
His integration efforts have resulted in perhaps the most tangible improvements because the duties of patient accounts and financial management never were part of his job description.
Baumel says he does not foresee trying to move toward the greater financial responsibilities envisioned in Afable's original proposal, such as cash management, payment recovery or other elements of the revenue cycle.
That was true from the get-go, he says, due to his situation as a system leader facing different institutional cultures and overseeing various levels of authority.
"At a smaller, one-hospital organization, some of that might make sense, but with six different information and accounting systems, I don't see that happening," Baumel says.
What has worked, he says, is clinical improvement through systematic changes in the care delivery model. Some of these are the growth of the internal hospitalist program at Mercy Health and the future development of an intensivist program.
His clearest achievement was establishing more efficient managed care relations under strong physician leadership.
"We created a relentless approach toward denials, which involves the interaction of case management, the attending physicians and managed care payers from an outsourced center of expertise that is essentially full-time," he says. "After about a year, we're getting close to a 300% return on investment in that effort."