What really matters to the CEO

In the mind of today’s hospital CEO, the challenge of meeting governmental mandates has pushed patient safety out of the top three concerns, according to the results of a new survey from the American College of Healthcare Executives.

However, executives said in interviews that safety and quality remain as high a priority for them as ever, if not higher than in years past, even if the annual results don’t strictly say that.

For the sixth consecutive year, “financial challenges” ranked as the highest concern in 2010, with 77% of the survey’s 542 respondents ranking it as one of their top three issues on the job every day. The No. 2 concern was “healthcare reform implementation,” a category that was immediately called the second-most-pressing issue when the ACHE added it to the survey last year in anticipation of the Patient Protection and Affordable Care Act.

“It’s indicative of a concern about how the regulations are going to evolve out of the legislation,” said William Petasnick, president and CEO of three-hospital Froedtert Health, Milwaukee. “A lot of pieces in the legislation say, ‘The secretary shall,’ which means significant uncertainty in regulations in a complex piece of legislation. So people are speculating about what’s going to occur.”

For the No. 3 spot, “governmental mandates” (32%) outranked “patient safety and quality” (31%), reversing the order of the Nos. 3 and 4 on the list from last year. But observers downplayed the significance of the shift.

“For me, I think quality and safety go above finances, but I understand why people think that way,” said Gayle Capozzallo, executive vice president of strategy and system development at Yale New Haven (Conn.) Health System.

Capozzalo—whose nomination for 2011-12 chairman-elect of ACHE was announced this month—said financial challenges, quality concerns and mandates to improve efficiency are all inextricably linked. Take the issue of the 24/7 hospital, for example.

Capozzalo said Yale New Haven Health System is extending more of its services around the clock. Such changes are aimed at speeding up discharge times, which can save on labor costs, improve the patients’ experiences and reduce exposure to hospital-borne pathogens.

“I think we have to look at both things, both the appropriate care at the right place, and being more efficient with that care. It’s hard. We’re never going to be inexpensive. But we have to look at how we can do it more efficiently,” Capozzalo said.

The reform law has ushered in many new prospects for payment reforms through concepts such as bundled payments for episodes of care, accountable care organizations and penalties for hospital readmissions. Those fall on top of perennial hospital financial concerns such as enhanced auditing by CMS contractors.

And then there’s Medicaid.

Among the survey’s 10 subcategories of financial concerns, 88% of respondents said Medicaid reimbursements were among their top three issues.

“That’s no surprise given the shape that state governments are in around the country. Every day we hear about a state that is trying to reduce Medicaid payments,” said Tom Dolan, president and CEO of the Chicago-based ACHE.

In the past two weeks, the governors of Arizona, Georgia, Idaho, Indiana, Kansas and Texas have proposed cutting Medicaid programs or reimbursements in response to crushing pressure on state budgets, according to news accounts from those states. Republican lawmakers in Montana have openly discussed the idea of opting out of Medicaid altogether entirely in coming years.

Petasnick, CEO of Froedtert, said physician alignment topped his list of concerns, though it ranked only No. 5 in the survey when matched against the other issues.

“As we move into bundled payment, it’s getting that alignment together, where your physicians are effectively integrated into your strategies,” he said. “We’ve acquired a lot of physician groups, and it’s integrating them … creating the right cultural mix and getting the right strategic focus.”

The ACHE survey shows one thing that hospitals were decidedly not concerned about in 2010: personnel shortages.

Only three year ago, in 2008, 30% of CEOs placed workforce shortages in their top three issues. In 2010, only 11% did—the biggest swing for any item on the list.

Academic studies have noted that hospital employment of licensed nurses reached all-time highs during the recession, as women whose incomes were considered “secondary” household incomes became more vital amid mass layoffs in other sectors of the economy. Dolan predicted that the shortage concerns will “come roaring back again” when the economy stabilizes.

“Nursing is a very difficult and challenging profession,” Dolan said. “When the economy comes back and spouses are working, some of these nurses are going to drop out of the workforce again.”