Dave Burda: Hello, everyone. This is Dave Burda, editor of Modern Healthcare. Two of the biggest issues facing healthcare providers today is restructuring for reform and expanding their information technology capabilities. I recently had the opportunity to speak with Peter Fine, president and CEO of Banner Health in Phoenix, who talked about his system's journey toward a more organized delivery system and toward a totally paperless medical-record system. We also talked about his personal journey through the healthcare system and what lessons he took away from that experience.
Transcript: Peter Fine, president and CEO of Banner Health in Phoenix, Part One
Dave Burda: Peter, thanks for joining us today. Why don't we start by you telling our readers a little bit about Banner Health.
Peter Fine: Well, Banner Health is a healthcare delivery organization, and we have 23 hospitals, hundreds of locations, a large medical group that's just short of 700 physicians. We have a Medicare Advantage health plan that we provide. We're in seven different states. It's a little over $5 billion in revenue and we have just over 36,000 employees now.
Dave Burda: Quite a big operation
Peter Fine: It is a big operation.
Dave Burda: Was it that large when you started?
Peter Fine: No, it's grown quite a bit over the last decade.
Dave Burda: Great.
Peter Fine: I've been there a little over 10 years now.
Dave Burda: Great. One of the issues that we're covering right now is hospitals and health systems restructuring for reform, whether they're redoing their organizational charts or shifting some of their managers or management folks around. Have you done anything like that at Banner Health?
Peter Fine: Yeah, we like everybody else are trying to figure out what all this means, and so to a certain extent you're guessing a little bit on where you think things are going and then trying to structure yourself to respond to that new environment. And we've done five or six things to try to prepare ourselves. One, our senior management team is made up of about nine—the most senior nine people in the organization—meets every two weeks. One of those days—two days—that we meet every two weeks is a strategy day. And we've actually restructured that day to bring to the table our strategic analysis leadership, our vice president of managed care that's responsible for the implementation of our accountable care organization network, developing all that, the CEO of our almost 700-member medical group. And we brought them together in monthly planning meetings with the senior management team in order to try to address a relatively comprehensive planning effort that is—we hope—allowing us to think through how to integrate community-based care sites with at-risk network contracting and the combination of network support systems that will be required to meet this new environment. And—
Dave Burda: Now let me—now prior to this, they didn't meet with the senior managers or they met on a less frequent basis?
Peter Fine: Didn't meet with the most senior people in the organization because the subject matter of our discussions was really entirely different. And it focused more on routine functions rather than really thinking through the future of the organization. As we began to think and understand we're facing a dynamic that could totally upset the apple cart and change the whole dynamic of how the organization is structured, we felt we needed some different resources at the table for that kind of a discussion.
Dave Burda: So in addition to increasing the frequency of these meetings and including others, what else did Banner do?
Peter Fine: Well, the organization is also looking to expand its physician leadership, so we're recruiting a chief medical officer for our medical group, and we're recruiting a chief medical officer for the Banner Health network, which will be our accountable care organization. They will report up to the chief medical officer for the organization, but we recognize, in order to survive going into the future, we're going to need expanded leadership in the medical environment. And physician leaders are hard to find and so we began the process of recruiting new physician leaders. We've also put together an internal leadership group led by our vice president of managed care, who is responsible for the development of our accountable care organization, and surrounded him with contracting expertise, case-management expertise. Expertise around care management, financial expertise, government relations expertise. And the reason we've put a group like that together, which is meeting with some frequency is to plan the best approaches that we could think through as it relates to new governmental programs around bundled payments, around global capitation and the myriad of other payment methodologies that we think are coming out of this.
Dave Burda: It'll be very important to figure out how to cut up the money.
Peter Fine: Well, no question about it. And in trying to understand one, where's the money coming from, and two, how to best use it to meet the needs of the patient is a key critical success factor in all this. We're also bringing together and integrating our two very large physician hospital organizations, which have been taking some degree of risk along the way for the last number of years, as well, and rather successfully, along with our own Medicare Advantage plan and a very, very large primary-care network. And pulling the back-office function of all of those resources together so it can become the unified back-office capability for what will likely be a large risk-assumption organization.
Dave Burda: Now will that be a separate legal entity at some point, your ACO? Or will that be just a tighter functioning unit?
Peter Fine: The advice that we're getting from our legal counsel was that we probably ought to be organizing this as a separate legal organization still within the confines of the umbrella organization. But because of how it seems we have to meet the rules and regulations not totally produced yet, but as we think that they will be, it will probably require that kind of a separate legal organization. In addition, we are trying to rapidly expand and further integrate our electronic environment, which we've become very proficient at in our organization and expand its capability and link it to our medical informatics division. Because having electronic environment with not really having a very well-structured and well-integrated informatics component really doesn't give you the advantages you're going to need to survive and thrive in the new environment. So we're spending a lot of our effort of linking those components together in the hopes that we can be successful in a risk-assumption environment. The last thing that we've really done to focus on where we think this environment is going is expanding the mindset of the organization over the last 24 months. About two years ago, we went through a restructuring of the organization and the whole idea of that restructuring was to take advantage of basically about eight years of development of restructuring the organization from what it was to what we thought it needed to be. But then, two years ago, to state exactly what that restructuring was intended to do, we've viewed ourselves, as many organizations like we are have viewed ourselves in the past, as a healthcare delivery organization.
Dave Burda: Right.
Peter Fine: We build buildings, build hospitals, we build clinics and we end up being organizations where people come and access healthcare. We believe that that's not the future for us in that the real way to thrive in the future is to become a clinical quality company. So we have really changed our whole terminology and our organizational thinking around not being a healthcare delivery organization but becoming a clinical quality company that is primarily focused on outcomes.
Dave Burda: Now did that require a change in personnel in certain key spots? Some people had the wrong skill sets, the wrong perspective on where you were headed?
Peter Fine: Right. Well, it actually required a host of movement in the organization of people having changed responsibilities, some people having new responsibilities. So, for example, we took all of the component parts of what we believe were necessary to effect change as a clinical quality company and put them under John Hensing, who at the time was promoted to executive vice president and chief medical officer in the organization, so that we had one person at the top of that pyramid responsible and accountable for the implementation of the various things necessary as we move forward. And so that was a big change for the organization, because those responsibilities—many of them—were dispersed among many people. And to pull them under one leadership role was a big change for the organization. Banner is not a holding company. We're an operating company, so we're very, very centralized, so when we try to implement things, it becomes easier for us to do than a lot of organizations because there's not the ability to opt out. We just implement throughout the whole organization.
Dave Burda: Right.
Peter Fine: That key critical success factor in our minds really, we think, positions us pretty well to make the kind of changes in a rapid way and respond to the environment that we see coming at a pace that we think will allow us to be very successful.
Dave Burda: Very good. Well, let's take a short break. And when we return, we're going to talk about some of that information technology integration you mentioned.
Peter Fine: Great. Happy to do it.
Dave Burda: Very good.
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