Less healthcare, more population health

Not-for-profit hospitals have always needed to earn a margin to keep their doors open, requiring smart business strategies and an eye for revenue growth opportunities. Yet Randy Oostra, president and CEO of eight-hospital, not-for-profit ProMedica, based in Toledo, Ohio, says his system sees its mission as broader than making money delivering healthcare. In an interview with Modern Healthcare reporter Joe Carlson, Oostra discusses revenue, costs, mergers, his system's legal battle with the Federal Trade Commission, and how to make people healthier. The following is an edited excerpt:

Modern Healthcare: Do you think it's good for a not-for-profit hospital to increase its revenue?

Randy Oostra: Given the cost of healthcare in this country, are you really interested in health systems incentivizing and encouraging your management teams to increase revenue? We want to go the other way. We want to start to think of doing less as opposed to more. When your incentives are all about doing more and getting paid on a fee-for-service basis, the motivation always was to do more. Many times people are saying, “Oh, we've got to find new revenue sources.” Well, maybe not. Maybe we have to scale healthcare differently in this country and really think about what we do in a very different way. The business people would probably throw me out of the room right now. But I think it's the idea of coming back to population health and having that as the goal for our hospitals, as opposed to revenue goals.

MH: What's been ProMedica's experience in mergers and growth?

Oostra: Our recent experience has not been good. The last three or four opportunities we've had, we have either declined or had to respond in a very different fashion. The opportunity to do growth in a responsible fashion is much more difficult than it's been in the past. This idea that we can grow to a really robust size, we're almost kind of stepping back from that and saying maybe that's not possible.

What we're seeing now is the advent of a lot of partnerships. Those work to a certain point. Partnerships of independent entities can do certain things. I think the issue for us all is whether that's really going to get the cost transformation that we need. And I think each organization is going to answer that for itself. We're feeling that to get true cost transformation, to truly rationalize services, it's probably going to have to be with a larger system. So that's been a big issue with us with our boards. We're having much more strategic discussions about those kinds of issues than we've ever had before.

MH: The Federal Trade Commission is trying to unwind your 2010 purchase of St. Luke's Hospital in Maumee, Ohio, because of antitrust concerns.

Oostra: We've always felt very strongly about the importance of St. Luke's working with a local system. You know, it's our belief that it would be very difficult for St. Luke's to stand on its own. We were looking at building a competing hospital several miles away from them and spending in excess of $100 million to do that. And as our trustees looked at the issue, their thought was this didn't make any sense and that we ought to figure out a way to work together as a community. We still feel that way.

MH: If the 6th U.S. Circuit Court of Appeals eventually sides with the FTC and orders a divestiture, will you appeal to the Supreme Court rather than abandon the merger?

Oostra: We still feel very strongly it's the right thing to do for our community. It's the right thing to do for patient care. I think it's clearer than ever before. We believe that ultimately we will win this case, even if we need to appeal to the Supreme Court. So, if we're not successful at the 6th Circuit, that's our intent.

MH: I wanted to ask about your view on population health. I understand that ProMedica has a fairly expansive view of what a health system can do in terms of social determinants.

Oostra: When you think about population health, one of the things that concerns us is people define it much too narrowly. They think in terms of buying an insurance company or having population health nurses or value-based contracts. That's more of a historical way that healthcare looks at healthcare.

I think it requires that when you look at a person's overall health and well-being, it really is more influenced by the social determinants than the things that we do within the walls of healthcare institutions. It has to do with genetics, of course. But it also has to do with where individuals grew up, what housing they had, what the environment was, what kind of education, what kind of food do they have on their table, the opportunities that they had as young people growing up, parents being in the picture, etc.

MH: How can a hospital address needs like hunger or inadequate housing?

Oostra: It's not that we have the money to solve all those issues. But these healthcare organizations are many times the largest employer (in a community), and they're professionally managed with local governance. They have a great opportunity to help connect the dots.

We have been working with some partners on a food reclamation project. We have reclaimed about 40,000 pounds of food so far in the past year. We have partnered with some area food banks and put some money in the advocacy fund that's been investing money in various food banks and missions and other people that are providing food. We have begun to screen our patients for food insecurity and are actually providing food.

We believe that we'll be able to do that in all our hospitals. We believe that we need to continue to look at those aspects in every one of our communities. In housing, we're trying to take inventory right now making sure that there are good housing options available for the elderly. Not that we need to build it. But we could maybe identify a need and work with others to make sure those sorts of things happened.

Follow Joe Carlson on Twitter: @MHJCarlson