KentuckyOne Health CEO discusses merger experience

Ruth Brinkley is president and CEO of KentuckyOne Health, based in Louisville, and senior vice president of operations for Catholic Health Initiatives. KentuckyOne was formed in January 2012 with the merger of the St. Joseph Health System in Lexington, which was part of CHI, and Jewish Hospital & St. Mary's HealthCare in Louisville. Later that year, KentuckyOne partnered with the University of Louisville Hospital; Gov. Steve Beshear had blocked a full merger partly because of concerns about applying the Ethical and Religious Directives of the U.S. Conference of Catholic Bishops to care at a public hospital. CHI is the majority owner of KentuckyOne, and the minority owner is the Jewish Heritage Fund for Excellence. Modern Healthcare Managing Editor Harris Meyer and Digital Managing Editor Gregg Blesch recently spoke with Brinkley about the challenges of the merger and partnership, the healthcare reform experience in Kentucky and her personal leadership style. The following is an edited excerpt.

Modern Healthcare: Has the Obamacare insurance expansion made a measurable difference for your hospitals?

Ruth Brinkley: It's too early to tell. Kentucky has some of the worst healthcare outcomes in the country, and Gov. Beshear has vowed to improve that and has expanded Medicaid under the Affordable Care Act. We're really supportive of what he's done. The real difference is going to be how and if people change their behaviors. We as a health system have to help drive behavioral change to healthier-type behaviors. I was on the exchange's advisory board as a gubernatorial appointee, and I'm very proud of both the exchange and the state's Medicaid expansion. People have signed up for plans on the kynect exchange. It's been phenomenal.

MH: What was your experience negotiating rates with the plans participating on the exchange?

Brinkley: That's always a difficult proposition. We're in some exchange plans and not in others. Insurance plans always want to decrease their cost and that's laudable. We're trying to decrease our costs, too. What we're trying to do is cover our costs and have enough to invest back in our organization.

MH: What initiatives are your system taking to achieve improvements in population health?

Brinkley: One of the biggest things we've done is form a clinically integrated network. We are managing about 100,000 lives, including our employees and their dependents. We were really enabled to do that through CHI, which helped us with the platform. We have started or will start three healthy lifestyle centers. We also have a Medicare shared- savings accountable care organization, and we expect to have some bundled-payment plans in the future.

MH: Will KentuckyOne acquire any health insurers and start offering insurance itself, as CHI is doing elsewhere?

Brinkley: I envision that it will. I can't say when. I envision that as we move to risk products, that will be one of the areas we'll get involved in.

MH: What are the challenges in integrating very diverse organizations?

Brinkley: First of all, you start with culture because it all begins and ends with people. We have undertaken some deliberate culture-shaping practices. When you're dealing with heritages of the Catholic, Jewish, secular and academic communities, it's a very rich stew. We set about to retain each organization's religious heritage if there was one. Navigating that and then shaping a shared culture around that is one of the first things we've undertaken. If you can't really get people to work with you, then nothing else is going to work.

The second big thing is we're in the process of developing a shared IT platform among the three big systems. We're installing a Cerner system. We expect to go live at Jewish Hospital sometime late this summer or early fall, and then in short order we'll bring it out at the University Medical Center and at Jewish & St. Mary's. It will cost $400 million.

MH: In merging with Jewish and now partnering with University of Louisville, the issue of the Catholic bishops' Ethical and Religious Directives arose. Have there been continuing concerns about following Catholic policies on reproductive care, end-of-life care and other issues?

Brinkley: No, because University Medical Center still manages the Center for Women and Infants. So that population gets the care and services they always got.

MH: The University of Louisville deal says the faculty and staff have to “respect” Catholic policies.

Brinkley: That goes back to respecting the religious heritage of all of the organizations. So while KentuckyOne Health itself is not a Catholic organization, we own and manage organizations that are Catholic. The former St. Joseph facilities all remain 100% Catholic, and the Jewish hospitals all remain 100% Jewish. So we respect the Jewish heritage as well.

MH: Doesn't Jewish have to comply with Catholic policies?

Brinkley: It has to respect Catholic policies. That means that neither organization will do anything to violate the religious heritage of the other. There are certain things we respect in the Jewish faith. They may not be as prominent as the Ethical and Religious Directives. At the university, it's a secular organization so there's a host of state rules and regulations that have to be respected there. It's very complicated.

MH: Was this situation unprecedented for CHI?

Brinkley: Yes and no. CHI is also a majority owner of Centura Health in Denver, which is a joint arrangement with the Adventist system. In Omaha, Neb., we partnered with the Lutherans. This is the first time we've partnered with a state organization and with a Jewish organization. The commonality was our shared values and shared desire to improve the health status of citizens across the commonwealth. When the University of Louisville joined us, that gave them access to a statewide network. It gave us access to teaching and research missions and the ability to capture graduates from the medical and nursing schools and the other health-related professional schools. So it was a win-win-win for all of us.

MH: KentuckyOne had an extremely difficult year financially in 2013, with losses of nearly $100 million, correct?

Brinkley: We did. When three organizations come together, there are always redundancies. You don't need three of everything. So that was part of it. The other part is the trends driving decreased inpatient utilization. Then there was downward rate pressure from all insurers. So you have a confluence of events that occurred as we came together, resulting in some challenges in 2013. We have started to work through those challenges. I feel very good about where we are today.

MH: What kind of financial performance are you expecting for this year?

Brinkley: We're not ready to say yet, but we have made improvements. ... We had our workforce reductions in February. Those didn't really start to hit the books until March. They'll go through June of this fiscal year, and then some will continue.

MH: Are you are finished with the workforce reductions?

Brinkley: Massive workforce reductions, yes. We'll have to stay on top of this with managing productivity and operational efficiencies. But we hope at this point we are finished with large-scale layoffs. I can't predict the future. If something changes in Washington or Frankfort, then we may have to change again.

MH: KentuckyOne also had problems with physician retention?

Brinkley: There is a little bit around that, not massive. Coming together, you've got three different cultures and you've got three different sets of values. We had some physicians leave before the merger came together. Bringing the university in was another dynamic, and we had some physicians leave after that. But we've also brought in 58 new primary-care providers. We've been very successful in recruiting and retaining a majority of our physicians.

MH: You also rolled out an unusually large telemedicine program, Anywhere Care.

Brinkley: The basis of forming KentuckyOne was to bring care closer to where people live, and you can't get any closer than coming into their homes through virtual care. Anywhere Care was a way to bring care closer to people and make it more convenient. It is episodic care, it's not intended for longer-term care. Those people are referred to a primary-care physician within our system. It's going very, very well. Referrals to primary-care physicians are up 33%. That's through a partnership with Carena. We also partner with Walgreens clinics to bring care closer to where people live, work and shop.

MH: Are you consolidating services?

Brinkley: We've started in our downtown medical campus, with Jewish and the University Medical Center. We're certainly not anywhere near finished. We're looking to see what makes sense in terms of effectively placing services there.

MH: What is your personal management style, and how do you hire people?

Brinkley: I look for people who have a passion for what they do. This is more than a job, it's a privilege, and it takes a special kind of thought process. I want people I hire directly to have that passion. Then I want them to be really good at what they do. I try to hire people who are smarter than me because they always make you look good. If we create the right environment to do that, we will become a great organization. It's the right kind of culture, rewards and environment, and having a very high standard of excellence.

MH: What are the specific ways you go about setting that tone across such a large organization?

Brinkley: I start with the people who are direct reports and how I interact with them. They know I'm tough. I'm tough on myself as well. I expect them to be tough but fair, kind, compassionate and live our values, which are reverence, integrity, compassion and excellence. If you use those values, it gives you all the guidelines you need for behavior, whether it's at a leadership level or at the staff level. I try to live those values every day, and they provide a compass.