Morphing healthcare market forces top execs to retool their skills

For most of his 16-year career as a health system technology chief, Jim Mormann had no need to employ software developers. His job was limited to purchasing software and mastering the technical minutiae and logistics of installation.

He and his department did not see themselves as “guys who go out and develop new code,” the chief information officer of OSF HealthCare in Peoria, Ill., said.

Not anymore.

Today, his work demands a sophisticated grasp of the intricacies of coordinating care for patients and involves doctors and nurses. His department now employs four programmers who write code to support new databases, as well as networks that collect and distribute data for coordinating care within the system, which admitted more than 60,000 patients last year across nine hospitals in Illinois and Michigan.

The programmers also adapt code when off-the-shelf software from vendors falls short. “We're at a point where tools and technology have given us the ability to do things we were never able to do,” Mormann said. But “it's an environment that doesn't exist today. You have to create it.”

Mormann is one of a growing number of healthcare executives whose jobs are quickly morphing as the healthcare marketplace—driven by new financial incentives in the Affordable Care Act and private insurers' turn toward risk-based contracting—forces providers to overhaul their processes in an attempt to deliver higher-quality care at lower cost. The organizational strategies they are pursuing to meet those goals—significant mergers, new business models and diversification—have created new tests of leadership skills and experience for executives, whether they're in the corner office, operations, technology, medicine or finance.

This growing demand for new skills ranges from an expanded array of management know-how—including better communications skills, agility and the ability to cultivate new partnerships—to expertise germane to highly specific management responsibilities.

Today's healthcare executive suite needs to stay on top of far more specialized knowledge about the day-to-day operations of the professionals they manage than the leadership generation before them did.

Similarly, financial managers today must understand actuarial risk, not just how to increase cash flow and manage capital budgets. Technology executives are increasingly likely to develop software, rather than to shop around for it. Recruiters are seeking medical chiefs with contract negotiation experience.

In the face of these new demands, some executives are looking to develop their own expertise. Other organizations are recruiting from the outside to fill these expanded responsibilities. And in some cases, organizations are creating new C-suite roles such as a chief population health officer. Recruiters say the hunt for new skills is leading executive search firms to explore new arenas for potential C-suite candidates, such as public health, insurance and customer-oriented retail giants, such as Amazon.

“There's a lot of moving parts,” said Mike Slubowski, CEO of SCL Health in Denver. Markets shift rapidly, he said, as policymakers introduce new reimbursement pilots and providers enter into new networks. “It does take your breath away sometimes.”

Slubowski said he is learning on the job by networking, taking risks and talking about “what a bold stroke would look like” with other providers and payers.

The rapid growth of accountable care organizations has become a major driver of the C-suite talent overhaul. Expertise more commonly found in public health agencies or insurance companies is in growing demand, as organizations enter into contracts that tie financial gains or losses to managing the overall health of large populations.

“There are social issues,” said Dennis Horrigan, CEO of Catholic Medical Partners, an accountable care organization in Buffalo, N.Y. “There are operational issues. There are educational issues, which all come together when you take care of a population.”

Tactical missteps can be costly. Losses mount quickly when executives fail to survey the population's medical needs, accurately match reimbursement to medical costs, or effectively manage patient care. “You can lose $1 million just as easily as you can make it if you're not paying attention,” Horrigan said.

Executives across the country are moving quickly to master the rudiments of care management, a broad label that involves a suite of tactics designed to manage services whose overuse or underuse can drive up medical spending. Care management includes initiatives that use data analytics to identify gaps in care, unnecessary treatment, and opportunities to prevent disease or limit complications among the chronically ill.

For top executives, that requires new skills used to target health and prevention efforts across an entire community, not just those patients who visit a hospital or clinic. Epidemiology, which identifies disease prevalence and risks, and actuarial science, used to determine financial risks, are increasingly needed in the C-suite, as accountable care organizations design and test initiatives that seek to broadly bolster community health—and potentially save money by preventing trips to the emergency department or hospital.

These efforts represent a major divergence from care that has historically been confined to treating the ill in hospitals and clinics, and many C-suites lack the needed skills, said Daniel Zismer, a healthcare administration professor at the University of Minnesota.

“The basic business of most health systems, frankly, is taking care of sick people,” he said. “Their core business is still sick people and people who get hurt.”

That has sometimes forced health system executives, governing boards and recruiters to look outside hospitals for expertise. Public health and insurance companies are top recruiting grounds.

“The competencies that you need in place resemble those that exist more in public health” such as epidemiology, risk stratification and the psychology of behavior change, Zismer said. For instance, Catholic Health Initiatives in Englewood, Colo., recently hired former United Healthcare executive Juan Serrano to launch the health system's health plan efforts.

Systems also sometimes go outside healthcare to adapt to the changing marketplace. As one example, Providence Health & Services, Renton, Wash., recruited a former Amazon executive, Aaron Martin, to develop a more consumer-friendly retail image for itself as its providers compete for newly insured patients.

Accountable care is pushing hospitals to shift medical care to patients' homes and neighborhoods, and that transition is forcing top medical officers to lead their physicians into taking on new roles. “It's not just inside the hospital, it's the care that's delivered outside and people who never get admitted at all,” says Dr. Samuel Skootsky, chief medical officer of UCLA's faculty practice and medical group, which has entered into a Medicare accountable care contract.

Skootsky now encourages physicians to meet patients wherever they are and to think about customer service. “There has to be attention to those issues,” he said. “You want to work on good patient experience and patient engagement.”

Executive-level skills “are going to look a lot like current skills that have been inside HMOs for 30 years,” said Dr. David Nash, dean of the Jefferson School of Population Health at Thomas Jefferson University. Managed-care expertise mirrors public health know-how and employs actuaries skilled at calculating risk.

The change is reflected in the new chief population health officer title coming in to some C-suites. Providence Health and CHE Trinity Health, Livonia, Mich., have created such roles. At Providence, the executive vice president for population health oversees operations and development of the system's accountable care and health plans.

“Population health in accountable care organizations or Medicare Advantage, in essence, is providers embracing many of the actuary and outcome tools that insurance companies have had for many years,” said Dr. Rick Lopes, who was named chief population health officer for SCL Health earlier this year.

As chief financial officer for Phoenix's Banner Health, Dennis Dahlen has seen his job change and his understanding of clinical affairs grow. Compared to his responsibilities five years ago, more of his time now is dedicated to mergers, acquisitions and insurance, rather than capital markets, Dahlen told financial experts at a June healthcare conference.

Banner, which operates two dozen hospitals in seven states, was among the first to join Medicare's accountable care initiative in 2012. Its accountable care efforts have since expanded and the system is looking to take on more financial risk.

Now, when executive vacancies open, recruiters are drawing candidates with increasingly diverse employment backgrounds. That is especially the case when health systems enter into risk-based contracts, and launch or buy their own health plans to compete for customers in the new insurance exchanges.

Recruiters have “to get creative about where you look” when searching for a chief executive with experience in prevention and an understanding of insurance, said Mark Andrew, a senior partner with executive search firm Witt/Kieffer. He has looked for executives with Medicaid experience, whose background blends chronic disease management, public policy and insurance.

Many governing boards also are looking for executives adept in so-called soft skills, said Mark Madden, senior vice president of executive search for B.E. Smith. Trustees are looking for strong strategists who can organize leaders across departments or organizations and encourage innovative ideas from nurses, physicians and others, said Kathy Nolan, vice president of senior executive search at B.E. Smith.

That requires strong communication skills and an ability to foster an inclusive workplace that maximizes team efforts and agility, Madden said. Governing boards are also looking for executives who can build relationships and bridge cultures, as accountable care organizations enter deals or affiliations with physicians, other providers and community groups.

Boards themselves must change as they ask more of their executives, said Dr. John Combes, chief operating officer of the American Hospital Association's Center for Healthcare Governance. Directors and trustees are looking to recruit new governance expertise from health insurers or community groups with local connections to help build population health efforts,

Boards must also be more comfortable with uncertainty. “Nobody knows what the outcomes are going to be” from accountable care, Combes said. “They have to be more embracing of risk.”

Follow Melanie Evans on Twitter: @MHmevans