Healthcare's evolution changing the role of hospitals and their leaders

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Marin General Hospital's only path to the goal of preserving its autonomy has been through partnerships and community support.

Since a public healthcare district regained control of the safety net hospital when it split from Sutter Health in 2010, Marin has looked to the community and other healthcare organizations to maintain its independence.

Its leadership has formed an array of partnerships and joint ventures that have allowed it to control costs and improve outcomes during an era of consolidation across the healthcare industry, Marin CEO Lee Domanico said. Executives had to lead a cultural transformation emphasizing collaboration over competition as the largest hospital in Marin County, Calif., earned the trust of the San Francisco Bay Area community, he said.

Marin partnered with 12 other providers in the Bay Area to form an accountable care organization called Canopy Health established by the University of California at San Francisco. It has joint ventures with local physicians for its surgery center and imaging centers.

The organization secured a $90 million, 15-year partnership with Philips to supply medical equipment. Marin also asked for the community's help and raised $394 million in public funding through general obligation bonds for recapitalization to help pay for its new hospital.

The public's trust in Marin has been invaluable, Domanico said. "You need to be partnership- and collaboration-minded today to leverage relationships with others," he said. "It's essential."

The Takeaway

As systems acquire more types of service lines and reach for new reimbursement models, the hospital becomes less of a focal point, and executives look to physician leaders and partnerships to lead the change.

As hospitals, physician groups and health systems continue to consolidate, navigating a sustainable route to clinical and operational alignment is more complex. While systems search for ways to scale up, many organizations are finding that partnerships are an easier choice. Providers increasingly look to team up with other healthcare providers to streamline operations and minimize risk rather than trying to control each lever of the care continuum.

The skills needed to lead a health system through cultural and operational change are evolving along with healthcare's business model. As systems acquire more types of service lines and turn to , the hospital is becoming less of a focal point.

"Besides the usual skill set—managerial, leadership, communication skills—the CEO needs the ability to be a thought-leader and influencer," said Dr. A. Marc Harrison, CEO of Intermountain Healthcare based in Salt Lake City. "A CEO needs the ability to build and sustain relationships with stakeholders and with other leaders, and the ability to think innovatively and be open to the cross-pollination of ideas and best practices from other industries."

Healthcare's push toward greater coordination and integration has required a change in perspective and leadership strategy. Executives increasingly view their organizations as a clinic that operates hospitals, rather than a hospital-centered system.

As a result, CEOs must focus on an overarching vision and clinical alignment as their organizations grow. Emulating models such as Cleveland Clinic and Mayo Clinic, more physicians are being tapped to lead that charge.

Hospitals are being essentially disintermediated as technology and new economic incentives drive care to outpatient settings, said Dr. Toby Cosgrove, president and CEO of Cleveland Clinic.

"Organizations used to be managed as small hospitals; now we think in terms of systems," Cosgrove said, although it's not a huge change for Cleveland Clinic's already integrated model, he added. "We are no longer getting paid for doing lots of operations. Hospitals will be cost centers instead of profit centers."

That shift requires more leadership than managing, he said.

From counting beds to calculating bytes

While fee-for-service revenue and value-based reimbursement, health systems such as the integrated managed-care giant Kaiser Permanente are building technology around populations, rather than trying to bring patients into the hospital.

The Oakland, Calif.-based system has embraced new strategies—including sending vans that deliver care to underserved populations—to keep people healthier and help them avoid more complex and costly healthcare conditions.

The industry was built around the hospital, but today technology is the infrastructure needed to build care continuity, Kaiser Chairman and CEO Bernard Tyson said. "We think about care holistically; we don't think about it piecemeal," he said. "What has changed inside the organization is we think of ourselves as a hospital system, not just a hospital, and how do we learn as a system how the absolute best care should be replicated."

Organizations must shift traditional mindsets about managing and understand that control isn't necessary, said Zachary Hafner, national partner in the strategy consulting practice at the Advisory Board Co. "As the need to manage populations and embrace value propositions are becoming more essential, recognition that leaders can't do it alone is setting in," he said.

More physicians are being tapped to lead health systems, as organizations look to work closely with doctors to limit unnecessary care and reduce variation. Demand is growing for strategists who can align physicians around a clinically integrated network and have the operational expertise to establish vertically integrated service lines, Hafner said.

"If there isn't a strong partnership between clinical and operational, then the organization will fail one way or another," Hafner said.

Physicians also respond better to leaders who share their background and expertise, experts said. Doctors who bring a "granular and frontline understanding of what it means to care for patients" have a built-in credibility with other physicians, Intermountain's Harrison said.

Some see it as acknowledgment of the importance of clinical care. The patient-physician relationship drives the healthcare industry, said Dr. Peter Angood, president and CEO of the American Association for Physician Leadership.

"With the Affordable Care Act rollout, implementation of the Medicare Access and CHIP Reauthorization Act and (its) Merit-based Incentive Payment System, ACOs and new pay models, for success to occur physicians need to be better integrated in the continuum of care, from pre-intake to post-acute," Angood said. "Systems begin to be better, outcomes are better and patient satisfaction is better."

Physicians would like to participate in value-based care models but also want to be paid for doing so. One of the most common issues brought up by AMGA members is changing the physician compensation culture when systems have a foot in both fee-for-service and value-based medicine, said Dr. Ashok Rai, president and CEO of Prevea Health and incoming chairman of the AMGA.

"I see that as the biggest challenge for the CEOs of today and tomorrow," he said. "Health systems need to adapt to physician and specialty groups, which are the centerpieces of care delivery today, not the other way around."

While physician leaders aren't always the best fit for certain provider organizations, several studies suggest that physician-led hospitals have higher-quality care. Hospital quality scores are approximately 25% higher in physician-run hospitals than in manager-run hospitals, a 2011 Amanda Goodall found after examining the 100 best hospitals for cancer, digestive disorders and cardiovascular care.

Conversely, more needs to be done to better prepare physicians in how to lead. "Many doctors are not very well-prepared to lead at all," Angood said. "Physicians understand the clinical model and delivery in a fiscally responsible way. It's why physician-led ACOs do better. But there needs to be more leadership education and professional development."

Healthcare boards are looking for executives who are willing to take drastic steps or bring an outsider perspective to lead their organization.

Patricia Maryland said her goal when she became Ascension Healthcare's chief operating officer in 2013 was to transform an "unsustainable environment." To do so, she wanted to create a culture that delivered "reliable information to monitor quality, cost and population health," said Maryland, who became CEO of Ascension Healthcare in June.

But providers are taking cues from companies outside of healthcare that have undergone successful transformations, said John Driscoll, CEO of CareCentrix, a post-acute care management company. Some of those strategies involve nutrition, transportation and behavioral support, he said.

"Healthcare organizations are looking outside of the industry to accelerate innovation and deliver better patient outcomes," Driscoll said. "It requires a whole-patient view."

Ultimately, healthcare is still local, said Domanico of Marin General. It's up to the CEO to maintain close ties with the community, no matter how big the organization grows, he said.

"The public's trust in us is invaluable," Domanico said. "And I think it's invaluable for all hospitals."

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