From blowing up Hartford HealthCare's governance and management structure to creating new care models, Elliot Joseph is convinced that healthcare organizations must disrupt themselves from the inside. Joseph took over as CEO of the large Connecticut integrated delivery system nearly 10 years ago. During that time, he's pushed to tie executive pay to disruption, formed joint ventures that ultimately will move patients to low-cost ambulatory settings and launched innovation centers. But the transformation hasn't been without its stumbles. Joseph recently sat down with the Modern Healthcare editorial team to talk about disrupting the industry. The following is an edited transcript.
Modern Healthcare: You were part of a panel discussion at the American College of Healthcare Executives' leadership congress on tying executive compensation to disruption. Talk about how you've approached that idea at Hartford.
Elliot Joseph: We're clearly going through a very disruptive phase. The industry has been tradition-bound for a century, and most people see that it's unaffordable. It's not as successful. It's certainly not digital by any stretch of the imagination. And it's bound up in institutional-based thinking.
When I arrived at Hartford 10 years ago, we had a great tertiary hospital. But we lacked system thinking. For the past 10 years, we've been building this very tightly integrated delivery system and there isn't much we've left untouched. We worked to build a compensation formula that focused on both maintaining the core business and being more transformative.
And we established, among other things, what I call an at-risk program. I don't like the word bonus; I don't like the word incentive. This is pay at-risk. And we did that for probably two, three or four years and then realized that the transformative changes that were required were longer-term.
We became an organization that said, "Here are some three-year targets" and it was truly at-risk. Most of our at-risk goals were set around wherever you call home inside the system. So whatever institution or part of the organization I sat in, if we succeeded, I succeeded. And seven years later now, everybody who reports directly to me is 100% tied to system goals. The other senior executives across the enterprise are 70% system goals and 30% functional or site-specific goals. And it's really changed the perspective in a very positive way.
MH: What's an example of how that at-risk approach has helped the organization transform?
Joseph: The creation of a new company we built called Integrated Care Partners, a clinically integrated network. It has 2,000 providers in it. We've built a tremendous capability with care managers, patient navigators and data analytics. And we created an accountable care organization as part of that.
We took advantage of the fact that we're the largest behavioral health provider in the state of Connecticut, and through Integrated Care Partners, we changed a lot of the care models. The best example was embedding behavioral health experts directly into primary-care offices. It has made a tremendous difference for patients. And we set up some three-year goals around getting ICP off the ground. They included the number of providers we wanted and the number of covered lives—and this is where we overreached a bit—we wanted to take responsibility for. There were other goals embedded over each successive three-year period.
The debate we had internally was that 90% of the management team was not involved in ICP, so in essence they couldn't affect it. The truth is, to change the care model, a lot of people across the entire enterprise had to get on board.
MH: Are there other examples where you think Hartford was ahead of the industry?
Joseph: I'll talk about two moves. One from a holding company to an operating company and the great integration we had, and then moving from a hospital company to a system-of-care company. Those are two tracks that we've strategically been pushing very hard. On the ambulatory side, we're moving care out of the hospital proactively. Sometimes at our financial peril, but we also realize that's where it's going anyway and it's going to go with us or without us.
We have joint venture operations with a private equity partner to build urgent-care centers. We have about 10 up already and we're putting 18 up over a year and a half. We just acquired about 20 diagnostic imaging centers. I believe we have the state's second-largest home-care company.
MH: Who is the private equity partner?
Joseph: We're working with GoHealth, which is funded by private equity. We're moving people out of the hospital ORs, moving people out of the hospital EDs, we're moving people out of the hospital imaging departments. For us that's real disruption. That's one side of it.
The other side is this movement from a holding company to an operating company. I believe we're one of the most tightly integrated delivery systems in the country.
We created one parent board, and we now have four regional boards. The regional boards are responsible for quality and safety, and they're responsible for local advocacy, fundraising, community health status and community health needs analysis, and medical staff credentialing.
We did this with management before we did governance. We eliminated hospital presidents, we eliminated institution management teams, and we created, at the time, three regional teams. We eliminated 20% of our management virtually overnight.
We created our own operating model called How Hartford HealthCare Works, a mixture of all of our internal experiences on improvement with Lean management, with 10 very specific leadership behaviors that we've trained all 19,000 people in. It's the way we operate.
MH: How much opposition did you get from employees?
Joseph: One of the huge mistakes in setting our at-risk goals is we said, "We're going to restructure management, and we also are going to improve our employee engagement scores at the same time." That tells you how enthusiastic we were. Huge, huge mistake.
There was opposition, but, again, we tried to base it all on where we were going.
MH: As you transform how and where care is delivered, are you structurally ready to deal with the finances of increased ambulatory versus hospital care?
Joseph: A number of small for-profit companies have figured out how to make adequate margins from the ambulatory space. I mean that's an area where everybody's attacking the industry, right? So you if you look at an Optum, for example, it's hard to distinguish their strategy from ours on the ambulatory footprint growth strategy. So there's actually margin in that space.
What we've had to do while we do that is be much more aggressive on market share growth on the inpatient side in select targeted areas. And we have had tremendous success in that arena. Connecticut is a dead zone for population growth. There is no growth. And the past 24 months of inpatient statistics show our organization outpacing everybody by a long margin in terms of growth. We've done that through what we call our Institute Strategy. We've created six institutes around cancer, neurosciences, bone and joint, urology, behavioral health and cardiovascular.
We've structured them across the entire enterprise so they're not just focused at our major academic tertiary center. They're focused around the patient's entire journey. If you have Parkinson's disease, for example, and you're a patient of our neurosciences center, that team of people is responsible for your entire health. And they can use ICP as a coordinating mechanism.
MH: You just had a contentious negotiation with Anthem.
Joseph: That was one of the worst moments of my 30-year-plus career. We were out of network for a little over two months. No one wins in those circumstances, and they are excruciatingly painful.
MH: What did that do for your patients as far as just informing them about what was happening?
Joseph: It was terrible. Our staff took the brunt of the heat. People calling up who were being denied services, and we did a lot of face time with our staff who were answering the phones, and office receptionists who were dealing with appropriately angry and frustrated patients.
What you discover in these circumstances, and it's the worst thing to discover, is the patients are in the middle. And both sides are using the patients to leverage against one another. Both sides typically try to work together on continuity of care. So if you're a cancer patient and you're getting care, or if you're an OB patient and you're in the middle of treatment, there are mechanisms to allow that care to continue. But beyond that, it's a free-for-all, and it's a tremendous amount of misinformation adding to the anxiety. The politicians get involved because their folks are talking to them saying, "Solve this problem for me." And there's no shortage of heartbreaking stories that go along with it. I don't have anything good to say about it at all.