September 11, 2017

How the health care CEO's job is changing, according to 6 top CEOs

Daily Briefing

As health systems acquire different service lines and adopt new reimbursement models, executives are fixing less on hospitals as a focus point and relying more on physician leaders and strategic partnerships to navigate the changing market landscape, Alex Kacik reports for Modern Healthcare.

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Changing demands

To build scale, providers are increasingly consolidating or partnering with others to streamline operations and curb risk rather than maintain control over each aspect of the care continuum, Kacik writes. These relationships call for leaders who can navigate cultural and operational change.

As Marc Harrison, CEO of Intermountain Healthcare, put it, "Besides the usual skill set—managerial, leadership, communication skills—the CEO needs the ability to be a thought-leader and influencer." He explained, "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."

In turn, as health systems expand the breadth of their service lines, the hospital "is becoming less of a focal point," Kacik reports. According to Kacik, executives increasingly are viewing their health systems as a clinic that operates hospitals rather than a system focused on hospitals.

For instance, Cleveland Clinic President and CEO Toby Cosgrove said hospitals are being displaced as the middleman to care as technology and new economic incentives push care to outpatient settings. "Organizations used to be managed as small hospitals; now we think in terms of systems," he said. "We are no longer getting paid for doing lots of operations. Hospitals will be cost centers instead of profit centers." And that change calls for more leadership than managing, according to Cosgrove.

Similarly, Bernard Tyson, chair and CEO of Kaiser Permanente, said, "We think about care holistically; we don't think about it piecemeal." He added, "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." At Kaiser, for instance, providers are building care systems around populations—such as sending out health care vans to underserved areas—rather than trying to bring them into the hospital for care.

As Zachary Hafner, a national partner at Advisory Board, added, "The opportunity for health system leaders to leverage partnerships to better serve populations can extend well beyond traditional 'components' of care delivery such as hospital, ambulatory care sites, and physician offices." He explained, "As the web broadens to include components such as post-acute settings, community services, and the like, the role of the health system evolves from care delivery provider to organizer and convener of care delivery systems. This is the next evolution toward true population health."

According to Kacik, as part of this larger trend away from a hospital focus, health systems are seeking leaders willing to embrace drastic change or incorporate an outside perspective on care delivery. John Driscoll—CEO of CareCentrix, a post-acute care management company—said, "Health care organizations are looking outside of the industry to accelerate innovation and deliver better patient outcomes," adding, "It requires a whole-patient view."

Wanted: Physician leaders

Hafner said given the broader market shift toward value-based care, organizations need to move away from conventional mindsets about managing and recognize when to cede control. "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," Hafner said—and health systems are often turning to physician leaders.

As health systems look to reduce unnecessary care and limit variation, Hafner said there is growing demand for strategists who can align physicians around clinically integrated networks and also have the operational expertise to create vertically integrated service lines. "If there isn't a strong partnership between clinical and operational, then the organization will fail one way or another," Hafner said.

Further, according to experts, physicians tend to respond better to leaders who have a similar background and expertise. Harrison said doctors who have a "granular and frontline understanding of what it means to care for patients" have natural credibility among other physicians.

Challenges remain

But while many providers are interested in participating in the shift toward value-based care, they also are interested in fair compensation, according to Ashok Rai, president and CEO of Prevea Health and incoming chair of the American Medical Group Management Association. "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."

And despite the increasing demand for physician leadership, Peter Angood, president and CEO of the American Association for Physician Leadership, pointed out that "many doctors are not very well-prepared to lead at all." He explained, "Physicians understand the clinical model and delivery in a fiscally responsible way ... But there needs to be more leadership education and professional development" (Kacik, Modern Healthcare, 8/19).

Tomorrow: How executives can help managers drive change

The flow of organizational change initiatives hitting managers at once is overwhelming, with any one manager juggling 5 to 15 initiatives simultaneously. This volume of initiatives exists because it’s hard for any one executive to have the full picture of all the changes rolling out across the organization.

Join us tomorrow (Tuesday) at 1 pm ET to learn the four best practices to help executives better coordinate initiatives and make them more "doable" for managers.

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