Health care reform is changing every aspect of health care today and the hospital C-suite is not immune. Cost reduction and operational efficiency have now made it to the top of the executives’ lists of main priorities.

Paul Keckley, managing director of Navigant Center for Healthcare Research & Policy Analysis, spoke with DOTmed Healthcare Business News about the challenges facing executives and how they are going to thrive in the future.

The changing landscape
Keckley says that there are three convergent tsunamis in health care right now. In order for a hospital to be successful, the executives will have to find ways to counteract them.

Restructuring the payor market is unintentionally exposing hospitals to more “bad debt.” “Larger numbers of people are insured, but most of those people with copayments will leave those unpaid and most of the payments from the Medicaid expense will not cover the cost of delivering the service,” says Keckley.

For Medicare and Medicaid payment, hospitals are still operating under a federal model. Keckley says that Medicare is going to continue to make cuts and market basket updates.

Additionally, the third party payor market is repositioning itself and they’re making negotiations a lot tougher, says Keckley. They now want steeper discounts and better deals.


New priorities
Keckley says that there are five business imperatives to focus on in the future.

Executives need to find every way to cut costs, but also need to be compliant with performance mrisk issues to avoid paying penalties ranging from fraud to unnecessary care.

They need to shift from organizing and delivering products and services to focusing on value-based payment, says Keckley. They also have to think in terms of scale and consider how big the enterprise should be and how to get there.

Lastly, innovating how they carry out each of the imperatives is important, says Keckley. When he was an executive at Vanderbilt University Medical Center, he would think a lot about whether the hospital should reward people based on performance or seniority.

He had to find a way to “organize the physicians where they took as much responsibility for the cost and efficiency of care as they did outcomes and safety.”


New and changing roles
CMOs used to just focus on credentialing doctors and served only the medical staff. Today, they have to address requirements revolving around meaningful use, implementation of electronic health records and standardizing care between doctors and the hospital.

Historically, CIOs were in charge of making sure the hospital got paid and staff was capturing the data from the system for coding. Their jobs have also become more complex. “It was a simpler job and now the CIO is responsible for clinical information and data — not just financial and administrative data — across wider, complex clinics and outpatient facilities and long-term care facilities — not just the hospitals’,” said Keckley.

In the future, he thinks that a role will be created for managing care and additional roles will be developed around retail health and noncore businesses as a “corridor for growth.”

Banding together
Keckley says CEOs are realizing they can’t do it all on their own and that they need help from physicians, which can be a challenge.

“Positions in hospitals have sometimes been like a bad marriage — you know you need each other, but you don’t really like the marriage,” says Keckley. “That’s where the doctors and the hospitals are again.”

But that’s changing. “If you’re a hospital CEO, you look at your medical staff and you say, ‘By the way, the same thing I’m facing, you’re facing,’” says Keckley. “So now these two become more codependent.”