Planning for an Uncertain Future: Q&A With Gene Michalski, CEO of Michigan's Beaumont Hospitals

Gene Michalski, the fifth CEO in Michigan's Beaumont Hospitals' 55-year history, answers questions on the future of private practice, addressing the provider shortage and his biggest success as a healthcare leader.

Gene MichalskiQuestion: The next few years bring a flurry of issues to the healthcare industry. What do you see as hospitals' top priorities over the next year?

Gene Michalski: We know health reform legislation passed only this year … so we're barely seven months into this journey, and much of the legislation has yet to be written. We have another political party that is going to assert its political prerogatives in the coming session of Congress. To that extent, much remains uncertain in terms of the details. There's still a lot of uncertainty on what a successful ACO is going to look like, what stakeholders are involved and what legal and other structures are going to be involved.

With that as a backdrop, let me simply say that I personally feel our organization is centered around two things that we think are important in any scenario we could conceive of. I would call these "no regret strategies." The first one is to strengthen relationships and collaboration with the various physician stakeholders who are a necessary partner in any structural changes under health reform, regardless of what that health reform structure might look like. Let me give you an illustration. We're a predominantly private practice hospital, with 80 percent private practitioners and 20 percent employed. We have a couple of physician organizations that are contracting entities that include both of those kinds of physicians. Further, there are non-academic physicians and physicians who are academics and researchers. So it is our belief — my belief — that we need to find a model that will provide a successful opportunity for every one of those physicians, regardless of their private or employed relationship or if they're primarily a clinician or primarily an academician.

Our other "no regret strategy" is to position ourselves for payment for value, not payment for volume. That is aimed at pay-for-performance. For us, that means we need to continue to strengthen our quality, safety and service formulas … and provide value at an increasingly lower cost. I'll couch this in two forms of cost: the unit cost, which is the per-case or per-procedure cost for a patient experience, and the number of units of service, which would be how many CT scans I perform, [for example]. If you have appendicitis, am I going to do an ultrasound and then a CAT scan and then a CAT scan with contrast, or will I go straight to the CAT scan with contrast and cut out the middle man?

Q: Many hospitals are struggling with the challenge of providing the best possible quality at the lowest cost. How do you plan to do that?

GM: There's only one way you can do it effectively. It's what we call clinical effectiveness, and the only way to do it effectively is provide the information technology platform that will assist the physician in using best evidence-based outcomes and methodology. There's nobody that can carry that amount of information in their heads.

Q: Where are you currently in the process of implementing that IT platform?

GM: We have invested $100 million in a clinical enterprise platform, the center of which is the Epic suite of products. That's by no means the only product, and there are a number of other "best of breed" systems plugged into Epic and Oracle that give us the capabilities of doing that. We just completed launching clinical practitioner order entry at all three hospitals and are launching a suite of products in the ambulatory setting that will include allowing the patient to keep a chart.

Q: In your experience, how does IT assist in promoting healthcare quality?

GM: You obviously have to be able to "connect the dots" and "connect the docs." You have to manage the experience of care over multiple venues of care. You've got hospitals that are reimbursed separately from nursing care and from outpatient care, and the challenge is connecting the silos with a system of bridges.

Q: Are there other ways you're connecting providers, aside from through an EMR?

GM: The other way we're doing it — and you have to do it in multiple ways — is by remodeling the management of the health system. Instead of managing the system by facility, we're managing by "center of excellence" or clinical condition. If you manage the organization by hospital, by nursing home, by home care, by outpatient care, then you're connecting silos and you're having to manage it across silos. You can only do so much with information technology to connect those silos.

What you have to also do is turn the organization on its side and create bridges managerially, structured around clinical conditions, so heart and vascular care is managed across the health system by a team that is multi-disciplinary across the enterprise. The team is led by a physician, supported by an administrator and partnered with nurses and other caregivers. It's a three-legged stool of physician, nurse and administrator that lead a team centered around clinical disease management across the enterprise.

[I will explain] value stream mapping in lay terms. Let's take a surgical procedure like a hip replacement. If I have a fall and I have pain in my hip, I don't know exactly what's wrong, so I go and see my doctor. [He or she says] I think we have a fracture, so we need to send you to an orthopedic surgeon and to the ER to do an x-ray. You get some diagnostic testing, and sure enough, it's a fracture. Now we have to do pre-admission testing and ready you for surgery and get your diabetes under control, if you're diabetic. Now that we're preparing you for surgery, you come in the day of surgery, [undergo] surgery, go to recovery and go to the floor for three days. Then you're discharged to a skilled nursing facility and spend five days doing rehab, and then afterwards you go home for home care. That's just one example. In value stream mapping, you would take the existing state of how that occurs, and you would value stream map the most ideal way of going through that process in the most efficient, effective manner. How can we close the gaps in the cycle?

For breast care, if a woman feels a lump, there's an evaluation process we used to go through that would take four days. Now we can do that in one day. All of that testing, all the ultrasounds and all the biopsies can happen very quickly now because we value stream mapped the existing state, value stream mapped the better state and involved the patient in the conversation.

So you organize your clinical experience first, you organize your managerial experience second and then you put an infrastructure in place that supports the clinical and administrative experience.

Q: Michigan, like many other states, expects a physician shortage over the next several years. What are you doing to prepare for that shortage?

GM: Let me tell you what we're already doing and what we're going to enhance. We're already training some 400 physicians and fellows right now in our graduate medical education programs at our Royal Oak campus and probably a couple dozen family medicine physicians at two other locations. That's right now.

For undergraduate medical education, we have 600 clerkships right now at our Royal Oak hospital filled with students attending medical schools in the area who are in the pipeline, so to speak. We're also partnering with Oakland University to launch a new medical school to train undergraduate physicians. We've received preliminary accreditation and the new medical school will start its first class of 50 students in August 2011. Over the next several years, we're going to increase the number of undergraduate medical education students by 150. As physicians age and retire in our community, this is our strategy to provide a replenishment of physicians.

Q: How do you think those physicians will be distributed throughout areas of need in your state? Is there a way to staff those areas that traditionally suffer from more severe shortages?

GM: Well, I wish we could control where physicians select and choose to practice. It's often driven by personal talents and skills, influenced by what their passions are and certainly influenced by economics and lifestyle. We can have some influence over that, but of course, usually it's lifestyle and economics that have a huge impact. I think until the reimbursement systems encourage more primary care and less specialty care, we can only do so much. We have some influence  to the extent that we have a balanced approach to training undergraduate physicians. There is a shortage of every kind of specialty in the state of Michigan, but everybody points to primary care. Pragmatically, a shortage in family practice physicians will mean the use of more physician extenders.

Q: Beaumont Hospitals has 80 percent private practitioners and 20 percent employed physicians. Do you expect that to change or shift toward employment in the future?

GM: I think we have to be flexible. There are a lot of pundits who would say the future of medicine is to employ more doctors. Seventy percent of the hospitals in this country are still primarily private practice, and while a great many folks in ACOs say it's best done with employed physicians, I hasten to remind everybody that 20 years ago, the same vision was put forth as a solution under capitation. It did not occur.

Sociodemographic conditions have changed, many more women are employed and lifestyles have changed, so the chances of more physicians seeking employment will continue. But we have to remain open to having relationships with every kind of physician.

I was at a private practice physician office, and they said, "We don't want to be employed. If you came to us with an offer of employment, we wouldn't be interested. What we are interested in is connectivity, and we want support for that connectivity. We want to be part of your health plan in terms of taking care of your people, and we want to make sure your facilities take good care of our patients when we need facility care."

Q: What has been your biggest success at Beaumont Hospitals?

GM: From a technical standpoint, it was probably helping Beaumont build many of the elements of the continuum of care. I helped launch the ambulatory care network and home health services, and we've expanded and nurtured the nursing home partnership that has given us skilled nursing facility beds and long-term beds. And of course, the growth of both hospitals and the acquisition of a third [has been a success]. From a technical standpoint, maybe [my biggest success] has been putting the puzzle pieces together regarding the continuum of care under healthcare reform.

What I'm most proud of, though, is staying grounded in keeping focus around the most important thing, and that is to remember why we're here. We're here to take care of people. All these other things are just the means to a larger end, and the larger end is to help sick people get well, help well people stay well, and, to the extent that we can, give them a seamless and flawless experience in doing that. That's what drives me and gives me my passion for handling some of the business challenges we have. It's really very personal.

I was just up in the hospital visiting a patient, a gentleman who had open heart surgery. He had his family at his bedside, and they're all going through a tough time right now. To the extent we can help that gentleman and his family get through the surgical process and recovery process and get back to enjoying life, that's the important part.

Q: It's an interesting and challenging time to lead a major hospital. What advice would you give to other healthcare leaders?

GM: My advice would be stay grounded in why we're here, and that's to help people. Since I stepped into my role as CEO, I don't have lunch with any of the business leaders in the organization. I dine with doctors, patients, family members and staff. People can tell you that I go to lunch and grab a tray and introduce myself to any one of those important people and ask if it would be okay if I joined them for lunch. I ask them what their concerns are.

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