Consolidate or go it alone? 2 hospital CEOs discuss strategies for the future

When hospitals consider the future, many factors come into play, including financial position, market share and branding. But when it comes to the most important factor — how to best serve patients — there is no one best strategy.

In a panel discussion at the Becker's 5th Annual CEO + CFO Roundtable in Chicago, led by Chuck Lauer, consultant, speaker and former publisher of Modern Healthcare, leaders at the helm of two distinguished organizations discussed this issue.

Panelists included Jean Meyer, president and CEO of Warren, Mich.-based St. John Providence Health System, which includes six acute care hospitals and one behavioral health facility, and Paul Stewart, president and CEO of Sky Lakes Medical Center, a small, geographically isolated community hospital in Klamath Falls, Ore.

Here are three key takeaways from their discussion.

1. Form follows function. When considering partnerships, mergers and acquisitions, hospitals must first consider where they are headed in terms of patient care. Ms. Meyer said St. John Providence looks first to its physician and program capabilities, and projects what those capabilities might look like five years from now. The system informs its strategic decisions based on the current and anticipated needs in various lines, be it primary care, orthopedics, cardiology, etc.

Mr. Stewart looks at the future from a similar, but slightly different, perspective. Because Sky Lakes serves a relatively confined population, it makes strategic decisions based on how it can best engage its patients. To do this, Sky Lakes divides its patients into three levels based on the severity of their needs and their risk factors, and then it crafts a unique strategy to best serve each patient group. This strategy helps Sky Lakes' leadership decide what kind of finances, technology or provider resources it may need.

2. Consolidation does not imply integration. "Just because [hospitals] are owned, doesn't mean they are integrated," Ms. Meyer said. She said her system prioritizes clinical integration more than consolidation and physician employment. "Leveraging size and scope is completely critical for us," Ms. Meyer said. Though St. John Providence is not completely integrated, Ms. Meyer said the system's size gives patients access to reference lab services, specialty pharmacy, and tele-radiology without leaving the system.

When asked if hospital networks or hospital integration is preferable, Mr. Stewart said, "As with most things in life, there are advantages and disadvantages to any structure." It depends on what a hospital is looking for and what they already have to offer. Sky Lakes was not interested in integration, but sat down with six other hospitals in the state to discuss strategy. The medical center ultimately joined a non-asset integrated partnership model so it could share population health tools and springboard off these resources to implement alternative payment systems, such as ACOs.

3. The industry needs to put quality first. Most people are motivated to go into healthcare by an altruistic desire to serve people, Mr. Stewart noted. While this motivation is still there, he added, "As an industry we have hid behind that mantra…and used it as an excuse to focus on the financial mission." Often administrative staff is so focused on the bottom line and new payment models they leave little time to focus on the actual care of the patient.

Ms. Meyer agreed. Some regulations have forced providers to shift focus away from patient care. For example, a primary care physician who is paid bonuses if their patients take prescriptions correctly and engage in preventive care might be more apt to dismiss a noncompliant patient, but those patients may be the ones most in need. "If we don't provide good quality, it's going to impact the bottom line," Ms. Meyer said.


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