Finding Excitement in Challenges: Q&A With Dr. Russ Richmond, CEO of Objective Health, a McKinsey Solution

Before he held his current position as CEO of Objective Health, a McKinsey Solution for Healthcare Providers, Russ Richmond, MD, began his career as a resident physician trained in pediatrics and internal medicine. During that time, he noticed certain things about healthcare that weren't quite right — analytic inefficiencies that could be improved to make patients' quality of care better, physicians' lives easier, and healthcare more efficient.

Dr. Richmond let those same things that bothered him about healthcare become his largest inspirations. In 2000, he decided to take a different path in his career and delve in to his passion for utilizing data and metrics to drive improvement in healthcare. Here, Dr. Richmond discusses hospital trends in 2012, explains the potential he sees for more efficient operations and shares his thoughts on the pivotal role of hospital CEOs today.

Q: You started your career in internal medicine and pediatrics, but grew disheartened with some things about healthcare and set out to change them. What did you see that bothered you most?

Dr. Russ Richmond: You can frame it as I was both bothered by it and excited by it. I saw two or three different things. One was the opportunity to really integrate information across different sites or different parts of patient care pathway to improve care. That was so evident to me when I was training as a physician. You had to go to three or four different systems, never having a perfect awareness of what's going on. That was a big realization for me.

Alongside that was automation — automating what was and still is done manually, to make healthcare tasks easier, higher quality, and more predictable. This involves using analytics to help physicians solve more complex problems. A lot of emphasis in medicine is on memorization and pattern recognition, but some of that can be automated for the physician to let them focus more on the patient.

When I was in training, we were writing all of our orders manually onto triple-carbon forms. One form would go on the patient chart, another to the lab and another into the records. When we would perform a test to identify whether a patient had a heart attack, it would be up to us to check the computer and results. Today a physician would get an automated alert from a system notifying them that a test came back positive, and that a next step was required. Databases used to be in separate areas of the hospital. Now you are seeing them streamlined into a single automated system.

Q: Many people face a point in their profession — whether in healthcare or another field — when something deeply bothers them or they feel disillusioned. Their job isn't as rewarding as they had anticipated. How would you recommend they transform that frustration into motivation, as you did?

Dr. Richmond: There are a couple of ways to approach this.  First, don't be afraid to take some risks. Frustrations generally come out of the status quo. That is, the standard practice or what is the standard for that time. In order to move toward a new way of thinking and practicing — a new way of helping to change healthcare and the world overall — you have to take some personal and professional risks.

What I've found is that every time I've taken a risk, it has been rewarded. It has put me into a way of thinking that is a little more cross-functional. I moved from practicing medicine into consulting and starting a new company. My medical degree is actually more viable now that I'm no longer practicing medicine. Sometimes you need to step outside of traditional boundaries of what society deems acceptable.

Second, if you're looking to change or make your profession more rewarding, it's important to do it in a way that moves you closer to your passion. Do it to create a double bottom line for yourself. It's not about making more money; it's about making the world a better place. Tapping into your personal energy and passion can make you feel more comfortable about the risks you are going to have to take.

You see more and more physicians doing this. Ten or 15 years ago, it was very rare for physicians to move out of practice. Now they're joining major organizations — whether it's payors and providers or going to business school. There's a whole host of physician entrepreneurs out there, creating new ideas, technologies, companies. Some of what you're seeing is that this frustration has actually led some physicians to take on [healthcare] management. They're going to change the system from the inside.  

Q: What are three things in healthcare — anything about the industry — that you most want to see change/improve in the next 10 years?

Dr. Richmond: First, I would like to see it become more efficient. There's a lot of waste in the healthcare sector that can be eliminated by better coordination — by linking together different parts of the healthcare value chain that have not been previously linked. This is a huge opportunity – as much as 10-20% of healthcare spend.

Second - better alignment between payors and providers. There are so many different mechanisms we see where payors and providers can better align. The different organizations essentially want the same thing. They want more efficient care and better outcomes; they care about the health of the patient. It's a market by market decision over how that alignment might occur…but, it needs to happen. In some markets, we're seeing ACOs. In other markets, it's medical homes. In many other markets, it's pay for performance. And for others, it's combinations of these mechanisms.

Third is taking better advantage of all of the different avenues of healthcare data and connecting them to improve care. The world is producing more data and information, whether it's managerial, operational or on the patient level. I think the biggest challenge – and opportunity – is putting that together to drive better decisions.

Q: Objective Health is aimed towards healthcare C-suite executives. Specifically, can you share your thoughts on the role hospital CEOs play in this industry right now? In your opinion, how influential are they in the transformation and reform of healthcare?

Dr. Richmond: We've talked to more than 100 hospital CEOs in the last year. The C-suite executives and the CEOs of hospitals have a critically important opportunity, and a dynamic one, in the transformation of healthcare. It's critically important because [hospitals are responsible for] 30-40 percent of healthcare dollars out there. Generally, hospitals are the largest healthcare players in any market in the country. In most communities, the largest healthcare institutions are going to be hospitals, so they're often looked to take a leadership position. In addition, hospitals are rapidly evolving into ambulatory care providers by purchasing physician groups.

[The CEO's role is] changing because the mindset of these institutions is shifting from a narrow focus on acute-care and fee-for-service to population management. We're seeing hospital CEOs become much more operationally and clinically focused. It's their job to influence care pathways in their institution. They're not just responsible for hiring and retaining the best physicians. They're influencing, directing and helping to support the care delivered in their institution. They're having entirely different sets of conversations. It's a more difficult role, but we're seeing quite a few hospital CEOs step up to take the challenge.

Q: On that note, how about physicians? How influential are the physicians in the transformation of healthcare?

Dr. Richmond: Physicians are playing a larger role, especially primary care physicians. The decisions these physicians make each day have a major influence on the outcomes, quality and cost of healthcare. We're also seeing many physicians going into management, as we discussed. Others are embracing clinical care pathways and integrating care across the acute-care and ambulatory-care spectrums.

Physicians are increasingly embracing EHRs and technology. We're also seeing them take on new kinds of risks in their contracts — risks for bundled payments or more capitation, which is also driving their behavior.

Q: Can you share a few things you're most excited about at Objective Health right now?

Dr. Richmond: By far what makes me most excited is the real and substantial difference we're making in driving results with hospitals. We've helped more than 100 hospitals this year to improve their strategies and costs. Now we're seeing the results show up in their metrics, which we are helping them to measure. To know we can have a role in driving those results is very gratifying to our team.

We're also launching software to help hospitals do this more on their own. I believe that software can empower hospitals to find their own opportunities and drive results, including financial, operational and clinical results. After hospitals find these opportunities, [the software allows them] to track their progress.

Finally, we've actually developed a new analytics capability to predict how every healthcare market will evolve in the next five years. This disruptive technology will allow each hospital to see how their market is evolving and enable them to make better budgeting, capital, physician acquisition, and growth strategies. We will be launching this new analytics solution in the first quarter of 2012.

Q: The new year is coming up. Do you feel safe in sharing any predictions as for what 2012 might hold for hospitals?

Dr. Richmond: Well, we’re not really in the business of making predictions, but I can comment on what I see as key trends to watch in the year ahead. I think cost control and efficiency is going to continue to be the most important focus for hospital managers. Those that can become profitable [under reduced] Medicare rates and reimbursement will have tremendous advantages. Those that cannot will eventually be part of a consolidation trend, we believe. More than anything, getting those Medicare margins right is a big trend for hospitals.

In 2012, I believe we'll also see the first examples of success with bundled payments and integrated risk management with hospitals and physician groups. That's been something we've been working on for some time, but to date there haven't been shining examples of how this new approach actually works in the real world. I also think we'll see hospitals adopt new business models. For example, some hospitals will almost act like payors, including handling more direct contracting with employers. We've already seen that happen in some markets. In this same vein, we can expect to see some hospitals integrate more with businesses like senior care.

Related Articles on Leadership in Healthcare:

11 Leading Health System CEOs Share Top Goals for 2012
Healthcare Leadership: 7 Adjectives to Describe the Best Hospital Executives
10 Challenges Healthcare CEOs Can No Longer Ignore



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