From strategy to reality: COO Michael Rowan spells out Catholic Health Initiatives' master plan

A lot of conversation at the Becker's Hospital Review 6th Annual Meeting in Chicago was conceptual — a healthy amount of ideas and strategies shared between hospital and health system leaders. Then Michael Rowan, president of health system delivery and COO of Catholic Health Initiatives, got literal.

Mr. Rowan took the podium May 8 to illustrate real-life examples of population health, integration and innovation. CHI owns and operates 105 hospitals across 19 states. A few years ago, its leadership recognized the need to reposition the system to thrive under healthcare reform. This involves managing the health of populations and keeping people out of the hospital.

"Yes, that will reduce hospital admissions, but that is our long-term goal. It's especially counterintuitive to hospital executives," said Mr. Rowan. "Once hospitals were revenue centers, and now they are cost centers."

Mr. Rowan used an analogy involving a basket and lump of cash to illustrate CHI's long-term strategy. In the fully fee-for-service environment, CHI would begin each year with an empty basket. Every time someone visited a CHI hospital for a test, procedure or admission, that individual added money to the basket.

Under the system's new strategy, however, it will start the year with a pile of money in the basket each year. Every time someone visits a hospital for care, they take money out of the basket. "Our goal is to keep people healthy so there is money in the basket," said Mr. Rowan. "Realistically, it is no more complex than that."

CHI's key goal for 2020 is to derive 65 percent of net patient service revenue from sources other than hospital inpatient care. And it's getting close to meeting that benchmark: In 2011, the system already had 48 percent of revenue coming from alternative sources, and that figure sits at more than 53 percent today.

More than 400,000 people are covered by CHI value-based payment plans. The system has 10 Medicare Shared Savings Program accountable care organizations, making it one of the largest provider participants in the Medicare ACO program with roughly 252,000 covered lives. It is also participating in the bundled payment for care improvement initiative, with four sites live right now and up to five additional sites in the future.

As for caregivers, CHI employs approximately 3,850 physicians and advanced practice clinicians. The system's staffing model is specialist heavy, however, and Mr. Rowan said this needs to change. "We need more primary care physicians. A few years back, before we had a clear plan, we had a lot of reactive employment and physician acquisitions," he said.

Now the system is "aggressively" moving to boost its PCP employment since these physicians are so integral to population health and clinically integrated networks, which Mr. Rowan called "the linchpins" of CHI's population health strategy. CHI has CINs in 13 regions, which represent nearly all of the system's enterprise. These include Mission HealthCare Network in Tennessee, KentuckyOne Health Partners in Kentucky, Mercy Health Network in Iowa and TriHealth in Ohio.

Mr. Rowan said the transition from volume to value has not been easy, simple or inexpensive — he compared it to changing the system's DNA. Nonetheless, he urged executives to not be shy about investing "considerable" resources in the transition.

"This shift is a tough one, especially since we're all still involved in a largely fee-for-service system," he said. "In the end, once we align incentives and better coordinate care, this transition involves huge value to everyone involved."

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