Proving it takes a village: José R. Sánchez and Norwegian American's remarkable turnaround

When José R. Sánchez arrived at Chicago's Norwegian American Hospital to serve as president and CEO in October 2010, the hospital was struggling to stay afloat.

Norwegian American, which serves a predominantly Medicaid and a poor Hispanic population in the Humboldt Park neighborhood, had its finances in the red. The hospital's payer mix is 31 percent Medicare and 55 percent Medicaid, with just 1 percent of patients having commercial insurance. It had been under surveillance by CMS for several years for quality and safety issues and was on the verge of losing its Joint Commission accreditation. Records were still kept by pen and paper, physician engagement was weak and there was no relationship with the community. Sanchez

Unlike most hospitals and health systems in the Midwest, Norwegian American is also challenged with future immigration reform, as high concentrations of undocumented immigrants who are not eligible for insurance seek medical care from the hospital.     

Mr. Sánchez, who at the time was senior vice president of the Generations+/Northern Manhattan Health Network, one of the largest healthcare networks in the New York City Health and Hospital Corporation, saw Norwegian American as an opportunity. He could make a mark on his professional career, he explained, but he also felt a bigger connection to Chicago as a city.

"Sometimes professionally you find yourself at the right time and the right age to move and take different challenges," he said.

Upon his arrival at Norwegian American, Mr. Sánchez immediately set up his vision for the hospital's turnaround. This included improving quality, stabilizing the hospital's finances, engaging physicians and the community and implementing an EMR.

First step: Realizing the importance — and power — of the community

Perhaps no other element of Mr. Sánchez's vision was as immediately critical to the hospital's survival as engaging the community, especially when he learned the state of Illinois was planning to cut $2.6 billion from Medicaid, the source from which Norwegian American's revenue largely depended.

"This was probably the most complex time during the period I arrived here. Here I am in charge of the hospital that is dealing with so many problems, and now I'm also dealing with a financial crisis at the state level," Mr. Sánchez said.

As a safety-net hospital, the residents of Humboldt Park depend on Norwegian American to deliver their healthcare, but furthermore, the hospital serves as an economic anchor. Nearly 75 percent of the Norwegian American Hospital employees are from the community.

Confronted by a seeming insurmountable hurdle, Mr. Sánchez became more than a CEO, he became a community organizer. He earned the support of the community, developed good relationships with elected representatives and even bused people from the neighborhood to Springfield to lobby for the safety net-hospital.

Community members accompanied Mr. Sánchez and CEOs from other Chicago safety nets, including St. Anthony's and Mercy Hospital, to testify in front of the Chicago City Council Committee on Health and Environmental Protection. Together, they conveyed the impact the Medicaid cuts would have on the hospitals, and their voices were heard. In 2012, the final Medicaid budget bill, called "Save Medicaid Access and Resources Together," or the SMART Act, spared safety-net hospitals from proposed provider reimbursement cuts. The provisions of the SMART Act outlined specific demands for safety-net hospitals to reduce costs.

"This state reform challenged us as a system to look for opportunities to make things better financially through improving quality and looking at efficiencies. At the time, we didn't have a choice, but it was the right thing to do for our patients," Mr. Sánchez said.

Improving quality and safety paved the way

Norwegian American's quality transformation set the groundwork for the hospital's turnaround. Abha Agrawal, MD, joined the hospital as CMO in 2012, and has played a significant role in driving Norwegian American's quality journey.

The hospital has made a significant investment of resources in technology focused on improving patient safety and clinical quality. Under the direction of Mr. Sanchez and Dr. Agrawal, Norwegian American has implemented a full-scale EHR in the inpatient and physician practice settings. Successful attestation to meeting meaningful use requirements has been accomplished in both areas. Further adoption of patient safety-focused technology includes computerized physician order entry, digital transcription capability, clinical decision support software and barcode automated bedside medication administration.

Additionally, a robust disaster recovery and business continuity plan was implemented, and the hospital has taken a leadership role in a Chicago-based health information exchange. Since 2010, Norwegian American has invested more than $5 million in capital funds and currently allocates 7 percent of its annual operating budget to information technology.

From 2012 to 2013, the hospital's Leapfrog quality scores improved by 235 percent from 20 percent to 67 percent, placing it 14 percent higher than the national average, and its resource use score improved by 408 percent, 2 percent above the national average.

"This component of running a hospital has been critical for the turnaround," Mr. Sánchez said. "If you don't provide good quality care, then it's hard to attract patients to come to you, physicians to refer to you and it's even hard to attract hospital staff."

When a hospital's quality is good, he explained, there are several interconnected effects. Referring physicians have confidence that they are sending their patients to a trusted organization, and this keeps both the medical providers and patients satisfied. And word-of-mouth is still the best form of advertising — according to Mr. Sánchez, people sharing their positive experiences in the community has significantly contributed to the hospital's increase in volume over the last few years.

Seizing opportunities and addressing the community's needs sustains growth

How can a standalone safety-net hospital sustain financial growth? Mr. Sánchez says, "Never lose a business opportunity."

The hospital's books have been in the black for the last few years now, but sustaining financial growth remains as a top priority. Norwegian American has laid plans to achieve this by creating collaborative, coordinated care entities with outside partners, as well as investing in various departments inside the hospital that serve the community's immediate needs.

Norwegian American, collaborated with four other Chicago hospitals, six family health centers and one behavioral health provider to propose MyCare Chicago, an accountable care entity and new managed care healthcare plan to serve the Cook County area. Illinois approved MyCare in early 2014, while the state rejected three other local ACEs for preliminary approval.

The ACE brings providers from each of these organizations together through shared data and processes to improve healthcare delivery to the growing Medicaid population. MyCare Chicago has already signed a contract with the state to sign on 40,000 Medicaid enrollees.

The hospital also has two initiatives in place to further enhance volume. One focuses on providing care for individuals with physical disabilities, and a second one is the creation of a coordinated care entity that focuses on individuals who have mental illness.

To continue growth, Norwegian American has identified various services it can further develop based on the needs of the community. For example, because cancer is prevalent in the population the hospital serves, Norwegian American has invested in growing its oncology department, Mr. Sánchez said. Over the past year, the oncology department has grown 159 percent. Similarly, the hospital has invested in cardiology to address the prevalence of heart disease in the community, and today the cardiology department is three-times the size it was in 2011.

As part of the hospital's investment in increasing behavioral health services, it has converted 17 beds to serve patients receiving behavioral healthcare, and this program has grown about 28 percent in the last two years.

Contrary to market trends, the hospital's inpatient utilization has gone up by about 4 percent from 2013, and emergency department visits have increased by 7 percent.

"With every decision we make, we address the question, 'How will this help the patient?'" Mr. Sánchez said. "We measure and trend our performance to help us guide our decisions and make the necessary changes to improve our services across the entire hospital, and this has been the key to success."

Enhancing culture and engaging staff at all levels is key to organizational successNA Photo

Another key element of Norwegian American's successful turnaround is the hospital's human capital.

"We knew that if we wanted to be successful, we had to change the culture, be more efficient and have quality people on board," Mr. Sánchez said.

While much of the cultural change was a natural impact of positive quality outcomes and performance, Mr. Sánchez recognized that the turnaround had to be backed by the entire hospital staff, including employees at every level.

"As a CEO, I feel our greatest assets are our staff," he said.

Every executive, including Mr. Sánchez, meets with hospital staff from different departments of all levels to ensure hospital employees' feedback and concerns are heard. In doing so, Mr. Sánchez breaks down the barrier of the C-suite. "I make sure they know how critical they are to the team," he said after describing a meeting he held with the housekeeping staff.

Norwegian American today, and what lies ahead

In addition to quality improvements, financial growth, increased patient volume and a cultural renovation, Norwegian American's turnaround has resulted in two consecutive Joint Commission accreditations. The hospital also maximized all of its federal incentives for implementing its EMR system, was clear of any citations on the federal EMR audit, attested to stage 1 for meaningful use and is on its way to stage 2.

When thinking about the future of Norwegian American, Mr. Sánchez is optimistic. The hospital has shown marked improvement on every measurable level, and the organizational culture fortifies it as a fixture in the community.

"In 2010, when I arrived here, no one wanted to work here. Now I have people calling me every day asking if there is an opportunity. Now I have doctors calling me and saying they want to move their practices to Norwegian or refer their patients here."

Because of large populations of undocumented immigrants in the area, Norwegian American is uniquely challenged by the impacts immigration reform will bring. While Norwegian American is faced with the usual health reform woes, the uncertainty of what will happen to the millions of undocumented immigrants poses the biggest challenge. Safety-net hospitals see many patients who are not documented citizens and are therefore ineligible to acquire healthcare subsidies.

At the same time, the uncertainty of where immigration reform will go gives safety-net hospitals the opportunity to continue playing a significant role in healthcare. Furthermore, many residents of Norwegian American's surrounding communities that are eligible for healthcare coverage often cannot afford it, and continue to depend on the hospital for medical care.

"Our success will depend on figuring out how to manage everything in front of us with limited resources," Mr. Sánchez said.

To do this, executive leadership of Norwegian American will continue to stay sharp.

"As a leader in this healthcare environment, you have to be very flexible, adaptable and never lose a business opportunity."

In addition to maintaining a business-oriented leadership team, Mr. Sánchez emphasized the importance of maintaining good relationships and strong partnership. Partnership is critical with various types of organizations, he explained, including other hospitals, federally certified healthcare centers, faith-based healthcare centers, schools and community-based organizations.

"You cannot do it by yourself in this environment. You need to have partners and the support of the community," he said.

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