Pursuing Hospital Mastery: Q&A With Experienced Hospital CEO Mark Dixon

Mark Dixon kind of has a thing for hospitals and health systems in the Midwest. He also has a knack for helping them improve clinically and financially.

From 1978 to 2011, Mr. Dixon has found himself at an array of Midwestern hospitals. He started as an assistant director of pharmacy at Region's Hospital (back then, it was still called the St. Paul-Ramsey Medical Center) in St. Paul, Minn. He then moved on to Allina Hospitals & Clinics, where he eventually became CEO of Minneapolis-based Abbott Northwestern Hospital. After a five-year stint as COO and CEO of the Community Hospitals of Indiana in Indianapolis, Mr. Dixon returned to Minneapolis to become the South Region president of Fairview Health Services.

Since the end of last year, Mr. Dixon has been working with his own consulting firm helping health systems and medical suppliers to, more or less, find a state of hospital and healthcare mastery. He explains how former CMS Administrator Don Berwick, MD, helped to give the healthcare environment guidance, how hospital leaders can grow their own grassroots projects and programs and why physician integration is more than just today's latest buzz phrase.

Question: How would you characterize the current state of healthcare?

Mark Dixon: The overall healthcare industry and economics of the industry are just unsustainable. Whether we see the [PPACA] as it currently rests or an adaptation of that, there's going to be reform. The average family premium for a family of four in 2015 is going to be $21,000 per year. Forty percent of the average household income in the U.S. will go toward healthcare. The costs are so overwhelming, and frankly, the outcomes we get for the costs are average at best — and sometimes well below average. Whether you want to call [the future changes] an ACO or not, we're headed in a different direction from a volume-drive, fragmented model to a value-driven, coordinated-care model. I like to use Dr. Berwick's Triple Aim: decreased costs, improved patient satisfaction and improved clinical outcomes. It has to be all three.

Q: You mentioned the healthcare law and the uncertainty behind it. How do you think the PPACA will shake out?

MD: [Laughs] None of us really know on that question. The Supreme Court is going to look at it [this month] and may not make any final decision until after elections. It's a political hot potato for the country. Frankly, as I talk to a lot of integrated delivery networks, they think IDNs staying put in the current model isn't going to make it in the future that we envision.

Q: Most recently, you were the South Region president for Fairview Health Services and oversaw several system-wide accomplishments. Can you explain what some of those were, such as establishing a freestanding ambulatory surgery center, and how other hospital executives could mimic those successes?

Mark Dixon, former CEO of Abbott Northwestern HospitalMD: We were early adopters around ASCs in Indianapolis with the Community Health Network. We had terrific experiences creating them, sustaining them and bringing in new investors, but we didn't have as many in the Twin Cities. They were seen more as physician-owned or hospital-owned, with not many joint ventures.

However, Twin Cities Orthopedics wanted to build an ASC. They're one of the largest orthopedic groups in the United States. We engaged in a dialogue — is there some way we can work together not only to partner around an ASC but also to partner around broader orthopedic value creation within the Fairview system? In essence, we had a co-management agreement with the group and agreed to expand it to a value-driven, coordinated-care model. It was more than, "How do we buy implants together?"

We added to our expanded, value-driven co-management relationship a new 50-50 ASC joint venture about a year ago, and it's been extremely successful. When you do these and do them well, you expand the market of physicians interested in coming to your organization. We also freed up capacity in our hospital to be able to accommodate more patients from the non-orthopedic realm by investing in an ASC, so it was a win for the hospital, the orthopods and for the health system.

My experience before Fairview in the early and mid 1990s was a rush toward the capitation model. That was largely about changing only the payment model of care. And that failed. We heard loud and clear that Americans value choice. [Given that,] how can we withhold care? The model that I recently saw working extremely well at Fairview was moving toward a different way of how we can literally change the care that's provided. Quality improvement, increased patient satisfaction and reduced costs — all were strong directions for this model. That begins moving toward a medical home and a team-based care approach with care coordination by a team of physicians and other team members. This involves reconfiguring the primary care base of the IDN and making healthcare a better experience by getting patients engaged in their care. If you have diabetes or heart failure, you know your care team will check in with you on a regular basis. Also, as one of the new Pioneer ACOs participants, [Fairview] will align payment models with their Medicare business in addition to their large commercial payors. This is a strong strategic move for them.

We also were getting a lot leaner inside the organization and were improving the overall operating performance. We looked at what kind of things can we do to improve operating performance across the organization: improve productivity, growth, expense reduction, reducing variation in clinical practice, revenue cycle and trying to break even on Medicare reimbursement. These could all lead to 10, 15 or 20 percent reductions in costs. As we reduce costs, we must keep our eyes on all three [components of the Triple Aim].

Q: How did physician integration play a role in some of those successes?

Mark Dixon: Physician and clinical integration is a key. From a clinical and business side, we were beginning to move toward integration, employment if physicians chose to be employed and aligning interests. I'll go back to the Triple Aim — better experiences/costs/outcomes from primary care to urologists to cardiologists to whatever "ologist." It was about how we can work together. Working toward an ACO across the whole community requires large groups of physicians — generally more than an IDN's employed physicians. It needs to be a larger physician group finding common ground and working toward meeting common objectives for your community and population health.

Q: You briefly mentioned your tenure at Community Hospitals of Indiana. While there, you helped improve the net operating margin to run consistently in the 7 to 12 percent range over four straight years. How were you able to do this?

We placed a significant focus on growth, especially the clinical service lines such as cardiovascular, oncology, neuroscience and women and children's. We established an accountability system and created expectations. Every month, we'd sit down, the various vice presidents and myself, and look at how we were doing, where we should improve, how we could support the leadership team. I was very proud of the team we developed there.

We also had a separate service line called ambulatory, where you think, breathe and sleep ambulatory and develop ways to grow the ambulatory business. We established new urgent care centers and imaging centers to position the organization for ambulatory growth. Sometimes, in IDNs, the focus is a lot more on inpatient than the ambulatory side. By establishing a separate ambulatory division, it created focus.

Q: You also helped develop the Community Hospital North expansion plan, which achieved an A+ bond rating in 2005. How can other hospital executives position their facilities to achieve favorable bond ratings and make the financing process easier?

MD: Achieving a good bond rating is more than having a strong balance sheet as an organization. What I learned from [Community Health Network] CFO Tom Fischer is how to position significant investments to the rating agencies — not just brick and mortar investments, but also the strategy. Part of the strategy in achieving a favorable bond rating is telling the story of what the clinical program developments are, how we are performing against them and what's planned for the future. Provide evidence that you have plans for these initiatives and that you intend to achieve results. I credit Tom Fischer, who helped to successfully tell our story to the bond market beyond the financial sheet.

Q: What are some of the key strategies to have in mind when growing a hospital cardiovascular, orthopedic or spine program, like what you saw as CEO of Abbott Northwestern Hospital?

One of the key things is to begin to think of yourself as an entire program and partnering with physicians and clinical staff with an eye to the future. I credit Gordon Sprenger and Bob Spinner, CEO and COO of Allina at that time, for mentoring me toward these directions. For example, if you're trying to grow cardiovascular or spine, develop a bold vision for five to seven years from now, and determine what it would take to get there. Be tactical. You'll often learn you just can't have organic and incremental growth. You have to take bold moves, recruit other physicians, develop new partnerships and invest in research.

Another thing I very much learned while I was at Abbott Northwestern Hospital and building those programs was quality improvement and how higher quality costs less. When Dr. Don Berwick started [the Institute for Healthcare Improvement], he said we need to get involved very early and reduce variation in practice. So we partnered with physicians, monitored length of stay variation and established clinical parameters. In that process, we reduced variation, dramatically improved quality, and patients were able to get out of hospital earlier. This is very much in vogue today, and it works. It just has to be strategically based. Through it all, I have maintained the mantra that "patients are the reason we exist." It has served me and the communities I have served very well.

More Articles on Hospital Leadership:

Q&A With Johns Hopkins' Dr. Peter Pronovost: How Clinical Communities Can Reduce Harm

100 Non-Profit Hospital, Health System CEOs to Know

Profit Potential: How Stamford Hospital Has Hit Positive Margins for 8 Consecutive Years

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