Craig Albanese, MD, an academic pediatric surgeon and former COO of Duke University Health System, took over as CEO of the Durham, N.C.-based system in March.
He joined Duke Health — which includes three hospitals, physician practices and home hospice care — in January 2022 after more than five years at New York City-based NewYork-Presbyterian, where he most recently served as group senior vice president and system chief medical officer. He previously held senior leadership positions at Stanford (Calif.) University and the University of California San Francisco.
Becker's caught up with Dr. Albanese to discuss how Duke Health plans to bend the cost curve, where its biggest growth opportunities are and how the system is supporting its "talentforce" in a challenging labor market.
Question: What are the top three strategic financial priorities for your health system in the next fiscal year?
Dr. Craig Albanese: Our business and our mission is delivering extraordinary clinical care that is safe, equitable and patient-centered. We aim to manage our daily work systematically, so care delivery and its supportive processes are efficient, timely and delivered without overburdening our workforce — or what in this era we should all call our talentforce. Our management system is grounded in a culture of respect and belonging. It only works when all in the talentforce feel psychologically and physically safe and supported, are comfortable escalating any concerns and actively contribute to daily problem solving. It's on that bedrock that we develop our financial priorities.
I have a simple three-word mantra: People. Access. Growth.
1. People. Stabilizing and growing our talentforce is our primary concern. The cost of turnover and contract labor is staggering. We are in a "people caring for people" industry and I am concerned by how many people are disaffected by the calling to healthcare, narrowing the formerly-robust pipeline for new talent. We've made major investments in salaries over the last 24 months, but engaging our skilled, dedicated people is key to success. In fact, I have asked everyone at Duke to add "chief retention officer" to their list of responsibilities — and I know our leaders have heard the call as our turnover has decreased by over 25 percent from the last fiscal year. We must all do our part to decrease attrition and bring joy back to work by tending to the varied stresses (short-staffing, workplace violence and burnout) of our talentforce.
Data and my own observations suggest we will simply not see the numbers of physicians, nurses and other staff entering the post-pandemic healthcare provider sector. North Carolina, for example, has a projected shortfall of about 12,500 RNs (9 percent of the current RN workforce) 10 years from now, concentrated in Duke's Raleigh-Durham-Chapel Hill home market. We must "do more with less," embracing industrial engineering principles (these form the basis of the Duke Quality System) to ensure that our people deliver valuable care in a fulfilling way. We see, and are pursuing, huge opportunities for AI tools and process improvement methods to converge and support this redesign of the talentforce — which will benefit our people and our bottom line equally.
2. Access. We're a comprehensive health system, supporting our community with everything from health promotion and primary care to groundbreaking transplants. Our ability to deliver any of those services depends on access. In the short term, this means hiring more providers, while also taking a critical look at our processes and procedures to ensure we are operationally effective and efficient.
In our hospitals, our main focus is patient flow — and efficiently managing our procedural areas. On the outpatient side, we are responding to this age of consumerism by focusing on access, convenience and experience. We continue to develop our distributed primary care network and we are embracing digital solutions that help us interact with our patients and them with us. These range from simple approaches like self-scheduling to comprehensive virtual care delivered to patients wherever they are.
One thing is of particular importance to me: we're a safety net health system, and we're committed to making all of the communities we serve healthier. Sometimes that means providing care directly and sometimes it means partnering community leaders and providers across the state to provide consultation and support. Healthcare is best delivered close to home, and while it's gratifying to know that patients across the state believe in our quality, we are committed to keeping care local (apart, of course, from certain distinctive and specialized services we're best equipped to provide) where possible.
3. Growth. We're growing in a smart way to deliver the services we believe will be most impactful five to 10 years from now. In other words, we're skating to where the puck is going. This largely means a continued expansion of our outpatient footprint, both in primary and specialty care, to growing submarkets that have a projected need for capacity. A few highlights include the opening of a new Duke Cancer Institute oncology access center that has simplified the physician referral process and accelerated scheduling for patients; expansion of specialty pharmacy services delivered straight to the home; and the ongoing development of a campus in a new and fast-growing part of Wake County that will scale and expand with the needs of that community.
Q: How do these align with the health system's overall mission and goals?
CA: At Duke Health, our mission is "Advancing Health Together," which reflects our legacy of breakthrough research that translates quickly to better care at the bedside. We're always finding new ways to address the challenges we face, to improve the health of our local community, and to be a good partner to others. It's exciting to say that we have recently completed the historic integration of the health system with our nearly 2,000 faculty physicians. Now more than ever we are all moving forward as one team to deliver top-quality care in a financially-sustainable way.
Q: What are the biggest financial challenges facing Duke Health today?
CA: No. 1, as I mentioned earlier, is that our people are our top priority. Healthcare workers, especially nurses, continue to bear the brunt of lingering pandemic and Great Resignation impacts — and they have more options, inside and outside of healthcare, than ever before. In fact, nationally, 22 percent of nurses are predicted to leave bedside care. Costly travelers can fill some gaps, but we firmly believe that they are a short-term solution to an underlying problem.
We are tackling this problem head-on and have responded by investing in our team members through salary increases, market adjustments, enhanced workplace safety programs, professional development and academic progression support, and renewing our culture so everyone feels valued, empowered, respected, and that they belong.
These actions have had immediate results. In addition to the recent reductions in turnover, applications have increased year-over-year by 15 percent. Part of this is due to local programs that encourage careers in healthcare, building the pipeline of future providers, research scientists and staff. For example, this summer we announced a partnership with Durham Technical Community College to help train their nursing students and provide them a pathway to employment at Duke after graduation.
As a result we have significantly reduced our reliance on contract labor and have line of sight to the high-reliability internal talentforce that we want.
Second, I'd be remiss if I did not mention a core challenge facing not just Duke but health systems nationwide: the use of a strained acute-care system as an unreimbursed safety net for an incredibly complex set of social and behavioral needs in the community. It's in the DNA of healthcare providers to care, and when you couple these good intentions with limited state and local resources, you crowd out acutely-ill patients who truly need the level of service only we can provide. Providers, payers and government health agencies must come together to solve for the mismatch of limited high-acuity supply and burgeoning low-acuity demand. Parties on all sides will benefit.
Finally, we're invested in bending the cost curve, in our local market and nationwide. There is without a doubt an unsustainable level of waste in the healthcare system. But the recent rise of what can only be described as nuisance denials is absolutely the worst tool for bending that curve. HHS Inspector General recently reported that Medicaid managed care organizations denied one out of every 8 prior authorization requests in 2019. A leading insurer was recently found to have spent just 1.2 seconds on each claim denial in 2022. These robodenials don't reduce the cost of care. They take doctors away from the bedside to defend medically-sound decisions and require health systems to increase the number of costly claims-processing resources. In short, they introduce more waste into the system. I'm sure I speak for many CEOs in saying that this practice is bad for the system, bad for the economy and bad for the vulnerable patients whose care hangs in the balance.
Q: On the other hand, what are Duke's most promising financial opportunities?
CA: The North Carolina General Assembly passed Medicaid expansion this spring, contingent upon a new budget that was recently approved. Medicaid expansion was Duke's top legislative priority for many years. It will provide affordable healthcare access to more than 600,000 people in North Carolina. Coupled with Medicaid expansion, CMS just approved the Healthcare Access and Stabilization Program to provide enhanced Medicaid reimbursement rates for hospitals in North Carolina. HASP is projected to bring in over $2 billion annually for hospitals in North Carolina and will help offset the state's financial share of the expansion population, which will be covered by hospitals. Medicaid expansion is the right thing to do for families and beneficial for North Carolina. We are still determining how this will financially impact DUHS specifically and health systems in general as the state moves forward with implementation, but we commend the legislators who have worked so hard on this important development.
Like every health system, we place a lot of focus on expense management. This comes through in both tactical ways (we have made great strides, for example, in supply pricing through our recent entry into the Vizient GPO and its key collaboratives) and in strategic right-sizing of our infrastructure. We undertook a rigorous redesign of organizational structure last year, which brought significant cost savings but more crucially yielded a flatter and more efficient management structure, one that empowers leaders and accelerates decision-making.
Expense management can only get us so far, however, and our biggest internal opportunity is the integration of our faculty physicians with the health system. The Duke faculty, whether we're talking about the newest recruits from top residencies or world-renowned experts, is unparalleled. They think critically and entrepreneurially about solutions to the most complex problems, and coupling that solution-oriented vision with the capabilities of our health system will be a game-changer for our market.
Q: How is your system leveraging technology and digital health platforms to enhance patient care, improve operational efficiency and generate revenue?
CA: Duke Health is continuing to build upon our longstanding history of innovative research to deliver tomorrow's healthcare today. Technology is a strategic differentiator that has limitless potential to revolutionize healthcare delivery. Among our major initiatives:
1. Duke Health is collaborating with nference, a Cambridge-based company, born out of MIT and Harvard, whose mission is to transform healthcare by making large repositories of biomedical information computable. This partnership will allow us to safely and responsibly accelerate the analysis of deidentified health information for biomedical research.
2. This summer, we announced a groundbreaking five-year partnership with Microsoft aimed at responsibly and ethically harnessing the potential of generative AI and cloud technology to redefine the healthcare landscape. The partnership marries Duke Health's leadership in patient care and medical research with Microsoft's technological expertise. This new era of innovation will include the creation of a Duke Health AI Innovation Lab and Center of Excellence. Our expectations are high for the ways in which AI improves the quality and efficiency of care.
3. We have expanded telehealth capabilities, making it easier for patients to see a provider on a variety of primary, urgent and specialty care needs virtually. We are also improving online scheduling to give patients more flexibility and schedule virtual visits at a time convenient for them. We believe it should be as easy to schedule and check in for many appointments as it is to book a hotel or a flight, and the data show this is exactly the kind of convenience patients demand.
Q: What partnerships, joint ventures, mergers or acquisitions is your system exploring to strengthen its financial position or expand service offerings?
CA: Duke Health is in a highly competitive healthcare market. Within this environment, we are seeking innovative ways to partner and collaborate to bring the best care to patients in the communities we serve. In that vein, we have recently broken ground on a new rehabilitation hospital that is a joint venture with another local health system, WakeMed, and with Lifepoint Rehabilitation, a business unit of Lifepoint Health.
The facility will function as a standalone hospital with 52 beds, all private rooms, and feature multidisciplinary therapy gymnasiums outfitted with the latest therapeutic technologies, outdoor courtyards and other spaces designed to help patients return to activities of daily living. The facility will be structurally designed in all units for the needs of patients receiving acute inpatient rehabilitation care for stroke, traumatic brain injury, amputation and other injuries and disorders.
We're pleased to continue and grow our partnership with One Medical to expand primary care access throughout the Triangle market. This partnership gives patients great benefits and makes it fast and easy to access care on demand. And now that One Medical is backed by the financial resources and innovation capability at Amazon, we're even more excited about what the future holds.
Our dedication to the local Durham community goes all the way back to James Buchanan Duke, who established the Duke Endowment in part to support Duke University and nonprofit hospitals in our area. We invest close to a billion dollars annually ($945 million in FY 2022) in total community benefit. Among our partners is Lincoln Community Health Center — the major community health organization in Durham County — and its satellite community clinics, which serve a majority of uninsured patients with incomes below the poverty line.
Q: Given the unpredictability of events like global pandemics, what are you doing to ensure financial resilience and sustainability in the face of unforeseen challenges?
CA: The pandemic taught us we need to prepare for tomorrow's problems today, and helped us to achieve a level of agility that frankly had not been a key aspect of our culture in the past. For Duke, embracing the pace of change has recently meant:
- Investing in our workforce. Our people are what make Duke Health unique. We are committed to becoming the best place to work in healthcare, so that our teams can continue to provide high-quality and safe care for our patients and communities.
- De-risking the supply chain by building in safeguards that provide access to key inputs.
- Evaluating existing processes and procedures, ensuring we are being as efficient and effective as possible while providing patients with a superior experience.
- Sharing information across our three hospitals, and our many outpatient clinics and provider offices. Through our lean Duke Quality System, we provide channels to highlight effective changes when they are made so they can spread rapidly throughout Duke Health.
- Deepening our commitment to health equity. Throughout the pandemic we saw deficiencies in the healthcare system, and we are taking a proactive approach to advancing health equity through improving clinical care, providing access to care to those who are vulnerable and investing in areas that need us most.
- Protecting our "rainy day fund." Our cash and debt positions are quite strong, and we're cognizant of the need to deploy capital strategically while maintaining that strength in order to weather market shocks and capitalize on opportunities.