Health systems that rise to the top over the next five years will not be separated by size alone. At the Becker’s CEO + CFO Roundtable, the CEOs of two respected health systems laid out the forces they believe will define winners and losers, and what they are doing now to stay ahead of each one.
Kevin Hammons leads Franklin, Tenn.-based Community Health Systems, a publicly traded operator of hospitals, surgery centers and primary care clinics across 12 states with more than 800 locations. Ketul Patel is president and CEO of Wellstar Health System, the Marietta, Ga.-based nonprofit that operates 13 hospitals with a plan to add more in the next few years. The two organizations are built differently, but the pressures their leaders described are largely the same.
One of the biggest changes both CEOs are leading is the shift from inpatient to outpatient surgeries and managing the reimbursement dynamics around it.
“Those systems that can really navigate some of the reimbursement changes, either through becoming more efficient or managing their costs, will be critically important,” Mr. Hammons said. “We know the government’s getting rid of the inpatient-only list; we’ll be sunsetting that here in 2028. So more and more, not only will insurance companies be pushing people into the outpatient setting, but I believe consumers are looking to receive care in outpatient settings, and physicians want to practice in outpatient settings.”
That view has shaped CHS’s strategy directly. The system recently acquired the largest multispecialty surgery center in Alabama and Mr. Hammonds said near-term growth will be weighted toward ambulatory over acute.
“It’s really an equation of return on investment,” he said. “We want to make sure we’re building relationships with physicians and with communities, and growing in the right areas, and then thinking about the opportunities that they can create within the hospitals by relieving a pressure release valve, creating additional capacity.”
Wellstar’s approach centers on a similar logic, built around a different asset. Mr. Patel described a 26-hospital digital care network, most of them rural, that Wellstar uses to extend specialist coverage to communities that previously lacked it. Before joining the network, 70% of patients in those communities were leaving for care. After, 70% stayed.
“I’m not proud of the fact that Georgia is one of the worst in the country in terms of health status,” Mr. Patel said. “It’s our responsibility to make sure we’re doing right by the people in those communities and actually increasing access to care, so that we can support the health status of those communities.”
In both systems, the question of scale surfaced as a more complicated issue than most would think. Scale is often considered an advantage in contract negotiations and economic strength, but it presents a variety of challenges as healthcare organizations need to operate with increasing nimbleness. Mr. Hammons described CHS’ pivot away from hospitals being “single dots on the map” — standalone hospitals without regional networks of care — toward networks spanning primary through post-acute services.
Mr. Patel, who joined Wellstar from a national system, has experienced the same transition.
“One of the challenges we all have whenever we grow, and grow exponentially, is that you always have to remember care is local,” he said. “Clinical decisions have to be, in my view, closer to home. The focus on health status has got to be closer to home. Every geography in Georgia is different.”
That operating philosophy is driving structural changes at Wellstar. When Mr. Patel arrived, the organization had 13 layers of hierarchy in corporate functions in some areas. He has brought that to seven. He also brought in an outside consultant with a directive that would be unusual for a system already carrying a solid operating margin.
“I told them the one thing I want you to do is treat us like a turnaround,” he said. “In not-for-profit healthcare, a 5.5% to 6% operating margin is very good, but when you have a competitor whose operating margin is 10% in largely the same markets, guess what? We should be doing something more.”
Nonprofit health systems, have not kept pace with for-profit competitors on speed and that gap has opened a door.
“One of the reasons Wall Street has gotten so involved in healthcare is that not-for-profit health systems weren’t able to fill that gap,” he said. “What for-profit organizations are able to accomplish in the time it takes us in not-for-profit healthcare to go through cycles is pretty significant, and we play catch-up.”
The response is to hire a quality and passionate candidate who can drive forward change, not necessarily the person with the most credentials.
“I look for hunger now,” Mr. Patel said. “I want to make sure the leaders on our team are hungry. They want to drive change. They’re agile. They’re nimble. They’re built for speed.”
Mr. Hammons agreed. Speed matters, but the foundation that makes sustained performance possible is trust.
“Right now one of the most important things all of us as healthcare leaders can do is create trust and operate with integrity,” he said. “There’s a lot of distrust in the health system right now. There’s distrust from patients in the healthcare system, and all of our employees are also patients.”
Beyond trust, clarity and vision are the leadership attributes that allow organizations to move faster in periods of rapid change.
“The healthcare industry at large, at least relative to other industries, has been slow to move and slow to innovate,” Mr. Patel said. “So having vision, creating a new vision for what healthcare might look like five or 10 years from now, and leading with that can actually move our organization at a much quicker pace.”
The physician relationship with CEOs also sits at the center of organizational resilience. Mr. Patel described a set of recent changes at Wellstar: quarterly meetings between himself and medical staff leadership at all of the system’s hospitals, a consolidation from 13 service lines to six strategic ones, and an operating philosophy he traces to his time leading Virginia Mason Franciscan Health in Tacoma, Wash.
“People closest to the work should be shaping their work,” he said. “That’s what I want from our team members and our physicians: to be able to drive change and do better for patients, because they’re the ones taking care of the patients, in my view.”
Mr. Hammons connected physician relationships directly to the competitive stakes for hospitals where most physicians remain independent.
“The majority of our physicians are not employed; they’re independent physicians who practice at our hospitals, so we want to treat them as customers and make sure we’re providing a good experience for them,” he said. “You’re not going to do that without really satisfied employees, so focusing on employees is the fourth leg of that stool.”
At Becker's 4th Annual CEO + CFO Roundtable, taking place November 2–5 in Chicago, more than 1,500 hospital and health system executives tackle decisions that determine whether organizations thrive or merely survive: protecting margins under cost pressure, choosing where to grow, renegotiating payer relationships, stabilizing the workforce and proving real ROI on technology. This is where leaders work through them together, face-to-face. Apply for complimentary registration now.
