Chris Van Gorder: Working Closely With Physicians Key to Turning Scripps Health Around

This past decade started off with a big promotion for me as well as a daunting challenge.

After working my way up through the ranks of healthcare administration in Southern California, starting as a police officer in suburban Los Angeles, I was named CEO in 2000 of San Diego-based Scripps Health, which currently has five hospitals and 19 outpatient centers.

Chris Van GorderI had only been at Scripps for about six months when I took over. The organization was losing $21 million a year at the time and the previous CEO had just left office after receiving votes of no confidence from Scripps' physicians.

Bringing physicians' voices into the C-suite

My predecessor actually had a good strategic plan, but the problem was that he hadn't anticipated the reaction from system physicians. I don't think you can overemphasize the need to work closely with physicians. The approximately 3,000 physicians on staff at Scripps are invaluable to our success. If we were a regular business, our doctors would be our distributors. They write the orders.

I've learned that hospital administrators and clinical people have different kinds of education and different views, creating an information or knowledge gap between these two groups. I created the Physician Leadership Cabinet to fill that gap.

The Physician Leadership Cabinet is a monthly forum between elected physician leaders and hospital administrators. The goal is to share information and address controversial issues as a team, before they can become problems. It is an advisory group, but for the past 10 years we have accepted 100 percent of its recommendations.

Closer ties with our physicians were key to our financial turnaround. By 2008, Scripps Health had an operating margin of $109 million.

Last year we added the Physician Business Leadership Cabinet. This new group, an offshoot of the PLC, also includes physicians and meets monthly with me. These are medical staff leaders who are elected by their medical group or IPA (independent practice association). We have to have a lawyer in attendance at the BLC because we can't talk about pricing and contracts.

Getting ready to align with doctors in accountable care organizations

Moving closer to our physicians follows a trend among hospitals across the country, as they take steps to form accountable care organizations with physicians. Regardless of what happens to healthcare reform, I believe this trend is inevitable. We are going to see more arrangements like bundled payments, where doctors and hospitals share reimbursements.

In some ways California hospitals are well prepared for these changes. Bundled payments hearken back to the capitated arrangements we've had in California for several decades. After a brief ascendency in the 1990s, capitation faded in the rest country. But in many ways capitated arrangements anticipated accountable care organizations. Both require close working relationships between hospitals and physician groups through shared payments.

We at Scripps are in the middle of our own internal analysis for a possible accountable care organization. In a presentation to the Scripps Board of Trustees recently, our physician business leaders outlined ways to prepare for accountable care organizations and bundled payments. Our doctors are interested in information technology, quality initiatives and safety across the system.

While a few hospitals across the country have joined CMS pilot studies on bundling, California hospitals have not had the opportunity to join. At any rate, I would like to wait and see how the trend develops. California's ban on the corporate practice of medicine is a barrier to fully integrating with physicians. Hospitals in this state cannot directly employ physicians, so they have to set up medical foundations, legal entities that own the practices but still do not employ the physicians in them. This makes for a fragmented healthcare system.

Our Scripps Medical Foundation encompasses about 600 physicians, as part of Scripps Clinic Medical Group, Scripps Coastal Medical Center and Scripps Cardiovascular and Thoracic Surgery Group. The foundation owns the buildings, IT system and everything else that the doctors use, but does not employ the physicians. Foundation physicians negotiate a professional services agreement with the foundation every one to three years.

Working with physicians to centralize services
We are working closely with our physicians to make Scripps more efficient. We believe hospitals will eventually move away from the old model of healthcare, in which each facility tries to do everything. As trauma systems have proven, it's better for care to be regionalized at certain hospitals. As a licensed EMT who still volunteers as an EMT on my off hours, I have witnessed the success of trauma systems first-hand.

Regionalization has worked exceptionally well for trauma. Twenty-five years ago, when six San Diego hospitals became the designated trauma centers for the region, unnecessary trauma deaths fell from 20 percent to less than 1 percent and have stayed there ever since.

However, creating designated centers for other functions will be slow. We are about to regionalize advanced cardiovascular care. Scripps is one of the largest providers of such services in Southern California. We will always offer some aspects of cardiovascular care at all of our hospitals, but we want to coordinate care as a system now. Our high-risk, high-cost cardiovascular procedures will be shifted into one center.

Scripps is one of the few health systems in the country that perform percutaneous heart valve replacements, currently a research protocol. This is done at one hospital, while less risky and more common procedures like diagnostic catheterization are still carried out at many Scripps hospitals.

We want to create this same kind of consolidation for other programs over time, as regionalization begins to take hold. For example, we have been talking about consolidation of stroke centers, diabetes centers, robotic surgery and neurosurgery.
All of these plans, of course, will need physician input at every step of the way. We have a strong governance system in place to make sure that happens.

Chris Van Gorder is president and CEO of five-hospital Scripps Health in San Diego and chairman-elect of the American College of Healthcare Executives. He is a licensed emergency medical technician whose EMT volunteer work won the Maltese Cross Award in 2006.

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