When William “Bill” Robertson, CEO of Tacoma, Wash.-based MultiCare Health System, described how his organization grew into the largest community-based health system in the Pacific Northwest over 12 years, he credited three cultural principles. Among them is what he calls “both-and thinking” — the belief that a health system can pursue more than one priority at a time.
Several health system CEOs told Becker’s they are working through a version of that same challenge. Facing federal reimbursement uncertainty, rising costs and capital demands on multiple fronts, leaders said they are making deliberate investments in more than one priority at once — and that doing so has required changes in how their organizations operate.
For Chris Schuster, RN, president and CEO of Concord, Mass.-based Emerson Health, the central tension has been between growth and margin discipline. As an independent community health system, she said, the two have to coexist.
“We cannot simply cut our way to long-term sustainability, nor can we grow without a clear expectation of financial return. We have to do both,” Ms. Schuster said. “Our strategy has been to aggressively manage our cost structure and improve productivity while continuing to invest in the clinical services, technology, partnerships and access points that will drive future growth.”
A related tension plays out in decisions about where to build capacity. Several leaders said they are investing in inpatient and outpatient services simultaneously.
Marlon Levy, MD, CEO of Richmond, Va.-based VCU Health, has been navigating that directly. VCU Health is adding beds to its downtown campus while also expanding its outpatient reach across rural Virginia. Dr. Levy said the system does not prioritize one setting over the other.
“The challenge is, how do you make both of them work, and what adjustments can you make in budgets and in timelines for both entities?” he told Becker’s in January. “The need is equally pressing for both.”
E.J. Kuiper, president and CEO of Baton Rouge, La.-based FMOL Health, said the more fundamental shift is in how health systems organize care across both settings.
“We are investing in both inpatient and outpatient capacity because the future of healthcare requires both. It is not an either-or strategy,” Mr. Kuiper said. “The operational change required is that we can no longer think of these as separate platforms. We have to plan, staff, resource and measure them as one connected system of care. That means aligning capital decisions with where patient demand is moving, using data to better understand access gaps, improving care coordination across settings, and building capacity in a way that supports both quality and financial sustainability.”
At Los Angeles-based MLK Community Healthcare, CEO Elaine Batchlor, MD, described a portfolio of investments that spans both care settings. The system has added an outpatient wound center and an inpatient cardiac procedure room, an outpatient diabetes management program and 31 new inpatient beds.
“The driver for all our decisions is patient need, balanced with the financial sustainability of the services,” Dr. Batchlor said. “We continue to invest in new forms of inpatient and outpatient care, even in the face of ongoing financial challenges, because our community lacks alternatives, and caring for our community is our mission. It is why we are here.”
Managing growth alongside financial targets has also required changes in how some systems track and measure performance. Mary Mannix, president and CEO of Fishersville, Va.-based Augusta Health, said the system is operating under two parallel board-approved plans. The Care Reimagined 2030 strategic plan calls for capital investments in key outpatient service lines, inpatient and outpatient facilities, and outpatient services in growing communities. Running alongside it is what the system calls an Alignment Plan, which targets efficiencies in overhead, the system’s self-insured medical benefits plan, potential service retractions and more rigorous goals in fundraising and development. Augusta Health has already consolidated three rural outpatient clinics into adjacent hubs, all within a 10-mile radius of the consolidated clinic, to gain efficiency and scale.
“The optics of this work can be contradictory at times: growing and investing in one area, retracting in another,” Ms. Mannix said. “But we call it alignment to our new financial realities, while selectively targeting strategic growth areas — all in the interest of sustaining our mission to strengthen the health and well-being of all people in our communities.”
Mr. Kuiper said the changes also require attention to the workforce.
“None of this works without physicians, nurses, advanced practice providers, clinicians, leaders and team members who are equipped and supported to work differently,” Mr. Kuiper said. “We are focused on workforce development, leadership capability, new care models, and the tools that help our teams deliver excellent care across the continuum.”
Ms. Schuster said the shift at Emerson Health also required changing how the system approaches financial accountability. Rather than treating the budget as an annual exercise, she said, financial performance has become an ongoing operational responsibility.
“Leaders are expected to understand their volumes, productivity, staffing, expenses, and contribution margin — and to adjust in real time,” Ms. Schuster said. “We are much more disciplined about matching staffing to workload, evaluating the return on new investments, and holding ourselves accountable for measurable results.”
For Ms. Schuster, financial discipline and mission are not in conflict.
“Margin creates the capacity to reinvest in the mission,” Ms. Schuster said. “The operational change was moving from an ‘either/or’ mindset to a ‘both/and’ expectation: every leader has to be thinking about how we improve performance today while building the organization we need for tomorrow.”
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