Strategic Initiatives on Physician-Hospital Alignment Fact and Fancy an Insider’s Perspective

1. Strategic Initiatives onPhysician-Hospital AlignmentFact and Fancyan Insider’s Perspective Becker's Hospital Review 5th Annual Meeting Ronald N. Riner, MD President and CEO May 17, 2014

2. “When you come to a fork in the road – take it.” - Yogi Berra

3. “You should never cease from exploration, and at the end of all exploring you arrive where you started and know the place for the very first time.” - Little Gidding, T.S. Eliot

4. Changing Employment Dynamics Private versus hospital-owned practices, 2002-2011 100% Physicians in private practice Physicians in hospital-owned practices 75% 50% 25% 0% 2002 2005 2008 2011 Source: Physician Compensation and Production Survey, Medical Group Management Association, 2011 Survey

5. Facts • Majority of physicians and other healthcare providers are focused on delivering high quality and safe care • Despite common purposes, many healthcare systems and hospitals struggle to involve physicians in organizational leadership, strategy, quality and safety efforts • Need to get real about finances • Incentives • Cost of rules and regulations • Financial metrics of acquired practices • Value – from all perspectives is not well appreciated

6. Rules and Regulations

7. Top Challenges Reported by US Physicians 91% Managing shifting reimbursement models with payers 90% Financial management of their practices 88% Patient engagement; spending time with patients 84% Dealing with the impacts of the Affordable Care Act 83% Keeping up with the latest research 78% Improving patient care 77% Using health information technology in the practice 73% Managing increasing patient volumes Source: Wolters Kluwer Health, 2013 Physician Outlook Survey

8. Thursday, February 13, 2014

9. Rationale The Employment Carrot • Port in a storm • Course of least resistance • Possible coordinated care

10. Employed MDs • Who? • Why? • Where? • What’s it like inside the tent? • How are they doing?

11. Key Points • Where professionals are in their careers • Exit strategy for older physicians • Gender • Happiness is a “relative issue!”

12. Challenges to Physician Employment • Employer – employee relationship • Accountability • Transparency • Scientific cynicism • Engagement • Credibility of the leadership • Followership

13. Leadership The Concept of Entrepreneurship

14. Philosophical Concerns Short Term vs. Long Term 2020 2019 2018 2017 2016 2015 2014 2013 2013

15. Professional Concerns • The ability to innovate • Stiflingbureaucracy • Transformation from profession to a “job” • Theory vs. pragmatism • Ideology vs. reality and experience

16. Loyalty Finances:Not the glue Key: Purposeful, Challenging Work • Mission • Vision • Values

17. Issues Trust

18. Issues Talent

19. A Calling? A Job? “Go and do likewise.” Luke 10:37

20. Hospitals • View the world from their vantage point – still! • Bricks and mortar don’t practice medicine or deliver care • Hospital acquisitions lead to higher prices and the amalgamation of additional cultures

21. Clinical Integration • What’s the objective? • In many instances just buying revenue streams or attempting to guarantee a distribution channel

22. Nota Bene! • Hospital and medical practices are different businesses • Different metrics

23. “It takes an endless amount of history to make even a little tradition.” - Henry James

24. Key Question Are Mayo Clinic, Cleveland Clinic and the large staff models applicable to your environment?

25. Importance of Culture • Decades to build • Often absent in small business other than in presence of founders • In established and stable systems, reflective leadership and training

26. Management Motif Professional Service FirmsPlant Management Medical practice Factories Accounting Hospitals Law Practice Hotels

27. Management: Cultural Difference Hospital (Plant Management) Medical Practice • Values autonomy, trained to work independently and take ultimate accountability • The need for quick decision-making – sometimes life and death in the balance • Resistant to hierarchy • Trained in biomedical sciences, clinical expertise • Seeks consensus in group decisions • Trained to delegate and work in groups, embraces the collective mission • Deliberate decision-making • Hierarchy is key to success • Trained in management, social sciences • Respects top-down hierarchy when making decisions Adapted from: Nathan Laufer, MD, “The employment of doctors by hospitals-indentured servitude or practice salvation?”

28. Leadership Skills & Management Motifs Different Professional Service FirmsPlant Management Medical practice Factories Accounting Hospitals Law Practice Hotels Transferability Hospital and Health System Medical Practice

29. Current Lexicon Appropriate use criteria Quality Evidence-based care Value Outcomes = Cost Readmissions Patient/associate/ physician satisfaction Leadership capabilities

30. Value Professional Perspective Supportive, knowledgeable colleagues Trustworthy systems Purposeful and meaningful work Quality Quality focused knowledgeable support staff Degree of autonomy Value = Cost Satisfactory compensation Credible leadership Learning environment Quality of life (balance)

31. Value Patient’s Perspective Physician communication Meeting expectations with outcomes Quality Easy access Value = Cost Friendly, caring staff Reasonable cost

32. Value Hospital/Health System Perspective Highly productive clinicians Quality Favorable managed care and payor relationships Value Positive revenue streams = Cost Coordinated (? integrated) care Safe, quality focused care Market leader status

33. “The next morning the sun was behind a cloud, but they started on, as if they were quite sure which way they were going.” “If we walk for enough” said Dorothy, “we shall sometime come to some place, I am sure.” - The Wonderful Wizard of Oz, L. Frank Baum

34. Fallout if Done Poorly Fallout for Physicians Fallout for Payors Fallout for Hospitals Fallout for Patients

35. Concerns That “You” Should Worry About • Digital world realities • The importance of “thick data” • Burn out • Loss of excitement and professional satisfaction • Quality • For patients • For the institutions • For those providing the care • For yourselves and your families

36. Leadership Focusing on Results “But you have not yet told me how to get back to Kansas.” - Dorothy, The Wonderful Wizard of Oz

37. Leadership The Complexity of the Task "Do you think Oz could give me courage?“ asked the Cowardly Lion. "Just as easily as he could give me brains,“ said the Scarecrow. "Or give me a heart,“ said the Tin Woodman. "Or send me back to Kansas,“ said Dorothy. - L. Frank Baum The Wonderful Wizard of Oz, Author

38. Leadership • Adaptive leadership • Focused on building skills needed for new know how • Different than leadership charged with organizational challenges • The power of collaboration • Long-term focused

39. Leadership • Innovation • Evidence-based medicine • Best practices • Guidelines

40. Why People Fail to See the Changes Occurring • They choose to ignore or accept changes in the external environment

41. Issues • Alternative payment mechanisms • Transformation of place of delivery of health services • Who should deliver care • The importance of an energized, creative, quality-focused healthcare workforce

42. “It was a lie but he believed in telling lies to people. Truth telling and medicine just didn’t go together except in dire emergencies, if then.” - Mario Pruzo, The Godfather

43. Future • Think value • Do you need to own all? Should you? Can you? • Understand the business metrics and leadership requirements of the different businesses • The talent is the asset: • Science and business • Credibility • Experience • Leadership focused • The power of credibility • Quality and safety • Multidimensional

44. The Brass Ring

45. The Brass Ring Harmony

46. A Brief History of Medicine 2000 BC “Here, eat this root.” 1000 BC “That root is heathen, say this prayer.” 1850 AD “That prayer is superstition, drink this potion.” 1940 AD “That potion is snake oil, swallow this pill.” 1985 AD “That pill is ineffective, take this antibiotic.” 1989 AD “Managed care will correct all that ails us.” 1995 AD “Managed care could be dangerous.” 2000 AD “Antibiotics are artificial; here, eat this root.” 2010 AD “Value is finally upon us . . . as are monumental rules, regulations, requirements …” 2014 AD “Obamacare is 4 years old … here, say this prayer with this potion!”

47. “The comic and the tragic lie inseparably close, like light and shadow.” - Socrates

48. “In the end, only three things matter: how much you loved, how gently you lived, and how gracefully and effectively you let go of things not meant for you.” - Buddha

49. Somewhere over the rainbow . . . . . . . . . . an unending journey