HealthCare Voice

BLOG SPECIAL: THE IDITAROD - A Unique, Grueling Alaska Experience

ANCHORAGE.   I am in Anchorage advising a client in connection with a senior executive placement.  It was my good luck to arrive in time to witness the ceremonial start of the 39th Iditarod -- the last great race on earth -- in downtown Anchorage.

Saturday's festivities, attended by thousands in one big tailgate party and winter carnival, was an exciting, and very cold build up, to the real race which began Sunday in Willow, AK.

"Today is a winter festival," an announcer boomed over the public address system. "Tomorrow begins a big old sweaty dog race." 

Sixty-three contestants -- Mushers and their dog teams -- will endure grueling conditions for the next 10 to 17 days over a more than 1,000 mile course to Nome through regions of this vast state that only dog sled teams go.  Even with GPS technology on each sled, Mushers face daunting challenges, including getting lost in nasty snow storms. This sport is not for the faint of heart or  weak of body and spirit.  Racers will experience bitter cold, brutal headwinds, and hallucinations resulting from loss of sleep. Truth is that the Mushers will take better care of their dogs than themselves during this 10+ days of the race. Before the race the dogs, which are bred to run and get stronger as the race progresses, are thoroughly evaluated by veterinarians.  That does not stop critics from labeling this event as animal cruelty.  

At race time on a cloudless Saturday morning, the temperature was about 2 degrees in downtown. I won't kid you, I was cold. Really cold. But judging by the elbow-to-elbow crowds in the bars, coffee houses and restaurants, I wasn't the only one who needed a break to warm up.

For me, this was a fascinating experience and an opportunity to learn more about this unique state.  Here are some race facts about this race and dog sledding that I found interesting:

• Iditarod is a ghost town that is located on the southern course. Each year the race alternates between the longer northern course and the southern route which is known for its bitter headwinds. This year the race is using the southern course.
  
• This year's entrants include Mushers from Stonehaven, Scotland; Aukland, New Zealand; St. Anne, Jamaica; a funeral director known as the "Mushing Mortician" from Anchorage; and a 62-year-old physician from Chattanooga, TN.
• There are 11 women in this year's field of entrants.  The first woman to win was Libby Riddles in 1985.  Susan Butcher, perhaps the best known woman to win the race, won her first time in 1986 and was the first racer to win four out of five sequential years. She is the second four-time winner. Ms. Butcher died of a virulent form of Leukemia in 2003. 
• DeeDee Jonrow, a fan favorite and breast cancer survivor, entered the 2003 Iditarod, three weeks after completing chemotherapy. A 27-race veteran, this native of Frankfurt, Germany has not been out of the top 25 since 1984.  In her 27 races, she has won more than $472,128.
• The ceremonial route is 11-miles long.  Because there has been no recent snow, and given the city's excellent snow removal program, snow that was stockpiled for weeks, is brought in to create a manicured course. Mushers invite friends to ride with them in the sled for the Saturday run, or they tow another sled, to add weight to keep the dogs for going too fast.
  
• Each Musher is required to carry the following equipment in the actual race: An ax with a handle at least 22 inches long, snowshoes, promotional materials provided by the race committee (yeah, believe it or not), eight booties for each dog on the team, cooker and pot capable of boiling at least three gallons of water at one time, veterinarian notebooks that are reviewed by a veterinarian at each checkpoint, fuel and a cable gang line capable of securing a dog team.
• A 1925 Diphtheria epidemic in Nome was ravaging children.  A train delivered the needed serum to the town of Neema, the end of the rail line.  Dog sledding teams carried the drug the last 674 miles in 24-hour shifts. Thousands of lives were saved, and dog sledding earned an important part of this state's extraordinary history.
  

I have uploaded additional photographs on my Facebook page.  http://on.fb.me/hy19hN

 © 2011 John Gregory Self

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That Other Potential Calamity for Healthcare

When some public policy calamity strikes, people tremble with fear or anger and they cry out:  "Why didn't someone warn us?  Why didn't someone tell us that there were bad consequences?  We do not want this pain!"

That is a reasonable request, especially for healthcare leaders who are already facing unprecedented challenges that threaten to dramatically change the way we do business. In responding, let me borrow a quote from Mike Moncrief, Fort Worth's mayor and a former county judge, who once said about a major change in EMS service for his community, "The train is on the tracks.  You are either on the train or on the tracks."

Now, which train are we talking about -- the Patient Protection and Affordable Care Act (PPACA) -- the so-called Obamacare plan -- or something far more sinister.  The answer to that question is easy:  something far more sinister. It is the fat, smelly elephant in the room that no one wants to look at, much less talk about: the skyrocketing and soon-to-be catastrophic debt crisis.  Healthcare executives -- it is time to step up to the leadership plate to prepare to deal with this very real possibility.

I try to stay away from politics in this space, but this issue is too important for me not to comment.  Hopefully, you will agree that this is truly a bipartisan train wreck.  The proposed GOP  House plan, which many know will probably never see the light of day, is more about ideology and a political principle than good policy.  Their proposed $61 billion in budget cuts comes from about 12 percent of the annual budget that is known as discretionary spending.  While $61 billion is serious money, and many in the GOP would argue that it represents a good start, it is woefully inadequate given the size of the deficit and our long-term debt.  In other words, this approach, without commitments to a sustainable policy of reduced spending over the long term will not keep the bond vigilantes away from our door. You simply cannot balance the budget by reducing discretionary spending.

The Democratic position is equally ludicrous.  Democratic defenders argue that the White House's initial plan was only a starting point for prolonged negotiations to craft a meaningful spending plan.  That line of defense of the President's approach is akin to a timid man whistling while passing a graveyard. You knew we were in trouble from a leadership perspective when the President said that he and the Republicans had "to step in the boat at the same time."  If a hospital CEO tried that approach with his medical staff when it came to a critically tough decision, there would be blood on the floor.

If the bond market decides that the U.S. is unable or unwilling to come to grips with the deficit and debt crisis, the consequences will be "abrupt, swift and painful beyond our wildest projections," argues David Walker, former Comptroller of the U.S. Public Accounts under George W. Bush.  Recently, while serving as a guest host on CNBC's Squawk Box morning show, he predicted that the crisis, now challenging debtor nations in the Euro zone, will visit the U.S.  shores within the next three to five years, if not sooner.  When it occurs, he posits, and it could happen at any time, the U.S. government's ability to continue borrowing, and refinancing existing debt, will become so expensive -- assuming anyone will lend to us at all -- that it will wreck our way of life as we know it today.

Healthcare providers will be at the nexus of this calamity. Regardless of what we say, the excuses we use and the promises we make, it will be too late.  Our economy, our industry will face an immediate restructuring, the type that is found only in the the most desperate of bankruptcies: It will be "abrupt, swift and painful beyond our wildest projections."

So why aren't we hearing more about this potential calamity from the healthcare trade press?  For the same reason that most futurists/after dinner speakers, and others who know better, are avoiding the subject.  Perhaps it is that we cannot imagine a system of care that is not like the one we have today, or perhaps it is simply that people will not pay good money for speeches who produce more heartburn than good feelings and laughs.   

This is a time when leadership must rise to the surface.  Leadership is not only about leading an organization for today, it also about the ability to anticipate how market and financial forces will shape its future, and to prepare the business to adapt.

© 2011 John Gregory Self

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What Would You Do?

So, here is the $64 million dollar question for hospital CEOs.  You learn that in the next 12 months the federal government is planning substantial cuts in Medicare reimbursement. Big cuts to balance the budget.  Moreover, CMS announces that all Medicare payments in 2012 will be tied directly to quality of care, patient safety, and customer satisfaction performance measures. Managed care payors announce that they will follow the government's lead. They, too, will join in the plan to bundle payments to providers, forcing immediate financial collaboration between physicians and hospitals.

This reflects a potentially devastating change for hospitals and physician practices, the perfect storm. This is the REAL sea change that consultants have been harping about for years.

To survive, hospital CEOs must take dramatic action including reducing costs by at least 7 to 10 percent below current Medicare rates. Quality of care -- using a variation of pay for performance formulas -- will be the key driver for all future payments. If hospitals do not measure up, they will get less, a lot less.

What will you do?   How will you restructure your organization?

This is no hypothetical scenario.  Today it may be just a fear, fodder for blogs, subject matter for futurists, and the inevitable journal articles about the doom and gloom future of healthcare.  But just around the corner, much sooner than later, it will be a reality.  

I have incredible confidence in the quality of U.S. healthcare leadership.  I know that, if challenged in this way, the vast majority of healthcare executives and physicians will respond in a dynamic and productive way. There is, in most executive suites, an untapped reservoir of extraordinary ideas and creativity that will lead to a new vision for the U.S. healthcare system.

However, most CEOs today are reluctant to advance these extraordinary ideas because we are an industry that is not comfortable with sudden change. Consequently we focus on what is safe in terms of strategy and innovation. But we are nearing that economic/reimbursement tipping point.

This is a subject worth thinking about.  What will you do?

© 2011 John Gregory Self

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Tis The Season: Thank You

This has been an extraordinary year. From being named the Senior Healthcare Leader of the Year for North Texas by the American College of Healthcare Executives to the very successful roll out of my new executive search and advisory firm, I have much to be thankful for.

As Christmas approaches, I want to take this opportunity to publicly thank some important people who have made this year so special.

First, let me begin with you, my loyal readers.  Thank you for your support, your kind words of encouragement and, most especially, your thoughts and ideas that help make this blog better than I ever could by myself.  

For those loyal clients who have supported JohnGSelf Associates, please know that your business means so much to me.  By selecting JGSA you allow me to continue a job that I love. Your support has propelled the Firm to a level of first-year success beyond my most optimistic expectations.  From Alaska, Indiana and Louisiana to Texas, we have worked on some challenging and rewarding senior level search and advisory assignments.

To the team that has helped make this first year so enjoyable  -- from Ellen Nassberg, FACHE, in Philadelphia to Dennis Bridges, March Wiertz and Randy Guttenberger, CBA, in Texas and my video editor, Nathaniel Campbell in Florida, thank you for your patience, your support and, most of all, thank you for a job well done. 

Melanie Hoffman, founder of Brand Nu Marketing, who guided the design of our logo, web page and whose counsel was invaluable in our startup, you have my sincere appreciation and my confidence that your continued work on our behalf will move the Firm to greater success. It is great to work with a firm who shares your values on service and accountability.

To Bethany Williams of PriceWaterHouseCoopers, thank you for your constant encouragement and your support as well as your savvy advice.  You and Melanie tell me things I need to know, and sometimes do not want to hear.  Thank you for your honesty.

To former ACHE Regent, Britt Berrett, PhD, FACHE, Executive Vice President of THR and CEO of Texas Health Presbyterian Hospital Dallas, who was instrumental in my selection for the ACHE award, know that this incredible honor is one of the greatest thrills in a healthcare career that has taken me around the world and allowed me to meet some of the most talented and interesting people.  Very few people will ever have the chance to do what I have done, but your Regent's award will be one of the most memorable highlights.

I look forward to 2011 with anticipation and great hope.  We pledge to provide you the same quality, service and value innovation in executive search that you have come to expect. 

Merry Christmas and Thank You.

© 2010 John Gregory Self

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The Ethics of Providing Misleading References

One of my mother’s oft repeated lines, reflective of her status as a true Southern Lady, was, “If you can’t say anything good about a person, don’t say anything at all.”  Hardly her original line but it is certainly a standard of conduct worthy of practice. 

There is a variation to this standard in the recruiting industry.  When giving a reference, recruiters would prefer that executives adopt this rule:  If you can’t say any good about a former employee, don’t lie.

I know of cases where exasperated executives, so happy are they to be rid of a troublesome or poor performing hospital executive or manager, that they have given remarkably favorable references.  Perhaps a sense of guilt led them to do what they thought was a good deed.  “I didn’t want to hurt his career,” one CEO said.  I guess that CEO did not think about the next CEO who would have to deal with his now departed employee’s problems.

We do that a lot in healthcare – say nice things to an unsuspecting future employer about a candidate.   Truth is we need to stop this. Giving a good reference when the former employee’s performance has been less than stellar is not doing anyone any favors, especially to the person who was sacked.

Verifying the performance of a potential employee is one of the age-old struggles of talent acquisition.  Recruiters are seeking good information to avoid a costly hiring mistake.    Companies that erect Chinese Walls to protect themselves against a lawsuit for a bad reference do not help the process even though these “walls” rarely prevent an enterprising researcher or recruiter from trying to dig out the truth.

If you feel compelled to support a former employee who did not succeed in your organization, then find those traits  that you liked and politely decline to answer each question regarding performance in which your response might be negative. 

This might be equivalent to “damning by faint praise” but at least you have done the right thing.  

© 2010 John Gregory Self

 

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What Am I Doing Wrong With Career Management? Nothing and Everything

An up and coming executive expressed angry frustration with the whole recruitment process.  Called twice for attractive positions that apparently represented career advancement, each opportunity ended with the job being awarded to internal candidates who were less qualified and lower paid.

“What am I doing wrong?”  Nothing and everything.

Nothing in the sense that his resume was an excellent reflection of his career progression, his performance, and the value creation for each prior employer.  In each case, the recruiters expressed great interest and assured the candidate that he would be a perfect fit – just what the client was looking for.  He interviewed exceedingly well – no apparent mistakes.  He received assurances from several of the interviewers that, in fact, he was just what they were looking for, but in the end, the jobs were awarded to internal candidates who were less skilled, less experienced but with a lower salary target.  This leads me to the “everything” part of my answer.

The young executive had no career plan, no targeted industry on which to focus, no concept of career brand management, a narrow list of networking contacts, and a lack of understanding of how the talent acquisition process really works.  Ten years ago, his list of “have nots” would have been largely inconsequential.  Today, those deficiencies are huge.

Here are some important career management points to consider:

1.   Recruiters are focused on building a credible panel of candidates for their client – whether as a search consultant working for an external firm or as an internal headhunter.  That is how they are compensated or evaluated.  They may, or may not, have your best interests at heart.  They certainly do not work for the candidate, regardless of how friendly the relationship.  They are probably unaware, or do not care, how not being selected for a position can subtly impact your personal brand.  Candidates who look at numbers of positions are naïve if they do not believe that the “always the bridesmaid, never the bride” image will ultimately affect their career brand.
2.  Always ask if there is an internal candidate.  Recruiters do not always like to divulge that information, but you are entitled to know.  Push the envelope and try to find out if that candidate is credible or if their involvement in the search is more “political” or “for show.”  If the candidate is a strong contender, or if the recruiter is evasive, it is time to hit the brakes.  In this troubled economy, employers are less likely to take a risk with a more expensive outside hire for non C-suite positions.  Candidates can always tell the recruiter to call them back if something cannot be worked out with the internal person.  Or better yet, just decline consideration.  This can be a smart, brand-enhancing move but timing and style are everything.  However, be forewarned that it is not a good idea to treat a recruiter badly.  They have memories like elephants, and they share information internally with notes to the candidate database.
3.  Develop a career plan – the sooner the better – focusing on a specific job or a type of work that brings joy and satisfaction.  Focus on a sector or an industry segment, if possible, and begin building your networking of contacts across this spectrum.  Do not focus building relationships only with external recruiters since they handle less than 35 percent of all management and executive recruiting projects.  Keep an open mind given there is a good chance you will not end your career doing the job you thought you would always have.  Finally, allocate time every week to focus on career networking and industry research.  This is as important as staying relevant with new ideas and technological developments in your current field. This is not “your parents” job market and it is only going to become more challenging. 

© 2010 John Gregory Self

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I Am Thankful

I am thankful.

Thankful for my family.   

Thankful for my friends.

Thankful for my freedoms and deeply thankful to those dedicated men and women who have worked and sacrificed to protect them. 

Thankful for my business and the wonderful clients who have followed me to my new firm. I am thankful for your support and your trust.  

I am thankful that I work in the healthcare provider industry. We face enormous challenges like at no other time in our industry's history. But with these challenges come bountiful opportunities that will lead us to be more efficient and to provide safe care and lower costs for those patients who depend on us. I am certain of that.

I am thankful to be working with so many talented and dedicated leaders who have the intellectual capacity, the skills and the determination to achieve these goals. Over the next 10 to 15 years these leaders will help transform our system of care and make the communities they serve a better place. 

 This will be an interesting journey and I am thankful for the opportunity to join you. 

 

© 2010 John Gregory Self

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Healthcare Reform, Deficit Reduction Will Transform Executive Search

I frequently write about the change that the healthcare industry will undergo over the next 15 years.  I have consistently argued that organizations that embrace change, and work to capitalize on market disruption, will thrive.  

It now appears that the tides of significant change are beginning to arrive at my front door. It is a bit disconcerting, but after 40 years of using the same business model -- a record very few other businesses can claim -- the executive search industry, especially in healthcare, will undergo what many argue is a long overdue transformation.

For healthcare, the drivers of change are legislative and economic. Legislatively, the Patient Protection and Affordable Care Act with cuts in Medicare reimbursement and new structures designed to streamline patient care processes, improve accountability and quality, notably the much discussed Accountable Care Organization, have spooked some executives at free-standing community-focus hospitals.  In short, more industry consolidation.   There is increased talk of new strategic alliances, mergers and asset sales.   Then there is the looming U.S. deficit crisis of which Medicare will play a prominent role.  Our current annual deficits are not sustainable.  Our long-term national debt, which has grown to a shameful $13.8 trillion, must be reduced to more manageable levels. Long-term unfunded liabilities -- promises that the U.S. Government has made but for which it has no cash reserves to fund -- are more than $53 trillion over the next 60 plus years.

So the healthcare industry we have all known and loved is going to be very different in the future. And that leads me back to my front door.

These transformational changes are driving consolidation of small health systems and independent community hospitals.  This consolidation means that more and more of executive and management recruiting will be handled internally.  Currently only 30 to 35 percent of all healthcare recruitment is handled by external recruiters.  That number will shrink significantly over the next five to 10 years. 

When healthcare organizations do turn to outside recruiting resources, they will expect something markedly different from what they have gotten in the past. In short, they will want lower fees, more aggressive expense budget management and increased value -- more for less.  High overhead firms with multiple offices are at greatest risk.  Already many of those firms are reporting year over year reductions in revenue and lower profits. Some long-standing partners in larger search firm are retiring or are being pushed out as their organizations grapple with how to reduce costs and maintain the existing business model as long as possible. Unfortunately, their national footprint that is secured with those multiple offices and related high overhead -- will soon become a liability.

Change is uncomfortable. You feel for the support staff members in those larger firms who are beginning to wonder about their job security.  It is never pleasant to see colleagues pushed aside.  But it is happening, and this change will only accelerate.  

Specialized boutique firms like JohnGSelf Associates will face our own set of challenges - expanding market share into geographic areas where we have no physical presence while sustaining existing relationships.  The secret to our success will be centered on a formula of lower costs, shared risks and more accountability for our performance and the performance of the candidates we recommend.

Luckily for my firm, we are ahead of the curve. Lower fees and extended placement guarantees with financial penalties tied to client service and satisfaction, are already central to how we relate with our clients.  

For the healthcare executive search industry to think that it can continue with business as usual, operating with an industry model that is 40 years old while all of our customers experience yet another in a series of transformations is just not realistic.

© 2010 John Gregory Self

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Balancing The Budget Without Medicare Cuts: You Try It

Hospital executives across America are warily eying the new Congress which will take over the first week in January.  

The House of Representatives is now solidly in GOP control and its members are decidedly more conservative and adamant that the size of government be reduced, that annual budget deficits be eliminated, and that future spending policies be geared to reducing the national debt. That could spell big trouble for hospitals, physicians and other providers since deficit reduction/elimination will require spending cuts, probably including further reductions in Medicare reimbursements.

 This nation's drive toward fiscal responsibility will be tumultuous.  As a nation, shared sacrifice and common good are no longer high on the list of admirable American values. We are also a nation of well-financed special interests which means there will be great temptation for Congress, yet again, to kick the can down the road again.  Except, now that we have already entered the dead-end section of road to fiscal responsibility, we do not have much room to wiggle around. Many economists and political leaders from both parties believe that further delays will only result in a financial crisis of epic proportions.

So how do we cut the spending and avert this crisis?  We talk about sacrifice for the common good, but what does that really mean? Significant reductions in spending will be necessary, but what programs will be affected?

Do you think you can make the tough choices that will be necessary to solve the problem?

The New York Times crafted a budget cutting exercise in its Sunday's Week In Review Section.  It provides readers with budget cutting alternatives to cut $1.345 trillion from the 2030 budget, the year where many believe that the full impact of baby boomers will be felt in terms of spending on Social Security and Medicare.  The Times scenarios include almost triple the revenue cuts and tax increases needed to solve this mounting financial crisis, allowing you the option to ignore choices you do not want to make.  Of course, Congress will have more alternatives at their disposal, including their now famous creative accounting, but the Social Security surplus which enabled President Clinton to achieve budget surpluses, will be  long gone at that point and Medicare and Social Security will be major contributors to deficit spending.  

Here is the link. Click Here or cut or paste this address in your browser. http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html.

I was able to do it without capping Medicare spending at GDP plus one percent, but it took deep cuts in spending from other programs, including defense, along with some tax increases. It is important to remember that as I made the tough choices we hear so much about, that I didn't have any lobbyists or political contributors beating me over the head while I did it.  

Finally, you must remember that these tough choices only limit future annual deficits, they do not address the overall national debt which as of 7:30 AM Monday, November 15 is $13,738,736,868,863.89. If you want to see how much it has increased since this writing, click the U.S. National Debt Clock. And if you want to write a check for your share, they will provide that amount to you as well.  But be warned, it is a depressingly large number.

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He Saw Trouble Coming. Now He Sees It Going.

In a period of prolonged BAD news, it is a very good news to read that our painful economic nightmare may be drawing to a close. The New York Times business columnist Gretchen Morgenson provided an important insight from top economist Ian Shepherdson who says the beginning of improving economic conditions are evolving.

In 2005, Mr. Shepherdson was one of the first to see a real estate bubble and predicted a meltdown followed by a big recession. He was right. Not many paid attention, but those who did and shorted those complex real estate investment instruments, made billions. 

With all the confusion following the elections -- with GOP House leaders threatening to limit healthcare reform by refusing to fund government implementation, including the expansion of coverage for low income earners and mandates for coverage -- this economic prediction is especially hopeful news for healthcare organizations who have seen a rise in unfunded care as families have lost benefit coverage as the result of business closings and layoffs. 

Big companies, who have had access to credit for some time, are already beginning to hire, but overseas. It is Main Street where the jobs are created, but debt-laden consumers have not been spending. This coupled with extremely tight restrictions on lending for small businesses, has kept the lid on expansion up until now. 

As the recession deepened through 2009 and early 2010, a great many healthcare organizations laid off workers or simply did not replace employees who retired or took jobs elsewhere. As we  move into 2011, now is a good time for CEOs to reassess their market strategies and employment plans. Moving aggressively, getting out in front of competitors by fortifying their leadership and management teams with top employees from other organizations, is the smart move now.

We still have a long way to go and we may not return to the go-go economy of  the mid-1990s for a long time, but this story highlights some encouraging news.

BUSINESS DAY

By GRETCHEN MORGENSON

Published: November 6, 2010

Ian Shepherdson of High Frequency Economics warned in 2005 that real estate would crash and a
recession would ensue. Today he sees reasons for hope.

http://www.nytimes.com/2010/11/07/business/07gret.html

 

Passion And The Leadership You Can Believe In

Too many CEOs shy away from one strong leadership skill that could make the difference between good and great:  passion.  Passion comes in many forms and shapes, but you must be willing to show it in order to leverage it. 

Today, people are desperate for good, solid leaders they can believe in.  Times are tough and people are scared, or at the very least apprehensive. They worry about their jobs, their retirement, the mortgage, educating their kids -- the list is long and important. Most are prepared to go all in for a leader they can believe in.  A demonstrated passionate commitment will cement that trust.

Leaders who are in it for the good of their customers, their organization, and for the good of their team and who can share these commitments with passion, compassion and consistency will get more from their employees and their organizations will consistently produce better, sustainable results.

If you are a senior healthcare leader and you are in it for YOUR greater good, for the advancement of YOUR career, or if you believe that your shareholders are more important than your customers and your employees, may I suggest you consider another career.

Your focus will not serve you well in this era of reform and transformation.

© 2010 John Gregory Self

 

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If It Sounds Too Good To Be True...

Consolidation may not be the right move for all hospitals.  

Healthcare reform, with its myriad of unknowns, may drive independent community hospitals to consider a merger or some variation of a strategic alliance that would shift local control -- ownership -- to a larger health system.  

The Accountable Care Organization (ACO) concept will undoubtedly spur some of this rush to affiliation -- a sale or change of ownership control -- because some hospitals will question whether they have the expertise or financial resources to manage reimbursement risks.  They reason that a health system with deeper pockets and a broader range of expertise is the prudent course of action to deal with what many believe will be complex implementation options under the ACO model. Then there are CEOs who have heard about ACOs and want one just because.... as this video so aptly explains.

My suggestion to these hospitals: stop.  Take a breath.  At this point there are very few experts with any real ACO experience.   Even consulting firms that stand to make an enormous amount of money selling ACO knowledge and insight to client hospitals are being unusually circumspect. Everyone is waiting for the rules to be written and then explained.

Now here is the real irony.  Healthcare reform is partially about reducing costs.  Sure there will be improved access and payment reform, but at this point, there is very little in the reform legislation that focuses on costs and quality.  When mergers are announced, usually with grand fanfare, the explanation for the transaction almost always centers around the belief that the merger or strategic affiliation -- a sale by any other name -- will produce synergies that will improve access, enhance quality and reduce costs.  The truth is that mergers almost always fail to produce on any of their grand promises.  In fact, there is a large body of evidence that healthcare mergers are extremely difficult to pull off and most result in unhappy marriages, not the hoped-for improved clinical quality and cost-saving juggernaut that was promised.  That is the norm.

Of course there are some good examples to the contrary.  East Texas Medical Center Regional Healthcare System now owns or leases more than 12 smaller community hospitals throughout northeast Texas.  Their approach incorporates investment to improve the local primary care hospital in hopes of keeping their residents close to home for the vast majority of all their care.  In addition to capital investment, ETMC has helped communities recruit physicians.  Almost all of what they do is to support their regional mission -- keeping their patients close to their homes, family and friends.   There are other successful consolidations and systems like ETMC, who have crafted relationships that are mutually beneficial. But so many do not work out so well. 

At the end of the day, CEOs in community hospitals are facing some daunting challenges.  This has always been one of the toughest most underpaid jobs around, a great deal more complex than most businesses of similar size.  While I may have 30 years of executive experience and a point of view that is built around my experiences,  I am not about to second-guess a CEO who is trying to do the right thing for his or her hospital and their community.  I just want to offer a word of caution:  Do not depend  on your merger partner or their advisors to help guide you to do the right thing.  As my grandmother once said, "If it sounds too good to be true, it might just well be."

 © 2010 John Gregory Self

 

Putting It All On The Line...

In life, in love and in work…we are exceptionally adept at NOT putting it all on the line.  When you are unwilling or afraid to go all in, things will rarely change for the better.  This is the reasoning of marketing guru and blogger Seth Godin.

I think he is right on the money.  We want the reward but not the risk.   We want the money and the respect but not the accountability. 

Hospitals, physicians, consultants, even lawyers, are not exempt from this thinking.  We want the reward – the big check and the comfortable life -- but the accountability makes us reluctant and resistant to making this type of commitment. 

For healthcare financial and operational consultants, lawyers and, yes, even recruiters, life is changing.  The big boys have almost priced themselves out of the market, value notwithstanding.  The golden goose –along with Elvis – has left the building.  Big firms with big reputations, big fees, big overhead pass through, big expenses  and heretofore automatically loyal clients, will have to resize or rethink their business models regarding how they plan to survive in this new normal healthcare environment.  

In a recent blog, I reported on a very capable CFO in New Jersey who said he was not sure how his hospital would survive the challenges of sustaining profitability posed by healthcare reform and the certain reductions in Medicare reimbursement.  “I am not sure how we can do it at this point, but this challenge excites me like no other time in my career."  

That CFO needs consultants who are prepared to put it all on the line. 

It is an exciting time.  I am all in.

© 2010 John Gregory Self

Accountable Care Organizations: Article for Review, Dose of Reality

The development of an Accountable Care Organization (ACO) is the subject of much discussion and some debate.  There is a certain emerging sense of urgency among healthcare leaders regarding ACO creation -- no one knows for sure what the regulatory environment will be like, but they want to be an early adapter lest they lose out to a competitor. That is what I am hearing as I travel around the country visiting with current and future clients. 

This reminds me of the rush -- and I think that is putting it mildly -- to the concept of system integration that occured in the late 1980s and early 1990s. From the acquisition of physician practices to the development of managed care products, a great many hospitals went "all in" before they understood the risks. In fact, the rush to integration was so vast and so quick that it earned the term Modern Healthcare Fad Management. That magazine published an excellent in-depth article on the importance of integration and within weeks, it seemed at the time, hospitals were inundated with all manner of consultants who claimed to be experts in a field of knowledge that heretofore barely existed in the context of hospital operations. Many took a bite of the apple and many lived to regret it -- financially and in their careers. Most blamed the messenger rather than themselves or, more appropriately, their consultants, who undoubtedly would have responded that the ideas were great and the advice spot-on but it was the client who failed to execute.  

Well, here we are again.

This time, however, the stakes are much higher. We all know that the world of hospital management is entering an era of uncertainty that is unmatched in last 40 years.  The same can be said for this nation, our economy and the depressingly large unfunded liabilities for Medicare and Social Security.

I found two articles that I feel might be helpful to Hospital CEOs and others who are thinking and talking about ACOs. Perspective is an important thing to have in periods of uncertainly an upheaval.

7 Aspects of ACOs From Steven Lieberman, Former Assistant Director of the White House OMB

5 Starting Points for Developing an ACO | Hospital-Physician Relationships

 Here is another dose of reality:  In the end, success or failure will hinge on leadership and management talent.  As you read these articles, you should give considerable thought to your leadership team and management group.  Do you have the requisite talent to take you through these major changes.  If you do, how do you keep them engaged and committed? If you fall short, what is your strategy to reverse this deficit?  

There are futurists and analysts, including those who rate hospital debt, who believe that the healthcare human capital position will move from a healthy (read: friendly) competition in many markets to a winner-take-all war for talent.

© 2010 John Gregory Self

Building Bench Strength: Key to Success for Healthcare Operations

Building bench strength --assessment, investment and consistency -- is an important human capital strategy for healthcare organizations. It is a strategy that will be an important foundation for an organization's future success. Or survival.

The assessment piece is easy -- evaluating senior leaders, managers, and all those hourly workers who are the heart and soul of whether an organization is great or mediocre, successful, or on the road to crisis and failure. A CEO who is not engaged in this process, who is not familiar with top, middle and low performers is missing an important leverage point for success.

Investment is a little tougher to master. Far too many hospitals and other providers by thought, word and deed treat their human capital as an expense that is tangential to success. In a time of Medicare reductions, those we know about today and those we will learn about as this nation's debt crisis continues over the next 15 to 20 years, it is counterintuitive to make investments in leadership, management and performance development initiatives, especially if an organization has always skimped in the past.  Most human capital specialists who work in the healthcare arena argue that this is no longer a discretionary investment but essential spending.  

Consistency.  This is truly the hardest hurdle to overcome. CEOs who do not see talent acquisition and development as a critical part of their job struggle with this the most. They begin with great intentions but then slip back to duties and issues about which they are more comfortable, or  about which they believe are more critical to the success of day-to-day operations.  Changing innate patterns takes time, energy and a trusted coach.  Randy Guttenberger, CBA, a JGSA associate and founder of CEROS, an executive coaching and team building consultancy, says that CEOs must rewire how they look at their role as a leader, their priorities as well as the underlying beliefs that drive daily behavior. Building a great team is not something that just happens.  It takes a focused effort and a willingness to adjust core values regarding how CEOS view their jobs along with a willingness to delegate operational matters that other team members can easily handle.  

Developing bench strength is a more cost effective and less risky approach to meeting management or leadership needs.  This is not rocket science but you must be willing to assess, invest and then be the type of consistent leader who says -- and who is a true believer -- that people are an organization's most important asset.

© 2010 John Gregory Self

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To Lead Or Adapt...That Is The Question

Healthcare leaders have two choices as the industry begins its uncertain journey into an era of "reform" and reductions in Medicare and Medicaid funding.  They can embrace the changes and get out in front, or they can stand pat, waiting to see what actually happens and then adapt.

The latter modus operandi has gotten us to where we are today.  Healthcare leaders are, without question, the most adept adapters in all of business.  That is an exceptional talent. They figured out Medicare in the 1960s when many proclaimed it would wreck healthcare in America, they quickly mastered TEFRA and the flawed implementation of DRGs (physicians were excluded) in the 1980s, and they survived the Clinton-era Balanced Budget Act as well as a series of other revisions in the late 1990s. All the while most healthcare providers flourished.   However, this time around, I am just not sure that waiting and then adapting is the right option.

As an executive recruiter, I like CEOs who believe that survival means recognizing and "accepting" that healthcare providers will face a series of significant reductions in federal payments over the next 20 to 30 years.  They have accepted the fact that an increase in Medicare and Social Security spending will produce a deficit of nearly $2 trillion unless something is done.  These CEOs,  and their teams, and some physicians, are already at the table designing strategies for new, more cost effective ways to deliver healthcare while improving quality and safety. These leaders understand they are the nexus of real structural reform, not the federal government.

This is the reality of healthcare reform.  Congress is badly divided. Even if one party gains a big majority, some of the devilishly tough issues that must be confronted are best not decided in a forum that is subject to the extreme, sometimes irrational positions of a political base.

A very bright and insightful CFO of a major New Jersey medical center once told me, "We will have to find ways to reduce our costs on an ongoing basis that are at least seven to nine percent below what Medicare pays us or we will not survive.  I know it can be done.  I am not sure how at this point, but this challenge excites me like no other time in my career." 

Making this paradigm shift is not a solo act.  I wonder what his CEO is thinking.  If he is a get-out-in-front leader who also is excited by this challenge, his hospital may be one of the survivors.

© John Gregory Self

 

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The Consolidation Myth: Being Nimble Matters

"If your hospital is attractive financially, has a good payer mix, makes a margin, and dominates its local area, it's a fat target for larger systems that see growth and scale as the way to thrive under healthcare reform."   -- HealthLeaders.Com

In anticipation of ongoing reductions in reimbursement and additional legislative attempts to change the way healthcare services are delivered, the consolidation of community hospitals into larger  regional healthcare systems is frequently touted as an answer to controlling costs, having access to capital, and improving quality.  

The problem with the consolidation scenario is that it rarely, if ever, results in reduced costs and bigger does not guarantee improvements in quality, safety or service.  The only possible advantage, assuming the independent hospital has done a good job in managing its operations, is improved access to capital, but that too can be misleading.  Well run, financially stable hospitals with solid balance sheets can get capital.  

Consolidation often occurs because the local leadership team and board have not done  a great job managing their operations and, over time, positioned their hospital in such a hole that selling out is the only answer. However, the days in which regional systems will step in and invest in a sinking community hospital are nearing an end. 

The regional systems are eying new sources of revenue, not dogs with fleas.

Consolidation eliminates competition.  The lack of competition allows prices to rise, which is exactly what has happened in metro market after metro market, when consolidation occurred (competitors were eliminated).

No one knows for sure what the future holds for healthcare reform, but I believe that we will see significant structural change along with the inevitable reductions in reimbursement. In this scenario, who has the best chance of surviving?  The large system with substantial overhead and the inability to change on a dime?  I don't think so.

I am putting my money on the well-managed smaller, nimble providers that can anticipate change and quickly respond. 

Running a big health system, one CEO confessed, is like managing an aircraft carrier with a fleet of support ships and systems to keep it on course and safe.  

In tough economic times with a threatening regulatory environment, think of that large health system as an aircraft carrier in the narrow Houston Ship Channel, trying to turn around.

(c)John Gregory Self

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Feds Charge 94 Suspects in Five-city Medicare Fraud Sweep; New Arrests Planned Over Weekend

With Medicare fraud estimated to cost taxpayers between $50 and $60 billion annually, the federal government is moving aggressively to identify and prosecute physicians, nurses, billers, patient recruiters and business owners who are suspected of defrauding the government.  

Federal officials said arrests in a five-city sweep that was announced on Friday will continue over the weekend as agents move to shut down operations that were charging the government more than $225 million in fraudulent claims.

Reducing Medicare fraud is included in projections to fund the healthcare reform bill.  

In addition to criminal fraud cases, justice department officials and CMS investigators are stepping up investigations of hospitals, particularly hospital-physician financial agreements that might violate fraud and abuse provisions. These include physician recruiting contracts and  hospital payments to doctors for certain types of medical director arrangements.

For details on the raids and arrests announced on Friday, click here to read the HealthLeaders.Com report.

Feds Charge 94 Suspects in Five-city Medicare Fraud Sweep. Seed Newsvine

Hope Is Not A Career Management Strategy

Hope. It is the lifeblood of our dreams.  It starts in our brain and settles in our heart.  Our lives are lived in phases, each beginning with hope.

We hope for true and lasting love.  We hope for a good education that we hope will land us a great job that will launch a career that is professionally fulfilling and financially rewarding.

Hope is what drives us but it is also what can derail us when a prolonged recession leads to the loss of a job.  This is a phase of life that most executives hope to avoid.

“Hope is not a good career management strategy,” says career coach Craig Honaman of H&H Consulting Partners in Atlanta.  Honaman, who has assisted many executives navigate the dicey waters of transitioning to a new job or new career, advises senior leaders that they should always be prepared for a career derailment by having the necessary resources available: a current resume, a robust network of professional contacts, and a strong career brand.

Hoping you can find a new job within three to six months is unrealistic in this new economy and ousted executives without a strong network of professional contacts could face a more prolonged period of unemployment.  Yet, the average senior executive says that their professional network consists of between 10 and 20 colleagues, which are not nearly large enough.  Many executives agree that they should have more but argue that they have little time to build or sustain such relationships given the demands of their jobs and their commitments to family.  Unfortunately, when the layoff or termination occurs, it is too late to build a network.

What many executives may not realize is that search firms handle only 30 to 35 percent of available executive searches.  Most are conducted by the organizations themselves.  Relying only on a search firm to open doors will substantially limit the number of opportunities to be considered.  It is the network of peers, former bosses, advisors and vendors who can produce leads, helpful market intelligence or, perhaps, even generate the next job.  The vast majority of executives that I have interviewed over the past 20 years admitted that their job search was made more difficult, was more frustrating, and lasted longer than they ever imagined because they lacked a vibrant network of contacts. 

I would like to think that when executives recognize the value of ongoing networking a few might become born-again converts and then, once they find a new position, begin to make the time for this important career investment.  Surprisingly, most do not. 

I guess they live in hope.

© 2010 John Gregory Self

Friday:  One Life To Live

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New Medicare Fraud and Abuse Provisions Under the PPACA

This is a good summary of the government's increased emphasis on fraud and abuse.

By Jeff Weinstein and Scott Honiberg for HealthLeaders Media

President Obama recently signed off on legislation that very likely will result in a substantial increase in lawsuits against health care providers. Intended to combat fraud in the Medicare & Medicaid programs, several amendments in the Patient Protection and Affordable Care Act significantly change the status quo, and will require greater vigilance by healthcare providers in their dealings with the federal government.

What the law means for the whistle–blower
The most dramatic change in the law concerns whistle–blower actions under the federal False Claims Act (FCA). The FCA is one of the government’s most important tools in fighting fraud such as false billings and requests for payment, or improper retention of government overpayments. In perhaps the most important provision of the new legislation, a whistle–blower who initiates a lawsuit under the FCA alleging such fraud no longer must be the “original source” of the information.

Read More:

New Medicare Fraud and Abuse Provisions Under the PPACA. Seed Newsvine

Perfection Is The Enemy of Good

This week’s sports controversy – with a blown call at first base by umpire Jim Joyce costing Detroit Tigers pitcher Armando Galarraga a perfect game – ended with a level of class and authenticity that is virtually unmatched in modern sports history, especially with the huge egos so common in professional athletics today. 

 For me, this rare event is one of life’s great teachable moments. 

 I hope we do not blow the opportunity to learn something very important far beyond the raging debate about whether the baseball commissioner should reverse the call ( highly unlikely) or the future role of instant replay, an important debate for the purists of the game, but certainly not the most important issue here.

 George Will, columnist and baseball fan of the first order, summed up these events with great clarity: “Perfection is the enemy of good.”

 This story has a special interest for me.  I am a former amateur baseball umpire.  I officiated high school and community college baseball games in Northeast Texas in the 1990s.  During my tenure, there was no process for undoing a blown call.  There was certainly no instant replay.  The umpires I worked with hustled and worked hard to get the call right for the players.  Everyone knows that umpires make mistakes – they are very human – but they rarely discuss them publicly.  Until this week. 

What happened in Detroit – as the talking heads of ESPN and local sports broadcasts were rehashing the bad call – was nothing short of amazing and uplifting for the human soul.  Mr. Joyce publicly admitted he had made a mistake.  He did not blame it on anyone or anything else.  He did not slip away in the dead of night to “umpire rehab.”  He went to the Tigers’ dressing room and apologized.  To his enormous credit, Mr. Galarraga accepted the apology with incredible grace and a very-to-the point comment:  “Nobody is perfect.” 

 The next night, Mr. Joyce worked the game as the home plate umpire.  Mr. Galarraga represented his team at the home plate meeting with the umpires.  Mr. Joyce clearly showed his emotion.  Again, Mr. Galaraga demonstrated his forgiveness.  They both showed their class and sportsmanship to their teammates, to the fans, and the rest of the world. 

I do not know how Mr. Joyce performed on this night calling balls and strikes after his emotional roller coaster ride.  Frankly, I do not think that is important. 

 This teachable moment is what is important.  I hope players from the Little League diamonds and youth soccer fields to the professional ballparks and stadiums around the world will reflect on the responses of Messrs. Joyce and Galarraga and convert this moment to an extremely relevant life’s lesson.

 It would be nice to think that our politicians, who have perfected an excuse or blame for everything done wrong, would give this moment some thought as well.  The civility these two men showed one another is what a great many Americans want to see in the halls of government, from the county courthouse, the statehouse, and the chambers of Congress.

Pay attention.  Blind and mean spirited partisanship is the enemy of good.

© John G. Self, 2010

Mr. Self is the President and Founder of JohnGSelf Associates, Inc., a healthcare executive search and human capital advisory services firm in Dallas.  He has represented clients recruiting from Asia, Africa, Australia, Middle East and North America

A  highly rated speaker, Mr. Self has more than 30 years of healthcare experience, 16 years in executive search, and his record of talent selection is one of the best in the industry.

He is the 2010 Regent Award winner as the senior healthcare leader of the year in North Texas, an honor bestowed by the American College of Healthcare Executives.

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Feds Probe Alleged Fraud at UT Southwestern, Parkland

Whether any real fraud was committed remains to be seen.  I certainly do not want to engage in the blog equivalent of piling on.  Nor do I want to suggest that UT or Parkland leaders knowingly ignored warnings from their internal auditors as part of a plan to maintain "revenue as usual."

Based on extensive conversations with hospital CEOs, medical educators and consultants around the country, it is clear that CMS and the Justice Department, after years of  lackadaisical enforcement, are now pursuing Medicare/Medicaid fraud cases with a vengeance.  We should not be surprised.  Medicare faces a shortfall of epic proportions.  Something must be done to narrow this deficit.  Aggressively pursuing fraud investigations, imposing significant fines, and in some more egregious cases, prosecuting and imposing actual jail time, is one way the federal government can shout out:  'Hey, pay attention.  We are serious this time.'

For years fiscal conservatives have complained -- rightly so --  that the federal government was not doing enough to protect taxpayer interests from fraudulent billing such as invoicing the government for duplicative, unnecessary, or phantom tests.  Now the government's philosophy regarding how the rules will be enforced seems to have changed amid the Great Recession and the political fear on Capitol Hill that has been created by the massive deficit crisis. 

Hopefully, this particular case as outlined in the following Dallas Morning News article, will end with limited consequences for the parties.  They are both important healthcare providers whose reputations for outstanding clinical care, medical education, and cutting edge research are above question.  But healthcare providers, including the leading organizations, can no longer claim confusion or ignorance of often complex or conflicting payment regulations.  That defense will simply will not be good enough this time around, the government lawyers seem to be saying. 

In those cases where the government can show a conspiracy to knowingly break the law or just ignore the rules, the consequences could be startling for some.  In New Jersey, physicians are beginning significant jail time as the result of guilty pleas and convictions in connection with hospital payments for physician medical director services.

Healthcare leaders and physicians who ignore this change in enforcement policy will do so at their own peril. 

I worry that this is a huge problem and that UT and Parkland are only the tip of the iceberg.  

READ MORE

Feds probe alleged fraud at UT Southwestern, Parkland | News for Dallas, Texas | Dallas Morning News | Latest News 

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