What’s on the Minds of Hospital CEOs?

john Lawn

How do you get inside the minds and thoughts of today’s healthcare executives, struggling with a fast-changing industry and the imminent changes to occur as the Accountable Care Act begins implementation? 

The Association for Healthcare Foodservice turned to Mark Krasnow, CEO of Bulleye Resources, as one provider of such insights for the 553 attendees of its 2013 annaul conference, including operators from the food and nutrition service departments of more than 185 U.S. healthcare facilities. Bullseye provides services that summarize the key points of leading conference speakers in many top industries, including healthcare, and CEO Kraskow distilled key points made by numerous hospital and healthcare executives and the advice of experts they turn toin their own conferences. 

Today’s healthcare C-suite concerns fall into eight key factors, he said, elaborating on them to help the AHF audience better understand the trends and issues of most relevance to healthcare leaders.

“Hospital CEOs talk about Quality,” he said. “They talk about Cost. They are concerned that they need more of the former and that increases in the latter are unsustainable. Hospital CEOs have many issues on their plates: financial issues, the survival of the hospital, its ownership and governance, how care is delivered and their role in the community. 

“There is discussion of the tremendous waste that occurs in healthcare, discussion of the payment system and its fee-for-service model and how it rewards the volume and intensity of services provided rather than the quality of services. That is the macro view talked about at executive healthcare every conference.”

Eight key takeaways

Krasnow elaborated on these themes, saying that the key issues on healthcare executives’ minds can be categorized as falling into eight key groups.

Consolidation. “Since 1994, over 1000 mergers have occurred in the healthcare sector, and last year may have been a record year. Hospital CEOs are thinking very much at a strategic level about the changes going on and about their institutions’ survival: at the strategic positioning and scale they need to negotiate with insurers and in other contexts. 

“First and foremost, I hear the question, ‘Do we consolidate or do we not.’ Most healthcare leaders believe that to survive and evolve, consolidation must occur so that hospitals can achieve greater scale.”

Reimbursement. “This is the healthcare industry’s term for revenue,” Krasnow said. CEOs and CFOs are extremely concerned about declining reimbursement from government sources, Medicare and Medicaid in particular, and a changing payor mix in which the number of patients paid for by the government grows and the number paid for by commercial insurers declines.” Because most hospitals presently lose money on government-paid services, and make it up with private insurance-paid services, that model is unsustainable, he said.

Sequestration has also had an impact, he noted, “85 billion in Medicare cuts,” right off the top. As a result, most hospital CEOs see an inevitable change in the basic reimbursement model, and the way hospital finances are structured “away from fee for service payments to models based on bundled payments, global payments and ACO (accountable care organizations) with shared savings, which involves more risk for the hospital.”

Coordination. “We can’t solve our problems just by cutting costs,” Kraskow emphasized. “We have to change how healthcare is delivered. This will require greater team coordination, more team-based care and reduced waste. Hospital CEOs are thinking about redesigning care delivery to address a much wider continuum of care.” For foodservice, that means “How can your department become less of a silo  and more part of the hospital team. It means finding ways to add value to that team.”

The patient experience. “Hospital CEOs are thinking about the patient experience, just as you in foodservice are,” he added. “Why? Because of the financial impact it will have in terms of the new reimbursement model and  because of the competitive differentiation it can provide.”

Quality. “As the quality of care results becomes more transparent, hospital CEOs will put more emphasis on Quality as a top priority.  For foodservice, that means more attention paid to handwashing, to infection control, to food safety. “You may not feel your department is noticed very often, but you can be sure you would be noticed if you had an infection problem,” Kraskow said.

“As quality outcomes are tied to a portion of reimbursement hospitals qualify for” they will become a key measure of performance and, perhaps, a key criteria in executive compensation.

Information technology. While healthcare has long focused on clinical technologies like advances in imaging, it has lagged other industries in terms of using information technology, Kraskow said. But that is changing, with a new emphasis on electronic records and data analysis that can be used to evaluate care, its outcomes and its quality.

Data/analytics. Knowing how to collect, interpret and ‘speak’ the language of data will be critical in the future for every hospital administrator, Kraskow said. “If you want to speak to the C-suite, become conversant in data and analytics. It will become more and more applicable not only to clinical decisions but all businesses and functions in healthcare.”