iProtean—The Medical Staff

The medical staff, though it has evolved over the last several years, faces additional pressures to accommodate the changing healthcare delivery environment.

 

The American Health Lawyers Association recently sponsored an in-depth discussion of the hospital medical staff and how and why it is evolving; contemporary challenges to the traditional role including declining physician participation, the friction between employed and independent physician members of staff . . . and the possible impact of health system reform on existing regulatory standards; the role of the medical staff of the future as leaders and drivers of change and in the maintenance of traditional duties such as credentialing and privileging, and oversight of quality.  (AHLA, The Hospital Medical Staff of the Future Webinar Series, Part I: The Role of the Medical Staff in an Era of Healthcare Consolidation, Health System Reform, and Increased Physician Employment, March 27, 2012)

 

These topics are covered in the iProtean video course The Medical Staff, featuring Monte Dube, Esq., Proskauer, Todd Sagin, M.D. J.D., Sagin Healthcare Consulting, and Brian Wong, M.D., The Bedside Trust.  The course provides both an historical review of the medical staff as well as the changing dynamics today. It covers the evolution of the medical staff, employing physicians and the tension between employed and independent members of the medical staff, an overview of credentialing and privileging as they relate to quality in today’s environment, and  the importance of physician leaders .

 

Todd Sagin, M.D., J.D., Sagin Healthcare Consulting

As we enter the 21st century we find that our medical staffs are bureaucratic and very complex organizations that are structured today much as they began to be structured 50 years ago.  It is not entirely clear that this framework is efficacious or functional for the new era of medicine.  Many medical staffs are starting to think out of the box and question whether they can be designed more efficiently and more effectively.

 

Monte Dube, Esq., Proskauer

There is an accelerated trend towards hospitals directly employing physicians.  This is not a new concept.  Throughout the 1980s and 1990s, many hospitals and health systems decided that it would be in the best interests of the hospitals and, ultimately, patient care to try to better align physicians and hospitals; that is, better alignment from a clinical care perspective, from a financial perspective and, quite frankly, from a competitive perspective.

 

Todd Sagin, M.D., J.D., Sagin Healthcare Consulting

One of the things that board members need to keep in mind is that as the medical staff becomes more diverse and, particularly, as there begins to be a divide between those who are in private practice and those who are employed, this creates tensions among members of the medical staff.  Those in private practice often become concerned that their interests will become subordinated to the interests of the employed physicians and that the hospital will not be as supportive of their private practices as they were in the past.

 

The other thing the board member needs to be aware of is that the medical staff now speaks with many voices and has many different interests.  Those of the employed physicians obviously are highly aligned with the needs and interests of the hospital.  The interest of private physicians may be less so.

 

Monte Dube, Esq., Proskauer

While credentialing and privileging have always been important, in light of health reform and the fact that government is only going to pay for quality measures that are substantially satisfied, there is heightened responsibility on the part of board to ensure that privileges afforded to physicians are earned, appropriate and, ultimately, will enhance the quality of your hospital.

 

Brian Wong, M.D., The Bedside Trust

One thing I have observed in many community hospitals across the country is how sloppy we have gotten in identifying, selecting and electing our medical staff leaders.  The medical staff organization is the engine that you as a board must rely on to fulfill your quality agenda.  You don’t have quite the expertise in quality; you are delegating this to your medical staff organization.  Wouldn’t you like to know that the leaders of that medical staff organization, namely the chief of staff, the chief elect, the secretary, the treasurer, the chairs of the departments are the best physicians with an aligned agenda, and who are as interested in quality, safety, satisfaction and cost reduction as you are?  That is typically not the case, and that begins with how physicians tend to be identified, selected and self-selected for leadership positions.

 

For a complete list of iProtean courses, click here.

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.

 

For more information about iProtean, click here.

 

 

iProtean—Board Culture

You may have heard this: “culture eats strategy for lunch.”  It’s a popular phrase in business, and popular on Internet business and video sites as well.  But culture remains difficult to define, especially when applied to groups or teams within an organization.  We can say, loosely, that culture is “the way we do things around here.”  Its components are easier to identify: the formal rules and rituals of an organization, the values the organization espouses, and how those values are lived out in process. (Edgar Schein)

 

The iProtean course Board Culture describes the context within which culture plays a role in board performance.  Barry Bader (Bader & Associates), Anne McGeorge (Grant Thornton) and Lawrence Prybil, Ph.D. (University of Kentucky) connect board culture with high performance.  They discuss the types of board culture, engagement and constructive questioning, how to deal with disruptive board members and improving board culture.

 

Barry Bader, Bader & Associates

The distinction between a good board and a great board essentially boils down to board culture . . . What are the things that would make for a positive board culture?  Typically you hear people talk about a culture of accountability, a culture of engagement, a culture of candor, a culture of continuous learning, and a culture of collaboration and partnership between the board and management.

 

Anne McGeorge, Grant Thornton

For any type of team, whether it is a management team, a family team, or any type of group that needs to have consensus on particular issues, it will be important to ensure that the culture of that particular team is consistent with making effective and good judgment decisions.  A board is no different.  The culture of the board is important to ensure you have enough trust among the board members so decisions can be made—with appropriate challenges and appropriate disagreements.

 

Barry Bader, Bader & Associates

How do you develop a culture of engagement where board members are not afraid to ask a hard, challenging question—where board members are willing to be candid and ask management to be fully candid?  “Edgy questions aren’t disloyal, they reflect the ultimate loyalty—that commitment to the mission and mutual trust are so strong that leaders can challenge themselves and never accept the status quo as the only alternative.” (Barry S. Bader, “Asking the Edgy Questions About the Future,” Great Boards, Winter 2011)

 

Lawrence Prybil, Ph.D., University of Kentucky

As we think about the culture of the board, we ask ourselves, what are the dimensions of board culture?  There are several of them.  Among those is, to what extent is the board committed to engagement, dialogue and discourse, and to respectful dissent and disagreement versus being more passive?  Boards distribute themselves all across a continuum in that realm, from being very engaged, very open to dialogue, very encouraging of discourse, very welcoming of respectful disagreements and debate, to those where the prevailing practice is to be polite, passive and to not challenge each other, to not challenge management, to not challenge the status quo or ideas.

 

Barry Bader, Bader & Associates

There are times that are defining moments for a board.  There is a particular decision, even the decision to make a decision, that a board makes that has a much more significant impact on the future, the fortunes, the mission, the success of the organization . . . I think the way that you handle defining moments is to put this culture into action on an ongoing basis for even the routine work of the board, at every meeting and at every board committee meeting:  engagement, candid disclosure of information, active discussion and constructive questioning.

 

No athletic team would get out on the field without practice.  Ask any baseball player if he can be on the field effectively and take his four or five “at bats” a day if he doesn’t take batting practice earlier in the day, and he will tell you, “No.”  It is no different for a board of directors, except that the practice field is the ongoing, seemingly routine work of board meetings and committee meetings.  That is the practice ground for effective governance performance at those defining moments.

 

 

For a complete list of iProtean courses, click here. www.iprotean.com/index.php/iprotean/onlineCourses/Available_courses

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here. www.iprotean.com/index.php/conference/conferences

 

For more information about iProtean, click here. www.iprotean.com/index.php/iprotean/demo

 

iProtean—Mergers & Acquisitions

Much of today’s activity in hospitals and health systems continues to focus on consolidation.  Hospitals have been here before, but today’s pressures have added to the list of strategic reasons to consider partnerships with other hospitals or health systems.

 

“Many of the forces behind today’s consolidation are similar to those in the past. However, this cycle’s deeper and more prolonged economic downturn is the key backdrop driving the recent wave of consolidations . . . Spiraling healthcare costs and the insurmountable federal deficit necessitate reducing waste and gaining efficiencies through consolidation.”  (Lisa Goldstein, Moody’s Investors Service Special Comment: New Forces Driving Rise in Not-for-Profit Hospital Consolidation. March 8, 2012)

 

Lisa Goldstein (Moody’s Investors Service), Michael Irwin (CitiGroup), and Ken Kaufman and Kit Kamholz  (Kaufman, Hall & Associates) speak on the continuing trend towards healthcare consolidation in the iProtean course Mergers & Acquisitions. They cover why hospitals are now at a crossroads, the history of consolidation, M & A considerations, partnering options, key metrics, the consolidation process, and critical questions you need to ask.

 

Lisa Goldstein, Moody’s Investors Service

When a hospital is considering a merger partner or an acquisition strategy to purchase another hospital, it is up to all of the board members to assess the organization’s long-term future.  We meet with many hospitals that want to remain independent, maybe they have been independent and operating in their market for the past 100 years, or the past 50 years and there is a strong desire to remain independent.  It’s really up to the board members, however, to not look at the past but look to the future and to the best of their ability determine what are the best steps for the hospital’s future viability to remain a viable member of their community, providing high quality care.  And in certain cases the answer may be we actually need to find a merger partner, we need to find a capital partner to ensure that for the next 50 years or 100 years we can provide high quality services.

 

For many board members this can be a very difficult decision to make because they have been an independent provider of healthcare.  But it is a necessary discussion that we believe needs to happen at the board level with senior management to make what may be a tough decision for the long term viability of the hospital.

 

Michael Irwin, CitiGroup

We certainly find ourselves at an interesting crossroads.  There have been several emerging trends that have created pressure on not-for-profit healthcare organizations.  Constrained revenue stream is one, especially given the high level of reliance on federal government funding, and the budget challenges confronting states and local governments. This pressure continues to build. At the same time, hospitals and health systems have the physician realities—the physicians they have been working with are exposed to the same kind of pressure.  You also have the challenges of the capital markets.  And on top of all of that you have the new imperatives that healthcare reform suggests for all organizations.

 

As a result of these and several other factors, many boards realize there are some serious challenges out there, and it means they are going to have to explore alternatives in order to deal with the challenges.  If you ask people in the hospital business, they will tell you, “Everybody’s talking to everybody else.”  That is a natural outcome of a period of challenge.  Those better prepared to confront the challenge consider bringing more hospitals into their health systems, while others, finding themselves very vulnerable, are recognizing that they are going to have to take steps to do something.

 

Ken Kaufman, Kaufman, Hall & Associates

Consolidation is a very interesting phenomenon in economics in American industry.  One of the things we have to understand is that it is a naturally occurring phenomenon in our 21st century economy.  Consolidation tends to move at a faster pace when you’re in the midst of business model changes, and we have a business model change going on in healthcare.  That is one of the factors now pushing consolidation.   Many organizations begin to look for a partner because they can’t handle the transition from one business model to the other, and that makes perfect sense.  If you have been in business for 50 or 60 or 70 years and you are very accomplished under one business model, it’s not obvious to you that you’re going to be accomplished under another business model.  Just think of Joe Smith who owns the steel company and then he sees this huge business model change because of low-cost steel in China and low-cost steel in India.  His best feeling about how to continue his firm may be to consolidate it with another firm because he may feel there just isn’t the talent or the cash flow necessary in order to manage his steel firm in another business model.  And that, of course, is very analogous to what is happening in hospitals.

 

Kit Kamholz, Kaufman, Hall & Associates

There is a whole spectrum of potential partnership options available to community hospitals and other organizations considering partnerships in hospital and health system mergers and acquisitions.  We generally divide them into things that are less than fully integrated and structures that are more than fully integrated . . . so if you have large capital needs or you’re in financial distress, you’re probably going to lean towards a more fully integrated structure to capture the financial elements of that.  If some of your needs lie more on specific service lines that you want to develop, perhaps an affiliation arrangement with a tertiary care provider in your market can provide you with that specific type of opportunity. So, it depends on the goals and objectives the organization is trying to accomplish in terms of where it ends up on that partnership spectrum.

 

In terms of community hospitals considering partnership alternatives, there are four critical questions they want to be able to address as they consider partnership options.  The questions are: who is going to be a strong partner?  . . . what would it mean to operate as part of a larger system?  . . . how well does that partner’s proposal match your goals and objectives? . . . are you better off entering into the partnership knowing what you know about that partnership, or is the organization better off remaining independent and continuing on its own path?

 

Michael Irwin, CitiGroup

M & A activities are likely to continue for the foreseeable future, which provides both good news and bad news to hospital trustees.  There will be more formidable competition in many markets as a result of this.  Trustees are going to have to be very careful in their consideration of whether their organization has the resources to meet their community need to ensure high quality services are available in the community they have served for a long time.

 

 

For a complete list of iProtean courses, click here.

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.

 

For more information about iProtean, click here. www.iprotean.com/index.php/iprotean/demo

iProtean—M & A as a Strategic Option

Whatever the market and financial conditions of your hospital, the quickly evolving healthcare environment dictates a robust assessment of its future direction, including strategic collaborations.  AHLA and HFMA recently noted in a jointly sponsored webinar on mergers & acquisitions that “Healthcare reform and other macro economic factors are pushing more providers to integrate both vertically and horizontally. . . Successful organizations understand their options, have developed a strategic framework to identify high potential arrangements, and use set processes to execute the integration strategy.” (Trends in Healthcare Mergers, Acquisitions, Consolidations and Affiliations. February 28, 2012.)

 

Boards and executives should be prepared to evaluate the conditions for strategic collaboration—whether these involve merging with or acquiring other organizations, or being acquired by other organizations—before the need arises.

 

The iProtean course Mergers & Acquisitions as a Strategic Option provides a framework for engaging in this necessary and challenging discussion at the board level.  Monte Dube (Proskauer), Dan Grauman (DGA Partners), Michael Irwin (CitiGroup), Kit Kamholz (Kaufman, Hall & Associates), and Jeff Bauer, Ph.D., offer their expertise on the current situation, how mergers and acquisitions differ, the benefits, the M & A process and lessons learned.

 

Dan Grauman, DGA Partners

The health reform law and the recent economic environment have clearly catalyzed another round of potential hospital consolidations.  It is easiest to say that everyone is talking to everyone right now.

 

Monte Dube, Proskauer

More and more I’m finding that hospital boards are undertaking the very difficult analysis about whether merging or consolidating with a competitor may ultimately be in the community’s best interest.  To do that requires giving up some control.  But to do so in exchange for enhancing your mission may well be what is in your organization’s best interest.

 

Michael Irwin, CitiGroup

I encourage trustees to really be honest in their assessment.  You are supposed to recalibrate around the business paradigm as it changes.  You should be vigilant in your board meetings.  You should talk about the long-term consequences of these trends and start early to develop a process in your own mind for when there is a need to move to the next level.  You should have a sense of urgency to protect the organization.

 

Dan Grauman, DGA Partners

A board should undertake a very rigorous process to determine what is most important to the organization when considering a merger or some type of significant strategic collaboration.  You can even generate a list of the absolute non-negotiables of what you are not willing to give up . . . Get all that down in a very structured way so that you can determine what is non-negotiable.  At the same time, identify what your most critical needs are; for example, access to capital, access to a stronger IT platform, access to other systems and processes that will help improve the clinical operation.  It is an important process for every board to undergo—to delineate those needs, those non-negotiables and identify exactly what it wants to get out of any contemplated merger or acquisition.

 

Monte Dube, Proskauer

How does a consolidation happen, whether it is a merger of equals between two competing community hospitals or an acquisition of a small hospital by a large one?  Well, every transaction is different.  Sometimes it is necessary in order to break the ice to have board-to-board meetings . . . If the two hospital boards or representatives of the hospital boards—the board chairmen, or board committees—can get to “yes” on what they have in common rather than focus on what differentiates them, then it is much more likely that the lawyers and financial advisors will be able to structure a transaction that will work.

 

Kit Kamholz, Kaufman, Hall & Associates

As we think about the role of a board, particularly for a larger health system that is considering partnering with a smaller community hospital, it really starts with looking at the strategic plan for the organization.  The board has a critical role in approving the strategic plan and ensuring that any potential partnership that the organization might consider is indeed going to advance the strategic plan and advance the organization in helping it achieve its mission and vision.

 

As it relates to the actual evaluation and the work that is done to put the partnership together, the board will play a critical role in terms of the interaction with that smaller community board.  Having that dialogue and that discussion and being able to tell the community hospital why its organization is so important to your future is going to be a critical selling element to bring that partnership together.  It also gives the boards an opportunity to gauge the cultural compatibility.  That dialogue and discussion at the board level is critical to ensuring that cultural compatibility exists between the organizations before entering in a partnership.

 

Michael Irwin, CitiGroup

Here is an example of a lesson learned.  I can’t tell you how many times I have gone into a strategic transaction where I’m representing a health system that is evaluating a community hospital that was very well positioned in the marketplace, but over the last several years has really been challenged, and now is a huge financial drain on itself and any partner that it might take on.  Some health systems will reconsider.  If [the health system] had been able to do something earlier when the community hospital was performing adequately, a transaction might have happened.  So you have to be vigilant, be honest in your assessment and make sure that the dialogue within the organization continues to elevate the need to look at strategic alternatives.

 

For a complete list of iProtean courses, click here.

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.

 

For more information about iProtean, click here.