September 25, 2014

Health System CEO joins other top health executives to discuss the state of the health care industry

Terrence Kessler, president & CEO of the Sisters of Charity Health System, joined four other Northeast Ohio health system leaders in a panel discussion about the current and future states of the health care industry at a recent half-day health care forum in Cleveland hosted by Crain’s Cleveland Business magazine.

More than 550 attendees took part in the forum, which included a keynote presentation, panels on health and wellness, and the panel discussion with the health system CEOs. As seen in Crain’s:

Hospital leaders come together
Crain’s event draws region’s top minds in health care

Health care providers expect to see fewer patients in the future as care, technology and access to treatment improve.

That means less revenue for hospitals — collectively, the country’s largest employers — which find themselves operating in a dramatically changing industry. 

“The United States is going through the biggest change in its society, probably since the New Deal, affecting the biggest industry in the United States and affecting 100% of the population,” said Dr. Delos M. “Toby” Cosgrove, president and CEO of the Cleveland Clinic. “And as we do that, we recognize that we have to change the delivery system to go to value, increasing in quality and making care affordable. And that is driving change in a very, very big industry.”

Cosgrove was one of five Northeast Ohio hospital leaders who on Thursday, Sept. 18, discussed a variety of topics surrounding the current and future states of the health care industry. 

The 90-minute conversation, moderated by Crain’s Cleveland Business reporter Timothy Magaw, capped off Crain’s Health Care Forum, which was held this year at the Cleveland Convention Center with more than 500 in attendance.

Other high-profile panelists were Dr. Akram Boutros, president and CEO, MetroHealth System; Terrence Kessler, president and CEO, Sisters of Charity Health System; Dr. Thomas Stover, president and CEO, Akron General Health System; and Thomas Zenty III, CEO, University Hospitals.

What worries hospital leaders

Boutros said the health care industry is undergoing a metamorphosis as hospitals transition from sick care to a more holistic approach based in preventive care, which is creating as many uncertainties as potential opportunities in the delivery of care. 

“I think in modern times, for us, this is the biggest opportunity and has the highest risk,” he said.

How hospitals will get paid is a concern across the board.

“This whole change from a sick-care model to a well-care model — as you know Akron General has been talking about this for over 20 years — we spent $110 million on that concept. As a doc, I really don’t understand how people are going to judge our individual practitioners in a value-based world,” Stover said. “That sort of calculus of how it’s all going to work out is something I think we’re all struggling with.”

Maintaining quality during these changing times is also a concern.

“How do we make sure that our commitment and our promise to the community to provide the highest quality care with easiest access is going to be something we’re going to maintain in a world of declining resources?” Zenty asked.

Kessler even compared a hospital’s transition to new pay and treatment delivery systems to a person trying to keep his balance with both feet in different canoes that are drifting apart. 

Cosgrove said that at the Cleveland Clinic, he wants to slash the budget by $1.5 billion over five years — roughly $300 million annually — by examining both direct and indirect costs.

“And that includes everything down to how often you cut the grass and wash the windows,” he said. “But the main savings is going to be in how you deliver care.”

The reasons costs are so high to patients, and vary so greatly between hospitals, range from the difficulty of assigning a value to services, Stover said, to a hospital’s costs for research and staff education. Meanwhile, Zenty pointed out, the antiquated way costs are reported to Medicare “really distorts” the true cost of care.

Collaboration: A key to viability

In the past, each community had its own hospital and resources. But times have changed. And so has the way hospitals feel about joining forces to improve care and bolster their bottom lines.

Physicians are consolidating into groups to share an “explosion” in knowledge and benefit from one another’s niche expertise, Cosgrove said. Hospitals join partnerships to share services, medical records and control malpractice issues. The goal is to improve efficiency, which could enhance the quality of care while decreasing costs.

Cosgrove noted that total hospital beds across the country have dropped from 1 million to 800,000. But the nation’s average hospital occupancy hovers around 65%. Ohio shares that same average.

And as hospitals see fewer patients, Zenty said, the result is a “decrease in demand and an increase in supply.” That spells bad news for hospitals that receive a large portion of their revenue from the federal government in the form of Medicare and Medicaid, which is expected to be cut next year, Zenty said.

Partnerships, therefore, are becoming increasingly common as hospitals seek viability and efficiency while maintaining a high level of care.

Just this past June, the Cleveland Clinic announced it would purchase a minority stake in Akron General. The partnership makes Akron General the Clinic’s exclusive health system partner in Summit County.

“I think you’ll see more and more of that happening across the health care industry,” Boutros said, referencing collaborations in general. “(But) if you want to see collaboration happen, take the CEOs out of the room and let the providers figure out how to collaborate.”

The event was also covered by radio station WCPN.

Pictured (from left to right) are Dr. Akram Boutros, president and CEO, MetroHealth System; Dr. Delos M. “Toby” Cosgrove, president and CEO of the Cleveland Clinic; Terrence Kessler, president and CEO, Sisters of Charity Health System; Dr. Thomas Stover, president and CEO, Akron General Health System; and Thomas Zenty III, CEO, University Hospitals.

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