While awareness of the current economic recession is universal, just how the recession is impacting hospital and health system operations is a more complicated question. To get a sense of what senior executives are thinking, planning, and doing these days, the consultants at the Minneapolis-based C-Suite Resources interviewed a number of hospital and health system CEOs to get their perspectives. The resulting report, “Leading Healthcare CEOs Sound Off On the Financial Crisis,” published last year, provides a range of insights into what the senior executives are doing to strategize during this downturn. Among the findings of the report: CEOs are seeing some opportunity in this economic crisis, which they believe will drive authentic healthcare reform, including an intensified push towards improved quality, efficiency, and transparency; the recession will accelerate the ongoing process of industry consolidation; and true partnerships between patient care organizations and their information technology and other vendors will become essential for organizational success going forward (go to www.c-suiteresources.com for the full report).
Donald Wegmiller, a well-known former Minneapolis health system CEO and consultant, and currently the chairman of C-Suite Resources, spoke recently with Senior Contributing Editor Mark Hagland regarding the findings of the organization’s report, and the implications of those findings for healthcare CIOs.
Mark Hagland: I noticed that your report didn’t focus strongly on the recession and on economic problems per se.
Donald Wegmiller: Everybody has reported on that; we found no need to report further on the hand-wringing.
MH: How would you articulate what we’re being compelled to move towards as a healthcare system?
DW: Well, first of all healthcare, as you know and others are becoming aware of, is like a huge ocean liner, and it’s very difficult to change direction on it. What makes this particularly so is that clinicians have been trained in a certain way, and are now being told, what you learned and how you were trained, is all wrong. And they’re saying, wait a minute, what are you talking about? This crisis is opening up a new dialogue around the statement that, be that as it may, you might have learned to do things a certain way, but this crisis is now mandating doing things a different way. So it is a window of opportunity; it is not a permanent opening.
MH: How rapid will the ramp-up be to pay-for-performance, particularly mandated differential pay structures under the Medicare program?
DW: I believe that it will clearly happen within a few years. Medicare may or may not take the lead, but regardless of who takes the lead and who follows, we’ll see a much greater influence of pay-for-performance on reimbursement. Will 100 percent of reimbursement be predicated on P4P? Absolutely not. But it will be a whole lot more than the 2 percent now. And that will attract a lot more attention from clinicians and others, who realize it’s not just about ‘good citizenship’ anymore; now, we’ll have to be good.
MH: What would CEOs’ biggest message be to CIOs in this operating environment?
DW: Stan Nelson and I founded the Scottsdale Institute 15 years ago; as part of that organization’s regular activity, we host talks among CEOs and CIOs, so we know what CEOs are saying to CIOs. And what they’re saying is, you either have to lead or be a part of the leadership that transforms our information efforts into the clinical enterprise. Now, you’ll work with our CMO; and if you have a CMIO, you’ll work with her or him. But you’ll have to lead the effort, you must seize the leadership. It’s much more for you to take the leadership than for me. And the clinical enterprise will now supplant or replace our emphasis on financial reporting, etc. We’ll still have to do financial reporting, of course, but clinical information is now job number one.
MH: One implied challenge here is that CIOs must truly be functioning at the same strategic level as do other members of the c-suite in the hospital organization. In other words, CIOs who started out as “Joe From the Basement”-type IS managers just won’t cut it anymore, correct?
DW: That’s absolutely right. As Joe in the Basement, I processed data, and often I didn’t even know why the higher-ups wanted that data. But now, years later, this is a C-suite position; it has the same transparency and vulnerability as any C-suite job. And now, in this most important aspect, clinical transformation, they have a leadership role, and it’s as much a part of their role as it is of the CEO’s role. Fortunately, we’ve had some very exceptional ones, such as Bruce Smith, Tim Zoph, and John Glaser. So CIOs are out of the basement, and a light is shining on them.
MH: How will the financial crisis play out, especially for EMR and CPOE implementations?