Today, while frontline healthcare workers are stepping up to help those infected with the coronavirus, leaders of hospital organizations are grappling with a related crisis – how to ensure quality of patient care, employee safety and financial survival of a business model during a global catastrophe that was unanticipated by any known business model.
Few see this situation more clearly than the national healthcare executive H+K’s Marvin Singleton spoke with recently. Singleton had the opportunity to interview Trevor Fetter, a Senior Lecturer at Harvard Business School, and get his views on the state of the industry. Prior to HBS, Fetter was the Chairman and CEO of Tenet Healthcare, one of nation’s largest healthcare systems and Fortune 500 companies. He served in that position for 14 years and was previously the President and CFO. In addition, he is on the board of The Hartford Financial Services Group as the Lead Independent Director.
What is the biggest concern you hear from healthcare CEOs today?
It depends on the sector they’re in. Those who operate on the front lines of providing direct care to patients are the ones under the greatest stress. They’re concerned about all the right things: their employees, their patients, their communities and getting the job done. In the midst of all of this, they are worrying about the survival of their enterprises. One thing everyone was reminded of: when something really serious happens, the hospitals are the segment of the healthcare system you count on most; no disrespect to the other important players, but it’s not as though your health insurer or local drugstore are going to save your life as you’re struggling to breathe.
What should a hospital CEO do to give patients and staff confidence they will be safe?
From the earliest moments of the crisis, hospital leaders did the right thing by prioritizing the safety of their employees, knowing that without the employees you can’t deliver on your responsibilities to anyone else. The nation’s hearts go out (literally, in the form of signs everywhere) for the front-line healthcare workers who have been ready to risk their own health to help others. The CEOs I’ve observed have been right out front with them.
Hospitals of all sizes and organizational structures have had an enormous shock due to the pandemic. What does it look like going forward?
I think this pandemic has exposed the fragile state of healthcare finance in this country. For years, public policy has been to squeeze the hospitals and doctors, forcing them to charge ever higher prices to private insurance. When these providers chose, correctly, to close their ambulatory centers and postpone elective procedures at the outset of the crisis, it revealed in stark terms how that’s where all the margin is, and how without it our front line of defense for healthcare is not sustainable. Fortunately the government stepped in. I hope this will renew momentum to expand insurance coverage and stop the persistent payment cuts that hospitals have had to endure from the federal and state governments for more than a decade.
Looking beyond the next few months, how do you think hospitals/healthcare systems/medical practices will look different in 1 to 3 years? Consolidation of hospital systems? Role of telemedicine?
Like with many sectors of our economy, this crisis will accelerate trends that were already underway: the move to ambulatory settings, the move to home-based care, the increased use of technology in healthcare, and the acceptance of telemedicine as a legitimate alternative.
What are the top few items the government can do – besides direct funding – to help hospitals for the short and long term?
I hope this will renew attention and efforts toward expanding access to care, insurance coverage and shoring up the holes in our safety net that cause enormous disparities in health based on income, wealth, and where you live.
If you were talking with a healthcare provider CEO in your office, what is the one piece of advice you would give him/her?
Take care of yourself. This will be harder and will last longer than you think. You’re most valuable to everyone who is depending on you if you’re healthy, well-rested, and thinking clearly. This is the moment when the purpose of your work has never been greater, or more appreciated.
What lessons should hospital executives take forward in preparing for the next pandemic? Could this happen again?
We can be certain that some shock will come again, whether it’s another wave of the current pandemic, a new virus, a recession or financial crisis, or (in some areas of the country) a natural disaster. I try to remind young executives who are experiencing their first crisis as a CEO to learn as much as they can from the successes they have and the mistakes they make in dealing with today’s crisis—and to remember those lessons.
Some experts say that COVID-19 will further hasten the transition of America’s healthcare landscape to value-based care, as hospitals that were paid by health plans based on outcomes versus fee for service generally fared better financially through the pandemic. Do you agree?
Not necessarily. The current crisis is wreaking havoc with every model, and not just in healthcare. I majored in economics in college, and we’re seeing things happen that I learned were not supposed to happen. How do value-based care models compensate for what’s happening now? Routine and even non-Covid emergency care is plummeting, while a very specific type of care is skyrocketing. Risk has been pushed to (and embraced by) the least well-capitalized and lowest-margin sector in the massive healthcare industry. I actually think the current crisis will cause providers to take a fresh and more critical look at the value-based arrangements. In the terms of risk underwriting, we’re experiencing an enormous worldwide catastrophe event that wasn’t contemplated in most of these models.