Value-less Based Purchasing

Because I no longer have an official relationship with NorthBay Healthcare, I try to limit my comments about that organization in this space.  Rather than looking back, I prefer to look ahead.  I’m the Healthcare Outsider now.

Nevertheless, I had a reason to go to NorthBay’s website recently to do some personal health related business.  The NorthBay site ( has been redesigned.  I find the new look very attractive.

I also discovered that a selection of some of the blog articles I wrote when I was CEO (aka the “Healthcare Insider”) are still available on the site. That’s a mixed blessing as I always worry that I might contradict myself from one blog to another.  My past could come back to haunt me.

One of my more or less persistent themes in those blog articles had to do with the inconsistency of various systems used to rate hospitals, particularly those ratings involving patient care.  Almost all these rating systems rely on a data base developed by the agency overseeing the Medicare program.

As I pointed out in several blog entries, it was very possible to be highly rated by one entity for a given condition and lower rated for the same condition by another entity.  It all depended on how the data was sliced and diced, when it was manipulated and sometime what I believed to be inherent bias of some rating organizations.

Most distressing I am sure to some of the rating organizations was the fact that there was little evidence that anyone used the results to make decisions about where to go for treatment.  Given the inconsistencies, the public was showing good sense.

Now it is emerging that one of the seminal rating systems focusing on quality measures is finally being confronted about its methodology.  That would be the so-called Yale New Haven Study which examined among other things readmission rates.  I am not a clinician or an academic but I did write several times in my old blog  about common sense concerns I had about some of the conclusions reached about readmission rates in that study.

Those conclusions were important because hospitals were judged by them and Medicare reimbursement could be affected.  This was the start of the so-called “value-based purchasing program” which Medicare was trying to roll out in an attempt to improve patient care and save money, mostly the latter.

Could it be possible that value-based purchasing (i.e., what Medicare will pay for care) is based on incorrect conclusions. Yes, indeed!

There is also now emerging concerns about whom the Feds are giving grants for further research into measuring quality care and the criteria being used for selection. Some observers say the same folks who did the initial research for Medicare are getting most of the funding and that poses a potential conflict of interest.

So far my past musings on this issue are not haunting me and for that I am glad,  I am concerned, though, that so many important decisions may have been made on a study which was not further substantiated.

The jury is still out about this type of research but if other more neutral researchers continue to find flaws with the conclusions of the Yale study, value-based purchasing maybe should be called “value-less based purchasing”.


Activities For The Sake Of Activities

This past weekend I attended a memorial service for Art DeNio, NorthBay Healthcare’s Chief Financial Officer, who passed away unexpectedly last month.  Art had been NorthBay’s Chief Financial Officer since 2001.  His financial prowess made possible great progress as NorthBay brought advanced medicine to its service area.  He was the best chief financial officer that I worked with during my career.

As a mark of the respect which Art had earned from the financial world, his memorial service was well attended by representatives of investment banking firms and institutional financial consultants.

Before and after the service I had an opportunity to speak to some of those representatives and what they had to say about what they were seeing in health care was interesting.

In the last few years there was a boom in financing hospital and outpatient construction projects. This was a result of delayed projects stemming from the 2008 financial crisis and extraordinarily low-interest rates which increased the ability of health care organizations to finance needed replacement and expansion projects.

This was particularly true in the non-profit segment of health care.  NorthBay Healthcare was able to issue $200 million in bonds in 2016 to finance a new patient care wing at NorthBay Medical Center which will open later this year.

Now, I was told, financing that kind of construction was at a low ebb since so many projects had been financed prior to 2018.  Instead what was happening according to one of the financial experts I spoke to was financing “activities for the sake of activities”.

That was another way of saying financing mergers and consolidations in the non-profit sector.  These kinds of organizational marriages may require a restructuring of existing debt and that is where investment bankers and others are currently making their money.

Implicit in “activities for the sake of activities” is that there is no positive net effect on the organizations involved.  To use a well-worn cliché, the deck chairs are simply being rearranged.  One expert was particularly adamant about that.

Which gets back to what I wrote about last week in “It’s The Money”.  Bigness takes on a life of its own without regard to whether anything positive is being achieved.  It almost seems like an ego driven activity.  Look Ma!  I’m merging.

To repeat myself from last week, what’s the point of this activity if patient care is not enhanced and costs reduced?   Despite all the merger and consolidation activity among hospitals and health systems, no one is writing in the New York Times or the Wall Street Journal about improved patient outcomes and less expensive care.  Lots of people are still making a living criticizing the performance of health care organizations on both metrics.

When you see this kind of aimless merger and consolidation activity I believe you are seeing an abject failure of effective governance.  When you look at the boards of a locally controlled health care organizations, you are more likely to see the regional manager of a company or a physician who practices in the community.  These are people who are closer to the marketplace and who see the consequences of their decisions.  They actually care.

When you look at the merging monsters, you are likely to see a highly placed senior manager of a national corporation or a physician who has not practiced clinical medicine for many years.  They are at a far distance from the marketplace.  That brings a different perspective, one which I contend leads to decision-making detrimental to health care delivery.  These board members who live in a rarefied world do not have to live with the consequences of their decisions.  It is just another gig.

If I am wrong, show me where patient care and outcomes have been positively affected by the constant churning of merger activity in health care.   And as for cost effectiveness being a by-product of mergers and consolidations, show me the money.

I’m waiting.





It’s the Money

This time of the year is when various health care publications get around to looking at the past year’s events as well as making predictions for the new year.  They tap into pundits who usually have an agenda for many of their predictions, thus providing a  satisfyingly closed echo chamber.

So sitting on the beach I will weigh in with a comment or two about several developments of note for the new year.  I am fully aware that observing from the beach is easy which makes me an amateur pundit of sorts which does not please me.

Of special interest to me in the past year has been the progress of the merger of Dignity Health and Catholic Health Initiatives (CHI) to form a mega-monster health system consisting of 140 hospitals and assorted other endeavors.  The new entity will be called CommonSpirit Health which sounds like the expensive result of working with a branding consultant.  I don’t recall a St. CommonSpirit from my Catholic background so my guess is this is a further attempt to distance the new organization from its Catholic roots as has been the case with Dignity Health in recent years.

It is always difficult to merge two organizations, especially when neither one has been especially stellar financially.  CHI, in particular, has been hemorrhaging red ink for several years, no doubt the result of having achieved operating efficiencies from previous mergers of smaller Catholic health systems.  The expectation is that  by merging with Dignity Health, these financial problems will disappear.  Bigness overcomes such problems according to the financial analysts. How could they be wrong?

CommonSpirit Health, showing great courage and decision-making boldness, will be managed by co-CEOs, i.e., the former CEOs Of CHI and Dignity.  That is a surefire formula for success–for about two months.

My prediction–experience shows that even  with the good intentions of the co-CEOs, there will be within a year just one CEO tasked with managing and making sense of an ungainly and financially challenged organization.

The other big merger of note which will begin operating in earnest in 2019 involves CVS Health and Aetna.  This seems to be an unnatural combination, akin to breeding a goat with a skunk.

CVS Health is, of course, best known for its ubiquitous drug stores on every corner where there used to be a gas station.  They are very easy to find.  All you need to do is look for a Walgreen’s and sure enough there will be a CVS across the street.

CVS’ other business is acting as a pharmacy benefit manager which is where, I suppose, the synergies will come with the merger with Aetna whose health plans have been also-rans in most markets.  Still,, this combination really seems a reach and like a good way to lose a great deal of money.

There is no shortage of other health care related endeavors thrashing around in this new year.  It is telling that no one mentions a goal of improving patient care in any of these machinations.

Bottom line though is the bottom line.  All this activity is less about health care than it is about the money. What a waste.



Free The EMR

My 97-year-old father passed away last week after a four-day hospital stay  That is a  matter of private sorrow.  However, that experience renewed feelings I have about a particular aspect of modern health care and they are feelings of anger.

I want to make clear upfront that there were no medical errors involved with the care my father  received.  In fact, the care and attention provided by his physicians, nurses and others was exemplary to my critical but knowledgable eyes.  That included an environmental services aide who while cleaning my father’s room noted how sick he had become and took it upon himself to lobby successfully for a private room for my father.

His caregivers, though, were needlessly handicapped by lack of access to important information which might have changed their treatment plan.

My father was still living independently when he died.  He was hospitalized because some lab values alarmed his new cardiologist.  As I was to discover a day later, those values were normal for him and his recently retired primary care doctor had been monitoring them for years.  I discovered that fact by going to the patient portal used by the health care system to which his primary care physician belonged.

The cause of death was something that could have easily occurred at home, something we had become concerned enough about that we had scheduled a meeting of his children prior to the hospitalization to discuss living arrangement options for him.

The hospital was unique in that it had as attending medical staff its  own medical group as well as  medical groups affiliated with two other large health care systems.  The other health care systems did not have their own hospitals nearby and used the local hospital to care for their patients.

The problem was the electronic medical record (EMR) used by my father’s medical group was not accessible to the hospital’s staff.  At least two of the medical groups used the same vendor for their EMR but even then there was no sharing of information.  This lack of what the IT types call “interoperability” continues to be a flaw in the roll-out of EMRs.  It is dangerous and inexcusable.

An example:  early in my father’s hospitalization, a hospital pharmacist came to the room and asked what meds my father used at home.  I had access to his electronic medical record and showed her the list. Why could she not access that list?  The answer has to do with the siloing of medical records to the benefit of everyone but the patient.

Another example:  as I indicate above, I was able to determine by accessing my father’s medical record that his “normal” lab values were abnormal for most people.  The admitting doctor at the hospital had no way to see that valuable piece of information and the result was more testing.

When I was still a health care system CEO I used to go every other year to the headquarters of the EMR vendor we used.  On each visit I raised hell about this issue of information silos.  The last visit I made before I retired I raised enough of a ruckus that the President of the company joined us at lunch to discuss what his company was doing to make the information more easily accessible.  His promises sounded good but to my knowledge nothing has changed.

My father did not die because of this problem but I believe many people have.  There are task forces looking at the issue but they seem to move at a glacier pace.  There is plenty of resistance below the surface to the idea of interoperability.  The information collected from EMRs has value and it seems to me everyone is benefiting except the patient who is the rightful owner of the information.

Access to a patient’s medical information is crucial when that patient shows up at a hospital emergency service needing life-saving care.  Which medical group he uses and which EMR they use should not be a factor in allowing access to information which could be valuable in treatment.

It is not the EMR vendors’ information. It is not the insurance companies’ information.  It is not even the medical group’s or hospital’s information. It belongs to the patient and it is time it has been freed.  When does this revolution begin?

Free the EMR!


Big Blobs

A recent article in the San Francisco Chronicle by John Gerzema, co-CEO of the Harris Poll, caught my eye.  In it he refers to research that seems to indicate that larger organizations are less trusted and esteemed by the people they serve.  He put it this way:

“To sum up, the bigger you are, the less trusted you are, and companies that have the best reputations are small, or they have found a way to connect more personally—or  ‘act small.'”

He was referring to private enterprises and not health care organizations per se. Nevertheless, I believe his observation has applicability to the health care scene.

There has been a great emphasis in health care in getting bigger.  All the pundits say it is a great idea and we know the pundits are never wrong.  Misinformed sometimes but never wrong as they are consultants and wise people.

Actually I think they are both misinformed and wrong.

Here in California, we have mega-monster health care systems like Kaiser, Sutter and Dignity.  In bowing to the god (or goddess–take your pick) of bigness, they homogenize and centralize and in the process lose differentiation.  They become big blobs.

I became familiar during my years at NorthBay Healthcare with many locally based health care systems.  They fly under the pundits’ radar but they have much more local presence than the mega-monsters. They have to do well locally if they are going to do good at all.

They sponsor Little League and Bobby Sox teams.  They participate in “Fun Runs” and local fund rasing events.  They sponsor public schools serving children of less economically advantaged parents.  Their employees proudly wear their logos and colors. They do all of this without having to check in with Oakland or Sacramento or San Francisco or whereever the lords of the mega-monsters live.

They don’t have pension funding problems.  Unlike the mega-monsters which sometime seem to be wildly merging two financially challenged health care systems in the hope that magically the deficits will disappear, the small guys are financially stable and much quicker to react when financial problems do occur.

Perhaps even more importantly, the smaller guys tailor their services for the needs of their local community rather than the needs of a spoke and hub health care system.  The spread of technology is making providing locally based advanced services easier.  All those specialists being trained by the academic medical centers do need some place to land.

When you are rooted in a community, you make different decisions in a different way.  You have no place to hide and no one in a far away place to blame if things go awry.

The mega-monster health care systems have a lot to learn from the small guys. Small is the new big—-and trusted.

Will Santa Deliver?

IMG_0033Santa Claus made a lot of promises last month in the election.  During the run up to voting, he could be often found on the beach telling the beachgoers all sorts of good things would come if he was elected.  It was difficult to see if he was a Democrat or a Republican.  Nevertheless, Santa is my age and then some and if you cannot believe Santa who can you believe?

When you look down the beach where I spend my time you noticed three distinct sections.  There is the relatively small section occupied by what I call the healthy and wealthy.  They seem to be having a good time. Hard work and good luck pays off.

The larger middle section of the beach is occupied by people just kind of  making it through their beach experience.  They do worry much more than the healthy and wealthy but as long as they do not suffer a major health problem or their company is unable to keep their pension checks coming or the stock market crashes, they are fine. Comes the day they need assistance with activities of living, they may have a problem.

The final section of the beach is around the bend and not easily visible from the rest of the beach.  Here the beach is rocky and not particularly enticing.  The folks here are in a precarious state, often with chronic health problems and dependent primarily on social security.  It seems the number of people on this section of the beach is growing larger every day.  This group gets lost in the shuffle.  Out of sight, out of mind.

All the attention paid to health care in last month’s political campaigning seemed to have been forgotten at least until the decision by a federal judge in Texas last week declaring Obamacare unconstitutional  .You get the impression that particular tide will not come in again until 2020 when it can be again exploited by the Santas in both parties.  In the meantime, expect more posturing by politicians of all ilks.

The folks on the beach and elsewhere will be disappointed but they should not be surprised. I remember in 2010, right after Obamacare was passed with no Republican votes, a Democratic congressman telling me that what he called “corrective changes” would be made to some obvious flaws. Never happened and one result was last week’s controversial judicial decision.

We are seeing in California that our new governor is backtracking on grandiose promises he made concerning health care. Just too expensive to do now.  He knew that before the elections but promises are cheap unlike reality.

Instead, now there is a pivot to education, specifically making pre-school free and available in public schools.  Most pre-schools are now private.  Students who go from there to kindergarten have a leg up on their classmates whose parents could not afford to pay for pre-school.  That does not seem right.

If I were Santa I would also give priority to education.  The needs of kids should take priority over those of us on the beach.  We have had our time in the sun. That is easy to say given my spot on the beach.

Still, I wish there was a way to bring those beachgoers around the bend back to the main beach.  I wish I had spent more time before I hit the beach thinking about ways my health system could have done well by doing good for others on the beach.

There is a great opportunity on the beach for organizations, private and public, to be creative in meeting the health care needs of this burgeoning sector. Can we help Santa deliver on his promises?

In the meantime ho, ho, ho and whether you are on the beach or still trying to get there, the best to you in 2019.

Doing Good Differently

Even though I am now on the beach, I think about things as if I still am CEO of a health system.  It is easy to do that when you don’t have all the day-to-day responsibilities of an actual CEO.

Where do you take an organization which has developed a nice array of both inpatient and outpatient services and has been able to integrate a health plan into the mix?

There are many directions a healthcare  organization can go to fill unmet needs.  At this point in my life I see many opportunities to offer services to aging baby boomers and members of even older generations.  I have seen the need in my own family with older relatives.

Here is a brief look at some ideas worthy of exploration as health systems look to expand their services for the fast growing older sector of the population:

Medical Fitness Centers:  These are fitness centers open to all ages and fitness levels with a twist. There is a more medical orientation with highly trained staff helping to develop fitness regimes which take into account the special needs of members with chronic conditions.

NorthBay Healthcare opened a 55,000 square foot medical fitness center in 2016.  It’s where I spend the first part of every beach day.  Whether you are fit already, want to get fit or need to maintain your fitness level post-rehabilitation from an illness, medical fitness centers are a natural fit for those who look to a particular health care system for care. Medical fitness centers also help to build your brand and provide “stickiness” with existing patients.

Glenner Town Square:  Some years ago I was in Amsterdam and heard about a memory care residential facility which recreated a small Dutch town in the 1950s.  Using what was called “reminiscence therapy”, this facility had a positive effect on dementia patients who live there. A stroll down memory lane makes a difference.

This concept was adapted in the United States by the George G. Glenner Alzheimer’s Family Centers ( The primary difference is that these centers provide day care rather than residential care and the “Glenner Town Squares” are 9000 square foot replicas of 1960s America contained within an existing building.

Continuing Care Communities:  This is for those organizations which think big and have the resources to back up their big thinking!  Continuing care communities (CCC) are not a new concept.  Demographics are making the need for such communities grow.  I have a friend who is in her early 80s and has just recently moved from her large home into a CCC.

CCCs come in a variety of configurations and can be for-profit or non-profit in organizational structure.  CCCs which offer independent living, assisted living and memory care to my mind are the most comprehensive and attractive.  I tend to think of them as Club Meds for the older set.

You don’t see very often local healthcare systems offering CCCs as part of their care continuum.  That’s a shame because they are a natural fit.

There are other possibilities as well along the continuum of care. What you do depends upon the definition of healthcare which your organization has adopted. If your mission is some variation of ” fix the sick”(and there is nothing wrong with that), then staying on the acute care part of the continuum is where your organization may be best suited.

If your organization wants to help people be healthy, then there is a broader palette of healthcare possibilities available. With longer lifespans, I think most healthcare organizations need to expand their care continuum to take advantage of other possibilities.

It is very sexy currently in health care to look for the “disrupters” in healthcare–often a nerd who thinks using an iPad in patient care is the height of innovation.  Down at the actual service level, there are great unmet needs which could be met and in the process bind people to a healthcare system in a positive and long-lasting way.

I am a baby boomer and there are still millions of us yet to hit the beach.  We are all going to need  more options on the beach.  If those of us who are in health care are truly committed to the idea of care continuity, there exists great opportunity for health care organizations to do well by doing good in meeting these needs.