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?
DW: Obviously, it will vary in different organizations. But these implementations will be what nursing positions used to be—they’ll be exempted from cuts. We have no alternative. Now, could we slow down the development of CPOE from tomorrow to the day after tomorrow? Yes, certainly, we’ll see some slow-downs. But will we see any of the really crucial core clinical implementations shelved entirely? I don’t think so. We can live for another year or two without the latest widgets. But we can’t do it without the core clinical information systems, for pay-for-performance, or anything. And what do you want to do, sit at night and manually accumulate data? Clinicians will say, forget it. And if the only way we can get to clinical outcomes and meaningful data is via the implementation of CPOE, then that’s what it will take. We may have to prioritize, but we will not eliminate.
MH: Would you say that ROI will become more of an element in our conversations, per core clinical information systems?
DW: Yes. We will talk about ROI in every conversation. That doesn’t mean that we have or will shortly have precise measurements of ROI in everything. But will we attempt to do so? Interestingly, we’re embarking on an initiative at the Scottsdale Institute around ROI with our members. So yes, it has to be a part of every conversation. The challenging part is, as every CIO will tell you, I can come up with what I think is a reasonable definition of ROI on something for our organization. And CEOs will ask, how does that analysis compare with what’s happening in the organization down the street? But the idea that numbers can’t be compared won’t fly anymore. CEOs will demand some level of comparability; right now, it’s still going to be a conversation. It’s going to move, maybe not next year, but the following year, to leading-organization benchmarked data.
MH: In all this, do you see IT as a facilitator of standardization of care processes?
DW: It will be at least a facilitator; and it may in fact be a driver, because clinicians, who are scientists, will use information systems to change care processes. And we will soon have clinicians demanding that information technology be stronger and broader. An example, CEOs are increasingly demanding information technologies to improve patient safety. What’s more, this demand for information technology and the information that comes out of it, is now coming from the bowels of the organization: the night nurse on Five East is now demanding this. That nurse is saying, I saw this demo’ed at a conference, and I want it and have got to have it. And I think CEOs are definitely supportive of this, because they’d much rather do things based on data rather than on subjective conversations. And so you’ll get the best stuff in the business. Now they’ll want to know, how does the data coming out of our tools compare with the folks down the street? Are we making fewer medication errors? How many times did we attempt to get the wrong drug out? And is our score better than the competition? And if so, will our training be better? So IT will play a really, really broad role; and I think that’s wonderful. We’re moving into an objective world now in clinical care. And that strongly resonates with clinicians, but it also resonates with the modern-day executive, who comes out of graduate school saying, you’ve got to make these decisions based on objective data, not subjective opinions. And in the past, no one ever talked to each other around a large table and figured out how better to do things.
MH: What would your core advice to CIOs be for the next two years?
DW: The first thing I would say to CIOs is, go back to the basics of articulating in some clear, detailed fashion what it is that we are trying to achieve with our information technology and information systems budgets, and then support every piece of that with, a strong rationale. Two, be realistic about the fact that some of those priorities may have to be rearranged; some may have to be delayed; but start with the idea that we must do this; start with the goal we’re trying to achieve, and remind everybody, let’s not get off the path here. So, let’s look at other areas before we start looking at the core of our enterprise, for cuts. And I will submit to you that information systems and technology are at the core of the enterprise right now. But be realistic; on your wish-list of five things, you’ll get three things. But start by making the case all over again. Don’t assume everybody already understands.