We will find out fairly quickly who the best of the best is at running hospitals. The Affordable Care Act and the inevitable deficit reduction will weed out the top performers from the soon-to-be unemployed.
History does repeat itself. In the early 1980s, a savvy investor-owned hospital executive, Charles Brightwell, of the old Hospital Affiliates International chain, warned his direct reports that “a sack boy at Safeway” could run a hospital with a 50 percent Medicare occupancy and cost-based reimbursement. When the feds implement prospective payments (DRGs), he warned, we would find out who the real hospital CEOs are.
Since Mr. Brightwell’s prediction about the future of hospital management, a lot of water, and the careers of more than a few hospital executives, have passed under the bridge. Most of those executive victims never knew what hit them. I know it was change, a radical overhaul of how hospitals were paid by the federal government for Medicare and Medicaid. It was a good idea to make hospitals more accountable for managing costs but there was an unintended consequence. Physicians were not included in the same formula and this disparity, that the physicians lobbied for, sharply knocked the hospital/physician relationship out of alignment. Hospitals had a big-stick incentive to discharge patients as soon as possible; otherwise they would lose a lot of money. The physicians, not so much.
And that is when the fight broke out.
That issue, combined with demands for more focused leadership, took a toll on executives and their hospitals. Nationally, more than 1,000 facilities closed their doors over the next 10 years.
Well, here we are again. Mr. Brightwell was talking in the 1980s about change but ACA and deficit reduction will drive a more radical transformation of healthcare, a far more consequential event.
The lessons that should have been learned from the 1980s is that those CEOs who embraced change and refocused their financial and clinical operations – working tirelessly and carefully to educate their medical staffs to understand the consequences of ignoring patient length of stay limits – succeeded. Those who lacked the skills, or the will, and resisted change, were last seen floating under that proverbial bridge.
Mr. Brightwell, a legend in the eyes of his employees, was dead bang right then and if he were in the hospital prediction business today, I am betting he would say the same thing about the impending transformation of healthcare.