PRIORITIES & ISSUES
THE RIGHT STRATEGIC PLAN
Nothing is more important for any Board of Directors to get right than the strategic plan. Currently, we have good plans in many, but not all areas. The three top priorities are clinical excellence, financial performance, and clinical partnerships.
This is where experienced physicians on the Board are critical. The leadership for clinical excellence must come from the very top: the Board. It must be clinically credible and inspiring.
The Board must support innovative and clinically proven programs. It must objectively demonstrate success by measuring, and continuously improving clinical processes, outcomes and satisfaction.
We have had a very good year financially, and I will build on these successes. We need to be vigilant about controlling costs, especially in good times. We all know that is when we might over-commit.
Finances must change as reimbursement is more based on value (population management) rather than the volume of services it provides. This transition requires a sure hand, not too fast, not too slow.
Physicians bring patients, the lifeblood of any hospital. Healthcare is changing and physicians and hospitals will be more interdependent. We need the right physician partnerships to preserve our independence.
PAMF and Stanford physicians are excellent, but belong to other organizations. ECH must have its own cadre of physicians as its partner to maintain control of its own destiny.
ECH's current strategy is to hire doctors as its future partner, the El Camino Medical Associates (ECMA). An incumbent Board member has indicated they plan to form a new ECH medical foundation, something long considered, but with a price tag of up to $100 million.
This plan has significant flaws:
Forming a new Foundation is not the right answer now. We are too late to the game; foundations at other hospitals are established and successful. We should not try to create a new one: we should join a successful existing one, but require self-governance for ourselves. PAMF does not form a new foundation whenever a new medical group joins, it expands its existing successful one, making it bigger and more powerful. Forming a new one is building a new island, or silo, replicating governance, management, infrastructure which increases expense, causes fragmentation and duplication, at a time when other successful foundations are expanding their footprints to achieve greater reach, size and scope at lower cost.
This plan was made with no input from the independent physicians. They do not support this plan.
The one critical success factor for successful physician practices is higher physician reimbursement rates from insurers. ECH does not have better physicians rates, and their plan does not achieve them. Once a medical foundation is set up and running (not all succeed), it takes many years to grow large enough and to demonstrate the competency in order to negotiate better insurance contracts.
Physicians will not join any foundation that does not offer better rates. The reason some independent physicians joined Stanford’s foundation recently was they offered the higher rates the Stanford faculty already had. The reward was immediate.
ECH also needs to be able to manage physician practices well. Its record here unfortunately is very poor. At its Mountain View site started 6 years ago and which it planned to expand, all 5 original physician hires left to open local practices, citing poor management. Some of the new replacement hires now plan to leave. Creating a new foundation does not decrease need for good management, it increases it. ECH has never shown it can do this successfully.
Stanford could grow its foundation offering because it had a proven track record of managing the Menlo Clinic successfully for many years.
An ECH foundation needs to offer competitive salaries. Their physician salaries have been below average, and there is a correlation with the quality of physicians it attracts. It is hard to get good doctors to give up control of their private practices when there is poor management, below average salaries, and no better reimbursement contracts.
There is a much better alternative:
If elected, I will press the Board to re-evaluate the assumptions of their proposed plan, and to compare actual performance of their clinics to their original projections. This has never been shown publicly. In the outpatient arena, ECH has higher than average expenses, and lower reimbursement; they have poor physician retention. This recipe needs careful and thorough review before proceeding with building more clinics.
If such review supports my concerns, I will propose exploring the better solution: joining a successful already operational medical foundation. One that already has better reimbursement rates which we can offer our physicians immediately. One that has proven management competency. Once there are better insurance reimbursements, higher salaries can be offered.
While PAMF and Stanford are both successful Foundation models, they represent other hospital organizations, which have their own interests. They are still extremely important to ECH; they just should not be counted on to be the only partners to keep ECH independent in the future.
However, Washington Township Hospital in Fremont, (also a District hospital), and John Muir are not geographic competitors which might threaten ECH independence. They have successful Foundations with better reimbursement rates, and have already stabilized the practices of their independent doctors. They have a track record of successful physician practice management.
They are small enough that they may offer local autonomy to get ECH to join them which would be very valuable to both parties.
ECH must not spend huge money on a poor strategy when there are much better alternatives!
The only requirement I would impose on any foundation partner is that the ECH branch has local governance. Keep ECH accountable only to District residents!
Other strategic partnerships. ECH can be a highly desirable partner to other large organizations, and a successful affiliation with Stanford, UCSF, or even Kaiser may overcome many of ECH weaknesses. Many other independent hospitals are already doing this to maintain their independence long-term.
Businesses: self-insured companies need a collaborative hospital partner and know-how. Many large firms are exploring ways to reduce healthcare costs for their own employees. These all need consideration.