A new (C)MO

A new (C)MO

HEALTH CARE by Jean Gruss | Editor/Lee-Collier

The relationship between physicians and hospitals has become more adversarial in recent years. At Health Management Associates, one doctor will try to change that.

Hospitals and doctors don't get along like they used to.

Take the hospital emergency room, for example. Doctors used to volunteer to work there so they could gather new patients and grow their private practice. Today, it's tough to find doctors who will work there for money.

Into this environment steps Ronald Riner, the new acting chief medical officer at Health Management Associates, the Naples-based operator of 58 hospitals. As a cardiologist and leading health-care consultant to hospitals and physicians, Riner has the tough task of figuring out how to help Naples-based HMA and its network of physicians work better together.

It's not going to be easy.

Historically, doctors and hospitals got along because they needed each other to build their businesses. But as insurance companies and the government cut back on reimbursements in the last decade, that relationship has grown "extremely turbulent," Riner says.

Under financial pressure, physicians have become more entrepreneurial. New technology has allowed them to open outpatient centers for a wide variety of procedures, from simple scans to complex cardiac problems. They've skimmed the best-paying patients, leaving hospitals with the burden of caring for 50 million people that don't have health insurance.

But don't count hospitals out just yet. "Most of us will have a problem that will require hospitalization," says Riner. The key, he says, is for hospitals to have such positive patient outcomes that physicians won't be tempted to compete and their patients will demand to be treated there.

Grading the hospitals

In the past, insurers and patients rarely questioned the quality of care they expected to receive in hospitals. But that began to change in recent years as the government and insurers started to grade hospitals' performance. Now, patients and doctors can measure one hospital against another on the outcomes for various kinds of procedures. For example, a patient facing cardiac surgery can see how hospitals compare based on survival rates.

This lifting of secrecy that shrouded hospital performance has forced these institutions to benchmark against one another. As a result, it's presented patients and doctors with a choice of where to receive care and where to practice.

Perhaps more important, insurers are increasingly linking performance with reimbursement rates. When it comes to these grades, Riner says HMA hasn't fared as well as its competition. That's shown up in the company's lackluster results and its recent stock price of $5.76 per share, which has declined 48% for the year ending April 4.

But the company's newly appointed CEO, Burke Whitman, is determined to turn things around. Riner's priority since Whitman appointed him recently is to raise the quality grades at each of HMA's 58 hospitals to top levels. Once that happens, Riner says, the company's financial results will improve as patients and doctors choose HMA hospitals over lower-graded rivals.

Improvements in patient satisfaction and outcomes don't necessarily require huge investments in new machines. "Most of it is not technology based," Riner says. Instead, it's based on giving doctors a greater say in how to run hospitals and developing systems that track quality. "It's a lot of grunt work," Riner says.

More power to doctors

Most of the physicians who practice at HMA's hospitals are not employees. Instead, these doctors are independent and practice in the hospital, a financial relationship that benefits both sides. Because of that, doctors at HMA haven't had as great a voice in hospital operations.

But that is starting to change, as Whitman and Riner give doctors who use the hospital a greater say in the management of these complex institutions. A major component of that is identifying and developing leaders among those doctors who can bring about changes that will lead to better patient outcomes.

Riner brings credibility to the effort by virtue of his experience as a cardiologist in private practice and 28 years as a health care business consultant.

After graduating from Princeton University, Riner attended Cornell University Medical College and was trained at The New York Hospital's Memorial Sloan Kettering Cancer Center and received specialty training in cardiovascular diseases at the Mayo Clinic. He also is a graduate of business programs at Harvard University, the Kellogg School of Business in Chicago and the Olin School of Business at Washington University, where he is a fellow of the school's Institute for Advanced Study in International Business Development.

For now, Riner is HMA's acting chief medical officer because he continues to run his 10-employee consulting firm, The Riner Group. Whitman recently said he is negotiating for Riner to become the company's permanent chief medical officer, perhaps by acquiring his firm.

To identify these doctor-leaders, HMA has created physician leadership councils at all 58 hospitals who recommend improvements. Regional- and national-level physician councils also have been established to address broader issues. "HMA is going through a cultural transformation," Riner says.

It's a delicate balancing act, Riner concedes. After all, it's fair to say that doctors may be less focused on costs than their counterparts in management. But Riner says that focusing on the quality of patient outcomes gives both sides a common goal.

"My greatest challenge is to engage the leadership in a dialogue with a common objective," Riner says. "We can't strictly focus on the finances. In this arena, short-term goals have to be balanced with long-term objectives."

That also has to be balanced with shareholders who often are more concerned with short-term results. "The basic, inherent nature of health care is long term," Riner says.

In three cases recently, HMA has given outside physicians a financial stake in the hospitals themselves. The premise is simple: Doctors who have an ownership stake in a hospital are more likely to take an interest in the institution's financial results. "When's the last time you washed a rental car?" Riner asks.

But while ownership is a "key piece," Riner says it's not necessarily the answer in all cases. It's too early to tell whether the recently formed joint ventures with physicians in places like Gadsden, Ala., are working. "The jury is still out on that," Riner says.

And ownership doesn't have to be financial to work, Riner says. "They can have ownership if they're involved in the leadership structure," he says.

Building credibility with doctors, patients and shareholders is a huge challenge in an industry that has seen its share of distrust. "Communication makes or breaks you at the end of the day," Riner says.

REVIEW SUMMARY

Company. Health Management Associates

Industry. Health care

Key. Focus on quality and the profits will follow.