🔒Hospital CEOs grapple with ‘broken system,’ funding worries

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If you have concerns about the U.S. healthcare system, it may or may not comfort you to know that Connecticut hospital CEOs also have plenty of worries.

From the gradual shift away from fee-for-service, to misaligned economic incentives and worries over budget cuts and government reimbursement, three executives recently aired their concerns during a candid panel discussion held at the Connecticut Association for Healthcare at Home's annual conference.

Elliot Joseph, CEO of the five-hospital Hartford Healthcare system, said the healthcare industry is broken, though its workers perform miracles every day. He said there's no real link between the cost and quality of care, although Obamacare's push for population-based care delivery is disrupting that broken system.

“Thirty percent of what we do is unnecessary, and we haven't fixed it,” Joseph said. “So now it's being fixed for us.”

Though hospital CEOs don't often publicly trumpet it, it's well-documented that there's fat in the fee-for-service healthcare system, in which providers are often paid per test or procedure, rather than for their performance in improving health outcomes. Doctors are also incentivized by a desire to avoid expensive malpractice lawsuits, which can cause them to perform too many tests rather than too few.

Those misaligned incentives are a major hurdle to change, said Vincent Capece Jr., CEO of Middlesex Hospital in Middletown. Capece said he walks into work each day and asks how many patients are in his hospital.

“And if there are a lot of patients in the hospital, we're happy. And if there are not a lot of patients in the hospital, we're not happy,” Capece said. “And that's kind of crazy, because if we're really in the health business, we really truly want there to be no patients in the hospital. Yet we're not incentivized to do that.”

That's slowly changing, particularly in Medicare, which expects 50 percent of its payments by the end of 2018 to go to accountable-care organizations and other alternative models.

Part of the idea of ACOs is that providers will take on financial risk for how well they improve the health of their respective patient populations.

Capece said he is in no rush to get there because he doesn't think hospitals are well equipped to take on that risk.

“The insurance companies would love to give us risk tomorrow, as much risk as we're willing to take,” he said. “Whenever someone wants to give you something really badly, you should think twice about taking it.”

The panel was moderated by Jennifer Jackson, CEO of the Connecticut Hospital Association, which just 24 hours earlier had launched an aggressive advertising campaign criticizing Gov. Dannel P. Malloy for mid-year funding cuts to hospitals.

Relations are tense between hospitals and the Malloy administration, which has responded to hospital gripes over the past several months by criticizing executive pay and budget surpluses, particularly at larger hospitals. The friction loomed over the panel discussion.

Panelist Kurt Barwis, CEO of Bristol Hospital, said he agreed with Joseph that hospitals perform unnecessary procedures and tests, but he worried it might be used as cannon fodder in the ongoing war of words with state government.

“I worry about things Elliot is saying, that 30 percent of things we do are not necessary, because I'm worried someone from [the Office of Policy and Management] is sitting in the crowd,” Barwis said.

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