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The Future of Hospitals & Health Care
In a wide-ranging interview, Yale-New Haven head Joe Zaccagnino looks into the crystal
ball — with some surprising conclusions
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Business New Haven
10/20/1997
By: BNH
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It was founded in 1826 as the General Hospital Society of Connecticut - the only hospital between Boston and New York Today the Yale-New Haven Health System has 10,000 employees (3,300 medical staff) and total assets of $1.3 billion. It discharged 67,573 patients last year and operates “vertical networks” in New Haven, Bridgeport and (pending regulatory approval) Greenwich. Its system-wide insurance products include HMO, PPO and Medicaid offerings. President and CEO Joseph A. Zaccagnino hasn't been there since the beginning, exactly, though he has spent his entire career at YNHH, assuming the top post following the departure of C. Thomas Smith in 1991. BNH spoke with him in his office at the hospital.
To begin, I'm not sure everyone understands the precise relationship between Yale-New Haven and the Yale School of Medicine.
Yale-New Haven Hospital has played a leadership role in health care since 1826 - it was the fifth hospital founded in the United States - and since its inception has had a very close relationship with the Yale School of Medicine. Although corporately independent, the hospital serves as the primary teaching affiliate for the medical school. That history is important, because it continues to shape the institution into its current form.
How does YNHH define its mission?
The hospital has always had a broad mission: of patient care, teaching, clinical research and community service. That mission may sound similar to other acute-care facilities here and around the country, but [it is] one which is unique in Connecticut as a result of the extent of its commitment to key components of that mission - specifically to the comprehensiveness of patient care that's offered here, with over 100 sub-specialties represented, and the total spectrum of health-care services available, uniquely, at this institution. Similarly, its educational role spans from providing the setting within which medical students get clinical practicum to serving as one of 50 hospitals in the U.S. that train 40 percent of physicians annually at the post-graduate level. Finally, the organization remains committed to its community-service responsibility - sponsoring school-based health clinics here in New Haven, active support of AIDS [initiatives] and also through its support of free care - over $25 million a year is provided to citizens who have no means of payment.
What is the imperative for this institution to grow?
As we look forward and see some of the changes in the way health care is delivered and financed, it's clear that we have a broader role than can be met just in New Haven. By that I mean the need to relate over a much broader geographic area to providers, both institutional and individual, who serve their local communities throughout the state. The way we have chosen to actualize that is to serve as the founder and initiator of the Yale-New Haven Health System - an integrated delivery and financing organization which seeks to differentiate itself from other provider networks on the basis of the quality and comprehensiveness of its services, its commitment to delivering care locally through local providers in their respective communities, and improving the health of the population. This comes about as payment changes move from individual fee-for-service payment toward capitation. When capitation is received, obviously the provider organization or system has the responsibility to care for a population irrespective of its needs, and therefore can invest in preventive care through acute to long-term care. That's what we're preparing for based on the assumption that payment and financing of health care will continue to move in the strong direction of managed care, with capitation being the likely long-term model.
Please explain the motivation behind the Bridgeport and, now, Greenwich alliances.
As a result of our goal of constructing this integrated delivery system, we've moved forward with other high-quality local vertical networks of institutional providers and their affiliated physicians to build out the Yale-New Haven Health System to the point where it now has an important presence in New Haven, in Bridgeport, in Greenwich - pending regulatory approval, which we anticipate by the end of this calendar year - and most recently in our discussions with Norwalk Hospital.
Is that deal done?
There is no affiliation commitment at this point in time, but a mutual commitment to pursue the exploration of affiliation. These relationships are built upon a core understanding that health care is best delivered locally, by local providers. So the role of [YNHHS] is to construct a delivery system with broad coverage so that patients across the state have access to high-quality physicians and their associated institutions. And secondly, to build the infrastructure to truly manage patient care efficiently with high-quality outcome results under a capitated payment system.
Where do physicians practices such as the one you just opened in Milford fit into the picture?
Part of the development of the Yale-New Haven vertical network for the local market area is to ensure that members of our medical staff - both full-time members of the Yale School of Medicine faculty as well as community-based physicians - are sufficiently distributed in the market to allow the population to have convenient access to their services should they choose either the health plan that covers their services or their individual physicians. The Milford office is simply an office location for physicians, and it supports the Yale-New Haven network. It's simply an outreach initiative not unlike what we've done in other areas.
The New York Times earlier this week observed that many hospitals are moving from being health-care 'department stores' to becoming more like 'boutiques' - shedding unprofitable departments or areas of specialization and moving into specific niches. That's plainly not YNHH's approach, but do you observe that elsewhere?
All hospitals are going through a significant transformation as the way health care is delivered and financed changes. The financing is a motivator relative to that as providers are faced with the challenge of keeping quality high and determining alternative ways to meet patient demand. Selected hospitals have chosen the strategy of underscoring one area of expertise or another. YNHH is of a type that is the most comprehensive in our U.S. health care system. It is where applied research takes place; it is where professionals of the future are trained; and it is where the sickest and most complicated patients are cared for. It's unlikely that these types of institutions will change substantially relative to the service range they offer because their breadth and scope of services are required for so many components of their mission. It's also true that hospitals have often followed the strategy you described to ensure that they are successful from a volume standpoint - having a critical mass to provide the resources necessary to carrying out their responsibilities. In Connecticut we have an unusual health care system in that it has always been conservatively organized. There are only 34 acute-care hospitals. Generally they have been large in size, geographically well distributed and supportive of the overall needs of the population. For example, Connecticut has about 2.4 [hospital] beds per 1,000 population. That compares with Massachusetts and New York which have, respectively, 3.2 and 3.6 beds per 1,000. When you have excess capacity to that extent, you have many and varied strategies being employed because, frankly, there's too much capacity for the population's needs.
They're more overbedded than we are?
They are much more overbedded than we are. In other parts of the country you find two beds per 1,000 - for example, in California, as a very aggressive system where managed care has reached very high levels of penetration.
What ought our capacity to be?
We should only have enough capacity to appropriately meet the needs of our population. And recognize that the population we're talking about has a fair degree of its need in the 'unpredictable' category. So the system can only be fine-tuned to a certain degree without creating a circumstance where a backlog or disruption or deterioration of service would be the outcome at peak demand times. In terms of what the right number is, I can tell that for extremes, there are still states where the number of beds are in the four- to six-bed-per-1,000 range, while the lowest prediction I've heard is from the Minneapolis market, where you have one of the highest levels of managed-care penetration. In that market they're projecting it might be conceivable to operate with slightly over one bed per 1,000. I think that's an exaggeration. My own feeling is that we probably will be in the two-bed-per-1,000 [range], and then find that we are periodically tight in terms of capacity.
Are hospitals likely to become smaller are economics and technology drive down lengths of hospital stays?
I think there will be changes in what institutions do. More [care] will continue to be shifted to the outpatient setting. Hopefully more will be handled through home care, [which is] both more humane for patients and more cost-efficient in most instances. The role of major hospitals will continue, but will become more like larger intensive-care units. What we're doing is increasingly intensive: Patients we get are sicker; patients who would be [admitted] for diagnostic work five years ago are no longer admitted to the hospital. Patients who would be admitted for a necessary hospitalization and who might have stayed seven or eight days are now gone in five days. [This is due to] pressure on the payment side.
What will hospitals like YNHH look like in ten or 20 years?
That's a very hard question to answer. If we took technology and segmented it, I would have one set of answers if we were talking about the equipment side of technology. One thing that has accelerated our ability to discharge patients sooner is the fact that not only length of stay shortened, but also the length of a [surgical] incision shortened. Instead of opening the abdomen, going through all of that muscle tissue [resulting in] a ten-inch scar, the incision can be one and a half inches. And through fiber-optic means, and endoscopic or laparoscopic procedures, we can do less trauma in correcting the patient's problem. So on the equipment side, we can speculate about how much we can shorten patients' length of stay. But there's another whole side to technology: the whole genetic movement. The ability to treat disease and potentially prevent disease through gene therapy. That whole dimension of technology has enormous potential. That could completely change the role of the hospital. In the most extreme sense, one could imagine that hereditary disease and other incurable problems could be addressed through gene therapy, and the institutional setting could be left to managing the products of accidents.
What will become of smaller or more rural hospitals?
I would expect those institutions to evolve more into ambulatory settings - perhaps with ambulatory surgery, but with little or no in-patient care. So I think there will be some consolidation of in-patient services into fewer institutions.
Part I of two parts. Look for Part II in our Health Care section November 3.
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