St. Raphael’s youthful new CEO says he and his hospital are in for the long haul
On July 29, 1970, Christopher M. O’Connor was born in what he now refers to as New Haven’s “other” hospital. Following a childhood growing up in Westville, he enrolled in George Washington University, where he earned bachelor’s (economics) and master’s (health service administration) degrees. While in school he worked part-time as an emergency-room technician at the Hospital of St. Raphael (HSR). Last October 1, O’Connor returned to HSR – this time as president and CEO of Connecticut’s fourth-largest (511 beds) acute-care hospital. Before that he was president of Caritas St. Elizabeth’s Medical Center, the 340-bed flagship of a six-hospital system affiliated with the Archdiocese of Boston and Tufts School of Medicine. He is a fellow of the American College of Healthcare Executives (ACHE). BNH interviewed O’Connor on July 8.
The hallmark of your tenure at St. Elizabeth’s was its financial turnaround. What were the main challenges there, and how did you address them?
The Boston health-care market has gone through significant changes with ‘RomneyCare,’ [a/k/a] the Commonwealth Care Plan, which is similar to what is envisioned [under the federal Patient Protection & Affordable Care Act]. It expanded access but what it didn’t do was to provide any significant access on the primary-care front. We had a strong push on our expense base; trying to manage more efficiently was the thrust of our turnaround plan. But we also coupled that with growth strategies and hired over 60 doctors the three years I was there, including more than 20 primary-care providers. That was our primary focus.
How does that compare with the challenges here, and what exactly needs to be done to place this institution on sturdier financial footing?
There was a great deal of effort that had already begun [before O’Connor’s arrival] with the hiring of [Lawrence E.] Larry McManus, our chief financial officer, two years ago. He implemented a financial bridge plan effort that was an overhaul of our operations to get our financials on a firm footing. We went from a $35.8 million loss in 2008 to just under $18 million in 2009, and we’re budgeted to be just under $3 million [loss] in 2010. That’s a pretty steep trajectory toward getting our head above water, which we anticipate [profitability] in 2011. This was a longer-term [initiative]; we didn’t want to reach profitability at the expense of safety, quality and culture, which are all critical factors for our long-term success. This is going to be a complex [financial environment] in health care that won’t end in 2011 or ’12. Our challenges are only going to get steeper as we go forward.
Many of the state’s hospitals are feeling pain from the recession’s impact on their investment portfolios. What is the extent of HSR’s reliance on investment income vs. operating income, and how great a hit has the former taken?
We did see significant losses in ’08 and ’09 in the investment portfolio. Of that 2008 $36 million loss, $25 million was in operations, so the remaining $11 million was in investments. In 2009, $10 million was a loss in operations [income], so about $8 million in investment [losses]. We like many others were probably heavier in equities than we should have been, in retrospect.
‘In retrospect,’ indeed. Also, what’s the outlook on changes in reimbursements for Medicaid and Medicare?
So how do you address that equation?
Improving our quality; implementing pathways and protocols that streamline care and provide it in the least costly manner possible — which [may] mean outside the acute-care [hospital] setting. And that’s going to be part of the excitement that the federal health-reform bill begins the dialogue around — there’s this language called ‘Accountable Care Organizations’ that are really [intended to examine] how do we integrate the community to the hospital to the post-acute care settings — long-term care, home care? How do we create connectivity that doesn’t exist today? [Right now] we’re all operating in silos. How do we create a shared information platform? How do we operationalize different quality protocols that are much more effectively driven out of the physician’s office? And how do we look at reimbursement, which ultimately may change as a result of federal health-care reform that may create a bundled payment system that not only looks at how we respond at the hospital, [but also] home care, long-term care all bundled into one payment. The incentive to providers is to drive that cost down, while keeping the quality high.
Overall, what will be the long-term impact of the federal health-reform bill on hospitals such as yours?
It’s creating a new realm of thinking about the delivery model. What got us to where we are today will not get us to where we need to go tomorrow. Our ability to adapt and think of new and innovative ways will be paramount for success going into the future. How do we derive for a patient — who ultimately is the consumer in our model — a better outcome, and do it in a way that’s more effective for them? No patient wants to come to a hospital, and for many [chronic medical conditions] it’s far more efficient to have [appropriate treatments] done in a physician’s office in the community than in a hospital. But how do we create the connectivity of information and protocols that makes it efficient and driven out of a standard set of process, versus the current way that we do it, which is very cottage industry-esque, with each doctor [treating similar conditions] differently. We can do a much better job if we connect between the physicians, the hospitals, home care, etc. That will yield better outcomes.
What about the insurance side?
There is a great deal of downward pressure from insurance companies to decrease costs. I talked about the underfunding of our government payers — Medicaid and Medicare do not pay costs. So we shift that cost to the insurance industry, and they are passing that cost on to employers. That model is going to get disrupted with things that we’ve seen — here in Connecticut we’re seeing downward pressure on what rates the insurance companies will be able to charge. That creates pressure to pay the providers less. There’s wide agreement that the model cannot continue in its current form. Businesses can’t keep providing the cost-shifting balance that the provider network needs over the long-term. The question becomes what’s going to happen on the government-pay side to sustain it over the long term. We can’t continue to afford to provide the services that we [now provide] for the 60-plus percent of our patient population who aren’t paying the cost of that care.
I understand you recently created a new position — chief quality officer — that’s filled by CMO Alan Kliger. Can you talk about this new focus on quality — doesn’t it imply that the hospital didn’t care about quality before?
Quality is a very vague term to the average consumer. But ultimately the education [about hospital performance] is taking place every day, with people going on to the Internet and reading what outcomes [individual hospitals produce] — there is public reporting of certain quality measures that we all participate in. We have hospitalcompare.gov, a site that people can go on [to compare hospital performance] in things like infection rates, re-admission rates, etc. Because we have highly trained, highly skilled physicians doesn’t necessarily mean that we’re providing highly valued outcomes. So linking what our actual performance is, being transparent about it…We’re going to be rolling out a website that will report a lot of this data and try to educate the consumer about what it means. It adds value to the community if we can provide [information documenting] where we are. Plus there’s a natural Hawthorne effect, where if we’re measuring it, and we see that we’re not as good as we think we can be, we get the momentum to innovate and think critically about the way we’re providing those services and improve those outcomes. It’s important for us to do that in general; but we haven’t [previously] approached it in a way that is forward-thinking.
HSR has the Fr. McGivney Cancer Center; now Yale-New Haven Hospital has gone one better and opened up its new Smilow Cancer Hospital. Do people here see that as a competitive power play to usurp the ‘cancer business’ from this hospital?
I don’t see them as necessarily competing. Our patient volume is community-focused and we believe we have a really good product to offer in cancer services that are community focused. Our ability to relate to a patient who is undergoing cancer treatment for things that are not so esoteric — we don’t have the Phase I clinical trial capability that Yale does or [the ability to treat] those unique cancers that really need to be in a large academic medical center-type setting. Things like breast cancer, prostate cancer, colon cancer — we’re very capable of treating and can do it in a very personalized way that adds value. We can do it in a community setting, in a place like Hamden [campus of the McGivney Cancer Center] so patients don’t have to come to a large urban hospital. It’s a more private, personal approach to how we deliver to the way we deliver cancer services.
Doesn’t ‘cost control’ in the long run mean either rationing care, paying health-care workers less — or both?
Not necessarily. We’ve made great strides in reducing length of stay in the hospital for many illnesses. Technology has been introduced [to make many surgical procedures] minimally invasive. That creates a challenge on the provider side because we obviously have to pay for that technology, and it’s not cheap. But once you integrate that technology it decreases the overall [cost of care].
What was your expectation coming here and why are you confident that the community can financially support two comprehensive hospitals like St. Raphael’s and Yale-New Haven?
The reason I came back to New Haven was that I believe in what St. Raphael’s is doing and in the people who are here. I am 100-percent confident in the care-giving capability that St. Raphael’s offers. The people here are second to none — and that, ultimately, is what we provide. In terms of can [New Haven] support two hospitals, we’re both busy. Our ER [emergency room] volumes are both up; there is still a need to access the high-end, quality care that both institutions fulfill in different ways. So as long as that demand is there, I don’t see any reason to believe that there cannot be two sustainable acute-care institutions for a city and region of this size.
So if you had to put money on whether this hospital will be here in 20 years?
I’m all in. We’ve been here for 103 years, so I think the next 20 will be easy.
What has been the biggest surprise since you started on the job, for better or worse?
What’s been happening on the state and federal level. There’s nothing on Chapel Street I can point to that’s been surprising; I think I am more confident of the capability of St. Raphael’s from being in this role for the time I’ve been here.
Putting your St. Elizabeth’s hat back on: Since ObamaCare is based to a large extent on the Massachusetts model, in your opinion is ‘RomneyCare’ working or not?
It doesn’t work. It doesn’t work because it didn’t get to that value equation I talked about — it didn’t [address] the quality side; it focused only on the cost side. If you’re going to be effective, you have to find ways to be more quality-driven [in addition to cost-driven] as well. That’s something we have yet to work out [in federal health-care reform]. The challenge is that we can’t provide all things to all people at all times — and still drive down costs. That’s something the public [sector] is going to continue to wrestle with.
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