Hartford Business Journal

www.HartfordBusiness.com November 16, 2015 • Hartford Business Journal 5 Hospital CEOs grapple with 'broken system,' funding worries By Matt Pilon mpilon@HartfordBusiness.com I f 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 mis- aligned economic incentives and worries over budget cuts and government reimburse- ment, 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 sys- tem, 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 pro- viders are often paid per test or procedure, rather than for their performance in improv- ing health outcomes. Doctors are also incen- tivized by a desire to avoid expensive mal- practice 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 incen- tivized to do that." That's slowly changing, par- ticularly in Medicare, which expects 50 percent of its pay- ments 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 compa- nies 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 Asso- ciation, which just 24 hours ear- lier 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 respond- ed to hospital gripes over the past several months by criticizing executive pay and bud- get 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 nec- essary, because I'm worried someone from [the Office of Policy and Management] is sit- ting in the crowd," Barwis said. n DESIGN/BUILD SOLUTIONS…ONE SOURCE Only one company can build, power, protect, and maintain the critical systems in virtually every type of facility. We are trusted to manage projects from concept to completion. We are experts in: Design/Build Pre-Construction Services LEED Capabilities 860.871.1111 Toll Free: 800.741.6367 nemsi.com License #'s: E1-104939 • S1-302974 • P1-203519 • F1-10498 • SM1-192 • MC-1134 MECHANICAL • ELECTRICAL • PLUMBING • SHEET METAL • BUILDING AUTOMATION • FACILITIES SERVICES P.O. Box 2468, New Britain, CT 06050 800.969.3837 nteriors.com Summer, Fall, Winter, Spring Keep your exterior colorful and festive year round with our exterior seasonal program! indoor / outdoor plantscapes • holiday decor PDS has been meeting the needs of the construction industry since 1965. Our dedicated team of design and construction professionals welcomes the challenge of serving its past and future customers on their most demanding projects. Guida's Dairy | New Britain, CT PDS Engineering & Construction served as Design- Builder for the construction of a new milk and ice cream processing plant for Guida's Dairy, one of the largest independent dairies in New England. In order to maintain an active loading dock during construction, sheet piling was used as a temporary support while the 16' concrete retaining wall was built. The second floor was designed to maintain 600 pounds per square foot. Total Project Size: 25,000 SF 107 Old Windsor Road, Bloomfield, CT 06002 (860) 242-8586 | Fax (860) 242-8587 www.pdsec.com PDS EnginEEring & COnsTRuCTiOn, inC. Design BuilDeRs • geneRal COnTRaCTORs • COnsTRuCTiOn ManageRs SPoTlighT on: inDUSTRiAl Elliot Joseph, CEO, Hartford Healthcare Vincent Capece Jr., CEO, Middlesex Hospital Kurt Barwis, CEO, Bristol Hospital

• Cover