Envisioning the Future Leadership Team of an Accountable Care Organization

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1 Envisioning the Future Leadership Team of an Accountable Care Organization 100 Top Health Care Executives Share Their Insights Sponsored by: BDC Advisors, LLC American College of Physician Executives Cejka Executive Search cejkasearch.com F4-1211

2 Introduction With the enactment of the Patient Protection and Affordable Care Act (PPAC), the concept of accountable care becomes the linchpin of health care reform. The Accountable Care Organization (ACO) may become the platform from which to deliver the full continuum of care and be accountable for the overall costs and quality of care for a defined population. The sponsors invited C-Level executives of hospitals, health systems and medical groups throughout the United States to share their approach to emerging trends and plans for the future leadership team of an accountable care organization. Survey Demographics The questionnaire was distributed to members of ACPE and executives listed in Billians and other proprietary databases. One hundred questionnaires returned from individuals with a title of President, Chief Executive, Chief Operating or Chief Medical Officer, or Vice President of Medical Affairs are aggregated and reported in this briefing. The 100 responses comprise 76 physicians and 24 non-physicians. Overall, 22% of the respondents were employed by a hospital, 15% were employed by a health system, and 47% were employed by a medical group. 100 Executives Total Physician Executive Non-Physician Executive CEO or President of a Hospital 12% 2% 10% CEO or President of a Health System 14% 4% 10% CEO or President of a Medical Group 15% 11% 4% Total CEO or President 41% 17% 24% CMO of a Hospital 35% 35% 0% CMO of a Health System 17% 17% 0% CMO of a Medical Group 7% 7% 0% Total CMO or VPMA 59% 59% 0% Total 100% 76% 24% Note: Responses may offer useful insights, but are not conclusive or statistically significant. The responses were voluntary and not controlled for a representative sampling. Key Findings Continuum Toward Accountable Care Respondents were asked to select from options that most closely describe their organizations approach to the development of ACO models. Choices included: Defend the Model: Actively strengthen the organization s position in the market through acquisitions, pricing, contracting to prevent the incursion of managed care, employer or physician initiatives to change the market. Wait and See: Maintain and continue to invest in current hospital volume-based model (beds and towers) waiting for payment reform to be adopted before announcing or acting on the need for a business transformation. Hedge Your Bet: Maintain and invest in the current hospital volume-based model but begin investing some profits in building infrastructure and capabilities that will support a business transformation if so required in the future. Begin the Transformation: Decide to fundamentally change the organization s relationship with both physicians and payers, and begin restructuring the leadership and decision-making processes of the organization to manage care across the continuum. Major commitment to primary care through investment in a primary care network. 1

3 Lead the Transformation: Declare the current model dead and set a new direction by aggressively building the new organization capable of offering bundled pricing of services, managing chronic disease in the ambulatory setting, and contracting with payers for quality premiums, a share of savings, and risk contracts. Find a Niche (or Join Another ACO): Recognize that transformation into an ACO is too great a change for the organization to achieve, and pursue a niche that can provide a unique service to the market independently or in partnership with another system. Developing an ACO Model (All Respondents) Defend Current Model 4% Wait and See 6% Hedge Your Bet 19% Begin the Transformation 52% Lead the Transformation 15% Find a Niche 2% Other 2% Organizations characterized their approach toward development of ACO models differently. A greater percentage of executives among the medical group indicated an orientation toward leading the transformation than reported by executives from hospitals and health systems. Developing an ACO Model (Hospitals) Defend Current Model 0% Wait and See 9% Hedge Your Bet 21% Begin the Transformation 58% Lead the Transformation 9% Find a Niche 3% Other 0% Developing an ACO Model (Health Systems) Defend Current Model 7% Wait and See 3% Hedge Your Bet 20% Begin the Transformation 60% Lead the Transformation 10% Find a Niche 0% Other 0% Developing an ACO Model (Medical Groups) Defend Current Model 5% Wait and See 5% Hedge Your Bet 15% Begin the Transformation 30% Lead the Transformation 30% Find a Niche 5% Other 10% 2

4 Growing Leadership Roles for Physicians The respondents shared a significant point of agreement, consistently acknowledging that the skills and training of their leadership team will need to change in order to effectively manage an accountable care organization (ACO). That includes greater representation of physicians within the executive team and increasing the number of physicians with responsibilities at the level of Vice President or higher. Skills and training of the leadership team will change Not Likely 3% Possibly 9% Likely 19% Very Likely 46% Extremely Likely 23% Physicians will be added to the executive team Not Likely 9% Possibly 8% Likely 13% Very Likely 22% Extremely Likely 48% Physicians at the vice president level or higher will increase Not Likely 11% Possibly 17% Likely 29% Very Likely 27% Extremely Likely 16% As the executives envision their future leadership team, there is overall consensus that the team s skills and training will need to change. Additionally, the respondents acknowledge that physicians will be added to the leadership team and the number of physicians with responsibilities at the Vice President level or higher will increase. Just how high may be a matter of debate, according to respondents. On questions about the role of physicians at the highest level of leadership, the survey revealed greater variations in opinions. Views differ with regard to the importance of physicians serving as top executive of a hospital or medical group, and the likelihood they will be considered for system CEO succession planning, when comparing the opinions of respondents who are physician executives with those of executives who are not physicians. The respondents were asked to rate the importance of having a physician serve in various roles as part of a system-level executive team, either as CEO/President of the employed medical group, or CEO/President of the hospital. They also were asked how likely it would be that a physician CEO would be considered for system succession planning. 3

5 Overall, the respondents indicated that it was more important for the medical group CEO or President to be a physician. There was less consensus on the importance for a physician to be top leader of the hospital. There was also less consensus about the likelihood that a physician CEO would be considered for system succession planning. Rate the importance of a physician serving as CEO or president of the employed medical group Not Critical 3% Somewhat Critical 5% Critical 12% Very Critical 29% Extremely Critical 51% Rate the importance of a physician serving as CEO or president of the hospital Not Critical 11% Somewhat Critical 7% Critical 25% Very Critical 29% Extremely Critical 28% A physician CEO will be considered for system succession planning Not Likely 21% Possibly 15% Likely 12% Very Likely 26% Extremely Likely 26% Given the disproportionate number of physician executives who responded to the survey, the overall responses should also be viewed from the standpoint of comparative responses among those who are physicians and those who are not. Looking specifically within the group of respondents who are physicians compared to the group who are not, physicians believe: It is very critical (36%) or extremely critical (52%) that the CEO of the employed medical group be a physician compared with the opinions of non-physicians (13% and 48%, respectively). It is very critical (33%) or extremely critical (27%) that the CEO of the hospital be a physician compared with the opinion of non-physicians (13% and 30%, respectively). It is very likely (25%) or extremely likely (31%) for a physician to be considered for CEO succession at the system level, compared with compared with the opinion of non-physicians (26% and 9%, respectively). 4

6 Leadership Development: Training and Perspectives The consensus is clear that the top healthcare executives expect and plan to effect change within their executive teams. The growing engagement of physicians in leadership roles that are not strictly clinical is a topic of signifi cant exploration and investment. However, formalized leadership training for physicians is not universal. Only about two-thirds of respondents (68% from hospitals, 67% from medical groups and 63% from health systems) reported that their organizations support a formal leadership training program. This briefi ng highlights perspectives shared by 100 top executives. Their insights serve as a stimulus for further discussion and study, with the goal of promoting greater understanding of how executive teams can be formed and enhanced in this challenging era of healthcare reform. About the Authors Dale Anderson, MD, MBA, FACHE Director, BDC Advisors, LLC With 25 years of experience in multispecialty group practice and hospital medical group management, Dr. Anderson brings the perspective of a physician working in large hospitals and integrated health systems in both the fee-for-service and managed care environments. He has a special interest in creating effective hospital/physician networks and structures that optimize the contributions of all participants in delivering superior patient care and service. Barry Silbaugh Chief Executive Officer, American College of Physician Executives Formerly a consultant with Healthcare Performance Improvement in Norfolk, VA, Silbaugh left a 15-year clinical practice of internal medicine and hematology in 1991 for a career in medical management. He has served as the medical director of New Mexico Blue Cross/Blue Shield in Albuquerque, NM; vice president of medical operations for Catholic Health Initiatives in Denver, CO; and was the chief medical offi cer for Consumer Health Care Advantage LLC, an internet start-up company based in Los Angeles, CA. Deedra Hartung Senior Executive Vice President, Managing Director Cejka Executive Search Deedra Hartung joined Cejka Executive Search over ten years ago following a successful career as a healthcare executive. Ms. Hartung has developed a national reputation for excellence while representing leading organizations around the country and building a portfolio of successful searches and expertise in health system, cancer center and academic search. She is an active speaker and author, and has participated in the AAMC Roundtable on Academic Search. Her article on The New Healthcare Leader was selected as one of the Ten Best Articles of the year by the American Hospital Association. About Cejka Executive Search Cejka Executive Search understands the healthcare industry and how to fi nd the candidates who fi t and whose talent and skills make our partner organizations successful. For more than 30 years, we have partnered exclusively with healthcare organizations to identify and recruit talented C-level executives, physician leaders, key members of senior management and academic medicine faculty. For more information, contact Deedra Hartung at or

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