Committed to publicly reporting both the good and the bad

Douglas Hawthorne has served as CEO of Texas Health Resources since that system was formed in 1997.

It’s one of northern Texas’ leading healthcare providers, with 17 hospitals, over 21,000 employees and nearly $4 billion in annual revenue. Named eight times to Modern Healthcare’s list of 100 Most Influential People in Healthcare, Hawthorne announced in January that he would step down from his post at the end of 2014. Modern Healthcare Editor Merrill Goozner recently spoke with Hawthorne about his system’s decision to publicly report its quality measures, its ACO experiences, what his board will be looking for in choosing his successor, and his personal plans after he steps down. This is an edited transcript.

Modern Healthcare: What is the board looking for in a new leader?

Douglas Hawthorne: An individual who appreciates that people will make things happen or not, that’s really what is No. 1. We need folks who understand how we bring together the various clinical components of what we do so that we have consistency in outcomes of our performance operationally, financially and clinically. So the biggest element for the search is to find someone who understands the clinical side of the enterprise and can match it with the other elements of financial and operational performance.

MH: One of the more interesting initiatives you’ve launched in the past year is you’ve become one of the first hospital systems to post its quality data on its website for public inspection. Why did you do that?

Hawthorne: We believe consumers should know how we are performing and to have better information about the quality and safety of healthcare in northern Texas. We believe transparency drives continuous performance improvement through accountability. It’s the right thing to do. As you wrote in your recent editorial, “the future of meaningful healthcare competition lies in ensuring full transparency on pricing, quality and outcomes so that all of the participants in the healthcare marketplace have the information they need to make informed decisions and choices.” That certainly is at the top of our list.

Public reporting will help us document our own care more carefully and drive performance improvement. We think it stimulates people when they see the information to make improvements. So we’ve committed to show it all, both the good and the bad. We will be able to see where we need to drive our efforts to make those improvements as swiftly as possible.

MH: Are you getting any feedback from the public?

Hawthorne: It’s still new. But we’ve had remarkable response to the announcement that we will be doing this, with a lot of applause from the public wanting to be able to see data for the first time that they can understand. There are so many reporting efforts around that oftentimes don’t give clear outcomes.

MH: Early on you were enthusiastic about forming accountable care organizations. You joined the Medicare Pioneer ACO program, but then you dropped out after a year. What went wrong in your view?

Hawthorne: We had one physician group that was more aligned with what was required to achieve this, and we did extremely well. When we added another physician group that did not have that same kind of discipline and performance prior to their involvement, we had a lot of teaching to do. Because many of the patients were not within the Texas Health Resources system, they used emergency facilities and other facilities outside our system where our physicians tried to follow them. Unfortunately, it didn’t work as effectively as it did with the first group. So we felt we needed to step back, do more engagement with the second physician group and improve our own process before we continued on.

MH: At the same time, you formed some ACOs with private insurers such as Blue Cross and Blue Shield of Texas. How is that working out?

Hawthorne: Very well. It opened up some new doors for us to relate to the payers in the Dallas-Fort Worth area to talk about how we can improve outcomes. These conversations were difficult to begin with. They got more comfortable with time. We talked about specifics in terms of paying for performance and outcomes.

As a result, we have seen excellent outcome relationships with Blue Cross and Blue Shield and with Aetna, and we’re currently working with the other major payers to see how we might expand the accountable care opportunity.

MH: Are you contemplating getting into the business of insurance?

Hawthorne: We’ve been there. In the early years before Texas Health Resources was formed, one of our founders, the Harris Methodist Health System, had a very large insurance product. We watched how that evolved as a provider-sponsored health plan and decided that we would rather not take on our own insurance group because we felt like there was some pretty hard competition between the provider side and the insurance side inside our own organization. So at this point that’s not on our list. We will work with other organizations but not invest independently in our own health plan.

MH: Texas has the highest rate of uninsured of any state and yet it hasn’t expanded Medicaid. How is that affecting your bottom line?

Hawthorne: It’s hard to say how it’s affecting our bottom line. What it is affecting is the relationships that we have with the people of Texas. Because we have a very significant Medicaid program already in Texas, we’re concerned that we have divided a very needy population. We’re seeing more people show up in our emergency rooms. But unfortunately, they wait too long to receive care. As a result, the amount of care necessary to get them back to good health is a lot more expensive than it would be had they had the coverage. So we’re concerned about the fact that we didn’t expand Medicaid in Texas. We are certainly advancing knowledge about this with the business community, which must be aligned with us to achieve the expansion. We’re going to take the issue up again when the Legislature meets in 2015.

MH: Do you think it will have a better chance in the future?

Hawthorne: We may need to reframe it a little bit as some other states like Arkansas, Indiana and others have done. Medicaid is a lightning-rod word. How do we bring more people into this coverage beyond just acute care or women and children’s services? How can we bring more prevention and wellness into the equation? So we will repackage it this time a little differently than we did in the first round.

MH: What’s next for Doug Hawthorne?

Hawthorne: Retiring is not a word I can comprehend. So for Doug Hawthorne, it’s refiring. How can I look at some of the things that have been on that bucket list for a while that I now can engage in? Healthcare will always be a part of my continuing life’s work but perhaps in just a little different framework than the CEO seat. But I’m a communitarian, I want to see more things happen where we are extending ourselves out into the community to improve health for the people we serve. So there will be opportunities to do that in a variety of ways. I’ll look back on this journey with wonderful memories and stories about the people who have provided health services to this community.