La­bor short­ages are ‘one of the most sig­nif­i­cant chal­lenges’

Modern Healthcare - - Q & A -

In late 2014, Thomas Priselac, CEO of the 886-bed Cedars-Si­nai Hos­pi­tal in Los An­ge­les, sur­prised many ob­servers when he led what some have called Hol­ly­wood’s glam­our hos­pi­tal into the Viv­ity al­liance, a joint ven­ture be­tween seven health­care sys­tems and An­them Blue Cross.

Cal­i­for­nia Bureau Chief Beth Kutscher re­cently asked Priselac for an up­date on a ven­ture widely in­ter­preted as a chal­lenge to Kaiser Per­ma­nente. The con­ver­sa­tion quickly swerved to other ma­jor is­sues con­fronting the pres­ti­gious med­i­cal cen­ter. This is an edited tran­script.

Mod­ern Health­care: In the year since Cedars-Si­nai joined Viv­ity, have you seen growth in terms of pa­tient vol­ume or new rev­enue streams?

Thomas Priselac: Viv­ity’s progress dur­ing the first year was very con­sis­tent with the goals that were es­tab­lished.

As a new en­tity, a lot of time was put into ini­ti­at­ing the in­fra­struc­ture and in­ter­nal sys­tems. Some of the ini­tial cap­i­tal plan­ning will play out over the next sev­eral years. On the en­roll­ment side, the de­sign from the be­gin­ning was to grow slowly.

MH: A large part of the ef­fort was build­ing the data ware­house. How close are you to re­al­iz­ing that step?

Priselac: We’ll be look­ing to se­cure the pro­fes­sional ser­vices in the not-too-dis­tant fu­ture to put a sys­tem in place that will al­low all of that to be cre­ated.

MH: In Septem­ber, CedarsSi­nai ac­quired Ma­rina Del Rey Hos­pi­tal. What is your ac­qui­si­tion strat­egy and are you look­ing for other al­liances? Priselac:

We be­lieve that health­care to­day and in the fu­ture re­quires the wise use of or­ga­ni­za­tions’ re­sources. Ev­ery or­ga­ni­za­tion needs to as­sess where it sits in the mar­ket­place and whether part­ner­ships, or­ganic growth of the or­ga­ni­za­tion, or growth of the or­ga­ni­za­tion through ac­qui­si­tion works. We be­lieve all three of those are rel­e­vant to con­tinue to serve Los An­ge­les and, for our spe­cialty ser­vices, the coun­try.

(Ac­quir­ing) Ma­rina Del Rey Hos­pi­tal was in part a recog­ni­tion that go­ing for­ward, health­care ser­vices need to be more ac­ces­si­ble and avail­able to the pub­lic. Ma­rina Del Rey Hos­pi­tal is a fine com­mu­nity hos­pi­tal. We look for­ward to be­ing able to ex­tend Cedars-Si­nai’s com­mu­nity hos­pi­tal ser­vices through that ac­qui­si­tion.

On the part­ner­ship side, we and UCLA and Se­lect Med­i­cal an­nounced in late 2014 the es­tab­lish­ment of a joint ven­ture to cre­ate the Cal­i­for­nia Re­ha­bil­i­ta­tion In­sti­tute. The de­vel­op­men­tal work re­lated to that ef­fort has been pro­ceed­ing. Con­struc­tion is largely com­pleted. We’re an­tic­i­pat­ing li­cen­sure ap­proval from the state of Cal­i­for­nia shortly, and will be open be­fore the end of the first quar­ter of 2016.

MH: How do you see your com­pet­i­tive po­si­tion in the South­ern Cal­i­for­nia mar­ket­place evolv­ing?

Priselac: The com­pe­ti­tion in South­ern Cal­i­for­nia in­cludes both or­ga­ni­za­tions that are typ­i­cally con­tract­ing with tra­di­tional com­mer­cial in­sur­ance com­pa­nies and Kaiser Per­ma­nente. We con­tinue to be the mar­ket leader in terms of ser­vices here in Los An­ge­les. The (ac­qui­si­tion and part­ner­ship) ef­forts we’ve been un­der­tak­ing, as well as a lot of in­ter­nal work on mat­ters re­lated to clin­i­cal ef­fi­ciency and re­source uti­liza­tion and op­er­at­ing ef­fi­ciency, are all part of po­si­tion­ing us for the fu­ture.

Cedars-Si­nai is a fairly unique com­bi­na­tion of both a large com­mu­nity hos­pi­tal serv­ing the 3 mil­lion or so peo­ple who are im­me­di­ately around us and a ma­jor aca­demic med­i­cal cen­ter.

We pro­vide more of the most ad­vanced ser­vices to the most crit­i­cally ill pa­tients of any hos­pi­tal in Cal­i­for­nia. So the mar­ket­place for those ser­vices is dif­fer­ent than the com­mu­nity hos­pi­tal por­tion of Cedars-Si­nai.

MH: What are the chal­lenges for health­care providers in South­ern Cal­i­for­nia?

Priselac: The la­bor short­ages for crit­i­cal po­si­tions. We see those short­ages only grow­ing. In par­tic­u­lar, nurs­ing and nurs­ing spe­cial­ties, whether that’s in the emer­gency depart­ment, the op­er­at­ing room or the more spe­cial­ized nurs­ing po­si­tions, are in short sup­ply.

From an op­er­at­ing

“Viv­ity’s progress dur­ing the first year was very con­sis­tent with the goals that were es­tab­lished.”

stand­point, Cal­i­for­nia, for all the right rea­sons, has very strin­gent earth­quake re­quire­ments. So in terms of fa­cil­ity con­struc­tion, con­struc­tions costs in Cal­i­for­nia are also ex­cep­tion­ally high. The bud­get num­bers for peo­ple look­ing to build hospi­tals in Cal­i­for­nia range be­tween $3.5 mil­lion to $4 mil­lion per bed.

MH: Has Cedars-Si­nai im­ple­mented cost-con­trol plans?

Priselac: Our op­er­at­ing costs are con­tin­u­ing to rise as both la­bor and sup­plies con­tinue to go up, so a sig­nif­i­cant fo­cus has been on what we call clin­i­cal trans­for­ma­tion—mak­ing sure our pa­tients are re­ceiv­ing all the care that is re­quired, that they’re not re­ceiv­ing things that are not go­ing to add value, and that we’re work­ing as quickly as we can to make sure that peo­ple, be­fore they’re hos­pi­tal­ized, are kept well and kept healthy.

A sig­nif­i­cant ef­fort in our physi­cian-de­liv­ery net­work has been to put in place care-man­age­ment sys­tems that al­low us to pro­vide spe­cial care for the frail el­derly, and those who are suf­fer­ing from mul­ti­ple chronic con­di­tions, in or­der to avoid hos­pi­tal­iza­tion.

For those who do ul­ti­mately re­quire hos­pi­tal­iza­tion, we’ve also put in place di­ag­nos­tic and treat­ment pro­cesses within the hos­pi­tal that move along as quickly as pos­si­ble. We’ve seen a sub­stan­tial re­duc­tion in our length of stay rel­a­tive to pa­tient acu­ity.

MH: How much of your rev­enue is cur­rently at risk?

Priselac: Prob­a­bly 60% to 70% of our rev­enue is in some form of at-risk pay­ment. For the physi­cian de­liv­ery net­work, the at-risk pay­ment is prob­a­bly sub­stan­tially higher, more in the or­der of 80% be­ing at-risk pay­ments of one type or an­other.

MH: Is there up­side po­ten­tial?

Priselac: Yes, for those pa­tients for whom we are car­ing on a cap­i­tated ba­sis. But part of our clin­i­cal trans­for­ma­tion work is putting the same sys­tems in place whether the pay­ment model is cap­i­ta­tion or fee-for-ser­vice. There are ob­vi­ously neg­a­tive fi­nan­cial con­se­quences as­so­ci­ated with putting those sys­tems in place for the fee-for-ser­vice busi­ness, but it’s the right thing to do.

MH: Are you in a build­ing mode? You did a debt re­fi­nanc­ing a few months ago.

Priselac: We have no ma­jor cap­i­tal con­struc­tion projects on the im­me­di­ate hori­zon. Our in­vest­ments from a cap­i­tal stand­point will con­tinue to in­clude, first, the sub­stan­tial con­tin­u­ing in­vest­ment in in­for­ma­tion tech­nol­ogy, which is cen­tral to our abil­ity to de­liver high­qual­ity and cost-ef­fec­tive care go­ing for­ward, whether that’s the things we do here at Cedars-Si­nai that re­late to Viv­ity, or things that we do here at Cedars-Si­nai other than what might re­late to Viv­ity.

We al­ready have a sub­stan­tial built in­fra­struc­ture here at Cedars-Si­nai con­sis­tent with our goal of mak­ing sure our fa­cil­i­ties are the best they can be for our pa­tients and our em­ploy­ees.

Our cap­i­tal de­vel­op­ment ex­pen­di­tures over the next sev­eral years will re­late to the growth and de­vel­op­ment of our physi­cian net­work and other part­ner­ship pos­si­bil­i­ties.

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