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Physicians in the C-Suite - Unknown Challenges

PHYSICIANS IN THE C-SUITE – THE UNKNOWN CHALLENGES

Joseph E. Jasmon, American Healthcare Management Group

Steven T. Sullivan, Pearl Meyer & Partners

I. Impact of Affordable Care Act on the Executive Leadership Teams of Care Providers

The Affordable Care Act (ACA) establishes new criteria for the reimbursement of care providers.  The value and lasting impact of care take precedence over traditional criteria like case volume and illness treatment.  Hospitals and healthcare systems are reengineering and restructuring their traditional service delivery models to align with these criteria. Many of these transformations require the medical and clinical expertise of physicians in executive roles to ensure that the strategic, operational and financial changes to care delivery models will result in greater value of service to the patient, with a particular emphasis on prevention and wellness.

With these goals in mind, health systems are quickly moving towards the development of Accountable Care Organizations (ACOs) in order to address the ACA criteria.  According to Donald Sibery, Interim Chief Executive Officer at Renown Health in Reno, Nevada, “Accountable Care Organizations will ultimately become the great integrators, since they will take risks and receive rewards for outcomes.”  Furthermore, hospitals will be required to move clinical data back and forth throughout the continuum of care and this will require physicians at an executive level, as well as at the service delivery level, to drive and interpret this data.  Once the Affordable Care Act is in full swing, Sibery believes, “value will carry the day.”

Healthcare leaders are beginning to identify and implement some of the changes necessary for acute care and post-acute care services to succeed in the ACA era.  Over the past decade, hospitals and health systems have been testing new management models designed to include physicians on their leadership teams.  A variety of models have been implemented, used and discarded.  These efforts at collaboration have not come without challenges from both the federal government and from physicians themselves.

In spite of all of the regulations, the physicians and hospital administrators have continued to create opportunities for collaboration and are beginning to find common ground.  The latest efforts of inviting the physicians into the C-Suite have been met with many challenges.  This article addresses these challenges, which include executive compensation, management and leadership experience, relationships, new roles and bureaucracy.

II. The Change from Private Practice to Administrator

In an ideal world, physicians and hospital leadership would work side by side to treat patients, solve administrative issues, reduce costs and create a more efficient healthcare delivery system.  Left to their own accord, this collaboration could be very successful.  However, continued governmental regulations (i.e. Stark, Anti-Kickback Laws and the Affordable Care Act, etc.) have created unintended results.   According to Sibery, “hospitals and health systems cannot be successful unless they embrace physician leadership at all levels.  The focus needs to change from traditional hospital-focused to physician-focused, with joint or shared responsibilities.”

Most physicians migrating to the C-Suite have been leaders in their practices and, for the most part, that natural leadership skill is innate.  “Physicians need training in management skills, not in leadership; some executives lump these together and that is a mistake,” says Brian Callister, MD, National Medical Director of LifeCare Family of Hospitals.  Callister further adds that ”Physicians need to listen more and learn to manage people and processes; they are usually solo problem solvers and that dog does not hunt in management circles.”

Organizations have also tried coaching, training and mentoring programs.  However, many physicians are very resistant and at times offended by the mere suggestion of additional training, creating inherent conflict between the physician and the leadership team.  The fact is that many physicians believe they are well prepared for the C-Suite, while their existing leadership team has a completely different assessment of their readiness. This dynamic creates less than satisfactory outcomes.

Collaboration among the team is a crucial component in the success of the organization.  Without a resolution to the conflict mentioned, the team and the physicians continue to be frustrated and the physician leader looks for a way out.  In this case, the physician leader’s tenure in the C-Suite will last no more than three years.  Callister also adds, “Some CEOs will leave the physicians out of key discussions and in fact marginalize them in the global strategy.  It is important for the physicians to be included in the overall plan – the inter-relationship is very important to their mutual success.”

Combine the awkwardness in executive skills with the discrepancies in compensation between a physician-executive and a non-physician-executive, and one can understand the animosity that is created.  David Line is the Board Chair of Renown Health System, a 700-bed multi-hospital system in Reno, Nevada.  David believes that “the awkwardness will go away based upon the development of a personal relationship, trust and transparency.” However, the compensation gap still looms as a major issue in the C-Suite.

Hospitals and Health systems, in order to attract physicians, have adjusted the compensation for a physician-executive above normal ranges to meet their existing compensation levels.  This creates a large gap between existing leadership staff compensation and the physician compensation. According to Donald Sibery, “in the early days we had a tendency to pay physicians based upon what they were making in their private practice, plus a little bit more.  Over time we have moved to a more market-based approach, with physician-executives creating their own market value distinct from what they could earn in their clinical practices.”

The compensation gap still creates animosity among the leadership team, specifically with physician leaders who rely heavily on their colleagues to solve problems, decipher budgetary issues and address staffing complaints.  The expectation of higher compensation for the physician, due to their medical education, creates an enormous C-Suite challenge.  “I have seen physician compensation at the C-Suite level exceed that of the CEO,” adds Sibery.

With all of this in mind, the trend toward physician engagement and physician involvement in leadership positions will continue into the future.  In spite of the challenges, these fundamental changes in the C-Suite are positive efforts.  The efforts will continue and will result in bringing together the key components of our healthcare delivery system. 

Making the change from private practice to administrator or executive brings some significant challenges to the physician.   “You are transitioning from being the solo leader and solo problem solver in your practice to a group or shared decision-making process.  This is where the challenge begins,” adds Callister.  Physicians are moving from small environments to large hospitals complete with significant bureaucracy.  According to Sibery, “The slow pace of decision-making will be a challenge. Physicians expect quick action, not slow Committee work.  It is a shock to them to go from individual to team.”

Physicians come into the transition with a lack of exposure to the collaborative efforts taking place in the C-Suite.  They have to quickly become comfortable dealing with payroll and performance evaluations.  They are moving into a complex organization and must learn the political environment and understand that they are now operating in a fish bowl.  According to Sibery, “the physician must be aware of what they say and what they do not say, as those comments tend to ripple throughout the organization.”

The physician must make sure their actions and comments are truly aligned with the culture and direction of the C-Suite.  The relationships between the physicians and the non-physicians in the C-Suite must be clarified.  For example, the non-physician executives see things differently when it comes to clinical measures and outcomes.  Adding the physician perspective offers the opportunity for more clarity and understanding which expands the dialogue significantly.  This provides the physician more of a voice in the process and the decision-making will improve.

In the past, it was assumed that bringing a physician into the C-Suite would significantly change the relationship and access that local physicians had with administration.  On the flip side, the executive leaders felt that they would also lose their access to the local physicians.  “This could not be further from the truth.  With the right physician; they become a new resource, new talent to help the team,” adds Sibery.

III. Leadership and Management Skills

Absent a Chief Medical Officer or Vice President of Medical Affairs, hospital administrators and their executive teams relied on the feedback of the elected medical staff leadership or the most vocal physicians.  Those requests were generally focused around their individual needs for a new piece of equipment or a device.  With a physician in the C-Suite or on the leadership team, the physician can sort through the demands and requests and address the real needs clinically and therefore combine them with the overall needs of the organization to prioritize and focus the best use of scarce resources.

Executives leading healthcare organizations have often been groomed for an executive role for much of their career.  Physicians providing acute care services have been trained to provide quality healthcare.  When physicians are then asked to execute the business strategy of a complex, high-risk healthcare organization, there is often a spread between the skills that are needed to succeed and what’s available.

Physicians wishing or expecting to participate in leadership may decide to voluntarily remediate their skill base by enrolling in formal educational programs, whether in graduate programs or through healthcare education classes.  More recent graduates of medical school may have already received curriculum in management, leadership, hospital administration and business.  However, the effect of long days of work, intense studying during off-hours over many years, and then starting a career after age 30 can limit some of the very skills that physicians may need as leaders.

“Physician leaders are not created overnight”, says Kevin O’Brien a Partner at The Ransom Group, an executive search firm focused on healthcare senior leadership recruitment and based in Columbus, Ohio.  “Success in the C-Suite requires many skills that are unrelated to the training and experience that a physician has amassed throughout their career, including an innate ability to interact, engage and build relationships with people,” says O’Brien.  “While some of those skills may be acquired from healthcare leadership courses, it takes a relentless desire and pursuit of understanding one’s strengths and weaknesses in order to broaden their leadership capabilities.”

O’Brien says that what separates successful physician leaders from others is emotional intelligence, which he says is all about “humbleness, showing empathy, and having an innate ability to read situations and people.”  O’Brien goes on to say that “it is important during interactions with others to have genuine interest in others’ thoughts and ideas.  It’s about being comfortable in your own skin so that you are able to self-reflect, and find imperfections in yourself so that you are able to articulate to others what they are and identify how to improve.”  He has found that while physicians have often been among the smartest people at various stages of their lives, they have not faced business and leadership challenges like those of a non-physician CEO.  Can physicians attempting to make the jump from the patient room to the board room handle it?  O’Brien says “the successful ones will make the transition very effectively if they can develop their EQ (emotional intelligence) to the same level as their IQ.”

Dr. Spencer Berthelsen is the Managing Director and Chairman of the Board of Managers of Kelsey-Seybold Clinic in Houston.  Kelsey-Seybold has been physician-run since its start in 1949, and Berthelsen has been helping to evaluate physicians for management duties for many years.  “We look for communication skills, really listening more than speaking”, says Berthelsen.  “We also look for their ability to explain complex concepts, not necessarily in the present, but those concepts that pertain to the future.  They need to have a solid grasp of economics, and be able to identify those activities or initiatives that will build enterprise value.  Trust is another important quality, which is not just a product of their long tenure, but their ability to exhibit consistent behavior over a long period of time.  We don’t necessarily look for the perfect leader, but rather the ones that have enough skill to succeed broadly.”

Considering the changes that hospitals and healthcare systems are making to traditional service delivery processes under the Affordable Care Act, perhaps a key success factor for physician-executives will be conflict management.  In common medical practices, physicians state the issue, prescribe the treatment and the patient obeys.  As leaders, physicians need to develop an understanding of the causes for disagreement and identify a course for compromise.

IV. Supply and Demand

Care providers are in serious competition with each other to recruit and retain physicians and physician-executives.  The unprecedented demand for physician expertise in the C-Suite far outstrips the supply at present and into the foreseeable future.  According to Linda Komnick, a Principal with Witt/Kieffer, an executive recruiting firm focused on the healthcare industry based in Oak Brook, Illinois, qualified candidate physicians are now looking for the proper setting in which they can grow professionally and succeed. 

Komnick says that many care providers are challenged to develop an environment for physician-executive success, and that this is now critical to attracting qualified candidates.  Potential employers must be able to establish and articulate their physician-executive roles, reporting relationships, governance responsibilities, performance goals and compensation opportunities linked to the organization's strategy and mission, in order to successfully attract qualified MDs. 

The principal challenge on the supply side, according to Komnick, is the insufficient number of physicians who can demonstrate the full complement of characteristics that the industry now demands: a full range of business skills, clinical acumen, emotional intelligence, self-awareness, and the ability to form relationships.  Komnick says that while medical schools are expanding their curricula to include content such as care quality, patient safety and others, and even though some physicians are returning to business school to develop the requisite knowledge, the supply-demand gap will continue to drive the discussion.  In the end, successful physician-executives will need a broader understanding of what it takes to run a medical system than many in those roles now have.

So where do healthcare organizations find these qualified physicians?  Many are utilizing their own home-grown leaders, through the development of leadership academies for physicians.  David Line believes “we will find leaders from among those physicians who serve on our Board and it will be up to us to build leadership programs for those physicians that have the passion and potential to move forward.”  Others will choose the executive search process.  It is yet unclear which method will reap the best results.

V.  Business Strategy and Executive Compensation

Traditionally, physicians and hospital administrators have not always seen eye to eye.  In most cases, their primary involvement with one another revolved around compensation.  While this primary topic of conversation may never change, the dialogue has clearly shifted to include physicians in leadership roles and leading clinical integration change. 

Like any business, hospitals and health care systems need to develop executive compensation programs aligned with the organization's mission and business strategy.  Executive compensation arrangements are typically weighted towards variable pay components, denominated by key metrics that reflect organizational success and are calibrated to deliver higher levels of compensation for greater levels of performance.

The business strategies of many acute care providers are changing and becoming broader to encompass a wider range of care.  Many aspects of financial performance within hospitals and health care systems have historically relied on driving volume over some time period: admissions, medical procedures, discharges, case mix indices, etc.  In the Affordable Care Act environment, providers are positioning care effectiveness, reduced readmissions and various aspects of community health as critical elements of their strategy.  The roles and accountabilities of the executives effecting improvements across these types of metrics will necessarily change.  Many of the leaders of acute care organizations must also develop and execute business strategies designed to coordinate patient care with a wide range of post-acute care facilities.

To the extent that a healthcare organization’s leadership team and Board determine that its business strategy must change to better promote its mission, it’s very likely that the roles and Board expectations of the executive team may also change, quite possibly to include the type of expanded medical and clinical responsibilities discussed in this article.  Then too, the accompanying executive compensation program will change, based on the new or modified roles created and in terms of the metrics and measures put in place to assess performance and progress to deliver appropriate levels of variable compensation.

Compensating the emerging physician-executive roles may present somewhat of a challenge, considering the differences in approach to direct compensation between traditional healthcare executives and those associated with physicians.  To the extent that a physician is hired to be an executive, reliance on the existing pay approach may not promote proper internal and external pay equity.

The base rates of compensation for physicians with clinical responsibilities have typically been driven by some measure of productivity, notably RVUs.  Depending upon the nature of a specific physician’s affiliation (hospital versus physician practice for example), this base rate may be accompanied by some short-term variable compensation component, such as sharing in a cash pool determined by the organization’s performance over a single year against some predetermined combination of financial and non-financial targets.

Direct compensation for healthcare executives, meanwhile, often consists of two or three elements: salary, short-term incentives and, sometimes, long-term incentives.  The base salary typically reflects the importance of the job to the organization, separate of experience and performance.  Quite often the salary is also the basis on which the award levels of the other components are determined.

The short-term incentive is usually tied to annual business targets and may reflect the upside and downside of corporate, group and individual performance levels.  Accordingly, the measures may be corporate, group or individual in nature, and are often based on annual financial and non-financial business targets as well as individual accountabilities.

The long-term incentive element, while less common, is similar in principal to short-term incentives, except the measurement or performance period is two or more years, and the award opportunity is often intended to motivate sustained effort to grow and/or transform the organization over a longer period of time.  While short-term incentive arrangements quite often include a group and/or individual performance component, long-term incentives are typically driven by corporate success only.  Multi-year award opportunities are often much larger than those associated with short-term incentives, and the awards themselves may only generate value when the organization’s financial and/or non-financial performance or overall financial status improves, hopefully as a result of the sustained and aggregated efforts of plan participants.  Actual delivery of long-term incentive pay may occur some years after the date of grant or inception, and the amount and form of payment depends upon the nature of the specific type of plan.

For physicians and healthcare executives, the base rate or salary reflects the value of the role to the employer, and serves as the foundation for the overall compensation program.  The short-term variable arrangement is designed to focus the participant on the organization’s annual plan, often revenue, earnings, performance against budget and/or some specific non-financial measures, along with some individual accountability.  The size of the award varies with performance, lowering the plan costs to the organization if performance is low while providing significant rewards to participants for achieving or exceeding objectives.  The presence of long-term incentives however, is usually only common to executive pay packages and not that of physicians.

As physician-executives in the healthcare industry grow in prevalence, suitable compensation arrangements for these roles must of course reflect overarching business strategy and be aligned with the plans already in place for the other executives.  A second critical consideration in the proper delivery and positioning of compensation is the nature of the individual physician-executive’s responsibilities.  Whether those duties are strategic, operational or financial is a key determinant of the approach to pay.  Compensation arrangements will also be driven by the degree to which the individual maintains responsibilities that are clinical and administrative.  A physician may be deployed full-time as an executive, or may function as a part-time executive who maintains clinical responsibilities (i.e., sees patients, engages in direct care delivery, etc.).

According to Komnick, larger, more strategic roles (e.g. Chief Physician-Executive, Chief Clinical Officer), which occur in larger acute care organizations, are more likely to be full-time executive positions.  The highly strategic nature of a senior executive’s duties simply does not allow time for clinical pursuits.  Physician-executive roles with split duties (for example 70% executive and 30% clinical) still exist however, and will continue to exist.  Komnick says that the clinical/executive split roles are often culturally-driven, based on the type of institution.  For example, academia, in the form of teaching hospitals, often mandates that physician leaders maintain clinical responsibilities for credibility purposes, understanding “what’s going on in the trenches.”

As noted earlier, physician-executive positions are not new.  Quite often Compensation Committees, wishing to provide fair and competitive remuneration and simultaneously acknowledge the unique skill set of physicians, have layered physician base rate equivalent values on top of executive base rates for those with split duties.  The result quite often is an extremely high base rate that may not fit within the employer’s internal equity model, and may surpass competitive market values for both the executive or physician role.

Berthelsen believes that we are entering a “new era in healthcare, and that we need to integrate goals between physicians and non-medical leaders, and establish a long-term focus.”  He says that “physician leaders and lay administrators should be paid the same way for their business contributions.”

It will be possible for Compensation Committees and Boards to establish executive compensation arrangements for their executives designed to align with the new business strategies driving the re-engineering and coordination of strategic, logistical, clinical, quality and financial aspects of acute and post-acute service delivery.  These arrangements will be reliant on the organization’s ability to measure and track the sustained efforts required to implement new coordinated approaches to providing effective care that is more affordable.  Specific compensation components such as long-term incentive plans may motivate team performance, spanning the gap between executives and physician-executives by delivering compensation based on team success.  Such plans can reduce the focus on individual compensation arrangements, internal inequities and unnecessary individual competition.

The types of transformational changes that healthcare leaders need to make are complex and long-term, not unlike those made by leaders of large publicly-traded corporations in transforming their strategies and business models in light of market or financial pressures.  The executive team develops a long-term strategic plan, seeks Board support, and then begins to identify key long-range performance indicators such as increased stock price and total shareholder return.  Similarly, the executive teams of hospitals and healthcare systems, working with their Boards, will be able to articulate a long-range mission and business strategy, and then establish multi-year aggregated targets for improving care effectiveness and cost, performance against budget, community health, and others.  Effecting strategic, clinical, operational and financial performance improvements simultaneously within and outside of a hospital or healthcare system will require an unprecedented level of sustained collaboration among physician and lay executives.  Multi-year performance-based incentive arrangements, aligned with strategically selected metrics, could be utilized to establish a level playing field on which physician and non-physician-executives can collaborate to create successful and effective organizations under ACA.  However, there are limitations to the inclusion of physicians in such executive compensation plans.

VI. The Regulatory Environment

Physician-hospital relationships have fundamentally been driven by the regulatory environment for the past three to four decades.  Those areas that have traditionally come to the forefront most often are Stark Laws, Anti-Kickback Laws, Corporate Practice of Medicine Regulations, Civil Money Penalties and the False Claims Act.  The most recently passed Affordable Care Act will add additional regulations to the mix, some in fact, that are not even written at this time.

The Stark Act originally proposed in 1989, Stark II in 1993 and Stark III in 2007 were intended to prohibit physicians and other healthcare professionals from referring their Medicare and Medicaid patients to facilities in which they have an ownership interest.   The Stark Laws allow for a series of exceptions in regards to these relationships that must be referenced in any contractual agreement involving the exchange of monies between physicians and hospitals, such as executive employment agreements.

The Federal Anti-Kickback Law’s main purpose is to protect patients and the federal health care programs from fraud and abuse.  The law states, “Anyone who knowingly or willingly receives or pays for anything of value to influence the referral of federal health care program business, including Medicare and Medicaid, can be held accountable for a felony.”  This law includes a variety of “safe harbors” or areas in which certain payment arrangements and business practices, if they fit squarely within the safe harbor, can be protected.  This legislation has been in force since 1972 and has been amended on multiple occasions.  In 2010, there were 15 significant cases and settlements affecting healthcare entities throughout the United States.  If the court were to find that a physician-executive received remuneration for referrals to a provider organization for which he/she serves in a leadership role, the penalties could be severe.  For example, those violations could result in up to five years in prison, criminal fines up to $25,000, Civil Money Penalties up to $50,000 and exclusion from all federal healthcare programs.

In some states, the Corporate Practice of Medicine is strictly prohibited.  This practice generally prohibits corporations, entities or individuals that are not physicians from owning, operating or practicing medicine.  The laws vary from state to state in an effort to address physician employment relationships, and for the most part will not be an obstacle to employing physicians as executive leaders.

A Civil Money Penalty is a “punitive fine imposed by a civil court on an entity that has profited from illegal or unethical activity.”  These fines have become more and more prevalent in the healthcare industry and have had an impact on the physician-hospital relationship.  The Civil Money Penalty will continue to be important and serve as a deterrent, as providers move physicians into the C-Suite, to illegal activities.  All organizations entering into agreements must take into consideration the above rules and regulations to avoid entering into a relationship that falls outside of the law.

These regulations have made it very difficult, if not impossible, for physicians and health systems to collaborate together in a meaningful way. The integration of even a well-qualified physician into the C-Suite is a difficult task for both the physician and the leadership team.  In the face of these challenges, why would anyone bring a physician into the C-Suite and encourage such scrutiny?  Rusty Ross, Partner at Morris, Manning and Martin LLP in Savannah, Georgia answers, “It is a need and a want.  Hospitals and health systems need it and physicians want it out of frustration with the practice of medicine.”

Certainly physicians have been at odds with insurance companies, Medicare and Medicaid for many years over reimbursement levels, approvals, denials and everything in between.  Some physicians have fundamentally given up on the process and are seeking other methods to support their families, lifestyle and careers.  They naturally look towards hospitals and healthcare systems both large and small for a solution. 

In every case, it is imperative that any relationship or deal cut between a healthcare entity and a physician be reviewed by a knowledgeable attorney or legal counsel.  With so many variations combined with Stark exceptions, Anti-Kickback safe harbors, and the looming Civil Money Penalties, it is prudent to get advice.  “It is imperative that any compensation arrangement made between an employer and a physician with clinical responsibilities meets fair market value and the relationship falls within safe harbor or is a bona fide exception,” adds Ross.  Ross further explains, “If the physician is leaving private practice completely, the conflict is eliminated.”

Any healthcare provider organization that brings a physician into the C-Suite as an executive employee needs to ensure that the employment agreement, the compensation arrangement and any operational agreement are in compliance with all pertinent regulatory rules and laws.

VII. Leading Edge Effort

One leading edge effort is being driven from a health system board perspective and seeks to incorporate physicians at all levels of the organization.  David Line and his Board at Renown Health System have created a Physician Collaboration Committee of the Board.  “We identified the need to build physician relationships in a very diverse market and we needed input.  We did not want to duplicate other efforts that were mostly operational.  We needed a ‘think tank’ to help the Board develop strategies for the next five to ten years,” adds Line.  Their Physician Collaboration Committee is chaired by a physician board member and comprised of a mix of specialties with both employed and independent physicians that creates a true community collaboration focused on Board initiatives around patient care and community/population health.

Many may ask if it was difficult to get physicians and other members of the Committee to join forces and solve the complex problems facing the organization.  Line believes the process was a natural transition to the groundwork that had already been laid. “We have been engaging our physicians both formally and informally for a period of time,” he says. “This was a natural next step.”

The first initiative taken up by the new Committee (and currently in process) is defining physician integration, which is center to the Committee’s formulation and charter.  What does physician integration mean to the physicians that are part of Renown?  What are the components of physician integration?  How can all of this be defined into objectives for the organization?

The Physician Collaboration Committee’s second initiative (and also currently in process) is identifying all of the quality goals for Renown in the context of its pursuit of being named an Accountable Care Organization (ACO).  Renown has filed an ACO application, and now the thought is that the physicians themselves must formulate the strategy (actually, reformulating aspects of Renown’s existing strategy in some cases) in order for the organization to go where it needs to be considered an ACO.  “The Board is keeping a close eye on this initiative. The Committee is a standing committee of the Board and reports directly to the Board and Medical Executive Committee on a regular basis.  This collaborative effort has become the foundation for the future of the organization.  This is a new type of partnership, one that clearly advocates for community success,” says Line.

In Closing

The Patient Protection and Affordable Care Act changes the fundamental rules that hospitals and healthcare systems follow in order to get paid.  Boards of Directors and CEOs are evaluating the new rules and are making the changes to their organizations they feel are necessary in order for them to succeed.  Some are moving towards their future vision as physician-led providers of highly effective and efficient acute and post-acute treatment services designed to promote prevention, recovery and wellness.  Others see themselves as a blend of that future vision and what they are now.  All will ultimately need to incorporate the critical knowledge and skills of physicians to ensure that these strategic, operational and financial changes result in healthier communities.

Moving physicians into leadership roles will change the dynamics of many executive teams, and quite a few physician-executives will be asked to demonstrate their management and collaboration skills in an unfamiliar work environment.  The Boards of many healthcare organizations will be required to seek out and identify suitable physician leaders, possibly from outside the organization, from what will likely be a short list.  Suitable candidates will be looking for well-defined roles and competitive compensation packages.  Compensation Committees will need to provide executive pay programs that are aligned with their modified business strategies and that do not run afoul of regulatory requirements.

All in all, this new strategic effort can and will be successful.  The collaboration between health care systems, physicians and executives may require some additional work and a lot of patience, but at the end of the day it will lead the healthcare industry in the right direction.  That direction is solving and improving complex healthcare cost and delivery issues, combined with fundamental healthcare change for the better.

Joseph E. Jasmon, M.B.A., B.A. is the Managing Partner and Co-Founder of the American Healthcare Management Group.  Mr. Jasmon has also served as Executive Vice President/Chief Operating Officer for Renown Health System, Executive Vice President/Chief Operating Officer for St.Mary’s Regional Medical Center and Chief Implementation Officer for Caritas Christi Healthcare System.  He served as Senior Vice President, Operations & Development for Memorial Health System, and also as Senior Vice President for Progressive Healthcare.   Mr. Jasmon served as Vice President, Consulting Services for Quorum Health Services, and was Vice President, Administrative Operations, for the University of Illinois College of Medicine.

In his current role Mr. Jasmon assists clients with turnaround opportunities, strategy, enterprise orientation, quality, reengineering, workflow and change management.  Mr. Jasmon has helped his clients to  increase corporate revenue , receive JD Power Customer Excellence Awards, boost consumer preference , capturing additional market share,  complete operational and financial turnarounds, increase gross revenue and raise net income, increase physician loyalty and increase cash collections.

Mr. Jasmon  graduated from the University of Illinois with a bachelor of arts degree and a master’s degree in business administration.

Steven T. Sullivan, M.A., B.A. is a Vice President in the Houston office of Pearl Meyer & Partners. His primary focus and expertise is advising compensation committees and senior management teams within health care organizations on executive compensation matters.  Mr. Sullivan has over 20 years of consulting and industry experience assisting clients in executing their strategic human resources and compensation initiatives.

Prior to joining PM&P, Mr. Sullivan was a Director at Verisight, Inc. (formerly McGladrey’s Human Capital Services Practice).  He also previously served as a Senior Manager with Ernst & Young LLP’s National Human Capital Practice, providing advisory services to both public and private companies; as a Compensation Manager for Andersen Consulting `(Accenture).

Mr. Sullivan’s clients have included such organizations as the American Academy of Pediatrics, the American Society of Anesthesiologists, Athens Regional Health System, Bethesda Lutheran Communities, Chesapeake Regional Medical Center, Froedtert Health, Health Quest System,  JPS Health Network, Regions Hospital, Swedish Covenant Hospital, ThedaCare and Valley Health System.

Mr. Sullivan holds a B.A. from Gustavus Adolphus College, an M.A. from California State University and has completed all academic studies toward an Industrial/Organizational Psychology Ph.D. at the Illinois Institute of Technology.

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