Gimme Five
By Shari Mycek
Community Hospitals Collaborate in the Midst of Competition
Community Care 5 (CC5) isn’t your typical hospital collaboration. But then again, neither are the powers behind it.
Pat Martin, CEO of Fisher-Titus Medical Center in Norwalk, Ohio, is a self-described “simple farm boy” who grew up on a dairy farm 15 miles from the hospital. David Norwine, CEO at H.B. Magruder Memorial Hospital in nearby Port Clinton, doubles as an ordained minister. Mike Winthrop, CEO of The Bellevue (Ohio) Hospital, has family roots in the “funeral business.” Al Gorman, the group’s only contracted CEO, at Memorial Hospital in Fremont, Ohio, was once a pharmacist. And Chuck Stark, CEO of Firelands Regional Medical Center in Sandusky, Ohio—the newcomer to the group—came to the table [from HealthSouth] with a strong for-profit background.
“Where these guys come from has absolutely everything to do with why and how this collaboration works,” says Rick Wade, senior vice president of the American Hospital Association, who addressed CC5’s collective hospital board members, executives and medical staff last fall. “If you think of the patience of a farmer and the persuasive power of a minister, you begin to get some idea of whom you’re dealing with—and the scope of what they’re accomplishing,” he says.
Which, quite simply, is collaborating for the higher good.
“When I went to grad school 30 years ago—before ‘Reaganomics’—we weren’t taught the market competition model,” says Martin. “We were taught to do what we could for our communities and to help each other out. CC5 proves that independent community organizations can work together.”
That’s not to say competition doesn’t exist among these five rural north-central Ohio hospitals, each located about 15 miles from the other. Bellevue and Memorial compete fiercely for Whirlpool (their area’s largest employer) contracts; Fisher-Titus and Firelands for OB-GYN and med-surg patients. And some in these parts would say that it was competition that drove the five hospitals together formally in the first place—fearful not of one another, but of the large tertiary centers, Cleveland Clinic and University Hospitals to their collective east, and Toledo area hospital systems to their west.
“Before I was hired, the Cleveland and Toledo area hospitals were looking to acquire or affiliate with these locally owned hospitals,” says Anne Shelley, CC5’s full-time executive director. “And in the face of losing autonomy and independence, each of the CC5 hospital boards chose not to affiliate with the tertiary care centers.”
Still, the reigning CEOs say that as far back as they can recall, there was collaboration among their predecessors. “The CEOs would meet informally as needs arose,” Norwine says. “They would come together around common regional issues that had nothing to do with Cleveland or Toledo.”
But during the 1990s, as hospital merger-and-affiliation mania swept the country, barely a board meeting went by at any one of the five hospitals where the tertiary hospitals’ names didn’t come up in regard to some type of affiliation or acquisition offer.
“We were all wined and dined. We all had our offers, and in the end, we all rejected the big guys’ proposals,” Norwine says.
John Bacon, board chair at Firelands Hospital and a CC5 board member, was born and raised in north-central Ohio. As president of Mack Iron Works, a company founded by his great-grandfather, he knows the area—and its people—well.
“At the end of the day, it all comes back to what binds us—and that’s community,” says Bacon. “All five of these hospitals are small, proud, independent community hospitals that share the same challenges—whether legislation or reimbursement—from a community hospital standpoint. And that’s our common bond. There are so many pressures on community hospitals to lose their identity. But we know it’s possible to provide top-quality care in a larger way and that acting larger doesn’t have to mean acquisition.”
In keeping with this philosophy, in 2000, after years of informal CEO and boardroom discussions, a limited liability company—Community Care 5—was formed.
“Ultimately, there’s a fine line between collaboration and anti-trust issues,” Norwine says. “As our [CEO] meetings became more frequent and more substantive, we sought legal counsel and decided that we didn’t want to form a health care system or a holding company. We want to collaborate where we can, share costs where we can. And that’s where the model came from. We’re not collaboration as opposed to competition; we’re collaboration in the midst of competition.”
All five hospitals share equal (20 percent) ownership in the company. The five hospital CEOs meet monthly, while the CC5 board—comprising each CEO and one hospital board representative from each hospital, typically the chair—meets quarterly. And none of them runs the show.
“Put five CEOs in a room, no matter how well they get along, and you have five CEOs all trying to lead, with no one quite able to figure out who’s in charge,” laughs Memorial’s Gorman. “We found it critical to hire a full-time executive director to oversee and lead.”
Also critical, according to Martin: trustee support. “The whole concept of collaboration must have board buy-in. If the board wants collaboration to happen, then the CEOs will make it work; that’s our job,” he says. “But the board must, ultimately, be committed to the idea. Individual trustees need to understand why their hospital, Fisher-Titus, suddenly wants to collaborate with Bellevue, which also wants to partner with Memorial.”
In CC5’s first five years, there are already several collaborative successes. One of the first was physician recruitment—specialty physicians in particular. “Like signing Babe Ruth,” Martin says, of Fisher-Titus’ and Bellevue’s recruitment of a top Beverly Hills plastic surgeon to the region.
“Recruiting specialty physicians is a way to bring depth to our communities—attract new business and keep our patients in our communities,” Gorman says. “And it’s working out great. We’ve collectively recruited top neurologists, pulmonary specialists, plastic surgeons, cardiologists, whom we would never have been able to attract on our own.”
Now, efforts are under way to attract and maintain radiology technicians. What started as a hospital-based radiology technician program at Firelands Regional Medical Center has since morphed—with a $50,000 contribution from the CC5 and an additional in-kind contribution from Firelands—into an academia-based radiology technician program from BGSU Firelands Campus. This way, students earn associates’ and bachelors’ degrees in radiology and work on-site at the region’s hospitals. And it’s where many of the graduates are choosing to remain.
Collective purchasing is yet another feather in the CC5 cap. Four out of the five hospitals now share a picture archive communications (PAC) radiology system—saving approximately $2 million on their initial investment, according to Shelley. Fisher-Titus, which already had a PAC system when the others decided to collaborate, chose not to switch from recently acquired equipment to the common vendor. Which is perfectly OK with the group. “If participation doesn’t make sense, the hospital doesn’t participate,” Shelley says. That’s the beauty of CC5.
In home health, for example, four of the five hospitals participate in a home health management services organization (MSO). Magruder Hospital does not have a home health program—it has always supported a county health department program. But just as Fisher-Titus did with PAC, Magruder supports the initiative and says that “should the county program ever become crippled,” it will be able to move in to the CC5 home health program.
“Sheer numbers and size make collaborative purchasing a no-brainer,” says David Deehr, M.D., a trustee at Titus-Fisher and a CC5 board member since its inception. “We’re all rather small hospitals, and the reality is, ‘Sure, we can each get someone to talk to us about purchasing a new X-ray system,’ but combine five hospitals, or four, or even three and make it known you want to buy a computer system or an MRI or a CAT scan, and everybody’s knocking on your door.”
Collaborative purchasing is only part of CC5’s success story, however. Nearly everyone involved—from Shelley to board members to the CEOs themselves—point to a critical success factor that may be difficult to replicate in its entirety. That factor is the dynamic of the CEOs themselves—their chemistry, their camaraderie. “We actually like one another,” Norwine says. “Our wives like one another,” laughs Martin. “We socialize.”
At a recent CC5 meeting, Bob Wise, board chair at Memorial Hospital, speaks of the admiration voiced by other board chairs watching the CEOs’ casual banter. “It’s really satisfying for all of us to see five CEOs from competing hospitals get along so well, to watch how they’ve come together around common issues and interests and put aside competition,” Wise says. It’s a concept that has dumbfounded many.
“I’ve had other CEOs come up to me and ask how in the world we do this,” Norwine says. “They said that when they tried to bring their three neighbors together to have lunch there was suspicion, question of motive, and that it wasn’t good for them to be seen together in public.” He continues, “A few years ago, Mike [Winthrop of Bellevue] and I spoke to a group in California about what we were doing here. And they were just scratching their heads, most uncomfortable at the idea of small hospitals coming together with no ‘Mother House,’ no ‘King Pin.’ We’ve demonstrated [collaboration] can work. But I can’t say exactly why or how. I know that, at the core, there must be trust. And I do think personalities come into play—that a lot of our success has to do with the dynamics of the group and the history of collaboration that went before us.”
Those familiar dynamics were tested for the first time three years ago when Firelands’ new CEO, Chuck Stark, a Duke graduate with a background in the for-profit health care sector, came on to the playing field. Like any new CEO with a job to do (in this case, the job entailed a financial turnaround), he put 100 percent of his effort into running his hospital.
“I think there was some apprehension that, being new to both the hospital and the region, he might not buy into the CC5 concept,” says Shelley. “And he definitely made us all rethink things—think larger.”
But three years later, CC5 is still intact and looking ahead to new ventures, namely a shared bar-coding system. All five hospitals have filed an application for federal funding and are currently awaiting word regarding financial support. With a few of the five CEOs nearing retirement, there’s likely to be more new CC5 blood arriving in the next few years. And with it, Firelands’ board chair Bacon stresses the need for both time and trust.
“Any new person will change the dynamic,” Bacon says. “But if there’s trust—especially in the board that is doing the hiring—the over-riding value of the [CC5] organization will prevail in blending that person into the culture. Our board bought into the CC5 concept, and during the recruiting phase, our values as a community hospital came through. Chuck knew, in taking this job, we didn’t want the 10,000-pound gorilla tertiary centers taking over. But at the same time, we were open to collaboration.”
Trust works in many ways, of course.
“When the CC5 concept was first introduced to our hospital board, there was some trepidation,” continues Bacon. “But we all had a great deal of trust in our CEO at the time and in his recommendation that we should start moving in this collaborative way. And we put [our] faith in him. We didn’t know for sure what we could ultimately do together, but we trusted our CEO and, surprisingly, those on the other hospital boards whose reputations we knew (this is a small town) enough to try. Competition is a funny thing. Yes, that person sitting across the table may be a competitor. But, as in any business, there are competitors you value—whom, if you have to lose, you’re glad to lose to [them] because you like and respect them. And that’s what we have here, a true personal respect for one another.”
Does the collaboration always work perfectly? “No,” says Gorman. “But overall, it works well. We’ve learned to respect each other’s differences and agree to disagree. We also understand that not everyone has to play [all the time]. There’s no rule that says all five hospitals have to participate in every initiative the CC5 does. There does need to be trust and openness—even beyond CC5. If something is bothering me—say at Bellevue—I will pick up the phone and say, ‘Mike [Winthrop], what’s going on?’ Our relationship is strong enough that we can do that.”
“Every single one of us realizes that we’re individually stronger if we cooperate collectively,” Norwine says. “And that trust is key. Yes, my good friends advertise their hospital services in my newspaper. But I have absolute confidence in every one of these CEOs that they respect the relationship. And if, down the road, they do something that’s detrimental to my hospital, my take will be that they had to. This is collaboration in the midst of competition. No one is asking anyone to put their hospital’s best interests aside.”
Shari Mycek is a writer based in Belle Mead, N.J.
A ‘To Do’ List
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Because there is no blueprint, no formal model for collaboration, we asked the CC5 CEO and trustee teams to identify, from their experience, some steps that helped them form a collaborative network. Here’s what they had to offer: 1. There must be a need—a reason, a common cause—to bring you together. And that common mission must be shared by every member. 2. Hire a part-time or full-time director to lead and coordinate the organization. One of the CC5’s greatest challenges was getting five CEOs in the room together at the same time. Scheduling conflicts are huge. An added bonus to having a director is that once ideas have been introduced, the director then investigates the legality and merit of pursuing them further. 3. Agree it’s OK to disagree. 4. Agree that not every hospital has “play” every time. 5. Start with a simple task—get a few hits before you aim for the home run. Example: Recruiting physicians was relatively easy for CC5; bar coding on medications for all five hospitals is proving trickier. 6. Educate the collective hospital board members, executives and medical staff annually. It’s a way for them to get to know their colleagues at the other hospitals and to become familiar with the collaborative mission. Solicit outside speakers [Note: CC5 hosted AHA’s Rick Wade in 2005; this year’s keynote will be futurist LeAnn Kaiser]. 7. Trust and respect one another. |
This article 1st appeared in the December 2099 issue of Trustee Magazine.
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