Medical News Interview, December 2010

Dec 28th 2010

Below is the full transcript of an interview with Joe for the December issue of Medical News. The interview covers important ground on a wide variety of topics, and provides good insight into the future of long term care from Joe’s perspective.

Signature Healthcare’s move to Louisville was a significant boost to the healthcare economy. Can you talk about your reason for selecting Louisville?

Really, a confluence of reasons made Louisville the best choice for Signature. We had four key goals in our relocation search: access to the best healthcare talent, a cost-effective headquarters, strong research commitment and real university partnerships. In the end, the opportunity to enter one of the most creative healthcare provider markets, work side by side with some of the best senior care companies anywhere in the U.S. and help found our state’s first international center for innovation with the University of Louisville and other state leaders was too hard to turn down. Remember, much of this superior talent that attracted us to the state was generated by a diverse collection of educational institutions, all of which continue to bring educational excellence into the healthcare workplace. This only increased our confidence that this was the one place where our aggressive growth plans could be achieved and disruptive innovation could happen. We have already engaged our leadership team to view clinical education opportunities in a new light that can give us a healthcare leadership pipeline.

Perhaps most important, Louisville is home to six of the top 10 senior care companies in the United States. The power of this economic cluster model will be transformative, giving Louisville a competitive advantage and making it the idea capital of the world.

What do you see as the future of healthcare and innovation in Kentucky? What do we (as a community) need to do to move forward as a leader in the business of healthcare?

Decades of solid groundwork gives us the ability to capitalize on the explosive intersection between healthcare services and new technology like no other location, resulting in a collective opportunity to create our version of the “gold rush” for Kentucky.  We all know the story of the demographic explosion in the U.S., but remember, it is an even greater problem and opportunity in the international communities, and we can play a role in it.  My time on the University of Miami healthcare sector board made me see healthcare solutions without borders and with multi-layered connectivity. Someday soon, our healthcare world will be flatter as a global industry, just like Friedman described in his classic work.

It is concepts like healthcare tourism, international telemedicine to save isolated communities, personalized medicine through telepresence, temporary physical space conversions, development of healthcare delivery systems with surge capacity, or cell culturing in the lowest-cost settings–all things we would not have thought possible just decades ago–that will impact us as the ripple effect accelerates. There will be constant reductions in physical space boundaries. This transcends what we may think about in traditional healthcare providers integration, because it’s fueling strategic moves to new systems.

For all of us who want to contribute to improved public health, collaboration will be a key factor in making Kentucky a healthcare leader. Collaboration is driven by two key factors, uncertainty and explosive growth, both of which are occurring right now. It’s a time to engage, not to be skeptical. It’s time to leave behind biases and a prior-experiences-only mindset, and realize it is already going open source. Thousands of new conversations between the private and public sector need to start because deeper partnerships will need to occur.

In early 2010, our industry saw passage of Healthcare Reform. What are your initial thoughts on the program and the overall affect it will have on the healthcare industry in our region?

The multi-decade debate over whether healthcare is a right or privilege has reached a tipping point of moral obligation. With the reform legislation, we have decided it is a right, but how we administer that will be an ongoing discussion for years to come. This means taking a deeper look at outcomes, pay for performance, utilization shifts and best practices. The goal is to drive down costs and improve quality through collaboration, in order to be help America regain its competitive advantage. How we really achieve that may not come from healthcare reform, but a new mindset by healthcare leaders and more aligned risk sharing.  This legislation just made healthcare a topic of discussion at the dinner table and at cocktail parties like never before.  It created a constant dialogue about healthcare for all of us.

One of the concerns raised over the past 12 months is the potential shortage of physicians in our regions.  Are there things we can do to make our region more attractive to physicians?

I think it’s more about finding the root causes of both the shortage and the new phenomenon labeled physician migration.  The projected shortages by specialty can shift with any material change in utilization, but the loss of most of our gerontology programs at the same time of the demographic explosion is a real problem, because of higher acuities throughout the post-acute care sector.  I believe we need to take diligent looks at the length of time our medical education programs take in the U.S. compared to other countries, the excessive costs of medical education, the skyrocketing costs of medical malpractice insurance and financial alignment, including equity structures that contribute to the growing trend. At the same time, I see physician migration might be an even bigger problem because of the rise of hospitals, fledgling rural health care systems and medical extender options. These are making us think about what structure is sustainable.

Outside of your thoughts on healthcare reform, are there other changes our industry needs to make in order to improve the system as a whole?

Healthcare reform may cause short-term uncertainty, but there are definitely emerging trends that are more material in nature than the current legislation.  I believe consumer transparency will create new demands that force provider change like never before. Viral access to information is going to grow astronomically, and quickly, so this will be the first highly-informed consumer group in the history of healthcare.  I think as society comes to moral terms with them, game changers such as predictive (illness) healthcare can save lives and reduce material costs if widely adopted, while regenerative medicine will force re-engineering of large parts of our acute-care system. These three emerging trends are most likely larger in scale, and new market forces that will be larger than current reform will create hundreds of newly-innovated companies and new partnerships like never before.

As a community, what can we do to help our region be a better place for businesses that work in, and support the healthcare system? What suggestions would you make to our leaders in order to make Kentucky a better place for people working in the business of healthcare?

I think our tenacity and stability gives Kentucky a long-term lens that makes us understand the challenge. We have a strong history of healthcare entrepreneurship and a wealth of TQM, lean design and cost vs. quality knowledge from our manufacturing history, combined with universities that have set up infrastructure to deliver the acceleration of knowledge transfer, that enable us to capitalize on both.

By taking the long view, we are already seeing the state supporting business development like never before, incubators that are already up and some in concept phase, groups of new phase 1 angel investors, a university-based innovation center and best practice methodologies to capitalize on commercialization of academic research, all of which will help develop start-up companies quickly. Our lenders and investment groups need to realize they are funding a third gold rush, and access to staged capital and how we manage this will affect our ability to meet the new demands.

I see movements to re-deploy expertise that’s fundamentally sound in any application–transferring principles and skill sets deeply rooted in the manufacturing industry to healthcare, for instance, has worked well in our management team. Having a low cost of living is more important than ever, and a value-based workforce provides a good foundation to build from.  We were never scared of hard work in Kentucky. Other factors that will help leaders develop competitive organizations are the significant improvement in our university-based rankings, our favorable location and access to quick distribution and supply chain management. Combined, these factors will help Kentucky maintain, grow and prosper.

What do you expect to be the hot topics in your industry in 2011?  Do you see any significant shifts in healthcare business models?

Changes related to how we get paid in our Medicare system at the same time Medicaid is experimenting with new models to lower costs will be a challenge for all.  Many long-term national leaders were forced into bankruptcy just a decade ago, so this modification of PPS /MDS 3.0 will continue to be a topic of discussion for us in senior care during 2011.

Meanwhile, fears of healthcare reform could plague innovation and growth into 2012.  The learning curve involved with payment methodology changes could breed uncertainty and fear, and slow growth. In a blue ocean period of innovation, we don’t want leaders to be so risk-averse and try to protect ourselves that we miss a key opportunity to move ahead of other states.  We need to keep the balance between short-term stability, clinical excellence and funding of innovation as a primary framework for the next few years.

From an innovation standpoint, are there programs that you have seen outside of our region that you would like to implement in Kentucky?

We are looking at everything.  We are close to utilization of the international model for healthcare leadership competency that would help everyone see the skill sets needed to be the industry leader. Adoption of this in Kentucky could help everyone. We watched the entry of The Scripps Research Institute into south Florida closely, and its growing impact on the area.  We visited wet labs, spent time at simulation labs, met with cutting-edge educators and sent our entire to team through University of Miami’s healthcare-related MBA program to create awareness of possibilities.

We think it will require global collaboration, similar to the manner in which the University of Miami is expanding their lens and assembling a kind of intellectual repository for international white papers and public research in other countries. Look at Eli Lilly’s relationship with the Rose-Hulman Institute and what great things are coming out to bring real change.  Later this month, we’re going to another European conference in Germany to test innovations and tell them why Kentucky could be a partner in distribution and logistics.

We were impressed with Kaiser’s simulation center and plan to test innovations there in the future.  We are studying strategic moves made by Vanderbilt on combining provider alignment with research that we could do here.  We’re also looking at joint ventures and product licensure through the Kauffman Foundation’s center for entrepreneurship because there are world-class models already available, and we do not have time to recreate the wheel.

They all have ideas, and we are working to actualize them. Our board is involved in other senior care initiatives across four other regions in the country, so we try to see it all.  We see a theme: open the borders, start the conversation, and see the potential.

What has the evolution of healthcare looked like in our region? What do you see for the future?

Louisville and the state of Kentucky have been solid hospital communities with deep roots in healthcare entrepreneurship. That sometimes surprises other state leaders because we all have short memories, forgetting our amazing history in developing national organizations, especially for a relatively small state.

Currently, we have some of the top providers in all sectors living here, or did at one time. For example, I see the impact a ResCare has nationally, the Kindred leadership role in policy and programming, strong historical growth at organizations like Almost Family and dozens of niche-based healthcare companies that will be industry champions within the next decade. But there may be no greater example of Louisville’s healthcare legacy than Humana. They validate the notion that great companies adapt with changing times, and there are few 50-year-old, for-profit companies that have continued to reinvent themselves as Humana has. With 6 out of the top 10 healthcare companies in the region, it is not a strategy of micro-competitive battles but a chance to develop conferences and forums right here that could have national implications. If we embrace a wider force of outside influences and full collaboration, even in the uncertainty of the time and given the explosion in demographic growth, it could happen here.  In coming back home, my daily dream is to have Signature assist and help all of us become a beacon of light for healthcare innovation, for the region and beyond.

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