Mercy

CHAPTER 22

Allyson led Romey into Suburban West’s expansive boardroom. The members-four men and two women, business and community leaders from the western suburbs of Boston-sat along one side of the long cherrywood table. Allyson took a seat next to the vice chairman of the board, an owl-faced man in his sixties named Thomas Winn. Romey wore his best suit to the meeting-a solid blue Paul Fredrick number that hung just right across his shoulders and had a slimming effect when buttoned.

Tremendous effort had gone into preparing for this meeting, and Romey felt confident the outcome would be in his favor. He also came with more than just assurances of better days ahead. He could not simply offer up a carrot and expect these seasoned business leaders to follow him, salivating. He was no snake oil salesman. Romey had to guarantee the reward and thereby assume most of the risk, eliminating at least one major obstacle the board might present. The biggest wild card remained Allyson. Would she play Romey’s game, or a game of her own?

Instead of sitting, Romey placed his briefcase on a chair and pushed it away, making room for him to stand. Standing made his short stature a benefit, as it allowed him to look down to make eye contact with each member of the board seated across from him.

He began immediately, with no introduction. He was on the agenda, and he had seen the e-mail that went around with his bio attached. No reason for redundancy. Administrators like Romey did not need an M.D. degree to be respected. They needed only to produce results, which Romey’s resume supplied in spades. He had climbed from assistant comptroller at White Memorial to comptroller, with no other candidates interviewed for the position. Romey, who was a wizard at hospital finance, had saved the CFO from his own idiocy on many occasions. The CEO back then took notice, to the point of replacing the CFO with Romey. In this new position Romey pulled out all the stops and the hospital began not only to improve its financial position, but to flourish. When the CEO retired, the board wanted to continue the hospital’s moneymaking ways and promoted Romey to the head position. He had never given the board cause to doubt their decision, something the White Memorial balance sheets made quite clear to the board at Suburban West.

“Health care is a changing industry and I am afraid, my friends, that your small suburban hospital is a dinosaur.” That’s it, Romey-start ’em off with a bang. He paused for effect.

“Even a repeal of the Affordable Care Act won’t change what is afoot,” he continued. “The changes being driven by Medicare are being picked up by private insurance plans and health systems. To profit in this new ecosystem, providers must become better, smarter-in a word, healthier. The job of the health system is to provide the right care, in the right place, at the right time.” Romey could quote the Center for Medicare and Medicaid Studies the way Shakespearian scholars could recite a sonnet.

“CMS wants all Medicare patients to be served by a broad-based accountable care organization,” Romey said. “And as we all know, Medicare is the bread upon which we spread our butter.”

A board member seated across from Romey spoke up. “What is an accountable care organization? I’ve heard the term tossed around plenty of times but never quite grasped the concept, I’m afraid.”

Romey returned a smile. The woman who spoke was Lydia Dutton, shorthaired with a pointed gaze. She was the CEO of Dutton Capital, a financial services firm headquartered in Worcester. Romey had come to this meeting armed with a deep knowledge of each board member. Not the sort of sordid details he had dug up on Allyson Brock, though he would gladly go on another hunting expedition if any board member got in his way.

“It’s a fine question, Mrs. Dutton,” Romey said. “An ACO is a network of physicians, outpatient services, inpatient care, and other services like rehab and home health care. The goal of every ACO is to share risk with Medicare and private insurers. Some patients are sicker, some are healthier, but in the end the profits are larger because the network has cost efficiencies and is better at absorbing the cost of care differences.

“But the most striking difference in the ACO model is how we get paid,” he continued. “Because the money comes in up front, we are in fact more incentivized to keep people healthy.

“I’ll give you an example. Let’s say Medicare gives you a hundred dollars for the care of your uncle Paul and that’s all the money they’ll give. We want Uncle Paul to get well and not come back to the hospital. The more he comes back, the more he eats into our profits. But there’s a problem. It’s going to cost you a hundred twenty dollars to put Paul back together again, but it costs me only twenty because I have the right staff and equipment at my facility, plus my costs are lower because my buying power is higher. We’re partners because we’re in an ACO together, so you send Uncle Paulie to me, and I give you thirty for the referral and make fifty in profits. You made money, I made money, and Uncle Paul is back to playing his weekly tennis match. That’s the ACO way, and it’s why White Memorial has become the most profitable health-care system in Massachusetts-in fact, in all of New England.”

“Thank you for clarifying,” Lydia said.

“What’s your pitch, Mr. Janowski?” Bernard Levy was the CEO of a large surgical and medical instrument manufacturer. His hobby was auto racing, and it came as no surprise that he wanted Romey to speed up the proceedings.

“What White Memorial is offering you is the opportunity to become a part of our accountable care organization,” Romey said. “Join us, and in addition to the services you have here, you will be able to take advantage of the services we have in the city and share in the profit. Your patients will see no difference-only you’ll now be able to offer them the backup of an expansive urban network.”

Levy looked intrigued as he rested his chin on his hands. “So we get paid to send you patients. Is that it?”

“We share resources, and by resources, yes: patients are included. As a network, we all play for the same team-and not to sound boastful, but you want White on your team. We have three hundred sixty-seven physicians and mid-level providers, including our nurse practitioners and physician assistants. We also have a team of hospitalists and intensivists who manage all the inpatient care for our physicians. We are the premier trauma hospital in the greater Boston area and the first choice for ambulances transporting victims of gunshots and car accidents. And since we have inpatient rehab, patients can be transferred there earlier than at other hospitals, making their recovery swift.”

“And the profits higher.” Lydia Dutton smiled and Romey thought, That’s it, two in the bag.

Vince Hanke, chairman of the board and owner of dry cleaning establishments across the western suburbs, piped up. “This sounds great for you big boys, but we are a relatively small hospital with only a hundred and thirty beds. And we know our patients like us as a neighborhood hospital.”

“Well, Mr. Hanke,” Romey said, “I’m afraid those days are coming to an end. Look at your last five years. Every year your volumes have dropped, and so have your margins. Allyson has tried to keep up through cost-saving measures, but it’s like swimming against the tide.”

Romey glanced over at Allyson, who kept up her stoic expression, making it hard to gauge if she was going to go off script or not.

“If you don’t jump on the ACO bandwagon now,” Romey continued, “while the terms are favorable, a larger provider is going to come here and gobble you up and take all the profits with them. There is a premium I’m willing to pay for early entry. Further down the road another player, I’m afraid to say-even White-might not be so generous. And that day is coming sooner rather than later. Your own balance sheet is red flag enough.”

A moment of silence allowed reality to sink in.

“How would you envision this moving forward, Mr. Janowski?”

Romey sensed that Vince Hanke would still take more cajoling. Change did not come easy to anybody, but at the end of the day, money was the motivator for everyone at this table.

“I want to start tomorrow by entering into a management agreement with you,” Romey said. “White Memorial will send over a temporary CEO who will begin the process of converting your hospital to the ACO model. And I will begin the transfer arrangements for your patients who would be better served at our larger facility. Your rehab patients make a good place to start.”

“What about our medical staff?” Dave Craig sounded angry, with good reason. A gastroenterologist and chief of the medical staff, he would bear the brunt of the upheaval.

“During the transition, your staff would practice just as always. As we move things along, we will train your physicians in the White ACO way of doing business. They’ll learn how to integrate their treatment plans with the network available to them. We’ll teach them how to move patients through our continuum of care, and by doing so minimize the cost of that care while maximizing the quality. I am certain that when your doctors realize the payback from risk-sharing with the feds and other insurers is robust, they will be happy to participate in this new system. Higher profits for you should trickle down to your physicians. This is a win for everyone involved.”

“What if our patients don’t want to go to the city for care? White Memorial hasn’t always had the best reputation.” The dissenting voice came from Rabbi Sarah Gertz, who represented the interests of the labor unions and members of the community at large.

“Ah, bad reputations live longer than they should, and new ones take a long time to get started,” Romey said. “There is the old White Memorial under the old regime, and the new White Memorial under my direction. I think you’ll find quite a difference between the two. Certainly we cannot force a patient to use White, but we count on word of mouth from the patients who do use the facility, and we offer a wide range of amenities to convince them to come back to us if they must. Once a person has been to White, will they spread the word? I’m betting a lot of capital on this arrangement that the answer will be yes.”

“And our employees? What about Allyson?” Vince Hanke glanced over at Allyson, who looked increasingly uncomfortable in her seat.

Yes, what about her? Romey thought.

“Allyson and I have discussed this arrangement in great detail,” Romey said. “All of the numbers are in the packet we provided for your review. She has gone over them carefully, as has your CFO. Allyson will of course assist with the transition effort as co-CEO, and we’ll jointly manage PR to make sure the right messages are sent to the community, hospital staff, and to your patients. Naturally, we’ll reevaluate Allyson’s role and position with Suburban West once the transition effort is complete.”

Vince fixed Allyson with a peculiar stare. “Allyson, is this true?”

Allyson straightened her suit and cleared her throat. Maybe it was only Romey who could see the strain in her eyes, who noticed her wan complexion. This was the moment of truth, and Romey felt a kick to his heart. If Allyson defied him, he would destroy her.

“Financially, this deal favors the board and the patients of Suburban West,” Allyson began. “As a board member, and hospital CEO, I have a fiduciary responsibility to recommend what is in the best interest of Suburban West and its stakeholders.” Allyson turned her head to look Roman Janowski squarely in the eyes. “Therefore, I recommend Mr. Jankowski’s proposal without reservation.”

Romey let go the breath he had been holding and finally took a drink of water. All that talking had left him feeling parched.