NEW YORK CITY — My brain hurts. OK, my wife and kids (and most of my co-workers) will tell you that it doesn't take much for that to happen, but I'm telling you, I'm beat. Day One of the 13th Annual Non-Profit Health Care Investor Conference was jam packed. We started at 8 a.m. with a provocative presentation by Paul Keckley, executive director of the Deloitte Center for Health Services, and didn't end until shortly after 5 p.m. During those nine non-stop hours, 20 of the nation's top-performing health systems presented their strategic and financial plans to the 725 attendees, a record number (another six health systems are on tap today).
Keckley set the stage by detailing some of the forces wreaking havoc on health care, most notably the financial crisis looming in D.C. — the government will spend nearly $3.8 trillion this year, but only take in $2.5 trillion in tax receipts. He cautioned attendees to not get too caught up in the Supremes and the fate of the ACA, but rather pay attention to the economy and discussions around deficit reduction. I caught with him following his speech. He also emphasized the tremendous impact that Big Data and information technology will have on the industry.
This is my fourth time attending this meeting and, honestly, the hard news isn't all that different year to year. Given the caliber of health systems on display, it should come as no surprise that the executive teams on hand proudly share their numbers with analysts from rating agencies and investment houses. And why wouldn't they? I mean, when you've got a good story to tell, tell it. There's Sentara Healthcare, with 276 days cash on hand, and Rush University Medical Center, which finished 2011 with a 5.6 percent operating margin. And Geisinger, which has seen 10.8 percent in compound revenue growth from fiscal 2001 to 2011.
None of this comes easy, mind you. The CEOs and CFOs all discussed how they are trimming costs out of operations in the face of reimbursement cuts from government payers and tighter purse strings from private insurers. "We are checking the sofa cushions for loose change," said John Koster, M.D., president and CEO of Providence Health & Services. And they all worry about the pace of transition from volume to value. "Everybody wants to be a leader, but not walk into bankruptcy," commented Robert Broermann, senior vice president and CFO of Sentara Healthcare.
One of the biggest themes thus far is the emphasis on clinical integration. It is the central element to nearly all of the strategic plans being discussed. Trinity Health's Kedrick Adkins said that the system is building Clinical Integration Networks with the aim of speaking "with one voice in each of our markets." What that means is working closely with physicians of all stripes to align goals and incentives. It's also a key strategy for Dignity Health (formerly Catholic Healthcare West). Marvin O'Quinn, Dignity senior executive VP and COO, explains:
I'll have a wrap-up of the meeting in Monday's H&HN Daily, including thoughts from S&P's Liz Sweeney and others ratings and investment analysts.