After 40 years in health care, eight as top executive at the American Hospital Association, RICH UMBDENSTOCK, 65, concluded his career at the end of August. He’s meeting some final commitments for the association through this month, then plans to step away from the industry to spend some time with his wife of almost 40 years, Barbara, four grown children, and six grandkids in the Pacific Northwest. H&HN spent a few minutes with the former health care executive, reflecting on his past and contemplating the future for hospital leaders. / Interviewed by Marty Stempniak
How has retirement been so far? What have you been up to?
UMBDENSTOCK: It’s been a time of transition. I’ve moved back from Washington, D.C., to Spokane, Wash. Our children were all born and raised in Spokane and are now all in the Northwest, along with six grandchildren, so that part of it has been great. It’s been busy. You have to find a new doctor, you have to find a new dentist, so there are lots of logistical things to do. It's amazing just how much moving entails and I’m even more appreciative now because Barbara did the whole move from Spokane to D.C. while I was working, and now I get to go home and unpack my own stuff. She’s been there 18 months, so she’s got us settled, but the days are still busy. Lots of to-dos, always still keeping an eye on emails and reading and being ready for the next trip, because I have trips scheduled through the AHA board meeting in November. It’s been busy, but it’s been pleasant. Not having to set an alarm clock is probably the biggest difference, and Sunday nights are just delightful because you’re not staring down on Monday.
Looking back on these last eight years, what are you most proud of?
UMBDENSTOCK: I’m certainly quite proud of how the field stepped up as part of the Affordable Care Act. There’s just no question about that. We knew that major change was necessary. We knew that the public policymakers would, once again, be looking to hospital payments to help fund parts of it. The question wasn’t whether we were going to contribute; the question was whether we would see some benefit in return for that. I think the team, with guidance from our board, did a terrific job of fashioning a package that moved the important issues forward, like coverage, quality improvement and insurance reform, while at the same time helping to position our hospital members as positive contributors to the overall design.
The other thing that I’m very proud of is the work we’ve done in quality and safety improvement. We’ve not only embraced performance improvement, but we have repositioned the AHA into a performance-improvement support system. The work that we’ve done shifting the Health Research & Educational Trust into a quality improvement and learning collaborative entity is going to be long-lasting. We’ve just received three more big grants and also a one-year extension of the HEN project. Those are significant projects and we’re going to keep that momentum going.
UMBDENSTOCK: You always want to solve every problem that is affecting your members, and one that we tried but, once again, could not solve, was the area wage index, an inequitable component of the payment system from Medicare. The only way we’ve been able to deal with it over the years is to find new money and clearly, in the last decade or so, there has been no new money. So the gap has widened between those at the top of that index and those at the bottom, and the ones at the bottom are really getting hurt by the design of this component. We knew that we didn’t have any good answers, but we said that we had to commit to solving this problem, and with leadership from Dr. Ben Chu as a board officer, we took this on. We did our best, but we couldn’t come up with a new system that unified the field and that was politically realistic.
Will you stay involved with health care?
UMBDENSTOCK: Actually, I’ve made a commitment to myself and to Barb that I won’t make any commitments. So, I have made no plans. I’m going to take six months, and use some travel time. After the holidays, we’re going to Australia and New Zealand, places that we’ve always wanted to visit. When we come back, we have a home in the Phoenix area, and we want to spend a couple of months there. I think that’ll be the time during which I’ll start to think more seriously about what to do next. The question that comes to mind is whether I want to do something again in health care, or volunteer in some other sector and learn something totally new. I’m a little torn about that. You hate to walk away from four decades but, on the other hand, you want to keep growing and learning, and I think this might be an opportunity.
How does your leadership style as head of the AHA differ from that of Rick Pollack, your successor?
UMBDENSTOCK: The board’s selection of Rick is just a terrific move on its part. I couldn’t have been happier when I got that news — proven leader, dedicated to our field, well-known by the membership, and somebody who has been with the AHA for 32 years. It was a quick and seamless transition. So, it was great for the organization and personally it was great for me. You have all the confidence in the world that you can move on and move on quickly.
Rick has spent his career in a different place than I spent mine, so it’s going to be different. He’s been in the public policy and advocacy world; I was closer to hospitals, their operations and the day-to-day activities. That’s why I took the lead on some of the quality improvement issues and with organizations like the Joint Commission or the National Quality Forum. What will change will be that Rick and the team don’t have to invest quite as much time as they originally did getting me up to speed on public policy. He already has stepped up to that role with the insurance consolidation hearings, and is off and running. Rick has spent a lot of time out in the field in recent years learning more about members and their operations but, at the same time, that will be something where he’ll turn to the board and other member bodies for a lot of guidance.
He’s very well-organized, very project- and progress-oriented so, in that sense, he’ll be able to build on a lot of the systems that we’ve tried to put in place inside the AHA in recent years, and sharpen our focus and our internal operations at a time when our members are doing the same thing out in the field.
Could you talk about why insurance consolidation is a key concern?
UMBDENSTOCK: The announced mergers of these four large insurers, in two large deals, are going to take us down to essentially three major national private insurance companies. That, I think, bodes not so well when you think about the fact that private insurance is a negotiated exercise between providers and payers, and size matters in that regard. Although we’ve seen consolidation on the hospital and health system side, we’ve not seen anything of this scale. So, we’re very concerned about what it will mean for the negotiation process and the insurance market itself, because these are now not only huge companies, they are gigantic companies. The price of entry to try to compete with them, should any new entity want to enter the market, is astronomical, and we don’t think this is going to increase competition; we think it’s going to decrease it.
You’ve recently chaired a committee on health systems looking to own health plans. What have you learned so far?
UMBDENSTOCK: We’ve learned that a significant portion of our membership, about 20 percent plus or minus, currently has a health plan, an interest in a health plan or a health plan license that they’re thinking about activating. That’s actually pretty large, one in five. Our surveys tell us that the field thinks that could even double in the next five to 10 years as people try to integrate delivery and financing into a more cohesive, coherent, coordinated system. I don’t know that we know enough yet to say that doubling is likely to happen, but the numbers will continue to increase.
Running an insurance company is no easy task. I had some experience in that regard back in the ‘80s as a volunteer board member of a consumer-governed HMO. It taught me a lot.
Scale matters in that sense, too. You need pools of beneficiaries over which to spread risk in the hundreds of thousands, not the tens of thousands. A lot of people will look at it, but then have to decide whether there’s a viable partner in the market to approach in the form of an insurance company and put something together on a collaborative basis. But I think it’s going to continue to grow because that structural separation we’ve seen historically between delivery and financing is going to change.
Do you have a progress report on the AHA’s Redefining the H efforts?
UMBDENSTOCK: The beauty of the Redefining the H theme has been the admission, implicit in that, in fact, we must change. The traditional model of the inpatient focus, the central location, the convenience to the provider, but not so much to the consumer and, frankly, the cost of the overhead of that kind of model has to change. We called it redefining because we think the H is such a powerful brand. We don’t want to be known as something other than a hospital, but we must deliver something totally different to the patient when he or she arrives at that entity. There’ll be a lot more orientation toward health, prevention and care in less expensive more distributed sites, but also through less expensive modalities, digital and other. We want to figure out what that new model looks like. It’s going to be, speaking broadly, a lot less facility-intensive and, ideally, a lower overhead model so we can work on the cost problem.
Any parting words of wisdom for hospital leaders?
UMBDENSTOCK: I think you have to fall out of love with your overhead. We’re builders historically. We build facilities, we build networks, we build continuums of care, all centered around physical entities and locations of care, and it turns out that a lot of those have to be funded over 25- to 30-year periods. We build in a lot of overhead. We have overhead on the administrative side. Our payers are very inefficient, public and private. I’m learning, as Barb and I come into the Medicare era ourselves as beneficiaries, the paperwork, the lack of coordination are just remarkable. Moving records from the District of Columbia to the state of Washington was no easy feat, and I’m experienced. My wife’s a nurse. We’re a new doctor’s dream in that sense. We walk in with existing records and we’ve got diaries of dates and of various health care experiences, so we can help them get up to speed on our situation quickly. Most people can’t do that.
We just have both physical and administrative overhead for which I don’t think the country has the appetite anymore, and [Americans are] going to migrate toward convenience and lower cost. They’re going to trade off cost for access, and I don’t think that’s consistent with a high-overhead model.
So, if I had to give one piece of advice, besides getting better faster and all of the things that we know about, fall out of love with overhead. The future will not support it.
Anything else you want to talk about that we haven’t gotten to today?
UMBDENSTOCK: Just my life within theAHA. I was in Chicago in the ’70s for four years and stayed close to the organization throughout my career. To come back as CEO many years later was just an enormous honor and pleasure. I can’t believe how many people were still at the AHA, some good friends, long-tenured, who welcomed me back, and it’s a joy to work with them. But also to see how the rest of the employee population had gathered around in support of the mission. When we do employee surveys and we ask people the degree to which they identify with the mission of our association in support of hospitals, it’s off the charts, and so it’s been a real honor to be the team leader for eight plus years, and to be associated with an organization that has such a fine tradition, strong public image and reputation, and such a wonderful purpose in support of hospitals and patients and communities. It’s been a real treat.
THE UMBDENSTOCK FILE
In retirement, what’s taking up most of your time?
Grandchildren and family is one. They were all born in the last four years and I’ve been on the other coast, so that’s terrific. Barb and I love to play golf together and travel, and we’ve been fortunate to do some international travel, but there are many parts of this world that we have not visited that we are thinking about.
Any books that you’ve been dying to read?
[Chuckles] I laugh because I’ve only read work-related stuff and management- and leadership-related stuff for a long time, especially in the past 10 years. If I did nothing but put a dent in the top 50 books and movies of all time, I’d be gaining ground, because I’m pretty deficient in both of those.
Who was the most influential person in your career?
Without a doubt, it was Alex McMahon, the president of AHA when I served as his special assistant in the ’70s. He was a very bright, astute and humorous leader, but he was first and foremost a teacher and former law professor. I learned an incredible amount from Alex about the field, but also about managing expectations and issues.