Stephen A. Williams has been president and CEO of Louisville, Ky.-based Norton Healthcare since 1993 and has held various positions with the non-profit organization, currently the largest health system in Kentucky. A native of western Kentucky, Mr. Williams held his first hospital CEO position at age 22 when he oversaw what was then 26-bed Livingston County Hospital in Salem, Ky.
Today he oversees Norton's five hospitals and more than 90 outpatient facilities as well as the system's ongoing efforts to improve healthcare access and affordability in a state that isn't generally recognized for the health of its residents.
Q: Norton has been in the headlines quite a bit in recent months. In November, you announced the planning of an Accountable Care Organization with partner Humana through the Brookings-Dartmouth ACO pilot program and a new partnership with UK HealthCare. Let's start with your plans for an ACO. Why did Norton decide to pursue this type of organization?
Stephen A. Williams: We were very pleased to be selected by Brookings-Dartmouth, and frankly we pursued the ACO model because it is the right thing to do. With healthcare costs continuing to rise at 17 percent of GDP, there is intense pressure to bend the continuing cost escalation curve. Compared to other industrialized nations, we're paying an exorbitant amount for healthcare but not receiving sufficient value. We pay over twice as much per capita for care but rank very poorly in the health status of our population, compared to other industrialized nations. That's not to say U.S hospitals are poor quality; they are the gold standard. If you have money, you can get the best care in the world, but those that don't have money lack access. They resort the emergency rooms for everything…primary care to quaternary care. That’s the most expensive and least efficient approach. We've reached the point that this industry has to change its current model of paying for and delivering care. The industry must move away from a volume based financial incentive system to one that rewards value.....keeping people healthy for an appropriate level of reimbursement. The ACO pilot is an experiment on how to do that.
Q: What progress has been made to date toward launching the ACO?
SW: The partners are starting with our own employees as an initial pilot. Humana is the second-largest employer in Louisville and we're the third. We hope to expand within a year or so to other employers in the area who have voiced interest, such as UPS, Ford and GE.
Our relationship with Humana is critical to the pilot's success as their data allows us to look at costs over a continuum of care. Even with 400 employed physicians and having 45 percent market share of hospital admission in the Louisville area, we only capture a part of the continuum of care from a cost and volume standpoint. Over the last decade, Humana has done an impressive job of developing outstanding information systems which captures what's going on with patients and working with us to improve quality.
Q: Are there plans to expand the ACO beyond Humana members? Will Norton apply to be part of Medicare's ACO program?
SW: As CMS moves forward with trying to implement ACOs with the Medicare population, we certainly plan to be ready to do that at the appropriate time.
Q: Two of the biggest challenges anticipated for ACOs are 1) aligning physicians with the goals of the ACO and 2) keeping patients engaged in improving their health. How will Norton tackle these challenges?
SW: We plan to begin our pilot with our employed physicians — more than half of which are in primary care, which is a sufficient for the purpose of the pilot. We have a medical staff of 2,000 and over the long haul won't limit participation to employed physicians. The ACO pilot is basically a shared savings model. The degree to which our physicians are able to reduce cost while preserving or enhancing quality will determine the shared savings payments, which we are able to easily build into our incentive system for employed physicians.
In terms of the promoting or marketing an ACO directly to the consumer, I think that is down the road. However, we could eventually see direct consumer marketing of specific plans [for care within an ACO] not unlike what we're used to with HMOs.
Q: Let's move on to your partnership with UK HealthCare. The partnership expands upon alliances you already had with UK. Why do you desire to further strengthen this relationship when Norton already has a strong partnership with University of Louisville's School of Medicine?
SW: We have had a various affiliations with academic organization for many years including University of Louisville but not limited to U of L. We've had a relationship with UK for several years as well. UK is the only university in the state which has a designated state wide mission. Their primary market has been eastern Kentucky, while we cover Louisville and the western part of the state. By working together, we have the potential to impact health throughout the state.
We also found that we agree in the way we see future of healthcare . Likewise, we have very compatible organizational cultures and strategies to achieve our respective missions and visions. We're going to build upon our previous relationship to move forward with programs that will jointly address how to approach various healthcare issues in our state. Unfortunately, Kentucky has to deal with some negative and unacceptable health statusstatistics, such as some of the highest incidences of lung cancer and heart disease.
Q: What do you think will be the biggest challenge or challenges for Norton this year or in the next few years? How will you confront them?
SW: Well, there's a lot of uncertainty about what will happen in healthcare reform. While it is unlikely to be repealed, there are a lot of unknowns out there. However, something pretty universally accepted is declining reimbursement from Medicare and Medicaid. At Norton, we estimate our 2011 reimbursement for the same services will be $10-11 million less than in 2010. We have to find a way to provide the same level of service with fewer dollars, which means we'll need to introduce new models and processes. We're finding fewer and fewer places to shift costs, so the issue of redesigning care is going to be the primary agenda of many health systems across the country, including ours.
Q: You have had a long career in healthcare — in fact you were a hospital CEO at age 22. What interested you in this industry?
SW: In high school I worked as an orderly at a local hospital and was always captivated by the mission of healthcare. I think it's a very gratifying field in which to work. At the same time I knew I wasn't a scientist, so I never really considered being a clinician. I was a business major in college [at Murray (Ky.) State University], and worked as an instrument tech in the operating rooms at a regional hospital during college. The two areas of interest naturally merged and I decided that a career in hospital administration might be right for me.
While enrolled in a MBA program, I received a call from the physician chairing the selection committee for the administrator of my home county’s hospital where I had worked in high school. It happened to be the physician that delivered me 22 years earlier. He asked me if I'd be interested in coming back home and giving running a hospital a try. I got the job and began my career. [Editors' note: Mr. Williams eventually earned a graduate degree in healthcare administration part-time from the University of Minnesota and left the county hospital after five years to join Norton as an assistant to the executive vice president.]
Q: Throughout your career, what has been the most important thing you've learned about leading a hospital successfully? What advice would you impart to other hospital leaders?
SW: I've found that folks who choose careers in healthcare are usually just amazing people who are drawn toward caring for others and find a huge gratification in that. The patients and families we see are often in a crisis of somekind, be it major or minor in nature, and we are there to provide an environment that is nurturing and comforting, as well as to provide state of the art, quality clinical care. Over the last 40 years, I’ve said hundreds of times that there are lots of different job descriptions and titles in healthcare, but there are really only two jobs: those who take direct “hands on” care of patients, and all the rest of us whose roles are to somehow support the direct care-givers. We all have one common purpose and that is to care of patients the way we would want ourselves and our loved ones to be treated.
One of the most important things leaders can do is foster a culture and develop an organization that is nurturing and caring — an organization that not only provides quality care but does so in an environment that promotes personal and organizational values…..doing the right thing in the right way. One of the most important tasks of leaders other than to meet basic fiduciary responsibilities is to develop and try to model values for the organization, to make sure these values are guiding principles and that they are demonstrated to those you serve. If you do that, you'll make your organization a place people want to come to get care and a place where doctors and employees want to work.
Learn more about Norton Healthcare.
Today he oversees Norton's five hospitals and more than 90 outpatient facilities as well as the system's ongoing efforts to improve healthcare access and affordability in a state that isn't generally recognized for the health of its residents. Q: Norton has been in the headlines quite a bit in recent months. In November, you announced the planning of an Accountable Care Organization with partner Humana through the Brookings-Dartmouth ACO pilot program and a new partnership with UK HealthCare. Let's start with your plans for an ACO. Why did Norton decide to pursue this type of organization?
Stephen A. Williams: We were very pleased to be selected by Brookings-Dartmouth, and frankly we pursued the ACO model because it is the right thing to do. With healthcare costs continuing to rise at 17 percent of GDP, there is intense pressure to bend the continuing cost escalation curve. Compared to other industrialized nations, we're paying an exorbitant amount for healthcare but not receiving sufficient value. We pay over twice as much per capita for care but rank very poorly in the health status of our population, compared to other industrialized nations. That's not to say U.S hospitals are poor quality; they are the gold standard. If you have money, you can get the best care in the world, but those that don't have money lack access. They resort the emergency rooms for everything…primary care to quaternary care. That’s the most expensive and least efficient approach. We've reached the point that this industry has to change its current model of paying for and delivering care. The industry must move away from a volume based financial incentive system to one that rewards value.....keeping people healthy for an appropriate level of reimbursement. The ACO pilot is an experiment on how to do that.
Q: What progress has been made to date toward launching the ACO?
SW: The partners are starting with our own employees as an initial pilot. Humana is the second-largest employer in Louisville and we're the third. We hope to expand within a year or so to other employers in the area who have voiced interest, such as UPS, Ford and GE.
Our relationship with Humana is critical to the pilot's success as their data allows us to look at costs over a continuum of care. Even with 400 employed physicians and having 45 percent market share of hospital admission in the Louisville area, we only capture a part of the continuum of care from a cost and volume standpoint. Over the last decade, Humana has done an impressive job of developing outstanding information systems which captures what's going on with patients and working with us to improve quality.
Q: Are there plans to expand the ACO beyond Humana members? Will Norton apply to be part of Medicare's ACO program?
SW: As CMS moves forward with trying to implement ACOs with the Medicare population, we certainly plan to be ready to do that at the appropriate time.
Q: Two of the biggest challenges anticipated for ACOs are 1) aligning physicians with the goals of the ACO and 2) keeping patients engaged in improving their health. How will Norton tackle these challenges?
SW: We plan to begin our pilot with our employed physicians — more than half of which are in primary care, which is a sufficient for the purpose of the pilot. We have a medical staff of 2,000 and over the long haul won't limit participation to employed physicians. The ACO pilot is basically a shared savings model. The degree to which our physicians are able to reduce cost while preserving or enhancing quality will determine the shared savings payments, which we are able to easily build into our incentive system for employed physicians.
In terms of the promoting or marketing an ACO directly to the consumer, I think that is down the road. However, we could eventually see direct consumer marketing of specific plans [for care within an ACO] not unlike what we're used to with HMOs.
Q: Let's move on to your partnership with UK HealthCare. The partnership expands upon alliances you already had with UK. Why do you desire to further strengthen this relationship when Norton already has a strong partnership with University of Louisville's School of Medicine?
SW: We have had a various affiliations with academic organization for many years including University of Louisville but not limited to U of L. We've had a relationship with UK for several years as well. UK is the only university in the state which has a designated state wide mission. Their primary market has been eastern Kentucky, while we cover Louisville and the western part of the state. By working together, we have the potential to impact health throughout the state.
We also found that we agree in the way we see future of healthcare . Likewise, we have very compatible organizational cultures and strategies to achieve our respective missions and visions. We're going to build upon our previous relationship to move forward with programs that will jointly address how to approach various healthcare issues in our state. Unfortunately, Kentucky has to deal with some negative and unacceptable health statusstatistics, such as some of the highest incidences of lung cancer and heart disease.
Q: What do you think will be the biggest challenge or challenges for Norton this year or in the next few years? How will you confront them?
SW: Well, there's a lot of uncertainty about what will happen in healthcare reform. While it is unlikely to be repealed, there are a lot of unknowns out there. However, something pretty universally accepted is declining reimbursement from Medicare and Medicaid. At Norton, we estimate our 2011 reimbursement for the same services will be $10-11 million less than in 2010. We have to find a way to provide the same level of service with fewer dollars, which means we'll need to introduce new models and processes. We're finding fewer and fewer places to shift costs, so the issue of redesigning care is going to be the primary agenda of many health systems across the country, including ours.
Q: You have had a long career in healthcare — in fact you were a hospital CEO at age 22. What interested you in this industry?
SW: In high school I worked as an orderly at a local hospital and was always captivated by the mission of healthcare. I think it's a very gratifying field in which to work. At the same time I knew I wasn't a scientist, so I never really considered being a clinician. I was a business major in college [at Murray (Ky.) State University], and worked as an instrument tech in the operating rooms at a regional hospital during college. The two areas of interest naturally merged and I decided that a career in hospital administration might be right for me.
While enrolled in a MBA program, I received a call from the physician chairing the selection committee for the administrator of my home county’s hospital where I had worked in high school. It happened to be the physician that delivered me 22 years earlier. He asked me if I'd be interested in coming back home and giving running a hospital a try. I got the job and began my career. [Editors' note: Mr. Williams eventually earned a graduate degree in healthcare administration part-time from the University of Minnesota and left the county hospital after five years to join Norton as an assistant to the executive vice president.]
Q: Throughout your career, what has been the most important thing you've learned about leading a hospital successfully? What advice would you impart to other hospital leaders?
SW: I've found that folks who choose careers in healthcare are usually just amazing people who are drawn toward caring for others and find a huge gratification in that. The patients and families we see are often in a crisis of somekind, be it major or minor in nature, and we are there to provide an environment that is nurturing and comforting, as well as to provide state of the art, quality clinical care. Over the last 40 years, I’ve said hundreds of times that there are lots of different job descriptions and titles in healthcare, but there are really only two jobs: those who take direct “hands on” care of patients, and all the rest of us whose roles are to somehow support the direct care-givers. We all have one common purpose and that is to care of patients the way we would want ourselves and our loved ones to be treated.
One of the most important things leaders can do is foster a culture and develop an organization that is nurturing and caring — an organization that not only provides quality care but does so in an environment that promotes personal and organizational values…..doing the right thing in the right way. One of the most important tasks of leaders other than to meet basic fiduciary responsibilities is to develop and try to model values for the organization, to make sure these values are guiding principles and that they are demonstrated to those you serve. If you do that, you'll make your organization a place people want to come to get care and a place where doctors and employees want to work.
Learn more about Norton Healthcare.