Welcome to the "Lessons from the C-suite" series, featuring Advisory Board President Eric Larsen's conversations with the most influential leaders in health care.
In this edition, Dr. Robert Vissers, CEO of Boulder Community Health (BHC), talks with Eric about staying independent, collaborating with competitors, bright spots amid the Covid-19 pandemic, and BCH's new partnership with Optum.
Robert Vissers, CEO of Boulder Community Health
Q: Rob, I'd like to begin by asking about your status as an independent community hospital with $350 million in revenue, which is quite rare in the highly consolidated Colorado marketplace. Across the country it seems systems are just getting unrelentingly bigger, with the top 100 health systems—these are pre-Covid numbers—collectively controlling $740 billion in revenue. At the same time, independent hospitals seem to be a vanishing breed. And the most recent data suggest that 50% of the nation's standalone hospitals have lost money on an operating basis for each of the past five years.
I'd be interested in your perspective on those figures. In past conversations, you've alluded to this wonderful "proprietary" feel that the community has toward Boulder Community Health (BCH). How does the will to stay independent manifest from your perspective, from the board's perspective, and from your employees' perspective?
Vissers: Eric, independence in and of itself is not our mission nor our vision. Our vision simply is to create and care for the healthiest community in the nation. That's the expectation of our community, and we think it's achievable. Currently, with the support of our board, we believe that independence is the best strategy for us to achieve that vision. When we have looked at options outside of being independent, what we find is it moves us further away from our vision, not closer to it.
But you're right about the financial constraints that smaller independent hospitals face—the lack of scale, not having the negotiating power to keep costs down on the purchasing side or to get the reimbursement that you need from payers.
Our average margin has been about 1.7% over the last 10 years. Fortunately, we have a very strong balance sheet that enables us to invest heavily in health services that are important to our community, such as mental health. Just over a year ago, we opened a $40 million mental health unit and added 18 mental healthcare beds—as opposed to some larger systems in Colorado that have none.
So that's an example of where being independent allows us to make the investments that we think are necessary to provide high quality care to our community.
That's important, because when you're our size, there's no such thing as a merger. We would be acquired. And we all realized that, once you go down that path, you don't get to change your mind. I can tell you as a physician that although there are many elements of heath care that are becoming regional and national, the actual care still takes place at the bedside, in the local hospital, in the community that it serves. When you remove that, and when you move some of that control outside of the community, I think you lose some of the compassion, the empathy, and the other components that have as much to do with patient outcomes as the type of MRI that you have.
So, we want to retain our ability to make autonomous decisions, but we do need to keep our costs low and earn a sustainable margin. Trying to compete against these larger systems and hoping that we'll be able to get the same reimbursement or the same scale and purchasing leverage is a foolish ambition. Which means that we must seek some middle road.
Q: Rob, that resonates—and I admire the resolution of you and your board to maintain the independent course, which, given the numbers we mentioned, is a bit of a countercultural decision. I imagine you've gotten all sorts of solicitations from would-be health system partners. Was there support from the community that the path you describe above is the right approach?
Vissers: When I came to Boulder, I was surprised at how most of the community really didn't understand how unique it was to have an independent hospital. So, we spent a lot of time over the last three or four years engaging with and trying to educate our community.
It's a thoughtful, informed community filled with entrepreneurs who started their companies where the end goal was to be acquired. Many people saw it as an inevitability. But I can tell you that based on the stories we've heard and our fundraising that now people have begun to value that autonomous decision-making and recognize that we have continued to be successful. And through the last six months with the challenges around Covid-19, the community has really stepped up and demonstrated that they appreciate why we are here and what we are able to do.
I think we were in the local paper every other day, meaning that one of the silver linings—and there are many in this Covid-19 crisis—was that it really highlighted how important it was for the community to have this independent, high-quality hospital.
Q: Absolutely. And you're right that amidst so much devastation, there have been some bright spots emerge in the current Covid-19 crisis. What has Boulder Community's experience been?
Vissers: The beginning of our story is like many others, although Colorado was one of the earlier states hit. We had people from all over the world who were coming to ski, and our outbreak really started in Summit County and spread to the rest of the state. It was early in March when we started to see the impact. And, like many, our volumes dropped, anywhere from 40% to 70%. Big drop in the ED volume. Big drop in our in-patient volume. We stopped our elective cases as others did and took a huge financial hit. At one point, we were predicting a $49 million loss by the end of the year…when you're $350 million organization, that's a big hit on your reserves.
But we were able to restart our elective surgeries by the end of April. And by May, we really started to see volumes go up, and then in June and July, we were profitable. We seem to be settling around 95% pre-Covid volume, and we expect to stay that way, maybe even get a little bit higher as things improve.
Since the end of April, I think the most we've had at one time is three Covid-19 positive patients in the hospital. I can think of one vented patient over the last two or three months. So the incidence within our community is very low.
Though I talked about the competitive environment, I have seen the health systems in Colorado come together so collaboratively and transparently to solve this problem, whether it's sharing resources such as extra small N95 masks or who's able to offer testing. So that has been a really positive feature.
Financially, we're actually doing pretty well. We're at about minus $7 million and we usually do better in the final quarter. Our hope is that we break even or make some money for the year despite the deficits and challenges we faced. We were able to avoid layoffs but did have some strategic furloughs. And on cost containment, we asked everybody to step up with shared sacrifice like pay cuts in the senior ranks.
And I think that our thoughtfulness around these decisions resonated with our employees. We were scheduled to do our employee engagement survey in May and June and thought, "This is going to be interesting." Surprisingly, we came back with our highest engagement scores ever. Improvements in some areas of 20%.
So the crisis brought us together and really highlighted some of the strengths of our organization. And we saw it in the community, too.
Boulder has more restaurants per capita than just about anywhere else. I don't think they build kitchens in Boulder homes…everybody eats out. And these beloved restaurants were in jeopardy, so local philanthropic leaders came together to find a solution. One of them put up $200,000 in seed money and asked the community to donate to help restaurants stay open to cook meals for healthcare workers—and it was a tremendous success, morphing into an initiative called Feed the Frontlines. It received national attention and was replicated across several places in the United States. We raised enough to not only feed our frontline employees for four months, but we fed fire, police, rescue, rangers, and many community partners—more than 35,000 meals delivered in total. So it benefitted our essential workers and helped sustain a number of our restaurants, too.
We had a board meeting in July and several board members said, "I can't remember having a board meeting ever where we've had so much good news." We feel incredibly fortunate to be where we are right now.
Q: Rob, that's great and it's a powerful illustration of how indispensable BCH is to Boulder. And I know that your desire to retain your independence was part of your calculus in your recently announced partnership with Optum. Can you briefly describe the partnership and walk us through your thought process in taking this step? (Editor's note: At the Helm is published by Advisory Board, a division of Optum.)
Vissers: I'll answer your question in reverse—starting first with our problem and how we came to the solution. At a board retreat a couple of years ago, we looked at trends and case studies in M&A, and got concerned about the potential loss of local control. But what came out of the retreat wasn't just, "Well, we're not going to engage in an acquisition." That was one end of a spectrum. But on the other end of the spectrum, we could no longer just rely on the fact that we're the dominant provider in an engaged community and hope for the best. So we needed to look for a middle path.
We wanted a strategic partner in the areas where we lacked expertise or resources. For example, when you start talking about population health, taking on risk, and the analytics behind it all, it's difficult even for very large organizations to do that well. Large systems can struggle with basic operational things like revenue cycle because there's so many other things that you need to focus on. We took the strategic step of asking, "Are there things that others can do in partnership with us, elements of our business that we don't necessarily have to have full control over?" So we decided that we could look to a partner to help us improve performance.
The other issue was speed and capacity to manage change. When we switched to Epic last year, we were quite successful with it. But we could not have done that and done Covid-19 at the same time. We could not have done that and totally revamped our revenue cycle at the same time. We have so many things that we need to do across the next 10 years, and we know that we can't do them serially.
At first, we thought the right answer might be a strategic alignment with another health system. But the thing about partnering with other health systems is that they struggle in the same areas that we do. It's not very often where they will have nailed all those things and are able to take them over for us.
So this led up to this partnership with Optum, which is based on three pillars: The first is around revenue cycle because that really is foundational to the partnership. There are approximately 280 employees who recently transitioned over to become Optum employees, and that represents the greatest margin lift in the short-term to help fund some of these other initiatives. The second pillar is in our strategic analytics. And it was not just having Optum take over our data and analytics function but rather gaining access to the FTE equivalence of hundreds of experts. The third pillar is focused on the operational efficiency of our care continuum within our ambulatory sites and hospital. We're not only getting patients out of the hospital more successfully and efficiently but we're also preventing readmissions and making their home experience more seamless.
So those are the three core areas. And we are already exploring some very specific growth opportunities in behavioral health and several other initiatives that fall outside of those core areas, so I'm excited to see where the next 10 to 20 years will lead.
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What was appealing about Optum was really three things: First, it was a big enough organization, with the scale that we were seeking and the expertise and the competence in areas that we knew that we needed. Just like medicine, we wanted to have evidence-based administrative leadership and decision-making. Second, we needed someone who would be committed to keeping operations primarily local. Taking on our employees in functions like analytics and revenue cycle, but allowing them to stay local, was incredibly appealing. And the final thing that I think was critical to the partnership is shared culture. When we look back at mergers and acquisitions that fail, it is usually a lack of cultural alignment. We knew that if we were going to have a partner that we're going to work this closely with, we needed strong cultural alignment.
We were surprised, frankly, but incredibly pleased—and not just myself, but our entire board visited the Optum headquarters and spent time with the leadership—at how closely aligned we were in terms of commitment to the health and wellness of our community. Through the entire process, the level of respect, thoughtfulness, and alignment around achieving a common goal was always present and was always at the forefront. And it was palpable to my board members, to my leadership team, and to anybody that we brought into the process. That was absolutely critical and, and once we really got engaged, we saw just how committed Optum was to our success, and the success of this venture.
What is most exciting to me is that this will allow us to grow strategically and compete with larger systems. We can continue to demonstrate that we have better outcomes, we will be able to show that we have better operational efficiency, and leverage some of the tools that Optum can bring to bear in ways that some of our much larger competitors, I think, will envy.
That's where I think the greatest opportunity lies—where we can really bring value to our payers, our patients, our community, and our employers.
Q: That's a strong affirmation because you're talking about a transformational opportunity to fundamentally address affordability, consumer-centricity, growth, and quality of care. I'm curious about the feedback from your employees. You have roughly 2,000 associates, and I imagine only a few were involved in the deliberations.
Vissers: Yes, Eric, fair point. And I do think one of the other silver linings of Covid-19 is that, if you're going to do a transformational, disruptive change in the organization, do it during a pandemic.
Being able to come out with an announcement that we had found a middle path that created sustainability not just for the next year or five years but for the century going forward was well-received. And the community understood it and they were excited about it, and our employees saw it as a bold move that was going to allow us to sustain all of the great things that we make us Boulder.
Now, this did involve some transition of employees over to Optum. Almost 15% of our workforce, which is not insignificant. And that certainly wasn't lost on us or the employees themselves. But once we moved past that initial shock, I think people realized that it came at a good time because it represented job stability. They still had essentially the same job. The badge was going to look a little bit different, but they now had more career opportunity and access to tools that they never had before. And I'm pleased to say that, at this stage, 99% of employees have fully engaged and embraced the transition.
Q: I'd like to switch speeds and ask about your clinical background. As I was preparing for our conversation, I heard from a few different people that you are the consummate "unflappable" leader. The armchair psychologist in me assumes that personality trait has something to do with the fact that you are an emergency physician by training. As a profession, it's a prerequisite to remain calm in a crisis.
Vissers: Well, I do come from a somewhat atypical background into the role of CEO. In fact, when I started as CEO here, there was maybe one other physician CEO in Colorado.
My clinical background has undoubtedly influenced the way I engage with physicians, caregivers, and patients. And having emergency medicine as my background has shaped how I think about the role of health systems. I always worked in inner-city Level 1 trauma centers and had the privilege of taking care of many people who didn't have access to other systems of care. While it was incredibly rewarding, it really exposed the deficits in our health care system, and particularly around mental health.
Combine that with the fact that I grew up in Canada—where there's a different approach to the social determinants of health and an appreciation for how they can impact acute care—it made me very aware that being concerned about the well-being of the community means more than just providing the relief of pain and suffering or managing their illnesses when they become acutely ill.
And finally, my medical background was all in academics. That cultivated my passion to teach, and it also showed me how you can make a big difference when you give someone else knowledge that they can use to make a difference.
So all those things made me realize that I really want our team to create a broader impact. More than just the patients we see day to day or the footprint of our local community, but at a national level. I truly believe that a place like Boulder Community Health can change the way that we deliver care to our communities across the United States.
Q: Before we get into that, let's set the foundation and talk a little bit about the history of Boulder Community Health. If my memory is correct, BCH spans three distinct centuries.
Vissers: You're right. It began with the medical school on the CU Boulder campus in the 19th century. Early in the 20th century, that facility moved down to Denver and a group of doctors got together and decided to start their own hospital which became Boulder Community Health. And in 2022, we'll celebrate the 100th anniversary of what was originally Boulder Community Hospital.
And now, we've consolidated down to a single, acute facility—which was the first LEED-certified hospital in the country. We have more than 30 primary and specialty clinics throughout Boulder County and Broomfield County, three surgery centers that we joint venture with our physicians, and several imaging centers and other services throughout Boulder County.
We're proud to be an independent system but as the barriers in health care have come down, competition has increased, and we've had to change how we serve our community. I mean, we are the dominant provider within Boulder County, but our revenue is about $350 million—so very small compared with some of our competitors around the region.
But if there's one key pillar to our success, it's been that the local community remains incredibly invested in our organization. And it was never more apparent than during the recent pandemic.
Q: I'd like to go a bit deeper into this idea of community, but first let's to go back to something you mentioned earlier—the integration of mental and behavioral health with medical care, which I know has been a passion of yours, dating back to your years at Legacy Health in Portland. I often characterize Portland as one of the most collaborative markets in the country. Were you present when the largest systems in Portland (normally competitors) all contributed capital to build a psychiatric ED, along with 380 housing units to address systemic homelessness?
Vissers: That came after I left, Eric, but I was part of the initiative to get that restarted. It had existed prior to my arrival, which was almost 20 years ago. So it was actually a rebuilding of what had been successful in the past.
And you're right, I would characterize the health care market in Portland as collaborative and focused on some of the things we've already talked about—social determinants of health, homelessness, mental health. It was impressive the way most of the organizations came together to collaborate with the support of the city and the state. There's some contrast between that and the current market that I'm in, that's for sure.
Q: I was going to juxtapose the two because I would characterize Denver—and Colorado generally—as more, shall we say, "competitive" than "collaborative." What do you see as the similarities and the differences when it comes to leading a health system in each market?
Vissers: Both have different advantages, but it was striking when I came to Boulder. You're right, Eric, it's a very competitive market here. And frankly I welcome that competitive environment; I want the quality of care that we provide to be held to the highest standard not only in Denver, but also compared with the best systems nationally.
And despite the fierce competition for patients and dollars, there are definitely elements of collaboration here. In fact, some of our greatest successes have been collaborative models with our competitors. As one of the few independents left in Colorado, we recognized early on that we needed to partner with others for us to succeed and provide high quality care.
Take our in-patient rehab, for example. We had had a unit for years but it was too small. We didn't have the scale to provide the quality that we needed, and it was not something we could financially sustain. But it was important to have that service in our community. We learned that UC Health had a facility not far out of town with an empty floor, so we created a joint venture, increased capacity by 30%, and within the first year we not only were profitable, but we knocked the quality metrics out of the park. I can list a number of those partnership examples that have really worked well for us.
Q: Let me close with my favorite question—as you reflect on what has been a fascinating and very heterogeneous career, Rob, what are you most grateful for?
Vissers: I think just the opportunity to make a difference. Choosing the path that sometimes was more challenging but created the greatest opportunity to make an impact and to make a difference was really the driving force behind this sort of circuitous path. I can absolutely tell you with certainty that I never once thought I would be a health care system CEO.
But, as you know, when that's your focus and you are given that opportunity, it's incredibly rewarding. And as much as I loved being able to impact one patient at a time, particularly those that were vulnerable and needed that care, the ability to have an impact at a community level is very special. And beyond that, I'd like to think that our small system has had an impact across our state and some of the initiatives that we've done have had an impact across the country.
So what I'm most grateful for is the ability to make a difference here in Boulder, Colorado and the entire U.S. health system. And, gosh, if we can do it, imagine what some of these other bigger systems around us are capable of.
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