September 2, 2013

New Medical Center CEO Takes On Challenges Of Cost Controls

CEO Patrick Muldoon said he will work “very hard” to establish a positive rapport with nurses at UMass Medical Center.

Two years after former UMass Memorial Medical Center CEO Dr. Walter Ettinger resigned, and following a months-long, nationwide search for a replacement, Patrick Muldoon assumed the role as the Worcester hospital's new leader last week.

"I'm just thrilled to have been the last one standing," Muldoon said a week ahead of his transition from CEO at HealthAlliance Hospital in Leominster and Fitchburg, a UMass affiliate.

Muldoon, a 58-year-old Princeton resident, is no stranger to hospital leadership, or the UMass system, which dominates the landscape with five hospitals in Central Massachusetts.

He led HealthAlliance for nine years and, prior to that, was CEO at South County Hospital and Healthcare System in Wakefield, R.I., and Northern Berkshire Health Care System in Massachusetts. Muldoon took on his first CEO job at Michigan's Riverside Hospital at the tender age of 28.

But he takes the helm at the medical center (UMMC) at a time when even the most seasoned hospital administrators are mired in uncertainty about health care reform, which is hitting health care providers with new state and federal mandates that dictate cost control and outcome improvements.

Industry 'Learning Together'

"I think that, you know, we're all kind of learning together. But we know that, collectively, health care is too expensive and we need to reduce the cost in the country, in Massachusetts and in Central Massachusetts," said Muldoon, who, since June, has been leading the charge as chairman of the board of the Massachusetts Hospital Association (MHA).

Among the latest developments that have posed challenges to UMMC and all Massachusetts hospitals is the state's 2012 cost-containment law, which sets annual benchmarks for health care spending through 2017. If providers don't meet the benchmarks (This year's cost-growth limit is 3.7 percent.), they will have to answer to the state's Health Policy Commission and possibly the attorney general's office.

On top of this new mandate, which took effect this year, the federal government has already begun slashing Medicare reimbursements to hospitals based on re-admission rates. The UMass Memorial system was hit with the maximum penalty, resulting in a nearly 1 percent cut in Medicare funding.

Muldoon: Labor Costs Crucial

Muldoon said meeting the cost-containment law benchmark is a real challenge, and CEOs must tackle the most expensive items in their budgets to keep spending at or below 3.7 percent this year. Labor and benefits are particularly costly, comprising about 65 percent of hospital budgets in most cases, according to Muldoon. Those items are followed by supplies and the cost of services, he said.

"I think any opportunity to control the inflation of those costs will help in getting us to the health policy commission's goal," Muldoon said.

Contracts with UMMC nurses were signed earlier this year, so it will be another couple of years before Muldoon and other administrators negotiate with those bargaining units again. The hospital has agreed to hire 80 full-time-equivalent nurses to satisfy the Massachusetts Nurses Association, which represents the nurses. Muldoon acknowledges that those hires will be costly, but he also hopes they will result in new efficiencies due to improved patient flow.

A state ballot initiative in November 2014 that would ask voters to approve mandated nurse-to-patient ratios in hospitals is pending. Though its fate is uncertain, it's unlikely that staffing won't be an issue at UMMC when contract talks begin again in two years.

But Muldoon said he's had a positive relationship with the MNA and expects to foster the same goodwill at UMMC as a way to compromise with the nurses.

"I think it's all about relationships," Muldoon said. "I will work very hard at establishing that relationship with the nurses at the medical center."

However, answers to shrinking Medicare reimbursements are less clear. "I think it's important for us to avoid re-admissions. I'm not sure it's a good thing to totally eliminate re-admissions," Muldoon said. "Having said that, it's our challenge to do everything we can to put systems in place to keep (patients) from being re-admitted."

Muldoon said one way to combat this is for hospitals to be sure patients see primary care physicians and seek rehabilitative care after they're discharged.

The challenges Muldoon faces as he leads UMMC are considerable, but his colleagues have faith.

Lynn Nicholas, president and CEO of the MHA, called him "the consummate professional," with affable personality traits that serve him well.

"He doesn't get frustrated. He always tries to find the upside of an issue and the good side of people," Nicholas said. "And I've always admired him for that."

And UMass Medical School Chancellor Michael Collins, who will work closely with Muldoon with an office in the same building, said in a statement that he was eager for Muldoon to lead the hospital.

"He is someone who has been a part of our health care system for years and has long impressed his colleagues. We very much look forward to continuing our relationship with Patrick," Collins said.

UMass Leadership Changes

Muldoon decided to pursue the UMMC job after his longtime colleague, Dr. Erik Dickson, was hired in February to lead UMass Memorial Health Care. Muldoon said that once Dickson was in place, UMass was prepared to hire a non-physician hospital executive to run the medical center.

That leaves HealthAlliance without a permanent CEO; the same is true for UMass's Marlborough Hospital, after Karen Moore resigned in April. UMass Memorial spokesman Robert Brogna said interim leaders have been appointed at both sites while officials look for permanent replacements.

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