CommonSpirit Health CEO at JPM: Some providers will be commodities

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Wright Lassiter III, who was named CEO of CommonSpirit Health last April, outlined his vision for revitalizing the finances of his large nonprofit at the J.P. Morgan Healthcare Conference on Monday. The conference returned to San Francisco after a two-year pandemic pause and had the usual bursting-at-the-seams feeling. While cracking a few jokes, Lassiter acknowledged that he is not here to take a “victory lap” and acknowledged the challenges health systems face nationwide including inflation and labor shortages.

CommonSpirit Health is the second-largest nonprofit hospital chain in the U.S. created in 2019 by the merger of Catholic Health Initiatives and Dignity Health. It has 150,000 employees of which 25,000 are physicians and operates 2,200 care sites in 21 states. In fiscal 2022, which ended June 30, the health system garnered nearly $34 billion in revenue and suffered a $1.85 billion net loss. While Lassiter did address how synergies are being gained following the merger, he added that more can be achieved.

One thing that his presentation did not address — limited as it was by time constraints and the investor audience’s priorities — was the role of the physician in the post-pandemic world.

So, after his presentation, I walked up to him and introduced myself as a journalist and asked him the following question:

“There are so many retail companies out there that are coming into healthcare. CVS Health has said it will buy providers. Pharmacists are looking to get provider status. What do you think is the role of the provider moving forward?”

This is how Lassiter responded after shrugging his shoulders at the question:

I think it’s going to depend on the provider’s vision, right. I mean in some cases, the answer the provider is kind of a commodity.

Me: But you don’t buy that?

Lassiter: Well, I don’t for this organization … I don’t like just being a commodity. So I think for some of us that’s what you’ll be and that’s not a negative role. It’s just more limited. In my mind, our job is to be more than just a commodity to all those folks. Our role is in some cases to be a convenor, in some cases to be a connector and not just someone at the bottom of the totem pole who gets kind of fed the scraps.

It’s not a huge surprise that Lassiter, who is currently the chair of the American Hospital Association, feels this way. As tech, retailers and others encroach on territory that had thus far been the exclusive domain of providers, there is an increasing pressure on health systems to provide great customer experience while reining in costs and improving operational efficiency. These are also key to remaining financially viable in a post-pandemic world. Friendly legislation can help in this regard, and during the Q&A session, Lassiter was asked about CommonSpirit’s advocacy efforts.

“First and foremost, we are advocating for reimbursement reform to ensure that people are paid appropriately for the work that they perform,” Lassiter said.

CommonSpirit of course is not the only organization hoping to change the tide of Medicare physician payment cuts. In fact, the American Medical Association, supported by more than 150 organizations lobbied hard to prevent a 4% cut in Medicare under the Pay-As-You-Go (PAYGO) sequester but wasn’t totally successful in holding of the 4.5% cut to Medicare payments in the Physician Fee Schedule that began Jan 1. That wasn’t eliminated and was instead reduced to a 2% cut this year.

Another lobbying effort that CommonSpirit Health is focused on is to address what Lassiter described as the “unintended consequences” of the “No Surprises Act.” Passed in 2021, it was hailed as a law that would prevent patients from receiving very high bills for out-of-network services — sometimes this would occur even if unknowingly patients received care in an in-network health system from an out-of-network physician. But the law has led to a large number of payment disputes between payers and providers and so isn’t surprising that Lassiter is making that one of his legislative priorities.

There are many factors that are challenging the traditional role of providers – a once-in-a-century pandemic, heightened customer expectations for better experiences, price transparency rules that are laying bare the insanity of different prices at the same hospital for the same exact medical procedure, as well as advancements in technologies like artificial intelligence that can be seen both as augmenting and threatening what providers do. Navigating these waters while also dealing with inflation and labor shortages is a gargantuan task. It will be interesting to see if the vision of  Lassiter, not even a year on the job, plays out and providers can chart out a path for them that is both financially viable and professionally rewarding but perhaps most importantly less frustrating for patients.

Photo: CommonSpirit Health