Featured Guest: Marc Mertz

What he does:  Marc is the Chief Strategy Officer at Kaweah Health in Visalia, California.  His areas of responsibility include strategic planning, business development, marketing and communications, media relations, physician recruitment and relations, and government affairs. 

On risk:  "There's really risk in everything that we do.  There's even risk of things that we decide not to do.  And then there's certainly risk in doing nothing … Risk comes in a number of different flavors: actuarial insurance, capitation and risk models, compliance and the risk department, patient safety, operational risk, financial risk, facilities, social media, competitive risk.  And risk comes in variations: the operating room, organizations and services, payer mix, organizational structure, financial stability and security, and geography and environments … Where I spend most of my time these days is an area that I hadn't really thought about before, reputational risk … Working with my team to make sure we don't create unnecessary risk.  We're constantly weighing risk and trying to respond to it and mitigate it without actually thinking about risk ahead of any potential risks … Think around corners and think about different angles and perspectives on issues.  Take steps to ensure that we are doing that every time.  It's not enough to do it most of the time.  We have to do it all the time."

Transcript

Scott Nelson  0:01  
Welcome to The Risky Health Care Business Podcast, where we help you prepare for the future by sharing stories, insights, and skills from expert voices in and around the United States health care world with a mission to inform, educate, and help health care organizations and individuals, ranging from one doctor practices to large integrated systems and organizations throughout the dental, medical, and veterinary health care industry with risk, while hopefully having some fun along the way. I'm your host, Scott Nelson, a guy that grew up in Ohio and has been working all over the United States during my 20 plus year and counting career in the health care industry, with a commitment to accelerating health care performance through creativity, not just productivity. Let's dive in.

I love plans and lists. There are many reasons to love them. A plan can help with organization and preparation, and possibly reduce stress, creating a less hectic environment. I also love history. There are lots of examples of plans in history. Start with the American Revolution and the resolution that created the Declaration of Independence and a plan for confederation. Unpleasant events, such as World War Two, also require and involve planning that includes risk. Think about the plans and risks involved with D Day and the Marshall Plan, also known as the European Recovery Program. NASA is a group that is meticulous with planning and checklists and exciting programs like Project Mercury, which was the first US program to put humans in space. The program made 25 flights, six of which carried astronauts, that not only had to launch but return to Earth. Now think about the Apollo 13 mission, which became a summer blockbuster film starring Tom Hanks. There was a plan to launch and a plan to return. But an unexpected shock event occurred during the mission that altered everything and everyone involved. Do you have a plan for your health care business? Do you have a plan to act if a "Houston, we have a problem" event happens to your health care business? 

And here are some interesting statistics about strategic planning. Harvard Business School and Harvard Business Review have noted: 48% of leaders spend less than a day each month on strategy, 95% of employees don't understand their company's strategy, and 60% of organizations don't tie financial budgets to strategic priorities. The Economist noted companies that are poorly aligned with strategy report weaker financial results than their peers. And in a survey of C-level executives 88% say executing strategic initiatives successfully is essential or very important for their organization's competitiveness. 61% of those executive respondents acknowledged their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation. 

How can plans help with risk in health care? Planning helps determine risk in order to strengthen vulnerabilities, reduce the likelihood of occurring, and provide a means for better decision-making in order to avoid future risks. A New England Journal of Medicine article about risk in health care states having an established plan in place promotes calm and measured response and transparency by staff and ensures that corrective actions can be implemented and evaluated. 

I have two favorite quotes I will use on occasion during planning sessions. One is attributed to Abraham Lincoln: If I only had an hour to chop down a tree, I would spend the first 45 minutes sharpening my axe. The other is attributed to Benjamin Franklin: If you fail to plan, you are planning to fail. In today's episode, we talk about planning and risk and more with Marc Mertz. Marc is the Chief Strategy Officer at Kaweah Health in California. At Kaweah some of his numerous responsibilities include strategic planning, business development, marketing and communications, media relations, physician recruitment and relations, and government affairs. The majority of his career was spent consulting with large physician groups and health systems across the US as well as internationally. Prior to joining Kaweah, he was a senior level executive and National Physician Services Practice Leader with GE Healthcare Partners, where he was responsible for business development, team development, and simultaneous leadership of multiple client engagements. Marc is also a published author and speaker at national conferences. Let's talk with Marc about risk in medical care. 

Marc, welcome to the show.

Marc Mertz  4:18  
Thanks. It's great to be here.

Scott Nelson  4:19  
Before we begin talking about risk in health care, let's go back to the beginning. How did you get into health care and where you are today?

Marc Mertz  4:25  
Yeah, so I've actually spent my entire career in health care.  Actually went to undergraduate school for health care administration. Early on, I actually ran physician practices on the East Coast, both primary care and specialty practices. And then spent a vast majority of my career in health care consulting, over 20 years, working with health systems and large physician groups, really across the country and even a little bit overseas, which was just a fantastic experience. I got to see a lot of different markets, think I got to work in 43 states and a couple of countries, so I think I got to see a broad perspective of the health care industry. And then for the last five years now, I've been the Chief Strategy Officer at Kaweah Health, which is an independent health system in the Central Valley of California.

Scott Nelson  5:12  
You've been involved in many initiatives in many health care organizations across the US, like you said, 43 states that's, that's very impressive, including your current work as a chief strategy officer and executive. So thinking about risk, how do you define or think about risk in health care in your work both as a chief strategy officer, and then also as health care executive?

Marc Mertz  5:31  
Yeah. So it's an interesting question, as I thought about this topic, and preparing for our conversation, you know, I think, I think that we spend a lot more time thinking about risk, without actually thinking about the word risk. I think about, I think there's really risk in everything that we do. There's even risk of things that we decide not to do. And then there's certainly risk in doing nothing. And so as I thought about, you know, my role and the work that we do, you know, I think risk comes in a number of different flavors. I mean, I think, you know, being kind of a hospital guy, now I hear the word risk, I think my mind immediately goes to the kind of actuarial insurance risk, right, you think about capitation and risk models, you also think about kind of the compliance and the risk department, right? Patient Safety and things like that. But in my role, obviously, is a big part of it is strategic planning. And so there's huge components of risk, and what are we focusing on? What's the what are the competitors doing in the market when you know, what's shifting, but then also operational risk. In addition to being the chief strategy officer, obviously, I'm also a senior executive at the organization. So all kinds of operational risk from patient safety and financial risk, you know, facilities reports to me, and so I'm constantly working with my team to make sure we have a safe environment that don't create unnecessary risk for us. But then I get, as I was thinking about this, perhaps where I spend most of my time these days, is an area that I hadn't really thought about before, but it's really, reputational risk. You know, as health care providers, it doesn't matter if you're a primary care physician, a surgeon, you're a dentist or a health system like we are, you know, we rely and depend so much on having a great reputation for our, with our, with our patients, and with our community, probably perhaps more so than any other industry that, you know, I spend a lot of time talking to the community, looking at data, and just thinking about what is our reputation in the community? What do people think about us? Do they believe we are a safe place to go? Do they believe that they and their family and loved ones are going to get the right service when they come to us? And how do we mitigate that risk? And how do we, you know, make improvements in that area? So lots of different aspects to risk. And, you know, again, I think we're constantly weighing risk and trying to respond to it and mitigate it without actually thinking about risk. At least I think I do.

Scott Nelson  7:58  
And that's really interesting, when you brought up the point about the reputational piece of it, which, you know, we hear a lot and there's a lot of engagement, whether or not it's online, internet, social media. So from a reputational standpoint it can come from all different ways. How do you approach that from either a reputational perspective or the approach from all of those those areas? Because you're coming across the entire organization.

Marc Mertz  8:24  
Yeah, so our marketing team reports to me, which includes our social media team. And so I think, years ago, we recognized that no one's going to tell our story like we can.  No one knows us the way that we do. And, and no one is obviously, you know, as vested in telling our story as we are ourselves. So you can't rely on the media or others. And so we've taken a very active social media approach to communicate that. And obviously, there's a component that's really just kind of informative of these are the services that we offer, these are locations that we have, and we do all of those things. But more than anything else, we use that platform to help foster that reputation in the community. And we try and highlight the human aspects of the organization. We try and emphasize the quality of care that we deliver, the focus that we spend on patient safety and patient experience, and really creating a safe and humane environment here. So we spend a ton of time there, as well as just direct outreach with the community. We've got a whole network of community advisory councils we call them that there's probably a half dozen different groups that we meet with on a on a monthly basis to talk about the things that we're doing. And it's really a bi-directional conversation with them to understand what they're hearing, what they're seeing, and what they're thinking about our organization. And that helps us probably stay ahead of some things, and maybe avoid some some risks. And so yeah, it's a huge component of the work I do every day?

Scott Nelson  10:00  
In terms of a planning process, so if you even go to each one of those flavors, as you described them, you think about those in components of a strategic planning process. Based on your experiences, how have you formed an approach to address risks from a planning process, you know, thinking about potential components, like strategies and tactics, and measuring and monitoring, put those together into into one plan that can then potentially address and maybe manage and mitigate or, or resolve risk even proactively before you come in contact?

Marc Mertz  10:31  
Yeah, great question. And, you know, my career as a consultant, you know, spent a lot of time working with different organizations to develop the strategic plans, whether again, it was a small physician group or a national health system. Oftentimes you found that organizations had a pretty limited planning process. It might be the executive team goes away for a weekend, or a retreat, or a smaller group gets together and puts together the strategic plan. And, yeah, it might be a great plan. But you know, it doesn't have all the different perspectives that are probably should have, and maybe doesn't get the broad distribution and use that it should be, maybe it sits on a shelf somewhere. And so when I came here to Kaweah Health, we looked at the process that was in place and really, completely started from scratch and started over and developed a strategic planning process that we go through each year. So I'd say our strategic plan is a multi-year plan, but we touch it every single year and kind of revisit it. We don't blow it up and start over every year. We probably do that every three years. But each year, we really take a close look at it. It's an extremely comprehensive and inclusive process. We include our board of directors, which we're a public health care district, we actually have a publicly elected board. We we include all five of our board members in the strategic planning process from the very get-go. We include, obviously, leaders from throughout our organization, including frontline staff, and so we probably have dozens of employees who participate in the plan. We include our medical staff, we invite the entire medical staff of 700 physicians and providers, to participate in multiple stages of the planning process. And then we include community members. We invite community members to participate in some of our planning discussions. And while this is a ton of work, as you can imagine, logistically scheduling these different sessions and having these different conversations many times, what you get is you get different perspectives. You get you that one community member who just happens to mention something that they saw or thought of that maybe we didn't because we live it every single day. And that might be just a nugget of, you know, a great idea or makes us think about something risk related that we had not thought about otherwise. And so it just gives us a much, much broader perspective, from from obviously a lot more people that I think helps us think around corners and think about different angles and perspectives on issues that we might not otherwise have, if we did kind of that smaller executive team get-together on a weekend kind of approach.

Scott Nelson  13:05  
Thinking about that work and the process of putting everything together, and we've done that, and you mentioned the experience of going through that, and people will go through that process, then potentially at some point, maybe put that up on the shelf. When you talk about the challenges and considering all the logistics and the scheduling. When you are involving such a big group of stakeholders or owners, how do you get the buy-in to show folks that, hey, this is a very critical process. This is a critical, it's not just necessarily an exercise, but this is something that we're going to take away and get get a lot of valuable information, not only like you said for today, but over the next one, two, and three years to help us in the long run at each one of those levels of the stakeholders and the owners that are engaging with you.

Marc Mertz  13:51  
Yeah, I think you have to lay the foundation for people and explain to them what strategic planning is, again, especially as you're thinking about involving board members who might have we might have a board members that's a school teacher, or you know, a former banker, they don't necessarily come from a health care background. You know, as you think about community members, again, might not have a health care background might not have a, you know, a big robust business background. So I think helping them understand what is strategic planning. You know, we're helping the organization think about the future. Think about opportunities, think about threats, risks, and develop a plan that's going to prioritize the most important things that we're going to be working on. The things that are most fundamental to our organization's success in the future that will avoid all of those situations we don't want to find ourselves in. And so I think if you help them understand the importance of all of that as a context it helps them have those conversations and think strategically as opposed to operational. That's another part of it is really as I try and work with my team, it's helping them understand there's a strategic plan, which is different from operational plans, right, there's things that we do on a day-to-day basis that will never get into the strategic plan and nor should it. So helping them understand that those differences is helpful. And also, for us these days, you know, in health care resources are not unlimited, right, so you can't do everything. We don't have the time or the staff or the money to do everything. And so as much as a strategic plan is about what we're going to be doing, most important fundamental things for success, it's also really a lens of what are we not gonna be doing in the next year. Because if it's not that important, and it can't get in the strategic plan, and we probably don't have the time and the resources to dedicate to it in the coming year. And so, for us that that plan becomes that roadmap of what we're doing, but then also, what we're not doing.

Scott Nelson  15:53  
From your experiences now, when you talk about just the areas of responsibility you have now, and then the work that you've done prior, and you mentioned today, marketing, strategy, physical plant, some of those pieces, if there were one, two, or three important actions that health care professionals and organizations can and should be doing to decrease vulnerabilities and to strengthen and manage against risk, if there are some specific actions they could do, what should they be doing and then where should they be focusing those areas? So you know, thinking about like, like physical plant, you know, areas around the facility, and the actual layout of the organization, wayfinding, things like that. Where would you recommend folks take a look at and tackle first?

Marc Mertz  16:38  
Yeah, I guess I'll start broad, and then specifically answer the question that you asked. I guess, you know, as I think about one of the most important things to be doing, I think we talked about one of them, it's that kind of comprehensive planning process, involving as many people as you can different perspectives, to see just different things or see things differently than you might is important. Second, I find that having a good network of colleagues outside of my organization that I can reach out to and talk about the things that they're seeing in their markets, the things that they're seeing in their organizations, can be a good way to think about things that I wouldn't have otherwise looked at. And then also, trying to put myself into other organizations shoes, and especially as I need to think about competitive risk, you know, if I were, you know, the system across town, how would I be looking at the market? How would I be looking at opportunities to align with physicians? Or where, if I'm looking at my organization from the outside, where are the weaknesses in my organization that if I were in someone else's shoes for the competitor what would I be targeting? What would I be trying to do to counter our efforts? And so that's all helpful. Specifically about, you know, some of the more physical plants, you know, nothing can beat walking around. And so on a regular basis, I obviously, meet with my director of facilities all the time, but on a regular basis, we've got scheduled blocks of time, and it's usually a couple hours, where we'll go out and walk. We'll walk the floors of the hospital. We'll walk some of our outpatient buildings and facilities and just look around and is the environment clean? Is it safe? Talk to the teams, you know, get their perspectives on the facilities. And again, you know, is it safe? Are there other challenges? Nothing beats going out and putting your eyes on things and in trying to witness it firsthand.

Scott Nelson  18:25  
And then when you're doing that, are there specific metrics that you're monitoring on a regular basis? Are there specific resources that you have found to be helpful or be successful for when you are engaging in all these different activities?

Marc Mertz  18:38  
For facilities, I mean, obviously, preventative maintenance, you know, there's, you know, indicators on whether it's an HVAC system or some anything else in trying to keep up on all those PMs and make sure that we're doing the preventative work so that we don't, you know, get into an unfortunate situation. But beyond that, I think it's just talking to the people, both from the facilities team as well as the operational folks out there. They know when there's an environment that's unsafe, right, they can see when something's not working, or they hear something from patients. And often it's, it's asking that simple question of, is there anything in this environment that you feel is unsafe for you or for the patients that you're caring for? And people will tell you, you know, these people work 8, 10, 12 hours in these environments, I might just be walking through for 30 minutes, so, you know, ask the folks who live there and work there and really know that environment better than I'm ever going to know it.

Scott Nelson  19:26  
Do you see risk variations among the different departments, among the geography, both internally within the system and then outside within the community? Are there different risk variations or variabilities within each of those areas that you have to work within?

Marc Mertz  19:40  
Yeah, no, I think there can be huge variation in all of those things that you mentioned. And you think about, internally for a moment, you think about different departments. There's one level of risk in the operating room or the let's say that we do a lot heart surgery so, you know, the cardiothoracic surgery OR is one level of risk whether or If you go into the finance department, right, completely different level and type of risk there. And so, you know, different levels of awareness and in risk mitigation, and emphasis on facilities, absolutely. Organizations, for sure. I mean, running a hospital these days in the state of California is not a, it's not for the faint of heart, you know, it's expensive place to live and to operate. The state, you know, seems like, continues to roll out these unfunded mandates on us so it can be very challenging here. Finances, especially post-pandemic, are a huge issue for us. We're an independent health system, I mentioned before, we're a public health system. 60% of our population in this community is on Medi-Cal, which is what California calls Medicaid. So a very challenging payer mix that creates an environment of risk for us, in this community, that, let's say, a hospital in Huntington Beach, or Beverly Hills, with a very different payer mix, maybe a very different organizational structure and financial stability and security, might have, obviously, a very completely different level of risk in the current environment. And so I think it comes down to the organization, but also geography, you know, different communities, different states, different areas, I think, can be highly variable in really all probably all aspects of risk, certainly, from a competitive standpoint, right, very different competitive levels. You go to Los Angeles, there's 90 plus hospitals. I'm in Visalia, there's one hospital. So the risk of the hospital across the street moving into one of my service lines and taking that volume is much lower here. And so yeah, variability in the types in the in the acuity level of risk, whether it's within the organization, between organizations, or certainly in geography.

Scott Nelson  21:58  
You mentioned you're in California, and some of the things that are happening within California, locally, but then around the state. Looking back through recent history of Kaweah, from a risk standpoint, what can you take a look at and think about that was expected versus unexpected? What could have been done differently if you had, you know, with the advantage of hindsight and being able to plan and prepare going forward?

Marc Mertz  22:20  
Yeah, I think we asked ourselves that question a lot, you know, especially with the COVID pandemic, and the last three years have been fairly unique. And so I think, we reacted and responded as best we could, in the, in the, you know, the heat of the situation. And there's, you know, the clinical aspect to it, there's a financial aspect to it, there's operational, huge issues operationally, with staffing and otherwise. And so I think we did a fairly good, or maybe a very good job, of navigating that when you really didn't know what to expect. I mean, every day, it was a, it was something new, right, with the <UNKNOWN/> and with the way that the state and the federal government responded to it. What I didn't anticipate, and perhaps we didn't anticipate, is that, you know, as the pandemic clinically declined, and we had at one point nearly 200 COVID positive patients in the hospital, we're down, you know, we might see four or five a day now, so it's essentially that clinical aspect of it is, is really for the most part over here. But what we didn't anticipate is really, the aftermath of the pandemic was greater, perhaps, than the pandemic itself, and I'm thinking about the inflationary pressures that we're seeing, and I think everyone has seen these days. Labor costs more. Medications cost more. Equipment costs more. Energy costs more. Everything just costs so much more than it did, and that, especially the staffing part was so unexpected. You know, we lost so many nurses during the pandemic, you know, nurses that either left the state, left the industry, retired, or went into travel nursing, that, you know, we struggle every day now to staff the hospital. And that is surprising that it's a bigger issue after COVID than it was even during COVID. I don't know that we could have foreseen it. But, you know, to answer your question, you know, what didn't we see coming as a risk? That inflation and especially the staffing challenges were probably the biggest unexpected risks that snuck up on us.

Scott Nelson  24:34  
Well, you mentioned inflation, and you mentioned some of those expenses. Now that we've had been dealing with those for a period of time now, and that things may be taking place towards the future, looking forward either during this year and maybe even beyond, factoring in some of those things about labor, overhead expenses, supplies, workforce, you know, with your nurses, what approach have you taken based on those lessons learned over the COVID period that you're applying and moving forward with and learning from there?

Marc Mertz  25:01  
Yeah, another good question. You know on the supply side, we do participate in a group purchasing organization. And so I think pressuring them to be more aggressive in their efforts, as well as our own buyers, working with our vendors, you know, shopping around more than we ever did before. Part of its just to find stuff, right, just getting things, you know, in the supply chain has been challenging, just the stocks haven't been there. And so, you know, trying to find the things we need, but then also shopping around pricing more than we ever did in the past on the supplies that has been vital. The staffing, you know, we've had to get extremely creative to the point that we started our own nursing school this year. And so in, in February, we actually sat our first cohort of registered nurse students. And so I think 25 new students joined the program, they're working part time for us, they've got full time benefits, and then they go to school part time, and the nursing school is in our administrative building. So they're going to class in our administrative building. They're doing their clinical rotations inside the hospital. And when they finish, and it's either a two year or three year program, depending upon what courses they have already completed, they then just owe us three years of service because we've heavily subsidized the program. So we just couldn't rely on the normal pipeline of nurses coming out of schools across the state or in our community to meet the needs of our organization. And so we had to go out and create our own nursing school, which is not something we had seen on the radar. But we have high hopes that although it's not going to solve it tomorrow, two or three years from now, we feel confident that we'll have a pipeline of nurses that we know well, that we've trained, and they hopefully got an attachment and commitment to this community and this organization that's going to result in them staying here for a long time to come.

Scott Nelson  26:52  
That is absolutely an example of taking a creative solution and approach to solving a problem. The last question goes back to geography, you mentioned geography earlier, and as you having lived on both coasts and worked in 43 states, taking a broad national view, what do you see as the biggest challenges we are facing in the US health care industry today related to risk? What could and should be done to either be prepared, address and manage, or even resolve before it even hits us?

Marc Mertz  27:18  
That's the $10 million question isn't it? Well, I think we already talked about the fact that you know risk is variable, it's variable by the organization, by the geography, and certainly variable by what you do, you know, the type of provider that you are, the type of services that you're providing. So I think there's just all kinds of different risks out there. But I think across all of those areas, I think as health care providers, we always have the kind of compliance risks, you know, we need to deliver safe and effective care to our patients who, you know, whoever they are. And, you know, take steps to ensure that we are doing that every time. You can't, it's not enough to do it most of the time, right? We have to do it all the time. And so looking at the systems, and the processes, and the approaches that we take to make sure it is the safest and most effective way to do things and constantly reevaluating that and then spending the time to proactively think about those things. Thinking about what is the next way that one of my patients could be harmed, and engaging your staff and other providers, in that, in thinking about that question and answering that question, so that you're ahead of any potential risks in concerns is vital. I go back to the reputational risk, and again, I think, you know, other industries can compete on price or on features or functions. We trade on our reputation for the most part. Certainly location comes into play and in you know, potentially services, but at the end of the day, patients come to us because they believe that we're the best person to care for them, or we're the best organization to care for them. So how do we foster that relationship and that trust among our patients, is vital. Because if you don't do that, I mean, talk about risk. I mean, if you don't have that reputation, you'll risk existence. And then in environments. Environments are different types of risk. We talked about a lot of California risks for us. I'm sure each market that everyone's in has their own inherent risks there. And so just thinking about their own particular situations. Going back to, I think, having that comprehensive approach that allows you to really evaluate all of those different areas. I would encourage everybody to think about what you're doing on a kind of semi regular basis, but also an annual basis, to really assess where your organization is, where is it that you want to go, but then really spending time thinking about what are the risks? What are the threats that are out there? Whether it's a competitor across the street, whether it's some of the government policies, and we spend a lot of time thinking about government policies because 80% of our money comes from the government, whether it's the state or the federal government, so we're constantly thinking about what are they doing to change. What's changing in your industry? You know, what, what do you need to be thinking about 6 months, 12 months, 18 months from now, to hopefully make sure that your organization is in a better place than it otherwise would have been.

Scott Nelson  30:16  
That's a great point to conclude our conversation. Marc, thank you very much for your time and sharing your thoughts and experiences today. We really appreciate it.

Marc Mertz  30:23  
Yeah, Scott, it was a lot of fun. I appreciate it.

Scott Nelson  30:24  
Thank you for listening to The Risky Health Care Business Podcast. You can listen to all episodes from the resource center page of the SpringParker website, springparker.com, or click the Listen link in the show notes to listen and subscribe for free on your platform of choice. And remember, accelerating health care performance is achieved through creativity, not just productivity.