It’s been almost a year since John Fernandez was named CEO and president of Lifespan Corp., so he’s had plenty of time to develop a clear vision for the future of the state’s largest hospital group, which has struggled financially in recent years.
Among his priorities: boosting Lifespan’s research capabilities, job development, providing patients with what he calls a “wow experience,” and improving the health system’s finances as it continues to rebound from the COVID-19 pandemic.
Fernandez arrived at Lifespan after serving as president of Mass Eye and Ear and Mass General Brigham Integrated Care, coming to Rhode Island not long after regulators rejected a merger plan between Lifespan and Care New England Health System, the state’s second-largest hospital group. (Care New England is also feeling severe financial pressures and has a new CEO and president, Dr. Michael Wagner.)
Now Fernandez is focused on his priorities, which don’t necessarily include a merger but could grow ties with Brown University.
“We need to worry about our patients and their access and the research and teaching missions … and we have to make sure it makes money so we can invest in those,” Fernandez said. “But if we do those, then if we want to do mergers or acquisitions and they’re good for us, we should do it.”
Whenever someone comes into a management-level job, they like to think they have at least an idea of what to expect. How did reality match your expectations here both in terms of opportunities as well as challenges? I think they match. The search process was thorough; I did my own homework. The finances are what they are. They need improving, but I knew that ahead of time. A lot of good people, but we [probably need to] be better organized. I can tell you that the relationship with the dean at the [Warren Alpert Medical School at Brown University] was very pleasant – wasn’t a surprise that it was a good relationship, but it’s been better than expected, just a lot more time together than what I had been anticipating. [Editor’s note: Lifespan confirmed on Oct. 23 that it is in talks with Brown University about rebranding the health system and strengthening affiliations and licensing agreements between the two institutions. In response to a question at a PBN Health Care Summit on Oct. 25 about how a potential agreement would affect Lifespan’s level of care and services, Fernandez said they “will be better regardless of what our name is.”]
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FULL SWING Lifespan Corp.’s net loss for fiscal year 2022 totaled $186.8 million, a stark contrast to a year earlier when it finished with a $161.6 million gain. Lifespan cited inflation, lower federal aid and “unfavorable” patient volume as some of the reasons for the poor performance. Fiscal 2023 reports have yet to be released. / SOURCE: LIFESPAN CORP. ANNUAL REPORTS[/caption]
What were some of your top priorities stepping into your new role? How many of those would you say you’ve accomplished? We’ve accomplished coming up with a budget for next year, so that’s good. But it’s only been seven months. So, there are a lot of things I want to accomplish. No. 1 is, how do we create better access for our patients of all different types? That will be high on my list. How do we fix our financial state? Because we only made $50 million over 10 years, which for a $3 billion operation just isn’t good enough because we make a margin to help invest in our facilities, but more importantly into our programs. That’d be cancer or hiring primary care doctors – that’s what we use our money for. It doesn’t go to shareholders or other places. And then, how do we work with our various partners in a better way? It started before I got here, but the research agreement we have with CNE, Brown medical school, Brown public health. [Looking at] how do we do more research and make it easier for our researchers. If we could do those big-picture things, we would be a lot better off.
Your latest quarterly report shows some improvements. Can you share a little bit about what helped give you the boost and what challenges remain? So, I’d say this year, credit goes to the folks that were here before, [such as] Arthur [Sampson]. They did some really good work [in managing expenses]. We had better volume than we did the prior year, we got some payments from the federal government, and we got some other places where we’ve grown clinical services. I would say it’s like a lot of little things that are just a little bit better. The year prior, we lost almost $80 million, so we had to go up from there. But we’ve got a long way to go to have a steady 3% to 5% operating margin, but I’m confident we can get there. We’ll need help from the private [payers], from the insurers, and … we got a big boost in our Medicaid payments where we paid more in, but we’re getting more from Medicaid from the state. So that’ll be a big help in next year’s budget. Then we have payer contracts, and do we take more risk on payer contracts? So, we have a lot to do to get them to be in a steady state.
Supply costs and labor costs have remained a challenge. How do you plan to manage those in the future? So the supply chain we’ve done a lot [with], [but] how do we standardize products? How do we get the best prices? That is detailed work that we have to just be better at. On the labor side, if I could fix one problem, it’s how do we have more nurses, more techs, more surgical techs, more primary care doctors or nurse practitioners. If we can have more of them and solve our labor problem, because we’re still up over 100 [traveling nurses who] are costing us two to two-and-a-half [times] regular price of that staff. So, we’re working with all the colleges and universities. But we have to work better with them to create more places for their students to do training. So, we got a lot to do on that front. It’s not a Lifespan problem [alone].
This is like where I’m working with CNE. I don’t look at them as our competition, [but] how do we do better? One of our biggest problems is also retaining. For every person you retain, you don’t have to recruit another one. So, we’re working hard at our retention, as well as our training and recruiting efforts.
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STANDING TALL: Rhode Island Hospital in Providence has long been the flagship of Lifespan Corp., the largest hospital in the state’s largest hospital group.
COURTESY RHODE ISLAND HOSPITAL[/caption]
Shifting gears a little bit, you’ve stated previously that you’re not currently interested in attempting another merger with Care New England. But given the financial challenges related to the industry, could you say with certainty that you wouldn’t pursue another merger with another health system in the future? I can say I’ll pursue something that’s good for us, that’s better for patients, better for our research and helps us financially. If it doesn’t meet those criteria, then I’m not going to spend a lot of our time, money and resources on exploring unless it’s pretty obvious early on that’s the outcome.
Let’s talk about the payment-in-lieu-of-taxes conversations with Providence. Why has Lifespan been sort of resistant to being part of that? It’s not that we’re resistant. We just have to work it through [with] the city. It’s a negotiation that goes on. So I think I would characterize us as we’re ready to talk about it. We have meetings set up and that’s what we’re going to do. And I’m not going to negotiate it in the press.
You mentioned earlier that patient experience was one of your priorities. Can you explain what that looks like and what steps you’re taking now to improve upon that? It starts with if you want an appointment, how do we make that incredibly easy? If you need a primary care doctor or a cardiologist, [obstetrician], thoracic surgery, how do we make sure we have enough physicians, nurse practitioners, staff so that you have an easy way to get to see that person? And if we get that done, then when you actually get here, somebody when they meet you at the front door of the office … says, “How can I help you?” and you walk away going, “Wow, this is really a great experience.” That’s what I’m looking for. I would hope we would use [mobile] devices … if you’re on your couch and your stomach was hurting or your head was hurting, you could go and click on your phone and get some advice. We have a lot to do to make that service experience better.
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MAN WITH PLANS: John Fernandez, Lifespan Corp.’s CEO and president, says his No. 1 priority for the hospital group is creating better access to health care for patients of all types.
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MICHAEL SALERNO[/caption]
Lifespan has entered into a research collaboration agreement with Brown and Care New England. Can you tell me a little bit about what areas you think this agreement has done well in and what areas do you think the research could improve upon? I don’t think we have results to report on yet. But our vision is that we now have four different ways. You got Lifespan, you got [Brown’s] School of Public Health, [Alpert Medical School] and CNE, and if you wanted to do a project that cut across any one of those four, you had to fill out different paperwork, you had to get different clinical trial agreements, institutional review boards, made it really complicated if you were a researcher. And this is the vision of people that came before me, but I 100% agree. How do we make it easier to do research? And then hopefully, we’ll then get more grants, more clinical trials that will benefit patients over time. But right now, we make it harder than it needs to be to do research.
What steps is Lifespan taking to improve its cancer center now, as you look to attain a National Cancer Institute designation in the future? We are conducting more and more clinical trials at both The Miriam [Hospital] and Rhode Island Hospital. Patients can receive the latest protocols, access groundbreaking immunotherapies and emerging cancer treatments. Between Lifespan’s clinical research and the basic and translational science research happening at Brown, we have an incredible foundation on which to build Rhode Island into a research and development center, which will attract private and public investment, similar to how Cambridge [Mass.] was selected as one of the federal [Advanced Research Projects Agency for Health] sites. Our focus is on bringing world-class accessible care, groundbreaking research and clinical trials to the communities we serve.
Lifespan is also part of the biotech hub with Care New England and Brown. Can you provide some detail about Lifespan’s role in that and the challenges associated with it and what you hope to accomplish from it? I think this is the most important thing I’m working on that’s not inside of Lifespan. My external part is, how do we create more jobs in Rhode Island and/or metro Rhode Island? This biotech hub is top of the list because thanks to the state leadership, the governor, [House] speaker and Senate president, $45 million [was put aside] to get this going. It is not a new concept. It’s done in Boston, done on the West Coast, done in North Carolina, Texas. We’re in competition with the rest of the nation. The most important thing is to have the chair of that appointed [former Rhode Island Foundation CEO and President Neil D. Steinberg was nominated for the job on Oct. 13 by Gov. Daniel J. McKee], get the board going, get the organization going, so we can compete in the marketplace for new companies to come here and retain the companies that are here. It should help us be more organized, sell our assets and invest in new ones to attract new businesses to come here. If we had more jobs being created by the private sector in this state, that means more people with insurance. That’s better for me, right? Because we have insured patients. It’s better for the economy. It’s better for the [Providence] mayor and the governor because there’s more tax revenue. So, to me, that’s where we ought to be focusing our time as leaders in this community, is, how do we get more jobs in the state?
