Michael Ugwueke 00:03
My hope is that the industry will take this seriously and use this as a catalyst to keep us nimble and force us to think differently as we continue to move our health systems forward.
Gary Bisbee 00:15
That was Michael Ugwueke, President and CEO Methodist Le Bonheur Healthcare, sharing his hope that the COVID crisis can catalyze health systems as they continue their forward progress.
I’m Gary Bisbee and this is Fireside Chat. Michael has a view of the importance of a reliable supply chain for PPE and suggests a strategy to identify those goods that need to be produced in the US. Any goods produced outside the US should be stockpiled to ensure appropriate supplies. Michael discussed the accelerated pace of decision making during the COVID crisis and his view of how to maintain it as the crisis lessons. He believes that consolidation will continue as health systems assess the risks of future crises. Michael spoke about Methodist’s obligation to care for its community and join with other stakeholders to prevent root causes of poor health. Let’s listen.
Michael Ugwueke 01:07
We have an obligation to truly take care of the folks that we have the privilege to serve. And one of the ways to do it is to really begin to prevent some of these root causes of poor health, of social determinants of health.
Gary Bisbee 1:21
Michael referred to the importance of understanding what physicians and staff are encountering as they respond to the COVID crisis and how showing compassion is an important characteristic of a leader in a crisis.
I’m delighted to welcome Michael Ugwueke to the microphone. Well good afternoon, Michael, and welcome.
Michael Ugwueke 01:43
Good afternoon, Gary.
Gary Bisbee 1:44
We’re pleased to have you at this microphone. Let’s start by learning about what’s changed at Methodist Le Bonheur Healthcare since the COVID crisis, discuss longer-term effects of COVID on the large health systems and customers, and wrap up with your view of leadership in a crisis.
The COVID outbreak is six or eight months old, but it seems like it began a lifetime ago. But looking back what’s been the major impacts from the COVID outbreak on Methodist to this point?
Michael Ugwueke 2:15
Thank you, Gary. I appreciate the opportunity to share some of these insights with you. We, just like any other health system, back in January and February timeframe were still not sure exactly what was happening or what was going to happen. And then all of a sudden we realized that this was for real. So our systems, just like anyone else, were impacted significantly. No one was prepared for this. Let’s just put it very simple. We do a lot of command center setups, we do tabletop exercises for plane crash or earthquake, for active shooter, you name it. We’ve never rehearsed real a pandemic at this level. We had experience with a little bit of Ebola but that was after the fact. And it was in a far away place. So it wasn’t anything close to home. So this was a complete total different for us relative to how we handle emergencies and things of this nature. So we quickly set up a command center as we typically do, but we set it up to learn on the fly, so to speak. And our team met twice every day, one in the morning and one in the evening, coordinating information across the entire system. And we purely call back on those days. The number one issue was the lack of our PPEs and where to get them. Most health systems don’t have on hand supply of PPEs for more than 30 days, at the best 60, because you just don’t have to need more stored in there. So immediately we went into high gear trying to secure as much PPEs as we can and enlisted the community, quite frankly, to come to the aid. So we had both of our organizations having to manufacture face shields, cloth masks, and you name it, even some hand sanitizers. So we had community sewing women doing a lot just to try to produce as much as we needed at the time. And sort of sourcing stuff from what I would call non-traditional supply chain companies. Back in those days a lot of people transitioned their businesses to going to supply in hospitals and health systems with PPEs. So that our number one focus back then. And then we had to shut down March 24. That was really a big deal for us. We lost about 45% of our business. So took a nosedive immediately and obviously we furloughed a lot of employees, cut staff, and PTO. The executive team took 20% reduction in pay. We knew we were going to work together as a team to really overcome this. So I can’t tell you how proud I am of our team, Gary. During those days people were coming up with all kinds of ideas on what we could do and how we could do it. And they were volunteering. And it really showed what we call the power of one here at Methodist Le Bonheur Healthcare and I’m extremely proud of our. But we’re coming out of it a little bit now. So financial was one hit there, obviously. Trying to account for extra cost of the PPEs, agency nurses, staffing, all of those debts were some of the challenges.
Gary Bisbee 5:38
What about strategic opportunities over the, let’s say the next three to five years, Michael, have they been affected because of this?
Michael Ugwueke 5:46
Yes. As you know, when this hit, no one knew for sure how we would get to where we are today. So we stopped most of our capital projects that we had originally budgeted for 2020. We immediately put a halt on those trying to conserve cash, because not exactly sure how big this was before the stimulus and all that stuff started coming in. So it’s impacted some of that. A number of initiatives have been put on hold. We’re now revisiting a lot of it trying to get back again. As I said earlier, we will have to find a way to coexist. This is not a situation where you wait for a better tomorrow, something to get better. So we’re now reengaging. We’ve initiated some of those projects that we had put on hold back in March/April timeframe.
Gary Bisbee 6:34
Michael, what about the medical staff? We talked about the employed and the independents. How are they managing all of this? Did this burn them out? Or how are they looking at it now?
Michael Ugwueke 6:48
As you can imagine, when everyone shut down, especially the elected procedures, even the office visits, that impacted them. A lot of physicians don’t have a lot of strong balance sheets to hold them or tie them up. So financially they were impacted, so then had to lay off as well. The employed physicians and the private guys went through the same process. One of the decisions we made was we did not want to cut the pay of our physicians. We did not lay off anyone in our physicians, we just didn’t cut their pay and kept them home for the period. And it was soft, but it was a strategic decision. We felt that, quite frankly, they’ve gone through a lot and we will need them once we start opening up to catch up. So we just wanted to keep them whole. The private guys obviously had to fend for themselves by all the means that they can. The hospital beds was we were moving at the speed of light to try to come up with ways to keep everybody safe. We came up with our guiding principle for our associates. Number one is to keep up associates and physicians safe, obviously our patients safe. So we went to extra length to make sure that we keep it, number one safe. We created different zones around the hospitals, what we called the hot, cold, and warm zones so people knew exactly how to get to some of the closest where we cohorted COVID patients, for their own sake. And there was no testing as you recall back in those early days. Unfortunately, we didn’t have the ability to test a whole lot in house. And again, there wasn’t enough reagents to even do that if you have the equipment to do it. That was a handicap or something we didn’t anticipate too. So as we go through all of this, we’ve made sure now going forward, we have enough, including for flu this fall. If we have to go, resort to that again. But our physicians are very resilient, Gary. They kept patients first. They knew what their charge is to make sure we do our best to take care of our patients. And we certainly did and continued to do.
Gary Bisbee 9:02
Yeah, but we certainly weren’t expecting any of this. Let me dig into a bit about the PPE and supply chain. Some of your peers, CEOs are talking about ways to make the supply chain more reliable. What thoughts do you have, Michael, about how could we make the supply chain more reliable in this country?
Michael Ugwueke 9:24
Up until now, we’ve all been, let’s go to wherever we can find it cheaper and buy it, regardless of the consequences. No one knew something like this was going to happen. I think one lesson, if any, is that there should be, what I will call strategic supply islands or critical supply islands. There ought to be a couple of plans or a couple of ways to look at them. So those are our immediate need supply. There should be an opportunity or a way to make sure that they’re either manufactured here in the United States or have the ability to bypass some of them just for emergency. And then you can’t outsource a lot of what we needed during that time. No one knew obviously that we were going to have a pandemic this level. I think there may have been in theory a possibility, but I’m sure no one can tell you that they forecasted exactly what kind of pandemic, what would be needed to fight a pandemic. But I think it really showed a big gap in our thinking, particularly from a medical supplier perspective. Even medicine. We do a lot of manufacturing of medicine outside of the country. So, God forbid, something happens in some of those countries. What is our back up? I think what this has forced us to do is to think about primary and secondary sources and what backups we need to put in place. Obviously, it is like anything else, Gary, once you put a backup, nothing happens anymore, right?
Gary Bisbee 10:55
The first step is to get that backup and then we won’t have a problem. Michael, if we produce more in the US, and that does seem to be the general consensus, that means it’s probably going to cost more. And the question is, do you think the governments, employers, consumers, do you think the health insurers will be willing to pay a bit more knowing that we have alleviated the risk by producing here?
Michael Ugwueke 11:23
I think we need to be selective on what needs to be produced here, meaning not all things need to be reproduced here. Things you can turn around very quickly probably don’t need to be unless I reckon, it’s disrupted. But I will look at it two ways. So I will look at strategic locations, just like you do with IT. If something were to happen, we have a backup, but they are in two different states so you cap off the risk of things happening in those states. And we don’t have any in California as you can imagine. But you look for different states where things can disrupt but not completely wipe you out. So China, obviously, Vietnam, and some of these southeast Asian countries, bulk producers and manufacturers of some of what we have. Maybe an alternative is we should have North America or somewhere, South America, some other place to balance it out. So if something were to happen in one area then you have another area that you can immediately ramp up. But the critical elements need to be manufactured here. I think, again, we can anticipate all kinds of risk, but I think if we really develop a stockpile and have those items stockpiled, then we don’t have to continue to manufacture it at a very high cost. It’s a one time cost to stockpile some of those, and then be able to easy it after a little bit. Because there is cost and somebody has got to pay for it. I don’t think the government is going to be willing to be paying for it. They can subsidize some of it, obviously. Otherwise, businesses will kind of wait to pass it through to the ultimate consumers. And that is the absotively challenge there.
Gary Bisbee 12:59
Well, turning to another topic that’s of high interest and that is, I’ll call it the pace of change of decision making. It seems that COVID has accelerated the timeline for decision making for health systems and most other healthcare institutions. And the question there is one, do you agree with that? And if so, do you think that we’ll slip back to pre COVID levels of pace of decision making or will it remain high?
Michael Ugwueke 13:28
That’s a very good question, Gary. As always in a time of crisis, decision-making seemed to be quicker, faster, because you don’t have time to sit around and with a committee. You don’t have the luxury of thinking it too hard. You have to, because lives are dependent on it too, for the most part. And survival of the organization depends on it as well. So you have to think and act very quickly. Give you an example. I think right before COVID hit there had been several years of industry talk about telehealth and wearables and monitoring systems and things of that nature. It was, for the most part, businesses were invested in it, but it was nothing that anybody thought that was going to be revolutionized overnight. I used to call it a solution looking for problem. And definitely, I think telehealth found a problem when COVID hit. So every single system ramped up very quickly. We had it on a deck to begin to ramp up in June. We immediately turned the switch on back in March. Immediately saw the volume of our telehealth quadruple immediately. And now it is there but it’s not as high as it once was before. I mean, during the height of the COVID we created a virtual COVID clinic, we created a live COVID clinic, and then virtual telehealth for our patients and people resorted to that. So my question to our team, again, as I said earlier, our goal is to find a way to coexist with this virus and not just think of it as some passing fad. So as a team, our goal is to continue to provide those services for those that want to continue to access their services through telehealth, those that want to be in person and make sure that telehealth at some point becomes another venue, another arm, a strategic opportunity to serve patients. So it’s no longer just outpatient clinic, inpatient hospitalization, physicians offices. Now telehealth becomes I guess the plot, a fifth way that we can provide primary care on any kind of service to our patients. So those kinds of decisions came out very quickly. What worries me sometimes with our industry is, again, assuming distance of sites over time, we’ll go back into what I call marrying the problems all over again, you know. And trying to come up with, again, problems looking for solutions. My hope is that the industry will take this seriously and use this as the catalyst to keep us nimble and force us to think differently as we continue to move our health systems forward.
Gary Bisbee 16:14
Can I follow up then on the telehealth issue that you brought up? With the exponential increase we now have more physicians staffing it. We have more patients demanding it. Do you see, looking ahead, let’s say the next five years, will we see increasingly innovative approaches to using telehealth?
Michael Ugwueke 16:34
Yes, I totally think we will see continued use of telehealth and innovation around that as well. Prior to all of this happening, for the last 5 to 6 years, we know that there have been a lot of companies pushing telehealth as an alternative for in-person visits and it is supposed to be cheaper. In fact, a lot of the companies were offering them as a means of helping their employees to stay healthy. But quite frankly, the usage was very, very low, even at that. So soon after COVID hit telehealth automatically just took off. And a lot of people that had it on the deck immediately just rushed to get it right going. We were one of those organizations. In fact, we’ve been talking about it. We have some telestroke and some other tests that we’ve done and trying to develop something as part of our strategic plan in June. So as soon as COVID hit, we ramped it up. By March we had a virtual COVID clinic and real clinic, telehealth and we saw the numbers went from, I think in April, we were seeing like 14,000 visits for the month. And that was unheard of. Yet prior to that in March, it was like 1,600 visits. That was March. And then April it was almost 14,000 visits. So we’ve continued over time, but it’s not as high as it was in March and April. What worries me a little bit is we are going to see a plateau at somewhere unless we really take it to the next level. And what I think is going to happen as we continue to embrace this is people will be comfortable staying at home for what I will call minor care, not quite acute. So that may help to spread what we now call the hospital at home for patients that don’t have routine chronic conditions typically that brings them to the hospital, can be cared at home safely while monitoring them and maybe having someone visit just as part of the home health, but slightly different than home health care, with a different, higher level of care there. So I think there will be some of that. I think there will be ways to make it easy for patients to access telehealth from anywhere in the world.
I think the only drawback again the regulations were changed a little bit during the crisis. I hope we don’t revert back to some of the tests that were changed to accelerate this process. But clearly, I think there’ll be some additional innovation. Bottom line, Gary, as you and I know, having been in this business long enough, if someone is willing to pay for it to cover the cost, there will be innovation there. Once that goes away, unfortunately, that’s my fear, no one will continue to innovate there.
Gary Bisbee 19:24
Yeah, that’s right. Well, what are you hearing from the insurance companies? You think they’ll be willing to reimburse for the virtual visits?
Michael Ugwueke 19:31
Sounds great to reimburse during the COVID. I’ve heard some that are scaling back and I understand, obviously, their model has not been just through these kinds of medium. But again, it’s demand and supply. If there is enough patients or consumers in this case that wants to get their healthcare through this process or medium, they would have to adapt to it as well to be relevant and competitive.
Gary Bisbee 19:58
What do you think about the competition for health systems? Do you think there will be firms that try telemedicine that will compete with our health systems?
Michael Ugwueke 20:08
I think so. Again, it’s one of those things. I think every health system will have to make a decision of make or buy, whichever one is cheaper for them. I think that a lot of independent companies that one can partner with, depending on what type of telehealth it is, it’s not a one size fits all. So if you own health insurance, for example, fully integrated in that side, it may behoove you to develop your own platform and that platform can be scaled up to accommodate all the technologies, all the innovations that are coming in and knowing fully well that if you can shift a greater number of your covered lives to the telehealth, ultimately it will be significantly cost-effective for you. In fact, I think Kaiser claimed before COVID that they were seeing most of their patients, 50% of them, through telehealth and that they would be one of the few exceptions before COVID hit. I think a lot of the health systems that do not have their own health plans are probably going to double down on trying to use telehealth as a means of controlling cost and being able to fully extended the care to the patient.
Gary Bisbee 21:16
Turning to consolidation, do you think the COVID crisis will provide more incentive for our health systems to consolidate?
Michael Ugwueke 21:24
I think it depends. Each market is different. There are entities that were significantly impacted and hurt financially. When the dust settles, again, we’re currently still about 8 to 10% below our pre-COVID volume. And, thank God, we have a very strong balance sheet so we can weather the storm. And again, with some of the stimulus, I think it’s very helpful, but there are some organizations that were already teetering before all of this happened. And I think those organizations, unfortunately, will see some impact from this. So whether that will spur mergers and acquisition to be able to sustain some of those entities that need support, I think the jury is out. Even the large systems also saw a significant decline in their heart of the revenue so they have to be selective in terms of where they put their resources and whether to acquire or not to acquire. I think it will all depend on market, but who knows, again, regulatory wise, and election year and all of those things, I’d be aware of impact and what happens in the free market, so to speak.
Gary Bisbee 22:32
We were talking about paying for telehealth visits. Let’s move on to the role of the government. As the percentage of health system revenue from governments grows from its current 55% nationally to, many people think could be 65, 70, 75% by the end of the decade with the new baby boomers and so on. What challenges or opportunities does greater government revenues present to Methodist Le Bonheur?
Michael Ugwueke 23:02
So obviously, I think you’re saying 55% nationally. We are in Memphis with 63, maybe even approaching 64% government, meaning your TennCare and Medicare for our patients. And then when you add all of those together, it doesn’t take a whole lot to truly become pure government reimbursed, so to speak. We know that’s challenging. I can tell you that very few organizations can tell you that they can make a go of anything based on just those reimbursements. So the challenge, again, would be how do you really get into value-based purchasing, which was publishing health, which were some of the things that we were dealing with, with an accountable care organization that is also in question right now. So I think if we end up with government-paid healthcare, there will be a lot of changes, obviously, relative to how you fund operations on a day-to-day basis. Depending on who wins the election has been, you’ve heard some of the comments about Medicare for all, or what that would look like, no one knows. You’ve heard also the dismantling of the Affordable Care Act. So no one knows what all of that will look like if that were to happen. Pre-existing conditions will go away, insuring kids up to a certain age will go away, so a lot will change as some of these issues that has changed from a government perspective. So I think we’ll all stay tuned and watch and see how the election year plays into all of this as we go into 2021 with COVID on our side.
Gary Bisbee 24:46
Yeah, for sure. I agree with your point about the election could be very important. Do you see a day in which Medicaid might become in effect the new floor for health coverage? I mean, we have now 80 million people collecting Medicaid and CHIP, that’s a third of the population at this point. Do you think that that could become the floor for health coverage?
Michael Ugwueke 25:13
It’s very possible. Remember when the Accountable Care Act came on, the part of the Accountable Care was the expansion of Medicaid. So some states expanded, others did not expand. But yes, very quickly, get in there with all of this going on. Again, if you think about the impact of COVID and what COVID revealed was obviously the inequities in our healthcare system. And particularly it’s impacted the minority population in this country. So I think we’ll all be forced to think about how do we find a way to ensure that we’re providing care to everyone, reasonable care. But Medicaid, as you all know is, you know, if that becomes the floor, we’re all in trouble.
Gary Bisbee 26:01
Just given the level of payment, you mean.
Michael Ugwueke 26:04
That’s right. That’s right.
Gary Bisbee 26:05
What about models where healthcare delivery and finance are merging in one way or another, perhaps partnerships between a health system and a health insurer? Is that happening in the Memphis area? Do you see any possibility for that?
Michael Ugwueke 26:21
No, I don’t see that happening here. I haven’t seen any close yet, but what I have seen partnerships in the sense of, out of developing a clinic, working towards Medicare Advantage, Copper Plan, obviously the health insurers are flushed with cash right now since they haven’t paid any elective procedures lately. So they have a war chest. They can pretty much do whatever they want to do, including, but I can tell you that I don’t know how many of them that want to go into being a provider. It’s complicated enough and I don’t think they will do that, but I can see health systems looking for ways to either partner with them or to swim upstream towards the premium dollars, assuming these guys will allow you to do it because there’s no crisis for them right now.
Gary Bisbee 27:15
Well, speaking about health equity, I think it’s clear that what COVID has showed us is that public health is actually part of the national security. How do you think about that, Michael?
Michael Ugwueke 27:27
It’s actually correct. It’s a part of the national security. Think about it. So we traditionally think of national security, private warfare, actual war, and things of that nature. Can you imagine the destruction this pandemic has caused to our economy and how long you would take to recover? I can’t imagine any single war that could cause that much damage so to speak. So if it doesn’t rise to a national security question, I don’t know what will? So we have to think of it from that perspective. What else can we guard against that will have a potential to disrupt our lives? I mean, students are not in school, sports are not playing, the restaurants are shut down and most of them are not coming back, ok? Small businesses are disappearing. Companies are shutting down. The government is pumping money. This is a huge disaster. So if we don’t think of this as national security, I don’t know what we will think of.
Gary Bisbee 28:25
Will our health systems think more about spending for social determinants of health as a way to approach this issue of public health being part of national security?
Michael Ugwueke 28:36
I think they ought to and we should all do. Obviously, health care tends to gravitate towards what is reimbursed and what is not reimbursed. I get it and end of the day you got to keep the doors open. But at the same time, I feel like, among these not-for-profit, particularly faith-based organizations, we have an obligation to truly take care of people that we’ll have the privilege to serve. And one of the ways to do it is to really begin to prevent some of these root causes of poor health, of social determinants of health, so to speak. So to the extent that we embrace it and be able to help fund it, long term, obviously, it will pay dividends. The problem is short term and how long can you sustain it? But it cannot be done and beared by just the health systems alone, there ought to be multiple stakeholders coming to the table and utilizing those resources to make sure it’s lasting and not just episodic in nature.
Gary Bisbee 29:37
This has been a terrific interview, Michael. I’d like to ask you another question if I could, which is about leadership in a crisis. What are the most important characteristics of a leader during a crisis do you think, Michael?
Michael Ugwueke 29:52
So during a crisis, I think something I’ll call it three Cs. One is calm. One is making sure you’re compassionate enough to understand what the team is going through. And the third is really clarity in communication and consistency. So I think during a crisis you need to communicate frequently, bring people up to date. In fact, we, as I said to you earlier, we started our command center, we met twice a day and every evening there is an email that goes out from me to the whole house. And it’s still going on until today. So I send an email every evening to our core team, summarize what happened today, how many COVID patients we saw, where we are with our PPE supplies, where we are with our blood supplies, where we are with staffing, how many beds we’re opening. I mean total transparent communication so people know exactly what’s going on and it has been very well received. I’ve always been told that crisis reveals character in leadership and I think it’s important during crisis for leaders to step up and truly provide leadership as needed to calm the troops, so to speak, but also to understand the challenges in our, as I tell our folks, we have moms, dads, siblings, brothers, and sisters, everyone is, and outside of this, we’re all afraid of taking this virus to our respective homes. We have elderly parents and kids at home. But we come to work every day, put up strong faith and strong determination to take care of our patients. And leaders need to understand that and be compassionate enough to understand what that means for folks is to do that and brave it every week, even at their own risk.
Gary Bisbee 31:41
The final question, which is actually a personal question and that is, how has the COVID crisis changed you as a leader and a family member, Michael?
Michael Ugwueke 31:51
Thank you again for asking that question, Gary. I can tell you that it has fundamentally changed the way we take things, obviously, for granted. Prior to COVID, we had travel plans and daughter was graduating and son was graduating, I had two kids graduating this year. And none of them obviously had that experience, so that impacted us. We had obviously some travel plans, all of that changed. But just outside of that, just to look at the total chaos and deaths that happened as a result of COVID and those that were impacted in the community, people we lost through this whole process. It just begs the question more as a leader and as a community member, the impact this has had on every one of us, how could this have been prevented or minimized? That’s a question that we can all sit back and do a Monday morning quarterback and talk about, but going forward, I believe we have an opportunity to truly begin to address things and make sure that it doesn’t get back to where we were back in March and April timeframe.
Gary Bisbee 32:57
Well done, Michael. Terrific interview. We very much appreciate your time today.
Michael Ugwueke 33:01
Thank you, Gary. Again, appreciate the opportunity to share these insights with you.
Gary Bisbee 33:06
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