In this episode of Fireside Chat, we sat down with James Hereford, President and CEO, Fairview Health Services to talk about the COVID-19 pandemic in the twin cities, how Fairview is handling the crisis, financial implications and pressures and communication with caregivers and the board of trustees. To listen to the full conversation, click here.

Below is a transcription of the interview:

James Hereford 0:04
Where it’s been helpful is we shared those guidelines and shared common processes across all of the larger systems in Minnesota so we can stay in lockstep. And we don’t confuse people about what is considered an elective versus an emergent or urgent kind of procedure. There is still some art in that though no one can write in a declarative way. This is… but this isn’t because the context is critical. We always have to leave that up to clinical judgment individual physicians,

Gary Bisbee 0:34
That was James Hereford, President and CEO Fairview Health Services. James is emphasizing the importance of the physician-patient relationship and making clinical decisions for elective procedures when Fairview reopens for them. I’m Gary Bisbee. And this is fireside chat. James provided an in-depth view of the strategic partnership with the University of Minnesota to create a joint clinical enterprise “M Health” All care delivery service. both organizations are encompassed by M Health, which has a single leadership team under James. He reviewed the status of the COVID-19 outbreak in the Twin Cities and the extensive preparations that have been made and are being executed. James reviewed the financial impact that COVID-19 has had on Fairview health services and the implications for cash flow stretching into 2021. Let’s listen.

James Hereford 1:23
There have been other changes and things that CMS has done that make cash flow less of an immediate concern. But in many ways, those are kicking the can down the road. So they’ll put more pressure on cash flow in future years. Because we’re basically borrowing from those future years.

Gary Bisbee 1:41
James spoke about communicating with the board of directors, and he shared important tips for the conduct of smooth and efficient virtual board meetings. I’m delighted to welcome James Hereford to the microphone. Well, good afternoon, James.

James Hereford 1:56
Good, afternoon Gary.

Gary Bisbee 1:57
We are pleased to have you at this microphone and welcome.

James Hereford 2:00
Well, thank you. It’s my pleasure. Thanks for inviting me.

Gary Bisbee 2:02
We’re all facing challenges due to the COVID-19 pandemic, of course, and we have learned that the surge is highly variable by region. What’s the status of the surge and M health Fairview’s primary service areas?

James Hereford 2:15
I would say we’re still in the flat part of the curves, which spent a fair amount of time modeling it based on the best information that we have. I would say that the surge is probably for us that kind of peak of the epidemiologic curve is at least four to five weeks out. Right now we have about 100 patients in our health system that are either COVID positive or strongly suspected to be COVID positive and we’ve centralized that into a COVID hospital. We took over L tak and basically converted it into a COVID hospital to try to localize and centralize our use a PPE and training and staffing. So that has worked out well for us.

Gary Bisbee 2:59
How many beds in that hospital that you’ve appropriated?

James Hereford 3:02
Right now, it’s 95. About 40 to 45 ICU beds, and then the rest general med surge beds, but we’ve been able to MacGyver our way into all of those having negative pressure.

Gary Bisbee 3:15
Excellent. Well, why don’t we come back to that in a moment, but it occurred to me that everybody is familiar with Fairview health services. Now it’s M Health Fairview. And we may not be as familiar with that. So could you give us a rundown, James? It’s always fun to hear the CEO talk about his view of the health system.

James Hereford 3:34
So we’re still serving health services, that’s still corporate entity and we have a strategic partnership with the University of Minnesota. And what we’ve done is essentially create what we term our joint care enterprise. And that joint clinical enterprise is comprised of all of the care delivery system assets between the two organizations. This joint clinical enterprise, we really have thought about this as a single coherent capability, but really informed by the academic capabilities. Trying the leverage, though, what is president of a major research university in the form of University of Minnesota, the, obviously the significant clinical abilities that are there, and then come together as a single leadership team. So my leaders include the president of the Faculty Medical Group, and we have a Chief Academic Officer who is just splendid Brad Denson, who thinks about how do we leverage teaching and research across our entire clinical platform. So that’s all come together quite nicely, and it’s now a little over a year into it and it’s worked very well.

Gary Bisbee 4:49
So do we refer to the health system as Fairview Health Services or do we refer to it as M Health Fairview?

James Hereford 4:56
So the care delivery system is M health Fairview. That’s our brand in the marketplace. Fairview health services is still encompassing of we have a health plan and we have our specialty pharmacy and we have our senior care subsidiary, Ebenezer, those sit outside of that joint clinical enterprise. So there’s a corporate entity, Fairview health services, but for the most part, the way that we think about our presence in the market, is M Health Fairview. That’s what’s branded. That’s what people for the most part, see on the side.

Gary Bisbee 5:28
We were chatting a bit earlier, and you’re making a point that this crisis has really brought for the value of being together with the academic medical center and all the innovation and so on. Could you explore that with us?

James Hereford 5:42
Yeah, it really has highlighted some of the advantages, whether it’s the testing that’s been developed, whether it’s PCR testing, or now certainly logic testing that’s been developed at the University of Minnesota. They’re manufacturing PPE and face shields for us from a design. They had one of their anesthesiology fellows when he heard there was a vent shortage, go into the lab call up a couple of his engineering friends, and came up with a very low cost designed for a ventilator. So we have so many examples. So that’s outside of the number of clinical trials we’re doing, whether it’s for hydroxychloroquine, or whether it’s for losartan or other clinical trials that you would normally expect in an academic setting. But that innovation has really been gratifying and incredibly powerful, right? Incredibly useful as we prepare to respond to this.

Gary Bisbee 6:43
We’d like to be the first to know how the hydroxychloroquine study is going. It’s quite a debate about that.

James Hereford 6:49
There is and like all good researchers, nobody talks about it while we’re in the middle of the trial, and everybody’s waiting to see what comes out on the other end.

Gary Bisbee 6:59
Well said, well, let’s return to the COVID-19 crisis. Communicating with your community and caregivers is all-important, I’m sure how has MHealth Fairview communicated with the community?

James Hereford 7:12
Well, it’s a large part of coordination activity because it is truly Community Health based. So it is both the coordination of nine fairly large systems in Minnesota, including us, Mayo, aligner, etc. So the CEOs have been getting together on an ongoing basis to help that coordination. We’re also coordinating with the state government, the governor, and the Commissioner of the Department of Health. So as we come together as an ecosystem, if you will, really trying to make sure that we are very aligned around our messages, very aligned around our policies because one of the challenges in this whole epidemic has been, there’s so much we don’t know and so much early information or even misinformation that we’ve been very conscious about making sure that we’re trying to be as clear and consistent as possible about how we’re approaching this collectively, as a state and as a collective set of systems, and then right down to our individual system.

Gary Bisbee 8:17
So while we’re on the communication topic, how and how often are you communicating with the MHealth Fairview caregivers,

James Hereford 8:23
Almost daily, if not more, it is so critical, just because there’s so much change going on. It’s highlighted some of our gaps in our communication, if you will, we were living in a world that was living in a different case, we have a development underway to make sure that we have a specific app that every employee can have that we can deliver video messages and deliver text messages that we can have two way kind of interactions with, because our communication has to be much more contemporary, much more real-time just because of the flow of events. While we’re doing a lot of broadcasts kind of normative things, emails, etc. What we found is that’s insufficient. Now we’re also doing a lot of person to person, just making sure and we’re leveraging our operating system in our huddles process, but making sure that managers are they’re talking with their people, and that they’re well equipped to be able to do that because ultimately, that’s the most powerful aspect of that communication.

Gary Bisbee 9:22
Right. Well, how’s the morale among caregivers at this point, James?

James Hereford 9:26
I would think you could fairly characterize it as mixed. We have some people who are truly on the frontline dealing with COVID positive patience and working through all that that implies we have other people who have been furloughed who don’t have enough work because we’ve like everybody else in Minnesota canceled our elective cases, like most people across the country, so we have people who don’t have enough work to do. Morales probably not as high there because a lot of It’s not just clinical, it’s administrating workers. It’s the people who are doing the revenue cycle, etc, who don’t necessarily have the same luxury financially than others. And I think they’re concerned as they should be, as we all are.

Gary Bisbee 10:16
Well, with the peak being possibly a month or more out, then I suppose there’s trepidation waiting for what’s to come. How are you handling that with your caregivers?

James Hereford 10:28
Well, that’s part of the hard part here is that we are in between, you know, we’ve been working, I think it’s an overly used hyperbole, right seven by 24. But I have a group of clinical operational leaders who have been coming together for the last month, literally seven days a week for long hours every day, in preparation for this. Now we find ourselves not completely prepared, there’s still work to do, but the boldness of that work has been done and we’re in This weird space where we’re waiting for the escalation point, the inflection point of that curve. And so the volumes, aren’t there. The work intensity from a clinical perspective isn’t there, we’ve canceled all the elective cases. So that work isn’t there. And so it’s kind of a strange time for people. Now, if you go to our COVID specific facility, that one is beginning to fill up, and there’s a lot of very intense activity.

Gary Bisbee 11:27
So are you anticipating needing to redeploy caregivers?

James Hereford 11:32
Oh, absolutely. And that’s part of the work that has gone on is training and retraining people so that they are capable of being able to step into surge when it happens because our modeling is consistent with most other modeling shows is that when we do hit the surge and we start to expand into our own surge capacity, we’re going to need a lot of hands-on deck to be able to manage that and even that may not be sufficient. We are redeploying retraining re-credentialing where appropriate people to be able to work in that, in that environment.

Gary Bisbee 12:08
Can you anticipate shortages and specific areas and begin to work on that right now?

James Hereford 12:14
Well, respiratory therapy is a great example of that where we clearly don’t have enough respiratory therapists. And again, it becomes a tempo thing, because the way that the state has worked from a licensure perspective was fine in the past, but when we’re in this more critical phase of preparation, that too has to be accelerated. So yeah, there are very specific skill sets. And each one of those as we think about how do we acquire that capabilities, the depth, the talent that we need, them presents other problems for us to solve and it goes back to that necessity of good coordination between us, the other systems and the state.

Gary Bisbee 12:50
Again, there’s been regional differences in house testing and capacity for testing in your service areas.

James Hereford 12:58
Well, it’s been a little bit of a mixed bag. Mayo did a terrific job of stepping up and developed a test and have pretty significant capacity for PCR testing. We have run into limitations though around like swabs to be able to take the sample or the test medium to be able to store the sample to go to transport it to take the test have been in short supply, we’ve run into difficulties there. It’ll be interesting as some of the serum tests, the serotonergic tests come online. I don’t know that we’re going to have the same shortages there. But that’s projecting into a future that we aren’t quite there yet. And those will have different views than the PCR kind of testing. We’ve had to limit our testing. We were one of the first with drive through testing. And then what we clearly found very early was we could not sustain it because we didn’t have the testing capacity and the full supply chain of that testing capacity. And the state has had to restrict testing to match The capacity that we do have

Gary Bisbee 14:01
What about PPE? any obvious shortage there?

James Hereford 14:06
Yeah, surgical gowns, regular surgical masks gloves better on face shields. And, you know, I mentioned that work at the University of Minnesota there been a number of manufacturers in Minnesota that have stepped up, we’re probably in better shape there. And 95 mass, the challenge is making sure you have enough but we’ve also again, it’s another example where the university was out in front and helping us think about reuse and how do we clean effectively and 95 mass for multiple use. So we’ve been able to conserve that supply and use that supply. So it’s a little less dire for and 95 Masks at this point.

Gary Bisbee 14:43
How about telemedicine? That’s been an issue as we’ve talked to your peer CEOs. In some cases, telemedicine is played a critical role and their response to the health system. How about an M Health Fairview.

James Hereford 14:57
Oh, it’s been amazing. We were going through this Primary Care Transformation and one of the things that we were really trying to prepare for is a world in which care delivery systems have much more accountability for the total economics and therefore would want to be in a position to leverage things like telemedicine much more effectively. Well, this COVID crisis has accelerated that and created a very effective change management force so that now in specialty care, anywhere from 80 to 85% of our visits are through telemedicine and in primary care, it’s 90% and above without this crisis, I’m not sure we’ve ever got to those levels. But I think what it’s gonna do is it’s going to fundamentally change both the expectations of patients because they now have this was also changing, I think the expectations and the ability of providers to work in this way,

Gary Bisbee 15:50
CMS waived some of the regulations in this space was that helpful to you’re moving more aggressively?

James Hereford 15:57
It’s helped us move more aggressively, and the other thing that CMS did from a Medicare perspective was make clear that the parity of reimbursements because there was quite a difference between an official telemedicine visit versus the low fidelity virtual conversation that might occur in a normative practice. So that evening out of that, I think has taken a barrier away. That is really helpful. The question will be what does it look like when we all come back after this finally ends? Will we be able to maintain those changes and really establish a new normal but I think we’re I think we’re setting the patterns and the expectations that will make it much harder to go back to those old patterns of care and how it’s received.

Gary Bisbee 16:45
Gonna be hard to put the genie back in the bottle on this one, isn’t it?

James Hereford 16:49
Exactly right. Exactly. Right.

Gary Bisbee 16:51
You mentioned before that you canceled or at least postpone elective surgeries. What about urgent surgery? Some of the health systems are thinking about how they can conduct urgent surgeries?

James Hereford 17:06
Our perioperative leader, Dr. Pete Kelly, working with his colleagues and using CMS guidelines as well as American College of Surgeons guidelines. We put together a grid that helps us elective as many ways as a clinical decision is this truly elective, and often there’s a time component to it. Only the physician and the patient have to come together and do the shared decision making about in terms of what the risks are in terms of delay. So we’re using those guidelines. And again, where it’s been helpful is we’ve shared those guidelines and shared common processes across all of the larger systems in Minnesota so we can stay in lockstep, and we don’t confuse people about what is considered an elective or versus an emergent or urgent kind of procedure. There is still some art in that though. No one can Right in a declarative way, “this is vs. this isn’t” because the context is critical. We always have to leave that up to clinical judgment individual physicians.

Gary Bisbee 18:10
Let’s turn to M health Fairview’s economics, we know that the finances of all our health systems will be impacted in 2020, likely substantially in 2021. But how’s the outbreak affecting me welfare views finances in 2020?

James Hereford 18:25
It’s huge. Our estimate right now is it’s about a $30 million a week impact that it’s having on us in terms of foregone revenues. And all of those costs don’t go away. And we’ve really tried to protect our people as much as we can. So it is a significant impact financially as it is on every care system. It’s not unique to us, but it is definitely changing what our financial outlook is going to look like in 2020. And frankly, it’s gonna change the outlook beyond that as well.

Gary Bisbee 18:58
Right, for sure. The no seems to be roughly a billion dollars is the annual impact of this? We’ll see if it might be more than that. What about the care grants? Have those dollars started to flow yet?

James Hereford 19:12
They have. We saw that first tranche come through this week, which was helpful, accounted for about a week, and a half of our losses. So yes, it’s helpful to have I certainly disparage it. But I also can’t pretend that it’s going to be equivalent to what we’re foregoing in terms of financial performance,

Gary Bisbee 19:31
For sure. Cash Flow is obviously critical. I suppose you’ve got a drawdown facility of some sort that you use during the crisis?

James Hereford 19:41
Well, we do and there have been other changes and things that CMS has done that make cash flow less of immediate concern. But in many ways, those are kicking the can down the road. So they’ll put more pressure on cash flow in future years, because we’re basically borrowing from those future years. is many the mechanisms that have been put in place by CMS to make sure that there’s cash available. We also have other credit facilities that we’re drawing down from. The immediate cash flow is going to be less of an issue than the overall financial health of the organization over time.

Gary Bisbee 20:17
Well, it’s going to be a problem this year, it’s going to be a problem next year, as you mentioned, I mean, it doesn’t look like there’s going to be a vaccine next year. So who knows how much of a problem it’s going to be in terms of incremental cases. But you all are, I’m sure planning for every eventuality. And it looks like well, challenge.

James Hereford 20:38
Yeah, it is. And I think all of us are thinking about what is the reboot look like on the other side of this and starting to think about how you start to do that in an orderly way, but in a way that meets the patient’s needs and helps the financial needs of the organization. One of the critical elements of this is going to be testing and the availability of testing so that we can started to establish a level of guaranteed COVID Free Zones because the other impact this is having it’s just on the general fear in the populace about their risks of now risk specifically is coming into healthcare organizations, how do we start to be able to create an environment that we can make sure that we’re providing for the level of safety that we need to from specifically COVID related issues. And a lot of that’s going to come down to our ability to have the kind of testing the availability of testing the characteristics that are going to be helpful. Now obviously, the best thing that we can come up with is a vaccine. But as you say, that’s probably at least a year off, if not more.

Gary Bisbee 21:40
Let’s turn from finances to the board of directors. How often are you communicating with your board?

James Hereford 21:45
Our normal cadence is we have quarterly board meetings timed around the end of the quarters financially, what we’ve just this week we completed which has been kind of an interesting exercise. Virtual meetings for the Finance Committee, our audit committee, and that our full board, that actually worked quite well, we had to do a little work to make sure that they were all capable of getting on to the technology. But so we’re trying to make sure that I have an ongoing conversation with our board. So they’re fully apprised. And we have an excellent board who are eager to help and have the ability to engage and influence in various areas that are necessary.

Gary Bisbee 22:25
So any tips for a smooth virtual board meeting, everybody’s wondering?

James Hereford 22:31
Make sure you have enough hand to hand it support? We learned that lesson relatively early, but I think persistence, maybe the best advice is, it won’t go perfectly the first time as we found with our finance committee, but the next meeting went much better. And the last meeting was quite good. And I love the fact that you can have this chat facility on the side so that people can be asking questions as people are talking about our operational preparation for COVID or financial applications. So it really I think, in many ways facilitates a better board meeting.

Gary Bisbee 23:04
I wonder if we’ll be able to use this virtual knowledge that we’re gaining now going forward even when we don’t need necessarily to have a virtual meeting, but seems like it would help on a wear and tear for everybody?

James Hereford 23:18
I think so. I can’t imagine we’re going to go back to the world in which we just assumed that when there was a meeting, that it would be a physical presence, let’s all coordinate and time and space to be in a in the same room. There’s still going to be reason to do that. But I just don’t think it’ll be assumptive that it has been, at least for my professional career. What we’ve learned is you can do so much of this through video conference effectively. Again, I think it’s gonna define a new normal.

Gary Bisbee 23:46
There are several key issues that your peer CEOs are discussing, and I’d like to just run them by you, James to get your input. One is the global supply chain issue and there’s a lot of discomfort you In the global supply chain on critical drugs and other kinds of PPE when our lives depend on it. What’s your feeling about that?

James Hereford 24:10
I admit it’s disconcerting because we are so much of the supply chain. All industries and specifically healthcare are truly global in nature. And so when there are interruptions in any country, you know, the butterfly’s wing flapping causes a tornado 1000 miles away, is certainly true here. I think we need to be a little careful not to have the pendulum swing too far back the other way. Because I do think there’s resilience also in having a supply chain that isn’t dependent on anyone country. I think again, we’re probably going to define a new normal, but the other thing that clearly should come out of this is we have to take seriously what is normal conditions are not guaranteed to exist in perpetuity, were clearly abnormal conditions. And we were clearly not fully prepared for an event that we all have seen glimpses of whether it was h1n1 or Ebola or other pretty significant threats. We weren’t ready as an industry and as a country. So he’s easy to say in hindsight is an inevitability. And we’re probably not through our last COVID pandemic either. Seems pretty likely that we’ll have at least one more episode of this as kind of been the historic pattern in terms of seeing a fall reoccurrence.

Gary Bisbee 25:38
That leads right into another issue, which is the role of health systems in a future crisis. And whether we should make some provision not only for PPE and equipment, drugs and whatnot but for capacity on the part of our health systems going forward. Any thoughts about that, and particularly who would be responsible for the resources required?

James Hereford 26:03
It’s a great question because we do live in a market-based healthcare economy. And we know what the market has been doing in terms of overall capacity of inpatient beds. And that’s been going down since the early 80s. If we’re going to say, as a country, we need to have a certain number of inpatient beds available for this kind of occurrence. You can’t place that as a burden onto the individual organizations when they’re in a competitive stance against others. There has to be some either state or federal level of support and guidance to be able to maintain that.

Gary Bisbee 26:45
I definitely agree with that. In terms of health insurance, that’s another critical topic and the flow of that one goes that the health insurers have the premiums, particularly large national ones, have the premiums been responsible for needing to pay for elective surgery. So should there be some flow of dollars from the health insurers to those health systems that are on the front lines and responsible for delivery? Any thoughts about that James? Side to the delivery side?

James Hereford 27:19
I think yes, there is an ecosystem here. And that ecosystem is completely each element is dependent on the other elements. It’s not in the payers best interest to see significant distress of the care delivery systems, because ultimately, that distress is going to ripple throughout the ecosystem. So I think enlightened payers are going to be working with provider organizations to help support them through this in a number of creative means. We’re certainly having conversations with our key pair partners about how to do that. But I do think the easy answer to your question is absolutely. The payers have to be willing to be creative and step up, and not simply watching the sidelines.

Gary Bisbee 28:03
Right, this has been a terrific interview. James, thanks for your time. Let me ask one last question. And that is we’ve talked repeatedly throughout this conversation about the new normal. Any thoughts specifically about what should be part of this new normal?

James Hereford 28:19
I think one, just the way that we think about our care models and our patterns of care have been altered, and in many ways, should stay altered. We talked about how we use virtual care in new ways. And I think that the overall approach should help support that on an ongoing basis. I do think that this has the great potential of accelerating what I think was already an inevitability of care delivery systems having to take on more of the economic responsibility. We’re clearly on the front lines of this responding to this crisis and I think as an industry have really stepped up and done an admirable job. My hope is that one of the new normals is a lot of the things that we’ve seen from a regulatory perspective from a reimbursement perspective. People have more confidence and we really bake that into our new world as we emerge on the other side of this pandemic.

Gary Bisbee 29:17
Well said. Let’s land here, James. I’ve enjoyed this conversation very much. Thanks for participating and look forward to seeing you soon when we can travel some point along the line.

James Hereford 29:29
Well, it’s always a pleasure, Gary, thank you for inviting me. I enjoyed the conversation.

Gary Bisbee 29:34
This episode of fireside chat is produced by Strafire. Please subscribe to fireside chat on Apple podcasts or wherever you’re listening right now. Be sure to rate and review fireside chat so we can continue to explore key issues with innovative and dynamic healthcare leaders. In addition to subscribing and rating, we have found that podcasts are known through word of mouth. We appreciate your spreading the word to friends or those who might be interested in fireside chat as well. Brought to you from our nation’s capital in Washington DC, where we explore the intersection of healthcare politics, financing and delivery. For additional perspectives on health policy and leadership read my weekly blog Bisbee’s brief. For questions and suggestions about fireside chat. contact me through our website, fireside chat podcast com or Gary at hm Academy dot com. Thanks for listening.

Transcribed by Otter