Umbdenstock Reflects on Tenure With AHA, Shares Insight for Industrys Future

After 40 years in health care, eight as top executive at the American Hospital Association, RICH UMBDENSTOCK, 65, concluded his career at the end of August. He’s meeting some final commitments for the association through this month, but plans to step away from the field to spend some time with his wife, Barbara, and four grown children. Trustee spent a few minutes with the former health care governance consultant, reflecting on his past and contemplating the future for hospital boards. | Interviewed by Marty Stempniak

How has retirement been so far?

UMBDENSTOCK: It’s been a time of transition. I’ve moved back from Washington, D.C., to Spokane, Wash. Our children were all born and raised in Spokane and are now all in the Northwest, along with six grandchildren, so that part of it has been great. It’s been busy. You have to find a new doctor, a new dentist, so there are lots of logistical things to do. Not having to set an alarm clock is probably the biggest difference, and Sunday nights are just delightful because you’re not staring down on Monday.

Looking back on the last eight years, what are you most proud of?

UMBDENSTOCK: I’m certainly quite proud of how the field stepped up as part of the Affordable Care Act. There’s just no question about that. We knew that major change was necessary. We knew that the public policymakers would, once again, be looking to hospital payments to help fund parts of it. The question wasn’t whether or not we were going to contribute; the question was whether or not we would see some benefit in return for that. I think the team, with guidance from our board, did a terrific job of fashioning a package that moved the important issues forward, like coverage, quality improvement and insurance reform, while at the same time helping to position our hospital members as positive contributors to the overall design.

The other thing that I’m very proud of is the work we’ve done in quality and safety improvement. We’ve not only embraced performance improvement, but we have also repositioned the AHA into a performance-improvement support system. The work that we’ve done shifting Health Research & Educational Trust into a quality improvement and learning collaborative entity is going to be long lasting.

Any regrets?

UMBDENSTOCK: You always want to solve every problem affecting your members. One that we tried, but once again could not solve, was the area wage index, a very inequitable component of the payment system from Medicare. The only way we’ve been able to deal with it over the years is to find new money, and clearly in the last decade or so, there has been no new money. So the gap has widened between those at the top of the index and those at the bottom, and the ones at the bottom are really getting hurt. We knew we didn’t have any good answers, but we said we had to commit to solving this problem, and with leadership from Dr. Ben Chu as a board officer, we took this on. We did our best, but we couldn’t come up with a new system that unified the field and that was politically realistic.

Will you stay involved in health care?

UMBDENSTOCK: Actually I’ve made a commitment to myself and to Barb that I won’t make any commitments. I’m going to take six months, and use some travel time. After the holidays, we’re going to Australia and New Zealand, places that we’ve always wanted to visit. When we come back, we have a home in the Phoenix area, and we want to spend a couple of months there. I think that’ll be the time during which I’ll start to think more seriously about what to do next. The question is whether I want to do something again in health care or volunteer in some other sector and learn something totally new. I’m a little torn about that. You hate to walk away from four decades, but on the other hand, you want to keep growing and learning.

How does your leadership style differ from that of your successor, Rick Pollack?

UMBDENSTOCK: Rick has spent his career in a different place than I spent mine so it’s going to be different. He’s been in the public policy and advocacy world; I was closer to hospitals, their operations and the day-to-day activities. That’s why I took the lead on some of the quality improvement issues and with organizations like the Joint Commission or the National Quality Forum. Rick and the team don’t have to invest as much time getting up to speed on public policy. He already has stepped into that role with the insurance consolidation hearings, and is off and running. Rick has spent a lot of time out in the field in recent years learning more about members and their operations but, at the same time, that will be something where he’ll turn to the board and other member bodies for a lot of guidance. He’s very well organized, very project- and progress-oriented, so he’ll be able to build on a lot of the systems that we’ve put in place inside the AHA in recent years, and sharpen our focus and our internal operations at a time when our members are doing the exact same thing.

Could you talk about why insurance consolidation is a key concern?

UMBDENSTOCK: The announced mergers of these four large insurers, in two large deals, are going to take us down to essentially three major national private insurance companies. That, I think, bodes not so well when you think about the fact that private insurance is a negotiated exercise between providers and the payers, and size matters in that regard. Although we’ve seen consolidation on the hospital and health system side, we’ve not seen anything of this scale. So we’re very concerned about what it will mean for the negotiation process and the insurance market itself. The price of entry to try to compete with them is astronomical, and we don’t think this is going to increase competition; we think it’s going to decrease it.

You recently chaired a committee on health systems looking to own health plans. What have you learned?

UMBDENSTOCK: We’ve learned that a significant portion of our membership, about 20 percent plus or minus, currently has a health plan, an interest in a health plan or a health plan license they’re thinking about activating. Our surveys tell us the field thinks that could double in the next five to 10 years as people try to integrate delivery and financing into a more cohesive, coherent, coordinated system.

Scale matters. You’ve got to have pools of beneficiaries over which to spread risk in the hundreds of thousands, not the tens of thousands. A lot of people will look at it, then have to make the decision of whether there’s a viable partner in the market to approach in the form of an insurance company and put something together on a collaborative basis.

Do you have a progress report on the AHA’s Redefining the H efforts?

UMBDENSTOCK: The beauty of the redefining the H theme has been the admission, implicit in that, that we must change. The traditional model of the inpatient focus, the central location, the convenience to the provider but not so much to the consumer, and, frankly, the cost of the overhead of that kind of model have to change. We called it redefining because we think the H is such a powerful brand. We don’t want to be known as something other than a hospital, but we must deliver something totally different to the patient when he or she arrives at that entity. A lot more orientation toward health, prevention and care in less expensive more distributed sites, but also through less expensive modalities, digital and other.

Are hospital boards currently focused on the right areas?

UMBDENSTOCK: Boards and executives have been pretty attuned to changing the way trustees spend their time, how they focus their agendas and so on. Our Center for Healthcare Governance has done a great job of helping people see that need and understand how to maximize the value of boards, but I worry that sometimes we focus on the wrong things. I’ll give you an example. Somebody said recently, “How are we going to keep our hospitals independent?” At the same time, somebody else said, “What are we going to do about Walmart or others who are now sending hips and knee patients to centers of excellence?” What I said was, “Think about it from their point of view. Here are their criteria: costs, quality and rehab time, return to work, and productivity gained or time lost.

Independence of the providers is not on the list. That’s not one of their considerations, and if you’re worried about that primarily, you may not be worrying about what the market is worrying about. It’s that disconnect that I think people have to be more realistic about.

Any parting words of wisdom for trustees who are reading this?

UMBDENSTOCK: Two things: First of all, this next era of health care will bring us even closer to communities and consumers, so the linkage of the board member between the community and the health system will be more important than ever. The collaboration with community agencies and other community systems, such as public health and education, which we haven’t parlayed very well in the past, will be more important than ever. In that sense, there’s a huge role for boards that will play to their strength: their knowledge of and connections to the community. The other thing I would say to boards is that, still, too many value independence too much. That may sound harsh and may sound as though I’m anti-independent hospitals. I’m not. What I’m trying to point out is that independence comes at a price. If you can afford the cost and you believe it’s right to build that into your cost structure for your community and your patients, that’s fine. Only the local or regional entities really know those locations and the needs and opportunities. On the other hand, speaking broadly, the price of independence is one that boards must look at as they consider all costs. Is there a less expensive, better way to do this through collaboration? Systems, on the other hand, also have to look at it. What’s the cost of being in a system? What’s the overhead? The system fees and so on? Are centralized system services truly reducing costs at both the community and patient levels? Everybody has to look at the issue of cost, coordination and convenience and come to a structure that is more friendly to the user and significantly less expensive. That will be a challenge for boards because they have to see that opportunity in the broader vision, but also be able to articulate it locally if it means significant change at the community level. 

The Umbdenstock file:

In retirement, what’s taking up most of your time?

Grandchildren and family is one. They were all born in the last four years and I’ve been on the other coast, so that’s terrific. Barb and I love to play golf together and travel; we’ve been fortunate to do some international travel, but there are many parts of this world we are thinking about.

Any books that you’ve been dying to read that you’ll finally to get to?

[Chuckles] I laugh because I’ve only read work-related stuff and management and leadership-related stuff for a long time, but more in the past 10 years. If I did nothing but put a dent in the top 50 books and movies of all time, I’d be gaining ground because I’m pretty deficient in both of those.

Who was the most influential person in your career?

Without a doubt, it was Alex McMahon, the president of AHA when I served as his special assistant in the ’70s. He was a very bright, astute and humorous leader, but he was first and foremost a teacher and former law professor. I learned an incredible amount, both about the field from Alex, but also about managing expectations and issues.