In selecting our first Businessperson of the Year, the Westfair Communications editorial team carefully weighed such factors as presence in and impact upon our region and beyond; potential for further growth; managerial savvy; and reputation.
While there were a number of worthwhile candidates, it is difficult to think of someone who has had a greater impact on the regional landscape over the past 12 months than Dr. John Murphy.
The longtime Western Connecticut Health Network (WCHN) president and CEO was instrumental in that group’s merger with Health Quest Systems. First announced in 2018 and finalized in April of this year, the merger created Nuvance Health, a $2.4 billion, seven-hospital juggernaut that will serve an area with 1.5 million residents across Connecticut and New York and be staffed by more than 12,300 employees.
Murphy, whose main office remains at Danbury Hospital, is Nuvance’s CEO. He also is a founding member and serves on the board of the Value Care Alliance (a group of independent Connecticut hospitals); is chairman of the executive committee of the Connecticut Hospital Association; and regularly advocates on behalf of the health care industry on the local, state and national levels.
On Dec. 12, he spoke with Fairfield County Bureau Chief Kevin Zimmerman to discuss his background, where Nuvance is today and where both it and health care in general are headed over the next few years.
Although it took a little over a year to be consummated after it was first announced, the merger that created Nuvance appeared to be relatively painless as these things go, at least from the outside.
“I’m delighted that that’s how it looked (laughs). When you’re dealing with hospitals and an organization that has a long history of being independent, there are a lot of factors involved on both sides. There are patient expectations, physicians’ expectations, financial pressures and the whole question of making health care affordable while maintaining a high quality of care. There are a number of assessments necessary to determine if there may be a better way than doing what you’ve been doing.
“Another thing to consider was the advantages and disadvantages involved, in determining whether this was the right thing to do for the communities we serve. It took a lot of time to do it carefully and thoughtfully. Ultimately, that’s how we got here.
“I remember in the early going, eight of our board members — four from WCHN and four from Health Quest — went to a restaurant for dinner and floated the idea (of the merger), laid out the reasons why it made sense. It was a two-, maybe three-hour dinner. And at the end of it all eight of us signed the menu — which I still have — and said, ‘Let’s do this.’ From there it was trying to put the pieces together.”
There were some unusual provisos involved in getting regulatory approval to create Nuvance. There is the cost growth cap, which links health care cost growth to the consumer price index as a means of slowing the rise of health care prices. And there is a requirement for Nuvance to expand its use of alternative payment models to provide incentives for physicians to lower costs and improve outcomes for the treatments they recommend. Were those provisos expected, or did they come at you out of the blue?
“They were something of a surprise. But I talked with a number of administrative and legislative leaders and got the sense that they were coming at it from a responsibility perspective. They recognized that for the economy of the state of Connecticut, and on the New York side, this was going to create a major economic engine. We are the single largest employer in most of our communities.
“And, of course, the cost of health care is a concern for everyone, as you’ve seen in the (presidental) debates. There is a sense of ‘somebody’s got to tame the cost side of this.’
“We also have an independent monitor that was required by the state Office of Health Strategy, to report on how we’re honoring those commitments. I thought it was intrusive and overreaching — but on some level it’s just responsible governance. We want to try to be an actual part of the solution.”
How has life changed for you from running the three-hospital WCHN (Danbury, Norwalk and New Milford) to the seven-hospital Nuvance (which now also includes Northern Dutchess Hospital in Rhinebeck; Putnam Hospital Center in Carmel; Sharon Hospital in Connecticut; and Vassar Brothers Medical Center in Poughkeepsie)?
“I’m the face of the organization and I’m responsible for its culture as well as carefully defining its values and standards. What do we want to look like in five years? How do we get there, and what values do we want to live by?
“As CEO, I need to make sense of the world outside. There are so many changing dynamics in our environment. The regulatory environment alone is so large — at any given time we have 42 different agencies telling us what to do. And there is a wave of new competitors trying to get into health care, from digital and retail competitors to large physicians’ groups and other hospitals. The nature of the competition is changing, to the point where in some cases we’re now cooperating with people that we have a history of only competing with.
“I’m out advocating on behalf of the health care sector to governments on the state and federal levels. Then I come back and say, ‘Here’s what’s happening. Now we need to create a strategy to succeed and compete in this environment.
“It’s a matter of balancing the short- and the long-term. I feel like I’m wearing a pair of bifocals. I need to look at what 2020 has in store and at what this will look like in five years.”
How is that manifesting itself?
“It’s easy to say, ‘We’ve always done it like this,’ but we need to recognize that there are people and organizations out there who can do a better or more efficient job in some areas. We’re trying to expand our presence in the home-care space, since more and more people have a preference for being treated at home, and we’re partnering with more and more retail providers. People can get their flu shot at CVS instead of having to come to the hospital.”
How often do you travel to each of the seven hospitals? And how do you deal with 12,000 employees? I’m guessing you’re not walking down the hall and saying, “Hi, Sam!” all the time.
“I need to get out more. I struggle with how to get to all the places they expect me to be. I’m hoping to travel to each hospital at least every quarter.
“But as far as the staff is concerned, what’s most important is maintaining the terrific teams we already have and attracting new people as well. We said at the time the merger was announced that there wouldn’t be any significant reduction of staff and I see no reason for that to change.
“What is changing is some of the skill sets involved — a couple of years from now some employees may be doing things in addition to what they did when they started. We’re building a data analytics team, which means adding jobs.
“The other night we dedicated a new OR site at Danbury Hospital to provide a suite of robotic cardiac surgery services. The suite is designed specifically to allow procedures that we never thought we’d even be doing 10 years ago. And talented physicians see those kinds of improvements and want to work here because of the kinds of investments we’re making.”
So there are no widespread redundancies involved?
“Most of the savings are through the supply chain. When you’re buying for an organization of this size, you’re more likely to get a discount on purchased items we all use — IV solutions, pacemakers, joint implants. And you’re also more likely to get a discount on the insurance that you purchase.
“In other cases, do you really need two IT systems? We’re in the process of making that one. And if we feel that one neonatal ICU can serve several regions, you don’t need to spend 10 billion bucks on another one.”
Presumably you’re pleased about the new, seven-year settlement between Connecticut and the hospitals regarding the hospital tax and Medicare reimbursement rates?
“I’m delighted that we reached a solution after four years. It’s good for the state of Connecticut, it’s good for the hospitals and ultimately, it will mean better care for people of low to modest incomes who enrolled in Medicaid when it was expanded. It invests in the provision of services that patients expect and deserve.”
What kind of metrics do you look at when trying to map out Nuvance’s next five years?
“Quality, safety and patient satisfaction are the key drivers. If we can’t provide that, we shouldn’t be in the business.
“We will continue to work to find the safest, least expensive place to deliver care — what’s most convenient for the patient instead of the doctor.
“We need to keep an eye on finances. Making investments in the right services and technologies will help us attract and retain talent, which ultimately reduces the cost of care. We can’t get trapped in what we’re doing this year. I want this place to still be here 50 years from now.
“How engaged are our employees? It’s fine to make these great statements, but if you turn around and it looks like nobody’s on the bus, what are you doing? We want this to be an exciting place to work, where they get respect and a feeling of joy in their work.
“How engaged are our physicians? There are a lot of pressures out there, from learning new procedures and technologies to lawsuits — and they’re all palpable and legitimate. We want to be an incredible place where people are eager to come and practice their art and craft.
“I met with 15 docs the other night and we talked about how it’s still a privilege to be a physician.”
What led you to a career in health care in the first place?
“When I was in high school (in New Milford, New Jersey), my father was hoping that, as the sixth kid, I’d take on the mechanical engineering business he’d built. My brother was into Chinese anthropology, so my father figured, ‘That’s not the guy!’ (laughs). And my sisters were on their own paths. So, he was kind of banking on me.
“But I was taking an anatomy and physiology course in high school and I was reading books like “Arrowsmith” (By Sinclair Lewis) and “Dear and Glorious Physician” (By Taylor Caldwell) and I was really taken by the notion of what a physician could do and what a gift that is.”
And we should note that the “Dr.” in your title is hardly just an honorific — you still practice.
“Yes. I see underserved patients monthly at the local neurology clinic. Serving other people has always been something I find very satisfying.”
What do you do when you’re not being a CEO, or traveling to Hartford or D.C. on business?
“I love to exercise, at least five days a week. I love to swim and to read. And my wife and I recently became grandparents for the first time, so we spend a lot of time with family. There’s not time for much else.”
What are the challenges Nuvance Health faces?
“Integrating the organizations is still going to take a lot of time. Properly navigating that process while keeping an eye on our key priorities is important. Eight months in, we’ve accomplished a great deal. And we’re looking to add some network-wide client initiatives — heart, cancer, neuroscience programs.”
What about the health care business at large?
“We will be influenced by the presidential election, regardless of who wins. Health care makes up about 20% of the national economy, over $3.5 trillion. The Medicare growth rate is projected to be 6% per year through 2022, which is a large part of the solvency of the Medicare Trust Fund.
“Spending on Medicaid is breaking states’ coffers.
“And there are certain efforts to essentially repeal every element of the Affordable Care Act with block grants. (According to remarks made by U.S. Sen. Chris Murphy of Connecticut, should the Trump administration succeed in gutting the ACA, “20 million people will lose their health insurance, insurers will once again be able to charge you more because you have a pre-existing condition, or your kid has cancer, or you’re a woman.” Block grants and per-capita caps would threaten health care access for the nearly 75 million low-income and disabled people enrolled in the Medicaid program, according to that program.)
“I don’t think Medicare for All will play well on Main Street — it’s not ‘salable.’ We need to come up with a solution where we can step in and tame the increases in the cost of health care services. I think Medicare for All is a bridge too far.”
Is there any more M&A activity on your horizon?
“(Laughs) I’m always looking and thinking about acquisitions, but we have so much value in front of us that we need to deal with. I think that will keep us busy for the next couple of years.”