FAIR Health Board Access Interview with Lynn B. Nicholas

A prominent healthcare leader, FAIR Health Board of Directors member Lynn B. Nicholas, LFACHE, has had the opportunity to shape the healthcare sector through myriad vantage points throughout her career spanning more than 40 years. Having held various leadership roles in the healthcare sector, Ms. Nicholas most recently served as the President and CEO of the Massachusetts Health & Hospital Association (MHA). There, she introduced bold initiatives that were emblematic of her steadfast commitment to public health and wellness. Under her leadership, MHA spearheaded tobacco use cessation and curbed opioid and substance use disorders—initiatives that received great acclaim. A former American College of Healthcare Executives (ACHE) Regent and Governor, Ms. Nicholas received the Early Careerist and Senior Healthcare Executive Regents awards; an ACHE Early Careerist Travel Scholarship was established in her honor. Currently serving on the Board of Advisors of the TeleDentists, Ms. Nicholas recently spoke with FAIR Health Access about the healthcare environment, the challenges and opportunities facing hospitals and health systems, and the role of transparency in the healthcare sector.

FAIR Health: What influenced your decision to pursue a career in healthcare? What, if anything, has surprised you most about the evolution of the healthcare landscape during your career?

Lynn Nicholas: I grew up in Knoxville, Tennessee, and had an uncle who worked as a medic in the labs at Oak Ridge National Laboratory. That’s where they previously secretly created the fuel for the atomic bomb during World War II. Although my uncle couldn’t share much about his work, whatever little he could share absolutely fascinated me. I had always wanted to know how things worked biologically and was intrigued by all aspects of nature. In fact, my career paper in junior high school was entitled “The Doctor’s Doctor: The Role of the Pathologist”.

As I progressed through undergrad education, I thought about nursing but I couldn’t see myself working with patients and preferred to work with test tubes, microscopes and analytical equipment. After a stint of running the laboratories in a hospital, I advanced into healthcare administration and policy work. I had quickly learned that I preferred working with people over pathogens, but I never lost my interest in all things clinical.

What I never foresaw, and I am so fascinated by now, is the use of genomics for predictive and therapeutic care. In the genetics lab that I oversaw in the 1980s, the technicians used an electron microscope and then took photos of chromosomes, developed them in a dark room, cut the photos out with little scissors, and pasted them on sheets of paper. This was then used as the basis of genetic counseling for a few conditions such as birth anomalies. Today, major medical centers have entire institutes dedicated to cancer immunology, virology, neurology and immunotherapy, among others. The field of precision cancer medicine is impressive and creates hope for many people who are stricken with dread diseases, not just cancer but those that are autoimmune in nature. In the past, most research was institution-based; in essence, my lab secrets and findings versus yours. It was difficult to share and collaborate on results. Today I’ve been so impressed with how researchers and clinicians across the nation are working collaboratively, using principles such as blockchain and technology informatics, to discover the secrets of a number of genetic anomalies.

FH: You held leadership roles with hospital associations in three different states—New Jersey, Louisiana and Massachusetts. How would you compare the issues and challenges that the hospital system stakeholders faced in each of those states?

LN: In my opinion, by and large, protecting and enhancing payment is probably the reason why state hospital associations exist. In all the states whose hospital systems I advocated for, the top issue was that the hospitals felt they were underpaid, especially by government payors, and especially by Medicaid. The system is such that hospitals made up for that by shifting to the private sector and, while that’s still the case, that opportunity is waning.

Population size and social demographics made each of the states I worked in unique. New Jersey was a densely populated urban state squeezed in by major medical facilities in both Philadelphia and New York. Fierce competition between community hospitals, over time, led to the emergence of a few, very large hospitals and health systems. That trend is now the rule, not the exception, in many parts of the country.

I joined the Louisiana Hospital Association in 2000. Unlike New Jersey, Louisiana had many small rural hospitals; its geography was larger. Hospitals there only needed to have a minimum of 10 beds; some had just barely above that. Sheer survival was their challenge. New Orleans, frankly, had more hospital beds than were probably needed. Hurricane Katrina, which hit shortly after I left the state, was a game changer. In its aftermath, the healthcare system was recreated by necessity and new relationships were formed.

I started at the Massachusetts Health & Hospital Association in 2007, a year after the passage of “RomneyCare,” which became the basis for the Affordable Care Act. Working at MHA was an opportunity to be part of a thrilling health policy laboratory. Bottom line, we were trying to make coverage expansion work from a cost perspective. Massachusetts was unique in that there was a real collective will to address not just quality of care but the underlying cost. The providers, payors and political leaders were aligned on many goals in that regard, but were rarely aligned on the methods—this made my job very challenging. Over time, they worked it out and established a lot of groundbreaking changes that have been emulated across the country.

FH: What are some of the most significant opportunities and challenges facing hospitals and health systems in the current healthcare environment?

LN: Hospitals and health systems face so many challenges, but I boil them down to three. The first is the aging population and declining reimbursement. In 2017, only 37 percent of reimbursement for hospitals and health systems was privately paid; Medicare is the dominant payor at 43 percent and this will grow as the baby boomers age. There will not be substantially more money in the system, so there is a need to create more efficiency, primarily by moving care out of the inpatient setting to lower-cost sites of care, improving the quality of care and reducing avoidable care.

On the issue of avoidable care, this past summer my very strong and healthy husband went into the hospital for a routine knee replacement. That surgery went just fine but he experienced an anesthesia-related complication that required a laparotomy, an open abdominal surgery. What should have been a simple procedure became a life-threatening situation when he developed a serious surgical wound infection, leading to a total of three more surgeries and a five-week hospital stay—and he has since had one more surgery. The costs to Medicare for this, and to us from a lifestyle perspective, were enormous. Admittedly, this is an extreme example, though all too common. On the other side of the coin, research estimates that from 25 to 42 percent of Medicare beneficiaries receive some form of low-value care—in other words, unnecessary healthcare services. That is a cost driver that providers need to address.

Consumers and their expectations are the second challenge. Baby boomers, unlike our parents and grandparents, who were largely trusting and healthcare illiterate, are technology savvy and impatient—they want the latest and greatest now. Boomers enrolling in Medicare are often beset with chronic conditions, but they want to improve their health and lifespan. Judging from my friends, they have a huge appetite for orthopedic improvements—not just one knee, but both knees! Consumerism, with its demand for data and more choice, is driving much of the change in the healthcare sector. Consumers increasingly like using technology. A recent American Hospital Association survey found that 75 percent of consumers said technology was important to managing their health, and 48 percent of healthcare consumers use mobile health apps.

I personally am a big fan of telemedicine. FAIR Health studies have shown that it is the fastest growing sector of the healthcare delivery system. In my husband’s example, we frequently text photographs and questions to his surgeon. Without going into the office, we have been managing his postoperative care mostly through a low-cost, low-tech method. Other emerging applications for telehealth include services for behavioral health and even oral health, an underserved aspect of overall health status. I’m hopeful that telehealth can change that, which is why I’m serving on the TeleDentists’ advisory board, which is designed to facilitate timely urgent and follow-up care.

The third challenge, which is also the biggest opportunity in my opinion, is the growth of value and risk-based payment models between payors and providers. It’s a challenge because it requires new learning and new behavior, but it has great potential. Fully capitated models, in which the provider and the payor are one and the same, like Kaiser Permanente, are the most promising. I don’t think fully capitated models such as this will ever become the norm, but there are many flavors of risk-sharing and pay-for-performance. Many of these models are effective because they tend to align the business side and the clinical side on common goals and put clinicians back in the driver’s seat. As one consequence, every year it seems more and more CEOs and leaders of hospitals and health systems are clinicians because it is important to understand patient care really well for these payment models to work.

FH: Your leadership of the MHA coincided with a time of significant change in the healthcare landscape of the Commonwealth of Massachusetts and was characterized by bold initiatives to advance health and wellness. What was the genesis of the Healing Inside and Out: Massachusetts Tobacco-Free Hospitals initiative and the MHA’s ban on hiring smokers?

LN: Through Healing Inside and Out, MHA had been running a campaign, endorsed by the MHA Board, to make all MA hospital campuses totally tobacco-free—not just inside the hospital, which was already state law. As the leader of a relatively small healthcare organization, I felt that we could take it a step further.

I have to admit I was personally dismayed by the tobacco users in our organization: They seemed to take more breaks than their peers and were out sick more often. They were impacting our productivity and I felt they were probably also increasing our healthcare costs. From an optics perspective, I didn’t think it set a good example for an organization dedicated to improving healthcare, to have employees huddled out on the edge of the parking lot smoking.

In 2011, I spoke with my senior team and told them that I wanted to “walk the talk” regarding healthy living. I suggested that we no longer hire tobacco users. We would exempt current employees who used tobacco and help them quit if they wanted to, but over time, by attrition, we would become a tobacco-free organization. Cleveland Clinic had done this in 2007, and so we did the legal work to see if this was feasible in our state. When I embarked down this road, I didn’t realize that MHA would be the first organization in Massachusetts to do so. Our move got a lot of attention and we received both praise and pushback for this initiative, but I decided to ignore the pushback and go with the praise! Over time it worked: With MHA as a test case, there are now five hospitals in Massachusetts that do not hire tobacco users and the trend is catching on; other large health systems such as Geisinger Medical Center and the University of Pennsylvania do not hire tobacco users. Looking back, I believe the ban made MHA a more desirable employer. Instead of being turned off, numerous job applicants told us they were jazzed that the organization cared enough to do that. It set a precedent and I’m very proud of that.

FH: The national healthcare debate has largely focused on controlling costs and increasing coverage. What other issues should be given greater attention in the public forum?

LN: Greater attention needs to be paid to preventive measures and to public health, public health and more public health! We need to focus on issues like early childhood education and development and the myriad factors that relate to social determinants of health: housing, education and food impoverishment, to name a few. In my opinion, the opioid epidemic has sucked all the air out of the room in the public health arena and in the media, perhaps understandably so—it is avoidable and a very visible tragedy. But many more people are affected over their lifetime by consequences of social determinants of health.

The United States’s health status ranks poorly compared to other nations. We spend about the same amount of money per capita, but other countries spend much more of that on improving social determinants instead of on procedures, hospital care and end-of-life care. As a result, healthcare is big business in the United States, and not so much in other countries. We should be spending more of our dollars on the front end to impact how society survives and thrives, and give more people a chance. The money that goes into administrative complexity, high drug prices and waste—recently estimated to account for 25 percent of our annual healthcare spending—could instead be spent on preventive measures. After working in the healthcare field for all these years, after all the promises made and all the work we’ve done, we’ve still got a long way to go.

FH: How has the role of cost transparency in the marketplace evolved over the past few years? How is cost transparency figuring into the national conversation on costs? What is the future of healthcare cost transparency?

LN: Cost transparency is very important and will be increasingly so, partly because of consumerism and partly because of the new emerging payment methods. Data and transparency are integral to that. But transparency for transparency’s sake is not going to be that effective. To make a difference, transparency must be coupled with strong goals and matching accountability.

As an example, in 2012, Massachusetts passed a landmark healthcare bill with three main provisions: to move over time away from fee-for-service for all payors, to set a healthcare cost growth benchmark and to create numerous transparency measures, facilitated by agencies such as the Massachusetts Health Policy Commission and the Center for Health Information Analysis. Since then, the HPC and the legislature have annually set a per capita spending growth rate benchmark and monitor providers and payors against it. They also compare it to the national rate. According to the HPC’s most recent official report, the overall health expenditure growth rate was 1.6 percent in 2017, two percentage points below the proposed benchmark of 3.6 percent, and well below the national rate. This led to a savings of $5.5 billion in commercial spending between 2012 and 2017. That sort of progress could be emulated across the nation for real gains.

FH: FAIR Health has continued to lead as a source of independent and objective price and utilization information. Looking to the future, how would you predict FAIR Health’s role will evolve?

LN: There is certainly a growing appetite for validated, unbiased data from a public policy point of view and to make better healthcare business decisions. One of the most exciting things about FAIR Health data to me, is not just providing data for consumers or businesses, but how the data are increasingly used for clinical and public health initiatives to improve access and quality of care.

One of my favorite expressions is “you don’t know what you don’t know.” When it comes to consumers, they don’t know what they don’t know and they can’t act progressively on what they don’t know. To combat this, FAIR Health has made great efforts to make it easy to interpret resources available to consumers. It’s a first step. But there is so much more opportunity to grow this work in the future and I’m thrilled to serve on the Board of Directors to work behind the scenes on those initiatives.

FAIR Health Board interviews reflect the views of the Board member in his or her individual capacity and not necessarily those of FAIR Health.