David Handel Knows Healthcare
former COO of Clarian now directs SPEA's health administration program.
He shares his thoughts on trends in the field.
More and more physicians are starting their own specialty
hospitals. You’ve obviously seen it happen in Indianapolis.
What can community hospitals do to survive this new trend?
I wouldn’t call it a new trend—more like an extension of
a trend that started several years ago. Physicians are facing the challenge
of declining reimbursement. They’ve been looking for additional
services they can provide in their offices and through new venues to
maintain their income levels. We saw it as one factor in the creation
of ambulatory surgery centers and diagnostic centers. Now we’re
seeing it again as one factor in the development of specialty hospitals.
Hospitals can respond by operating as efficiently possible. And they
need to provide new services, bariatric surgery, for instance. And many
hospitals are expanding their services in areas like cancer, heart disease,
and in women’s services.
Some people predict that community hospitals will eventually
become giant intensive care units, serving only the sickest.
I don’t think so. Clearly, we’ve got an aging population.
The acuity of patients will go up and so will the utilization of intensive
care services. It’s also going to lead to an increase in other
inpatient and outpatient services. The proportionate increase in intensive
care services will probably be at a greater rate than the increase in
medical/surgical usage. But the idea that hospitals will become giant
intensive care units—that’s an overstatement.
What other challenges face hospitals today?
First, just having capacity to provide needed care. One of the assumptions
prevalent years ago was that the amount of inpatient care would decrease
and there would be the need for far fewer hospital beds and hospitals.
Now health care is reaching a point where inpatient care will probably
increase and hospitals will have to expand their capacity in the number
of medical/surgical beds and in intensive care.
Another challenge: the level of reimbursement hospitals receive. For
a typical hospital, over 50% of their patients are covered by the government-funded
Medicare and Medicaid programs. That percentage is increasing for many
hospitals. If you look at the short term, all the government-funded
programs will be challenged from a financial standpoint because of large
deficits at both the federal and state levels. If you assume that hospitals
won’t get an increase from Medicare and Medicaid consistent with
increases on the cost side, that’s a significant and potentially
Looking long term, funding of Medicare is a big issue. The working population
funds a significant percentage of the costs of the Medicare program,
including the costs of those currently in the program. As the population
ages, there will be proportionately less people working relative to
those covered by Medicare.
There are a variety of other challenges. One continuing issue is labor
shortages in key areas such as nursing. Another is availability of capital.
This will be an increasing problem as hospital finances are challenged.
How do you think government will respond?
The two potential sources of revenue for Medicare are payroll taxes
and retirees’ co-pays and deductibles. While this will be a very
difficult political issue, it’s likely that both will have to
increase to meet the rising costs of the Medicare program.
Let’s get back to the cyclical phenomenon of a nursing
shortage. What has to happen in order for hospitals to recruit more
nurses, along with radiology and medical technologists?
The nursing shortage will be with us for awhile. The average age of
hospital nurses has been going up for many years; they’re now,
on average, in their mid-forties.
As these nurses retire, hospitals will have to recruit large numbers
of nurses to replace them, and to do that, nursing needs to be attractive
to potential students.
But at the same time, there’s another immediate challenge. There
aren’t enough nursing faculty to allow a significant expansion
in nursing enrollment. You need a focused effort to expand the numbers
of qualified faculty.
Applications to nursing schools are up. It’s a case of supply
and demand; salaries increase when you have a shortage of staff. So,
financially, a career in nursing is more attractive now. It’s
also a stable profession, which is attractive in an unstable economy.
We’re seeing similar trends in radiology and medical technologists.
What hospitals need to do is focus on retention and recruitment. I say
that very intentionally in that order. They need to make the hospital
a satisfying place to work so they can retain the staff they have. It
all starts with keeping the people you have by creating the best work
environment possible and providing benefits like educational support
and flexible work schedules. At the same time, you need a proactive,
effective recruitment program.
It’s so hard for people to be informed consumers when
it comes to health care. You can easily find reliability information
on almost every product—used cars, for instance—but it’s
very hard to know if your hospital is a good one. How can hospitals
convey that they deserve the public’s trust?
In the coming years we’re going to see a lot more emphasis on
the quality of health care. We’re going to see data that reflect
how providers are doing in terms of quality.
That kind of data collection has started but it needs to be more developed
and refined. Many different groups are doing this, including Medicare,
the Leapfrog initiative, Health Grades, and insurers like Anthem.
From a health care provider standpoint, it would be beneficial to have
consensus on the indicators to be measured. It’s still early in
this process and I expect the data to get a lot better over the next
Do you see nationalized health care happening in our lifetime?
At this point, no. The U.S. has such a long tradition of private health
care that people are generally comfortable with this kind of system.
The more immediate question is, what will happen to the 40 million-plus
people who are uninsured? Will there be significant efforts to find
ways of reducing that number? In that process, how will it be funded
and what will be the insurance mechanism to provide that coverage? Some
of these are political as well as practical questions.
Do you think things will change if we get a new man in the
That’s hard to predict. One has to remember that the Clinton administration
spent a huge amount of time focusing on health care and, in the end,
there was no progress or major changes. It’s a very complex issue
and potentially a very expensive one. A lot of people portrayed the
Clinton initiative as a move toward national health insurance and that
was viewed negatively by many. The fact that Clinton’s program
made no progress demonstrates just how complex the health care field
is. The very large federal deficit also will make it difficult to fund
expensive new initiatives.
Considering all the stress involved, why would someone
want to pursue a career in hospital administration?
Look at the health care field in general. You’re in the business
of really helping people and that’s very satisfying. Hospitals
and health care administrators can have a very positive impact on the
patients served as well as their communities. I think that’s one
of the biggest attractions of health care. Hospitals are clearly among
the most complex organizations around. But you have an opportunity to
make a difference in a complex environment—that’s also attractive
to many people.
Career opportunities for those with Masters of Health Administration
degrees used to be limited mostly to hospitals. What are job options
They are very diverse. Clearly, there are still significant opportunities
in hospitals. There are also a lot of opportunities in ambulatory care
and physician practice management, health maintenance organizations,
health insurance, health care companies, and consulting.
This is a huge transition for you, going from COO of Clarian
to director of the health administration program at SPEA. Why are
you doing it?
Health care is one of the largest and most important economic sectors
in the state. It’s seen as a major area for potential economic
growth as exemplified by the Biocrossroads initiative. For long-term
success, we need strong health care leaders. I expect SPEA and the MHA
program will play a major role in helping achieve this.
This position is a new and different type of opportunity for
me. I like the fact that I can have a positive impact on the education
and career development of these future health care executives.
I also think it will be fun.