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Hospital executives must make tough decisions ‘before we have to’ | Lessons for Leaders

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Aspirus Health CEO Matt Heywood talks about the importance of being proactive, especially as he sees a difficult environment for hospitals in the years ahead.

Now more than ever, Aspirus Health CEO Matt Heywood says hospital leaders must be proactive.

Matt Heywood, CEO of Aspirus Health, suggests that leaders should look ahead and make hard decisions to be prepared for the future. (Photo: Aspirus Health)

Matt Heywood, CEO of Aspirus Health, suggests that leaders should look ahead and make hard decisions to be prepared for the future. (Photo: Aspirus Health)

Heywood leads a Wisconsin hospital system that has seen significant growth in recent years. Aspirus completed the purchase of seven Wisconsin hospitals and 21 clinics from Ascension Health in 2021. Now, Aspirus is looking to acquire St. Luke’s in Duluth, Minn., a system with two hospitals and a host of other healthcare sites.

Heywood says the deals make sense to expand the system’s model of rural healthcare. But he says he’s not necessarily foressing a sunnier outlook for hospitals in the near future.

In a recent interview with Chief Healthcare Executive®, Heywood says he expects hospitals, particularly those in the midwest, to be dealing with higher costs and modest growth. That’s why he suggests healthcare leaders need to be looking ahead.

“The world I’m seeing requires very tough choices to be made,” Heywood says. “And we're going to make them now before we have to.”

Read more: Aspirus CEO Matt Heywood talks about the system’s rapid growth

A couple of years ago, Heywood said he realized the difficult financial environment ahead, and he told his team they needed to find $200 million in savings. “There probably wasn’t much support at first,” he says.

But he says that financial rigor has enabled Aspirus to move when opportunities presented themselves, such as the purchase of the Ascension hospitals and clinics.

“We saw the future coming, we planned for it, we implemented it,” Heywood says. “Now, does everybody see it and agree? Not at first.”

Heywood also emphasized the importance of not only looking ahead and preparing to make difficult choices. Leaders must also work hard at communicating their vision to teams and explaining why some actions are necessary, and they should be prepared to face some resistance.

“As a leader, you need to go out into the world, gather as much information from all sources and be open-minded,” Heywood says. “Connect dots that go beyond just what people say, and frame a picture of what you think is going to be the future state of an issue or a concern.”

Heywood pointed to his projections of persistent inflation and modest economic growth over the next four or five years.

“I see that as a high probability of the future. And if I'm wrong, and it's worse, we'll be as prepared as we can be. If it's better, then we'll be extra prepared. But you’ve got to see that. Then you’ve got to go out and communicate it to your constituents and get them to buy into it, to believe it, and to act on it, before it may be the reality of the world they see,” Heywood says.

“In the world I just told you, that means we got to cut costs,” Heywood says. “We’ve got to figure out how to operate more effectively. We might need to look at where services are located.”

At the same time, Aspirus is looking for ways to bring more healthcare services closer to the system’s rural communities, he says.

Aspirus has worked to be a step ahead, and Heywood says that’s helped the organization’s bottom line. Aspirus has had an operating margin of about 2% over the past year.

While that may not seem like an overwhelming figure, about half of all hospitals had negative operating margins in 2022, according to Kaufman Hall, a healthcare consulting firm. Fitch Ratings projects that hospitals can expect weaker operating margins for the rest of the year and into 2024.

“As a leader, what I'm finding is, and it’s happening more and more in the last three years, where I've had to go out into the future, see the challenge, see the position, put it out there, argue for it, get the organization to agree to it, move to do it and do it,” he says. “And I think if you don't do that, as a leader, in this world, you will be reacting all the time. And I would have to say one of the successes Aspirus has had in three years, we have not been reacting.”

“We’re usually a little bit ahead of the curve,” he adds.

Leaders must maintain their focus even in challenging times, Heywood says. He says that was a key when Aspirus began working to acquire the Ascension hospitals and clinics in the height of the COVID-19 pandemic.

Aspirus maintained profitability even after purchasing the Aspirus hospitals, he notes.

“I think first and foremost, you've got to have that mission and vision and that desire for the common good,” he says. “And then I've worked really hard to build a good management team and leadership team, and I focus a lot on leadership and our team and trying to function and work well together. And I think we've got a really good management team and I give them kudos, our leaders, as well as our staff.”

(If you’d like to submit your lessons in leadership in healthcare, great advice you’ve received, or insights you wish you had earlier, submit an idea for our “Lessons for Leaders” series. Email Ron Southwick, senior editor of Chief Healthcare Executive: [email protected])

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