Interview: Chris Van Gorder

San Diego Physician: What do you see as the biggest challenges facing the Scripps Health system today and into the coming few years?

Van Gorder: Like everybody in healthcare, we face challenges on a number of fronts. One significant issue for Scripps is the physician shortage. We’re already seeing shortfalls in some areas — ED calls and trauma calls are particularly affected — and we expect the situation to worsen over time. This is due largely to an aging physician community, the high cost of living in San Diego, low reimbursements for providers, and the small number of medical schools training future physicians in the United States.

In addition to having too few doctors, the nursing shortage is also going to continue. And often missed in the discussion are the pharmacists, imaging techs, therapists, and other allied healthcare workers we rely on. These shortages create supply-and-demand issues, compelling us to use more expensive travel and registry options, as well as more overtime for our own employees.

Another challenge is access to capital to expand our facilities and invest in new technology. Our population continues to grow both larger and older, which creates greater demand for healthcare services. And while many growth initiatives are taking shape across the Scripps system, the state of California requires us to focus much of our capital on complying with the seismic laws (SB 1953) just to keep our hospitals open past 2013 and 2030. Unlike some other local healthcare providers, Scripps receives no taxpayer subsidies. We rely on operating margin, philanthropy, and debt (borrowing) to fund our expansion and retrofitting work, which means we face pressure to perform strong financially so we can access the capital markets.

And California’s insurance industry has consolidated. There are fewer insurance companies now, which builds economic and contracting leverage that challenges hospitals and doctors.

SDP: What do you see as the biggest challenges facing San Diego County’s physicians?

Van Gorder: Physicians are facing some of the same challenges affecting Scripps Health, namely, low reimbursement rates from state and federal government payers, as well as from the commercial sector. This places a financial strain on physicians, which is compounded by the steep costs associated with their own office staff and space. The independent physicians in particular are at a disadvantage when negotiating contracts with the consolidated insurance companies.

As our physician population gets older, we find they typically become less interested in taking ED and trauma center call. This dynamic places additional demand on the region’s already strained physician population.

SDP: What do you see as the biggest challenges facing San Diego County’s healthcare system?

Van Gorder: One of the key areas is behavioral health, which is going to loom as a huge weakness in this county. There are very few acute care providers that deliver inpatient behavioral health. It’s virtually impossible to make ends meet financially, given the reimbursements we receive, which in this case come primarily through the state and county. And while we have an excellent working relationship with the county, reimbursement here is lower than most places across the state, and our state is lower than most places across the country.

Another key issue revolves around the costs and approval processes for hospital construction projects. Our building costs in California are virtually twice as much as they are in other states, largely due to our requirement to upgrade for seismic reasons and our very high administrative costs created by many layers of government bureaucracy. The cost of building a replacement bed in this state is now more than $2 million per bed when you look at the square footage cost. That’s enormously expensive. And the steep costs are coupled with some really long processes to get approval to build. It can literally take years to get all the approvals to actually start construction — these longer lead times drive up costs. On top of that, there’s a lack of coordination between local and state government agencies that can be frustrating.

Additionally, our emergency departments in San Diego and across the nation are in a state of crisis. Scripps’ chief medical officer, Dr. Brent Eastman, was one of the authors of the recent Institute of Medicine report, “The Future of Emergency Care,” which found serious overcrowding of EDs, long wait times, and a shortage of critical specialists. This situation could be exponentially troubling in the event of a large-scale disaster. Fortunately, California has mechanisms in place to deal with disaster situations, with three mobile field hospitals that can be deployed anywhere in the state within 72 hours. Scripps also has extra capacity with surge tents at each of our hospital campuses.

SDP: What healthcare reform proposals or concepts do you favor?

Van Gorder: Scripps favors a public-private solution to reforming our healthcare system. I think history has shown that when you have government taking responsibility for healthcare insurance and/or delivery, you’re going to end up with some form of rationing, either through time delays or actual rationing of care. I don’t think people are going to be very happy with that. And you can’t say that there’s a pure private solution, because government already assumes a huge burden with Medicare and Medicaid, and that’s not likely to change. So the only solution comes down to a more efficient public-private relationship, similar to what Gov. Schwarzenegger and others have proposed. A single, one-size-fits-all solution won’t work in this country.

One concept that will be fundamental to whatever healthcare system we have in the future will be the regionalization of resources, given our limited resources and the shortage of physicians, nurses, and key technical staff. If there is one thing to stand out from the IOM report, it is that we’re not going to have enough doctors, enough resources, and enough of the expensive, high-tech equipment, so we are simply going to have to face regionalization for people to have access to care. San Diego County’s trauma system has proven that regionalization of services can save lives.

SDP: What would you want every physician in San Diego County to know if you had five minutes alone with them?

Van Gorder: The notion that physicians and hospital administrators are adversaries needs to be left in the past. I think physicians and administrators are far more aligned as partners than they are as adversaries, and with all of the challenges now facing us, we certainly need to be more collaborative moving forward.

Scripps created the Physician Leadership Cabinet (PLC) eight years ago as a monthly forum where our elected physician leaders and hospital administrators sit down together and fill in the information gap that had previously existed between us. The goal is to share information and address controversial issues as a team, before they can become problems. By getting together in the same room and talking openly, we gain a common understanding of the challenges that we all face.

The PLC includes the chiefs of staff and chiefs of staff-elect from each of our five hospital campuses, the chief executives from each of our hospitals, and a chief nurse executive who represents the entire system. Members of Scripps’ corporate executive team (in areas such as finance, IT, HR, and others) attend as guests and present as subject matter experts.

Dr. Eastman and I chair the PLC, but the meeting agendas are driven by physicians, and their issues receive top priority for discussion. And even though the PLC is an advisory cabinet, it does wield tremendous power and influence. In fact, 100 percent of physicians’ recommendations have been accepted since the PLC was formed in 2000.

It’s no coincidence that since the PLC was created, Scripps has achieved a remarkable turnaround as an organization, going from annual losses of $21 million in 2000 to an operating margin of $129 million in 2006. By sharing clinical and financial information across the table in a spirit of collaboration, Scripps physicians and administrators now have a broader understanding of key issues — and, as a result, can make better-informed decisions. Not surprisingly, Scripps has returned to strong financial footing, able to borrow and build for the future. Mutual support is the key; neither physicians nor the administrators can do it alone.

SDP: What is Scripps Health doing to help address the challenges it faces?

Van Gorder: We’re trying to create solutions to our own challenges where we can, and two key areas for Scripps are education and research. Scripps’ invested $12 million last year toward graduate medical education (GME) programs at Scripps Mercy Hospital’s San Diego and Chula Vista campuses and Scripps Clinic/Scripps Green Hospital. These programs train local doctors, most of whom stay in the San Diego community and help address our physician shortage. We’re also strong supporters of local nursing programs, having invested a combined $1 million in financial support toward nurse training in San Diego the past two fiscal years.

Scripps is also committed to excellence in clinical research, which is the source of advances in patient care. We add more than 100 new clinical trials each year, and we’re now expanding our infrastructure for clinical research so physicians across the Scripps system who are interested in participating in clinical trials will have the necessary support to do so. Scripps is also home to three newly created research programs, led by renowned physician-scientist Eric J. Topol, MD: Scripps Genomic Medicine, Scripps Translational Science Institute, and Scripps Advanced Clinical Trials. We also recently recruited Brian F. Issell, MD, an accomplished oncologist and clinical research leader from the University of Hawaii, to lead Scripps’ systemwide research initiatives.

One of the things I recently proposed to the San Diego Regional Economic Development Corporation is that a public-private partnership be developed to create a regional clinical research organization (CRO), so patients can remain within their own healthcare system and remain with their own physician, and yet have access to the latest clinical trials and studies. Some patients don’t get access to the latest clinical trials because individual physicians can’t afford the infrastructure under which they can get patients into these programs. Physicians may also be concerned that if they refer their patients into these programs, they may not get them back. By creating a community CRO in partnership with other local healthcare providers, San Diego could be a hotbed for the latest trials, without the competitive nature of patients being referred out of their own healthcare system.