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Every local economy in America has a health care industry. In our state, according to the Georgia Hospital Association, health care facilities have an economic impact of  $31.5 billion and employ 137,000 full and part-time workers. Take a Georgia employment multiplier, and hospitals produce more than 285,000 full-time jobs.

So what makes health care different than other industries? At a time when one-third of all hospitals in Georgia – including Grady Memorial, one of the Southeast's largest – are losing money, consumer demand for health care services aren't decreasing. Profitable hospitals are forced to pick up the slack – whether they're compensated or not.

In a series of exclusive interviews, Business to Business discussed uncompensated care and other issues facing the health care industry with three of Atlanta's top executives: John Fox, president and CEO, Emory Healthcare; Gregory L. Simone, M.D., president and CEO, WellStar Health System; and R. Timothy Stack, president and CEO, Piedmont Healthcare.

Business to Business: Is health care a recession-proof industry?

Tim Stack: Not necessarily. Employees and people drop coverage during tough economic times, so I don't think it is recession-proof at all.

Greg Simone: I don't know of any industry that's recession-proof. When you look at health care, you have to use it in the broadest text. Health care includes prevention, cosmetics – all sorts of things – including elective treatments. People are going to spend money if they have an option to do so. Of course, if somebody has an acute illness, recession or no recession, people will pursue it. But a recession will have an impact on the industry.

John Fox: From a volume standpoint, it is essentially recession-proof, or certainly recession-resistant. The way recession-like features can be felt in the health care industry – it's a $2.1 billion industry – is in changes of approach or by reimbursement by major players. About half of the cash flow in the health care industry is driven by the federal government through Medicare and Medicaid, so with a flick of the wrist on the shores of the Potomac [River], water can be turned into wine and wine into vinegar fairly quickly.

BTB: Is being a medical professional today more about helping people or dealing with insurance companies and lawyers?

Fox: Insurance carriers and lawyers – in terms of decibel levels and time and attention – is greater than we'd like, but I don't think we've lost our moral compass. It's about helping people.

Stack: I'm pretty lucky because I get involved with all these things. But it's really all about helping people and making sure they have the right kind of care and that you have the resources so your staff can do their jobs.

If you trip and fall in the front of your office, you're not going to your insurance provider. You're going to your local E.R. I feel pretty good about the position we're in. I think we are on the side of the angels.

BTB: Dr. Simone, you're a doctor and an executive. Do you have a different perspective?

Simone: All of us who went into medicine are purely focused on the people. We are here for one purpose, and that's to serve the people we are trying to treat. And that's why I went into medicine in the first place. And now in this position, which is administrative, that's still the intention ... We want to help people. Dealing with insurance companies and lawyers is one of those things we have to do because that's what people need as well.

BTB: What is the ultimate measuring stick of a hospital's success – profitability, number of patients' served/treated, bottom line performance, etc.?

Stack: The mortality improvement. Every year, we try to improve our mortality rate, and every year we have. That is the best measure you can possibly have in the field. This isn't about money; it's about helping people, people who would supposedly die in your facility. If you're doing better than the national average and doing better each year – [that's] our goal we submit to our board every year. We tell them we are going to do better each year on that, and we have.

If I asked you as a patient, "Would you judge me more on the money I make in my organization or more on my mortality improvements?" ... Which one would you rather be judged by?

It's not something you market, but saving lives is the simplest way to put it. We picked this up about five years ago when we went to Boston to visit the Institute for Healthcare Improvement. It was like an "aha" moment. We had some of our doctors there and some of our board members and management team, and we finally said, "You know what? This is what it's all about. It's about saving lives."

Simone: It's simple. You have to look at your mission. That's the sole reason an organization exists. Here, our mission is quite simple: To develop and deliver the high-quality hospital, physician and other services that improve the health and well being of the individuals and community we serve.

If we do that properly it will lead to our vision, to ultimately provide world-class health care service. Now, we're not there yet because that's a moving target. What we mean by world-class health care is we're looking at innovative, integrated health care system that helps patients with their personal state of health and well being. That's what we're looking for.

Fox: It's easy: First, second and third, it's quality. The clinical outcomes we provide patients who come to us and that we are achieving absolutely everything we can given their condition vis-à-vis the science of medicine and what health care should be doing for them on that given day. It's doing so in a way that is safely done in an incredibly complex health care system. And when we give quality, we must have three elements – outstanding clinical outcomes with the patients; safely delivered; and with impeccable service.

BTB: What is your opinion on universal, government-mandated health care? How could these ideas impact hospitals? Doctors? Patients?

Stack: There's no doubt this will impact both doctors and hospitals. Universal health care has picked up steam. What I worry about are the deductibles. They just keep going up and up. And I worry about my kids. Are they even going to be able to afford insurance? So when you start thinking about universal health insurance, [the younger generation] will start thinking to themselves, "How am I ever going to be able to afford insurance?" There's going to be a lot of dialog about universal health care. A lot.

We really need to think about it as a society, and what we want to do. It has problems, too. We need to reinvent the medical field from that side. I don't know what the answers are, but I do know it's broken now.

BTB: Is there an international health system that you could see America implement in the future that stands a real chance of working?

Fox: I don't believe there is any single nirvana system out there in the industrialized world. The national health care system reflects that nation's culture and values to a certain extent, and America has a unique culture. If you look at the system in Germany or the UK ... there are unique features that go back decades, if not centuries, in terms of certain themes and how they evolved. Depending on which lucky person gets elected this November, they are going to be staring down the barrel at the same set of facts, and the ultimate reality is that the numbers don't work.

BTB: The numbers don't work for universal health care?

Fox: They don't work for America staying on the trajectory we are on. The biggest unfunded liability the federal government has today is Medicare. Social Security is nickel-and-dime stuff compared to Medicare.

BTB: If The Home Depot had $40 million in write-offs, it'd go out of business. Uncompensated care makes up a sizable portion of your balance sheet. How do you stay profitable when people don't pay?

Fox: It's simple, and the recipe hasn't changed in 50 years. All the hospitals in America cost shift, or tax, if you will, because really we're almost executing a public policy dimension, whereby we charge people and managed care companies more so we can take care of those who cannot pay.

Round numbers, there are 300 million people in America; 50 million of them don't have insurance or substantially no insurance. That's how the brick flows across America and how it's flowed since I've been in the business. It has inherent problems because we use it for the uninsured and Medicaid. We believe we do our fair share and then some in Georgia's health care economy; there are players out there that I'll leave unnamed that do much less. Then you have Grady that does much, much more.

Simone: What we have to do is take the business' profitable pieces and fund the ones that are non-profitable. For example, emergency rooms must stay open. So if they are not making a profit or not sustaining their own expenses, we have to take another part of the health care system that does make a profit or sustain [itself], and shift those funds to something that has to be there, but can't provide it. What happens is, the people who have insurance, especially private pay, are helping, in a way, to fund those who don't pay.

Stack: The truth is that we don't go after that. We're really not allowed. We do our very best on being efficient in those areas that we can be. We're a not-for-profit organization, so all our money goes back into our organization. There are no shareholders who we have to pay. Our Medicaid percentage is only 5.2 percent.

BTB: What are the main challenges to Atlanta's health care industry today?

Simone: Pretty much the same as other cities have. The increasing uninsured numbers are something that's a true challenge. We're all aware of the challenges Grady has been facing. That is something not limited to Grady, but we are seeing increasing, uninsured populations in many parts of the state, including here.

Fox: The health care industry in Atlanta has hopefully dodged a major bullet with Grady being able to modernize its corporate structures, so it becomes a modernized vehicle for going forward that is credible, which is enabling the state and philanthropy to send the ships in.

Stack: Coordinating care for our patients, what I call enterprise scheduling, or making it more seamless for our patients. Think about when you go see your doctor. Does it take you a while to get in? We have to make this process a lot more seamless. If you need a test, we need to get it done that day. If you are taking a couple of hours or a half-day of work, we need to get those procedures done during that time.

Don't you think you should be able to come in and give your credit card and have all your health care data in our admitting office or our doctors' offices? That's where we're heading. And that's where we ought to be. Other industries have done it. You can get $500 out of your bank right now by using your card at a bank machine. They have all the information there, such as how much you have in the bank, etc. They deduct it right away. If you don't have it, you can't get the money.

We, in the health care field, owe it [to] our patients and doctors to make the process much better. We want to have an appointment and any follow-ups scheduled within the same day, so that when you take time off of work you can get it all done. You should be able to travel with just your health care ID card or your Piedmont card and have all your information called up. This is a work in progress, but it will become a reality. We need to start thinking more about the patients and decide that they're the most important thing. If the process and experience is smooth, then they're going to tell their friends. Waiting rooms are inefficient, by their mere name alone. Why do we need them?

BTB: Define competition in the health care industry.

Simone: It depends on what you mean by competition. To me, competition means developing the best possible outcomes for an individual for the lowest possible price. If we look at that, competition is a great thing to have.

I would love to have all the facilities in metro Atlanta at the 99 percentile of outcomes over costs, compared to the rest of the country. I don't see that as competition. Competition means something different in a free enterprise system. But health care is not a free enterprise system. We are highly regulated, so competition is more the sense of, "What are we trying to produce?" And great health outcomes are what we are trying to produce.

Fox: Competition should be the patient having an opportunity to select where they go based on the performance of the provider – a hospital, a physician, a device company – so the patient is able to reach the right tradeoffs of total value that optimizes their health and what they are trying to achieve.

BTB: If there was one thing you could change about your business – regulatory, political, financial, etc. – what would it be?

Fox: The uninsured situation in America. Through policy efforts and structural change, that issue can be dealt with. On the surface, it's a major financial issue, but more importantly, it's a major health issue for people and their families that we often underestimate and don't focus on.

Simone: It would be hard to select one thing. But I would like to see a better alignment with the financial incentives across the wide spectrum of health care for our patients. That spectrum includes wellness, prevention and disease and treatment. We've traditionally had financial incentives for treatment of diseases. But I would like to see us have some form of an incentive to prevent those diseases in the first place. I'm not sure I have a magic bullet for making that happen. The change I would like to see is to make the industry more about health than disease treatment.

Stack: I would try to make it more seamless for the patient. Patients become disgusted by a lot of factors in health care. It's an awesome struggle for them, and we need to make it better on all ends – from our side, from the insurance side, from the doctors' side.

BTB: What is the biggest hurdle you face every day?

Simone: Dollars. We would like to do so many things to help the individuals in our community and at large. But like any business [or] household, we have to have dollars to make them come true. How do we manage to have enough finances to float the organization? We're a 501k C-3, non-profit organization. So anything we earn with revenues over expenses, we take every dollar possible and run that right back into the community. Because of that, we have to make sure we have enough dollars. As the Catholic nuns have said in the past, "No money, no mission."

Fox: Dealing with the incredible complexity of the American health care economy; doing our job as part of that complex organism; and helping people through it in terms of visiting our zone, if you will, for health and healing in whatever predicament in which they find themselves.

BTB: What keeps you up at night?

Simone: I would really like to see change in the culture of every team member in the WellStar organization. I would like to see a culture where [we] embrace and are oriented to the individual's personal care. I would like to see people who have an understanding – and want to use that understanding – to be sure we use evidence-based medicine for the best possible outcome.

Fox: Right now, it's what levers and buttons a new administration may press to deal with [the future of health care] ... I'm concerned with how they deal with it, and also if they don't deal with it, what it could mean for America in terms of being competitive in world markets with a healthy, vibrant domestic economy and society.


Top hospitals in Metro Atlanta (by 2006 gross revenue)

1. Northside Hospital - $1,452,556,000
2. Piedmont Hospital - $1,353,657,577
3. WellStar Kennestone Hospital - $1,252,384,358
4. Grady Memorial Hospital - $1,114,449,455
5. Emory University Hospital - $1,107,287,472
6. Saint Joseph's Hospital - $1,083,951,517
Source: Billian's HealthDATA Hospital Financials Report through fiscal year 12/31/06


Top hospitals in Metro Atlanta (by total beds)

1. Grady Memorial Hospital – 953 beds
2. Emory Crawford Long – 583 beds
3. Emory University Hospital – 502 beds
4. Piedmont Hospital – 500 beds
5. WellStar Kennestone Hospital – 493 beds
6. Northside Hospital – 475 beds
Source: Billian HealthDATA 2008


Top hospitals in Metro Atlanta (by employees)

1. Piedmont Hospital – 7,000
2. Grady Hospital – 5,509
3. Northside Hospital – 5,000
4. Emory University Hospital – 3,103
5. WellStar Kennestone Hospital 2,970*
6. Saint Joseph's Hospital – 2,858


Top hospitals by Metro Atlanta (by operating expenses)

1. Grady Memorial Hospital - $672,144,878
2. Northside Hospital - $569,566,842
3. Piedmont Hospital - $514,027,066
4. Emory University Hospital - $490,650,192
5. WellStar Kennestone Hospital - $448,610,176
6. Saint Joseph's Hospital - $371,631,883
Billian's HealthDATA Hospital Financials Report through fiscal year 12/31/06


Leading hospitals in Metro Atlanta (by uncompensated care)*

• Grady Memorial Hospital – $343,290,223
• Northside Hospital – $54,862,495
• WellStar Kennestone Hospital - $46,795,753
• Piedmont Hospital - $25,937,542

Billian's HealthDATA Hospital Financials Report through fiscal year 12/31/06
* This information is a new reporting requirement in the Medicare cost report. For more information on hospital market intelligence, visit
www.billianshealthdata.com


Photography of Simone, Fox and Stack by Daemon Baizan