Ronald Paulus’ epiphany came five years before Congress passed health-care reform in March. As executive vice president of clinical operations and chief innovation officer at Geisinger Health System, based in Danville, Pa., he had asked business owners frustrated by rising health-care costs what they expected him to do about it.
Their response? “If something goes wrong, could you be on the hook for it, so we know whatever price we agree upon is what we’re going to pay?” Paulus came back with one of the nation’s first plans that offered fixed prices and a guarantee. When complications arise, the hospital pays.
That put Geisinger on the map and made Paulus, 47, a star in his field. Since the beginning of 2009, he has testified before Washington hearings more than 30 times, trumpeting the importance of accountability. This month, he becomes president and CEO of Asheville-based Mission Health System and Mission Hospital. “He’s a firecracker,” says William Hathaway, a cardiologist who will become Mission’s medical chief of staff in January. “We don’t know where reform is going to take us, but Ron Paulus is as capable as anybody I’ve ever met of adapting to the changing landscape.”
At Mission, though, Paulus will have to adapt to a landscape that sprouts more than just the brambles of reform. He will succeed interim CEO Carleton Rider, who replaced Joseph Damore in January after a rebellion by some physicians (cover story, April). The split at the system’s flagship Mission Hospital, one of the state’s best, stemmed not only from personality clashes but policies that stressed cost control. Damore held Mission’s annual increases to less than 4%, compared with 7% or more at similar hospitals in the state. Mission is also the only hospital in North Carolina that operates under a state-monitored Certificate of Public Advantage, which limits annual increases.
Paulus’ mission at Mission: Heal the rift with physicians while simultaneously positioning the system for reform that likely will place an even greater emphasis on cost-effective care. His dual credentials — M.D. plus MBA — should give him a leg up on both fronts. The hospital system won’t disclose his compensation, but Damore received more than $900,000 in salary and benefits in 2008, according to tax records.
Paulus is well aware of the controversy surrounding his predecessor. His management style, he says, is to “thoughtfully and politely question the status quo,” which should fit well at Mission. He also can be blunt. In talking with doctors during interviews, “I told them if they didn’t want me to come, I didn’t need to be here. I really wanted to be at Mission, but if they didn’t want me, I was willing to bow out.”
His role in the health-care trenches might be tougher. Though George Renfro, chairman of Mission’s board, calls Paulus “a game changer,” he comes from a system where most physicians were employed by hospitals. Some Asheville doctors objected when Mission set up Mission Medical Associates to acquire practices. Similarly, the concept of bundling or fixed-price, warranted care that thrust Paulus into the limelight at Geisinger, is popular with consumers and businesses that pay employee health bills, but many doctors fear it will strangle their incomes.
On the other hand, it might help them do their jobs better. At Geisinger, Paulus’ approach led to an 80% reduction in mortality for in-hospital heart bypass operations. “A lot of people in the past thought higher quality meant higher cost,” Hathaway says. “Instead, higher quality often means a huge cost savings. Ron has pushed that, and he’s had a great track record.”