October 26. 2013 8:21PM

A year at the helm

CMC's CEO still a doctor at heart

New Hampshire Union Leader


MANCHESTER - One year after he was introduced as the new CEO of Catholic Medical Center, Dr. Joseph Pepe hosted a news conference for a more somber reason - to inform the public that neurosurgical instruments at the hospital had been tainted by a patient with a deadly brain disease.

That crisis in early September, and his effective handling of it, marked an eventful 12 months for Pepe at the helm of one of the state's largest hospitals.

The patient who arrived at CMC with Creutzfeldt-Jakob Disease (CJD) later died, but the eight patients who were at risk of exposure have so far not shown any signs of it. The rapid pace of the hospital's response and its transparency in a potentially damaging situation were widely applauded.

Pepe suspended all brain surgery, notified authorities and met with each of the affected patients. "I put on my hat as a physician," said the former chief medical officer. "I didn't think twice about making sure these patients were informed and cared for, and that the community knew as well because I did not want any kind of public hazard. Being transparent, open and honest was not part of a strategy; it was just the right thing to do."

The response to the crisis may have been instinctive, but many of Pepe's initiatives are rooted in the hospital's first three-year strategic plan, posted on the hospital's website. "CEOs everywhere have strategic plans," he said. "But to me, when you're a nonprofit organization, it's important to let everyone know where you are headed."

Health care evolution

In an interview marking his one-year anniversary, Pepe reflected on big changes underway in how health care is paid for and delivered. CMC intends to be on the cutting edge of those changes, he said, and the strategic plan reflects that objective.

It calls for expanding the hospital's geographic reach, increasing its primary care capacity, enhancing collaboration with partners (including other hospitals) and participating in new payment programs that reward outcomes, not procedures - going from volume to value, as Pepe puts it.

CMC is expanding its reach not by building outlying campuses, but by partnering with smaller hospitals in sharing talent. CMC doctors now perform specialized surgeries at hospitals from Derry to Berlin, particularly in cardiology and bariatrics.

On Tuesday, CMC celebrated the opening of a primary care practice at the Executive Health Club near the Manchester-Boston Regional Airport. "We're repurposing existing space in the health club," Pepe said. "It will be a primary care practice that will also work collaboratively with occupational health and physical therapy services that are already there."

The detox unit at the Farnum Center, which recently moved to Queen City Avenue in a newly renovated former motel building, was dedicated to CMC for its years of collaboration with the alcohol and drug treatment facility.

Like many hospitals, CMC is evolving toward a payment system that rewards outcomes, not fee-for-service, said Pepe, through partnerships with private insurance companies, Medicare and Medicaid.

As of Jan. 1, CMC will become part of the Pioneer Accountable Care Organization at Dartmouth-Hitchock, a model promoted by Medicare and Medicaid, in which groups of doctors and other health care providers work together to provide high-quality care for their patients at lower cost, and share the savings with the insurers.

The hospital also has a risk contract with Anthem Blue Cross in which CMC is rewarded financially if it meets certain quality measures without increasing costs.

CMC is also one of 16 acute-care hospitals in the state that will be part of the Anthem network on the newly established online health care exchange at healthcare.gov. The fact that 10 of the state's hospitals are not included in the network has been controversial.

"You're going to see many different products as we move through health care reform," Pepe said, "and there's going to be good and bad about them. We don't want to sacrifice access, choice and quality in the name of lowering costs. Quality outcomes that matter to patients are still the most important thing."

He said CMC knew it would have to accept comparatively low payment levels to be part of the new Anthem network, and did so in the interest of innovation.

"We knew going into it that the exchange was not going to provide the highest levels in terms of reimbursement. We didn't have high expectations," he said. "But we also knew that this was just one aspect of going forward into the future, and we wanted to be flexible and nimble to be able to do different things."

Calming presence

Pepe has brought a period of stability to the hospital after a tumultuous end to the 13-year tenure of his predecessor, Alyson Pitman Giles, whose effort to create a merger with Dartmouth-Hitchcock failed, and whose $1.36 million salary became the flash point for criticism of executive compensation at nonprofit hospitals by the New Hampshire attorney general.

Instead of a merger, CMC in the past year quietly signed on to a partnership in the accountable care project with Dartmouth. Pepe's $445,000 a year, as reported to the IRS, is lower than the statewide average of $485,664 for hospital CEOs as cited by the attorney general. Like the compensation of other CMC executives, it's linked to a variety of outcomes, including charitable care.

CMC is the second largest hospital in the state by number of beds, after Dartmouth, and the fourth largest by revenue, which beat expenses by 5 percent in the hospital's last fiscal year, the best result in the past eight years, Pepe said.

The hospital treats some of the sickest patients in the state, has some of the highest ratings for quality and was ranked number one by the Centers for Medicare & Medicaid Services in New Hampshire in terms of cost-efficiency. "If we're paid according to quality, value, size and complexity, then we're underpaid," Pepe said.

The doctor who spent his entire career in practice at CMC said he misses day-to-day contact with patients, but embraces the challenges of leadership. "I feel I was made to do this," he said. "I'm still taking care of patients, but taking care of them from a different vantage point .."