One on One: Paul Korth, CEO of Cookeville Regional Medical Center
Tuesday, Apr 2, 2013
With unanimous support from the hospital’s board of trustees, Korth moved from CFO and interim CEO to the lead chair, and in doing so, changed his life.
The day after his decision was made final, the Upper Cumberland Business Journal sat down with Korth to talk about that decision, how his life will be different and his vision for the future of Cookeville Regional.
UCBJ: Well, the obvious first question is…what made you change your mind from thinking you weren’t interested in the permanent CEO position to now finding yourself in the seat you’re in?
Korth: When I was appointed interim, it was a very quick thing, and I didn’t have a lot of time to really sit down and think about what the future held for me. My goals and aspirations when I first started in healthcare were never to be CEO. I’ve always enjoyed being CFO and the numbers side. Over my career, I’ve been in operations quite a bit, so as the time moved on during the interim, we sat back and me and my family talked about it. I didn’t realize the outpour of support that I had and how many people wanted me to pursue the CEO position. The board was very gracious in giving me the time I needed to decide if this is what I wanted to do. We thought about it, worked on it over a couple of months, and then we decided, “Yeah, we can do this.” I talked with them (the board) about if they were still serious about my becoming CEO, so we came to terms and we’re excited about that.
UCBJ: How long have you been with Cookeville Regional now and how has your vision for the medical center changed over the years?
Korth: I started with Cookeville Regional as Chief Financial Officer in May 1999. I was hired in when one of the changes in administration happened…in that time period, Mike Mays had left and Bill Jennings was interim for about a year. Then the board hired Tod (Lambert) and Tod brought myself and Bernie (Mattingly) in with him, me as Chief Financial Officer and Bernie as Chief Operating Officer. We all worked together for about five years. Tod left and Bernie became CEO. We didn’t have a Chief Operating Officer for quite some time during Bernie’s time, so he and I did both operations and financials. The year or so before Bernie left, we hired Menachem (Langer) in as Chief Operating Officer then when Bernie left, Menachem took that and Menachem and I pretty much split responsibilities.
I have been here going on almost 14 years, been in healthcare for almost 24 years now. I started out in a small, rural hospital in Clay County as the financial officer. Moved from there to Livingston. Both of those of hospitals were a little different because they were for profit, company hospitals.
UCBJ: How does your combination of experience and professional qualifications make you the right person to lead Cookeville Regional in these ever-changing and somewhat tumultuous times?
Korth: I think my experience basically the whole time I have been on the healthcare side has been as much or more operations as it has been financial. Especially in the 14 years I have been here, I have a great accounting staff. So from a day-to-day accounting operations standpoint, actually doing journal entries, making cash postings and all of those things, I don’t do those. I review statements, I review the work being done there, and I manage the people. For years now, I have more report to me than just the accounting staff, other operational things. All of the maintenance, supplies, so I have had a lot of different departments reporting to me outside of accounting that are part of the full function of the operation. I know what it is like to do those functions because I have done them before. And I think that experience will help me with leading this organization into the future.
UCBJ: Do you feel not being a doctor will help or hurt you in dealing with the medical staff?
Korth: You know there are positives and negatives about that. I see a different aspect than they do. I probably see a more business-type aspect, more from the true accounting side than the doctor does. You have to realize that all physicians are extremely intelligent. They are tops in their class. So, if you have a CEO who also has a medical degree, they relate with the physicians very well because they know what they have gone through, they have been there before. One of the things that I am putting together as a team...as you know, we recently just hired a Chief Medical Officer, Dr. Jeff Gleason, and Dr. Gleason will handle a lot of the medical staff affairs. He is a doctor. He knows their terminology and how they function on a daily basis. What I try to bring into the picture on top of that is the stability and financial-side expertise to manage both of them.
UCBJ: Do you plan any significant changes at Cookeville Regional, especially given your long-time view from the CFO’s chair?
Korth: Yes. I believe that is one of the positive things that I bring as the new CEO of Cookeville Regional is my stability and my years of service here at the hospital. My strategic goals for the future are to grow and expand services, and I think the way to do that is to continue to recruit highly qualified, quality physicians. On the medical/hospital side, physicians are the only people that can make you money. They are the only people that can bring you patients to the hospital, so basically they are the only people that can bring you what you need and what you service. So, we continue to expand those services. We have about 25-30 new physicians coming into the medical center over the next few months between now and September. A lot of those are joining practices that already existed. We are getting a couple of new cardiologists.
One new service we are going to be adding this summer that we haven’t had in a while is rheumatology. We have a rheumatologist who will be joining the staff later this summer and we haven’t had that service here in a few years. We do a community needs assessment every couple of years to see what the community thinks we need, physician wise. We kind of use that as our recruiting tool to say these are the physicians that we need to go after.
The short-term/long-term goal really is to expand services and continue to grow in what we are doing and continue to move forward with the quality care we give and, again, the way you do that is with good, quality people.
I also plan to look for and hire a COO. I’m going to leave the financial where it is right now for a little bit…not looking for a financial officer today. Our first goal is to look for and hire a COO…someone with experience, who knows hospitals and has worked in a hospital. Someone who, of course, is a good fit for the hospital and a good fit for the community. And what that will allow me to do as CEO is to focus on strategic and be involved in the community. I think it is very important that the CEO of this regional medical center be very involved in the community…be involved in those things such as the chambers, the different social organizations...just to get out there and be able to talk to those organizations and get out the good word of what is going on here at the medical center.
UCBJ: Your partnership/alliance with Vanderbilt, how does that play into the future of Cookeville Regional?
Korth: Right now that network is in its early developments. We will get a lot of things from Vanderbilt that the general public will never see. But it will help the operation of the hospital. Just to mention one of those things that is just a small tip of that right now, when you go to computerized electronics, there are order sets, standard order sets...so when you go in to look up a diagnosis, there is an order set that says do this, this, and this to that patient because it has been clinically proven that if you follow these standards, patients do well. Vanderbilt has almost 700 of those standard sets on every diagnosis already written. They are sharing those with us, allowing us to download them into our system. That is one small instance the general public will never see.
One of the other big things is transferring patients…getting patients that need a higher level of care than we are able to offer them here in Cookeville. It is a seamless way to get them into Vanderbilt. We call Vanderbilt, they see we are in the network, they say send us the patient ,we will take care of them. So it cuts down on a lot of frustration for the physicians, especially in the emergency room. When they have a patient that is critically ill, minutes mean saving the patient’s life.
One of the other things that we are working on and are very close to putting together, maybe sometime this summer, is an insurance network. Vanderbilt, through the help of Aetna, will be putting together an insurance network to take to market. The Vanderbilt network will not sell that directly. You will still have to go through your local insurance company. But it will give employers the opportunity to have another plan to shop and hopefully that price will be a better price than another plan. It will give small businesses in the community another option on healthcare for their employees.
UCBJ: What have you found to be the most challenging aspect of your job as interim CEO?
Korth: The biggest challenge that we will have and have continued to have here at the medical center is finding good quality physicians and staff. You know as well as I do this is a great place to live and I love it, but when you are trying to recruit in someone who has never been here...physicians sometimes want a bigger area. So, recruitment of quality people is one of the biggest challenges.
The reimbursement side of healthcare...we are a unique industry where our reimbursement is dictated to us. We don’t get to tell you what we want to charge. We charge these numbers that are inflated and never get paid those numbers. About 95-98 percent of our reimbursement here is fixed reimbursement. The payers are telling us what they are going to pay us, we aren’t telling them. Again, it is so much different than any other business. You go to Wal-Mart, you buy something, it is priced on the shelf and that is what you pay for it. Service we give is priced out differently. Medicare gives us one rate, TennCare pays a different rate, commercial insurance pays a different rate, so you are paid all these different rates and you are paid what they tell you you are going to get. That continues to decline every year. So, that is a challenge.
So what we do is look for efficiencies…how can we be more efficient delivering quality healthcare that we need to give. We don’t really talk anymore about what we can cut because we have cut all of the stuff. You continue to look for efficiencies. You continue to negotiate and deal with the vendors about the costs of the supplies you get in here.
Our two biggest costs at the medical center are salary/wages/benefits and supply costs. Those two lines are close to 65-70 percent of the total operating costs here. Managing those efficiencies means get it done quicker, get it done faster, but not sacrificing quality because, if you don’t give quality care, you aren’t going to be open.
UCBJ: There was much criticism in different circles of the most recent CEO, Dr. Menachem Langer. How do you plan to overcome any strife that may have been caused during his term as CEO and how will you do things differently?
Korth: One of my management styles is to just be out there, be involved, listen to the staff, and listen to people in the community about what is going on and what they see. We have one set of eyes here in the hospital and we think this is the way things are going or being done, but I need to be...and I think that is one of my key roles as CEO, is to be that community spokesperson, to be out in the community not only to speak, but to listen. What does the community see happening that we need to work on or fix here at the medical center? Because, if I am not out there listening to it, I will never know it.
I think one of the things that I bring to the organization is stability and integrity. I feel like I have worked hard to inspire that in people and to gain that support. And I think I have pretty good support here at the medical center. You know we have 2,300 employees and 200 physicians, you are never going to make everyone happy. When you have to make those tough management decisions, those decisions are made with the organization as a whole in mind. You are trying to keep as many jobs open as possible. There will be times when things will have to be changed. We will have times, don’t have any plans right now I want to make that clear, but there will be times when cuts have to be made.
One of the ways we will do that is to be informative, let people know what is going on because then they are able to deal with it a little better. If you are honest with them, straight forward with them, they won’t always like it, but they will understand it. After their initial reaction, they will sit back and say, I don’t agree with it, but I understand it. And I feel like that is something I have done over my career is to try to educate them, tell them the truth, and tell them why we are trying to do something. It isn’t always easy, but it is the right thing to do.
UCBJ: In light of the federal Health Care Reform Act and all the changes affecting healthcare today, what is the biggest challenge facing Cookeville Regional and your leadership role in the coming few years?
Korth: It will affect us in that there are going to be cuts in reimbursement. The plan is supposed to offset that with additional people covered with insurance as opposed to not having insurance coverage today. That is yet to be determined whether that is going to work or not. I think we are waiting to see, it is too early in the plans to see what is going to happen. We will just have to take it when we get the information and go with it when we get it. Again reimbursement is always going to be challenging in the future for all medical centers all over America. We just have to be efficient and do the best we can with what we have.
UCBJ: With those cuts in reimbursements and the commitments we already have out there as far as growth here at the hospital, do you see any problems with meeting those needs in the years to come?
Korth: No. We always manage those. We are in a market that is well positioned for that as we are the largest medical center between Knoxville and Nashville, so we are in a great location. Things like partnering with Vanderbilt will help us with some of those efficiencies. They are constantly doing research and development on how to do things better. And I believe they will share that with their network hospitals. I don’t foresee us cutting any services.
It is going to be tougher for smaller, rural community hospitals to stay open. That was one of our strategies with Celina was the purchase of that to get us a little bit of market share and help keep that facility open because facilities in our area need to stay open. We have capacity issues today. We are full a lot of the time and we can’t take many more patients. We need to help support those other community hospitals in the area…allowing us to do bigger stuff that they don’t do, and Vanderbilt to do the bigger stuff that we don’t do.
UCBJ: Do you see any more acquisitions, like Celina, happening in the future?
Korth: It is always a possibility. We don’t have anyone that we are talking to right now, but there will always be those opportunities that come around at different times and we will just have to take a look at them individually and see if they fit in with what we are trying to do here.
UCBJ: Overall, how do you define the health of Cookeville Regional today?
Korth: We are in very good shape strategically. We are in a great location, as I mentioned. We have almost 200 physicians on staff now and that continues to grow. Financially, we have done well. So we are in a very good position to operate and continue to provide the services that are needed for the community.
UCBJ: With the new role comes a higher degree of public exposure and scrutiny. Is that something you and your family talked about and are ready for?
Korth: There were two major decisions that had to be made. Number one, I have been here a long time, at this facility for 14 years, and I have seen changes. And the CEO position has not always been the most stable position in the history of most hospitals. It is a proven fact that the industry standard for a healthcare CEO is three to five years. So that was definitely one of the main things to think about.
And the second thing is realizing and knowing when you are the CEO in any community our size, you will have those rumors, those things that are always out there and that is something that my wife, Janice, and I and the family talked about. When you are the top individual at an organization, lots of times you have that target on your chest. You are the person when something doesn’t go right, you are the person who is going to be blamed. There will be stuff in the community that will be talked about. You have to have thick skin and I have had that for quite some time. You let those things come and go. I don’t let things bother me personally when I am attacked because I know it is more about the organization than me personally.
But those were the two main things that we had to think about. And it came down to the decision, personally from where I stood, that I have worked here for 14 years, I know the community pretty well and I have a pretty good repoir with most. I realize the people in the community who you need to be involved with, like the city council. The Board of Trustees, they are the ones that I report to. They hire the CEO and then the CEO hires everyone else. But I understand how it is to work with the city council, to educate them, give them what I think is needed here at the medical center. Be truthful with them, if things are not good, tell them what they are and the same thing with the board...you have to give them the good, bad, and the ugly. Every four years you can get potentially five new council members. So you are getting five new bosses there (every four years) and one boss a year with the (new) board member and that sometimes can be challenging.
UCBJ: Tell us about your personal life…your family, hobbies, other interests outside of the confines of your professional life.
Korth: Janice and I have been married since 1986…married in June for 27 years. I have two children. Wes, my son, and Macey, my daughter, and one daughter-in-law, Katie. Outside the organization, I enjoy playing golf. I enjoy travel and time with the family. We spend a lot of quality time with family and friends. In fact, the family is scheduled to take a trip here in the next couple of weeks together and it is always good to be able to get out of town and enjoy family. Wes and Katie are going to join us too. We always really enjoy that when we can get away with them and do fun things.
UCBJ: Do you consider this a “dream” job?
Korth: Oh yes! This is an outstanding position! That was another thing I focused on when I decided I wanted to pursue being the CEO. I have been in the Upper Cumberland area since 1972. My family moved to Celina in 1972, so I have been in this area a long time. I went to Tennessee Tech. So I have spent a lot of time in Cookeville. We consider Cookeville to be home. We enjoy it here. Both of our kids went to school here. Wes was actually born here and Macey was born in Livingston when I lived there. So this is home, this is the best place to be and this is the best job that you could have in the community.
UCBJ: Anything else that you would like to share with us?
Korth: Like I said earlier, it was a tough decision...my wife and family and I discussed it for a long time and we think we made the right decision. I think I am the right fit for the organization. I have had an outpouring of support. That is one reason we looked at this…the amount of support that I got from the board, the medical staff, the hospital staff, the community. I have been asked this almost three months now on a daily basis. “Are you taking it? Why wouldn’t you take it?” So I have spent a lot of time thinking about this and the bottom line was I want to stay here. I want to be at the medical center. I want to be in the community and it felt like this was the best way to do that.