Hoag CEO Takes Hospital Helm

Dr. Richard Afable knows he’s got a tough act to follow.

“The simple answer is that you don’t replace Mike Stephens. He is irreplaceable,” said the new chief executive of Hoag Memorial Hospital Presbyterian in Newport Beach.

Stephens retired as Hoag’s chief executive in August after 30 years at the hospital.

But Afable’s not fazed by the challenge.

“The future is not about filling Mike Stephens’ shoes,” he said. “The future is about leading this organization from this point onwards, which is a new future, a new direction.”

Afable takes over a 409-bed hospital that consistently ranks among Orange County’s top facilities. Hoag was No. 2 among local hospitals with $435 million in net patient revenue for the 12 months ended September 2004. It’s OC’s largest independent hospital.

He’s coming on at a critical time for the hospital. Hoag is readying to open its $200 million Sue and Bill Gross Women’s Pavilion.

The seven-story, 320,000-square-foot facility will take its first patients later this month. The Women’s Pavilion is set to provide women’s health services, including a maternity ward with private rooms for each expecting mother.

Gross, the cofounder and bond guru at Newport Beach-based Pacific Investment Management Co., and his wife donated $20 million to help fund the Women’s Pavilion.

In a past Business Journal interview, Stephens said the Women’s Pavilion was Hoag’s top priority for 2005.

“This addition to our clinical capabilities will not only consolidate services for patient convenience, but will add some well-needed beds,” Stephens said.

Afable comes from Catholic Health East, a large hospital system based in suburban Philadelphia, where he served as executive vice president and chief medical officer.

He is among OC’s new crop of hospital leaders, which includes Deborah Proctor at St. Joseph Health System in Orange, who took over as chief executive last year. Unlike Proctor, who oversees 14 hospitals, including three in OC, Afable is head of one facility.

“It’s very difficult for most stand-alone hospitals to be able to maintain and sustain the resources necessary to be that community asset,” Afable said. “So what you do is join a system or create a system in order to get economies of scale.”

But Afable said Hoag has some unique advantages in the quality and size of its medical staff, “which attracts large numbers of patients from around Southern California, not just Newport Beach or Orange County.”

“This hospital has been able to meet the community needs and remain independent, a position that most hospitals would like to be in, if they could, but many, if not most hospitals, cannot,” he said.

The region’s wealth has helped Hoag attract donors, Afable said.

“Well, it certainly doesn’t hurt, but on the other hand, affluence or not, I don’t think a community will support an organization, especially a not-for-profit community based organization, unless they are receiving benefit and they see the value,” he said.

Large hospital systems often are seen as helpful in negotiating with health plan providers for covered treatments and drugs.

“Payers are not na & #271;ve in that respect,” he said. “They understand full well that healthcare providers, whether they (are) doctors, or hospitals, or both, will begin to aggregate and sometimes even consolidate for purposes of trading leverage in the contracting mode.”

But health insurers, Afable said, also look at quality.

They ask: “How essential is a particular hospital, a particular doctor or group of doctors in a payer environment, and therefore, what are we willing to compensate that hospital or those physicians in the marketplace?”

Afable spent 15 years as a practicing internal medicine and geriatric doctor. The past decade of his career has been in healthcare management.

At Catholic Health East, Afable particularly was interested in “clinical collaboration” among the system’s 31 hospitals, which run from Maine down to Florida, said Scott Share, a spokesman for Catholic Health East. Share also said that Afable took interest in doctor-hospital relations and patient safety studies.

Prior to Catholic Health East, Afable founded Preferred Physician Partners, a practice management group that supported doctors’ groups and provider networks.

Regulatory issues are on Afable’s mind.

The state’s earthquake safety law and nursing shortage “clearly are in the highest echelon of challenges for any leader of a healthcare organization in California,” he said.

“It’s not enough to just have enough bodies, if you will, in the nursing department,” he said. “It’s having (an) adequate number of well-trained nurses who can work in a contemporary environment.”

Afable said Hoag strives to maintain an environment that meets nurses’ professional needs, as well as investing in training and education.

Hoag officials have said in the past that the hospital has adequate staffing to meet California’s nurse-patient ratio law, which was scheduled to go into effect at the beginning of this year.

Late last year, however, Gov. Arnold Schwarzenegger delayed implementing the law, which calls for one registered nurse for every five patients in medical and surgical units.

The state’s seismic requirement, meanwhile, calls for hospitals to remain standing in the wake of a major earthquake.

“So what we have to do is plan for that, and we have been planning,” Afable said.

He said the Women’s Pavilion is “as seismically safe a facility as there is in Southern California. That’s something we are proud of.”

Meanwhile, Hoag is planning to make its older buildings safer, too.

Afable said he’s enjoyed his start at the hospital. He took over in the middle of August.

“My initial impressions are really about the people,the employees, the staff, the board and the incredible number of supporters of the hospital,” Afable said.

Afable got the Hoag job after being contacted by an executive search firm.

“Interestingly, I wasn’t looking for a job. In fact, I had a great job that was with a great system. I didn’t need a job or a new place to live,” said the married father of three, laughing.

“We tested that fit and came to the conclusion that this was a good place for me. I did not want to come to Southern California,it is where the call has brought me.”