Blocking and Tackling for Capital Health

Frankly, I was worried about Capital Health System’s building a new hospital on Scotch Road in Hopewell, while at the same time University Medical Center of Princeton is building its own new hospital in Plainsboro.

How will both have enough patients to be viable, I doubted.

Capital Health’s CEO Al Maghazehe (pronounced “MAG a see”) cleared that up today, speaking at a Princeton chamber lunch on how CHS contributes to the area’s economy. CHS will draw some patients from Princeton’s catchment area, yes. But as the southern-most high tech hospital, it can tap patients from all the smaller hospitals to the south, a rich source of revenue indeed.

Okay, now I get it.

Maghazehe also revealed some intriguing business strategies.

Yes, he promotes teamwork. Yes, he advocates employee empowerment.

But how did he walk away with the largest loan that the U.S. Department of Housing & Urban Development ever made?

He credits his “down year” of 1998 when, after the merger of two century-old hospitals (Helene Fuld and Mercer), he had trouble meeting payroll. “The auditor sat in my office. I had terminated just about everyone on the management team – the CFO, the two medical directors, the CIO, and many midlevel directors,” he said. “It was just me.”

With a new team he reversed the trend and doubled business. And this is what he says HUD based its nearly $800 million loan on — not on a balance sheet that shows 700,000 patients and a half million dollars in revenue — but on its confidence in CHS being able to cover its debt service.

Other strategies:

Incentives to primary care practices. “The primary care network should be large enough to fuel growth. Some hospitals have 200. We are up to 35, and adding.”

Designating Fuld as a trauma center and bringing in top-level doctors for it.

Buying technology (the cyberknife and robotic surgery) and bringing in people to run it.

Competing with Philly by hiring away entire teams (including the stroke and cerebro-vascular team from Thomas Jefferson, though he didn’t name that hospital in his talk). And setting up cutting edge (sorry for that one) equipment.

Opening satellite offices like the Hamilton walk-in surgery center, which went from 7,000 to 35,000 procedures annually.

Designating the Philadelphia Eagles as CHS’s official team (no, that’s the inside joke of the lunch today, but Maghazehe is a notorious Eagles fan).

Perhaps the most interesting revelation, that Maghazehe is a one-job man. He came to CHS as an intern and never left. That may explain why he is so famously and outspokenly loyal. On this occasion he introduced a table-full of his own doctors, but he also gave gracious nods to Skip Cimino (just named CEO of RWJ at Hamilton) and metaphorically doffed his hat to Princeton: “This region is extremely fortunate to have two brand new hospitals built at the same time.”

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One thought on “Blocking and Tackling for Capital Health

  1. Why worry? The ability of the US "health care system" to generate "customers" is well proven. Does anyone really believe that lack of true attention to prevention being seriously addressed is an accident? As they say, if you want the truth, just follow the money. And currently the health (?) of the average citizen tracks back to the (unhealth) "health care system". Thanks Al?

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