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Leader Q&A: Dr. Joseph Pepe, CEO of Catholic Medical Center

New Hampshire Union Leader

November 03. 2012 11:29PM

Dr. Joseph Pepe officially became chief executive officer of Catholic Medical Center on Sept. 4. (DAVID LANE/UNION LEADER)

A physician who spent his entire career at Catholic Medical Center in Manchester, Dr. Joseph Pepe officially became the hospital's new president and chief executive officer on Sept. 4, after leading the hospital on an interim basis since mid-January.

He started as a doctor at CMC in 1990 and has held a variety of executive positions at the medical center over the years, serving most recently as acting CEO while a nationwide search was under way.

Despite a large field of qualified candidates, the search committee was unanimous in selecting Pepe to replace Alyson Pitman Giles, who stepped down as CMC's president and CEO after 13 years as the hospital's chief executive.

Pepe graduated from Saint Anselm College in 1983 with a B.A. in biology, received his medical degree from Tufts University in 1987, and completed his internship and residency at Baystate Medical Center in Springfield, Mass., before beginning his career as a general practitioner at CMC. He was named chief medical officer in 2000.

Q: What areas do you see for growth and expansion of Catholic Medical Center? The hospital this year proposed a family medical center on Route 101 in Auburn. What does that say about the vision for the size of the organization five to 10 years down the road?

A: I don't really think it's so much about size. It's more about better alignment - better alignment with physicians, better alignment with the community. When we go outside the walls of the hospital, it's really to provide more patient-centric care - higher convenience, coordination and communication. That's what the future of medicine is going to be. Instead of the current system of volume-based, fee for service, we're moving to a value-based quality per dollar spent. So anything we can do to increase the quality of care, access to care, and reduce cost and redundancy is our goal.

The building in Auburn is a no-deal. We're not going to pursue that. It just didn't work out for business reasons, but we will be looking to expand primary care and anything that will increase convenience and coordination of care to patients, and in order to do that we have to get outside the walls of the hospital.

We are not in the hospital business, we are in the health-care business. It's very important that we get into the community, and go where we're needed. It may be in the form of a lab or diagnostic imaging center, or a primary care office, or a health center, a screening center for cancer. It may mean collaborating with businesses that aren't even in the health-care sector.

Q: Can you explain what you mean by creating value. What does the "value-based" model mean for the average consumer in terms of their transactions with medical service providers?

A: Instead of just getting paid for procedures, or work that is done, the new system, the value system, they actually take into consideration the quality and the cost, that is the outcomes. Up until this point, there was no incentive to have high quality or improved efficiency or lower cost. You didn't get paid for that. But the change to a value system means there is going to be monetary incentives for outcomes, for lower cost, better efficiencies and better coordination of care for patients.

Q: So when you say "they" you mean the insurance companies, the payers, Medicare, Medicaid?

A: Yes, the payers, whether it be government or commercial payers. Right now we have somewhat of a perverse incentive of the more you do the more you get paid with no regard to quality outcomes or cost. So the idea is if we align the incentives better for physicians as well as hospitals, then we will move in the right direction, doing what we're supposed to be doing.

Q: Have the insurance companies and government programs developed the systems to measure quality and outcomes, and put a price tag on that in their payment to the hospitals?

A: They're trying to do that now. There is a system at the Center for Medicaid and Medicare Services called value-based purchasing, and they take certain process measures and quality outcomes as well as patient perceptions of quality of care through surveys, and they measure us compared to the nation. Right now, the government has taken away 1 percent of payment, and if you do better than 50 percent of the nation, you get the 1 percent back, plus, and if you do less, you get less money.

The other day we just got information that we are going to get 0.3 more than our 1 percent put back, which will translate into about $169,000.

Q: How close are we to having payment heavily weighted on value and outcomes?

A: We're just getting started. That's one of the challenges for the hospitals, and the challenge of health care today. We are moving from volume-based fee for service to a value-based system, and it doesn't happen by flipping a switch. So now the challenge is living in the gap. If you move too quickly, you leave revenue on the table and that takes away from what you can do for your mission. If you move too slowly, then you're not prepared for life on the other side of the gap.

Q: The hospitals in the state took a very heavy revenue hit when the state withheld anticipated reimbursements for the Medicaid Enhancement Tax. What was the impact on CMC in terms of the hospital's finances?

A: It was very difficult. We never had to pay this tax before. It was a tax in name only. And now all of the sudden this was a new tax, so yesterday we wrote a check for $13 million, which is extremely difficult when reimbursements are decreasing from government and commercial payers. New Hampshire's Medicaid reimbursement rates are the worst in the entire nation. Even Guam is ahead of us.

The good news is that we're still in the black, and we did very well. However, a part of that was through a reduction in force, just like many other hospitals across the state.

Q: Do you think the Affordable Care Act is a positive or negative development for health care?

A: The Affordable Care Act had some good parts to it, in that it started to attack the proper incentives, but I think it didn't go far enough in certain aspects, such as portability of health insurance. Why can't we have health insurance that you can buy individually, maybe with some help from a tax credit, and it's not tied to your job, so that if you lose your job you don't lose your health insurance.

It didn't address medical liability and malpractice. It didn't address many different issues that are causing the rise in health-care costs, but it's a start.

It would be great if the Affordable Care Act had incentives to increase the number of insurance companies in a state or enable consumers to go outside the state to purchase insurance, because competition works.

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Dave Solomon may be reached at

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