Executive Voices: David Klementz, Chief Strategy and Development Officer at Encompass Health

Despite some health systems not leveraging their electronic health record (EHR) systems, others, such as Encompass Health, are thriving by integrating the technology into their daily workflows to improve clinical outcomes. In fact, the health system invested $200 million on its EHR platform eight years ago with zero HITECH dollars.

David Klementz is the chief strategy and development officer of Encompass Health, a 130-hospital health system headquartered in Birmingham, Alabama. His job has two components: strategy and business development. On the strategy side, Klementz looks at lines of business, technology and how to position Encompass for the future of healthcare. On the business development side, he runs a group that focuses on new hospitals, acquisitions and growing the rehabilitation section of the business.

A former senior vice president and chief financial officer for Progress Rail, Klementz received his bachelor’s degree in finance from James Madison University. He got his certification in procurement and contract administration from the University of Virginia and completed Duke University’s Fuqua School of Business’ Leadership Development Program. He is a certified public accountant.

I spoke with Klementz about Encompass Health’s Post-Acute Innovation Center, how the health system is leveraging the EHR and his approach to mergers and acquisitions.

Editor’s note: This interview has been lightly edited for length, clarity and style.

Samara Rosenfeld: What are some key projects that you’re working on?

David Klementz: On the strategy side, we established the Post-Acute Innovation Center in 2017 with Cerner. There are two aspects to it. One is leveraging the platforms and analytics that we currently have available — things like how to risk-stratify patients at discharge from acute to a more appropriate setting. How do you coordinate EHRs between acute care and post-acute? The other is developing new things that don’t exist in the market today. For example, with Cerner we developed ReACT, which is focused on reducing key care transfer rates. That takes the clinical info on a live basis in our EHR and identifies patients at risk for acute care transfer. The Cerner system helps introduce a clinical intervention, so we can actively reduce ACT transfers from our rehabilitation hospital.

On the business development side, we have a post-acute assessment tool, which analyzes the post-acute space for any acute care hospital in the U.S. We use that to identify collaboration, acquisition, de novo and joint venture opportunities.

S.R.: Can you tell me more about ReACT?

David Klementz: There are two phases of ReACT. The first is during the plan of care, while different data points come up in our EHR. We look to see if there are signals or trends that suggest a patient is trending toward an acute care transfer rate. The algorithm is running behind the scenes in our EHR, and it updates our clinicians, so if a patient is trending in a certain direction during their plan of care, we can have a clinical intervention to help reduce the probability of an acute care transfer rate.

On the post-acute side, we’re taking that same logic and applying the risk stratification of a patient at entry or discharge from the acute care hospital and our hospital. So when you think about risk-stratifying patients, it helps to come up with plans of care post-discharge, so you can do your care management and know certain points of intervention. It also helps us handle the transition of care to the next setting — the home, in most cases.

For example, if someone had a high risk score, we would engage with home health and talk about how soon they should engage the patient to reduce the probability of a readmission.

So, ReACT is acute care transfer during their stay, reusing those analytics to drive down readmission rates.

S.R.: A lot of what Encompass is doing is tied to EHRs. What did you want from your EHR before you set out making it a reality?

David Klementz: Cerner had an EHR platform. We spent $200 million eight years ago with zero HITECH dollars. The premise of it was to come up with a post-acute EHR that doesn’t exist in the market, which is now employed across our whole portfolio. The evolution of that has gone from using the data that are available in our EHR to develop tools and solutions, like the ReACT algorithm, to improve care and transitions of care. It’s where all of the clinical and patient data exist. But we have the ability to interface with acute care EHRs upstream and use the data to look at the transition of care, in terms of where they should go and how the follow-up care should be post-our-care.

So, it’s evolved from the EHR, which is a Cerner platform, into using that data to drive and improve clinical outcomes.

S.R.: What are the benefits of a fully integrated EHR?

David Klementz: For us, the benefits start at the determination of an appropriate patient for rehabilitation. For example, our clinicians use our information to identify patients in acute care who are appropriate for rehabilitation. And because we have an EHR and admission process ingrained with that, we can identify the patients and get them quickly to the right setting. This helps the flow-through for the acute care hospital.

Then the EHR helps us with the plan of care for that patient, to help drive functional improvement, drive down acute care transfer rates and increase our discharge to communities.

So there are a couple of aspects to it. One is the ease of which you get the patient to the right setting. The other is the degree to which the EHR allows you to get the right outcome for the patient.

S.R.: There’s a lot more going on in healthcare than EHRs and solutions. How do you vet and account for new innovations that come to the market in your strategic plans?

David Klementz: We start with our strategic plan and what tools and solutions we need to be a full post-acute solution provider. We then look at the capabilities we have and what we’re developing ourselves in conjunction with our post-acute innovation center. Typically, we will look at new tools and folks coming to the market who fill a void that we are either not developing or could develop faster through collaboration with innovations that are hitting the market. Sometimes we’ll come to the conclusion that it’s something we already use. Sometimes we say, ‘That’s a good partner in this niche of what we are trying to do,’ which is a full post-acute solution with patients across their whole episode of care.

S.R.: We’re in the age of mergers and acquisitions in healthcare. How do you approach them?

David Klementz: In the provider space, we have, on average, five to six new hospitals per year. Most of those are through joint venture relationships, de novos or CONs. There are opportunities where we have acquisitions in the rehabilitation space, but the majority of the acquisitions have come in our home health segment.

On the mergers and acquisitions side for home health, we look for markets where we are existing as a rehab hospital but do not exist as a home health or hospice business. Because of that, we need to have the overlap to coordinate care better. That’s usually a pretty good road map as we think about portfolios for acquisitions or acquisitions that may be one-off agencies.

S.R.: How do you consider them when setting strategy?

David Klementz: We have 130 hospitals. We have about 60% overlap with our home health. So the road map to the other 40% is rather transparent. We know the collaboration markets we don’t co-exist in, so those are pretty straightforward. In addition to that, there are acquisitions we have had in the hospice business that are less about the overlap and collaboration with rehab and more about the collaboration and overlap with home health. We look at our geography and for holes in our service areas and find opportunities to help fill those holes.

S.R.: How do you incorporate the clinician’s opinion into your strategic plan?

David Klementz: The aspect that often gets overlooked is that, while we’re developing analytics and solutions, we also develop playbooks and address the process and people side of it. We are uniquely positioned, as opposed to some others in the patient setting determination or payer side of it, because we are a provider of care — but we can also help facilitate the right setting and right care.

That comes with not just being able to take an algorithm and say, “Well, here is where the patient should go.” It comes with looking at the data, having the solutions, having the analytics, but also having the people and process to implement and get the effective clinical results.

I always get nervous to talk about the Post-Acute Innovation Center because while it gets you directionally correct and drives outcomes, what ultimately is driving the outcome is the process and the clinicians who are using those tools to get the most efficient and the best outcome. At the end of the day, it’s still the clinicians using the directionally corrected devices, tools, solutions or analytics to get the right setting, the right outcome and the right cost for a patient, specific to a patient.

Any analytical tool, solution we develop or strategy we partake in has a very active engagement from our physician staff. If you think about ReACT, it’s an algorithm and solution. It will drive down acute care transfer rates if it’s effectively used. But all it is is a compass. The key is, ingraining that into our EHR and the clinical process, sending signals to physicians, nurses, therapists that there is a potential negative outcome. That still takes the intervention of using the analytics, having a process that brings it to the clinician’s attention to take action. The clinician is really the one who’s impacting the clinical result.

All of our strategy has active involvement from our clinicians.

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