This interview with Lloyd Dean, the president and CEO of Dignity Health, was conducted and condensed by Chas Roades and Eric Larsen.
Q: Most health system CEOs have worked in hospitals their whole lives—but for you, it was almost a third career. Can you talk about your early decision to become a teacher, and why you made the switch into health care?
Lloyd Dean: I always liked the power that came from teachers—a good teacher can have a great influence on your life.
And I grew up in a difficult financial situation; education became a highway out of it.
Education helped me get into college, and get scholarships. Education became a means to an end.
So once I graduated from college, I gravitated toward those kinds of opportunities. And I loved being a teacher, and also working on the business side of a university.
But that's where I encountered some business people who were fascinating to me, and our conversations encouraged me to make the change. Long story short, I ended up going to the Upjohn pharmaceutical company, starting in the home health care division, when I was about 28 years old.
Q: That must have been a change for you.
Dean: It was, and not just because of the difference between pharmaceuticals back then and education, where you were on a shoestring budget.
This was around the time that large medical groups and systems were beginning to form. One of my first assignments was to figure out the impact on our company, so I went out and spoke with hospital leaders, and with physicians, about how they thought their world was changing.
But before that, I don't remember ever spending any time in a hospital. And I don't remember going to a physician myself when I was growing up. My parents couldn't afford that—we didn't have any insurance—and the idea of going to the doctor for a routine checkup was foreign in my community.
Q: Eventually you left the pharmaceutical world and moved into hospitals. Why make that change?
Dean: At Upjohn, I did well and moved up the ladder—eventually, I became executive VP of marketing and operations for the whole corporation. It was one of the greatest professional experiences I ever had.
But I'd always asked myself, how can I use the opportunity I have, the gifts I've been given, to have an impact on the kinds of communities that I came from?
And I began to realize that in health care, faith-based organizations were really focused on the poor and most vulnerable. As someone who grew up in a religious family, and also wanted to help those communities, that really resonated with me—it was a two-fer!
That's how I got into this side of it. And I love health care. What greater opportunity do you have to impact large numbers of people? To help people really sustain life, or change the path that they're on in a positive way?
Setting a vision
Q: How does your teaching background inform your management style?
Dean: Successful educators tend to have three key attributes.
One, you have to be able to listen. Two, be able to take complex principles and ideas and put them in a language that people will understand. Three, motivate and create the desire in individuals to learn—to get them to focus together on a common project.
It's the same in business. It's what a CEO does. You create a vision—together, where do we ultimately want to go. And how do we ultimately get there.
"The best thing that I can do is create a conceptual framework ... so that at the center of everything we do is the patient."
Q: Interestingly, the word doctor comes from the Latin word for teacher. Yet those skills you just mentioned—ability to listen, or use simple language to convey complex ideas—don't come to mind when lots of patients describe their doctors.
Dean: You're spot-on.
If you think about patients' top five criticisms of their doctors—and I know the Advisory Board does some of these surveys—it's exactly the opposite.
Doctors don't seem to have enough time, or aren't clear enough in their communication.
If you talk to physicians, they love to communicate with patients and set a vision. But the economics—the paperwork, the receivables—get in the way.
Believe it or not, I think reforms like ACOs and bundled payment are designed conceptually to remove some of those impediments. To allow physicians and nurses to get back to those things that we as consumers and purchasers still desire.
Q: To bring that line of thought full-circle, how can you move Dignity Health to be an organization where there's teaching at the bedside, at the coalface of care?
Dean: The best thing that I can do is create a conceptual framework—the vision, the value sets, the metrics—so that at the center of everything we do is the patient.
If we start by thinking that the most important thing is the patient experience, and then work outwardly from there, we'll have the highest probability of doing the right things to achieve the right outcomes.
For example, what do patients need before they even have contact with us—are there screens we can do to ensure that they even need to see us today? And where should we be seeing them—at a hospital, or an outpatient facility?
We have to think about the processes that we've imposed within Dignity Health, and whether they're having the opposite impact from what we want to have.
Part of that is research—getting best practices not just from health care, but from outside the industry, too.
Where is our ATM? Where is our game changer?
Dignity Health's transformation
Q: The architecture you're creating around Dignity is inherently more complex and distributive—the acquisition of US HealthWorks, for example. Can you talk about what you're trying to do on the organizational level?
Dean: We're trying to create a new footprint. Acute care will be one part of that—but to be successful and manage new populations, we need to have new [elements] of our portfolio, and multiple access points within a geography.
That will include surgical centers, home health care capabilities, physician groups, clinics, and so on. And an innovation center, which [keeps] us in a constant improvement mode.
I want us to have a brand that's definable—that has people think about access and quality—and with affiliations and relationships so that once you enter our network, you never have to leave the Dignity Health brand to get anything you need. Wherever you go in this country, you have Dignity with you.
That doesn't mean you have to get all your services through Dignity Health. But through our technology and our relationship, it's like Coke—we're everywhere.
Q: Does that mean a different geographic footprint in addition to a different care footprint?
Dean: Yes. We're looking beyond the Western region, and US HealthWorks was a multi-purpose acquisition for us. It lends itself well to our portfolio of services, and it's a relatively inexpensive way to enter other communities. It gives us access to folks where they might not need the full portfolio of our services.
And health systems don’t have to own everything anymore. At Dignity Health, we have options where [members of our portfolio] can keep their identity, all the equity they've built in their name, but we can be their backroom.
Q: In some sense, it sounds like you’re trying to build a national network. Is your vision that the future landscape will be dominated by national networks that are contracting directly with employers, or selling to individuals on the exchanges?
Dean: There’s a role for national networks, but I believe we need community-based hospitals, too.
I'm opposed to the day when there are five national brands, or where there’ll only be the health care equivalent of a Wells Fargo or JP Morgan—I like that I can go to my local community bank.
So while every community does not need to be part of a national brand, they might access a national brand for certain kinds of things.
And while there will be more consolidation, I’m one of the voices saying big is not necessarily better. I think we’ll be able to either sell or bring the efficiencies of a national system to a community, but not dwarf them in it.
"I want us to have a brand ... [so] wherever you go in this country, you have Dignity with you."
Q: The vision you're laying out is around growth and innovation, but one of the big tensions today is between growth and austerity. And in health care, we're trying to figure out how to grow and transform—but on less money and, frankly, in very stressed fiscal circumstances.
Dean: I think that’s where we are. Although as much as we are experiencing the pains of this environment, in the end we’re all going to be better off—we’ve been talking about the perils of fee-for-service as long as I’ve been on Earth.
But this is the first time that there's actually a transition going on. So regardless of what you think about the legislation, it is forcing some of the changes that we've made.
Yet I think our best days are ahead of us. We can’t sustain this; the consumers can’t sustain it.
Remember, the most significant changes in the history of the US have been revolutionary—few have been evolutionary. Look at civil rights, look at women’s suffrage. They were all gut-wrenching and soul-searching moments.
In the U.S., we don’t change until there’s a significant force that causes it. We don’t do things because it’s the nice thing to do. We do it when some groups come together or when we reach our pain threshold.
Q: We began this conversation talking about your background, coming from a community that was under-resourced. Do you worry about those kinds of communities in a world where health system transformation may create winners and losers?
Dean: I absolutely do. I think one of the flaws in health care—even in our current legislation, which I say to the president and anybody that’ll listen—is that we’re back to this idea of "build it and people will come. "
We can create access to insurance, but that doesn't mean the most vulnerable patients are going to sign up. That doesn’t mean the care is going to be there.
So we’ve got to create some momentum for people to sign up, or we’re going to have these great exchanges and it’ll be like a factory that can make all kinds of wonderful things, but there’s no one purchasing the products.
And I worry about the most vulnerable getting caught up in it. The exchanges are a pretty complex proposition. How do we simplify that so those that we want to access it understand it and see the benefits?
And how do we tell patients the truth that, at this moment, their costs may be higher, before we can undergo [the transformation] to take them proportionately lower?
Hear from other leading CEOs
Anthony Tersigni, the CEO of Ascension Health Alliance, shares his thoughts on where the health care industry is headed, how his health system approaches potential partners, and one of his biggest fears when running a $21 billion enterprise.
Read our interview with Anthony
Ernie Sadau, the CEO of CHRISTUS Health, talks about his journey from hospital patient to hospital CEO, how he's dealing with his top three challenges, and why he doesn't allow BlackBerries in the boardroom.
Read our interview with Ernie.
Next in the Daily Briefing
Daily roundup: June 21, 2013