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August 7, 2013

Lessons from the C-suite: Jim Skogsbergh, CEO of Advocate Health Care

Daily Briefing

    This interview with Jim Skogsbergh, president and CEO of Advocate HealthCare, was conducted and condensed by Tom Cassels and Dan Diamond, and facilitated by Eric Larsen, managing partner.

    Q: Let's start at the beginning: Why did you get into health care in the first place?

    Skogsbergh: I thought I'd be a teacher and a coach—that's what I went to school for, playing baseball at Iowa State and getting a degree in teaching.

    But my mom was a nurse, and encouraged me to think about a career in health care. And it helped that I had mentors along the way who were gracious enough to give me a chance. Leaders like Steve Ummel, who was president and CEO of Memorial Health System in South Bend, Indiana, when I was starting out about thirty years ago.

    It's been a wonderful decision.

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    Q: We've spoken with Lloyd Dean, another teacher-turned-CEO, for this series. How has your background as an educator shaped your career?

    Skogsbergh: In health care or in the classroom, I think being with people, being around people—and seeing them grow and achieve their goals—is so rewarding. Watching someone set an [objective] and work hard to accomplish it.

    And also having the understanding that you've got to keep learning, whether you're a young person just starting out or you've been [in the industry] for years.

    We know that at Advocate, for all of our success, there's so much that can be learned from outside of our own leadership. There are an awful lot of organizations within the industry that we admire greatly.

    Setting strategic goals

    Q: Advocate is one of the largest health systems in the nation, and it's grown under your watch. Can you describe what it means to be a 'system' at this moment in health care?

    Skogsbergh: That's a good question. And you know, we've evolved since I arrived at Advocate in 2001. We're a larger organization—but a tighter system today.

    When I got here, there were a lot of things that were optional for our hospitals. Different processes at place at different [locations], which can add up when you've got ten hospital campuses.

    We have gradually, over time, reduced the amount of optionalism, with a focus on how to improve our outcomes. Working with leaders across the organization on whether there's a better way to do a certain [process]. Using economies of scale to control our spending. Standardizing performance measures for our physicians.

    And reducing variation can lead to clear benefits—especially when you have the goal of excellent medical care.

    So the whole notion of a "system" for us—getting different parts of [our organization] working together—is significantly different today than it was a decade ago.

    "The whole notion of a 'system' for us ... is significantly different today than it was a decade ago."

    Q: And part of Advocate's evolution is the relationship with your doctors, from the growth of Advocate Physician Partners to other alignment initiatives.

    Skogsbergh: Definitely. Our partnership with [our doctors] is key.

    Keep in mind, there was a time when the notion of physicians and hospitals coming together was unexpected. But changes in the industry, and the clear value of having a strong relationship, means that we've worked hard on aligning with our physicians.

    And in terms of whether they're employed or independent, well, I don't think one size fits all. At Advocate, we employ about 1,000 physicians, and another 3,000 to 4,000 are independent.

    But we've really worked hard on this relationship. We've tried to show our support for our physicians over the years.

    One key moment was when we were thinking about an offer by [a major insurer]. It was a good opportunity for us—and then we discovered what was put in front of our physicians, which would have put them in a tough spot.

    After some thought, we decided: This dog doesn't hunt. And we said no to the lucrative contract, said yes to our physicians.

    They remembered that.

    "We said no to the lucrative contract, said yes to our physicians. They remembered that."

    Q: From what you're saying, Advocate's changing relationship with its physicians reflects the broader transformation in health care. The need to rethink the hospital's role.

    Skogsbergh: Yes, and it's been accelerating the past few years. It's the race to the South Pole for our industry.

    Some of that is a self-imposed catalyst—how do we get better health outcomes, how do we deliver care in a changing environment. That isn't easy. And alongside all the traditional cost pressures, the marketplace may be brutal.

    I had a chance to have dinner with Jim Collins not long ago. [Editor's note: Collins is the author of "Good to Great."] We talk about those lessons, about how to get from good to great across all of Advocate.

    We try to make them real.

    Navigating new models

    Q: Many hospitals have begun moving to adopt new alignment and integration models, but Advocate has been pushing on Clinical Integration for years. Can you talk about your approach?

    Skogsbergh: Our Clinical Integration model is our secret sauce. We try to incent things that we should be incenting. A focus on fewer falls, for example, or ways to improve access. Having providers spend a few more minutes talking about smoking cessation, diabetes.

    We're able to create the incentives that we believe will make the biggest impact on our patients' health outcomes.

    Meanwhile, the goals are really identified and created by our physicians. It's a physician-led, physician-created partnership, designed to reward those good acts and good deeds.

    And it's a [model] that's constantly being tweaked, constantly being adjusted.

    Q: And Advocate also has been a pioneer on the commercial contracting side, launching an accountable care organization in 2010 with Blue Cross Blue Shield of Illinois. Can you walk us through that decision?

    Skogsbergh: A couple years ago, we arrived at the conclusion that the world is changing; we should create a vehicle and react to it. And Blue Cross had come to a similar conclusion.

    Some of that was because of the existing contract that we had. At Advocate, we were doing a lot to focus on efficiency [that] wasn't necessarily leading to financial benefits.

    So it's a shared savings model, where we're at risk for some outcomes. And so far, it's been a good relationship—it hasn't been perfect, but it's been successful. We've been able to outperform on readmissions rate, for example. And we're learning.

    Q: So drawing on these experiences, and your years of hard-won expertise, any advice for other organizations?

    Skogsbergh: There have been a couple of hurdles that come to mind.

    First, there's been an issue with data lag, and time lag. Something that you need to think through is your data plan, your information capabilities, so you're not just getting the information, but you're getting it when you need it.

    You have to make sure that your physician offices have the right Internet capability—we can't send information, we can't collect information without appropriate technology.

    "There's a tremendous need for strong leaders who understand how the game is played, understand how you score, and understand how you win."

    Second, don't underestimate the importance of physician leadership. It's really about getting the right people on the bus. You get the right people, you can go anywhere.

    And physician leadership is especially important because we have physicians who have changed the way they do things. They need to understand how those measures make sense. And while nothing we do is terribly controversial, at the end of the day this is how a portion of your compensation will be determined.

    If you're going to work successfully with a large medical community—and we work with 4,000 physicians and growing—there's a tremendous need for strong leaders who understand how the game is played, understand how you score, and understand how you win.

    Looking ahead

    Q: Based on what we've discussed, and just looking at your organization, it's clear that Advocate's changed tremendously in the past decade—so where are you going in the next ten years?

    Skogsbergh: Our conversations are now around the delivery system capability. What can we do to get better, from population health to performance and outcomes.

    And that's not just on the system level, but our interactions with patients, too. We don't think our patients care that much about back office stuff, but do care about how care is delivered at the bedside.

    I'm sure there will be new challenges. We know we've got something special at Advocate, but lest you think that we've got this figured out—I've learned in this industry, there's always something new that throws you a curveball.

    We've got a certain humility at Advocate that serves us well. Take this physician relationship. As strong as it is for us, we know it's tenuous, so we're deliberate and intentional about it every day. And we're learning as we go.

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