Editor's note: The Daily Briefing is published by Advisory Board, a division of Optum.
Welcome to the "Lessons from the C-suite" series, featuring Advisory Board President Eric Larsen's conversations with the most influential leaders in health care.
In this edition, Lloyd H. Dean, CEO of CommonSpirit Health, talks with Eric and OptumInsight CEO Robert Musslewhite about assuming the singular CEO role, the intersection of Covid-19 and racism, and the creation of a "movement that cannot be silenced."
Lloyd H. Dean, CEO of CommonSpirit Health
Question: Lloyd, I was reflecting on the interview that we published almost a year ago and one of the questions I asked you and Kevin Lofton, who joined you in your role as Office of the CEO until his retirement on June 30th, was around the expansiveness of CommonSpirit—21 States, 150,000 employees, and 25,000 physicians. It's such a heterogeneous grouping of geographies and assets, and in some ways it's really reflective of the richness and the complexity of America itself. Covid-19 has disrupted every aspect of life for this country, and with your footprint you must have a unique perspective on that. How has Covid-19 changed the world at CommonSpirit?
Lloyd Dean: CommonSpirit is blessed to have the footprint that we have because we are positioned to provide care to 20 million people across 21 states each year. That puts us in a very powerful place, but it also comes with a lot of accountability and responsibility. We have a lens into what's happening in this nation that I would say very few people have. We are in very large concentrated metropolitan areas, but we're also in some of the most rural locations in the country. We see it all.
Remember, at the beginning, masking was voluntary. It showed us as a country what we didn't know about a pandemic, that this was not going to be contained to a few communities. And you would think that we just had this repository of knowledge from events like the 1918 flu and SARS, but this virus moved at a pace and in a way that was different from what we had seen.
But because of our scope, we were in a position to quickly learn and to see what we needed to get out ahead of. As the virus spread, it moved geographically to communities that had large concentrations of the poor and most vulnerable. The challenges of the historical inequalities and health disparities that we'd been talking about and advocating for immediately came to the surface. And as we saw the data, we knew that the nation was in for quite a challenge. We could take that data, and we could act on it. For example, one of the strengths of our system is that we could move assets. We could move materials quickly and, in many cases, we even moved staff to support efforts in our various communities.
But we saw that even with our resources, we couldn't do it alone and that we had to work with others in the communities. We had to work with other healthcare providers and public health agencies.
Having that opportunity to look geographically at a major portion of the United States, we could quickly sort out what we needed to do, how and where we needed to do it, and where we had gaps. And we also saw that we needed to speak out very quickly about access to safe care in communities that did not have the resources—safe care for patients but also for caregivers.
More broadly, this pandemic has really disrupted life as we know it, Eric and Robert. In fact, this pandemic—a crisis on a level none of us has experienced—will change life as we know it for many, many years. As we deal with this crisis, we must seize this once-in-a-lifetime moment to lead the kind of comprehensive changes in health care that we knew were needed long ago but require a comprehensive industry-wide and American effort. The challenge for all health systems is to build on the progress of managing through Covid-19 to embrace change and improve the ways we deliver health care.
Q: That resonates on so many levels. I want to try to unpack some of the different dimensions of the pandemic that you just shared. Let's start with arguably one of the less important but still relevant aspects—the economic consequences, which have been catastrophic. The American Hospital Association projects a $323 billion loss for hospitals by the end of the year, which may be an understatement given the probability of a second wave this fall.
CommonSpirit, which has been so disciplined around the operational work you were doing in moving from a holding company to an operating company, had an operating turnaround, a positive margin, entering the pandemic. Tell us about the anticipated economic impact for CommonSpirit.
Dean: That's right. We were in a very positive situation when this pandemic hit, and that's because the excellent work of our teams. But like so many other systems, we were impacted by the virus, particularly when we got to shutting down elective surgeries, which was devastating because people still needed care. But we had to prioritize addressing the impact of the pandemic and make investments in personal protective equipment (PPE) and ventilators—and you saw what happened to prices because of that demand. One of the major lessons learned from this event is that the United States has to have the capacity and the ability to do certain kinds of production; the national warehouses were just insufficient because we had not experienced, since 1918, a call for that volume of material throughout the United States.
So that's a long way of saying that when you look at the way we had to staff up and the investments that we needed to make immediately to ensure that we had the necessary resources—while at the same time, dropping our volumes by 40% to 50%—it would have been an economic challenge for any system, regardless of size or available resources.
For us, our response to the pandemic was driven by our mission—which meant prioritizing what our patients and staff needed. We're really proud that we were able to meet the demand for care and even expand capacity by adding special Covid-19 units and even an entire surge hospital in Los Angeles in partnership with the state and county. We've held off on billing patients for their portion of health care costs related to care for Covid-19, so we can make sure they receive all of the financial assistance afforded to them from payers and the government. And we're really proud that our staff hours are only slightly down, and that we have not had to make any layoffs, as a result of the pandemic.
Q: To put that in context, you're the largest not-for-profit health system in the country with $29 billion in revenue, and at the end of fiscal Q3, the loss was around $1.4 billion, including investment losses. That's potentially devastating, but at the same time, everything you just talked about before this question really wasn't about finances, it was about your mission. And so how do you balance that?
Dean: When we first recognized the depth of this pandemic, our focus was not on numbers. Our focus was on saving lives, supporting the communities that we serve, and ensuring the safety of our caregivers.
It was well into the virus' lifecycle where we thought, quantitatively, about how we are being impacted. But I will tell you that when the decision was made to shut down elective surgeries, it got the attention of every acute care facility in this nation. And we were not spared that impact.
All of that said, we feel confident about where our finances are. No question we have huge financial challenges—our operating loss in Q3 was about $380 million. But we're starting to see volumes bounce back. The investments we made in virtual care was crucial, and we're still seeing tens of thousands of virtual visits each day. And the aid we've received from the government, which is about $5 million per hospital from the CARES Act, has helped a lot, although it doesn't come close to covering our losses. We certainly expect that our Q4, and our new fiscal year, will see stronger results.
Q: Let's double down on that. Where are you today?
Dean: As of July 20th, we have 1,522 positive cases throughout the system, that's up more than 250% from June 9th—so basically a month ago. On the ICU bed occupancy side, as of July 20th, we're at 70%.
And, as you know, LA, Houston, Arizona, Central California are now being referred to as the epicenters of the virus in the United States. And we're in all those markets. So, we're in this for the long haul, because we're seeing an escalation in numbers of positive cases across the nation and within our geographies that are superseding the initial wave that everyone talked about.
Re-ignite the growth engine: 3-part report series
On the PPE side, we think that we're okay for the time being, but we're watching it on an hourly basis and are prepared that if we need to make additional investments or secure additional resources. When you think about who we serve—and we're in some of the most vulnerable communities in this nation by choice—it's all about getting quality and access, which we know will save lives. We'll figure out the economics.
So while this is quite a financial challenge, it hasn't, in any way, deterred us from focusing on saving lives, delivering quality care to all, and in particular, looking at what we can do to deal with some of the health inequities and some of the injustices that have existed in health care based upon institutional racism. And that's where we find ourselves today.
The intersection of health and racism
Q: Lloyd, I know that addressing inequities in care is a passion of yours—and right now, it's of even greater importance given the intersection of the pandemic and the national movement around George Floyd and others. How are you addressing both enormously consequential issues?
Dean: When you looked at the United States through the lens that we have, one of the things that we have long known is that communities of color face additional challenges in unequal care. And that's why we became such a strong voice in health care for all.
For example, as the virus spread, we noticed immediately that people of color were presenting sicker. They were staying away longer than they should have because of concerns they had about not just ability to pay, but also concerns about whether they would be treated openly and justly.
I'd love to be able to say that I was surprised to see that, but we've been living that reality since our inception. We're one of the largest Medicaid providers in the nation and have been advocating, since Day One, for a more just and fair system.
We immediately started focusing on the data and realized that we had a double issue—it's not just treating those that are coming through our doors, but we also were seeing a disproportionate number of people of color being put on ventilators and later dying.
Once it came to surface as a national conversation, we used our voice and all the various taskforces that we have been members of, to call for specific actions. One example of those actions was setting up testing services in communities of color—whether it's in a church or other organization—to make sure that the most vulnerable get care. Our goal was to take care to the communities, as opposed to waiting for folks to just show up at our facilities.
And we've used our voice in a very strong way—sending messages through Congressional leaders, CDC, FEMA, and every vehicle possible—to call out, "We've got to move, and we've got to move quickly."
What must happen now is that champions must force the issue—call the question—demand action and create action to wipe out the neglect that created and enforces a second-class healthcare system for Black Americans and other people of color. We know how to do it right—we have done it hospital by hospital, and now we must teach and model and fight for funding for all healthcare organizations.
Q: Lloyd, that makes so much sense, and I know how authentic your passion is for this cause. I remember you telling me years ago about growing up in Muskegon, Michigan—one of nine children—and about your father, who was a foundry worker. You shared that the first time you saw a doctor was when you had to get a physical for the high school football team.
Dean: That's right. And we know that diabetes, hypertension, and asthma lower the immune system. So, should we have been shocked that communities with those chronic health conditions would be disproportionately impacted by a virus? As a nation, a primary intention of the ACA has been to try to increase access, particularly to communities of color and communities of economic challenge. So, when I say I wasn't surprised, it's because that data has been before us.
We have merged our conversation, and the learnings that hopefully this nation will have from the George Floyd tragedy, to say that racism manifests itself in health. And that institutional racism has been at the core—not the only factor—of the injustice, the access issues, and the imbalance of resources that the pandemic has exposed. Just the same way as when you pull on a scab, it exposes the wound that's just below the surface.
And it is just mind-boggling when we think of the percentage of people of color who have lost their lives, whose families have been destroyed. And we, in this nation, have had opportunities over decades but in many cases have turned a blind eye to the impact of chronic conditions. Now we're seeing it more clearly.
Q: As heartbreaking as this is, and as societally catastrophic, I do hear an undercurrent of optimism in everything you're saying. Maybe it took a once in-a-century Black Swan event to bring this to the forefront of society's consciousness. Do you feel that this is truly going to be an inflection point?
Dean: I do feel positive and I'm hopeful that this is our moment in history and that the change is real. But I'm tempering my optimism because we've been here before. We've had microcosms before. We've had events in this country around justice issues for women. And this is not the first case of brutality that has played out in our nation. This is not the first call for racial justice and a focus on institutionalized inequities of people of color, of economics, of gender. I could go on and on.
There's a story I want to share, and I know you've probably heard so many stories like this. Three weeks before the pandemic hit, my wife and I went to a department store here in LA. I was looking for a shirt and my wife went up to the women's department. I got on an elevator to go meet her and there was an older woman—Caucasian, in her eighties—on the elevator.
Addressing racism in health care
Here's the painful part: I'm the CEO of one of the largest health systems in the country. We'd be a Fortune 500 company. I'm a pretty non-threatening looking guy. This woman had her purse on left side and when I walked onto the elevator, she moved it on the right side. [Pause.] This is an issue of justice and fairness. You never don't see it, but you never let it define you.
I was recently blessed with a new grandson and with his arrival—and with my background in education, where I started my career—I'm reminded that we don't come into this world hating or being prejudiced. We come into it pure. So how does somebody go from coming in pure to outright racism, and fear of an individual because of his color?
I had to have this conversation with my son. And my father had it with his seven sons. But what I hope is that we will all be a part of the change. I hope, before I leave this Earth, that I don't have to have that conversation with my grandson.
I do believe that this moment in time is different. I think that, if we seize this moment, the fact that this has become a global moral discussion gives me a great deal of hope. And I think that while it's sobering, it's heartbreaking, the convergence of the George Floyd event with the pandemic, this intersection is important. This pandemic has no racial ties, it moves unbridled by who you are, what your economic condition is, where you live. Those factors, in terms of treatment and access, are important, but they are neutral to its movement. I think those two events together have called the nation's consciousness to the forefront and have synthesized conversations that have long been overdue. This has created a movement that cannot be silenced because we are all impacted.
And I do believe that one of the lessons that we've learned from this pandemic is that what happens in another country, what happens in China, what happens in Brazil, is critically important to what happens in the United States. And I don't think historically that people have been looking through that global lens. It's been kind of, "Oh, that's unfortunate that X is happening in that geography, but we're immune because we have resources." So, it has created a global focus and conversation that I am very optimistic will bring about change. And, as I've been saying for weeks, this pandemic is the “great neutralizer." It doesn't matter who we are or where we live and what resources we have. Viruses know no color, they know no economic demographic, and there are no borders.
Learnings from the Office of the CEO experience
Q: This resonates on so many levels, and it's encouraging to hear about some of CommonSpirit's learnings throughout this time. One of the adjacent learnings I want to explore is around leadership. Our friend, Kevin [Lofton], retired on June 30. We're now just days into your tenure as sole CEO. I'm curious to hear your reflections, Lloyd, on the Office of the CEO experience—what worked magnificently, what were some of the constructive learnings, and how has the shift played out in practice for you and for your 150,000 employees?
Dean: Let me just start from a premise that the Office of the CEO worked very effectively.
A lot of people thought that Kevin and I were life-long friends, but that wasn't the case. I knew of him and certainly his reputation, and vice versa. We had both been CEOs, and early on we had discussions about what we saw as potential challenges with us being co-CEOs versus the Office of the CEO. Did we both have to make some sacrifices? Yes. Because we were both used to getting data and making a decision. Our decision-making processes may have had some variation, but we agreed on a methodology and some principles about how we would function, and we stayed true to that.
We looked at some of the co-CEO examples from others within our industry, as well as many outside, and some of the lessons learned there. And out of that, we agreed on where we were going to focus our attention.
We were in quick and complete agreement that with the completion of the merger, being one voice was critical. We agreed that, at all costs, the most important thing was that this merger be successful, that the vision that we all came together to create for CommonSpirit Health would be our focus.
A couple of our lessons learned—an Office of the CEO is truly like a marriage in that it's give and take. We had to figure out how to handle decision-making; each of us was used to independently having consultation with our board or with our leadership team, and then we would just move. So, to adjust, we made it a practice that we would be open and share with each other to make a unified decision. And when it came to communication, we agreed on a cadence of who speaks when—in front of our board, as an example.
But was it more work having two? Yes. Were we able to do some things faster in terms of sharing a workload and making decisions? Yes. Do I think that we benefited from having our shared expertise and experience as we were bringing two systems of our complexity and our size together? Absolutely yes.
I learned a lot from Kevin Lofton, and I think that he would say the same. Together we formed one of this nation's largest not only Catholic ministries, but health care ministries. And I'm very proud of that.
Q: That's just very well-stated. What changes now?
Dean: Let me say what doesn't change—our mission, our vision, and our values. Our strategies and tactics don't change.
Remember, we've only been a system for 17 months, so we continue to work to integrate our two systems and improve the entire enterprise. But I think people will see an accelerated pace and a sustained voice in terms of what I think is important—both challenges and opportunities. We're on a journey to build the culture, so a continued leadership voice on the attributes of our culture that are consistent with our ministry, who we are, and who we want to be. And a continued focus on our voice at the national, state, and regional level around the importance of addressing health inequities and racial injustices, particularly as it impacts health care.
Opportunity in partnerships
Q: Let's expand on that, Lloyd, because when CommonSpirit was coalescing, you were very articulate around your five focus areas. And since we last talked, you've iterated on those focus areas—particularly your focus on partnerships, which is part of your DNA, and not just because of you (legacy Dignity's) proximity to Silicon Valley. What plans or strategies have accelerated? What have decelerated? What has been contradicted or been confirmed?
Dean: We've always seen partnerships as an important thing. We've always recognized that even at our scale—with the resources, knowledge base, and leadership that we have—there are people out there that have expertise that we need to access. And philosophically, we have always felt that we don't have to build or own everything; there are capabilities out there that have been developed over time that are very efficient in terms of cost and outcomes.
Health care lags other sectors in terms of recognizing the importance of relationships, taking best practices, and integrating itself with others. And if there's ever a learning that we take from the pandemic, it's that in order to effectively deliver care in communities we serve, people want their care differently than the legacy of everybody going to the hospital campus. So, it zeroes in and puts a bright light on partnerships with organizations who have capabilities that help you to effectively and efficiently serve the community.
Even serving small communities, we need other community-based resources to deliver the totality of the care that consumers and patients need. When I look at Google, Amazon, and Apple's investments in health care, I think, given their capabilities, why not try to see where we can partner? We don't just partner for the sake of partnerships but instead look for organizations that bring health care innovations to the forefront that we want to be a part of and that we believe will lead to better patient satisfaction and better outcomes. I think there's huge opportunity there.
Q: And you've also focused on advancing CommonSpirit towards greater health digitization and accelerating a site-of-care shift, especially with the home as an epicenter of care. Even before Covid-19, we witnessed a shift in the industry towards health at home—but the pandemic accelerated that shift and thrusted telehealth to center stage. What does your presence in the virtual health space look like?
Dean: Everyone's talking about the role of telehealth and you're right that it's not going to go away. And it's more than just virtual visits—there's diversification through home care and other services we're providing to prevent readmissions. We're currently serving 140,000 people in their home in 10 states.
Q: And on the flip side of serving patients through telehealth is the return to elective surgeries. What's your prognostication on how quickly and sustainably elective volumes will return?
Dean: I will tell you that those are questions that if you ask any CEO right now, they'd give you an answer today and it could be different tomorrow. If you had talked to me three weeks ago, I'd be telling you that, we're about 80% back in our elective surgeries. We think we'll be all the way up to 90%. If you ask me today, given that we're having to shut down in some states, if the predictions by the CDC and Dr. Fauci are correct, three weeks from now, it is going to be a totally different picture.
What we have found though is that delaying a service or procedure that might be considered elective for a patient who is managing a chronic condition or going through a course of treatment—that service or procedure isn't going to be elective a week or a month later. It's going to be urgent. So, when we talk about "elective" procedures, we're talking about health care that is critically important to the health of our patients. We simply need to find a way to continue safely and effectively providing that care, and I think we're finding that for the most part we're able to do that, but ultimately that's dependent on getting the virus as under control as possible.
Q: Now, we (Optum) are obviously one of your partners, so I'll ask a little bit of a self-serving question—as you look externally for partnerships, what's the formula for evaluation? How should we be collaborating with you on achieving these goals more effectively?
Dean: First of all, of any entity that I think about as a source of innovation for CommonSpirit Health, Optum is second to none. What we need to do now is look at the assets and resources we each have and what we can do together to optimize better care, more efficient care, and more cost-effective care, especially in light of Covid-19's impact. We need to change the equilibrium of health care and figure out how to better serve communities—and do it in a meaningful way with some precision around pace.
Health care workers' impact on the economy
Q: Lloyd, as always, this has been a great and enlightening conversation; I wish we had several more hours. What haven't we covered?
Dean: I agree, Eric—there are so many topics that I wish we could explore. But the one last thing that I want to be sure I acknowledge is the absolutely heroic staff and clinicians that are on the front lines at CommonSpirit and around the country. And in many situations, our nurses and our caregivers are also now the main breadwinners for their families because the economy is shut down. And what gets the economy going again? In addition to a vaccine, it's people back to work. What allows people to get back to work is people being healthy. So, I'm grateful to all of our health care heroes who are working around the clock, putting themselves at risk, for the sake of our country's physical and economic health.
Addressing racism: Resources for health care leaders
At Advisory Board, we are committed to making a difference against the structural racism that is contributing to real health inequalities in our communities. We want to help you make a difference too. As a start, we've gathered a list of helpful resources below. We're sharing these resources with our staff, and we hope they will be helpful for you too.
- Podcast: Radio Advisory's latest episode on why racism is a health care issue and what you can do about it
- Blog post: 3 steps hospital leaders can take to mitigate the racial impact of Covid-19
- Daily Briefing story: Racism and health care: Your reading list
Get more lessons from the C-suite
Check out Eric's recent must-read interviews with top hospital and health system leaders:
From Ascension to Intermountain and now 'home' at SSM Health: How Laura Kaiser is 'systematizing' mission-based care
Laura Kaiser, president and CEO of SSM Health, talks about the call to nonprofit health care, SSM Health's legacy of caring for "Our Dear Lords," and why she's completed at least one triathlon almost every year—for the last 36 years. Read our interview with Laura.
Marc Harrison promised to turn Intermountain into a 'Tesla.' He wasn't kidding.
Marc Harrison, president and CEO of Intermountain Healthcare, talks about Intermountain's recently announced strategic reorganization, previews the launch of a "virtual hospital" to better serve rural communities, and shares the surprising worry that keeps him up at night. Read our interview with Marc.
'A little bit of a pirate': How Kelby Krabbenhoft built a $6B system—and where he's taking Sanford next
Kelby Krabbenhoft, president and CEO of Sanford Health, talks about the unprecedented CEO-philanthropist partnership behind Sanford's rapid growth, why a successful leader needs to be "a little bit of a pirate," and the merger that will make Sanford a nearly $6 billion health system. Read our interview with Kelby.