This interview of Dr. Toby Cosgrove, President and CEO of The Cleveland Clinic, was conducted by Eric Larsen, managing partner, and John Deane, president, Advisory Board Consulting; and condensed by Dan Diamond, managing editor.
Question: You've had one of the most diverse careers of any of the folks we've spoken with for this series—getting a bronze star, running a hospital in Vietnam, doing thoracic and cardiovascular surgery at the Clinic, and even becoming a would-be venture capitalist. And now, CEO. When did you know this would be your path?
Toby Cosgrove: I never expected I would wind up being a CEO. That was never part of my plan—or going into hospital administration in any form, really.
My academic career was a bit bumpy. I got into [only] one of the 13 medical schools I applied to. I was told during my residency not to go on cardiac surgery because I didn’t have it. But I just persisted anyhow.
And then the most amazing thing happened one day—I got a letter from Fred Loop saying the Cleveland Clinic was looking for a cardiac surgeon.
Now, I knew the Cleveland Clinic had just come off the development of the coronary angiography and coronary bypass surgery, and I thought, my gosh I must have died and gone to heaven. So I arrived here and instantly got the opportunity to become very busy.
Q: There's a big difference between being a busy surgeon and a hospital administrator, though. What steered you toward the C-suite?
Cosgrove: As I went along as a surgeon, I looked for ways to make things better. And sometimes, that meant coming up with new inventions. That opened up a whole new opportunity in dealing with the business world.
And as I was getting to the end of my surgical career—as you know surgeons are like athletes, they can't go on forever—I was going to hang it up and figure out what to do next. But Dr. Loop announced his retirement, and they asked me to throw my hat in the ring for the job, and next thing you know I'm trying to figure out what a CEO does.
And I'm still trying to figure it out. It's been a wonderful opportunity.
Q: What was unexpected about becoming a CEO? As you got in the job and started to find your footing, what surprised you about it?
Cosgrove: First, the change was dramatic. Everything from the clothes I wear, who I talked to, where I hung out, and even what I read—it all transformed in a hurry.
But here was the biggest change. As a surgeon, if I did two or three or four operations during the day, I could go to the intensive care unit and see my accomplishment: I either did well or I didn’t do well.
But as CEO, I'll make decisions, and won't know the results of those for a couple years.
Another big difference is as a surgeon, even a busy surgeon, you'd say, "I'm taking my family off for vacation," and you'd stop and devote your time to something else. Now, my job is all the time. There's no off the grid, no turning off your phone and disappearing, so you're always involved.
A doctor's changing role
Q: I think what exemplifies the Clinic is that everyone is on salary, including you. I heard you say you are on a one-year contract and—what's the presidential phrase—you serve at the pleasure of the Clinic.
Cosgrove: I do.
Q: Can you talk a little bit about how that approach to teamwork pervades the Clinic, especially as health care transitions to a very different environment.
Cosgrove: I think it's very interesting what's happening in the industry. If you stop and think about how physicians are trained, we were not trained as team players—we were trained as individuals
I remember back when I was in training, the chief resident said to me, "I'm going home now, and if anything comes up that you can't handle—handle it."
"Calling me is a sign of weakness."
The doctor used to be able to do the whole enchilada. Now, driven by the explosion in knowledge, you can't do it anymore. It's beyond the capabilities of one human.
The way we dealt with it initially is we took specialties and sliced them up like bread. Chest surgeons used to do everything in the chest. Now you've got somebody who operates on the esophagus, aneurysms, and valve. I ended up just doing valves.
The knowledge and the capabilities became so great and a person can only handle so much.
We can't do that anymore, we have to be team players. If you look at the average cardiac surgical patient, they see 130 people, and any one of them can screw up the deal. You are dependent on this whole team.
The Clinic and venture capital
Q: Organizationally, the Clinic has fostered 66 or so companies, and some have achieved considerable prominence. How did that innovation ethic take hold?
Cosgrove: That ethic has always been part of the organization. But the funding strategy goes back to Fred Loop, who called me one day and asked me to start a venture capital company—and I didn’t have the slightest idea what a venture capital company did. So I got some venture capitalists and entrepreneurs together. They said what Dr. Loop is talking about is trying to monetize the intellectual capital of the Cleveland Clinic.
“So many great ideas die from lack of being able to take them to the bedside—most doctors don't have business acumen.”
We first tried to do this by forming Cleveland Clinic Innovations, and later we also put together a venture capital organization that plays by venture capital rules. I think they're on their third or fourth fund—about to raise $175 million.
Q: In a sense, you've become the venture capitalists.
Cosgrove: If you stop and think about it, so many great ideas die from lack of being able to take them to the bedside—most doctors don't have business acumen. To get the great ideas out, and give them form and substance, and give them commercial applicability and spread is another way to improve patient care.
Understanding industry challenges
Q: You've been outspoken about the Affordable Care Act—its opportunities, its challenges. Is the industry stumbling in the right direction?
Cosgrove: Well, we knew we had to change. Health care had become so expensive in the United States and we had to solve for the uninsured, solve for the 10,000 people who are turning 65 every day. We had to figure out how to look after them.
I think the law's biggest effect on health care will probably be the financial effect. It's going to cause enormous changes. Less money in the whole system is going to cause consolidation.
Q: On the consolidation and M&A front, I'd love to hear your thoughts on the strategy for the Clinic and how you architect that, perhaps starting with Community Health Systems and Wayne Smith.
Cosgrove: They initially approached us a couple of years ago, looking for some help with their quality metrics. The more we talked, the more we thought there was an opportunity to learn from each other. They are very efficient in how they run a hospital, and they have a very big system. So we thought there were ways we could learn from each other and we're trying to figure out how to do that. (Related: Clinic, CHS team up to buy Ohio health system.)
Is it easy? No. Has anyone done it before successfully? No. Are there opportunities? Absolutely, but new things are never easy. I think we need to continue to work at it. I think Wayne would tell you the same thing. There is opportunity for both organizations to be better for the experience.
Thinking about other M&A, there's no way in the world that any system is going to wind up merging with facilities all over the place. Hospitals fall in two categories—people who want to use you as a bank because they're in terrible shape, or those who are doing well and really don’t see the need for doing something with somebody else.
We're all trying to do the same sorts of things, for example, take costs out of our purchasing. We're all trying to draw care paths and figure out how to do that, and we have the opportunity to share experiences and learn from each other.
I think there is a big advantage in collaboration. I'd rather collaborate than compete.
Q: So are you willing to put the Cleveland Clinic brand on a community hospital 200 miles away?
Cosgrove: Depends on the relationship. Mayo has done that same sort of thing to a limited extent. If you look at the cardiac affiliations we have had, every time we've done one we have raised the quality of that group. (Related: Clinic forms 'first-of-its kind' cardiac alliance with Maryland health system.)
Q: How will the Affordable Care Act influence your legacy? Or more specifically, what would you like your legacy as a leader to be?
Cosgrove: I frankly don’t think about my legacy at all. I think about the organization.
I recognize that I am far from the smartest guy in the role or that’s ever held the scalpel. The only reason I'm sitting here is to try to drive the organization to achieve.
Q: So I'll ask it differently. If you were going to write a press release Jan. 1, 2018, what would you hope to write?
Cosgrove: The organization is now united around a new model for health care delivery. Incorporating some of the things we talked about including team-based care, quality, transparency, I would think that’s kind of where we're headed, hopefully.
Building a career
Q: Talk about a mentor who influenced your career.
Cosgrove: There are so many. But Jerry Austin at Mass General. He was very wise, and I owe him a great deal—actually, it's sort of a cute story.
I was coming out of Vietnam, and I applied to all these places to get a residency. I called Mass General, and they basically said, "We have a residency opening…but we're not going to give it to you."
So, I called Jerry Austin's office and said, "I would like to come see Dr. Austin. I've met him and I would like to apply for residency" and picked a day. But his secretary said, "He's busy that day." So I said, "Well how about the next day?" and she said, "He's busy then too." Then I said, "Well how about the next day?" and she said he was busy then. You get the idea.
So I said, "How about I come sit in his office so he's got 15 minutes for me. I'm flying in from California, and I'd really like to meet him."
And they called me back and said. "He'll see you Thursday at 9:00." Probably thinking, get this guy out of my life! [Laughing.]
Q: You were worth the risk for tenacity alone.
Cosgrove: That was a great opportunity for me, and then I sort of bumbled and fumbled my way along from there. I had an interesting reflection...this might be too much detail.
Q: No, please.
Cosgrove: I had an interesting reflection. After I left, I was invited back as a visiting professor to give a lecture, and there was going to be a dinner with all of my old friends.
And I thought to myself, oh my God, I'm going to have to stand up and speak afterwards. What am I going to say? "Were they are the greatest teachers I've ever had"? Frankly, they were great, but they weren’t the greatest teachers I've ever had. I've had a lot of great teachers along the way. "I do everything the way I learned at Mass General"? No—I've picked up stuff along the way, and watched lots of great surgeons. And what about the fact that I was on every other night and every other weekend for all those years and never seemed to get anything quite right. That wasn’t the greatest thing that ever happened to me!
So what about Mass General was so great? Here's what I realized. Mass General raised my level of expectation for me greater than it had ever been. And maybe that's really the essence of education, raising people's level of expectation. So I think that's really what I attribute to Mass General. I was going to be a general surgeon and go back to Watertown, NY, to practice general surgery and I'm a long way from that. Funny isn’t it?
“I am a shameless stealer of ideas … Don’t think that you’ve learned it all by 35. Or 65.”
Q: Many up-and-coming executives will end up reading this interview. So travel back in time to Toby Cosgrove, age 35. How would you mentor your 35-year-old self?
Cosgrove: That's a hard one.
I'd try and take a lesson that worked for me the first time around. I knew that there was somebody better doing everything that I was, and so I would go and try and learn from the best places.
Q: 'Shamelessly steal.' That's something Steve Jobs said.
Cosgrove: He wasn't the only one. I am a shameless stealer of ideas. I learned about valve repair in Paris, I learned about minimally invasive robotic surgery at Stanford, I learned about aortic aneurisms in Texas, and on and on.
So, don’t think that you’ve learned it all by 35. Or 65. I'm still trying to figure out what a CEO is supposed to do.
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