At the Helm

Stanford Health's CEO can't remember his life-altering crash. But his approach to care has never been the same.

Eric Larsen, Managing Partner, larsene@advisory.com

Welcome to the "Lessons from the C-suite" series, featuring Managing Partner Eric Larsen's conversations with the most influential leaders in health care.

In this edition, David Entwistle, president and CEO of Stanford Health Care, talks to Eric about being one of the youngest health system CEOs, how artificial intelligence is—and isn't—going to revolutionize health care, and chipping away at the 'CEO code.'

David Entwistle
David Entwistle, president and CEO of Stanford Health Care

Question: David, you were one of the youngest, if not the youngest, health system CEOs in the country when you took the reins at University of Utah Hospitals & Clinics (UUHC) at 37. Now, a little more than a decade later, you're helming Stanford Health Care. Before we dive into your career progression and the vanguard work your team is doing at Stanford, I'd like to take you back to 2009 and your catastrophic bike accident. About 23 miles into a 24.4-mile triathlon, you crashed, flipped over the top of your bike, and were thrown onto the road at high speed.  You were helicoptered to your own hospital with traumatic brain injuries (TBIs), spent one week in the ICU, and then spent several more in rehab.

I want to ask you about this because I'm struck by how sensitized you are to the patient experience—the pioneering decision to post un-blinded physician rankings at UUHC, for instance—and it's been my observation that the CEOs who have the most passion around this issue often have had a personal experience as a care receiver. How did this accident shape your perspective?
 
David Entwistle: You know, Eric, I have no memory of the accident, nor any of the outward outcomes associated with TBIs, but this was a "wow" moment for me—a defining moment in my life. I'd never been a patient in a hospital bed. I'd never seen the world from the patient perspective, directly experiencing the care provided by our physicians, therapists, nurses, and all of the other members of the team who help treat patients.

That's why I say "a defining moment," because I gained even more appreciation for what our caregivers and patients go through. That experience made me reaffirm my commitment to ensuring that all of the decisions we make as a health system—starting in the boardroom and extending well beyond it—facilitate patients' access to the best care quality and the best care experience. Return on investment isn't as important as the quality standards and the patient experience. My experience as a patient—and that new perspective—drove me when I was at UUHC, and continues to do so at Stanford.

At the end of the day, being successful as a patient advocate—whether as the CEO, COO, or part of the direct care team—depends on making the patient paramount in your vision while you work.

Making a CEO

Q: David, let's talk about the other factors that shaped your career in leadership. In conversations with your CEO peers around the industry for this series, it seems everyone has highly unique and divergent backgrounds. But when you dig in a bit more inquiringly, you find several common characteristics. One is that these CEOs all were blessed to have some extraordinary mentors and guides. Would love your thoughts on this.

Entwistle: That's exactly right. I'm so grateful to some wonderful mentors who were not only interested in my career, but also put me into settings that allowed me to acquire a great deal of knowledge and experience.

For instance, at the start of my career, Donna Sollenberger—who is now the CEO at the University of Texas Medical Branch—recruited me for a fellowship at MD Anderson Cancer Center back when she worked there as COO. Yet as soon as I came in the door, she told me she had accepted a new job as the COO at City of Hope in Los Angeles.

While MD Anderson is an extraordinary institution that I was thrilled to join, Donna was also a key factor in my decision to take the fellowship there. So when the fellowship wrapped up, my wife and I followed Donna out to City of Hope. I immediately got to work with the hospital system's senior teams on some serious challenges, which involved significant reductions of cost and force. So right off the bat, there was the mentorship with Donna that was made even stronger by her trust in me to talk with the senior teams and say, "We have to make some considerable changes."

Q: That brings me to a second consistent theme I've encountered when talking to your peers: In addition to this gratitude you've just described, there is a proclivity to "jump into traffic," to seek out and try to solve the most complex problems in an organization.

Entwistle: Absolutely. Today, when students ask me, "How do I become a CEO?," one piece of advice I always give is, "Be ready to take on any assignment." That willingness to dive in and put some elbow grease into tackling a complex issue was a strong foundation for my career. It allowed me to get even more experience in the skill sets I'd need to eventually become a health care CEO: learning how to manage people and budgets; being accountable on the operational metrics side; and, of course, always putting the patient perspective first in any discussion.

With Donna's mentorship, her trust in me, and my willingness to jump in, I had a lot of great opportunities at City of Hope. I was made a director within the year, VP within two years, and then CEO of the oncology network in downtown Los Angeles.

Q: One last question, David, on the 'CEO Code' if you will. Harvard Business Review last June published the "CEO Genome Project"—a retrospective on Fortune 500 CEOs, trying to deconstruct what CEO traits are most predictive of success. One interesting finding was that while a high-confidence CEO candidate is twice as likely to be hired, high confidence is not at all a predictor of success on the job. In fact, it's the more introspective, less-flamboyant CEOs who are more likely to surpass performance expectations.

How do you navigate that "psychic equilibrium" between being confident enough for somebody to bet on you, but also have the humility to know that you're not omniscient? That can be a hard balance.

Entwistle: It's a difficult transition for folks who fear that humility will somehow undermine their ability to gain the respect of their team. You have to have faith and confidence that you can be a leader. Then you have to lead by action—by following through with what you say, by supporting your team, by creating opportunities for your team to succeed. It takes some time—and humility—to build that kind of trust, but the payoff is tremendous.

At the helm at Stanford

A: Let's talk about your move to Stanford. As CEO at the UUHC, you presided over some impressive improvements in margin, patient experience, and care quality. After your success there, why leave? Obviously, Stanford affords some unique opportunities to serve and have impact, but I know you were very happy in Utah. I know you're a reflective person, and you make these decisions as a team with your family. Tell me about the process.

Entwistle: You're right. Quite frankly, I thought I'd retire in Utah. My son was in high school at the time, and my wife was living near all of her sisters and family. We had actually recused ourselves from several CEO searches, but the Stanford opportunity was especially intriguing. With that said, it was a difficult decision. We had brought UUHC to the top ranks in quality and financial metrics, with an incredible team in place. So, why move?

It really was the opportunities that Stanford offered. We are a service-oriented industry. We're driven by our capacity to help people. Technology—including the devices we're using, artificial intelligence, and big data—has enormous potential to help us achieve our goals when married with service. What better place to realize that vision than in a technology-driven organization like Stanford, sitting in the middle of Silicon Valley?

Q: You started your role at a time of great investment and expansion at Stanford, with a $5 billion campaign for a campus renewal and the $2 billion hospital project. That's a notable divergence of fortune from so many other academic medical centers (AMCs) nationally. Of the 400 major teaching hospitals, many of them are in severe financial distress. But even Stanford isn't immune, it seems, from some of the headwinds.

Entwistle: That's quite true. In my first two months here, we had $9 million and $11 million operating losses, and a declining trend line. We still ended the year at about $142 million profit—not unreasonable, but not the incredible $241 million from the year before. So we suddenly found ourselves in a different position and had to do a bit of a reset, including workforce reductions. Also, in that first six months, a lot of people on my team were recruited away—our COO, CNO, and CHRO, among others, for some great opportunities—and I had to do some rebuilding.

Q: An unanticipated challenge.

Entwistle: Exactly, but there was a silver lining—all of that transition really drove our strategic plan. We had an opportunity to reset and recruit a new team. The most exciting piece was the decision, made along with the Dean of the School of Medicine and CEO of the Children's Hospital, to refocus the strategic plan as Stanford Medicine instead of our individual components. That process took us a bit longer, but it established a more holistic and system-oriented view.

Stanford's strategy

Q: Let's dig in on the strategic plan. I'm particularly interested in Stanford's approach to its segmented primary care model—the Primary Care 2.0 strategy—because this is an area that most systems, academic or non-academic, are struggling with. As of a year ago, I believe there are four different care models: You meet patients where they want to be met, in-person or virtually.

Entwistle: Our bold new idea coming out of the strategic plan is that as a patient, unless we have to physically provide treatment, you shouldn't have to come see us—unless that's your preference. Why would we make you wait? Why make you drive up here? Why make you find parking?

That's what's driven our Primary Care 2.0 strategy. We're asking, "How do we create that patient-focused, patient-centered environment around you that is different from anywhere else you may go?"

Q: This multi-tier primary care approach emboldened you, it seems, to implement other innovative strategies. One of which is your vertical integration and launch of various insurance ventures—a Medicare Advantage (MA) product, a health plan offering for your own employees, and a targeted extension to some of Silicon Valley’s employers.

Entwistle: Yes, exactly. A little background: As a quaternary and tertiary AMC, the case mix at Stanford is incredible, as is the acuity of the patients coming in—not only from our local market, the region, and nationally, but also internationally.

The challenge for us is how to focus. As an AMC, you have, what we often say here at Stanford, "a thousand flowers blooming," and so we were executing on a lot of different fronts.

Now, with our strategic plan in place, we have on-site clinics with many of the tech vendors here. We market ourselves as an "accountability product." It's not a self-insured product, because these are self-insured companies, but we have relationships with a number of tech vendors—Google, for instance—so there is an incredible resonance with this community with Stanford.

MA can be challenging—there's a lot of ebb and flow—but our effort is going well so far. It's a unique aspect of this market, because basically 70% of all of MA business is Kaiser Permanente. Since we have a slant toward partnerships, our ongoing investment in the MA market is going to be partnership based.

Stanford as an academic medical center

Q: David, I'd love for you to expand on your MA comments. One prerequisite for successfully moving into MA is an ability to manage the complex, poly-chronic top 3% of our sickest patients, given how disproportionally expensive this segment is. It strikes me that this is an area of competency for Stanford. Your approach to this patient segment is multidisciplinary and team-based: two-hour initial visits; physicians augmented with physician extenders and social workers; an attention to social determinants. Your approach seems to be moving the cost curve here—for your first 253 patients in this program, there was a 13% reduction in cost. Fair summary?

Entwistle: Yes. The work our teams have done here is incredible. This is a skill set we need. We see this as an investment in making our MA approach a success. The challenge is that in the up-front years, if you don't have the risk adjustment factor (RAF) scores, then that drives your star rating and, of course, your reimbursement. So we're looking to identify the right partners to help us, such as outside vendors with high RAF scores, which would give us the opportunity to learn from their experience.

We know that when it comes to some of the chronic management scores and being able to take patients in through the Primary Care 2.0 model, we can do that. There are a lot of great options, and we're trying to hone in on the best strategies for our patient community.

Q: Let's pivot a bit and move from vertical to horizontal integration for Stanford, and specifically your acquisition of community hospitals and building geographically distributed ambulatory sites. Of course, the ValleyCare health system acquisition preceded your arrival, but after you took the helm, Stanford proceeded to expand its outpatient footprint considerably. Talk a bit about how you're thinking about geographic expansion and how that fits into your strategy.

Entwistle: My strategy—here and in my previous roles—is building enough capacity to meet market demand. If you look at overall bed capacity here in the Bay Area, it's about 50% utilized, so it might seem that there's plenty of space. But we're running close to 98% utilized.

That quaternary, tertiary piece is very targeted and deliberate, and that's why we're building capacity to meet that need. But we work with the local market—our focus is very much how we can add value to communities so patients can stay local when appropriate. If we can keep patients local, that's better for the patient. In some cases, that also means being able to put physicians in that community.

Technology

Q: Let's talk about technology. Your proximity to Silicon Valley is a gift. You've partnered with Google, and you've recently announced a project with Apple Watch to monitor atrial fibrillation. This access to technology was one of the gravitational pulls for you to come here. Now, 18 months in, what are you doing? Did the expectation match the reality?

Entwistle: The reality exceeded the expectation. It's not unusual that one or two companies a week are in here, and it's amazing to see the technology that's coming out. With the Apple Watch, there’s a unique opportunity to gather critically important data from a device that so many people use. Similarly, with Google, we're interested in a genomics project that could have significant applications to Precision Health.

With this said, we still need to be mindful about integrating technology and health care in ways that produce the best results for patients. I was at the American Hospital Association board meeting recently, and everyone paid particularly close attention when we mentioned our projects with Google and Apple. That's amazing recognition, and there are many more tremendously exciting areas where we can partner with tech. But there's still a lot for tech companies to learn about health care and patient well-being, and it will be really important for us on the health care side to continue to help educate them on this.

Q: That's a good point, particularly when it comes to the hyped expectations around the application of AI and machine learning to health care.

Entwistle: Agreed. I see AI taking on a very real and frontline role in terms of garnering information, processing that information, and creating meaningful ways for doctors to give better care. With digital pathology, for instance, our piece is creating large data sets and producing the algorithms that analyze and match the data to what the pathologist is seeing so that he or she can make a more accurate and quicker diagnosis. The doctor—not AI—is always going to be at the center of patient care. So ultimately, I think the real promise of AI lies in how physicians and caregivers implement it. Even if we have great data sets that give us a significant amount of knowledge, those data sets aren’t truly helpful if providers can't use them.

In closing

Q: I'd be remiss if I didn't ask your view of the recent spate of (conventional and unconventional) mergers: huge health system combinations; PBMs buying insurers; insurers buying large medical groups. How is Stanford interpreting and responding to this?
 
Entwistle: Much like they did in the '90s, I think large providers are trying to tee up to say that "bigger is better." I'm reluctant to make a conjecture about the overall market's trajectory, but I do think you have to take into account the unique differences in local and regional markets.

I spent my whole career in AMCs, so I have a very strong bias for research as a delineator on the provision of care. At the same time, teaching the next generation of medical professionals is important to me as well. That makes our operations more expensive and less efficient, but it also allows for unique drivers that become additional differentiators for us.

Q: Let me close with my favorite question—as you reflect back on your career so far, what are you most grateful for?

Entwistle: My proudest moments, quite frankly, are being in a community setting and having patients come up to me, talk about the experience they had, how well they were treated, how they were respected, and how it defined their lives in that moment. I take great pride in that, because it means our team has been successful in achieving its goals, and that our success has benefited the patients.

I chose this industry because we serve people. As you're walking out of the lobby and you think you've had a tough day, and you have the opportunity to talk to a patient who just had a transplant, and you see the way his or her life has changed—that's just the best.

Questions or comments about Lessons from the C-suite? Email Eric at larsene@advisory.com.

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