David Callender 0:02
Very importantly, keep our employees confident that we can protect them that it’s safe for them to work in our facilities to care for these patients. So again, I think most of us have plans that describe all of these things, but now we’re having to use them and test them and make sure that we’re ahead of the curve in terms of the execution of pandemic plans.
Gary Bisbee 0:26
That was Dr. David Callender President and CEO, Memorial Hermann health system, speaking about the importance of employee safety during the execution of the Memorial Hermann pandemic plan. I’m Gary Bisbee and this is Fireside Chat. Dr. Callender was appointed CEO eight months ago in mid-2019. But he’s been through significant crises before and he’s well prepared to lead Memorial Hermann through the COVID-19 outbreak and its aftermath. Dr. Callender shares lessons from past crises, how he thinks about communicating with local, regional, and state officials about the pandemic Memorial Hermann’s growth strategy and the importance of scale, and how he said his priorities as incoming CEO. Stay tuned for Dr. Callender’s fascinating story of lessons learned from mentors, and particularly the famed cardiovascular surgeon, Dr. Michael DeBakey. Let’s welcome Dr. David Callender.
David Callender 1:29
Thank you, Gary. It’s great to be a part of the effort.
Gary Bisbee 1:32
Given what’s going on with our coronavirus epidemic. Just give us a quick rundown of some of the considerations you’re making and where is Memorial Hermann in this process?
David Callender 1:43
Well, sure, absolutely. We’re fortunate right now and we’re learning, we’re able to learn from some other urban areas in the country that have had a higher outbreak rate than we’ve experienced thus far in Houston. So we’re looking for guidance from other leaders around the country who are already thick into the management of patients who have either been exposed to COVID-19, who are suffering from it and also dealing with worried well among our large urban populations that are trying to figure out how they can avoid contracting the infection. I think like all big systems, we’ve had a pandemic response plan for a long time. But knock on wood, we’ve never had to fully deploy it. So we’re looking at that sort of opportunity right now. We’ve been operating our emergency command center, at least in a modified model for a little over two weeks now. Trying to coordinate our response across our system. from a Central standpoint, make sure we’re all in sync. We’re all learning together. We’re expressing our concerns and benefiting from the discussion and resolution of those. And that all seems to be going pretty well. The thing that makes this so difficult is the ambiguity associated with this infection, look overseas to see what’s happened to some extent in China with greater clarity, Korea, now Italy, and are in the process of learning from those experiences and trying to translate those not only into better preparedness but also into giving better advice to our local and regional and state officials about what they can do to help us reduce the impact of this threat.
Gary Bisbee 3:43
Have you found as you’ve talked to those in areas that have been affected more East Coast or West Coast is capacity? Either emergency rooms or ambulatory facilities? Has capacity become an issue yet?
David Callender 3:57
You know, that varies. What we’ve heard from the larger urban areas is it’s not the larger, more centrally located, perhaps the larger academic medical centers that are at capacity constraints, but it’s the outlying community hospitals, particularly those that are closer to a cluster outbreak or example in Seattle. Those facilities that are near that nursing home where so many elderly patients were impacted and affected by the virus. So they’re suffering more extensively in terms of limitations of capacity, having the right equipment, having adequate numbers of personnel. You know, I don’t have anything in writing. These are just reports but that’s what we’re registering from information coming around the country.
Gary Bisbee 4:51
How do you think about the protection of your caregivers, your physicians, nurses, and others that will be with the patients or with those that are coming in to be diagnosed?
David Callender 5:02
I think all of us as part of our pandemic response plans have screening elements that are built-in as the level of outbreak increases, then you start to limit access to your facilities, you start to screen people entering the facilities, visitors, vendors, employees, again, depending on the level of the outbreak, you limit access, you track what’s happening. Obviously, make sure that everybody understands how to use PPE, that you have the right protocols in place to deploy it and use it appropriately. We certainly don’t want it to be wasted, constantly monitoring exposures having effective policies in place to manage either definite exposures or those that are suspected. So all of those things are necessary to adequately manage the situation. And you know, very importantly, keep our employees confident that we can protect them that it’s safe for them. So again, I think most of us have plans that describe all of these things. But now we’re having to use them and test them and make sure that we’re ahead of the curve in terms of the execution of the pandemic plan.
Gary Bisbee 6:25
The final question regarding this. David, is your board of directors? How have you informed them? What kind of information have you provided them?
David Callender 6:34
We’re regularly in touch with them. We’ve sent out quite a bit of information to them about our current status across all of our facilities, what’s happening on an ambulatory basis, we particularly shared a lot of the educational information that we put out across the community in terms of how people should prepare for this threat respond to it protect themselves, what employers should do if they have someone who’s either been in contact with an infected individual who likely has had an exposure, who’s suspected to have an exposure, what to do if you have an ill member of your household. So again, we’ve tried to engage them and have them help us advise us. Okay, is this information effective? What did we miss? You know, could we do more with this? What points do you think we should emphasize what should be our priorities in terms of educating the public and playing the appropriate role within the community is not only a provider but an educator?
Gary Bisbee 7:42
Oh, sounds like you’ve done a terrific job preparing for this. It would be great if it didn’t reach proportions in Houston that it has other communities hard to know at this point. In any event, thanks for the update. Well, why don’t we turn to you personally, I think you grew up in Texas, is that right? You seem to be a Texas person through and through.
David Callender 8:03
That’s correct. You can probably tell from my Texas accent. I’m a native Texan. I grew up in a little city in North Texas called Wichita Falls and actually attended college there. There are a great pre-medical prep program and the small university there’s the State University. I moved to Houston to attend medical school at Baylor College of Medicine, did all of my internship and residency at Baylor after completing medical school, and then went not too far went across the street, to the MD Anderson Cancer Center to do my ethnic surgical oncology fellowship. So, you know, definitely stayed within Texas, to get a great medical education and get the training that I wanted to get to prepare myself for a professional career.
Gary Bisbee 8:58
We could drop back for a moment, though, at what point did you decide on medicine? I think your family is finance executives, aren’t they?
David Callender 9:06
That’s right. I’m the black sheep of the family. You know, just growing up, I always had that natural interest in science and biology and chemistry and enjoyed maths and physics. And I was looking, as young people typically, to where can I express my interest? What appeals to me? And I was extremely fortunate to have family, friends who were physicians, and at that time, you know, you could actually take a young person and pull them into your office and introduce them to your patients and show them the ins and outs of the daily life of a physician and several did that for me. And that hooked me This is awesome. It allows me to express that natural interest with the desire to, you know, help people, impact people. Help them optimize their health and so just all seem to come together very naturally for me.
Gary Bisbee 10:05
Was there a point at which you said I would like to be a surgeon?
David Callender 10:08
Not until I was in medical school. I was one of those young people in medical school who loved everything. When I was at Baylor, Dr. Michael DeBakey, famed cardiovascular surgeon, Dr. DeBakey had a significant hand in designing the curriculum for students at Baylor. And so we were rushed through and I don’t say that with any critical intent, the basic sciences program and about 13 months, as opposed to most medical schools, which took 24. Dr. DeBakey believes that getting students into the clinical environment as quickly as possible allowed them to begin to take those basic concepts and learn about the pathophysiology of disease and how basic metabolic function physical function, biomechanical function, and dysfunction lead to pathophysiology. I started with pediatrics and I did OBGYN and I did internal medicine, then I did general surgery. And at the completion of every one of those general rotations, I was sure that I wanted to be a pediatrician, an OB Gynecologist, an internist, and then a general surgeon. So I loved everything. But as I got a little farther along, I got really interested in otolaryngology. For me the combination of medical and surgical practice, I’d always been interested in cancer. In fact, the first term paper I ever wrote was about cancer and amino therapy many years ago, and the potential for immunotherapy. So just got more and more interested in that. And while I did a residency in general otolaryngology, I had my eye on a subspecialty focus dealing with head neck cancer patients. And that’s where I ended up. That was the focus of my fellowship. And again, I ended up at MD Anderson and finished my fellowship, and then stayed on the faculty there forward.
Gary Bisbee 12:11
Well, it seemed like you moved into leadership pretty early in your career. David, did leadership find you? Or did you find leadership?
David Callender 12:19
It was accidental. At the time, I had finished my fellowship at MD Anderson, and it was a brand new, brand spanking new faculty member. And you know, turnover occurs in academic institutions. And we had a significant turnover of faculty members not that they didn’t leave because they were unhappy. They just all got really nice leadership opportunities. In that other institution, there was an administrative need for someone to step in and provide position leadership. And the chair of our department came to me and said, calendar your it, I’ve got a consultant to help you pay attention, listen to what they say and learn, and you’ll be just fine. And so that sort of started me on the path.
Gary Bisbee 13:10
So it turned out he was right.
David Callender 13:12
Well, you know, it just again, it just was fortunate to be blessed with many opportunities. But I learned a lot and I was very intrigued. And so that just kept me in a mode where I was looking for opportunities to continue learning. And you know, I’ve been blessed than that they actually appeared for me,
Gary Bisbee 13:30
What was the most rewarding thing about leadership?
David Callender 13:33
Oh, you know, the opportunity to learn, you know, and learn from so many smart people. I was really fortunate to have a lot of mentors, who were willing to take me aside and you know, at times have some pretty frank conversations with me and say, “Callender, what are you thinking?” And then they’ll get me back on the right path. So I think that was the thing that, you know, kept me involved. It was just, I continued to learn a lot, sometimes the hard way. But you know, it was the joy of learning and seeing the impact of being able to work with others successfully to accomplish something.
Gary Bisbee 14:17
Sometimes learning the hard way is the best way though, isn’t it?
David Callender 14:20
Well, in retrospect, that’s true at the time.
Gary Bisbee 14:26
So after being the VP and chief operating officer of the MD Anderson Cancer Center, you were recruited out to sunny Southern California. How did you and Tanya find California after all those years in Texas?
David Callender 14:40
Well, California is you know, a marvelous place. LA is an incredible, vibrant city. UCLA is an incredible campus with just great people, faculty members. So again, another wonderful learning opportunity for me. I have to say, Los Angeles has a higher level of density than even Houston. So one of the things that I continue to experience is I had to drive forever to get out into the countryside and actually see livestock and crop. You know, having grown up in Texas, particularly in a small city. That’s kind of a thing that you want to do on occasion. So that was a shift for me. But again, there are so many wonderful things about la It was really an enjoyable time.
Gary Bisbee 15:29
Well then recruited back to UT Galveston and were President there for what about 10 years, David? 12 years? What were your main priorities during that time at UT Galveston?
David Callender 15:41
Well, they shifted over the course of time. When I was recruited back the institution had gone through several major consultations, I guess, really arrangements. And it was trying to set itself on a different course. It had been a sole safety net institution, since its founding, very well supported financially by the state. Able to really focused its academic and clinical efforts on meeting the needs of the safety net population. And few years prior, the state needed to change its approach to funding not only UT Galveston but all of the health institutions across the state, there just weren’t enough resources to fund everybody at the level that the Galveston institution had been funded with over the course of time. So essentially, it was having to learn to float on its own bottom. And so I arrived at the time when it was sorting out the way that it would do that not abandoning its role in terms of treating and managing the safety net population, but expanding its focus beyond one population to a mini population does an interesting challenge. And about a year into it, we were struck by this huge Hurricane Ike which completely flooded the Galveston campus. Fortunately, we had some ability to operate off the island and so that we were able to sustain ourselves with that and some financial machinations involving changing the timing of funding that was actually flowing from the state. It took us about four months to get our hospital back open again, and then gradually rebuild it over the course of the really next five to seven years. We storm proofed the entire facility, brought it all back, and restored all the academic operations. We were able to then expand off of the island with a significant presence on the Texas mainland between and 40 miles away from the island. And so it’s a different place today, not because of anything that I specifically wanted to do or die, but just because that’s what the leadership of the institution determined needed to happen. And as a team, we were able to successfully execute that plan.
Gary Bisbee 18:27
Several months ago, Memorial Hermann came knocking. Congratulations on your appointment as president and CEO. That was six or seven months ago, David, for our listeners that may not be totally up to speed on Memorial Hermann, could you describe Memorial Hermann for us?
David Callender 18:45
Well, we have about 17 inpatient hospitals, we have about 322 overall delivery sites and counting. We have about 28,000 employees and were about 5.7 billion in annual revenue. So we’re one of those moderately-sized regional systems that we see in abundance around the country.
Gary Bisbee 19:18
Pretty close to the average sizes. If you look at the largest 100 systems, it’s about 6 billion, maybe six and a half. So you’re right about there. Memorial Hermann is right about there. How do you when you come to a new CEO, how do you set priorities, David, both for the organization and for yourself?
David Callender 19:38
Well, you know, the board had really begun a hard look a few years back at the existing strategic plan. The changes in the market that were occurring are expected to occur and work with the existing leadership. The CEO who I think you know, well, Chuck Stokes, he’s a marvelous fellow, to rethink the strategic plan, redo it, make it more future-oriented and over a little bit longer horizon. So I really didn’t have to facilitate that getting done, what I’m primarily responsible for at this point is making sure that we execute that plan. And that in the process, that we take a little bit broader view in terms of our responsibility to the Greater Houston community, we just get beyond the delivery of health care and think a little bit more about what we need to do to improve the health of Houston overall. And that’s what really attracted me, you know, as a physician, that’s what you want to be a part of. And so the role today is about working with all of these marvelous people we have in this system, with the resources we have available, executing the plan detailing it as we move forward. Obviously, it will need to be modified as we go along. But I’m very comfortable with the vision of our board, the high-level intentions of the plan, and I think that it’s the board spot on the planned spot on in terms of what we need to do. And now we need to do it,
Gary Bisbee 21:28
David, how does the board and vision scale in the sense of growth?
David Callender 21:33
What we really focused on is growing our ability to impact healthcare. And so it’s not so much about physical growth, it really is looking at the resources we have available within the system, looking at the resources that are probably available to us through partnerships and affiliations. Not a big merger, the system considered that before I arrived and decided now is not the time. But you know, again, what’s necessary to execute this plan, what’s the optimal way, optimal way or ways to get the resources that we need to do that? And let’s pursue those particular paths.
Gary Bisbee 22:22
I was thinking about government pay. I’m trying to track right along with your strategic plan. I think Houston, the average age in Houston is 30 or 31 or something? Medicare eligibles seem like it’s low, probably less than 10% of the population. So I’m assuming that government pay is not a big part of Memorial Hermann’s revenue base at this point, and probably won’t be for the foreseeable future. Is that a fair assumption? David?
David Callender 22:53
I would say, not quite. I mean, we have a pretty significant Medicare observed by our system and a significant Medicaid population. We actually serve more unsponsored, and Medicaid patients in our county health system do, we in one other system have the largest bulk of those patients. So again, we have to look across the diversity of the population here in Houston and make sure that our plan describes how we care for all as we go.
Gary Bisbee 23:33
So is Medicare Advantage part of what you’re offering the community? An MA plan?
David Callender 23:39
Yeah, definitely. And we’d certainly like to grow our engagement with Medicare Advantage as we go forward.
Gary Bisbee 23:46
If you look out over the next 5 or 10 years, then given the fact that half the baby boomers aren’t even on Medicare yet, you’re probably looking for continued growth in government pay. How do you think about that? Because the growth of government pay probably means a shrinkage in commercial pay?
David Callender 24:07
Yeah, absolutely. You know, we, we tend to look across again, the population demographics here. And, you know, just kind of putting the government pay aside for just a moment. About a third of the jobs in Houston are at an annual compensation of $50,000 or less. And of course, that’s the group that traditionally hasn’t had employer-sponsored health benefits. And we really don’t have a highly functioning exchange system in Houston, or in Texas, and we were one of the states, Texas that hasn’t adopted the ACA and is not likely to do so in the near future. So again, we’re looking at that population with a particular needs and the sorts of products that we need to have available working with employers, and in some cases, payers, to be able to serve that segment of the population as well as we can.
Gary Bisbee 25:18
Affordability is probably an issue that you think about. I know among your CEO peers, that is one thing that comes up every time we have a group of CEOs together. So how do you think about affordability? And is there anything or what can Memorial Hermann do about that?
David Callender 25:36
Yeah, well, one of the things we need to do is to better educate the business community about the components of cost. You know, right now, there’s seemingly a significant effort by the thumb to really point the finger at health systems and hospitals as being the primary cost drivers and appropriately driving costs and new heights that financially benefit. And we certainly don’t believe that’s the case. There are a lot of factors that go into the overall cost equation. And so we want the business community here to understand the impact of the uninsured population, one in five people in Houston has no health insurance, how that translates into basic attacks on the employers. What about the cost of supplies, pharmaceuticals, labor, all of those things? We firmly believe that you know, we don’t want to point the finger at anybody else, either, that we all need to come together and look across our community and think about how we work together to bend the cost curve for the governmental payers as well as the private payers.
Gary Bisbee 26:52
Well, anytime that we have a group of CFOs together a group of CEOs together, they’re exactly on the point that you’re making. And that leads you to try and influence the elected representatives to broaden their view of it. Is that something that Memorial Hermann thinks about and tries to tries to focus on?
David Callender 27:16
Oh, absolutely, we spend a lot of time trying to educate our local delegations, as well as those in general at the state and federal levels. But again, we think actually our most important levers our business community, if they can understand this more complex situation, and they can translate that for our elected officials in terms of impact on them what they’d like to see, then hopefully, that creates a little additional attention from our policymakers in Austin in Washington to try to do more to solve this problem or these problems.
Gary Bisbee 27:59
Yeah, well, that’s well said for sure. What about transparency, publishing prices, some of the health systems are more aggressive about doing that than others? Are you thinking about publishing prices at Memorial Hermann?
David Callender 28:13
Yeah, you know, we believe that the better approach for us is to work closely with our patients and help them understand their out of pocket costs. Now, based on whatever they have in terms of health benefits, other forms of support. This is what your out of pocket costs for a particular procedure or hospitalization, our ambulatory need for service will generate in terms of an out of pocket costs, and then try to work with them to make sure that that’s appropriately managed, just publishing a general price list really doesn’t help patients understand their out of pocket cost, the impact on themselves and their families. So we’re not actually certain that that would accomplish much. We think that you know, we should spend our time and our resources with our patients, helping them understand how their benefits translate into a direct financial impact on them, and then what we can do working with them to offset that
Gary Bisbee 29:24
That particular impact definitely feels right. This has been a terrific interview, David as we wind down thinking about the preparation of becoming a CEO. When you went to UCLA back in 2004, versus now coming to Memorial Hermann, how would you describe the difference in the role and the different kind of preparation that it would take or does take to become a CEO of a large health system?
David Callender 29:54
Going back to the comment all the hard lessons I’ve learned over the course of time. I think, Gary, that experience is so important. Understanding how to work with large groups of stakeholders, internal and external to the organization, understanding how to create a shared vision among a group of stakeholders in terms of what an outcome should look like convincing people to strive together to achieve that outcome, again, you know, experiences a great teacher, I think having an appropriate foundation in the principles associated with good leadership at a high level in a big organization, is also very helpful. And so, again, I think a range of experiences in operations, as well as in actual hands-on care delivery, has really helped me. And I’ve been, assist that a lot in terms of learning about the principles of leadership and applying them in big organizations by really great mentors,
Gary Bisbee 31:23
I’m always curious, did mentors just happen, or do you seek out in some way mentors?
David Callender 31:30
I think a little bit of both, you know, some people who have benefited from the mentorship of others, and have come forward to me and offered to help. And in other cases, I’ve actually sought out help and guidance from leaders. And they’ve been very kind and generous in terms of providing that. So I’d say I’ve experienced both and benefited from both.
Gary Bisbee 31:57
Why don’t we wrap up here with three questions that I love to ask our CEO guests. And thinking back to your entire career as a leader, what’s been the toughest decision you’ve had to make over that period of time?
David Callender 32:13
Oh, my gosh, it was pretty easy for me to point to that one. With the passage of Hurricane Ike and the decimation of the campus in Galveston, the hospital is closed, no way to generate revenue for up to four months, we had to lay off over 2,500 people, including faculty members, and that was just an awful thing. But many of them were impacted by the storm. They lost their homes, they lost cars, they lost clothing, valuables. And so that was just an awful thing. It was necessary to preserve the institution. Fortunately, over the course of time, we were able to hire most of those people back, the ones who wanted to come back. But that was just a very dark time. And, you know, as I think about that, it still just makes me feel awful.
Gary Bisbee 33:13
Yeah, I bet. How do you keep your spirits up in a circumstance like that?
David Callender 33:18
You’re focused, sometimes minute by minute, day by day on all of the things that are necessary to get your institution and very importantly, its people back on its feet. Moving forward one step at a time, always trying to inspire them. Again, with that shared vision, we can do this, we can get this back together, we can get this up and operational. Here’s what the next seven days looks like, here’s what the next month looks like, here’s what the next quarter. Here’s what the next year will look like for us. And you know, we’re all in this together. Let’s make it work. So again, focusing on what were what we were trying to achieve, what is what is the goal, the steps that are necessary, engaging every individual in terms of accomplishing that goal is the key to success.
Gary Bisbee 34:15
Well, the second question is, what’s the major lesson you’ve learned? And you may have just answered that, but what’s the major lesson you’ve learned through your career as a leader?
David Callender 34:27
This was actually taught to me very early on by the CEO of the Memorial health system, Dan Wilford. Dan was one of those people who actually offered to help me when I was at MD Anderson. As you know, I was here I was this young surgeon, you know, driven by data and logic, and the hard lesson for me was not everybody uses the same logic? And just because you look at the data and you come to this particular conclusion, and that leads you to a particular approach doesn’t mean that everybody sees it the same way. And if you go out there and you try to sell them with your logic, they’re not going to be convinced. They said Callender, you dummy. It’s sell, don’t tell. Yeah, I didn’t realize how important that was at the time. But I think about that frequently way Dan delivered that message. It was right on point at the time and an absolute critical lesson for me. at that particular time in my leadership journey,
Gary Bisbee 35:43
It was like a great lesson for all of us. Actually, final question over this period of time as a leader, what’s provided you the most enjoyment?
David Callender 35:51
Seeing the benefit of what we do in these big organizations. I tell a lot of people it’s pretty easy sometimes to get concerned, to be a little bit down with regard to your spirit, you trying to keep your glass half full and keep people engaged around you, but you’re a little frustrated. You know, and so all I have to do is just walk through one of our hospitals or through one of our ambulatory facilities, see our people doing their great work. See the impact that hands on delivery of care and the support of it from others translated into something that’s positive for an individual patient that reminds me what we’re supposed to do and encourages me and lifts me up and moves me for keeps me moving forward.
Gary Bisbee 36:43
David, this has just been a terrific interview, have very much enjoyed spending the time with you all the best of luck at Memorial Hermann, I’m sure you’re going to be terrific. So thanks again.
David Callender 36:53
Okay, Gary, thank you so much. Take care.
Gary Bisbee 36:56
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