Episode 48:
Creating a Health Company
Scott Reiner, CEO, Adventist Health
itunes stitcher googleplay spotify

In this episode of Fireside Chat, we sit down with Scott Reiner, CEO, Adventist Health to discuss the new organizational structure with three divisions: Care Division, Well-Being Division, and the Managed-Health Division. We also talked about the role of a leader during a crisis and how Adventist Health altered its Cap-Ex spending as a result of COVID.

Scott Reiner is the chief executive officer of Adventist Health. Scott has been in his current role since 2014. A registered nurse with nearly 30 years of healthcare leadership, Scott has a passion for mission, especially serving the underserved. He is committed to quality, experience, consumer value and expanding mission into the community. As CEO, he is responsible for setting the vision and direction of Adventist Health and positioning the organization for growth. Read more

Transcription

↓ scroll 

Scott Reiner 0:03
We have made a decision within the last six months with a lot of pre-work to move the organization from hospital-centric to a health-centric organization so that we can better take care of all populations before they even become patients.

Gary Bisbee 0:22
That was Scott Reiner, CEO Adventist Health, reviewing the decision to evolve to a health company from a more traditional health system. I’m Gary Bisbee and this is Fireside Chat. Scott described Adventist Health as a $5 billion health system operating in four states with 30,000 employees and 83% government pay. The conversation included Scott weighing in on the fact that he believes it is not necessary for most health systems to stand down elective surgeries as a standard policy during a public health crisis. Scott updated us on the new Adventist Health organizational structure with three divisions: the care division, well being division and managed health division. He candidly discussed how Adventist Health has altered its capex spending as a result of COVID. Let’s listen to Scott discuss the most important role of a leader during a crisis.

Scott Reiner 1:15
Know what your role is, and empower those who are held accountable and are knowledgeable to do the work and get out of their way.

Gary Bisbee 1:24
Scott wraps up the conversation with his view of what will change coming out of the COVID crisis. I’m delighted to welcome Scott Reiner to the microphone. Well, good morning Scott and welcome.

Scott Reiner 1:39
Good morning. Thank you. Good to be here.

Gary Bisbee 1:41
We’re pleased to have you at the microphone. Why don’t we launch right into your background? Judging by where you went to school, you must be from California. Is that true?

Scott Reiner 1:50
Pretty close. Yeah, I grew up in Maryland, ironically, but when about 16 I moved to California. Went to high school, college, and graduate school all in California.

Gary Bisbee 1:59
So a little bit East to start with, and then West. You did pursue a Bachelor of Science in Nursing, which is kind of unusual for CEOs of health systems. Did you work as a nurse before you pursued your MHA degree?

Scott Reiner 2:13
I did. Yeah, I actually was a nurse for about five or six years. You kind of get these progressive responsibilities like we’ve all had in our careers. Early on, I was starting to taste a little bit about what management was. I actually really learned to enjoy the idea of the care of the patient and the business side of it. And of course, that goes together with administration. So I moved from nursing to director of nursing to eventually manage care and healthcare experience related to the managing physician practices. So I kind of used that clinical background to launch into the business side of healthcare.

Gary Bisbee 2:50
What point along that line did you decide to pursue your MHA degree?

Scott Reiner 2:55
So a family member who has been kind of a mentor to me has talked to me about it for a very long time. So probably about five years into nursing. I started to taste, like I said, some of the management responsibilities. Then I realized there’s a whole runway available to someone who gets a master’s degree.

Gary Bisbee 3:17
So there’s an obvious question, which is, has the nursing background been helpful to you in administration and as a CEO?

Scott Reiner 3:25
Yeah, actually, it’s been amazingly helpful. I had been in all areas that hospital CEOs oversee. And I’ll tell you that was very, very effective in working with physicians and medical staff building programs. I understand their passion. The physicians’ passion for data accuracy, the care of the patient and decisions we make and the filters we use to make decisions. Because of that, we use the higher slanting towards clinical effectiveness and quality and safety. I actually think it helped quite a bit on growing the organization because one thing links to the other as far as pathology goes. You know how the microcosm of the physician relationship works really well. And then moving forward to being a CEO of a health system. Same thing, you know, I’m not at the level of working with individual physicians anymore. But this first clinical care pursuit was very helpful.

Gary Bisbee 4:30
I would think it’d be very helpful in terms of decisions. During your time as CEO at Adventist Health, what’s been the most rewarding decision that you’ve made?

Scott Reiner 4:47
It may be the evolving decision we’re making right now. That’s an interesting question. The most important decision we’re making now is what we believe this organization is called to do, not just in the last few years, but we’re called to do in the future. And that is the improvement of the health of populations. And so we have made a decision within the last six months with a lot of pre-work to move the organization from hospital-centric to a health-centric organization. So that we can better take care of all populations way before they become patients. So I think that will be the most important decision and ultimately rewarding decision. Now, that’ll take many, many years to do. Probably pass my tenure. But the point of it is, I think that’ll be a very important decision when we look back upon it.

Gary Bisbee 5:34
Well, let’s cover that more when we talk about Adventist Health. But let me follow up with the question about the most rewarding decision to the most difficult decision. What do you think the toughest decision you’ve had to make as CEO?

Scott Reiner 5:48
Toughest decisions are never about entering something right? It’s always about accepting things. I would say the toughest decision making is actually shaping the portfolio. Making a decision that we can’t be everywhere doing all things at the highest level of performance. And so making decisions to exit markets because people love their hospitals and they should. And we’ve had to divest in three or four hospitals over the last eight or nine years, ten years. And those are tough, because there’s mixed feelings about having to do that. Those are probably the toughest actually.

Gary Bisbee 6:21
I could definitely see that. Well, why don’t we move from your background to Adventist Health. Will you please bring us up to speed on Adventist Health as it is today, Scott?

Scott Reiner 6:34
As we stand today we’re in 75 to 80 different communities and four states in California primarily. But we’re also in Oregon and Hawaii and Washington with hospitals. They have 22 hospitals, we have a very interesting mix of urban-based large teaching hospitals to actually a fair amount of rural community hospitals, critical access hospitals, and a very differentiated footprint of where we’re located. I was looking at a map the other day because we’re working with COVID. We’re in 17 different counties. So we can probably talk about that later. But when you start to try to manage a county’s perspective on managing a pandemic, I was thinking of 17 different organizations we have to align with. So we’re in 17 different counties. Our mix really is mostly 83/84% government there. We serve a lot of disadvantaged populations, socioeconomic or even health status from East Los Angeles to a lot of farming migrants, field workers, and hospitals in Central California, Northern California, and some very poor communities. It really is how the organization was built. We’re about $5 billion in revenue. 30,000 Associates and we’ve been able to maintain a pretty strong financial position. We’ve actually been growing; we’re adding about one or two facilities a year and they really are communities were really filling in the pieces around where we have presence. We have also been moving into the population health business of managing Medicaid population. So we have north of 200,000 risk medical and this is certainly in the state of California population or members that we manage the full health for. That’s been very interesting and actually quite rewarding. We’ve had to learn a lot of new things about managing Medicaid. We have large integrated physician practices about 1200 physicians and our providers that are part of a statewide network in the state of California and a couple hundred more physicians in Portland, Oregon area. So it’s your typical health system now the most incredible thing about our opportunity is our mission. We are a part of a faith based tradition. And our sponsorship is the Adventist church who had a very long term over 100 year passion around improving health. And so we take that very seriously a whole person health. Physical, mental, spiritual,and social care of our communities and patients. I could go on. But that’s the nature of the organization financially. That pyramid is not easy. We have a very aggressive cost structure in order to manage that population. Now we’re an A-rated organization and we’ve been staying in that zone. Our days of cash on hand have been going up, I would say we’re managing well given the communities that we serve and the challenges they already have an economic perspective.

Gary Bisbee 9:23
Now, there’s one structural thing that’s interesting. You’re the CEO and have Bill Wing as President, which is a growing trend. But why did you go ahead and split the CEO and President’s job?

Scott Reiner 9:38
Good question. Seven years ago, I started as a CEO. We had an organization that was very hospital-centric. And I think we were doing well but to be perfectly honest, we were pretty average. And most of the things we did were because we have really good people working hard, but we hadn’t really adopted and aggressive performance-based mindset. We really were behind on I would say quality and experience. We were behind on growth or average, I should say in all these areas, and very federated. So we did not have an operating model that was a health system operating models. It was a collection of individual organizations doing good stuff in their community. So I realized early on that we had to do two things, we had to create a new operating model that would create a health system, which we could aggregate scale, given our pair mix, we had to get to top quartile on operating performance. I also knew that’d be a significant change in our culture, our business, culture, governance, our brand all aspects. So I made a decision at that point that we have a tremendous amount of body of work to do. So I asked Bill who reports to me to be the President and essentially drive the business, drive the operations, and drive the implementation of a lot for strategy. I have spent the last bit of time really building out the case for change modifying managing the culture, creating greater presence in this country, and driving a lot of a strategy and really reforming our governance. So we kind of work as a team. We split up the work and we work tandemly and a lot of things in order to get the job done. I must say, it’s been very effective. I think we’ve moved twice as fast because of that structure. It’s different. Some people can’t do that. I have found that quite effective. And it seems to work for organizations.

Gary Bisbee 11:29
I think as health systems continue to grow and healthcare becomes more complex. My guess is we’ll see more and more health systems pursue that model, particularly when it’s been working well for you. I think it’s been working well at Baylor with Jim Hinton and Pete McKenna. What about Adventist Health in terms of where you’re headed? I think you’ve made some changes, more like a healthcare company. Can you share that with us, Scott?

Scott Reiner 11:57
Our original strategy was rounding up the Round 2020. And like I said, creating certainly a tight operating model health system running at the top everywhere we can manage. So you know, everybody does sell these markers out. We really have done an excellent job of doing that. But I really talked to the board and our leadership and said, that’s really interesting from a business perspective. But is that really significant? Significance to me would be, are we really transforming our communities and transforming the populations we have? Because the truth of it is that I think the best way to absolutely manage the entire health of a person, you’re going to still have to have the capabilities of managing all the care and all the finances that go with it. Really, it’s a population health strategy. So our 2030 strategy that we just rolled out March one, which is pretty much the same day we rolled out a shelter in place for the state of California, we launched a new strategy to create a health company with the ultimate goal of community and individual well being. So we have a care division, which let’s face it as 90 some percent of our revenue, holds our hospitals, holds our providers, and holds our clinics and holds our home care and so forth. We then have stood up a well-being division. Wellbeing division is really around innovation, products, services, capital-light, that we can do two things. One, we can meet the needs of our missional goal, and that’s improvement of health, social determinants of health, health access, and also improvement of community environments. So we acquired a company called Blue Zones, which was established by Dan Buettner, and hired on their team and their leader Dan has joined us, he’s really the thought leader behind Blue Zones and Ben ladle who’s been the CEO of Blue Zone. So Blue Zones really becomes the organization where we invest our resources to work with our communities. Especially around areas of environment, social determinants of health policy. And then the end, we believe by having knowledge collaboration, we will be more successful in managing for risk. So we’re taking that approach. It has capital-light, it generates a reasonable even though we do believe that health systems across the country and a lot of businesses now will be, I think more interested than ever post COVID about the idea of the healthier the community, the greater the ability then to withstand either economic and or clinical issues, pandemic type issues in their community. And then the third division we stood up is our Managed Health Division, which is really the area of population health strategies. We’re not going to have a huge health plan, but we take a lot of delegated risk and we’ll continue to do that, especially in areas of Medicaid. Under that section, we’ve also created some new products we’ve created some joint venture with paste programs. We also assisted abolition a hospital at home model during the pandemic, where we literally have 20 diagnoses that we are now admitting straight into the home, using a care center that is staffed by physicians and nurses 24 hours a day. So we are literally taking care of patients in their homes that would be normally on a medical unit right now that manage Health Division becomes kind of areas that we can try new areas, whether it be paced programs, a hospital at home, those types of things, to manage populations. And probably the last part of that is we’ve created a new competency around consumer. And so everything we do, we want to do it through the lens of the consumer and design our services orient our experiences. So our new health company really has those three divisions. Really, you have your care division, you have your well being division and you have your managed health division, also driven through the lens of what the consumer would benefit from. Then what the ultimate outcome of individual well being or health to the individual, and that would be through data connectivity, and improvement of health community, especially looking at social determinants of health and community health indexes and that type of thing. That’s what we’ve launched. We’ve been pretty excited about the efforts that we’re making in that space.

Gary Bisbee 16:20
It’s very exciting as clearly the health system for the future and the whole COVID crisis just totally supported your plan going forward. So congratulations there. Well, let’s turn to COVID. While we’re on it, what’s the status of the surge in Adventist health markets?

Scott Reiner 16:38
I think we probably have, I would say 12 markets if you will give or take and I would say for them, were pretty busy now in the Los Angeles area. We have some large hospitals in LA. Glendale White Memorial which is in East LA they’re about five miles apart, very busy with COVID. Bakersfield, California and then around the Fresno area, Central California, in Lodi, California if you know these areas. But if you start getting north of that where we have the rest of our organizations, it’s been generally pretty light. We’ve been prepared as all have been prepared. So I would say we have some hospitals that are some of the busiest hospitals in the state of California from a ratio basis. And then we have some pretty quiet spots. But generally, the areas that are busy are at capacity. So it’s been very challenging.

Gary Bisbee 17:29
What’s been the trend in terms of telemedicine? We’ve seen an explosion and televisits in certain places, how has it affected you all?

Scott Reiner 17:38
That’s one of the areas I’m sure you’re finding that from the other members. There are some things we’re learning in this so hopefully we will not go backwards. So initially we are running of our 1200 providers, 15% televisits. And of course at the peak of this and I’m not sure we’re at the peak but let’s say a month ago, we were running at close to 60% to 70%. Like I mentioned, we also stood up the capability of managing patients in their homes, that is all basically is very similar to the ICU, right? It’s very similar to that. We’ve also used tele-behavioral medicine. Through our well being division, we’ve made some partnerships with an organization that is using robotic and face to face behavioral health medicine. So we’re kind of standing that so we’re very pleased that the digital platform is being utilized for care of patients and not to mention the business applications overall that we’re all using in a different way.

Gary Bisbee 18:43
Well, speaking of business and finance, CMS, came out of course and paid for the televisits. How important was that in increasing usage, do you think?

Scott Reiner 18:56
Quite a bit. That’s a practical avenue whether the providers were part of our foundation or independent. It became a very important vehicle. I’m certainly hoping various members are working on creating permanence on some of these waiver. We should heavily incentivize our providers to use virtual care, which means you got to keep the money flowing. Now at some point in the future is a less costly as an overhead maybe, but I would say that’s way down the road, but we need to move the culture to that spot. And then we can start managing the efficiency over time, but I’m hoping that continues. It was helpful. It was quite helpful to us to encourage that.

Gary Bisbee 19:37
How about remote working? Did you pursue that in any one of your hotspots?

Scott Reiner 19:43
Yeah, well, our system office has 1300 people in Roseville, California. I’m in our actual office today. I think there’s 80 people in here so we basically have gone to remote for four months now. I don’t think there’s ever been more than 100 people in our building here. In the distant and of course, the hospitals, you know, they do their work. But if it’s administrative, they’re staying at home and doing administrative work. We’re learning a lot of things. I bet you are. I’m not interviewing you, but how do you stay connected to these great organizations that give us insight that give us connectivity? It’s got to be very challenging. So we’ve taken advantage of that. And I think we’re learning some things as well.

Gary Bisbee 20:23
Well, we definitely have heard a number of different learnings from that, all the way from how does that affect new facilities. One CEO said that she had stopped planning a new administrative facility because they wanted to have more people work at home, we’ve heard one CEO in a health system that was in more of rural areas said, we can now recruit nationally, because we’ll structure this so they can work from home and somebody else said, we can actually become more asset-light now than we were before. So those are some of the things that we’re hearing.

Scott Reiner 21:03
So maybe a little too soon to understand the cultural impact from that shift. The pendulum swung so hard, I don’t think it stays there. I also don’t think it goes back to where it was. There is something about building culture that you have to have some connectivity with. And especially as new associates, new people join you. It’s one thing for everybody to move out. We’ve been working with each other for a long time, but I’m finding as new people join…It’s hard for them to be connected. But if the pendulum will swing right, we’ll hit a new sweet spot, and we’re all looking for that.

Gary Bisbee 21:32
Yeah. To the extent it gives us extra flexibility then that’s terrific. What about elective surgeries now, assume that you had to stop surgeries in certain places, but have you reestablished surgeries?

Scott Reiner 21:45
We did. As all the states, certainly the West Coast states, were very connected. All places were at shelter in place. We stood down. The state of California asked to create 50% capacity in our hospitals early on, which was to eliminate a lot of the elective surgeries, that all was reduced. So we were running at two months without elective procedures, surgeries. We’re at a spot now and I’ve had the blessing or chance: I’m the vice-chairman of the California Hospital Association. And we’ve been able to work with the governor’s office and association very closely on search planning. I think we’ve hit a good spot. We have shown that the hospitals in California have actually done an exceptionally good job and managing the care as long as there are supplies and appropriate policies in place. There was enough capacity. So we really believe there is no need to stand down as a blanket rule, like we did last time. However, we’ve already done that in one of our hospitals that was dramatically busy, we do our own internal policies, we eliminated our own like the surgeries and went to, if you will, a walk down for a period of time, so we’re going to have to manage this flow by facility using right protocols. But there is no need, in my mind, to stand down entire states on elective procedures surgery. It did not provide to be that beneficial.

Gary Bisbee 23:12
Yeah, for sure. I mean, that’s a clear finding out of this whole crisis. Let’s use that as a trigger into talking about economics, which has not been a pretty picture really, for any of our health systems. How’s this crisis going to affect Adventist Health?

Scott Reiner 23:28
Like you said, like everybody else, the revenue loss was on a ratio you’ve probably seen across the country as far as revenue loss. One of the things I think, that’s been a little bit beneficial of having a population of hospitals that serve multiple populations and or models. We moved from critical access hospitals to safety-net hospitals. We have a lot of government payer, we’re probably like I said, 83% government pair. So we actually have done reasonably well. Rightly or wrongly, we had a lot of medical patients. So the surgical volumes were affected, but they may not be as effective as maybe some systems. So we’ve been able to navigate, we’ve had to manage down probably 15% to 20% of our labor costs out of the organization. So as the revenue is starting to build back, we’re forecasting out 85%, a normal run rate for the rest of the year, I think June will land at close to over 90%, which is good. So people are coming back. Overall, we’re close to what we said we would do from a budget perspective, prior to COVID. We’ve had to be very aggressive with cost management as well.

Gary Bisbee 24:39
Will Cap-Ex be affected in 2020? Or 2021?

Scott Reiner 24:44
Yes, two reasons for that one, let’s say even if we do hit the target at EBIDTA, we’re learning some things. We’re really trying to shift some of our investments away just from bricks and mortar right. We’re going to make some different decisions on our facilities. We’re going to make some different decisions on our office buildings, especially medical office building, not dramatically that we’re going to have to watch it. So we really slowed down capex. I mean, I have to say we’re kind of frozen until we have a better handle. But even after that, strategically, I think we’re going to be making some different kinds of investments with a capital that are not so capital intensive, hospital intensive.

Gary Bisbee 25:21
Let’s turn to leadership in a crisis, which leadership is always important seems like it’s magnified in a crisis. When you first became aware of the COVID crisis and that it was going to affect Adventist Health. What was your first thought?

Scott Reiner 25:37
Well, it’s interesting, it kind of came back to some prior experiences I’ve had in my career and I teach our leadership development academy here inside. And if you’re the CEO, you know, you can’t manage the crisis. Your job is to lead through it. And I’ve watched this across the country interestingly with peers of mine and everybody tackles it a little differently. I’ve watched some that have kind of stood back and are letting the command center their clinical team navigate and lead. I’ve watched some get very involved very hands-on. My style and approach is there’s two things, we’ve got to do really important things. One, we have to manage a pandemic, which is not my expertise. So you put your clinical team in charge, you provide the right resources for them to do their work, and they do what they do. They’re phenomenal at it. What I was very cognizant of, and important to me is that we continue to stay attached to those from a culture perspective, doing the work and continuing to drive the master long term strategy. So we actually have gotten a lot of work done over the last four months as an organization propelling us to the next spot. Initially, you’re kind of like all hands on deck, and then you realize within a couple of weeks is going to be a while and I’m engaged, but I’m not overly attached. I’m involved. I know what’s going on every day. But I am not in the business of managing the pandemic. That’s for someone else to manage in our system and it’s worked reasonably well that way.

Gary Bisbee 26:59
Well, you’ve made the point actually, let me ask the question again, which is what is the most important characteristic of a leader during a crisis?

Scott Reiner 27:07
Know what your role is, and empower those who are held accountable and are knowledgeable to do the work and get out of their way. It’s communicating, trying to keep the will of the people up, keep the vision alive, remind them of stories of how we’ve made two things like this in the past, reaffirm them and be real. I mean, if it’s not working, it’s not working. And I would say also be nimble. We change things, be willing to change systems that you’ve had in place. I think you’ve got to know what your role is. And that’s important. To be honest with you. It’s important to know what your role is before there is a crisis because it helps you navigate to the next steps.

Gary Bisbee 27:54
Good point. This has been a terrific interview. Let me ask one other question if I can, which is where we’re all talking about a quote-unquote new normal. What do you think will change after this COVID crisis in the health system?

Scott Reiner 28:09
I think there’s going to be more attention to various models of care to basically sites of care. I think we’re going to be looking at it certainly expanding the virtual environment. I know that we’re going to be understanding and investing in our communities, we’re going to be creating more partnerships with health plans, because I think there’s going to be certainly less dollars involved. The business side of it is going to be much more virtual and less travel. I mean, those are some of the obvious ones. But I think basically, the footprint of our delivery system is going to get modified, based upon a lot of new virtual capabilities that I think we’re just on the beginning of capitalizing on.

Gary Bisbee 28:51
Well, that sounds right, and let’s come back in a year and talk about it because I think you’re exactly right. terms of how this is going to lay out, Scott, Thanks. Excellent interview. We very much appreciate it. Good luck to everybody at Adventist Health.

Scott Reiner 29:05
Thank you, Gary. You too. Take care.

Gary Bisbee 29:08
This episode of Fireside Chat is produced by Strafire. Please subscribe to Fireside Chat on Apple Podcasts or wherever you’re listening right now. Be sure to rate and review fireside chat so we can continue to explore key issues with innovative and dynamic healthcare leaders. In addition to subscribing and rating, we have found that podcasts are known through word of mouth. We appreciate your spreading the word to friends or those who might be interested. Fireside Chat is brought to you from our nation’s capital in Washington DC, where we explore the intersection of healthcare politics, financing, and delivery. For additional perspectives on health policy and leadership. Read my weekly blog Bisbee’s Brief. For questions and suggestions about Fireside Chat, contact me through our website, firesidechatpodcast.com, or gary@hmacademy.com. Thanks for listening.