May 25, 2023
Warner Thomas believes that communication and transparency are key to an organization’s success.
This episode was made possible by our partnership with Edwards Lifesciences.
John Koster, M.D.: Welcome to the Gary Bisby Show. It’s my pleasure today to invite Warner Thomas to join us. He is the CEO of Sutter and former CEO of Ochsner Healthcare Warner. Welcome today. How are you doing?
Warner Thomas: Doing great, John. Thanks for the opportunity. It’s great to see you and it’s an honor to be able to do this do this show in honor of Gary.
John Koster, M.D.: Yeah, I know he was looking forward to this conversation, Warner, and we were both excited about you taking the opportunity at Sutter and. We’re anxious to hear about how it’s going. As this show is really about leadership. Maybe you could give us a little bit of background, Warner not everyone knows about where you’ve been and where you’ve come from. So maybe starting with your childhood and how that led up into your education and then your professional career. Everyone be curious to hear about you.
Warner Thomas: Sure. John, thanks. I I grew up, pretty humble beginnings in small town in Vermont, Bradbury, Vermont, about 10,000 people. Dad was a welder and had an autobody shop, and my mom was a payroll. Administrative leader in a nursing home for about 40 or 50 years. And grew up in a small town went to high school there and then left went to college in Southern New Hampshire at New Hampshire College. Spent time there getting a undergraduate degree, double major in accounting and computer information systems. And so don’t ask me anything tech anymore cuz I, I forgot it all, but I used to know how to, how to program in for train and cobal. But yeah, those are long, long gone. And then when I graduated from there, I went to work for Ernst and Young out of the Manchester office and. And had a lot of great mentors. There. A good friend of mine, Glen Foster, is still a great friend of mine today. And we connected a lot, worked on a lot of clients together, and I spent about probably three to four years at Ernst before I went to work for one of my clients. At that point it was Nashua Memorial Hospital, became Southern New Hampshire health system in Nashua, New Hampshire. First as a director of finance, then, Interim cfo and then I got into business development and ran the position group there. So it was a great experience. I spent almost 10 years there. Person is my mentor then and still is today. Tom Wilhelmson was the CEO there for, 30 years. And after spending about 10 years there and realizing that I. He was I think I was 32. I think he might’ve been, 40 and he wasn’t going anywhere. And so there was really not upper movement. That’s when I went to Oxner Health in New Orleans in 1998, and I spent 24 years at Oxner. Working for someone you know that you and I know well, John Pat Quinlan and Pat is a great mentor to me works in them for a long time up through 2012 until I. Took over as a CEO when Pat, transitioned into retirement, but had a really great run at Oxner. First president, chief operating officer, then CEO and then made my way out here to California after 24 years at ner. I’ve been here at Sutter Health for five months and really honored and blessed to have the opportunity, but I would say honored and blessed to have the opportunity. When I led Oxner had an amazing team there. Got succeeded by Pete November, who’s doing a great job. Pete Mike Feld, the president, chief Operating Officer Tracy Scro, chief Human Resource Officer, Robert Hart, chief Medical Officer. He just a great set of people and really felt fortunate to be working with him for so long.
John Koster, M.D.: Yeah, I’d like to spend just a moment talking about your time at Ochsner because you guys had some real adventures. You, You had Katrina, of course, which was every, that was just an incredible journey that you led. You led the organization through, you really led the community through. And I’d like to hear this a little bit about that. But I also, you also had a number of different strategic initiatives that you had, Ochsner at a time, a member of the clinic group with Mayo and all these other big medical groups had its own health plan and you. Then evolved into a bigger system. So tell me about the strategic journey and then a little bit about the Katrina episode, because that was just an exercise of just absolutely incredible leadership.
Warner Thomas: Yeah, so you know when pat got there at auction about six months before me in 98. I got there at the end of 98 and we really formed a bond to work together. And I think the first thing we realized, cuz we were both working. On the clinic side of Oxford and we realized that the hospital and the clinic needed to come together. It needed to be merged into a single entity. And Pat really took the lead. And we worked together on that for a number of years and ended up merging the clinic in hospital in oh one. And I think that was the, really the sentinel event, that position auction to really take off and grow and expand dramatically over the next couple of decades. Because really you had a clinic that, that was under capitalized. I had a hospital that didn’t have alignment with the physicians, but when you put ’em together they really did, did incredible things. And so I think from oh one to oh five, we really focused on organic growth. Did divest the help plan the Humana that point in time? And frankly, it’s probably looking back, probably not the best strategic move. You probably should have stayed in the help plan, but there was a lot of questions about the. The financial viability of Medicare Advantage and what the government was gonna do, so divested it to Humana, but took those dollars and reinvested to grow the system and to grow the delivery system, throughout Louisiana. That Divesture in oh four positioned us in oh five to number one, get through Katrina, and then after we got through Katrina to really start the inorganic growth, which was to purchase several hospitals. From Tenant Healthcare in oh six. So started those discussions in oh five immediately after Katrina purchased M in oh six. And I would say, I would give that credit to the board of AHA to really double and triple down on New Orleans at a time when New Orleans was in a very challenging situation coming out of Post, Katrina and purchased those three hospitals. And I think that fundamentally changed the trajectory of Ner forever. Really worked hard to bring those hospitals together. To grow and expand those. So that was really the acquisition phase, if you will. Really, from oh five through about 11, brought another hospital on in Baton Rouge, brought a hospital on from tenant in the North Shore and Slidel, and had a couple of smaller critical access hospitals joined. And then as Pat transitioned out in 2012 and I transitioned in, I think we realized we needed to go to more of a partnership model. And create a partnership model that looked at, joint operating agreements, looked at joint ventures, looked at management agreements, and really built ner throughout the entire Gulf South, from Shreveport to Lafayette to the North Shore, to, west of Lake Charles, and then into Mississippi Russia system through a variety of different transactions and a partnership model. A lot of those were very, capital light. Types of models and there was a lot of district or kind of governmental hospitals in Louisiana, so purchasing them was gonna be capital intensive and politically very difficult. So we really created a different model and that was the genesis of growth. Of Ochsner over that 10 year period from 2012 to when I left at the end of 22. But it was the team did a great job. Pete November was involved a lot in that development, A lot of those deals as was Mike who found, and really just, that was a, that was the progression of och. If you go back to oh five in Katrina, I was actually just got asked about it by an employee at Sutter Health today, and I said, yeah, I lived in my office for. For three months. Cause I didn’t have power in my house. And so the commute was good so that, that worked out. But the, it was a very just an incredible time of teamwork, of fighting through adversity, of working together, of just figuring it out. Every day there’d be a new challenge. You just gotta figure it out. How do we find food? How do we get generators? What about fuel? How do we, get, make sure we keep water going to our facilities? And we had a lot of preparation and our facilities team and our clinicals team did incredible work. But even with that, there’s always things that you don’t anticipate, like we didn’t anticipate not having help from anyone for two weeks. And we kept running on our own for a couple of weeks and then we started getting food and we got generators and, we were on our own there for a time and, pat did a great job. As ceo we partnered together to go through that and our teams really stepped up and did incredible things, but. As we came through it, we said what can we do to position Ochsner strategically long term? And that’s when we started the discussions with Tenant Healthcare about, Hey, what are you guys gonna do? How do you look at new Orleans? And that’s when we found out they were interested in divesting the hospitals. And the rest is history.
John Koster, M.D.: One of the things that really impressed me, Warner, is I, I’ve had a chance to interact with a lot of your medical staff and board members and things over the years subsequent to you. Doing your expansion, but you’ve managed to keep the culture the drive behind the medical group and everyone there in as they grow. And that’s very hard to change strategic directions and keep the energy going. How did you do that?
Warner Thomas: Yeah, I think a lot of it was through just constant communication and I think a lot of it was, we had some fundamental tenants on how we ran the organization. We had a clear operating cycle of. Governance cycle strategy cycle, talent review, operating reviews and that never changed. That was always a constant, we evolved our communication model with our physicians. As I took over as co I created what I call the physician strategy cabinet, which is about probably 15, and then evolved into about 25 physicians that. Really we were focused on what I told Ms. You, look, we’re not gonna make a big move without me having a conversation with you. Because it was a question cuz I was a non-physician ceo, first non-physician, ceo. And it’s I really wanted them to, I wanted to build trust with them and have them understand like I was, they were the kitchen cabinet. We were gonna do this together, we were gonna connect together. So I think that connection with the physicians was important. I think the second piece is we started what we called Power of One Sessions. Which is really meeting with direct employees in groups of about a thousand to 1500, three to four times a year. So the idea was could we touch the whole employee base over a two to three year period of time? And these were half day sessions. Frankly, about re-energizing, reconnecting the or folks in the organization to, to the organization talking about purpose, talking about where we’re going. And it really became part of the culture of who we are. That every single person, every single patient matters and makes a difference. And it didn’t matter what your role is, whether you are a nurse, a physician on the front lines, or the person that makes sure that payroll gets done or that we have heat and air conditioning. Everybody’s role is critically important to the effective. The, for the organization to be effective and for us to take great care of patients. And I think that was a core part of, who we are and ran through the entire organization. Even, post the growth and post other organizations joining us. I think people felt like they’re part of something bigger. They’re part of a broader vision. They’re part of a, making a bigger impact. And I think that excites people.
John Koster, M.D.: Clearly you succeeded wildly there at Ochsner from everyone’s experience. And so I’m gonna ask the question that so many people ask me about you moving to Sutter, and that’s what in the world is Warner thinking? And so may, maybe I can phrase it. So how did you analyze the opportunity?
Warner Thomas: Yeah look, Sutter Health is an amazing organization. It’s got an incredible ecosystem here in Northern California. A lot of storied hospital organizations, both here in Sacramento, a hundred year old hospital here in Sacramento, Sutter Mills Peninsula in the South Bay, and Sutter Alta Bates in the East Bay, as well as Sutter CPMC in San Francisco. And then the Storied medical group relationships, with the, Sutter Palo Alto Medical Foundation and Medical Group. The Gould Medical Group and Modesto. These are storied organizations that just have incredible history. So the physician and hospital, ecosystem was incredible. We also have the 12th largest home care service in the country. We have an effective health plan asset, that we want to grow and expand. And so I think, these various components were very interesting. And then I think I lookeded at that. Could I have an impact to help Sutter grow and expand and care for more people in Northern California to build a more effective platform to a adapt to today’s healthcare environment and to just have a broader impact? And I, that was really how I thought about it.
John Koster, M.D.: So you land in this land of opportunity and there is a great clinical culture there. Sutter’s got a. Wonderful group of people and just outstanding culture in my opinion. But how do you get your, how do you get traction? What do you do when you hit the ground? How, what do you do? I’ve been following what you’re doing. You’re out there with people, you’re out asking questions, you’re out learning. You’re, it’s about as transparent as anyone can be. And so what are the things you use to get a, get traction in a situation like that? Warner?
Warner Thomas: Yeah, so I think, I came in obviously with a plan of how I wanted to approach it. So I spent the first two to three weeks doing a talent. Review going a couple of layers down in the organization. I met with every executive, direct report and every person underneath them and said, tell me about your team two layers down. Who do you have? Where are the strengths? Where are the gaps? What are we doing well? What are the challenges? And that gave me really good insight. That was one path of work. The second path was listening to it. Getting out, talking to physicians, talking to nurses, talking to other clinicians, talking to our support people, talking to leaders across the entire geography and spending time with them. So that was a second path of work. I think a third path of work was doing what I call business reviews. Just understanding the geographies, understanding the markets, understanding our asset base in those areas, understanding, Where we’re strong, where we’ve got opportunities where we can grow and going that. And then the fourth path, I would say is all about communication. How do we communicate with our management team? How do we communicate with our, all of our teammates with town halls? How, and I would start a, I start a rhythm with the executive team, with the top 200 leaders that I expanded to the top 400 leaders that we meet every month. And then the management team, our top 3000 that we meet with every month as well, and really was, we’re gonna be very clear about, what’s happening. We’re gonna be very clear about what we’re doing, we’re gonna be very clear about where we’re going, and we’re also gonna be very clear about what we don’t do well and the things that are problems and the things that we gotta fix and owning that. But all the way, the overlay of communication, the overlay of transparency, the overlay of making sure people understand where we are, where we’re going. And once again, just owning what doesn’t go well.
John Koster, M.D.: Yeah, you clearly have been effective from what I’ve seen and heard in terms of your landing there. What are the differences? You came from a physician group. Group culture and organization to one that’s me, historically hospital centric, but with a lot of medical groups. How have you found those relationships, which I think are critical, particularly now with our, the new entrants that are in the healthcare arena with with physicians. How do you see the leadership evolving regarding that?
Warner Thomas: Yeah, so I think one of the things in restructuring, we’ve realigned a lot of responsibilities within Sutter, but we’re moving to a dyad model. Of administrators and physician leaders working together at each level of our clinical areas, whether that’s service lines, whether it’s our market presidents and market, chief medical officers or at the top of the organization, new chief operating officer, new chief physician executives. So I think that’s a new construct for Sutter. That we put in place and, really puts physicians in leadership roles at all levels of the organization. I think the second piece would be, same sort of thing, creating more of a physician strategy cabinet, both with many of our community physicians, which we’re evolving and building on, and also our medical groups about understanding what their issues are, what are the things they’re concerned about, how are we working on that? And just continuing that dialogue and then, Really just being open to, to, meet with constituents and had a big, donor event last, about a week ago. Talking to lots of community physicians and being visible and listening. Not just talking, but listening as we go. So I think those are things that are now the key foundational pieces that we can build upon as we advance our strategy in the future.
John Koster, M.D.: Another key area that I thought was exceptional at Ochsner, which I’m wondering how you’re gonna bring to Sutter is your innovation institute at Ochsner. You hit way above your weight at, in your innovation institute there, and you got a great innovation institute at Sutter. How are you seeing that develop, particularly since you’re sitting right there in the middle of Silicon Valley?
Warner Thomas: Yeah. I think that’s a huge opportunity for Sutter, frankly, that I think it’s been a lot of good work done by Chris Wa and Albert Chan in that area. But I think it’s really underdeveloped and I think there’s opportunities to get involved on the venture investing side. I think there’s opportunities for us to be, beta sites for lots of organizations. So I view that as a key part of our strategy, and frankly was another one of the attractors to come to Sutter was the proximity to Silicon Valley and the proximity to these. Incredible tech organizations, which I do think are going to be part of the solution for how we continue to change healthcare in the future and become much more digitally enabled and digital digitally connected. Hired a new chief digital officer and Laura Wilt, who’s started, she’s doing a great job hitting the ground running focused on being a lot more consumer oriented with a new consumer officer. So I do think it is about evolving the team, but I, innovation. And I think our investment in the innovation center is something that is, is on our roadmap, and I think you’ll see more coming in that area in the very near future.
John Koster, M.D.: Oh, that’s exciting. You do have some talent there. So let me just synthesize a little bit about Sutter. What do you, now, you look five years ahead where are you going now? Now you got, you came, you’re getting it organized. You’re solidifying, you’re thinking you’re bringing the right operating structures in and discipline and then, and now what? Where are you going?
Warner Thomas: Yeah. Yeah, I think the key thing is number one, As I said, we gotta be much more consumer oriented. Access is a challenge in Northern California. It’s a cha, it’s a challenge at Sutter Health. It’s a challenge across all of Northern California, so a much bigger investment in ambulatory care, closer to home. And that’s physician practices. It’s ambulatory surgery, rehab, pharmacy, just a much bigger ambulatory footprint to be closer. To to people and to be able to care for more people in Northern California. I think that’s number one. And we, we need to disproportionately invest in that area. Not once again at the expense of what we gotta do for our hospitals, but we have to make sure we disproportionately invest in the ambulatory, given the needs and given the growth and expansion in that area, just for the industry trends. I think the second piece is really around what I call, as you mentioned, innovation. It is, taking a large physical presence, ambulatory oriented, physician driven and, regionally oriented and marrying that to a digital footprint and a digital ecosystem that essentially marries together because people don’t want to think about it that well, I’m, I got a physical. Provider that I go to, I got a digital system they want to integrate experience and I think the incumbents that do that well are the ones that win over time. I think it’s the ones that don’t lean into that or don’t invest on the digital platform and or don’t integrate it are the ones that are gonna be more challenged. I think that’s number two. Number three is value-based reimbursement. We have to get better at being value-based. And being able to take, global payment. It is a, it’s a, a capability that is underutilized and underdeveloped within Sutter Health. It’s a big opportunity for us. If you go back, decades ago it was a big strength, frankly, of many of our physician groups. And so we’ve gotta redevelop that capability. We’ve gotta make sure we can do a much better job taking global payment, especially in Medicare. And evolve in that area. And then I would think the fourth is really around, I think it is the foundation of everything is we have to win in workforce. We need to be the best place for people to work, period. We need to be building a talent pipeline with our universities and colleges and technical schools to build the pipeline of people to come into healthcare. We can’t pay our way out of the workforce challenges we have now. We have to essentially train our way out of that. So I think being the best employer, investing in our people, helping people grow and develop their careers within Sutter Health and then, building that talent pipeline are four key tenants, if you will of where we’re going organizationally. And I think if we do those things well, we’re gonna, we’re gonna be fine.
John Koster, M.D.: Man. Oh man. Are they lucky to have you?
Warner Thomas: Thank you. I thanks John coming from you. That is, that means a lot, so thank you.
John Koster, M.D.: Warner, thank you so much for your time today as a consumer of healthcare. I’m really glad you’re there helping those of us who consume get the best product possible, and it’s wonderful to be able to catch up with you. And congratulations on what you’ve done at Sutter. It’s very impressive. And thank you for your time today, my friend.
Warner Thomas: Thanks, John. Appreciate the opportunity and Once again, this one’s for Gary and it’s such an amazing guy and somebody who had a huge impact on healthcare. But thank you for the opportunity to chat with you today.
John Koster, M.D.: Thank you, Warner.
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