Episode 50
Democracy is Hard Work
with Governor Bob Kerrey and Mitch E. Daniels, Jr.

February 24, 2022


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Governor Bob Kerrey
Managing Director, Allen & Company; Former Governor & U.S. Senator (NE)

Bob Kerrey is Managing Director at Allen & Company. He is also Executive Chairman of the Minerva Institute for Research and Scholarship, supporting The Minerva Project, an exceptional liberal arts and sciences education.

From 2001 to 2011 Mr. Kerrey was President of The New School, a university founded on democratic ideals and daring educational practices. On his watch, The New School experienced unprecedented growth in enrollment, faculty, scholarships, capital projects, research, and international engagement.

From 1989 to 2001 Mr. Kerrey represented Nebraska in the Senate, where he promoted equity for rural communities, led in farm and environmental legislation, strengthened taxpayers’ rights, led in restructuring our intelligence agencies, and partnered with local leaders to build projects of lasting value to Nebraskans.

His public service since leaving the Senate includes: the 9/11 Commission, advisory board of the Iraq and Afghanistan Veterans Association, co-chair of the Concord Coalition, and the Natural Resources Defense Council.

Prior to his Senate service, Mr. Kerrey served one term as Nebraska’s Governor.

Before entering politics, he was a businessman who helped build a chain of restaurants and health clubs employing over 1000 people.

Mr. Kerrey served as a U.S. Navy SEAL during the Vietnam War. For his service, he received the Medal of Honor. While in Vietnam, he was wounded, permanently disabled, and received from this injury a great gift: sympathy for those who are suffering and an appreciation for the capacity of government to save your life.

Mr. Kerrey earned a BS degree in Pharmacy from the University of Nebraska.

Mr. Kerrey is married to Sarah Paley and lives in New York. They have a 20-year-old son, Henry, and Mr. Kerrey has two children from his previous marriage, Ben and Lindsey Kerrey, and four grandchildren.

Mitch E. Daniels, Jr.
President, Purdue University; Former Governor (IN)

Mitchell E. Daniels, Jr. became the 12th president of Purdue University in January 2013, at the conclusion of his second term as Governor of the State of Indiana.


During his first term, Governor Daniels spearheaded a host of reforms aimed at improving the performance of state government. These changes and a strong emphasis on performance measurement have led to many state agencies, including the Bureau of Motor Vehicles, Department of Child Services and Department of Correction winning national awards.


Daniels is also the author of three books, including best-seller “Keeping the Republic: Saving America by Trusting Americans.” He is a contributing columnist in the Washington Post, and his writings are regularly featured in other publications. He earned a bachelor’s degree from the Woodrow Wilson School of Public and International Affairs at Princeton University in 1971 and his law degree from Georgetown University in 1979.

President Daniels and his wife, Cheri, have four daughters — Meagan, Melissa, Meredith, and Maggie — and seven grandchildren.


If we capitalize on the learning we've made through COVID, we can see faster and more effective innovation, in and out of crises, just like the one we've just been through.


[00:00:06] Gary Bisbee, Ph.D.: In the spirit of bipartisanship, we invited two former politicians, one Democrat and one Republican, for a bold discussion on today’s greatest challenges. President Mitch Daniels is the former two-term governor of Indiana and the current President of Purdue University. Governor Bob Kerrey is the former Governor and United States Senator from Nebraska, who was the President of the New School. Bob is lead director of Tenet Health. And Mitch is a current director and former lead director of Cerner. they share political, educational, and personal insights into politics and leadership. We dive into the impact of COVID-19, how it has affected all levels of education and trust in institutions like the CDC and news media. both describe how, as leaders, they approach decision-making when they have limited information. We, explore how the pandemic is creating lasting change by accelerating existing trends in the workforce, healthcare, and higher ed. They are both thankful for the incredible innovation occurring in healthcare, including vaccines and technology. We discussed the current levels of partisanship. Both note that America has a rich history of debate and overcoming great challenges. Democracy is hard work and we can’t fear conflict or criticism. We touch on their experiences as board members and their principles of leadership. Mitch emphasized the importance of leading change and Bob highlighted how the best boards and organizations empower all members to be leaders.

Good morning, gentlemen. Good morning, Governor Kerrey and President Daniels, and welcome.

[00:01:47] Governor Bob Kerrey: Thank you.

[00:01:48] Gary Bisbee, Ph.D.: We’re pleased to have you at the microphone. So why don’t we kick off with the one thing that’s occupied all of our attention in the last couple of years and that’s COVID. And you’ve each been in a role of actively managing your organizations, Mitch has the President of Purdue University and Bob as a lead director of Tenet Health. So why don’t we start with the question of, what’s been the major challenges that you’ve faced over the couple of years? Mitch, could we lead off with you, please?

[00:02:22] Mitch E. Daniels, Jr.: I think a major challenge was that the discussion was dominated for too long by, in a one-dimensional way, all of us were, quite naturally in human and in the most human sense, alarmed at the beginning, all the things we didn’t know. But rather quickly, it became clear, at least to some of us, that you couldn’t approach this, you couldn’t look at this, only through one lens. I believe history will judge very, very harshly the decision making of leaders across society, really, who, hid behind the alleged expertise, much of which was later shown to be fallacious, of people in one discipline. Epidemiologists were indispensable to addressing this problem, of course. But I think too many people fled from their responsibilities or abdicated them and thereby, I think, inflicted harm on the people for whom they were responsible, the institutions that they were charged with leading way beyond any medical, safety, or improvements that they provided. I do believe that, again, the first, maybe the essential, task of any position of high responsibility by definition is to balance interest, to assign priorities. Again, by definition, you’re dealing with multiple goals and obligations. And in case after case after case, people, I think, ignored the consequences of what they were doing, took refuge, again, behind alleged medical expertise, and in that sense, I believe, failed in their responsibilities.

[00:04:00] Gary Bisbee, Ph.D.: Bob, as the lead director of Tenet, how did you react to and manage COVID?

[00:04:05] Governor Bob Kerrey: Well, first of all, I agree with Mitch. I mean, this was a healthcare problem without precedent. I mean, we can go all the way back to 1918, but this is much different than what happened in 1918. It’s connected to the forces of globalism. It’s not something that you can come in and just say, I’ve got a solution. You got to do A, B, and C, and everything is going to be fine. You have to be willing and you have to have the capacity to adjust. With Tenet, it’s still difficult. They still have people saying, well, we’re going to cancel all your surgeries. Without any evidence. A patient coming into a hospital to get surgery is going to be at risk. It’s a good example of where you just say, this is the way we’re going to do it. No surgeries. Or, you gotta cut back all elective surgery. Elective surgery was cut back initially, and without any definition of what elective meant. And then it got heavily politicized. You’re for the mask, you’re against the mask, and it was exceptionally difficult to both take care of patients and take care of your employees. And what Mitch said, again, is a hundred percent right. This is a situation where you’re dealing with, I would say, limited amount of information, with a steady improvement in our capacity to provide treatment. We’ve seen that steady improvement, by the way, across all diseases. But this particular disease, you see steady improvement and the capacity to provide care for the individual. So, on the leadership side, I just think the more you can stay open to the possibility that what you’re doing is wrong, but at the same time, almost contradictorily, don’t waiver in what it is that you’re doing. Make the decision about what you’re doing, adjust as the additional information comes in, and do the best you can with the political class because they’re not going to be issuing a press release always based upon the health of the people coming in and out of your business. They’re going to be doing it based upon the golden rule in Washington, D.C., which is, there’s two kinds of people in the nation’s capital, those who can count and those who lose. And they’re counting voters. So it was exceptionally difficult and I gotta say, I do think on balance, we’ve been managing our way through it. The most important exception to that is the K through 12 school environment, where, I just think, almost from beginning to end, we’ve been making more mistakes than doing it right.

[00:06:11] Gary Bisbee, Ph.D.: Mitch, you made reference to epidemiologists and that brings up the role of the so-called expert versus the, let’s say, in each of your case as governors or as President of Purdue, the decision maker. And how do you balance that? How do you, specifically in this case, where a lot of people were immediately believing what the experts were saying, you were a decision maker, and recognizing that there needed to be some balance. How do you handle that, Mitch?

[00:06:45] Mitch E. Daniels, Jr.: Start by asking yourself, what is my assignment? In our particular case, the assignment was to enable tens of thousands of young people to grow and learn and advance educationally, academically, as quickly as possible. Get on to productive lives. And we interrupted that temporarily, as others did. There was so much we, none of us, knew. And I think any decision or even mistake that people made in the first few months of this experience, I think, has to be excused. We all made them and none of us knew what we needed to. But for instance, in our case, it rather quickly became apparent that this particular virus, almost inversely compared to the 1918 virus, was mortally dangerous to older and infirm people, but very relatively benign to the young, which happened to be our population overwhelmingly. And so, we simply looked to our duty and said, it’s our job to keep this place open if we can, consistent with some reasonable degree of safety. And we recognized from the beginning that we might fail on that attempt. probably the single most useful thing, Gary, that we did, and I don’t understand why something like it wasn’t universal. I asked the team we assembled, we don’t have a medical school. We had to build a Protect Purdue system from scratch. In some respects, I actually think that was an advantage, that we had to do it that way, but I asked the medical people we assembled, please advise for us a simple severity index, because what I really want to know is not how many people have the bug. Any significant number of faculty, or staff are getting very seriously ill, that’s when we take no chances and close down. And so a 1-6 severity index, 1, asymptomatic, 2, one symptom, so forth, 6, candidate for hospitalization. And we watched that, along with all the other data, every single day. Now, as it happened, after 6,400 cases in the academic year that finished last June, fewer than 2% ever reached level five. That told us that, all things considered, we had made a correct choice because our students did not sacrifice a year of their lives, did not have to set back their life plans by a year as so many others did. But we recognize that might or might not prove the right choice. But to fail to try, we thought would have been a dereliction. And looking backward. I I’m comfortable that we that we chose correctly.

[00:09:26] Gary Bisbee, Ph.D.: You were a leader in that movement among the university presidents, Mitch, and I think clearly that was the right call. Bob, you were surrounded by medical experts at Tenet. How did the Board kind of balance the medical expert versus your roles as leaders?

[00:09:44] Governor Bob Kerrey: Well, of course, I mean, first time I heard of Mitch’s severity index, I think it’s a very smart response, because we were under pressure from government agencies, federal and state, who are at times taking the right action, at times, not, just responding to, their severity index said, if I have one really bad incident, I’m going to get in trouble politically. And so they were, I would say, applying a pretty broad brush to the solution side. On the question of experts. I mean, the problem with experts is it’s sometimes wrong. Just because I’m an expert in something doesn’t mean, a hundred percent, I’m going to be right all the time, whether it’s In epidemiology or any other area. And the one expression that I hear it, I just, in my calm moments, I’d roll my eyes, “well, I just follow the science”. Well, what does that mean, you’re gonna follow the science? Does that mean that scientists always are a hundred percent right? And the answer is no. The whole idea of science is to do research and make discoveries in things where you’re wrong. You don’t start off a research project presuming that everything you know is all you need to know. You’re always pushing the envelope, trying to discover what works and what doesn’t work. So, that expression, just follow the science, I think it’s an indicator that we need to learn from our mistakes. There’s a lot of mistakes being made and that’s one of them, I’m just going to follow the science, because it doesn’t take you where you need to go.

[00:11:03] Gary Bisbee, Ph.D.: The CDC has had difficulty, in fact Dr. Walensky came out over the weekend and said the clarity of communication had been a problem for them, but I think it goes deeper than that. And the problem there was that I think CDC was generally viewed as a trusted source of information, but it became apparent as this went along, whether it was kind of, as you’re talking about, follow the science or just inability to keep up with it, or somehow politics involved. Where do we go from here, where it doesn’t seem that the CDC is a trusted source at this point? Who do we believe? Who do we count on at this point for information?

[00:11:46] Mitch E. Daniels, Jr.: I’m inclined to be a little maybe more charitable than some about the challenges that the CDC or other agencies have faced. I mean, just as the virus keeps changing forms, what we know about it, what experience tells us about it, has changed. Yes, of course, things said that proved incorrect later. In some cases, I think there were statements made either by folks there or elsewhere in public life that were agenda driven as opposed to science driven. But I don’t think it excuses people who were responsible for large entities, businesses, or institutions like ours from making independent judgements. And once again, it was too easy and too many people, I think, took the easy way out of hiding behind highly, highly cautious attempts to make fail-safe what was never going to be. We were never going to stop this virus cold. It should have been clear from very early on that we were in the business of managing our way through it the best we could. I think that’s better understood now with the benefit of two years experience, but I don’t think it would be fair to lay excessive blame at the foot of that agency or any other source of information. Actually, if I’m going to be highly critical of any institution, Gary, it’s the news media, which I think did an atrocious job not only of failing to explain a complicated, alarming situation to the general public, but of misinforming them day after day after day, hysterical reports of cases, as though a case in a nursing home was the same as a case in a sixth grade classroom, clearly self-motivated by the the opportunity to drive ratings and clicks and viewership and so forth. I really think it was disgraceful and it contributed to prolonging the period in which we did not deal effectively and sensibly in a balanced way with our challenge.

[00:13:49] Gary Bisbee, Ph.D.: Bob, where do we go to find a trusted source of information about something like COVID?

[00:13:55] Governor Bob Kerrey: Well, I mean, there are lots of, I think the CDC is reliable. In America, I mean, it needs to be pointed out, it’s rare that you get a standing ovation if you say, I’m from the government and I’m here to help you. So we start off with a, I think, a healthy distrust. I think it goes too far when it becomes personal and people attack people. I mean, what Mitch is saying about the press is a hundred percent right. You have to choose who you’re for and who you’re against, as opposed to trying to decide what’s the best way to protect myself and my family and my friends. And I do think that what Mitch described for Purdue is the smart thing to do. You’ve got a range of severity. I mean, actually, right now, I wouldn’t mind getting COVID as a consequence of what I see. And I talked to doctors and other people who are experiencing this. The symptoms are relatively mild. I’m not actively going out and trying to become infected with COVID. But I think not trying to get an absolute answer, if I do the following three things, I’ll never get infected because I think that’s not going to happen. You may still get infected if you do everything right. I’d like, if you don’t mind Gary, to focus a little attention on one area where I think we’ve really gotten it wrong, not in every school system, but in the K-12 environment. I mean, what Mitch said is a hundred percent right. We’ve got all kinds of evidence, not just from CDC, but from health agencies across the country that this particular virus was going after older people. And we haven’t thought about that whole child and the education and all that they need. And it’s been brutal. We’re going to be paying a price for that for a long time because the whole school system, the public system and the private as well, to a certain extent, is set up for one thing. You’ve got to be able to read by the time you hit third grade, and then you read all this stuff to advance your education. And I don’t know what the numbers are, but there’s going to be a lot of kids showing up in third grade that don’t have those reading skills as a result of the rules that we imposed, that, by my lights, didn’t add much value in terms of health security.

[00:15:48] Gary Bisbee, Ph.D.: Mitch, how’s that going to affect higher education?

[00:15:51] Mitch E. Daniels, Jr.: It’s certainly affected it already in terms of confidence, which was suffering anyway. The percentage of people, young people and their families who see value or sufficient value in higher education, at least at the prices that are being charged anymore, was shrinking anyway and it took another double digit drop last year. Maybe it will recover some in time, but that’s a starting point. It was the biggest single one-year drop in enrollment. It’s been dropping for 10 years, but typically by basis points or something. It dropped a three, three and a half, I guess, percent, this last year. That’s a bad thing overall for society. And it’s a bad thing in the individual lives of people who choose to bypass that opportunity. And we know from research that it’s not just the pre-existing problems, it’s the way the system dealt or didn’t deal with COVID that has dissuaded a lot of people from pursuing education that they probably…not everybody should be going to four year colleges, but many people who should probably aren’t right now. And that’s troublesome.

[00:17:00] Governor Bob Kerrey: How many years in a row, Mitch, have you been president of Purdue without having a tuition increase?

[00:17:04] Mitch E. Daniels, Jr.: This is year nine and we are already pledged to the 2022-23 school year. So it will be at least 10 years.

[00:17:12] Governor Bob Kerrey: How have you done that?

[00:17:14] Mitch E. Daniels, Jr.: It’s a matter of what you focus on. I guess this is a general principle that applies in all contexts and to all sorts of leadership responsibilities. But we have never said that affordability was the only goal, but we tried to establish it as a primary goal of what we were doing here. I learned a long time ago in healthcare, by the way, I was working at a major pharmaceutical company for a very long time. One of the best lessons I ever heard, I didn’t learn too much from business consultants who came through, but one that I did, we were talking about the need to control expenses at a very difficult time in the unit I was leading. And he said you’re very rarely going to find a place, take a cleaver, and take him off a big piece of fat because the problem is the fat is marbled through the animal. And so, that’s been the case here too. We found a few things. By the way, switching to more consumerist healthcare from a very old fashioned model saved us eight digits worth of money year on year. That was one counterexample. But basically, the answer is we tried to get everybody focused on this. We said, listen, thank goodness we’re a place where people disagree about every subject you can imagine with the possible exception that we all agree we would like this place to be accessible to young people of all income levels and all socio and economic strata. So, when you get everybody sort of pulling in the same direction, it’s amazing how small economies can add up. So that’s been the biggest single reason. And then finally, and I have to say, it’s been a virtuous cycle because our enrollment is up 30% over those years and a strong top line fixes a lot of problems. And we know that affordability was a big driver of the increase.

[00:19:03] Governor Bob Kerrey: Yeah, it’s impressive. It’s very impressive.

[00:19:06] Gary Bisbee, Ph.D.: Mitch when you get together with the other university presidents, any of them asking you the question Bob did, which is how do you do that because we want to do it here?

[00:19:15] Mitch E. Daniels, Jr.: Yes, we get some of that. And we get others who think maybe somehow it’s a great illusion of some kind, some kind of magician’s trick, but it’s not. We never preached this, just as we did not ever once suggest that our choice about COVID was the right choice for anyone else. It might not be. Institutions are different, just as businesses are different. We’ve simply said, we think these were choices that were appropriate to our university and our situation. So when they ask, we try to give them some suggestions, but we’ve never been critical of those who chose a different path.

[00:19:52] Governor Bob Kerrey: It’s a pretty good example of one of the challenges once you accept a leadership position, which is that, very often, the most important choices aren’t between good and bad. They’re between bad and terrible. You’re not sitting there saying, oh, I can’t wait to get a panel discussion because I’m going to show everybody how virtuous I was because I chose a wonderful, really good solution that solved lots of problems.

[00:20:13] Gary Bisbee, Ph.D.: You know, Bob, when I interviewed you in April of 2020, it was right in the thick of the first wave of COVID and you made the comment that everything was going to change. How do you apply that now to healthcare? What do you think the new normal is healthcare is going to be as an outcome of COVID?

[00:20:36] Governor Bob Kerrey: I don’t know. I really don’t. Among the things that comes out of this is I’m probably going to have more people grateful that they had their lives saved or didn’t get sick. And I think you have to hunt pretty hard to find a single man or a woman in America that didn’t have somebody, either that they loved who died or were close enough to it, that they understand that this is a virus that didn’t care. No virus does, but it wasn’t out there saying, well, I’m only going to infect this category. I’ll just get the Democrats or I’ll just get the side…we were all vulnerable. And so it heightens your awareness of how fortunate it is that that you’re alive and healthy. So I think there’s a number of other things that change. I think the workforce is going to change. I don’t know exactly how but I work for a small merchant bank in New York City, Allen & Company, and we’ve conducted an awful lot of business. And yes, it’s going to be great to see everybody again, but we had a terrific year in 20 and a terrific year in 21, and I think you really see it in healthcare, particularly in mental health where people are recognizing it may not be as good as going in to see the doctor, but sometimes, it’s going to be better because you’re going to be able to get the treatment and get the diagnosis and get the answers to whatever questions you’ve got. So, I don’t know what all changes are gonna be. The new normal is another expression that gives me the same feeling I have when somebody drags their fingernails down a blackboard, I don’t see any new normal I think we’re going to be changed. And hopefully, we’ll be changed for the better.

[00:22:06] Gary Bisbee, Ph.D.: Mitch, from your vantage point, what changes do you see happening in healthcare as a result of COVID?

[00:22:12] Mitch E. Daniels, Jr.: Clearly as in elsewhere, more remote work. Certainly a lot of the administrative stuff. I don’t know what the residual will be, but it’ll sink back some. As Bob says, there’d be some second thoughts about the value of having more, people back in physical contact, but I know we expect at least a quarter of our workforce to remain remote here. And I would think healthcare would look something like that. Telemedicine for sure as another phenomenon. It was there. You could see it coming. But it has been propelled by this phenomenon. It’s coming faster. I don’t have personal experience, but I know innumerable people who did, and they found it very effective, in some cases, more effective and certainly more convenient as people have now in shopping and other activities, trading convenience for personal direct contact that turns out not to be an unpleasant or unworkable thing at all. So I think we’ll see all that. Lastly, I could be wrong, but I think a lot of people have now had more experience with self, I’ll call it, the self-treatment, self testing, and so forth. And people may be a little more confident and a little more assertive about looking to their own health, looking around for alternative sources or multiple sources of information about whatever seems to be ailing them. A little more autonomy as opposed to having the first instinct being to turn it all over to the, deity like doctor.

[00:23:41] Governor Bob Kerrey: There was good and bad things going on independent of COVID. So on the good side, lots of innovation that’s occurring just in the healthcare space, somatic cell editing gene line editing, artificial intelligence. I mean, personally, I wouldn’t let a radiologist read an x-ray unless they’re using AI to read it as an example. On the bad side, presuming your audience is at least younger than me, Congress has done nothing about the cost of the liability for Social Security and Medicare. Medicare writes $900 billion a year in checks on $300 billion a year of income. It may not affect me. But boy, if interest rates normalize and when, I say, when they normalize, I mean, you’re going to have a very high fraction, some estimates 20% of GDP, just to pay interest on the national debt. So there’s some things, bad things, that have been going on at the same time that I think decrease the capacity of the country to deal with whatever problems we’re going to be facing in the new normal.

[00:24:38] Gary Bisbee, Ph.D.: Yeah, for sure. Well, on the cost of Medicare, there’s still 15 million baby boomers who aren’t even collecting Medicare benefits yet. They’re not 65. So,

[00:24:50] Governor Bob Kerrey: 10,000 a day, 10,000 a day.

[00:24:53] Gary Bisbee, Ph.D.: Mitch, you’re probably glad that you’re not the director of OMB right now, right?

[00:24:59] Mitch E. Daniels, Jr.: Oh for multiple reasons. Yeah. But you know, Bob is right and people have been writing books now for a generation about the intergenerational unfairness of our situation, specifically the safety net programs, but that’s hardly the only example. What we’ve just done in COVID is the latest, I think tragic, example. If a fair test of a just society is how it treats its children, we don’t stack up too well. And this is the latest instance. What we have done to the youngest in this society in a, I believe, over-reactive attempt to protect their elders is, I think Bob said, we’re going to be paying the price… young people will be paying the price, in perpetuity. So don’t get me started on that sermon, but it’s certainly applicable to the experience we’ve just gone through. And unfortunately that’s only the most recent of many examples.

[00:25:54] Governor Bob Kerrey: Yeah, I agree. One thing, Gary, that Mitch and I are working on together we started a couple of years ago at the peak of COVID is we identify a problem in the United States where the manufacturing capacity in the biotech space is insufficient to keep us with a comparative advantage to the rest of the world. So, I’ve been involved with creating a company called National Resilience. It’s an example of the innovation that continues to go on. By my lights, it’s a great source of hope, but it’s also a roadmap of how the government should be responding to crises like this. It’s a mistake to assume that anybody, I don’t care who they are, at the federal level, is going to be able to come up with an answer to…whether it’s a healthcare economic problem, that’s going to work for a nation of 330 million people. That’s not how we got to where we are today, and it’s not how we’re going to make progress in the future.

[00:26:44] Mitch E. Daniels, Jr.: Yah, by the way, just to pick up on another potential positive Bob mentioned a couple of minutes ago, but the miracle that these vaccines were produced as effectively as they were, and as quickly as they were should really, I hope, throw the doors open to lowering the barriers that we have historically put in the path of innovation like that changing our as we should have a long time ago, our methods for evaluating and determining which medicines and other medical treatments ought to be available to the public. If we capitalize on that learning, we could see a lot faster innovation, a lot more effective innovation in and out of crises, like the one we’ve just been through.

[00:27:30] Governor Bob Kerrey: I agree with that as well.

[00:27:32] Gary Bisbee, Ph.D.: We’re tracking with you. Here at Think Medium, we just started a show called Day Zero, where we’re interviewing founders, primarily of healthcare companies, as a way to promote innovation across all of healthcare. Back to higher ed just for a second, and then I’d like to move into this whole discussion of our partisan times, but we’ve seen in healthcare substantial consolidation across all verticals, really, health systems, health plans companies. Bob, Allen & Company have probably been active in that through the years. But what about higher ed? Seems like we’ve got more educational institutions than we can support. Is there any way that we’ll see consolidation in the higher ed industry?

[00:28:21] Mitch E. Daniels, Jr.: It’s happening and is likely, I think, to accelerate. As so often happens, people have identified this trend for a long time. Clayton Christiansen, one of the great thinkers about innovation and about disruption in markets over forecast this a decade ago. It hasn’t happened as fast as he thought, but we’ve lost 70 schools in the last five years. Many of them were, some closed, but many were rolled up in some other institution. I think you’ll see a good bit more of that. Unlike the market for healthcare, which at least for a long time is going to grow as we age, the market for higher education has gone flat, at least traditional higher ed. We are not having, in my judgment, nearly enough children in this country. And so the number of 18 year olds, the traditional market, has gone flat or even slightly down in some places. So, yeah, there’s a lot of pressure. There was a lot of pressure even before the rising skepticism over costs even before the perhaps mishandling of the pandemic. And the market is belatedly beginning to speak.

[00:29:25] Governor Bob Kerrey: Yeah, I think there’s two kinds of consolidations. One is small liberal arts colleges just can’t make it. Everything worked for 40 or 50 years or a hundred years, or however long and it no longer works. It’s not the worst thing in the world if a not-for-profit goes out of business. We don’t get all teary item and a for-profit company goes out of business and sometimes the not-for-profit doesn’t make it. In fact, my own view is, in some cases, a not-for-profit ought to put up a fuse and say, we’re going to do this for 10 years and then we’re gonna have to make the case as to whether or not we survive any longer. And I think there’s another thing that, particularly in the not-for-profit higher education, and Mitch is a great example of this, there are some times when there’s an advantage in participating in the for-profit sector. Your merger with Kaplan, I know it was controversial in the beginning, but I think it’s worked really, really well. And you might add a little detail on why you did it and what that’s done for Purdue.

[00:30:20] Mitch E. Daniels, Jr.: We did it because we believed that, first of all, as a land grant university, we couldn’t stop at age 22 or 22 plus graduate school. If the duty of a school like ours is to open the doors to higher education more widely then, in this century, that has to include the tens of millions of people who never got to college or who started college and didn’t finish. There are twice as many people in that last category as all the 18 to 22 year olds on the schools we all pay attention to. So that was number one. The only way to serve those people is remotely. Life won’t permit them to move back to a campus. So that was number one. Second, it was a buy or build decision of the kind businesses face frequently in healthcare, I know, all the time. We had, I thought, floundered around trying to learn the ways and means, mechanisms, of online education. And I just didn’t think we were ever going to master it or certainly lead it ourselves. So we saw a chance to leap into it by acquiring an entity that had been doing it well for a long time and so far so good. We have essentially as many students in what is now Purdue Global as we have on the campus from which I’m speaking right now, 37,000. But they’re completely different people. The typical student in that school is a 30 some year old single mother with a job and family responsibilities, but this is her one chance to finish or to achieve a credential that we know will help her really advance in life. So that was in a nutshell why we did it. Yes, it was not well understood at first, let me put it that way. Years ago, Bob, I was in public life and advocating things that were new and different, and that always unsettles people. And I don’t remember what the controversy of the day was, but a very good general principle I was taught by a farm wife in central Indiana, she said, Mitch, don’t worry so much about it. Dogs don’t bark at parked cars. And, uh, I’ve told so many people who’ve asked who are taking on important jobs, I said, like, don’t park the car. If you’re going to do that, let somebody else have a go at it. You should only take on that responsibility if you got some idea of why and some idea about how you’re going to make things better or different and barking goes with the territory.

[00:32:47] Governor Bob Kerrey: So Mitch, I presume you agree with me. One of the underappreciated things that American citizens do is to agree to be on boards of directors for higher education institutions. I presume for the moment you agree with that. Your board must have been nervous when you first made this proposal to them because here was some disagreement, as I understand it. First of all, would you advise our audience to say yes if a university president asked them to be on the board? And if they say yes, how would you advise them to behave in order to improve the effort?

[00:33:15] Mitch E. Daniels, Jr.: That was a very, very important question because I think most of the problems that we find in higher ed, and there may be some healthcare, I think there are some healthcare parallels. I’ve been close enough to a number of big systems and other big players, an insurer in one case. It’s a very useful and an important task to take on, but you should only take it on if you really plan to press for change. A tough love approach, way too many people in the higher ed space, I’ve said so often, some of the toughest business people, some of the most resolute professionals I ever met, go all squishy and wobbly in the knee when they get olde alma mater. And you know, whatever you guys think is best. Give me the 50 yard line seats. If you’re only going to do it out of affection, then probably you better let somebody else do it, especially at a time of great pressure on the system as now. And I believe I’ve seen some of that in some big healthcare systems that I’ve been around. It’s maybe less pronounced, but it’s there too. I mean, you should go in with a set of questions you really want to ask about how we’re doing things and how we can do it better and why it costs as much as it does and so forth.

[00:34:27] Governor Bob Kerrey: But how important is the board? The fine people that are willing to do that, how important is your board?

[00:34:32] Mitch E. Daniels, Jr.: Well, it can be fundamentally important. And again, I don’t think it’s any different in healthcare, but certainly in, the bylaws of every school I’ve ever looked at, the board’s word is law, but the boards too often have abdicated that responsibility, delegated it to folks who have acted too often out of self-interest and not out of long-term interest of the institution. Here at our place, the board’s involved in everything. I don’t want a rubber stamp board. In fact, the opposite. And when they put their chop on a decision, it’s permanent until some other board maybe changes it. It’s sort of like executive orders in the federal government. They’re well and good, but they can be undone at the stroke of a pen. So it parallels to a congressional statute. And the boards that take on that responsibility, I think, can make a lot of change and can be the kind of stewards that they’re supposed to be.

[00:35:20] Gary Bisbee, Ph.D.: Bob, you’re the lead director of the Tenet board. What role does that play? What are your main responsibilities as a lead director?

[00:35:29] Governor Bob Kerrey: Well, support the CEO and don’t pretend that you are the CEO. So, I think you need to know what you’re supposed to do, but in my view, it’s at least as important to know what you’re not supposed to do. So you have an obligation first and foremost, to evaluate the CEO. The CEO is doing a great job, you extend them. And if they aren’t doing a great job, you terminate them. It’s not the end of the world for them. You’re not doing any favor if they miss five straight quarters and keep accepting the excuse that the dog ate their homework. I think that’s the most important. The second, and it’s connected to what Mitch was saying, when I accept to go on a board, typically not for profit boards, for-profit as well, I just, my rule is I never have to quit because I’m only doing it for one year. You have to persuade me to do it a second year. And altogether too often, a board member thinks, oh my God, they’re not asking me to run for reelection. That’s not an insult. A board has to change. It’s gotta be changed. And we had to do a lot of changing in the Tenet board. But it’s got to change. So I say to the board, it’s not insulting if the nominating committee doesn’t want you to stand for election because it may be, in fact, it’s likely to be, that what we need today is not what we needed five years ago when you came on the board.

[00:36:36] Gary Bisbee, Ph.D.: Yeah, well, Mitch, you’ve been a lead director and went through some major changes at a company that we’re both together on the board. So how did you view your role there as lead director?

[00:36:48] Mitch E. Daniels, Jr.: With trepidation. It’s a very solemn responsibility. Everything Bob just said sums it all up. And I think in a healthy way, today’s boards, certainly in the for-profit sector and I hope this is spreading in the not-for-profit sector too, are taking those responsibilities more seriously than they used to. It’s not a social club. It’s not simply a support group or whoever the executives are. You’re expected, and you should expect yourself to know, with sufficient depth, how the entity is doing, constantly press for improvement, and be prepared, as Bob said, to step back if that’s not happening, or if there’s someone that might ask better questions than you’ve been asking.

[00:37:36] Governor Bob Kerrey: And Gary, one of the things that is on my list of things that I learned while being an elected politician, particularly 12 years in the Senate, and you learn to both do it, but also listen to people that are asking questions that are designed to show the audience how smart they are, not necessarily designed to try to help the CEO or whoever it is get to the answer to the question. And so, it’s something I do watch for. If I see a board member just constantly annoying everybody asking a question that reveals how smart they are, as opposed to…because it can be disruptive. Get one person that’s disruptive and it’s a problem. And so I take seriously the responsibility of, if somebody is doing that, of saying to the chairman and the CEO it’s time for us to make a change there because, if you force the CEO to do all those sorts of things, it seems to me it burdens that individual with things they shouldn’t be doing.

[00:38:28] Mitch E. Daniels, Jr.: I got to say that Bob, and this, as in many other respects, is a rare figure in this respect. That’s hard to do. And I guess I can look back and say there are times when I should have piped up or, let’s say a member or two who was either disruptive or simply not contributing. And it takes some nerve to do that, but it’s absolutely part of the responsibility. That’s a really important lesson you just delivered.

[00:38:52] Gary Bisbee, Ph.D.: Yeah. Let’s turn to politics for a moment. How partisan are these times? I hear people in the media talk about most partisan time since the Civil War and others talking about it in a different way, but how partisan are these times, would you say, gentlemen?

[00:39:08] Governor Bob Kerrey: Well look, I’m in some ways unsympathetic to a citizen who’s complaining about how hard things are, in part because I went through underwater demolition and SEAL team that was trained by a guy by the name of Vincent Oliveira and Oliveira used to say to us, “your easiest day was yesterday. And if you want to go to heaven, you got to die first.”So, democracy is hard. It’s not easy. It’s not for the faint of heart. “Oh, well, you know, they changed their mind. They went, they did said this one day and then another. It’s gotten too partisan and it’s difficult.” Yeah, it’s difficult. The founders had to pledge their lives, their fortunes, and their sacred honor to move forward. So, it is more partisan and it’s gotten especially sort of stacked up on the issues and become more difficult. But my goodness, if you compare today to the 1850s, there’s 700,000 men died during the Civil War. Look at the debate over whether we ought to go into the second World War that occurred in the 1930s. I went in the Vietnam War in 1969. There were people bombing buildings in 70 and 71 and 72. Part of the reason people can say it’s never been worse as they either don’t have any memory or no willingness to make the effort to discover what our history was. Look at our history. We’ve overcome a lot worse than what’s going on today. And the great countries, and we’ve been a great country, if you want to be a great country, you’re not going to do it by being afraid of having somebody criticize you or getting your feathers ruffled because things don’t quite work out the way you want them to.

[00:40:30] Gary Bisbee, Ph.D.: Mitch?

[00:40:31] Mitch E. Daniels, Jr.: Well, what to add? I mean, I also have limited patience for those people who, maybe because of no sense of history, don’t recognize we live in the safest, freest, most intelligent, best informed, best fed, most prosperous society that’s ever existed. Any problems we think we have are minuscule compared to those that even our recent predecessors and ancestors faced. So, I also am less alarmed than some people are. I frankly think that we’ve over politicized almost everything. Reference was made to this earlier. If at some point, people begin to realize that the important parts of life are not those that are centered in Washington or even in government. If they do become, for whatever reason, a little more self-reliant, a little more prone to look to private solutions or non-governmental guidance, it would sort of lower the pressure, lower the steam in the system a little bit in a very healthy way. I hope that can happen. But, yeah, I mean, it’s, been troublesome for years now and getting worse the extent to which people either focus on these questions and then translate differences of opinion into negative judgments about the character of someone else. We got to grow out of that.

[00:42:00] Governor Bob Kerrey: One more time to demonstrate something I learned in politics, which is to answer a different question than the one that’s been asked. So, I’m liberal on the question of immigration. And if you asked me, why do I want to bring more immigrants into the United States than the 1.3 million that have come in legally now, we need more patriotic people. The immigrant citizen is far more patriotic than the indigenous population. And I happen to be one of them. My mother did all the work to make me a citizen. And the immigrant population, they get the American dream. They understand what it means, what Mitch just said, that they’re safe, they can do whatever they want, they can say whatever they want. I mean, it’s a remarkable thing to go to a naturalization ceremony with people waving all kinds of flags coming in and waving one flag going out. It’s not phony. It’s real. Patriotism can be a bad thing, but if it’s somebody who loves the idea that they can live where they want, they’re going to be safe, and they’re free, that’s a big deal.

[00:42:59] Gary Bisbee, Ph.D.: Yep. I love that point of view. This has been an awesome interview, gentlemen. You’re both what I would call serial leaders. You just lead no matter where you’re at. What drives you?

[00:43:11] Mitch E. Daniels, Jr.: I think the most fulfilling thing for any of us is to have a sense that you left something better. Taught us in scouting, leave the campsite cleaner than you found it. In the inevitable difficult moments and grouchy moments, and believe me, I’ve had as many as any, try to remind yourself, I used to tell our team all the time in state government, we were in perpetual disagreement with folks as we tried to make a lot of change. And I had to find a different way to say it, but I used to say, just remember results are trump. And I need a new phrase now, but you know what I meant. What I meant time was before, much time passes, what people do remember, what you’ll remember, and what matters, is whether you actually move, some dirt around. Did you move the boulder forward or not? That really to me, is the essence of it. Ronald Reagan, for whom I worked a long time ago, used to say, some people seek high office to be something, others to do something. You want to be in that latter category. I tell young people here who ask this question all the time, I say, look, the first question is the why question. Why do you want to do that job? And “I” should not be in the answer. It’s not, I a have a passion for this, or I always wanted to serve. That’s all good. But the answer to the why question should start with “you” or “us” and how things are going to be better. If you’re lucky enough to get that done, afterwards, that’s all that’s really going to stick with you.

[00:44:44] Governor Bob Kerrey: Yeah. I went to a book party, Mitch, of a friend of mine, and I won’t identify who they are, but it’s sort of a partial memoir of their life, and it was 847 pages long. And the first person that introduced him said, if it had been illegal to use the pronoun, “I”, this would have been a 200 page book. I mean, I think the best organization, let’s say you got 10,000 people, you got 10,000 leaders. The best organization is, everybody’s a leader. And everybody understands that they’ve got permission to lead, to try something under the assumption that there’s two possibilities. One is it works. And the other is it doesn’t work. I used to say we need as many followers as we need leaders. But today, in my view, a great organization is one where everybody understands that they’ve got certain leadership responsibilities.

[00:45:32] Gary Bisbee, Ph.D.: Yep. This is a great place to land. We’re going to follow Mitch’s advice and we’re going to do it in Bob’s advice, which is everyone’s a leader. That’s just a great place to land. Gentlemen, thank you very much. I appreciate your time today, as will our audience.

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