January 26, 2023
Peter McCanna believes it is not enough to preserve legacy systems; healthcare must evolve:
This episode was made possible by our partnership with Citi.
Dr. Gary Bisbee: Good afternoon, Pete, and welcome.
Peter McCanna: Hi, Gary. Glad to be here.
Dr. Gary Bisbee: Well, congratulations. You’ve just wrapped up your first year as CEO of Baylor Scott and White Health, which kind of brings up the question, how does your first year go compared to the previous four years as president? And what have you noticed that might be different about the CEO role than was different as president?
Peter McCanna: Yeah, good question. A couple of things come to mind. One, being a really big respons. To stake out the future and the vision of the organization. A lot of other roles I’ve been in the visions established, had some input into it, obviously, but I’m all in execution mode. How I achieve the vision and really the first step in my role was I need to sketch out the future. And then the second observation is the amount of stakeholders in the expansion of the number of stakeholders. I really needed to get to know and to needed to get their perspective. So the job was very very different in those two aspects.
Dr. Gary Bisbee: How would you rate the amount of time you’re spending just generally? , the stakeholders, getting to know the stakeholders and whatnot. What percentage, just off the top of your head, would that be of your time?
Peter McCanna: Wow. I mean it, I think it’s more normalized now being in the job a little over a year. But I think early on, I think, for the first three months, it’s probably half of my time and it’s. , it’s not just the board, our board’s about 20 people, but it’s key community leaders. And then internally we have 50,000 employees. We’ve got 8,000 physicians and other key leaders. And I think going into a new job, particularly if you’re an internal promotion, you really need to, in my view, you gotta. And it’s both important substantively, but also from a perception so people don’t say he’s just stuck in the ways he was, he is the same guy and stuck in the ways and beliefs he had before. It’s like, no I want to gather more information and perspectives and really look at this with a fresh point of view and mindset so that requires talking to people.
Dr. Gary Bisbee: So Baylor Scott and White clearly is a successful organization. How do you think as a new c e o about incremental change over time? It’s not like, this wasn’t a really successful place to begin with, but how do you think about incremental change, Pete?
Peter McCanna: This will sound counterintuitive, but I’m really rejecting the mindset of incremental change. So given the given. The inflection point that I believe we’re in healthcare that large legacy health systems like Baylor Scott and White have gotta stake out a future and drive to get there. So it’s a new destination rather than taking the legacy business as we did in the past in incrementally improving it all the time because it’s not a stable environment. Our belief is, and my belief is that really that intersection of consumerism and the technological tools really demand a new destination for healthcare where the customer’s in the center and healthcare’s more accessible and more navigable. So that’s not incremental. That’s a new place.
Dr. Gary Bisbee: So Pete, as you as a new CEO and you go meeting with your 50,000 employees and talking to them, and then all the stakeholders, is that your basic. Message what you talked about in terms of change and timing, and
Peter McCanna: it is it’s acknowledging the strengths of our organization that in the bed, in the clinic, when you’re one-on-one with a patient, that’s our strength. , I’m not being critical of that. I wanna embrace that and keep that. But once you get outside those environments, the message is we’re not providing adequate service to our customers. One example of that is what business, what service capability in the world issue. Proudly back orders every day. And that’s us. That’s us. When we make it difficult for you to access the healthcare system, we’re saying, I know you wanna use us, but we’re not available to you. And a lot of the difficulties in cost in healthcare is due to difficult and AC access. Hard to navigate, hard to know where.
Dr. Gary Bisbee: Pete, your drive for change, given everything that’s going on around healthcare, how does that feedback to your. Selection of your leadership.
Peter McCanna: One is it really requires really two things. The more, as I reflect on it, it does require people who are very experienced in the delivery of healthcare. because of its complexity. But yet at the same time, executives that are willing to change, actually curious about the new tools and capabilities, and have a mindset of transforming healthcare. They’re not protecting the old model. They’re embracing a new model, but they have enough experience to know how to integrate the new model into our environment. So finding those executives is really.
Dr. Gary Bisbee: Let’s go to succession if we could, Pete, the transition from your predecessor, Jim Hinton, to you as one of the smoothest on record. How did that process go? Can you just give us a flow of that process and why it was so successful?
Peter McCanna: I believe there was intentionality by Jim and by our board when I came to the organization and Jim’s Jim’s willingness to name me president. So as you’ll notice in Baylor Scott and White, c e o, and then I was named president and I think there was an expectation, there wasn’t an anointing, don’t get me wrong, but I think our board was, and Jim said, we’re gonna, we’re gonna invest in this guy and it will position Baylor, Scott and White when the day comes where Jim moves on, where we could have an executive within the organization. I think it, it sets a so I really give our board a lot of credit for that. It also sets an example for how we develop people in other levels of the organization and how, for me, I’ve got a goal and the, there are about 14 people in the senior management team. Each one of them has a goal to develop one or two executives such they are they are capable and ready to step into the next role. They’re not anointed. Cuz I think there’s a, if you go too far down that track, it’s actually demotivating to people. But that you’re taking a couple of capable executives and saying, I’m gonna invest in you.
Dr. Gary Bisbee: So back to the division between the c e O and President’s roles you’ve maintained that which is highly unusual, I would say, for health systems to have the divided role. What’s the rationale for that, Pete, with you being the c e o and somebody else being the president?
Peter McCanna: Yeah, I think there are a couple things that come to mind. One is the recognition of the complexity of large health systems. and that complexity to be able to move and transform and change at speed, at pace, frankly, is too much for one individual to be sitting at the top. It’s really a recognition of that. So they, if you have two individuals that compliment each other, so if you take Jim and myself, I think we complimented each other well and entrusted each. and now in our current environment, myself as c e O and Julie Kremer, we compliment each other very well. Julie comes up through a clinical background and I come up through a financial background and we trust each other implicitly. You can make the organization move much more quickly. be much more connected to that next layer of management and and also have the benefit of the broader thinking than just one individual.
Dr. Gary Bisbee: For sure. Let’s talk about Baylor Scott and White Health. Next. Clearly Baylor Scott and White Health has multiple regions. I’m sure that each region has a different operating model, different delivery model. How do you think about that, Pete? How do they differ a bit and how do you incorporate all of that into your overall Baylor Scott and White health strategy?
Peter McCanna: Our model is not hub and. , our model is define a market, and that market is defined by our customers and patients, not by us. So where do people seek care? And when you do that, you see the formation. So in a, in our case, for example, Austin is a distinctly different market than the rest of central Texas. So Austins of market DFW actually in our view is three different markets. Fort Worth, Collin County, sort of North Dallas and Dallas. And then you allow that leadership locally to have their own growth plan, to have their specific things around physician alignment and development. Cuz those dynamics are different. The amount of risk products will be different and the pathways to growth will be different and allow them to make decisions within that local market. But yet on the other hand, when it makes sense, clinical standard. Safety protocols, the way we do expense management, some of those things will be standardized through the system, but having enough flexibility locally for those local leaders to make things happen.
Dr. Gary Bisbee: So you mentioned the importance of the consumer a bit ago. How do you think about becoming more consumer centric, if I could use that term.
Peter McCanna: Yeah, I think you know, the first thing question we asked is let’s not look to other healthcare entities to answer that question. Let’s go outside of healthcare and look at businesses that are b2c fundamentally, cuz healthcare. Again, other than if you’re in our clinic or hospital bed, we’re not b2c, we’re b2b. We deal with payers and so on and so forth. So when you look at B2C businesses, what we’re learning and the, and our view changes all the time. As we learn more, they have massive investment in understanding what the customer wants and what they need. And for us, the other thing we. as part of that investment is b2c. Businesses spend a whole lot of time defining in detail the various customer journeys in their receipt and seeking services and understand in that journey, where are the pain, where are the moments that matter, and where are the pain points. So we’re on that journey to really learn. And understand the customer. And what we’ve learned early in this journey is that some of the customer’s requirements, if we did it the old way, we, and for a pain point, we would overcomplicate it. And what we’re learning is some of their requirements are just very simple and we need to listen to the customer and then deploy. And I. those solution to those pain points. And we really believe if we do that well, we’re gonna differentiate ourself and if we differentiate ourself, our customers are gonna be loyal, more loyal to us. So that’s really at the heart of it.
Dr. Gary Bisbee: How does that model how is it affected by. Expenditures for inpatient versus outpatient care going forward? Does that suggest that you need to increase your commitment to outpatient care?
Peter McCanna: Yeah. I think maybe more broadly, not necessarily just outpatient care but things outside the hospital, be it either delivery environments. Like the home or virtual, but also supports, as I mentioned earlier, supports around navigation, investment around navigation, investment in analytics where we’re personalizing to you investment in new products and services like chronic care management. Generally a lot of those investments will be out there while maintaining that inpatient excellence. The interesting part for us, given the markets we’re. We are big. Part of our capital investments still is inpatient facilities and enhancing those, given the growth we have in our market. But a little bit of both but really outside different channels outside the hospital, definitely.
Dr. Gary Bisbee: Do you think that one of the kind of effects of. The pandemic is that the health systems will take more public health responsibility going forward, or was that just a one-time situation?
Peter McCanna: Yeah, I think the answer to that is yes. I think what we saw in the pandemic and what we begin to see in our health equity work. That we exist in certain communities where there are big gaps in care for different specific populations. And I would call that a public health problem really. And I think we need to find where can we uniquely assist or solve some of those gaps. So to answer your que long answer your question, but the answer’s yes. I think we have an obligation to do that our. Drives us to do that as a Christian Ministry of healing at Baylor Scott and White that we’re looking for that injustice, let’s just call it in terms of health equity and saying, what can we do to narrow that gap?
Dr. Gary Bisbee: Let’s talk about consolidation for a moment. Most of the large health systems have been consolidating over the last 30 plus years. Baylor Scott and White has participated in that as well. What do you see going forward, Pete, either vertical or horizontal? Consolidation for Baylor Scott and.
Peter McCanna: I think if you believe we are in this inflection point. That the fourth industrial revolution, whatever you want to call it, is coming to healthcare, and healthcare needs to modernize around data-driven platforms, personalized platforms. You have to talk about consolidation because the new business model is based upon scalable platforms. It’s investing in the ability to take something and then dis sell and distribute it to a wide popul. Who builds that and says, I gotta stop at the Texas border, right? I gotta stop at the Illinois border. Many of the things that are being built and products and services have application nationally, if not globally. So I think you’ll see partnerships and collaborations come together as that happens.
Dr. Gary Bisbee: Pete, you mentioned chronic disease and the growth of chronic disease earlier. Let me follow up on that if I could. What comes along with increased chronic disease is increased federal dollars for all intents and purposes. The population ages. So how do you think a growing number of federal dollars and patients with chronic disease will affect Baylor Scott and white strategy over time?
Peter McCanna: The management of chronic disease is something that’s fundamentally broken in the US healthcare system, and I think it’s broken because, The US healthcare system, as we’ve talked on previous occasions, is driven by incentives of the fee for service model. And chronic disease really requires a partnership between the provider and the person with chronic disease. And the management of chronic disease needs to be easy. A diabetic managing their chronic disease is a daily. And it’s as fundamental as to the foods that they eat and the medications that they take on a daily and sometimes hourly basis. And that we’ve gotta make that easy. And if we make it easy and accessible and affordable, chronic disease management and the participation of the patient in that will go up and if that goes up, we’ll have better health. So chronic disease management actually lends itself better to, in a risk environ. Where the government money getting back to your question really comes and it’s more in an at-risk environment where everybody wins if the individual becomes healthier, as an
Dr. Gary Bisbee: For sure on that. Pete, how do you think about the large cap companies, the Walgreens, CVSs, Optums, Walmarts, and now Amazon? How do you think about them? Elbow elbowing their way into primary care fundamentally. And how will that affect Baylor Scott and White strategy do you think?
Peter McCanna: I really believe that this disruption will eventually coalesce. Into a partnership that health systems have with organizations like that, that patients don’t want all this fragmentation, that those health systems that are e able to develop really an accessible navigable. Ecosystem that provide you all the products and services you want, where and when you want it are gonna be the winners. And the winners and the customers are gonna want those. So I think as much as we see some of these disruptors as competitors, we have to be mindful in the short term, in the long term, our orientation is how can we evaluate all these companies, both large and small, and develop a partnership with what we believe are the winner. and if we can do that, we’ll ultimately provide our customers what they want in need.
Dr. Gary Bisbee: That’s a nuanced view that I think is the right one. Pete, no question. This has been a great interview. We really appreciate your time. I’ve got one last question if I could. For those in our audience who might be up and coming leaders healthcare leaders, what advice would you have for them?
Peter McCanna: I, I interviewed someone the other day who was coming right outta graduate school. Let’s just take someone like that and said, what’s the most important thing in your mind for. In my career at this point in time and I told them is most important thing is to have a great supervisor. So don’t worry about the flash of the title or even of the money. If you got a great boss earlier in your career, it’ll stick with you all the way. I remember my first boss. A guy by the name of Dave Kennel, he was fabulous and I learned so much. I apply it today to what I do. So that’s number one is seek out great people to work with that. That’s probably the biggest one. And the other is be open to grow, be open to move laterally and build out ir repertoire of skill and knowledge. Don’t think of it as a linear journey to the c. Move around, learn a lot from a lot of different things. And the executive of the future is gonna need to be very diverse in their thinking, very diverse in their skillset in order to be effective.
Dr. Gary Bisbee: That’s great advice and I must say that those that have the opportunity to work with you, Pete, are going to be very lucky.
Peter McCanna: I hope so. I hope I can attract the best ones. So
Dr. Gary Bisbee: sure you’re, thank you Pete. Much appreciated.
Peter McCanna: All right, Gary. Thank you.
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