Jamie Lewis (Host): Welcome to the Healthcare Executive Podcast from the American College of Healthcare Executives, providing you with insightful commentary and developments in the world of healthcare leadership. To learn more, visit ACHE.org. I'm your host, Jamie Lewis. And in this podcast episode, we're joined by Warner Thomas, President and CEO of Sutter Health, which provides comprehensive care to approximately 3.4 million patients throughout California. He's here to talk about the importance of company culture and how it is the backbone of any successful organization. Facing healthcare workforce challenges? From leveraging innovative staffing technology to optimizing your talent balance with flexible models, AMN Healthcare offers solutions to build a resilient, future-ready workforce. Learn more at amnhealthcare.com. Warner, welcome to the Healthcare Executive Podcast.

Warner Thomas: Hey, Jamie, thanks for the invite. Happy to be here.

Host: Great. Well, you've presented and guest authored a blog post for ACHE called The Most Important Job You Have as a Leader. Can you tell us what that job is and why it's so important?

Warner Thomas: Yeah. I think many times leaders think about, as a CEO or leader of your department or your area, that your job is to set the strategy to create accountability, and those things are critically important. But at the same time, you have to set the culture of your organization or the culture of your area. And you know, it's interesting, in talking at the ACHE Meeting several months ago, we talked a lot about the big C of culture is kind of the organizational culture. Like for example, here at Sutter Health, our organizational culture, but each part of Sutter Health has their spin on that culture. And each department, each area of our various regions, our various businesses, our home care, ambulatory surgery, yes, there are the principles of kind of what our overall culture is, but they also need to cascade through the organization. And so, every one of us as leaders plays a critical role to set the agenda around culture and to set the attitude and the way that we expect people to conduct themselves and the way we expect people to serve patients and to serve each other in our various areas. So, it's a critically important role of certainly CEOs of organizations, but it's critical role for any leader in their areas of responsibility.

Host: Well, how would you define a thriving organizational culture, especially within the context of healthcare?

Warner Thomas: Yeah. I think the idea that we like to think about our mission at Sutter Health is serving our patients first and our people always, because, you know, we exist to take care of our patients. And we retooled our mission statement last year, retooled our vision and values at the same time. And part of this was really to reemphasize and to make it absolutely clear that we exist to take care of patients, and we also exist to take care of each other so that we can do a great job taking care of patients. And if people don't understand why the organization's there, what's most important, how should we make decisions against what types of criteria, against what types of goals, what types of vision statement or goals for the future, then, frankly, it becomes complicated and confusing to leaders to make decisions. But if you have clarity about your mission and your vision, and you have clarity about your values, I mean, decision-making becomes a lot easier. Does this decision align with our values? Is it going to set us on a path to achieve our vision for the future? Does it align with our mission?

So, I think all of these components are components of culture, which is how we want people to conduct themselves, how we want people to behave, how we want people to tackle problems when leaders aren't around. So, it's interesting, a colleague of mine, Frances Frei is a Professor at Harvard Business School, talks about that culture is how people will act in the absence of their leader being around in the room in the department. And we want people to make sure they know what is absolutely most important, and how they should make decisions, when they're the ones that are on the front line having to make those decisions. And I think that's a big part of what culture is about.

Host: Can you share examples of how investing in company culture has directly contributed to organizational success?

Warner Thomas: So, I started at Sutter Health about 18 months ago. You know, I came in at the very end of November 2022. And, you know, I think there had been some challenges coming out of the COVID environment for Sutter Health, we saw a turnover. Then, at kind of an organizational high, it was near the mid-20s, as far as, you know, turnover, overall turnover. Engagement had dropped, engagement of our medical groups had dropped.

And so, we set on a path to create clarity for the organization and outlined what we call Destination 2030 about being the best place for people to work and spend their career, the best place for patients to get their care and to be cared for. We wanted to be the most digitally connected and digitally enabled organization and also embrace value-based reimbursement and global payments, and finally, to be a great resource for our community. So, we set the clarity around this. And, at the same time, then talked about our mission, vision, values and evolving our mission, vision, value statements throughout 2023. And what we saw is we saw a reduction in our turnover rate. We saw about a 14% improvement in our overall medical staff engagement, a 30% improvement in our medical group engagement. And also, about a 2% or 3% increase in our employee engagement across the organization. We had a great year economically. We had the best year ever hiring new physicians and clinicians into Sutter Health. And I think it was because people rallied around why we exist and rallied around being able to serve more patients and rallied around this idea of who we want to be.

And so, I think it just creates clarity. It creates alignment and then allows people to operate with more freedom, but with a goal about where they need to go and what they need to achieve. And so, it's been a rewarding 18 months. I think the team has done an incredible job continuing to drive change throughout Sutter Health. And, you know, I couldn't be more proud of our physicians, our clinicians, our leaders, and all of our team members at Sutter Health that are really working hard every day to serve more people in California and to have a bigger impact on healthcare and the communities that we serve.

Host: Talk a little bit more about the cultural transformation journey at Sutter Health. What lessons have you learned that could be applicable to other healthcare organizations?

Warner Thomas: I think a couple of things. I think, one, you need to look at the past and make sure that you are celebrating the past and bringing forward things in the past that are not going to change. Because whenever you're going through a lot of change, if you can be clear about the things that aren't going to change, I think that's important as well. So, we were clear that we were doubling down on ambulatory care, and we were going to expand ambulatory care. We were clear that we were staying in our health plan and we're committed to our health plan. We were clear that home care was important and that wasn't going to change. We wanted to grow and expand. And so, I think creating clarity around some of these things really help people to have more confidence, have more calm about the future, and really tackle the ambiguity of what we have going on in healthcare today.

The other thing we talked a lot about was, and spent a lot of time on, was investing in training and education for all of our leaders within the organization. And one of the things that was really important is talking a lot about accountability. And it's interesting, you know, Sutter is a relatively large organization. We have about 55,000 employees. I mean, in a large organization, there can be a lack of clarity. There can be a lack of what people understand. And we talked a lot with our leaders about the idea of creating clarity. This idea of, you know, you have to make sure the people around you understand what is required of them, what the goals are. And one of the first things I did when I got to Sutter Health was create clear priorities for 2023. We moved from 39 incentive plans to one incentive plan. So, there's absolute clarity as to what the incentives were, that we were driving as a system, we were integrating ourselves, and that we had clear priorities for 2023.

And then, we also went through a lot of education. If you don't understand the priorities, or you don't understand what's basically expected of you, then your job as a leader instead of just saying, "Well, they haven't told me. I don't know what's going on," is to seek clarity, to seek clarity above you, to the people that you work for. "Hey, I'm not quite sure on the goals and objectives. Can we have a conversation about it?" So, not only do you have to create clarity in your own area, you have to seek clarity above you if you don't have that clarity. And then, you need to cascade clarity through the organization to make sure the priorities of the organization are cascaded as applicable in your own area.

And then, the final is to confirm clarity, to keep setting up whether it's daily huddles, weekly team meetings, monthly operating reviews to check up to make sure things are getting done, that you have accountability, that goals are being achieved. And we just found this idea of creating clarity, seeking clarity, cascading clarity and confirming clarity really set up better accountability within the organization, and we've seen improved results across the organization at the same time.

Host: You talked a little bit about positive change. How do you plan to sustain and continue to evolve those positive changes in culture at Sutter Health in the future?

Warner Thomas: I think part of it also with culture is it's about setting rituals, right? And it's about creating the way that you expect the organization to work. So, for example, when I got to Sutter, there was not consistent monthly leader meetings with our top 3,000 leaders. And I'm like, we're going to have a leader Zoom every month. Then, twice a year, we get together in person.

But the point is that we're going to have absolute transparency. We're going to tell you what's going well, what's not going well, and kind of how our results look, and we're going to do it every month. And that's something that hadn't happened previously. The chat had never been open on Zooms previously, and we opened the chat so that we had absolute transparency around questions and Q&A, and I had the whole leadership team on the Zoom. So, everybody, if it was an HR question, our chief human resource officer would take it. If there was an issue around IT, our chief digital officer would take the question. So, I think the leaders saw that we were working together as a team and that we were transparent about tackling issues that were issues for the organization. And then, that kind of sets a behavior about what's expected of them. So, communication became part of that ritual meeting, twice a year in person, to celebrate achievements, to recognize people became part of that ritual.

And then, we also put in place a very robust talent management system of mid-year reviews, annual reviews, talent management, succession planning throughout the organization, that is becoming part of our ritual about what we expect in our culture and how we expect it to behave, as well as operating reviews in all of our operating areas, strategy, reviews and updates quarterly.

So, this idea of how you create this operating rhythm of monthly activities, quarterly activities, annual activities, really becomes part of the culture and part of how you want the organization to work and what the rituals are within the organization. So, all of those components are part of culture. It's not just putting four or five or six words on a piece of paper and sticking it in the elevators. It's about the behaviors that you expect, but it's also about what you do as an organization, as a leadership team. If you don't have a good evaluation system, then you're kind of sending a message to the organization that performance and evaluation of performance isn't important. You know, if you don't set priorities as an organization and communicate and follow up on those priorities, then you're sending a message that priorities and priority-setting for the organization is not important.

So, whatever you do and however you conduct yourself as an executive team and as a leadership team really filters down to how others will conduct themselves and drive results or what activities they take at a local level. And I think that had been one of the challenges, frankly, at Sutter is Sutter operated very much as a holding company, which a lot of different hospitals and our ambulatory clinics ran things differently in different parts of the organization. And we're very much moving to an operating company and have converted to an operating company model, being very integrated, and very consistent about how we approach things. I mean, adapting to what happens in a local market, but consistently running the organization, consistently having key metrics that we follow up on, consistently allocating capital across the entire system, which was a different way than how things have been done previously.

Host: All right. So, with all of that in mind, what are some practical steps healthcare leaders can take to create an environment where employees feel valued, energized, and safe to take risks?

Warner Thomas: You know, I think part of it is transparency and communication is a big deal. And I'll tell you, like one of the things when I had gotten to Sutter, when I got to Sutter, there had been a really challenging workday implementation. And instead of docking it, I mean, on an open forum with our 3,000 leaders, and then on an open forum with a thousand employees, they said, "Look, we didn't do a good job with this. And we're sorry that we didn't do a good job with it." I mean, just that transparency kind of goes a long way. So, I think, transparency is important. Clarity of goals and expectations and priorities is important. I think being clear about the rituals that you want to have and how you want to run your part of the organization or your organization, whether it be daily huddles, weekly meetings, reviewing performance monthly. You've got to have that, ritual and kind of all with the goal of where you want to go in the future, how do you define success three years from now, five years from now? Helping people understand we're doing all this work with a goal of ending up, in this place in the future, because then people can be aspirational and they can get behind that.

But I think, you know, this idea that it's somebody else's responsibility and culture's soft and it really doesn't matter. I mean, culture is a lot of the soft skills and they are the hard things to do and the hard things to do well, which is why a lot of people avoid them. But if you do them well, you create a sustainability of your organization, which is enduring long after I'm here or others are here. It becomes a long enduring component of the culture.

And I think the other thing that I would say also for all of us, and communicating this internally around being lifelong learners. We doubled down investing in our leadership development for our leaders. We put more resources into it at a time that was challenging, not less. And we put more into education for our people, not less, because we want them to understand education's important and we all have to be lifelong learners, and that's how we can get better over time. So to me, all of those things are components of culture, which lead to, positive momentum for your organization.

Host: You've attended and presented at ACHE's Congress on Healthcare Leadership for many years. Can you talk a little bit about what draws you to the organization and the value of your FACHE credential to you?

Warner Thomas: Yeah, I think being a fellow in ACHE, it's a huge honor. And it really is a distinction in the industry that I think a lot of people look for. It is a process you have to go through to pass and to achieve that credential, which I think is a huge accomplishment.

You know, one of the things about ACHE, I just find the quality of the meeting gets better and better each year and that the connection and the diverse backgrounds of people that come from the students that are there that are kind of, you know, looking at their fellowships to people coming out of the military and the service and what happens in our healthcare system within our Armed Forces and those areas to small hospitals, large hospitals, large systems, I think it's a diverse population of people that we realize that we all have a lot of things in common and we all have a lot we can learn from each other. And that to me is a really attractive component of being at ACHE. And I find it to be a great experience, a great place to network, a great place, frankly, to recruit and to bring people to Sutter Health. And so, when I'm there, I'm constantly recruiting, looking for great people because it's a great place to meet a lot of different people from a lot of walks of life.

Host: Well, thank you so much for your time, Warner. We really appreciate your insight.

Warner Thomas: Thank you. It's an honor to be here and honor to be part of ACHE. And thanks, Jamie, for the opportunity today.

Host: That was Warner Thomas, a fellow of the American College of Healthcare Executives and President and CEO of Sutter Health. This has been the Healthcare Executive Podcast from ACHE. For more information, please visit ache.org. And thanks for listening.