Joey Wahler (Host): We're getting to know Mike Lucas, Senior Vice President of Health Systems for a World Leader in Lab Management, Quest Diagnostics. 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. Thanks for joining us. I'm Joey Wahler. Mike, welcome. Great to have you aboard.

Michael Lukas: Hey, thanks, Joey. Thanks for having me.

Host: Yeah, we appreciate the time. Looking forward to it here. So first you got a master's degree in finance from Notre Dame. You later held various positions at General Motors and you've been with Quest since 2007. So first, what's it like being associated with such a major, well known American brand as Quest?

Michael Lukas: When I first came to Quest, the thing that really struck me, you know, you, you go in and you do interviews and you meet people and, you know, they talk about, their focus on patients, right? And ultimately that's who we service, right? Sometimes it happens through intermediaries, but it's definitely a focus on patients.

Coming from a large automotive company and, you know, I was, you know, in a role that was farther away from the people that bought your cars. But when I came here, it was so clear to me at every level within the company that there is a passion around getting it right because there's a patient on the other end of it.

So, you know, from that perspective, it's been uplifting to work for a company that, you know, truly has noble purpose. And, that part of it has been true for every day I've been here for 17 years.

Host: That's great. So you started at Quest as VP of Finance. How did you transition from that to now being VP of Health Systems?

Michael Lukas: Yeah, great question. I wasn't really expecting to find my way into a general manager role at Quest. You know, we were, back in 2012, we got a new CEO at the time, Steve Ruskowski came and, one of the things that he noted in the company is that, you know, how we were organized, we really needed to modernize our organizational structure.

So, you know, as part of that, we really reorganized the company and he approached me and said, Hey, we'd like to really focus on building a services business for a laboratory. And, primarily hospitals would be the focal point for that business and servicing hospitals. He, and some others that had come from large corporations, thought Services was a great opportunity for Quest to, you know, find a new business and a new platform for growth in the company.

So, he tapped me to do that. You know, my background probably, gave me some good foundational experience to go into that role. You know, I was employee one of a new organization inside of Quest.

And, you know, it's great news with that. You get to build your own team and you get to hand select everyone. And, you know, that part of it was good. And we got to develop a vision for the business. I think, you know, we were, early on had some ideas of, you know, what it might be and how it might work and what it might look like, but really it was a startup inside of Quest Diagnostics at the time.

So, we went about doing that and, you know, building a value proposition and, ultimately going into the market with that value proposition. And it, you know, took us a full year before we acquired any customers. But, what a journey it's been from a learning perspective, it's been tremendous from my perspective, but, you know, we've built something very valuable for Quest Diagnostics and we think our customers too. So, you know, it's been quite a journey. I think one of the things that, know, when you're building something new, right, you really, really need to be flexible. I think there's been some major learnings along the way for us that have been key to the growth that we've experienced as well as the relevance for our customers along the way. But, yeah, I wasn't expecting it, but it's been a fun ride.

Host: And so how would you best describe your role now with Quest? What's a typical day like for you, if there is such a thing for someone in your position?

Michael Lukas: Yeah, well, I think, when I look at what we do with health systems, we talked a little bit about that services business early on, but we also have a business that we would call our reference book of business where we're a laboratory for the laboratory of the hospital.

You know, they're gonna send out certain testing that they don't run, for a lot of reasons, but, you know, that's part of the business. The rest of it is the professional lab services business that we built along the way. I own both. So, making sure that both of those businesses are addressing issues for customers, you know, continuing to evolve. And obviously it's a big platform for Quest Diagnostics from a growth perspective, we think it's core to what we're going to do long term and short term and medium term as well.

So being, you know, making sure that we're good in that space is really, really important. So, for me, I could be cutting across any and all of those issues. And, you know, a typical day might be working with a new professional lab services client to structure something. Typical day may be reviewing metrics on our reference book of business to ensure that we're delivering for our customers. A typical day might be evaluating those growth opportunities and the pipeline of opportunities that we're looking at.

So, you know, really, honestly, it could be anything. And, while I'd like to be planful for every single day, you know, you got to pick up the phone when your customers call you and you know, you got to react.

Host: Sure. So what would you say the main challenges are right now for healthcare executives in general, and how are hospitals and health systems addressing those these days?

Michael Lukas: I think that coming out of COVID, well, number one, there's been a tremendous uptick in the cost curve, right? You know, if you think about COVID and what happened in, in that environment, I would tell you the supply chain got stretched and pushed and clearly, there was cost pressure in the supply chain.

 I think we've resolved a lot of the issues that were related to shortages and during COVID, I think we all dealt with those things and how to get, you know, the things that we needed to support the business and the customers that, and their demands. I think over time though, probably the most significant issue, at least short term, has been the impact on employees.

And, you know, if you're a healthcare executive or health care health system executive in any of the industries that support that; I suspect that your cost of labor has gone up significantly and acquiring the skill sets that you need to run your business has become significantly more challenging.

So, you know, those two things, have you know, created an environment, you know, honestly, that, you know, managing your ongoing businesses is tough. And I think that's true in our business. It's true for health systems. And we've had to get much, much more creative on attracting talent, retaining talent.

And, you know, as part of that, it's also become more expensive to operate your business because, you know, over time, I think wage inflation is up. I was reading a study from the advisory board, a couple months ago. And, you know, when you looked at healthcare cost; probably the biggest in most industries that support healthcare is employee related and employee related costs are up 15 percent year over year.

 And that was a study that looked at 22 to 23. Will be interesting to see what it looks like in 2024, but that dynamic in the near term has created a lot of cost pressure and a lot of pressure on everyone's bottom line. So I think, finding talent and retaining talent and the cost of operating the business is probably in the near term, there's a lot of focus on that with every organization. I think medium to long term, definitely sites of care shift, are relevant. You know, if you're a health system, honestly, the care shift is very significant. Like most, procedures, you know, we're looking for the right place to perform them and support a lower cost model, but providing patients better service. I think that's, you know, true.

On the health system side, I also believe that and in healthcare generally, this would be true; value based care, you know, managing a population over managing health over a longer period of time. It's going to require new tools and, you know, new thinking and new partnership models to get there.

I think, you know, we're all trying to work through that right now and figure out the best way to leverage that. I would tell you, our prior CEO used to use a term, healthcare is a team sport. I think as you get into some of these places on side of care shift and some of the longer term challenges with population health and reducing costs, you know, it's not more true than ever. Health care is a team sport. So I think the various players are trying to figure out how to make that work. And I think we're all engaged in, in various ways to facilitate that.

Host: Well, you did a great job there, Mike, because you also answered my next question or two, I think, in that last answer. I was going to ask you a little bit about Quest's expertise in working with hospitals and health systems on these strategic collaborations, et cetera. It sounds like when we talk about that and how you expect that to evolve in the future, one of the keys is just staying on top of what's coming next, right?

Michael Lukas: I think the journey that we've been on building professional lab services. I'll maybe talk a little bit about that. As we got into that business, you know, we really thought about places where we thought we could take our expertise and health systems in particular, leverage that expertise to drive value.

 Initially, you know, it was a lot of operations and operations efficiency focused. So, you know, like we looked a lot at network optimization and that might be about where do you perform testing? You know, you have a large health system with multiple sites. Does it make sense to run every test everywhere or can you do some consolidation?

Look, you you're going to need a lab at an acute setting, right? You definitely need a lab, but do you need to run every lab everywhere and can you consolidate and can you do that internally? Or can you leverage even a partner to help you, you know, drive network optimization. As it turns out, you know, that's probably a really big lever to look at if you're a health system and to drive value.

I think the second place that we really focused on initially was around supply chain. Every vendor that sells into the commercial lab space also sells into the the health system space. And, the instruments may be different sized and different scale, from that perspective, but it's really the same vendors.

Quest has incredible relationships and footprint with all of the vendors that sell into that space. So, you know, what we've found is that supply chain is another place where, you know, we could add tremendous value initially. And I would call that, you know, sort of operational efficiency as well.

And then our core reference book of business, most health systems use multiple vendors. And, ultimately, there's lots of reasons why that evolves, but there's definitely an opportunity to drive value through that lever as well. So I would tell you on the, our initial foray into helping health systems on the professional lab services side was very operational focused and, we've developed good content and good skills around that and I think we have a pretty good track record as it relates to that.

I think as we go forward, we're thinking longer term about sites of care shift, helping health systems build the tools necessary to manage populations and, drive value in other places. So, as we think about our services, we're definitely going beyond the test and trying to build tools and services that are going to help health systems, address some of the longer term and medium term challenges. Like population health, for example.

Host: So Mike, when we talk about these strategic partnerships, looking into the future; what are some of the things that are most pertinent moving forward here?

Michael Lukas: I think, you know, we live and breathe that every day. You know, we've been at this business for about 10 years now, maybe a little more than that, but, as you could imagine, these relationships tend to have a little bit longer term nature to them. And, as we've gone through contract renewal cycles, you know, it's very clear that our customers are looking for us to create more value.

And, you know, initially that operational step function that we're able to provide is great. And while there can be continuous improvement with it, I think, you know, our partners are looking for truly incremental value in a step function way and from an operations perspective, you're just not going to squeeze it from there necessarily without radical change or significant change anyway.

As we've done that, we've gone and started to really develop other solutions that are maybe lab related or near lab related, that go beyond just the operational efficiency. And I kind of alluded to that. And when we talked a little bit about long term and medium term needs and objectives and looking at solutions, but, you know, as an example, laboratory stewardship is a great, example of that. That laboratory stewardship, right test, right patient, right time.

That's one element of laboratory stewardship. That's important, right? It's important if you're thinking about. population management and building tools long term that are going to allow you to do that. You want to order the right test at that right moment in time for the patient, and that can be different in an acute setting versus an outreach setting, etc.

But having tools to help facilitate that and having the clinical knowledge to help facilitate that is really important. We've invested in developing a solution that is really going to help our customers deal with those issues. And, as we deploy that, we're learning more and more about it and we're continuing to tweak it and make it relevant. I think that's more relevant, but it's a building block solution for long term population health and, and being able to do that. There's others, right, for sure, but that's one that we think is important from a lab context perspective.

In addition, we talked specifically about lab stewardship, but there's a number of solutions longer term that we think are relevant to adding value to our customers. And, you know, at the end of the day, you know, what have you done for me lately is something that we think about constantly because, if you're not adding value to your customers, then it's pretty hard to expect to retain them. And I think that is, critical that we continue to evolve.

Host: So a couple of other things, one being as a healthcare leader, what was it, or who was it, or maybe a little bit of both that you would say most helped shape your leadership style? And how would you describe it?

Michael Lukas: Well, I'll tell you, like I I definitely have gone through transformation over time. You know, early on in my career, you know, I would, was very, very hard charging and, you know, very focused on completing a mission. And, you know, I would tell you that over time, I, and especially when you sit in front of customers, right?

You understand that you need to meet them where they are. So I would tell you that, you know, my leadership style, I, I still have, you know, a desire to complete a mission. But I think in the work that I do today, and working with health systems in particular, you better have honed your listening skills to make sure that you're solving their problems and not completing, you know, your objectives.

So, like, that to me has probably been one of the greatest transformations for me, and I would tell you that, you know, coming out of a finance background, I could certainly appreciate all the finance activities, but you know, when you are working with health systems in the lab space in particular, what you quickly learn is that the clinical elements, the operational elements, and many other, and the, you know, employee related elements become much more important than the financial elements.

And to really get to the right place with our customers, we need to be balancing that. And you can't do that without listening. So from my perspective, that's been some of my own personal evolution and journey. And, you know, I get an opportunity to put together these really complex relationships that are trying to tap into these longer term value creation plays and you got to be listening.

Otherwise, it's just never going to work and you're never going to be solving your customers problems. And if you're not doing that, then it's not going to be relevant long term. So I think that's a little bit of my journey and what I've learned along the way.

Host: Indeed. So many successful leaders like yourself seem to point out the importance of being a good listener. In summary here, Mike, let me ask you this. Quest Diagnostics is one of the ACHE's premier corporate partners supporting their mission to advance healthcare leadership excellence. So what would you say is most beneficial about that partnership?

Michael Lukas: I've gone to a number of ACHE events and I think, you know, the one thing you have to be coached on, for the first time, every single time you want to go in there and talk about all the things that you could do to help your partners or help the people that are there and it really is important to stay away from the sales pitch there.

But what's incredible is that it's such a diverse group of people and, you know, you're going to bring in healthcare leaders from all walks of life. There's a tremendous learning opportunity by attending these types of events and a networking opportunity that, frankly, you can't find, in many, many places.

And I think ACHE does a great job of that. I also would say that, any time that, as I've gone to these events and my colleagues have gone to these events and made connections there, you know, people really are interested in helping their corporate partners, you know, not necessarily sell, but understand maybe sometimes it's understand their perspective, but they're going to give you time a day.

And, you know, from my perspective, the networking aspect to it is unbelievable. You know, you can use these to understand problems at a deeper, more thorough level. And as you're, as we're thinking about the future, that's really, really important input. So, it's almost the voice of customer, if you really leverage these events is incredible.

Host: Well, folks, you're now more familiar with the latest in lab management while getting to know Mike Lucas, Senior Vice President of Health Systems for Quest Diagnostics. Mike, a pleasure. Keep up all your great work and thanks so much again.

Michael Lukas: Thank you, Joe, for the opportunity.

Host: And for more information, again, you can visit ACHE.org. If you found this podcast helpful, please share it on your social media. I'm Joey Wahler. And thanks again for being part of the Healthcare Executive Podcast from the American College of Healthcare Executives.