Kathleen Wessel (Host): The most successful business transformation isn't just about financial performance, business operations, and clinical workflows. It's about building smarter systems that fuel growth, support staff, and deliver better patient outcomes.

Hello and welcome to AHA Associates Bringing Value, a podcast from the American Health Association. In this series of podcasts, we speak with AHA associate program business partners, check in on their efforts and learn how they support AHA Hospital and Health System members. I'm Kathleen Wessel, Vice President of Business Management and Operations at the AHA. And today, I'm joined by one of those members, Theodore Scherpenburg, Chief Financial Officer at the Christ Hospital and Health Network in Cincinnati, Ohio; and Eric Kammer, Initial Health Partner at Guidehouse. Teddy and Eric, welcome to the podcast.

Eric Kammer: Thank you. Real pleasure to be with you. And Teddy, it's always great to have some time with you as well. Thank you both for having me.

Host: I'm really interested in kind of diving into your experiences. Today's healthcare environment transformation, not easy to navigate. That is an understatement, if I've ever made one. The most successful business transformations happen when hospital leaders, boards, staff, and hospital members are fully aligned. At Christ Hospital, you launched a mission for transformation. What was the driving force for that change?

Theodore Scherpenburg: Yeah, Kathleen, I think you touched on it at the beginning. And maybe for a little bit of historical context, quite honestly, I think transformation is something that's been ongoing my entire time here, you know, at the Christ Hospital, as we've tried to overcome just macro trends in the industry, whether it be shifts from inpatient to outpatient, aging population, which means, you know, shifts in our payer mix, annual inflation, you know, acceleration of technology and the like.

As everybody knows, margins have always been tight in the healthcare industry. We've never had much cushion to really absorb any significant changes outside of things that we had planned on. And so, really, I would say this transformation effort that we've embarked on was really driven by the pandemic and just some of the acceleration of inflationary pressures that that came out of the pandemic.

Going back pre-pandemic, agency labor, temporary labor wasn't a thing here at the Christ Hospital Health Network, we maybe had a little bit of nothing like what we've seen. And we put a little bow around it between '21 and '22. So, our fiscal years, we invested almost a hundred million dollars into our workforce, which was around a 20% increase in our salary and benefit costs. So, we went from about a 4% margin in '21 to a -2% margin in '22. And we had a 25% decrease in our days cash on hand.

And so, when you think about what I said at the beginning, this had become an annual exercise for us. Number one, we had taken advantage of a lot of the, I'll call it, low-hanging fruit. And we understood that we needed to accelerate the pace of change, but a much faster rate for really two reasons. You know, number one, we still needed the capital to make sure we're reinvesting back into our mission. And then, number two, given that we had had dipped into negative territory from an operating margin perspective, really our 135 plus year mission started to become at-risk. So again, there were a lot of driving forces. But again, primarily the pandemic and like most healthcare organizations, just some of the after effects really drove this transformation effort that we're on, and the pace at which we needed to drive that change.

Host: Teddy, you're right. I think your experience was not unlike many members. Really appreciate your kind of articulating the real specific instances and situations and challenges that you guys were dealing with. Can you both share with members a bit about your professional background, your journey? What led you to the collaboration between Christ Hospital and Guidehouse?

Theodore Scherpenburg: I've been at Christ Hospital now for 12 to 13 years. And before that, I spent a little bit of time at Ernst and Young out of college, a variety of finance leadership roles here at the Christ Hospital, but have been the CFO for the last five. And really, when it came to the collaboration with Guidehouse, there's probably not a lot of, I think, secret sauce, you know, in this. I talked about the fact that we thought we needed some help to accelerate the pace of change. Obviously, whether it be me or many leaders throughout the organization, we've had strong relationship with many business partners that we really leaned on to try to figure out who was the right partner, I think, for us or for change. And like everybody else, you know, we engaged those various partners in what we're looking for. We engaged constituents across the organization, the board positions, and other leaders.

Quite honestly, and Eric will probably laugh at this, Guidehouse was somebody I probably wasn't as familiar with as some of the other organizations plugged into it. But, you know, our former chief operating officer had worked with Eric and the Guidehouse team in the past and really brought them to us. And again, just through that process, they were the ones that we thought that had a great fit and gave us a great chance of achieving the goals that we know we needed to achieve to get things back on the right track.

Eric Kammer: Thanks, Teddy. And first, I'll acknowledge it's been an honor and a privilege to work with Teddy and Deborah Hayes, the CEO of The Christ Hospital and the team we've tried to operate as an extension of their great team and mutually focused on the goals as part of the transformation set forward

I, myself, am a partner within Guidehouse's Commercial Healthcare. I've had the great privilege of working in the industry for almost three decades and serving great organizations and great leaders like Teddy and Debbie. And just a brief about Guidehouse, so we're a global professional services firm focused in delivering advisory technology and managed services in both the commercial and the government sectors. And we serve companies across industries including healthcare, financial services, energy, infrastructure, and even national security markets.

Host: I appreciate that background from you both there. You know, as we look back on the year and a half transformational journey through your Forward 2.0 efforts, what do you believe were the keys to the successful launch of that program? And then, is there anything that surprised you or reshaped your approach as you went through that exercise?

Theodore Scherpenburg: Yeah. Maybe chuck it out into it too, and Eric, maybe I'll touch on some of, I think, the keys to success. And I would also say that I don't think we're completely successful yet. I would say that it continued to be there and ongoing. But I think the first thing that really drove some of our success was we had a lot of clarity on the why, both short term and long-term. And actually, Eric and I had dinner the other night and I was giving credit to one of our board members who really helped us understand the position that we were in. We weren't going to sort of overcome overnight. So, we set very, I think, thoughtful goals financially for what our recovery had to look like, which helped us I feel like not become overwhelmed with what we're trying to accomplish as we got back to-- or tried to get back to-- profit levels that were consistent with where we were, you know, before the pandemic.

And I would say the second thing too, again, we take a lot of pride in our mission and what we need and what we deliver on to the community. And so, not losing sight of tying that why, that financial aspect to that around what that why meant relative to our ongoing success from a clinical quality and clinical experience perspective. I would say the second thing too is having great teammates and partners, whether it be internal, the executive team, you know, the physicians, many throughout the organization from a leadership perspective, all the way down being great partners in this. And then, obviously, external partners too, like Guidehouse.

Three, I would say the overall governance model to help us support accountability throughout the organization, whether it be the board, subcommittee of the board, you know, the executive steering committee, which also included position leaders. As I mentioned, many of the executive team leaders, you know, raising their hand and stepping up to lead various work streams.

And then, the fourth thing I would just say is the continuous reporting out on the success. Again, if the chief financial officer, whenever you engage on something like this, one worry I have and one excitement I have is when I can actually go find it in the profit and loss statement, which then helps me draw that full circle back to everybody, but dipped to the why to show them how the improvement that we're generating is actually being reinvested back into the mission, the people, the capital that makes this place so special.

Kathleen, in your opening comments, you know, one thing you touched on too, related to experience and quality. And one thing too that's I think has helped made us successful, if we haven't taken our eye off, you know, experience and quality metrics. So all along, one fear you have is by embarking on something like this, will you be damaging something else that makes your organization or what you do so special? We've made sure that our balance scorecard, not only are we reporting out on the financial successes that we have, we've been watching closely the experience marks that we've set, as well as the quality marks that we've set as we've kind of gone through this whole process.

Eric Kammer: Yeah. And if I may add a few comments, I first want to acknowledge and recognize Teddy's comments on setting the why. I think as we set forth a couple of years ago on this respective journey, providing the context before the content really allows your broader team to get a sense of the bigger picture and rally around the purpose for the transformation. And then, routinely as Teddy mentioned, coming back to the why. Now here we are, you know, roughly two years later into the start of the journey and still coming back to what the initial why of this particular transformation as it related to the future of the Christ Hospital is.

I think the second thing is we acknowledge that we were going to prioritize efforts. We were going to do that early to help us set forth a plan, and a very intentional plan. So, we did an initial diagnostic together that provided a portfolio of opportunities for us. And then, we tried to be as exhaustive as possible. So, we looked at growth and cost and revenue and capital efficiency. And then, we prioritize where are we going to start and what's going to happen initially and what might happen days later. But we made that a living and breathing process, because we'd acknowledge that things are going to change and not every plan is going to be executed as perfectly as you said they would need to be.

And so, what's the process that we're going to routinely monitor or discuss and pivot as necessary? You know, a great example, Teddy and I routinely talk about, is we had some opportunities that we really wanted to focus on around growth. They have some very spectacular service lines that the Christ Hospital and its medical staff provide to its community. And there were some great opportunities to grow, but growth was complex and some of them just didn't happen as quickly as we were hoping to and seeing some of the benefit they were hoping to. And so, what didn't change was we the why and we had goals and outcomes we wanted to achieve. So, we had to pivot. And we had some other areas like what we were doing in rev cycle, that we had some chances to push a little harder and accelerate. And so, we created that pivot. And so, the prioritization itself was flexible in a living and breathing process.

And the last I would say that we learned is really cultural awareness. The Christ Hospital, it has a very special and unique culture. You could feel it, and that's really been a privilege to be a part of it and experience it. And as we started the collaboration, we intentionally talked about how do we embrace and work within the culture, not be a blunt object against it. And we acknowledge that we could drive and challenge change. But we'd have to do it within sort of the boundaries of the culture and take them along the journey with us. And so, I thought those were a few things I would add to the comments that Teddy offered.

Host: Great comments. Just the focus on reiterating the why over and over and over again and setting that vision, I think, is so critical to engagement overall and really lends to a successful program. So, you know, it sounds like you had all of the right parts in place there.

So when we think about meaningful transformation and that not happening in silos, you need all of these groups to be working together. You know, as you progressed over this year and a half, how did you bring all those stakeholders together, like your board, position leaders and internal teams to get into alignment? Teddy, you referenced each one of those groups previously. So, you know, what approaches helped build that alignment into the culture.

Theodore Scherpenburg: It hasn't been easy, I'll say that, and it's probably a little bit to your point, bringing everybody together. It's a little bit of a careful what you wish for too, but you know that it's sort of a necessary evil sometimes to make sure that you're driving the success out of the program and the most out of the program.

It's never been something that we sort of have done, I would say, off the side of our desk. And, you know, quite honestly, and Eric brought this up, you mentioned our CEO, Debb Hayes. She was our old chief operating officer, and she embarked on something like this, led something like this very similarly five years ago. And so, she had a lot of, I think, advice for us. And I think the first thing was we embarked on a pretty thorough road show, going back to all the same things that we just talked about, you know, with the why. And we went out, talked to the board, talked to many team members, talked to our management team, talked to physicians, just to create that awareness around the why. And then, quite honestly, then it just got down to putting things on the calendar with the various constituent groups so to make sure we were keep coming back to them and providing updates. So for instance, you know, at our weekly leadership team meeting, the executive team meeting, it's a standing agenda item.

And so, Eric, last, you know, he goes and meets with Debbie and checks in on the progress and he always comes up and says, "Sometimes I think that she knows more than he does about what's going on. But it's that thoughtful intent at those weekly meetings to provide updates not only to Debbie, but the entire executive team relative to what's going on, and quite honestly, hear from the executive team because they're leading many of the initiatives, what's going well and what's not, your standard monthly steering committee meetings, a couple of cool things that I think we did. Our medical executive committee meets every month. And we actually had physicians presenting out of the medical executive committee meetings on work streams that they've been a part of, and sharing the successes that they've had, you know, many maybe in the supply chain space or one that stands out was really around some redesign that we did with our block time. And quite honestly, one of our physicians came to our most recent board meeting because we present out at the board level too on the work, and gave an update to the board on some changes with plot utilization. So again, it's just been, I think, a very thoughtful process. We engage everybody and how do we give everybody a chance to really be a part of it and not only be a part of the work, but also be a part of, I think, sharing those successes that have come from it with all avenues of the organization.

Eric Kammer: I really love Teddy's comments because I think it's a testament to a lot of the little things and a transformation that when attended to and packaged together make a big difference. And one he was referencing, and I'll pull a little bit on, is communication right from the beginning, the board, the leadership team was very clear on the need for a very thoughtful, intentional, routine communication strategy. And actually, one thing that was very unique about the program that continues to be in place today is the Chief Marketing Officer, Jenny Collopy, is actually part of our core transformation leadership team, and it's unique as someone who's done many, many transformations over multiple decades, I've never had a chief marketing officer be one of the key leaders. I share that because it's been extremely valuable because the communication needs change. They evolve through, you know, the various stakeholders that Teddy had referenced, and having someone that leads that function in the organization right there with you to think about, how do we message this and what's going to be important, what's the context. And the why really has been a really, really valuable asset to the program.

I'd also say around communication, the leadership team pushed hard on we didn't want communication just to be one way, meaning we're just updating groups and we're just giving status reports. We wanted to embrace conversation and feedback and discussion. If there's concerns, let's put those concerns on the table. And as Teddy mentioned, they embedded that within their existing rhythms within leadership team, management team, board sessions. And so, hats off to those various things.

The other thing I really want to highlight that Teddy, the board, Debbie and team have done very well in my opinion is this recognition that transformation is not a quarter by quarter thing. There's a long game and it takes time and it's hard and it requires a discipline and a routine and a focus from the leadership team.

On that note is we have this executive steering committee, which is generally a monthly governing body that leads and guides our efforts within the transformation. Teddy starts each one of those sessions with a bit of a reflection on the why, the strategy of the organization, the long range financial plan, and the impact that our transformation could have on the future of the company. So, we never sort of lose, like, yes, we're focused on this month and the actions that we need to accomplish this month, but we constantly are tying it back to what's the bigger picture and what's the long run.

Host: Thank you. The detail in walking through that and actually, you know, as you are describing that, the example of including your marketing lead, I mean, that's a no-brainer. So, I appreciate those real life examples there. Finally, as you prepare to continue your journey moving forward, how are you thinking about the path ahead?

Theodore Scherpenburg: Yeah. And again, I think as everybody knows, you know, healthcare is not getting any easier. Transformation is ingrained in the way we operate and will continue to be. And so, we have our strategic plan. And we have our long-term financial plan goals that really underpin that strategic plan. And so, for us, it's really all about, I would say, number one, sustaining the momentum of success that we've had in certain areas and revenue cycle as Eric touched on earlier. There's one place that we've had success. And what I don't want to have happen is steps be taken backwards in the revenue cycle space, like we have to hardwire the work that we've done to ensure that that success is sustained. And that could be said about any number of areas across the organization.

The next thing is we had to continue to build out more opportunities across different areas because we know that forces that existed before the pandemic are the same forces, if not more, that we're up against now. So, I think we always have to continue to make sure we're feeding that pot of opportunity.

And then, I would say the third thing is too, we have to continue to figure out how we can scale our successes and how we use technology underneath to help us do that. So, how do we take processes that are maybe manual today within the way that we work, and how do we use technology to make our lives a little bit easier so that our resources can spend more time on continuing to identify new opportunities and transform operations for our organization.

Eric Kammer: And I might add a few comments on what I'm hearing and seeing in conversations with the leadership team at the Christ Hospital, and as Guidehouse works with other organizations across the country and maybe a little bit of a compare and contrast. And first in the path forward, there's this constant struggle to balance the short-term needs and the long-term broader strategy and focus. Obviously, that becomes more difficult as we see some of the regulatory changes and pressures from the government, of course, but it's so important, as Teddy mentioned, to connect the strategy to the long range financial plan, to your capital strategy, to your annual operating plan and your people strategy, and having a consistency of how the pluses and minuses work across those various plans, and then routinely measure, routinely adjust, routinely understand our performance.

The next is this notion of no more peanut butter spread. And what I mean by that is the age old or traditional, we're just going to have a 10% improvement or cost savings from all of our business units, and that's how we're going to address any gaps we might have in our annual budget. I think there's a recognition that that's inadequate. I think it's been proven enough that it's not necessarily an approach to sustainability and success. Instead, there's just a growing interest of how are we more precise. So, back to how do we understand where our opportunities are, how do we prioritize? And then, for those areas that we know are the capabilities or the services that fuel our growth or that produce the value for our organization, how do we actually fund them more and put more into those and maybe give them a little bit more of the pie in other areas. We just have to adjust accordingly.

The third is sustainability is key. Probably the number one question myself and my colleagues at Guidehouse get from CEOs across the country, which is, "Will these changes be sustainable?" We really need to address the way we work our processes. We cannot continue to just cut a little bit on the edges and react to the market challenges.

And then, the last point is there's a growing and significant focus on this new skills for middle management. So if you think about it, that's the real make or break for sustaining transformation, because these are the individuals that make hundreds, if not thousands, of decisions to serve patients, to deploy resources, to put out players, and they also have to see through the new changes. So if there's new technologies that they do embrace and new processes, and if we're not also appropriately modifying and increasing their skills, it becomes a breakdown. It becomes a barrier that makes it very, very difficult. And the probability for success of maintaining the gains is just significantly less. And so, those are just a handful of additional areas on top of Teddy's comments that we see in the path ahead for healthcare organizations today.

Host: I want to thank you both for kind of sharing the work that you're doing together. I think it's been really helpful to kind of walk through some of those challenges that you were experiencing and really how you pulled apart and really looked for solutions and worked together on trying to strategize.

Teddy, Eric, thank you so much for joining the podcast and sharing your takeaways with other AHA members. I do appreciate that. For our listeners, if you'd like to learn more about Guidehouse and the AHA Associate Program, please visit us at sponsor.aha.org. This has been an AHA Associates Bringing Value Podcast, brought to you by the American Hospital Association. Thanks for listening.