The following is a transcript of my interview with Kevin Callahan. To find links to the audio files and more information about the interview, please click here.
Bonica:
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Welcome to the Forge, Kevin.
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Callahan:
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Nice to be here.
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Bonica:
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You studied history at Seton Hall in New Jersey and you
graduated magna cum laude. Does that mean you were a Jersey boy?
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Callahan:
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Jersey boy, right. Not in terms of the play The Jersey
Boys, but born and raised in New Jersey. Spent 26 years in New Jersey. I went
to Seton Hall prep school part of that, and then subsequently graduated from
Seton Hall University.
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Bonica:
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Okay. You studied history. Why did you chose to study
history and do you still have an interest in it?
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Callahan:
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I do. I actually have a very deep history. My particular
focus was in colonial American history, and in particular the influence of
the British and their sensibilities regarding governance and the impact it
had on early colonial thinking. I spent a lot of time, particularly, on
Thomas Jefferson. Really interesting gentleman in our American history,
suffice to say. Brilliant man in his own right. I also have a pretty deep
interest in the history of leadership across the different centuries.
Particularly the 20th century leadership, I read a fair amount. I have great
admiration for some of our great 20th century leaders from Teddy Roosevelt to
Theodore Roosevelt to Winston Churchill. Particularly right now I'm focused
on exploring and reading quite a bit about the battle of Briton, and Winston
Churchill's role in that.
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Bonica:
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Is that right? Great. After you graduated from Seton
what did you do?
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Callahan:
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When I was originally in Seton Hall and studying
history, I kind of dabbled with the concept that I'd like to teach, but I
also had somewhat of a latent interest in law and I felt as though that
understanding of history, focusing, in particularly American history, kind of
gave me a broad grasp of not only the organization of our country, but the
organization of its laws and how they were ultimately constructed, certainly
from the Declaration of Independence to the constitution, so forth. I kind of
had an interest in law, but I wasn't convinced either way, what I wanted to
do. From there I needed to work, and I knew that if I was going to go to
graduate school, either to study law or to study something else, I need to
kind of collect sufficient resources to get myself through graduate school,
so I started working in a hospital. My sister at that time was a nurse. I
thought, well, it's a good place to work. I would kind of figure out what I
ultimately wanted to go, what direction I wanted to go in. They paid well,
and I knew a lot of people that worked there. I worked a summer in the
hospital after I graduated.
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Bonica:
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What did you do?
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Callahan:
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I worked in hyperbaric medicine. I actually started
working there, now that I kind of reflect on it, I started working there my
junior year of college. Very active scuba diver. Spent a lot of time diving
around the western hemisphere. That got me interested a little bit in
hyperbaric medicine, and so I worked in hyperbaric medicine for probably
close to three, almost four years, between the last two years of college and
about two years after college.
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As I spent that time in hyperbaric medicine, and as a
result of that getting very much enmeshed in the organization of a hospital,
and how it ran. I was quite fascinated by it. I remember somewhere senior
year, toward the end of my senior year, perhaps, making an appointment to
speak with one of the administrators of the hospital to try to understand
what he did. We chatted at some length and that kind of piqued my interest in
understanding a little bit more about working in a hospital from a leadership
perspective. What it meant, what would be the necessary education
requirements to pursue to be able to fulfill that aspiration. That kind of
pivoted me away from law and pivoted me away from teaching colonial history to
considering a career in health care management. There I went.
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Bonica:
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Okay. You went George Washington, to get your, was it a
MA?
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Callahan:
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MHA.
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Bonica:
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MHA. How did you choose George Washington, and how was
that experience?
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Callahan:
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Well, the experience was phenomenal. It was just a great
experience. It was in part constrained, but I wanted to stay still on the
east coast. I had an aging parent. I had a lot of connections on the east
coast. Also had a lot of connections in Washington D.C. for a variety of
reasons. George Washington University, when I went down there to interview, I
was just really impressed with the faculty. Importantly, I was impressed by
the environment in which it was operating in, specifically the political
environment Washington D.C. was vibrant. At that time, I'm thinking back,
there was an enormous amount of work that was going on from a health planning
perspective. National health planning laws were beginning to evolve. Carter,
President Carter had just come in in 1976, so we were somewhat through his
term as a president and there was a lot of work being done from a national
perspective in health planning. It was really a hotbed of really a lot of
interesting work going on from a health care perspective. George Washington University
being in Foggy Bottom, merely being a few blocks away from the Capital, in
just a incredibly rich environment, politically, socially, intellectually. It
was just a great place to go and I like the faculty and I like the people
that I interviewed with. It was a pretty easy decision for me.
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Bonica:
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Yeah. You did your degree at George Washington and the
next thing I saw on your CV was Exeter. Did you do anything in between?
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Callahan:
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Yeah. I did two years post graduate work in Fall River.
You were required, and I still think you are at George Washington, you were
required to do a one year residency program. Kind of an insight to residency
where you spent time working in a health care environment for a year. My
first residency, you didn't really have a lot of choice in residencies at
that point in time. I was assigned a residency to go evaluate. That residency
was actually here in New Hampshire, was in Manchester. I came in to the
airport, I think it was about 35 below zero. The city had gone through an
incredible ice storm and nothing worked. I was leaving Washington D.C. where
most things worked, but not everything worked. I was particularly interested
in working in health systems that were merging or contemplating going through
mergers, through a merger. At that time, the hospital was a Catholic medical
center, which was a result of a merged hospital on the west side of
Manchester.
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I had a great interview there. There was just something
about coming this far north, in just what I considered to be really just kind
of gnarly weather and again being from New Jersey and spending time in
Washington. I was interested in the residency, but not maybe overly
enthralled. I came back and my professor at that point in time, conference
with him and said, "I don't think I want to go there." He goes,
"Well, I don't think you really have a choice." I go, "What
does that mean?" My professor said "Well, there's not many
residencies in America in the east coast that involve mergers. I think you'd
be best taking that one." I said, "I don't want to take it."
He kind of left it at that. He goes, "Why don't I give you some time to
think about it and then why don't you circle back to me."
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I did give it a few days and kind of did some more
thought, gave some more thought about the environment, both the hospital
system and the environment of Manchester itself. I came back to the professor
and said, "I'm not going." He goes, "Well there's a good
chance that you're not going to have the residency of your choice," and
I go, "Well, then that's okay. I'll figure it out somewhere or the
other." Probably about two weeks later he came back to me and he goes,
"We have residency opportunity." At this point, I think maybe he's
going to send me to Hades. "We have a residency opportunity for you and
it's in a place called Fall River, Fall River Massachusetts. I go,
"Well, sounds interesting. I don't know where it is, but tell me about
it." This was, again, a health system that was merging Union Hospital
and Truesdale Hospital, now Southcoast Health System, which includes New
Bedford and a couple of other health systems down there.
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It sounded really interesting. I came up for an
interview in Fall River, met the CEO at that point in time, and was totally
struck by the opportunity, the intellectual opportunity to really learn about
the merging of two organizations, both from a business perspective and
economic perspective, corporate perspective, but the merging of two very
different cultures. I spent two years there. One year I did my required
residency, and they asked me to stay and do a second year fellowship there,
so I spent two years in Fall River.
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Bonica:
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Okay.
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Callahan:
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I learned a lot there.
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Bonica:
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That's an exciting time to be in an organization when
you're going through that kind of change
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Callahan:
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It really is. There was a lot going on. I would have to
characterize it as an incredibly positive and incredibly negative learning
experience. You saw both the best and the worst of organizations trying to
come together organizationally. A lot of organizational in fighting. There
was conflicts amongst board members, conflicts amongst two different
communities. It was really quite interesting to see how two community assets
with their own deep rich traditions were attempting to come together and
create one entity. I learned a lot from that. It had also persuaded me at
that point in time that I don't know if I want to stay in health care.
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Bonica:
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Really? Okay.
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Callahan:
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I was going to go back and I kind of dabbled with the thought
of going to law school, so I took my LSATs. Did well on them, was accepted in
law school and was seriously thinking about going to law school to do
healthcare law. I liked health care. I figured I'd be really good in the
corporate side of health care law. Before I made that final decision though,
a good friend of mine, which will bring me up to Exeter, who is an executive
at this merged health system attempting to complete the merger, in Fall
River. He said, "There's an interesting place that I think you ought to
go take a look at. I don't know. I think you'd be a good lawyer, but I think
you'd be a better hospital executive." "Really? Where's that
place?" "In New Hampshire," and I'm like, "New
Hampshire?"
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Bonica:
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Not again.
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Callahan:
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Not again, New Hampshire. He goes, "Yeah, it's a
small organization, up in Exeter New Hampshire." I'm like, "Exeter,
New Hampshire?" I say, "Oh let me think about it. I'm kind of
thinking I want to go in a different direction." His office was down
from mine and he was good friends with the CEO that was up here at this time.
At least once a day, "You going to go up there and take a look at that
position, this is the position that's open. Take a look at it. It sounds like
a perfect match. You know if you don't like it, you can always leave."
Excuse me. "You can always leave and go back to go to law school."
"I don't know. Okay, I'll come up and interview."
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I came up and interviewed with the CEO at that point in
time, and I didn't really take the interview all that serious. It was maybe
more for the sake of satisfying my friend back in Fall River and out of
professional courtesy, because he had reached out to the CEO, this position
was open and vouched for my upstanding character as an individual. I was
convinced I wasn't going to like it when I first came up, but I was
surprised. I was surprised by the people that worked here. I was surprised at
the depth of their commitments to the community that they served. I was
curious to pursue it more and so I came back for a more formal interview with
the board chairman and, gosh, I think probably the entire organization at
that point in time. I was offered a position here. I committed to staying no
more than two years, because I wasn't sure how it was all going to work out
but I said, "I can make a commitment for two years." I committed
for two years and I stayed for 33 years, something like that. That's how I
got here.
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Bonica:
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Wow. All right. Let's talk a little bit about Exeter for
a second and then we'll come back to the organization itself. Since this
podcast is being listened to by people from outside New Hampshire, who
probably knew about as much about Exeter as you did before you got here. I'm
making you the temporary internet ambassador for Exeter and Rockingham
county. Sell us on the area.
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Callahan:
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Sure. Initially, as you can tell, I wasn't totally sold
on the area. Everything was frozen over and I decided I didn't want to come.
Cycle forward two years later and I come and I stay for 30 plus years. It is
a unique environment to be in for a whole bunch of reasons. The state itself
is relatively small, 1.3 million people in the state. The sea coast itself,
geographically is kind of a unique area. It's got a lot of things that I
like. I like to snowboard, so it's got mountains. I love the ocean, so it's
got the ocean. It is a community that is intellectually precocious. There's a
lot of very smart people that live in this community.
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There are a lot of people that are very committed to the
work that they do whether it's in healthcare or otherwise. It's a state that
is still trying to find its way in some ways in a rapidly changing global
economy, in a global society and a national society. It is deeply rooted in
some of it's very old traditions dating back to King George, perhaps. Yet
struggling to figure out how it plays a role in contemporary society, whether
it's in education, in the case of UNH and other educational school systems in
the state. In the case of health care. In the case of employment growth, it's
trying to figure out how it can maintain a contemporary role in the growth of
the state economy. It is imminently accessible. The legislative process is
imminently accessible. Leaders are imminently accessible. Every four years,
every presidential candidate that comes through New Hampshire is imminently
accessible.
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It's a fabulous place to raise a family. Boston is close
by. It really is just a fabulous place to be. For me, notwithstanding the
geography, who you work with, your colleagues really frame in many, many ways
how rich a life experience you're going to have. You've got your family for
sure, but you spend a third of your waking hours at least sometimes in the
company of your colleagues. You combine a fabulous geographic environment
with great colleagues to work with, that's why I chose to stay. I've
recruited executives from around the country. The 30 plus years I've been
recruiting executives in to this organization, not a single one has left.
They've come from everywhere. It is a unique place. Similarly, when we
recruit physicians, most stay. Few leave. It's got the right combination of
factors, I think that appeal to people that are looking for an environment
they can raise a family, raise themselves, grow, expand and have
accessibility to some of the brightest institutions in Boston and some great
institutions here. It's a great place to be.
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Bonica:
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All right. They recruited you.
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Callahan:
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They did.
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Bonica:
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What was your first position?
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Callahan:
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Executive Vice President. I was executive vice president
and as a result of that I served in an executive capacity whenever the CEO
was not present, but also had principle operating responsibilities for the
ambulatory services of the organization as well as the support services of
the organization. At that time Exeter was a relatively small organization. I
think we only had about 300 employees, I think we're somewhere around 1,700
at this point in time. In some ways it was a smaller organization. You knew
everyone and they knew you. In some ways that made communication that much
more intimate and direct. It's become a little bit more complex. It's become
more challenging as we've grown over the years, but it has not lost the
values that attracted me here as an organization, which kind of ties in to
some of the questions you had about culture. It's retained an intimacy,
notwithstanding it's size, that enables people to communicate and stay
connected as colleagues.
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Bonica:
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Great. What did you learn during that first five years
or so that you were here, that kind of prepared you for your next role, which
was CEO.
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Callahan:
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Sure. Yeah. That came pretty quickly. I think when you
come out of graduate school and you spend a couple of years post graduate
work, you think you know a lot. You think. In some ways, perhaps, more than
other people that had gone directly from graduate school without spending
time either in a residency or in a fellowship. In the middle of the battles,
I think in some ways I probably knew a lot more than most graduate students
coming directly out of the classroom setting, but I didn't have any idea how
much I had to learn coming in to this position. This was a relatively small
organization. I left a much larger organization in Fall River to come here.
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In some ways, I don't think I appreciated the total
complexity of any organization that no matter whether you have 100 beds, or
whether you have 1,000 beds, you have an amazing degree of complexity in any
organization you combine services with people and people with different
backgrounds and educational disciplines all trying to collaborate and
converge on providing patient care in an environment that is probably one of
the most regulated industries in America with enormous uncertainty over the
economics underlying healthcare. It created a degree of complexity I think
that I did not fully appreciate on the one hand. On the other hand, what I
came to appreciate is that leadership doesn't have to be necessarily complex.
I think being able to work in a small organization initially really caused me
to understand the critical essence of effective leadership that can
ultimately be multiplied over any scale of an organization. There are
elements that are true in any leadership position so that whether you're
leading a team, platoon, or whether you're leading 475,000 people in the case
of IBM, globally across different countries. There are elements of leadership
that ring true no matter what you're doing. I learned those here in a very
intimate and direct way. That was a real positive about coming here.
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Bonica:
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Can you give me an example of something that you learned
during that period?
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Callahan:
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Absolutely. The thing that people ask me about is what
is some of the most important leadership constants that you have to have.
There is no question what struck me is that leadership is incredible lonely
position at times. Not that you're isolated because people will look at any
CEO, any president, any leader and like you're surrounded by people all the
time and I am. It's like it's nonstop. It just goes nonstop. There is time
when I go out for a run or go for a bike ride, I don't want to hear anything.
I don't want to listen to anything, but you're decisions and the consequences
of your decisions are very lonely decisions at times. Even in the instance
where you're not actually controlling other elements of your organization.
You bear the responsibility for those elements and when something goes wrong
it's a very lonely time to recognize that truly the buck does stop with you.
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The thing that I learned a lot out of that is to be
comfortable in that loneliness. To embrace it for what it is. When there's a
singular level of accountability, there's a singular level of accountability
and with that a unique loneliness to yourself. You're alone with your
thoughts, your decisions, with your consequences. Learn to savor that and
learn to understand those feelings and learn from them. That was powerful for
me. I know one of the questions that you are posing, what are some of the
more difficult decisions that you've had to make. They're all difficult. When
you think about it, and I think the degrees of difficulty, maybe the more you
make the more sanguine you become. "Oh that wasn't all that hard,"
but when you step away from it and look at it, the consequences of any decision,
small or large, are always significant. Given the fact that you're making
decisions continuously, there are certainly degrees in which one decision has
much more greater significance or consequence than another. I really see a
decision that has to be made, that's a simple decision.
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Bonica:
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Okay. At your level.
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Callahan:
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At my level. They all have consequences and you need to
understand what those consequences are. In some cases you will never
understand the totality of those consequences until after the decision is
made. You're process, small or big, for making decisions is a continuous
process of calculation, of assessing the risk, of assessing the benefit. To
be able to do that in the moment, to be able to do that in a short cycle
time, or in some cases to do it over a long cycle time.
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Bonica:
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Give me a specific example of a decision that you're
talking about, so we get a sense of the scope of what you're talking about.
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Callahan:
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Sure. We make the decision, by way of example, we make
the decision to buy a laboratory, a for profit commercial laboratory, we
decide to buy. It was my predecessor, the CEO, said, "We got to buy this
laboratory." I, "Okay. Why should we buy it?" We kind of went
through the analysis and made the decision that we would buy the laboratory
and jointly acquire the laboratory with another health system, with another
hospital. That decision, both in terms the acquisition of the laboratory,
integrating our laboratory operations in to it, in to a commercial enterprise
both here as well as at the other hospital, having to significantly
restructure the laboratory, bring in professional management and elevate that
laboratory so that it could sustain itself had a multi-year consequential
chain of implications for our organization, all positive in many ways.
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Bonica:
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Okay.
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Callahan:
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It was a very successful decision to buy the laboratory.
Cycle forward, probably about 10 years later, maybe 12 years later. I
concluded that we should sell it.
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Bonica:
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Okay. Things have changed?
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Callahan:
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Things have changed. It was not necessarily a core
competency of ours. The valuation of the commercial laboratory had reached a
significant apogee, and it had become much larger than what we had
contemplated. It was providing services in New Hampshire, Massachusetts,
Hawaii, and it had grown significantly. We decided to sell our ownership
interest in it and probably got about a 500% or 600% return on our original
investment, still maintaining a contract with the laboratory to provide
services to the hospital's laboratory services as well. Pretty significant
consequential decision in terms of people, systems, other organizations. Just
as importantly, when you're at your high point, when you're doing the best
that you can, having the courage to say "Maybe we've reached the maximum
limits and we don't want to take any more risk associated with the
laboratory, and it's moving in a direction that's not necessarily within our
core competencies." To have that courage, insightfulness to say it is
appropriate to exit a business. It's hard for a lot of healthcare
organizations to leave something. We're creators. We create services for
communities and rarely do we abandon services or go in a different direction.
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That is a great example of that. Additionally, we made
decisions on investments in technology. We made decisions in investing in
services. Somewhere in your questions there you referenced the decision to
join Venture, to enter into an affiliation with Mass General Hospital for
radiation oncology and medical oncology. Those are decisions that we make
that have long term consequences to our organization. Hopefully we manage
that such that the consequences are all good and that it's beneficial to our
patients. In all instances, it involves people. It involves tens of millions
of dollars of capital equipment and capital facilities. The decisions are
pretty significant. That would be an example.
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Bonica:
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Okay. No, that's great. Let's talk a little bit about
Exeter health resources.
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Callahan:
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Sure.
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Bonica:
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It has three components that I've observed. The
hospital, core physicians, and Rockingham VA and hospice. Let's talk a little
bit about the hospital. How big is the hospital?
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Callahan:
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The hospital, which is the original part of the company
that's what had existed here for, it's probably been 110 years now. It's a
hundred beds. It was a hundred beds when I got here.
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Bonica:
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Oh it was.
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Callahan:
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It hasn't changed at all. There was great pressure on us
to increase beds. I have a somewhat conservative view of investing in beds,
largely because my view is that beds are expensive to build. You do need to
have them, but I had a sense many years ago that the pressures to reduce
hospitalization, reduce length of stay would create a situation where we could
have stranded capital, beds that are being underutilized. When you look at
some of the classic forecasting models for inpatient capacity. If we apply
those classic forecasting capacity models, we would have built another 50
beds, 150 beds. I didn't believe in those models, given what I saw occurring
over the horizon, in terms of pharmacological, technological interventions
that would transition a lot of inpatient care to the outpatient setting.
Demographics were changing. A lot of times the forecasting models are
significantly biased based on historical perspective.
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We decided not to expand our bed capacity. We renovated.
We invested in the existing capacity. It's 100 beds. Our length of stay is a
little shorter than four days. 60%, close to maybe 60% of our revenue stream
comes from the outpatient basis anyway. It's a little bit of a different view
point.
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Bonica:
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Okay. Core physicians?
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Callahan:
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Large multispecialty group practice.
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Bonica:
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About how many physicians?
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Callahan:
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It's over 100 physicians.
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Bonica:
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100 physicians and as well other kinds of providers?
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Callahan:
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Yeah. Other providers. Probably a total Nps, nurse
practitioners, physician's assistants, they have a total of about 500
employees, somewhere right around there, 400 employees. I think all total
providers, physician and non-=physician is probably close to 150 individuals.
We have employed physicians for 20, 25 years. We've been doing it for a very,
very long time. It's a model that I've believed in, in terms of a way of
integrating physician services into the healthcare delivery system.
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Bonica:
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That wasn't common 25 years ago.
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Callahan:
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No it wasn't common at all.
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Bonica:
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It's becoming more common now.
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Callahan:
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Well it is. There was also an extensive period of time
in which health systems shed their physicians that they employed because they
were losing a lot of money on them. There was a great build up in the 1990's
with health systems acquiring physician practices. Just acquiring them
without any rational basis of understanding why they were acquiring them, in
part driven by some of the reimbursement models that were out there,
particularly Capitation. That was out there. They didn't really understand
what they were doing and why they were doing it. They didn't have a long term
view point of it so as quickly as they got in, they got out as losses mounted
in to the millions of dollars. We have been doggedly pursuing the physician
employment model, because we believe that's a good way to integrate. We had
anticipated that because the changing demographics, most physicians at some
point in time, not all but most physicians would prefer to work in a
corporate setting where the volatility is reduced, relative to private
practice or small group practice. The ability to deeply collaborate is
enhanced because of investments in the EMR that solo practices or small group
practices can't make.
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Frankly, lifestyle choices of the whole new generation
of physicians that are coming in that have a different view of what work is
defined as. We've been providing physician services on an employment model
basis, as I said, probably since, I don't know, 1990 maybe, sometime around
there.
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Bonica:
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Core physicians doesn't just have an office here.
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Callahan:
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Yeah it's scattered around throughout Rockingham county.
My guess is I think maybe 14 office locations. I could be mistaken with that.
We have five, six, principle ones and then smaller satellite ones covering
all of Rockingham county.
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Bonica:
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These facilities kind of drive workload into the
hospital?
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Callahan:
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Well they do, and other facilities. Our physician group,
they admit mostly here, many cases based on patient preference, they don't a
lot of cases, for out in a peripheral area and patients prefer to go to other
communities. That's where they would be admitted. The ability to care for
patients in an organization that has an interconnected EMR is pretty
powerful. Patients sense that as well. Patients truly appreciate an
integrated EMR so that whether they're in a physician office or in the
hospital setting, the EED, patients have frequently articulated ways that
they can appreciate having a global view of their health status, so that
people aren't fumbling around to try to figure out who you are.
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Additionally, for a lot of specialty services that we
don't provide as a health system and so those patients are referred
elsewhere. We're scattered all over Rockingham county.
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Bonica:
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Okay. Then the Rockingham VNA and Hospice. Tell me a
little bit about that. How do we measure the -
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Callahan:
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Rockingham VNA hospice was an organization that was in
financial failure. They approached us about someway of incorporating them
into us. Home care has been an economically challenged industry generally. It
kind of goes through these cycles of feast or famine based on kind of the
political winds of reimbursement in Washington. Rockingham VNA had a pretty
deep history of providing home care services here as well as in the western
part of Rockingham county, and Merrimack county. They were in significant
financial distress. They approached us, approached me, we evaluated them.
Analyzed what changes would need to be made in the organization to make it
viable. We integrated them as an affiliate of our organization. Gosh, that's
probably now about, I'll say it's probably about 18 years ago, maybe or right
around there, 15 years ago. It's been a long time, needless to say.
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Our view about home care is that it would be a critical
asset to any health system that is looking to find alternative settings in
which care can be provided, and depressurize a very expensive acute care
setting, hospitalizations. We're able to shorten our length of stay because
we have a pretty significant outlet for that with home care. We had at one
point in time, also operated 125 bed skilled and intermediate care facility
which we closed down. We operated that for a long, long, long time. The
economics of that became, you talk about decisions that are consequential,
the economics of that became so pernicious because of inadequate Medicaid
reimbursement and declining Medicaid reimbursement and the sophistication of
care that we provide to complex patients, we had to make a decision to leave
that business. We closed that about four years ago now. Rockingham provides a
very sophisticated level of home care for patients.
|
|
Bonica:
|
What kind of things could a patient have done in their
home?
|
Callahan:
|
There's several things that can be done. Hospice care,
that can be done, obviously. A lot of care that is provided is to chronic
disease patients. Chronic diabetes, chronic congestive heart failure, chronic
obstructive pulmonary disease. You're dealing with respiratory support,
you're dealing with infusion support, pharmacological support, as well as post-surgical
follow up. We're able to discharge patients very rapidly from home,
appropriately so, but rapidly from the acute care setting to the home care
setting, knowing that we have a pretty sophisticated and competent nursing
home staff. If you don't have that you can't make the discharge. Frequently
patients will linger in the acute care setting, waiting for the opportunity
to be discharged at home. The home care setting in itself can be a challenge
from the standpoint of the sophistication of the patients, the complexities
of the family. There's a lot of challenges to home care as well, but it
provides, most people prefer not to leave the home. If they can receive their
care at home, they would prefer to do that. We enable that.
|
Bonica:
|
Okay. You took over as CEO after about five years. How
did you grow in to this role? That was a long time ago. That was in '85 so
almost 30 years ago, how have you grown in to this role? I guess I would say
if you could go back to 1985 and talk to your 1985 self, what would you tell
him, be prepared for this?
|
Callahan:
|
Yeah, exactly. I guess you're not well prepared for the
unknown things that come at you and they come from everywhere. If you were to
look at in from the standpoint of regulatory changes, the changes that have
occurred in reimbursement, the changes that have occurred in technology,
changes that have occurred in the way care can be delivered. I'm kind of the
person, that I just expect change to come. It's part of what I do. For me,
I'm actually in many ways more comfortable in chaos than not. I can connect
dots that people don't even see the dots, I can make connections, I can see
patterns, I can see trends. For me, what might appear to be complete
ambiguity is not complete ambiguity. There's uncertainty but there are
pathways that you can see emerging and those pathways represent choice points
for you as a leader and as an organization.
|
Bonica:
|
Is that an important skill for someone sitting in your
role?
|
Callahan:
|
I think it's a critical skill. You can manage by the
numbers. You can lead by the numbers, but the numbers lie all the time. If I
followed the numbers, we would have built the beds.
|
Bonica:
|
The extra beds, right and they would have been wrong.
|
Callahan:
|
They would be empty. Numbers are important. They kind of
give you a reference point. It's by the singular greatest creation of mankind
is mathematics. It's such an interesting extraction. They're reference points
for an organization, but you could look at, if you think about even digital
computing, there's zeros and ones. That's all they are, and yet you think
about the complex tasks that zeros and ones can perform if arranged in
patterns. What I think as a leader is to be able to transcend the numbers.
The numbers will certainly in some cases maybe reinforce your tuition. I'm a
very intuitive leader. They can maybe cause you to pause, kind of a hard
quantifiable data causes you to pause and maybe to think a little bit more
deeply. I think a significant part of leadership is intuitive, it's
emotional, not to be emotional, but there's an emotional component to it.
Especially in healthcare where you're trying to understand the consequences
of your decisions on human lives and communities. I think there's a good part
of it in which you need to know when to have risk on the table and when to
take risk off the table.
|
I spend, and I think a lot about things that may not be
apparent on a sheet of paper. I extract things from a lot of different parts
of the economy, a lot of different parts of the political environment, from a
lot of different areas. I assemble them in my mind to a sight picture. A
picture of what you see and how you envision the future, how you envision
even the opportunities that are going to face you today. I think it's very
important to be intuitive, to be able to make connections to what might
appear to be abstract things that at some point in time in the future
converge and create opportunity or threats, to be anticipatory. I think those
are really, really important.
|
|
[00:39:03]
|
Any single leader, any single CEO can sit there and read
a sheet, read a financial statement, kind of do the financial analytics that
need to happen in any organization that generates revenue and has a revenue
cycle with it, but it's a lot more than that. For an organization such as
healthcare where it is powerfully grounded in people doesn't lend itself
easily to automation for a variety of reason at this stage. It is powerfully
grounded in people taking care of people, doing things to people with all the
frailties of human endeavor that are not easily mechanized. With all the
uncertainties and recognizing that no human endeavor is ever free and
recognizing people do things in the care of patients that also come from a
deep emotional commitment to their profession. I think being a CEO, being a
leader in healthcare requires a lot of complex skills but I think above them
all is your ability to intuit and your ability to anticipate and your ability
to be flexible about the future.
|
Bonica:
|
That sounds really interesting. I'm sitting here
listening to you talk about that, and it sounds like you're interest in
history kind of comes back around
|
Callahan:
|
Right, comes back around. It does. Sure it does.
|
Bonica:
|
You're doomed to repeat it, if you don't understand it.
It seems like the kind of intuition that you would have gotten, or maybe the
kind of intuition that you had would have interested you in history to begin
with maybe.
|
Callahan:
|
No question about it. You think about great leaders and
there's a lot of things they have in common. You're ability to connect to the
people that you lead is really critical. I tell people this and Exeter is an
organization that's had its ups and downs. The environment is remarkably
challenging. Leadership is easy when things are easy.
|
Bonica:
|
Sure. Right.
|
Callahan:
|
It's when it all goes south, when it goes wrong and it
is then that you really begin to appreciate how people look to a single
person, to assure, to find a pathway to correct the situation, to provide an
alternative to the position that they're in. There's no one else that can do
that at that moment. If you think about the great leaders who were able to
execute on the opportunity that was presented to them historically, they were
able to do that. Whether it's Roosevelt, whether it's Shackleton, whether
it's some of the great military leaders of our time who through the playbook
away and understood that they had to deal with what was presented to them and
improvise. It's really quite striking. I really think about anybody that's in
an official capacity of being a leader, doesn't mean necessarily that they
are a leader. Opportunities are thrown your way, they come your way to give
you the opportunity to be the leader. You have to choose.
|
Bonica:
|
Okay. Let's talk just for a minute about governance.
Exeter Health Resources is a nonprofit entity. You have a board. Talk a
little bit about the board, your relationship with the board.
|
Callahan:
|
Sure. The board, most healthcare systems as you know
have a governing body. The board for Exeter Health Resources is a relatively
small board compared to what you might see in some healthcare organizations,
it's about 13, 15 people. It has several critical responsibilities. Number
one is to establish the policies that govern our institution to ensure its
viability, it's sustainability from an economic perspective. To ensure that
it provides quality care that our patients, customers come to depend on. To
ensure that we are conducting ourselves in an ethical way, in a compliant way
relative to regulations and laws. To evaluate leadership, most importantly
the CEO, and ensuring that the leadership is present to execute on those
policies and to provide guidance for the board to think about as policies are
formulated.
|
We work very hard. I work very closely with the board to
ensure that the board is diverse in its view points and has a skill set that
represents our future demands. We have board members that periodically turn
over as we look for the skill sets that we think are important for governing
body, governing in 2016, 17 and 18. Continuously evaluating how do we ensure
fresh sets of eyes to consider our organization, different perspectives. As I
said, to also encourage, embrace diversity of thought, intellectual diversity
of viewpoints. That creates challenge for leadership, CEO.
|
|
I've been here for 35 years and I can't tell you how
many boards have turned over, over that time. Yet, I think what's important
is that as I work with the boards is to continue to sustain our values as an
organization when we look at someone, when we evaluate a board member. How do
they represent or match to our value system and things that we hold as
important to our organization. It's no different than when you evaluate
anybody that you bring in to an organization. A leadership position or in a
board position. How do they advance your capabilities as an organization? How
do they syncopate with your values as an organization and how do they bring
intellectual rigor to the decisions that loom in front of you.
|
|
We've been very fortunate over the years to have just
amazingly competent board members. Just amazingly competent.
|
|
Bonica:
|
Are they all drawn from the community?
|
Callahan:
|
Yeah. They are. Local community being within 30 miles.
|
Bonica:
|
Okay. You have a unique viewpoint having been here for
an extended period of time. You have been able to kind of stay ahead of the
wave in a lot of ways. You made it through some major kind of seismic kind of
changes that you mentioned. The shift to perspective payment. Big shift to
outpatient care, you saw that coming, you avoided it, or you embraced it.
|
Callahan:
|
Embraced it.
|
Bonica:
|
Rather than avoid it. You avoided making the mistake of
continuing in the old way. Now you're kind of in the midst of adjusting to
the ACA and the implications of that policy change. Kind of talk about some
of the big changes that have happened during your tenure and how Exeter has
kind of thrived on them.
|
Callahan:
|
I think it's probably part of the reason why I've stayed
here. It's like I said, I thrive in ambiguity and chaos. At some point in
time you've got to make a decision, but that stimulation of uncertainty and
volatility creates an opportunity all the time. It just does. It's a question
of how you, what pathway you see and which one you choose to take. There are
a lot of regulatory changes that certainly have happened, whether it's DRGs,
whether it's APCs and the like and obviously now the affordable care act and
all of the sequella that come from that. Some of the changes that occur are
done to you. It's like taxes. You pay taxes. DRGs you got DRGs, APCs, you got
APCs. You got ICD-10, you got ICD-10. It just goes on and on.
|
There is an expected and predictable regulatory burden
that has a consequences to us in terms of the changes, but you have to take
those in stride. It's kind of part of the scenery, I guess. I have enormous
intolerance for people who complain about all the changes that are happening.
I always think well, what's the alternative to changes? Horse and buggy? I
just don't know what the alternatives are.
|
|
For me, the speed of change is actually striking in some
ways. As an industry, however, when I think about the healthcare industry we,
if you think about the changes, certainly in my career, maybe I'm just
becoming kind of diminishing the significance of some of the events that
happened in the 70's or the 80's or the 90's. I'm sure in the moment they
were probably quite astonishing to me, and yet when I look back, in some ways
it's an industry that has remained relatively unchanged. It's new facilities,
couple of new imaging things here and there. PET scanners, CT scanners or MRI
scanners, but in a lot of ways it's remarkably the same. We got computer
terminals, and we got EMR, but in a lot of ways the work that we do here
isn't significantly different.
|
|
It's work that has existed, in some ways it may have
been automated as a result of emails and networks and so forth, but the front
end of my career, where a lot of people think a lot of change happened, I've
come to conclude that it's not going to be like anything compared to the
change that's going to happen, which I do think is going to be deeper and
more transformative.
|
|
Healthcare has been on this really remarkable ride. When
I started in healthcare, when healthcare spending was going to hit 10% of the
GDP of the country, all hell was going to break loose. We wouldn't sustain
it. 20% now, three trillion dollars a year, plus or minus. Healthcare for the
longest period of time has enjoyed enormous economic advantage as it has
garnered resources from other sectors of the economy. Who can't thrive on
compound annual growth rates at 6% to 8%. Apple thrives very well on those
kind of compound growth rates. The auto industry is pretty content with 1% or
2% compound growth rate on units sold on average.
|
|
Healthcare, it's just amazing. It's just been great.
Population grows, they want more healthcare, there's more technology, fee for
service reimbursement, Social Security Act, Medicare and Medicaid, commercial
insurance, employee sponsored plans. Really it was an amazing period in
which, I think about what's gone on in terms of QE2 with the stimulus in to
the economy. Why are we surprised that we're at three trillion dollars a
year? I think about that and it's been a period of certainly changes, but not
kind of the deep transformative change that really sets the industry in a
very different direction. I think we're on the verge of that.
|
|
Bonica:
|
What are the things that -
|
Callahan:
|
There are many factors that are driving it. In fact, as
I presented to one of the UNH classes a couple years ago, and I put a picture
of a Chinese ministry official up there and I said, "Do you know who
this guy is?" Nobody new. He's one of the most important factors in the
United States economy. It was the Chinese finance minister. He makes
decisions on how much treasuries they want to buy, how much US securities
they want to buy, how they want to invest in the United States. That man
alone, this is a little facetious, probably has more impact on what's
happening in healthcare than anything else that you can imagine. It's not
that alone, I was using that more for hyperbole.
|
Whether you think about the global interconnectedness of
economies, you think about the United States industry that historically has
been largely insular from that and as a result of that, has been able to
afford greater benefit expansion that has occurred and the wage expansion
that had occurred up until probably the last ten years. The United States
still is the world's largest economy, but that's changing. It's being
globally challenged as a dominant economy. We are significantly in debt.
There's a lot of views as to whether that's good or bad. Technology's just
truly disruptive technologies which enable the consumption of healthcare to
be displaced, regardless of geography and time is pretty significant. That is
only starting to take hold.
|
|
Bonica:
|
Telemedicine kind of thing?
|
Callahan:
|
Telemedicine, classic example. Telemedicine is a classic
example. Take a smartphone, six billion transistors on a single chip on your
phone. It's very intelligent and can change a lot about the way that
healthcare is consumed and the way it's evaluated.
|
Bonica:
|
You think mobile, maybe, is going to be -
|
Callahan:
|
It already is.
|
Bonica:
|
It already it.
|
Callahan:
|
Swipe your card, forty dollars you get a physician
consult in 90 seconds. Transformative. Anytime you can just change the time
and place of consumption it's really a remarkable event. It really is. If you
think about healthcare, it's always been predicated on physician office, nine
to five. That's when you go. If you get in within two weeks, consider
yourself lucky.
|
I can't quite say whether the cabbies out there fighting
against Uber, but I think it's going to be that transformative. I think even
beyond that, however, and that's just one aspect of it, the deep
investigative resources that have gone in to understanding disease at the
cellular level, at the molecular level, almost at the kind of protein level,
and the work that's going on there to truly understand how disease proceeds,
how personalized it is and how to intervene with disease is going to find
expression over the next ten years. It's going to be pretty startling. How we
afford that is another question. Nonetheless, it's emerging. I kind of look
at it as a convergence of many, many macro, micro economic considerations,
enormous societal implications, technology and it's like, when I talk to
people I say, "Why do you think healthcare is not going to be
transformed like virtually any other American industry? Why do you think
we're going to be immune? Why should we be immune?"
|
|
Transparency of data. We just had this discussion this
morning. Patients, shortly, if not by federal or otherwise, by absolute
demand, will have access to every single piece of information regarding their
care within a day. Four days at most. Some institutions are making it
available immediately. What has happened, in some ways, is that healthcare
has been able to regulate its own destiny, one might argue to ensure its
destiny through the collection, dissemination, and control of information.
It's the ultimate definition of a profession in some ways. That's being
shattered. When you have an empowered consumer who is knowledgeable, and if
they're not that knowledgeable about their healthcare are enabled through
expert highly powered drive algorithms driven by the Watsons of IBM world.
It's an amazing thing. It's amazing consumer driven healthcare economy. That
changes everything.
|
|
Bonica:
|
Consumer driven, you think is -
|
Callahan:
|
I do. I think it's going to be a very, very powerful
factor. We all want to be taken care of when we're sick. We all want to go
someplace and we want to be taken care of, but when you actually look at
healthcare consumption is significant. An overwhelming part of healthcare
resources go to banishing this small part of the population. The vast
majority of the population doesn't really consume a lot of healthcare until
later years of their lives. In that period in which they are not acute care
consumers, they're not chronic disease healthcare consumers, they're
relatively well healthcare consumers. They consume healthcare. They're mobile
and they can be enabled through information.
|
As a result of that, they're expectation of the delivery
system changes. "What do you mean I have to wait two weeks? What do you
mean I can't get my CT scan image tomorrow. What do you mean I won't
understand what I'm looking at? What do you mean I have to wait for you to
tell me what's wrong with me? Why?" I made this comment to a group this
morning, we have always articulated as an industry, well the medical records
are always the patient's. When you think about it, in the old days when the
medical record was a paper record, it was in a chart and it was kept in the
nurse's station. It wasn't kept at your bedside so you could read it. That
was kind of the penultimate insult to the notion that the patient is the
owner of their medical record information. To where we are today where there
will be ubiquitous and universal access to that information by the consumer,
by the patient as it should be ultimately. That changes things.
|
|
I kind of look at any one event, yeah that's kind of
intellectually interesting. I'm not sure what it means. I think it's in any
industry, it's about conversion. It's conversion about factors that are
disparate in some cases, obvious in other cases to get to a tipping point. I
think we're getting there.
|
|
Bonica:
|
Okay. Can we talk about the strategic planning processes
you use a formal process, you use today versus say what you maybe you started
using? How have you changed your style in that over the years?
|
Callahan:
|
We have changed over time. When I first came here, we were
an organization that contracted out to the great consultancies of the world
to do our strategic planning. It would produce a document after 18 months of
arduous, at times, agonizing processing of data and demographics and
committees and board committees, and it would be delivered, it would be
bound. It would be perfectly crisp paper, and it would be absolutely obsolete
the day it was delivered. But, God, we loved those plans. Hundreds of
thousands of dollars later, when I got here I saw these plans stacked up in
the hospital and I was like, "That's not me."
|
We have historically, since I have been here, have used
a ground up top down, bottom up combination of planning that is very organic.
It is very short cycle planning. I don't have a 50 year view. I don't have a
10 year view. I do have a lifetime view of adaptability. What I've tried to
do with our organization is to have a planning process that stimulates
calculated risk taking that enables absolute flexibility, that has a
relatively short view from the standpoint of how we plan. The degrees of
probability, the degrees of certainty, obviously attenuate as we go out
further. We view ourselves currently in a continuous planning process. There
is no discrete, there's no ending or beginning. We're always looking at that.
It happens to be index, because we have a fiscal year. We have to put
together a budget by regulatory requirements. Serendipity, a lot of our
planning index is to our fiscal year, but the reality of it is, is that we
are in a continuous planning mode. We tend to stretch out our view points to
2016, this case. We're doing 16, 17, and 18.
|
|
There are however events that lead us to have to make
longer term capital investments. If we decide to invest in radiation therapy,
we put in new radiation therapy and ten million dollars later, you got a long
live asset sitting there that you have to have a little bit of a longer view
then a three year story as to how it's going to be used. We do recognize that
for major capital investments we have to stretch our legs and kind of look at
what's the relative risks of demand for that particular service or product
that we put in place that has a long lived asset base that has significant
resource commitments and have to make that judgement as to what the relative
probabilities of success five years, ten years from now will be. If for
whatever reason we miscalculated in that, what's our exit strategy? What do
we do if we made a wrong investment decision there.
|
|
Bonica:
|
Is that part of your adaptability?
|
Callahan:
|
Absolutely. We built a synergy health and fitness
building about 15 years ago. It's comprehensive rehab services as well as a
public fitness membership, and I looked at that and it was the right thing to
do, but I knew if it was the wrong thing to do that we could easily exit that
business, the fitness business, which one could argue was a little bit
further away from our core competency, but was still tethered to that core
competency of rehabilitation services. If our calculus on membership driven services
was such that the marketplace couldn't support a premium price for it, which
we did construct a premium price, we would have another alternative use for
that facility. If we exited the membership, the premium price membership
facility service, fitness facility and we were renovating that facility to
house consolidated musculoskeletal physician specialties in there.
|
Adaptability. Longer term investment, from a planning
perspective for sure, but what if you're wrong, what's your alternative.
|
|
Bonica:
|
You try to structure into any kind of longer term
commitment a means of adapting to the change.
|
Callahan:
|
At least minimally -
|
Bonica:
|
If it doesn't work out.
|
Callahan:
|
Right. Minimally, a provision of another possibility.
It's a little bit harder for radiation therapy. You got a million tons on
concrete sitting out there, radiation bunker maybe, fallout bunker -
|
Bonica:
|
Not a lot of demand for that - hopefully
|
Callahan:
|
It's a little bit more complex, but we do use Hoshin
Planning here as Hoshin Deployment, it comes out of Japan. We've integrated
that with our lean processes you saw some of that up there. I don't know if
you're familiar with Hoshin Planning.
|
Bonica:
|
I'm not actually. Is it like Lean?
|
Callahan:
|
It's a way of deploying strategy throughout your
organization. We're in to the second year of that and it's kind of
interesting to see how that works. We don't make any pretensions about having
a grand solution. I can't tell you how many countless Harvard business review
articles I have read about planning, strategy planning. What works. What
doesn't work. How to do it. They've only done nothing more to convince me
that there is no right way of doing it.
|
Bonica:
|
This, sorry, Ocean planning?
|
Callahan:
|
Hoshin.
|
Bonica:
|
Tell me a little bit about that.
|
Callahan:
|
It's a way in which we create alignment between our
principles our values, our overarching strategic goals, the tactical
expression of those goals and it graphically displays those goals and enables
us then to subsequently disseminate that into the organization and have the
organization at lower levels provide feedback, input and modifications to
those goals. It's kind of a cyclical process. It's constant feedback and when
you bring the elements of your Hoshin, your key strategies, your key action
items that you want to be taking action on, and when you bring it down to
lower levels, different levels of the organizations it's called spinning.
It's kind of interesting. Again, it's a Japanese view of planning.
|
For us, what we like is it provides a simple, relatively
simple graphical way of tracking and identifying and linking up overarching
goals, our values, our tactical intentions and with kind of the measurable
objectives that we're going to establish for it. It enables you to push that
down to the frontline.
|
|
Bonica:
|
To the frontline.
|
Callahan:
|
To the frontline, so when you're sitting in a department
in a remote physician office and you see this Hoshin diagram, it's not so
much about the diagram it's about the connectivity of mission, strategic
intentionality in what we’re doing here today.
|
Bonica:
|
Okay. Great. Let's transition and talk kind of
specifically about leadership and then like a little bit about mentorship.
How would you encapsulate your leadership philosophy? We've talked a fair
amount about it now.
|
Callahan:
|
If you were to come one of my management meetings, you'd
think, "How's it broken out at a meeting." I really, I like loose
tight management. I guess that's maybe the best way to describe it. I hire
competent people. I provide them the support. Encourage them to take the
risk, encourage them to think differently than me, to push me, cause me to
see things differently than the way I currently see things. I tend to place
competent people in the roles, align them around our principle vision, our
mission, our key strategic objectives. I let them go. Truly.
|
There's a high degree of autonomy amongst my management
group. There is obviously coordination, because we have to function at a very
coordinated basis. We are increasingly more integrated in what we do then
disintegrated in what we do. Yet, I don't attempt to orchestrate for them,
the understanding of what their key roles and responsibilities are. They need
to know what their key roles and responsibilities are. We create an
environment in which they can create and naturally forming collaborative
bridges. Formally and informally. There's a lot of matrix management that
occurs here, between people that have formal reporting relationships to each
other, bridging over to other areas in the organization that they don't have
formal reporting relationships.
|
|
Leadership, for me, is I set on a singular basis, on an
individual basis, what do I think the organization asks me to do. I think
they ask me to provide principled guidance, support, ethically driven
decision making in our organization through role modeling.
|
|
I look at and we've faced many challenges in the
organization. We always come back to what's the right thing to do. Frankly,
the right thing to do places you at individual jeopardy, it may place your
organization at financial jeopardy. At the end of the day, we care for people
and you have to always make the decision, what's the right thing to do for
that patient, for that family, for this community. We're unswerving in that
commitment of always doing the right thing. We talk a lot about our true
north as an organization, in terms of our orientation to those principles of
high quality care, sustainable healthcare, ideal patient experience and
ensuring that when patients come here they receive the very best care that
we're capable of providing to them.
|
|
Bonica:
|
Are those the values that, of the organization.
|
Callahan:
|
Yep. See them anywhere. Everywhere. They're everywhere.
I think as leadership, leadership is frequently characterized as functioning
in the gray areas and a lot of times there are a lot of things that are gray.
In terms of either regulatory interpretation, legal interpretation, what does
this mean, what do you think that means. I think the laws in this country are
purposely written for the sake of being black and white, but over decades of
interpretation they seem to become gray. We recognize that there are things
that are in many, many cases that maybe gray.
|
As a leader, you always have the intuitive sense as to
what's right, no matter how gray it is You just know that. I look for that in
people, just to know what's the right thing to do her, and if they're
uncertain, let's talk about what we think the right thing to do is.
Leadership, when I think about what does the board look for me to do, as a
CEO is to try to understand the operating environment that we're in today and
what we might be in tomorrow and create a pathway for sustainability today
going into tomorrow. What is that pathway, what does it look like? What
investments do we need to make, what kind of people do we need to have? What
shouldn't we do. They look to me to do that.
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I kind of view myself not quite like the harried coach,
running up and down the sidelines of the football game, because I'm looking
at them. Sometimes when the play starts, it's out of their hands. What do
they do? They recruit good people, they make sure they're competent, well
cared for, there's a strategy, there's a tactic, there's a plan and then the
game begins. What it doesn't change, it can't change is your confidence in
the people that you hired and they're adaptability.
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I can't say I have an expressed leadership philosophy. I
don't know if I'm that smart. I do know what to do and when to do it and what
the right thing is.
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Bonica:
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Okay. One of the important roles of a leader, of course,
is creating a positive culture. How would you describe the culture here at
Exeter and what do you do to try to cultivate it?
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Callahan:
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I said a lot about people we hire. A lot of times they
don't quite say what's the culture. They'll say, "What is it like to
work there?" Same thing, in some ways. I kind of reflect back as to why
have I stayed here. Have I simply escorted the culture that was to the 21st
century as a leader? Maybe. Have I changed it in any way? I don't know. I
certainly think about the values that we have as an organization. We are a
deeply caring organization. A lot of organizations say that. We are. Amongst
ourselves. Most of us receive our healthcare here. There is nothing that
creates more intimate connection to an organization than one that you work in
that you turn to help you if you're dying or to help you when you're really
sick. When you have your colleague take care of you, there is nothing like
that. Anywhere.
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It's really quite a remarkable experience. Coming as you
do from the military, there are those instances in very close team operations
where one person thinks, the other blinks. They're just they're functioning.
They're syncopating, the mutual dependencies so, so intimate.
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It's kind of like that here spread out over very large
organization. The culture here is one of intimacy, respect. It is one that
doesn't suffer fools well. You've got to be on your game here. Physicians sense
that when they come here. They're surrounded by really smart people who are
always pushing the envelope to do things better. You really got to be smart
to work her. You just have to be. It's an organization that encourages
curiosity. I would like to think it's an organization that encourages
dissent.
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Bonica:
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How do you ensure that it encourages dissent?
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Callahan:
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It's hard. It's real hard. We survey our employees and a
lot of times we get feedback that, no, this is, I'm afraid to speak up in a
particular department, and I'm like "How is that possible? Why did that
happen?" How do you ensure that what you believe to be true in your own
mind, is in fact true on the ground? We do a survey. We do a lot of surveying
of our staff confidentially to kind of get a sense as to what we call
alignment. Alignment with those values. Where there is not alignment, why is
that happening? Is it leadership, is it communication? What's happening in
that unit to cause someone to say that, "I'm fearful to express dissent."
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Bonica:
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That's dangerous in healthcare.
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Callahan:
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It's very dangerous in a high reliability environment,
in a kinetic environment. You know that in the military, it's dangerous in
healthcare where something goes wrong, not because of anyone's intentional
co-mission, but it's prone to human error. Another set of eyes, another
willingness to speak up, is a critical factor for ensuring safety. That's
what drives us in this organization, deeply, is this notion of patient
safety. You've got to have an environment where anyone at any given time, can
say, "Wait a minute, what are you doing?" Whether it's someone
sitting at a leadership meeting with me and I think, I think we got to do
this as a strategy. If they all said, you know all 13 of my executives sit
there and nod their head, I know there's something wrong. There's got to be a
different view point of the world.
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It's a critical role of a leader I think, to sense that,
to survey that, to understand what that means. As I said, an environment that
demands high reliability, such as healthcare, dissent is a critical part of
safety. That's something that we work very hard on.
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Bonica:
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If you get that kind of feedback from a survey, what do
you do, how do you respond to that?
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Callahan:
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Usually, it's always interesting. It's like, really, is
that possible, because we're not like that. A lot of the time we say that,
"That can't be us, is that us, really?" You've got to move beyond
that to recognize that if you have parts of your organization that are not
aligned with those very important principle values, you need to understand
why. We work very closely with the management on that unit to try to
understand, "Tell us what's different here? What's happening? What do
you do from a communication standpoint? Verbally, and non-verbally. What's
the operating environment like? What are the colleagues like there?"
While we have a culture here, in our organization, there are micro cultures
everywhere. You think you're dealing with a homogeneous organization that
believes it has a unified culture, but in reality there are micro cultures
everywhere. Shift to shift, unit to unit. It's really quite striking.
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That is good in some ways, yet nonetheless there has got
to be an overarching connection to the principles of the organization. We do
a lot of diagnostics on that, where if there's something going astray, we do
a lot of intervention, training, working team building with groups, trying to
understand what is causing a disconnect from our overall principle values.
That's nonstop.
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Bonica:
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Let's just finish up on talking about mentorship a
little bit.
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Callahan:
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Sure.
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Bonica:
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Sounds like you had somebody looking out for you at the
beginning of your career a little bit.
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Callahan:
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I did. Nobody officially. When you pose the question to
me, "Did I ever have an official mentor?"
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Bonica:
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Yeah.
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Callahan:
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I really didn't. I'm a student of leaders though,
contemporary and past. Even today. I've been doing this for a long time but
it always surprises me the way other leaders behave, good or bad. There's
always something to learn. It's not just in the healthcare industry. It's
throughout all industries. How do people deal with uncertainty, how do they
deal with catastrophe. Whether it's the BP oil spill in the times of crisis,
or failure to grow earnings or revenue in the case of the Yahoo CEO or
someone dealing in the healthcare crisis coming out of adverse patient event.
You'll learn a lot by what they do and what they don't do and try to
juxtapose yourself in to their shoes. What would you do? I do that
continuously. I've had the opportunity to work with board members who are
very strong leaders in their own rights.
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In my own encounters and my own work, I've always
learned from all the people that I've worked with that are strong leaders,
not so strong leaders, you always learn something from them. Was there
someone who actually took me under their wing and made me a project of
theirs?
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Bonica:
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Yeah.
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Callahan:
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Sometimes I wish that was the case. I kind of go back to
the sense, sometimes leaderships kind of lonely. I sought people out. The
gentleman who directed me up here was a person who would always make a point
to just, he wasn't mentoring me, he probably didn't think that, but I took it
as that in terms of asking me about what I thought and what I did and what I
was doing. Yeah, we've not had that. We try to do that in our organization,
which is probably you're follow up question.
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Bonica:
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Yeah.
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Callahan:
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Mentoring, mainly because I haven't had as much of an
opportunity, I'm very keen on that, of how do you mentor someone. How do you
consciously and subconsciously track them and engage them and spend time with
them. On the clinical level we have very formal mentoring programs.
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Bonica:
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You do? Okay.
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Callahan:
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We do. Absolutely.
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Bonica:
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Outside of an official training program like their
resident or something like that?
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Callahan:
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You're new to our organization and you're a clinician,
you're going to get mentored here in terms of who we are, how we work, things
that we do, things that we don't do, why. Someone to go to in case you need
help. We also do that for our leaders as well. We do try to mentor and to
create opportunities for that. We've had formal programs for leadership,
we've had informal programs, we've kind of cycled through it. We've had a
relatively stable leadership group in this organization for a number of
years, but when new managers come in, they are connected with other leaders
in the organization. They're tracked so that they're never out there alone in
terms of how you're doing. As an individual there are people in the
organization, who I have a particular interest in because I see them as high
performers in the future that I take a particular interest in ensuring that
they are growing and developing. It's kind of the way we do it.
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Bonica:
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All right. What about professional associations? Which
ones do you belong to and what would you recommend to people who are
interested in healthcare administration?
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Callahan:
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There's kind of the before and the after. In the early
stages, I think I was a member of every professional association that you
could shake a stick at. American College of Healthcare Executives, I was part
of the New England Planners Group. It went on and on and on. I'll be honest
with you, that early stage, I struggled with identifying with them, what they
thought and how they viewed the world. Increasingly, I found that the
thinking there was, not the kind of thinking that I had about healthcare in
the future and where we might be going as an industry so they became less and
less intellectually stimulating to me. One by one I kind of dropped out.
Where I moved from there is I got engaged in a variety of different board
roles and different industries which I've enjoyed a lot. Insurance industry
and on the industrial side of industry. Right now, I'm not a member of ACHE. They'll
strike me in the rear end I'm sure. The American College of Healthcare
Executives, "What do you mean, you're not a member?" No I haven't
been a member in decades.
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Bonica:
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Okay.
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Callahan:
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Not a strong value there.
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Bonica:
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One thing that I know our program is very grateful for
is you take an intern from our program every year or two.
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Callahan:
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Two.
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Bonica:
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What are you looking for when you select an intern and
what does a successful intern do when they're on the job with you? Just a
little special advice for my students.
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Callahan:
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No not at all. Actually, we just bought two interns and
just made that decision a few weeks ago. I look for people, interns,
individuals to come in to this organization that are really intellectually
curious and willing to take intellectual risks. They're given an opportunity
here to interact at a very high level with parts of an organization that they
may not normally get a chance to do if they stay in the healthcare track for
years. I want them to see the organization in all lights. Good and bad. I
want them to draw observations and conclusions to them that we can
intellectually challenge. What do you see? What do you think you saw? What do
you think it means? The first prerequisite is that you got to be able to see.
Your powers of observation and it's not just seeing one box move to another
box, but in the context of your educational experience and what you've
learned in class. What do you think you saw what was going on there, or what
we're doing as an organization.
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That's really important. Self-direction is really
important and they need to be self-organizing. We do provide support for them
so they don't totally drown in a big ocean or what might be perceived that
way. Self-organizing, confidence in one's self. The ability to communicate in
a powerful way and articulate way, both verbally and in writing is critical.
I guess, probably, beyond that is to develop a comfort in oneself that you're
coming into an organization that is affording you enormous opportunity to
learn. How do you take advantage of that? Not that you use the organization
in a pejorative sense, but how do you take advantage of that? How do you peer
around the corner? How do you dig a little bit deeper than someone else would
normally dig. If you've got 15, 20 minutes with an executive and you kind of
covered the typical questions that you would have, how do you go off the grid
a little bit to understand a little bit more deeply their vulnerabilities of
what they do or the risks that they take or concerns that they have about
leading a function. Do you know how to do that? Do you feel confident doing
that?
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We've been fortunate having generally, students in turns
have come through that have been able to do that. They've got to contribute
to us. We want them to contribute to us and I tell them that. I tell them
that, "You're getting paid for your summer's time here, I want you to
give me a work product. You're best work product. I'll help you choose what
that's going to be, but ultimately it's going to be your choice. It's going
to be your work product and you're asking a CEO to judge that. I want value
for my money. I want you to produce value." Some of the work that's been
done has been startlingly good. Last year's work was outstanding. It's
challenging. This is a problem that I think just is kind of the structural
problem with it is that educationally they're not in a lot of places that
they need to be to be able to form conclusions and insightful observations
about what they see in healthcare. They're just developmentally, they just
have not been exposed to that. I enjoy -
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Bonica:
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That's part of the process.
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Callahan:
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That is part of the process. Exactly. A lot of time,
whether it's on health policy issues, economic issues, governance issues,
leadership issues. I always go through a process of kind of feeling out how
much of this is real life experience that you've had and how much of it is
theoretical and how much you just don't know. That's just part of it. There's
no question about it. The organization, I particularly, but other people have
enjoyed having interns that are in that are precocious, that kind of ask
those questions that always cause you to pause and go, "That was a good
question." We all like that.
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Bonica:
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In conclusion, what advice do you have for someone
thinking about going into healthcare administration today. What education
should they pursue? What kind of initial job should they be looking for?
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Callahan:
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I just had a long conversation with one of the interns
from last year, just a couple of weeks ago. As they're sorting through
directionally where they want to go, they're most interested in how I got to
where I got to, and almost everyone is. "How'd you do that?" I'd
like to say I had a grand plan, but as you can see in this interview, I
didn't have a grand plan per se. What I tell them is that generally, I'm a
person that'll go through a door, just am. I have a view that there are so
many opportunities. As long as it's not life threatening, and you can assess
that, but my tendency is to go through a door. Without necessarily a clear
understanding of what the destination will be, but I always have a sense
directionally of where I'm going.
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At this stage of their career, I encourage them, go
through doors. Don't get so structured around a destination that you never
get your trip started. Healthcare is a remarkable diverse opportunity for
employment. It represents enormous opportunity. It's three trillion dollars a
year we spend. You can't find a place there to work? Don't get wrapped around
conventions that well I need to get my master's degree. It is absolutely
helpful, there is no question about it, especially if you can get it in a
very rigorous program it will help in that rigor. I always tell them ,go in
to the program mature. Go in to it mature, knowing a little bit more about
life and experience, it'll just enrichen your graduate studies. Whether you
go in the pharmacology side, you go into the biotech side, you go in to the
actual delivery side, you go into the policy side, you go into the insurance
side, you go into the physician side. All of those are great opportunities
and one will lead to another opportunity to another opportunity. Have a sense
of what your destination is and be surprised when you arrive there.
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There is sometimes they just kind of get this mental
model constructed that, "I need to do a, b, and c to get to d and then I
can get to where you are Kevin." I don't think it's that way anymore. It
wasn't that way for me. I could have easily been somewhere else than sitting
here talking to you today. Like I say, always have a sense of directionally
kind of where you want to be going. You'd be surprised when the opportunity
stares you in the face. A lot of people don't even see it.
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The other thing is I tell them this all the time, is
that you never say no to opportunity you just never say no to someone who
you're working with who asks you if you can do more response, do something
more for them. We've hired, I can't tell you how many interns into this
organization who have had stellar careers here. They have been eager to take
on more responsibility. When I was asked to be the CEO in this organization,
I was three years out of graduate school, what did I know? I didn't say no. I
can figure that out. I've always thought, I can figure that out. I have
enough of a common understanding of what it means to run an organization, I
thought, that I could do it. When the opportunity is presented to you. Take
the opportunity, get the experience. You can parlay it and you can do
something else, somewhere else. Remain true to your values, what are your
values. That's what I always advise them.
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Bonica:
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That is great advice. Thank you so much for being part
of Healthier Forge today.
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Callahan:
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I've enjoyed it and enjoyed the conversation.
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