Dr. Joseph Pepe Transcript

The following is a transcript of our interview with Dr. Joseph Pepe To find links to the audio files and more information about the interview, please click here.

These transcripts are made possible by a gift from the NNEAHE.

Bonica: Welcome to the Forge Joe.

Pepe: Thank you very much.

Bonica: You graduated from Saint Anselm College here in Manchester in 1983, with a Bachelor of Arts in biology. Why did you choose Saint Anselm, and why did you study biology?

Pepe: Well, I knew I wanted to be a physician since I was very, very small, and so I knew I was going to need to go into pre-med. They didn't really have the specific pre-med program at Saint Anselm, but they had a biology program, that was the closest to pre-med that there was at the time.I thought that Saint Anselm was a perfect match for me, because it was a small college, it was relatively close to home, but more importantly it was a liberal arts college, and I felt that I was going to go into Sciences and I needed that well-roundedness that a liberal arts education would give me.

Bonica: How did you know you ... how did you come to know that you wanted to be a physician? Why did you?

Pepe: That's an interesting story. I would say that my parents respected physicians greatly, and I saw that, so I gravitated to it wanting to please them initially. Then I found that I just loved science and I started reading about it, and wanting to do it more and more. By the time I was in high school, I worked as an operating room technician, I worked as an orderly, I worked as a nursing assistant, and I worked as a home health aide. When I was about almost 17, I was involved in a major car accident in which I broke my neck, and I was paralyzed from the neck down. I spent many weeks in the hospital with rehabilitation and so forth, and I knew that just strengthened my reasoning for wanting to become a physician.

I moved on to study hard, and I didn't miss a beat in high school, went to college, and so I literally ... I have told people that because of all those positions I've had along with being a patient myself, and as well as being a caretaker, a physician, a chief medical officer, and a CEO, if there's another side of a bed then someone needs to tell me about it.

Bonica: Excellent. So you graduated from Saint Anselm, and you attended Medical School at Tufts University School of Medicine in Boston where you earned an MD. What surprises you about Medical School? Was it what you expected? Was there anything that you weren't expecting?

Pepe: I think there were a few things I wasn't expecting, and that is ... the first was that I was used to being at the very, very top of my class. All of a sudden you're in medical school, and there's only so many medical schools, a very competitive field, and I found that while I was doing well, I was certainly not at the top one, two, three in my class. That was a big blow to my ego, so that was the first part. I think the second part were the ... well the second part was the fact that the students there were less of a fit with me from Saint Anselm, to an area of professional school. I guess the best way of saying that is that I came from a cabdrivers' son, and a waitress's son, and many of the people I went to medical school with had professionals as parents.

That was a little bit of a change, and also I was expecting more people from the area. I remember distinctly on the very first class, I raised my hand and I said, "Excuse me," to the professor, "What's the number with the bar over it?" They said ... and everyone turned around and said, "Number? Bar? Where are you from?" I said, "I'm from right here. Where are you guys from?" They were from California, and Hawaii, and all these other places and so it was interesting. I was out of my element, let's just say.

Bonica: Okay. You were home, Tufts being in Boston but out of your element because everybody was from so many other places.

Pepe: Correct.

Bonica: Okay. So you graduated from Tufts, and you attended an internal medicine residency at Baystate Medical Center in Springfield, Massachusetts which is out in the western side of the state.

Pepe: Correct.

Bonica: What attracted you to internal medicine?

Pepe: Well I always wanted to be a physician that did it all. I just felt that if I went into one specialty, the good news is I would be able to master a lot of that specialty. I always thought of in my mind as a physician of knowing a lot about everything, and so that's what got me into internal medicine, and that's why I stayed in primary care. I really like the relationship with patients, and I liked knowing a lot about everything. Also, I think that it was just ... in my mindset that's what a physician was so.

Bonica: Okay. A question about physician identity. Society holds physicians in high regard, as you mentioned your family did. Being a physician is usually an important part of a person's identity once you've achieved it. When did you feel like you had really become a physician? Was it when you graduated from medical school? Was it somewhere later?

Pepe: Well, it certainly wasn't when I graduated from medical school. Although I received an MD as we all do, I felt like an imposter. That's the best way to describe it. I think that it's a gradual socialization process of getting that identity, learning the language, learning the attitude, the way you conduct yourself, and the professionalism that goes with that. I would say it certainly was a gradual process, but when did I first feel that I was indeed a physician? It was probably ... I would say it was in my last year of residency, probably six months left to go, I was thinking about flying out of the nest at that point, and I felt like I had enough tools and I had enough information to make it on my own.

Bonica: Upon completing your residency at BayState in 1990, you came here to Catholic Medical Center and joined the Catholic Medical Center primary care associates. What brought you back to Manchester and Catholic Medical Center?

Pepe: Well, I've always had some small thing in my heart about New Hampshire, and specifically Manchester, New Hampshire because that's why I went to school here at Saint Anselm. I had a great time here, I met my wife at Saint Anselm. We were engaged at Saint Anselm in Manchester, New Hampshire. We were married at Saint Anselm and so ... The other part of it was that when I did come back here, CMC was an organization that made me feel like I belonged. They made me feel like they wanted me, whereas other places I went to they made me feel like I needed them. It was that fit feeling that made me say yes and pursue a professional career here.

Bonica: I've done a couple of interviews in Manchester, but in case folks haven't listened to those and are not from New Hampshire, can you briefly talk about Manchester as a community? Kind of where it is and what makes it special?

Pepe: Sure. Manchester, New Hampshire I think is a very special place. I think that when I tell my colleagues that are not from around here, that we're an hour from the lakes, an hour from the ocean, an hour from Boston, an hour to the mountains, they think that it's not real. They think I'm making it up. Having said that, I try not to tell too many people because I don't want it to get crowded. But it's a great place. New Hampshire is a great place for a career. You know it's not just no taxes, and no sales tax, and income tax and so forth, but it's run like a small town. It is a place where everyone can get to know everyone, and you're not lost in the crowd. It has access to a lot of professional entertainment, and growth education. I believe that there's no better place. Now, is it perfect? No. Could the winter be just a little bit less? Yes. But you know not every place has everything, but I think this place has most things that most people want.

Bonica: Can you tell us a little bit about Catholic Medical Center? What are its origins, and what makes it special as an organization?

Pepe: Sure. Our origins go back to 1892, with Sacred Heart and a couple years later 1894, Notre Dame Hospital, which is where CMC is located today. Those Catholic hospitals came together and merged in 1974 to form Catholic Medical Center. We have a long history of being Catholic. We have a Catholic identity. We follow the ethical and religious directives for healthcare services, and I believe that that catholicity has helped with our culture and our mission of this institution. This is why I believe we're a special place, and I believe we're pretty unique. When I hear from other nurses and doctors, and staff members who've been to other hospitals, both in this state and outside the state, they come to me after a week or after a month and say, "This is amazing. I can't quite put my finger on it, but it's run like a family organization. People are kind. People are compassionate. People go out of their way to help you," and that's what I think keeps people here.

We have a very, very good retention rate and there are many people who are getting their 30-year pins, and their 40-year pins, and I think to myself, "They must have been here when they were 12." But it is a very special place, and what attracts me that Catholic Medical Center is the mission of the organization, the high ethics that it has. It's a fit for my personality, and my core values is very similar to organizations core values.

Bonica: What is the mission of Catholic Medical Center?

Pepe: The mission of Catholic Medical Center we shortened it to say it's health, healing, and hope. But it goes on to say that we provide health care to everyone that wants or needs our care, so regardless of the ability to pay, we take on everyone that comes through our doors. We are very, very strong in our community benefit. In fact, we give more charity care ... this is according to not me but the IRS, we give more charity care as a percent of revenue than any other Hospital in the state. More than double the national average for nonprofit hospitals. We're very, very proud of that. We don't just write checks, we're out in the community. We have a press-on dental center, which we provide dental care for all the children that don't have the insurance. We have a pregnancy care center, so if a woman finds themselves pregnant and they don't have the ability to pay, they get just the same prenatal care and maternal care delivery as anyone that has the best insurance in the world.

We provide medical care for the homeless, homeless shelters, new horizon. We have providers that go out there and provide that care. We provide the medical care for the Farnum Center, which is a detox center, families in transitions. We even have nurses that go around in vans and give immunizations to folks that live under the bridge. It's a very, very community oriented organization and we really take our mission and our nonprofit status very, very seriously.

Bonica: Can you give us some sense of the size of the organization? May be number of beds, number of physicians, and sort of those things?

Pepe: Sure. It depends on ... like anything else is how you count. We have a 330 licensed bed, which would make us the second largest in the state. There are 26 hospitals, but if you go by revenue or particularly patient net service revenue, we're probably around four. But the spread between two and four isn't very much, so we're at the top of the largest organizations in the health care field. We have 180,000 visits a year 36,000 emergency room visits. We have over 500 physicians who are on staff here, and about 600 nurses. Total employees about 2,500.

Bonica: That's a significant organization.

Pepe: It is.

Bonica: Coming back to your career, what was the relationship between CMC primary care Associates, and CMC? Was this practice owned by the hospital? Were you an employee, or was this an independent organization?

Pepe: When it first started, there was a third party who contracted with us to be employed, and that part third party contracted with the hospital, so we were indirectly employed. After a few years, we became directly employed by the hospital. I tend to have an innovative attitude but I decided I wanted to be employed from the very beginning, mostly because I could take care of patients without any regard to a conflict of interest. I didn't have to worry about making sure they got lab tests at the lab that was in the office. Making sure they had a bone scan at the office, bone skin. Making sure they had things that was good for business, but might not necessarily be good for them, or be as cost-efficient for them. Being employed as a primary care physician, I was able to give the patients exactly what I felt they needed, without that conflict of interest, that even under the best circumstances that human nature can spoil.

Bonica: You served as a staff physician until 1999 when you became the vice president of medical affairs, and the chief medical officer. You served in that role until 2012. What made you decide you wanted to addition for being a staff physician to a leadership role, and what was your leadership experience prior to that if you had any?

Pepe: Well it's a great question. Most people actually make that decision. I didn't make that decision. I gravitate just by the nature of my personality toward leadership positions, because I want to get things done. I became somewhat leader of my group, putting things together, being fair and equitable, making the schedule and things like that. I volunteered to be on committees and rose to leadership positions, because people chose me to be in leadership positions. To the point where the former CEO militarily volunteered me to be the chief medical officer. My first thought was, "Well yes, but what do they do?" That was interesting. Then I was the chief medical officer, and doing very well and very content doing that, and worked putting my head down, when our CEO suddenly left and the chair of the Board of Trustees walked into my office and said, "You're now the interim CEO." I said, "Okay. What do I do?"

Finally, I decided, "Sure. I'll take that role on, but make sure that when you go out for a national search, I go back into my role as chief medical officer." They did a national search, they kept asking me to throw my hat in the ring I said no, but the third time I finally said yes. I threw my hat in the ring, and they interviewed about ... they had about 12 final candidates, they were bringing in six to the CEO committee, and their job was to have the six whittled down and present three to the board. At the end of all of it, they only presented me to the board, so once again I was militarily volunteered to be the CEO.

Bonica: We call that voluntold.

Pepe: That's right.

Bonica: Going back to your role as chief medical officer, can you describe the duties of the vice president of medical affairs and CMO at CMC?

Pepe: Well, that's interesting because I'll describe the duties of most CEOs, but because there's no CMO school, I didn't go to school to become a CMO. I really didn't know what the job was, so I went above and beyond what the role usually is as vice president of medical affairs and chief medical officer. The normal role is you oversee the medical staff, the quality, the peer review, and pretty much that's your role. Your role is also a liaison between the medical staff in the administration, so that's the traditional role of a chief medical officer. Because I didn't know any better, I came involved in pretty much every department, because by nature I'm a problem-solver, and I like to help. People came to me and I found myself entwined in virtually almost every department aside from the gift shop. I say to people all the time that when I became CEO I picked up the gift shop.

Bonica: Nice. Okay.

Pepe: I didn't know it at the time, but I was preparing myself for CEO when I was the CMO but just didn't know it.

Bonica: How is the medical staff organized at CMC when you took over, and is it's still organized the same way? Can you explain how that works?

Pepe: Yeah. I would say it was organized into many different departments and there were fiefdoms, and when I came in I changed that to only two departments: a medical department in a surgical department. Also, just by the nature of the beast we started a hospice program, and once we did that, the internists no longer came to the hospital. We wanted them associated with the hospital, they wanted to be associated with the hospital, but we didn't know how to do that, so I came up with this idea of creating a different section called active ambulatory. Active ambulatory where they can say they're active at the hospital but really they don't go into the hospital, but they're very much associated with the hospital, and it comes with different kinds of privileges as what an internist used to have. That caught on and it went right out through New Hampshire as that active ambulatory and many of the other hospitals now have a section very similar to that.

I would say that one of the things that I instituted was in peer review. It's always difficult with peer review because people think of it. No matter how much you say it's not people think of it as punitive, and in fact in the past it had been punitive. I wanted to change that culture, because it's all about learning and improving, and not about being punitive. At the same time, I wasn't of the type that felt that it should be a blameless culture, because people need to be accountable for their behaviors.

I introduced to the medical staff just culture. Just culture is that the actions that you take on issues, whether it be mistakes or certain behaviors, is based on the behavior rather than the outcome. In that particular sense that even if the outcome was great, if the behavior was reckless, that person deserved a harsher penalty than someone who makes a mistake because they're human. It had to do perhaps with the system of being human and not having a system that was supportive of what they should be doing, or what they could miss. We introduced that to the medical staff and that continues to this day.

Bonica: As you mentioned, in January of 2012 you were appointed as the interim president and CEO, and then in August of 2012 you were confirmed as the president and CEO. So how did your 13 years as the CMO prepare you for that role? Other than the gift shop of course.

Pepe: Right. I think one of the most difficult parts of being the chief medical officer was that you had to have very good conflict ... you had to be good at conflict resolution. Many times whether it was between a physician and another physician, or a physician and administration, physician and a nurse, physician and a tech, or a tech and a nurse, you had to be the facilitator of conflict resolution. That taught me a lot. It taught me a lot about human dynamics and human nature, and I learned myself as I went along how to be actually even more professional than I was as a physician, and know that it's not the person that is bad it's ... once again it's going back to the behaviors. Part of my job was teaching. Part of my job was mentoring. Part of my job was helping people find the right solution, in the right way, with the politics that are over and above all of that.

It really prepared me for what the CEO job is to the 10th degree, and getting along with, and understanding and listening, to a wide array of individuals and positions, and then formulating an opinion not before you heard all the opinions. That's a tough thing to do. By human nature, you tend to believe the first person that talks to you, or explains things to you, and you have to set that aside, and that's a tough thing to do, but it's a learned response and you can do it. That was quite helpful.

Bonica: Okay. What is a day in the life of the CEO at CMC like?

Pepe: Wow. Well, a lot of meetings. I would say that the day in the life of a CEO is up and down. I always say that of all the jobs I've had, this has the highest highs and the lowest lows. One minute I could be with a person in an animal suit collecting a big cheque for a donation, and then the very next minute literally I'm making multimillion dollar decisions or strategic decisions that will affect this institution for decades to come. Its changing from one to the other I find fascinating and stimulating, but also challenging.

Bonica: Sure. That sounds dizzying.

Pepe: Exactly.

Bonica: What would you say is an advantage of having a physician as a hospital CEO?

Pepe: Sure. I would say that there is no better time than now to have a physician as a CEO, and the reason for that is that we are changing right now from our payment system, from volume to value. In other words, for 100 years we've been paid for how much we do, and now we're going to be in the future, we're going to get paid by how well we do it. That means that we have to come up with that value proposition, and that value proposition is quality plus patient experience, divided by cost, and who better to understand all those realms than a physician administrator. I think that knowing that was a big part of the success that we've had in CMC over the last four years, and it comes with assembling a team that is excellent, and everyone around me is much smarter than I am, and that's a good thing.

I think that also being a physician, I know how physicians think, and they are a major stakeholder in the growth and the strategy of a hospital. I can meet with them one-on-one, and I can teach the other administrators how they are thinking, why they are thinking certain ways, and get into their heads and be that in-between person who can bring it together. Because ultimately we have the same goals, but we have to understand each other in order to row in the same direction.

Bonica: Just a side question.

Pepe: Sure.

Bonica: Do you ever get to see patients anymore? In the hallway? The gift shop?

Pepe: Right. No. As a chief medical officer, I still saw patients, but once I became the CEO it was just too overwhelming to do. This is really a two-person job if I had to say so. I do see patients in the hallways, and I visit patients. There were former patients that are in the hospital. Also, I do still keep up with the literature because I find it interesting, but I do not see patients other than the folks that call me and ask for a second opinion.

Bonica: What metrics do you track as CEO, both kind of short-term and long-term? What do you keep in track of? Do you have a dashboard of some sort that you're looking at?

Pepe: Sure. I would say that what we look at is ... we have pillars of organizational success, so we look at people service, quality, finance and growth, and we have metrics along all of those lines. But I would have to say, if I had to look at the important and measures that we look at quite frequently, certainly its finances, but it's also mini quality and safety issues, compliance issues, strategic issues of growth, and where we're going. Because it's so important for us to be around for the next 100 years, so the decisions we need to make, and the decisions that CEOs should be making are not the decisions that make us look good, or make me look good next quarter, it's to make the institution good 20 years from now. That I think is the key to moving an organization in the right direction, and sometimes that's forgotten in other industries.

Bonica: What is the thing that people outside of health care least understand about running a hospital and a health system?

Pepe: You know, let's say that judging by the feedback I get from our board of directors, I would say that most people don't realize how complex this industry is. Between the quality and the heavy regulations that we have to put up with, it is just so extremely complex. There's a lot of risk involved, and when I have business leaders on the board who are in everything from major businesses that are five times as big as this, to the defense industry, and they come to me and they say, "This is about 10 times more complex than our industry," I realize that this is a very, very complex industry that people don't realize or understand to that degree.

Bonica: You mentioned the boards. Let me ask you a couple quick questions about the board. What is the function of the CMC health systems board, and what level does the board interact with the operations of the system?

Pepe: Sure. I would say that the functions of the CMC board, is the function of what I think is any good board, and that is there's a fiduciary responsibility certainly in finance. With hospitals in particular, there's a responsibility to oversee quality and safety and credentialing of physicians and other providers, and also over seeing the short and long term strategic plan of the institution. I do believe that their role is to advise, is to support, and it's to bring their talent to help the management team move in the right direction. I think that it's not their job, or any ... the job of a highly functioning board is to get into the operations of the hospital or the business, because that's why we're getting paid. It's important for them to be at a 30,000 foot level, and luckily we have a great board that is at that level.

Bonica: What kind of people are on your board? You mentioned a wide array of industries it sounds like.

Pepe: Yes.

Bonica: How do people come to be on your board?

Pepe: A lot of it is about what talent we need, and what gaps we might have on the board itself. We have physicians on our board, we probably have more physicians on our board than any other Community Hospital in New Hampshire. Our bylaws state that we have to have at least 25% physicians, and we have actually a little bit more than that. But also in addition to that, doctors and nurses, we have clergy, we have business leaders, other CEOs, other executive vice presidents, community leaders, and we have people that are in industries that we just need more help with. Whether it be finance, or whether it be insurance, or risk, or things like that. Every year we evaluate what our needs are, and then it goes to a board of governors, who look at that and there's usually 12 people that we start off with, and we Whittle that down to maybe three a year that change over on average.

Bonica: How large is your board?

Pepe: Our board is large by industry standards. We're probably at around 20, the industry standard is somewhere around 12 to 14, so it is a very large board. We have a three-year term, and we have two terms that we have. So you can come back on if you're out for a year, you could potentially come back on, and we've had a few people do that. But we strongly believe in term limits, and fresh blood.

Bonica: What do you find most challenging about your job? What keeps you up at night when you go home?

Pepe: I would say that the most challenging part of my job now is being with. We are doing so much with the resources we have, that I often get concerned that I'm putting too much pressure and too many things into a small group of individuals. We have so much more external strategic initiatives and partnerships going on, that we've never had before at this institution just by the very nature of where the hospital industry is going. There's kind of two jobs going on at all times. I always feel like I have one foot in one arena, and one foot in the other arena. What are the arenas? I have one foot in the present, but you have to also have one foot in the future. I have one foot internally, but you have to have one foot externally as well.

Because of this volume to value doesn't turn on a dime, I have one foot in the volume world, and one foot in the value world. Trying to prioritize that, and trying to make sure that you give enough time in the right places, at the right time is a challenge. What keeps me up at night is virtually just that. It's the bandwidth. It's the idea that we're not doing enough, that we can't do enough, because we don't have enough resources, to do what we absolutely want and need to do.

Bonica: You mentioned external projects that you're involved with. Can you give an example?

Pepe: Sure. Catholic Medical Center just recently, as of yesterday, signed a letter of intent with Monadnock Hospital. About a month or so ago, we signed a letter of intent to affiliate with Huggins hospital in Wolfeboro. What we're doing in CMC is we're involved in these partnerships. These two hospitals both Monadnock and Huggins Hospital, they are going to create a system that we will be a part of, and there'll be three hospitals, a part of that new system, if obviously I like to say when, that definitive agreement occurs. There's a lot that goes in that letter of intent to affiliate, and there'll be a lot of work that goes now because we have to do our due diligence on these hospitals, and they have to do it on ours. We have to then get approval from the board and in our case also the bishop, and then further we have to get approval of the regulators, including the state in the federal government, the FTC, and the Department of Justice.

There's a lot going on from there, and that's just some of the external things that we're involved in, the Granite Health, which is a group of five organizations that came together for population health, and we formed ... we're one of the few community hospitals in the country that ... they actually have an equity ownership in a brand new insurance company called Tufts Health Freedom Plan, so we just did that last year. We're actually 50% ownership in a new insurance company that is rolled out in January, and there's going to be ... CMC will roll it out in July. I can go on and on, but you don't have enough tape.

Bonica: What surprised you most about taking on the CEO role? What was different about it than you expected? By this I mean the role, not the organization. You had had a view for quite a while from the CMO seat.

Pepe: Right.

Bonica: But when you actually stepped into the role, what surprised you the most?

Pepe: What surprised me the most was the influence of the position. I pretty much came from humble background, and when I came into the CEO job, especially being in an internal candidate, I didn't realize how much things would change on what I said, what I did, my body language. Everything I said was amplified. Every thing I did was projected, and I just didn't realize how much of that was taking place. Things that I were able to say before and could be thought of as a joke, were now hurtful to some people, because I had to ... because I was in a different role, and I quickly had to understand that and incorporate that, and realized that I'm always on all the time, 24/7. I can't be walking down the skybridge and looking down, or be with my thoughts. I have to be smiling. People would say, "What's wrong? Something's going on in the hospital." Even when I'm out in the community, I'm always the CEO and that is just more than I expected. I knew I expected it, but I think the degree was much higher than I've anticipated.

Bonica: How have you grown into that role now between what you just described, and kind of just the role generally in the last ... you've been in it now for four years.

Pepe: Yes.

Bonica: How have you grown into it?

Pepe: I would say that I have grown into it by really learning to take a little bit more of a backseat. I have honed I believe my leadership skills even more so than when I was the chief medical officer, and I feel good about that, because I see others grow and that makes me feel good. When you have good people around you, you don't need to be a micromanager. I'm certainly not a micromanager. I love to let people go and do their job, and I believe it engages them and makes them have a sense of self-worth, and makes them want to work harder, and be more loyal to the organization.

Bonica: Can you talk a little bit about your strategic planning process. Processes you've participated in over time and what you're using now. How does that incorporate maybe your staff, the board? How does it all work here at CMC?

Pepe: Yeah. The strategic plan is interesting because it used to be that a hospital would have a strategic plan of five, seven, maybe even 10 years, and because this market is moving so fast, and there are so many variables going on at once, that anything more than three years is like looking into a crystal ball. We knew that we had to have a retreat and that's what we do. We have a retreat with the board members. Management does a lot of prep work prior to that, and we do a lot of education to the board prior to that, but ultimately it's the retreat where we formulate our plan. What we've done is we've said we really can't predict certain things in the future, so how do we deal with that? How do you deal with a direction if you really don't know what the future holds? What we came up with were principles, guiding principles, and we fell back on the basics of well ... we realize we can't be independent, because no hospital can be independent as we move from volume to that value. You have to in some way, shape or form collaborate, partner, merge, do whatever you need to do to gain scale and scope. How are we going to evaluate the opportunities going forward?

We went back to these guiding principles and those guiding principles were this. That we were going to continue our mission, we were going to continue our Catholic identity, and the third principle was we were going to have enough governance necessary to accomplish the first two. Every single opportunity we look at, we go back to those guiding principles we say, "Is this going to maintain or enhance our Catholic identity? Check. Is this going to maintain or enhance our mission? Check. Is this going to give us the governance necessary to continue those? Check." Then we go with that, and if there's only one check missing, we don't pursue that opportunity.

I would say that's how we start, and then from there we build into the future a direction, and it is purely directional. We know that you have to be nimble, and there may be opportunities where we have to come off the road a little bit to snag that opportunity, or there may be a situation where we get hit with a negative and we have to deal with that in the proper way, shape, or form in order to move on. But one thing we learned for sure it's mostly about offense. We have to think about defense, but it's mostly about offense, and we have to stop worrying too much about the defense. As one professional fighter once put it, everyone has a plan until they get punched in the face.

Bonica: You've been talking about value and value-based reimbursement. What are you doing in order to be better positioned as we move towards that?

Pepe: Sure. Well, one of the biggest things CMC he has done is what I mentioned previously, and that is we have formed our own insurance company with other institutions in Tufts health plan, called Tufts Health Freedom Plan. That is one way where our chief medical officers of all the hospitals, sit down, get together, and they look at ways that they can make things better for patients, lower cost, higher quality. In other words, they look at evidence-based medicine, and they roll it out to the institutions ... at every institution. We also pull our resources together so that we can have the infrastructure necessary to have the value proposition. It may be difficult for one hospital to have many care coordinators, to have better value to patients, to direct them in the right way, but together we can send them off to school, and we can disperse them among all the hospitals.

There's a larger platform to spread that infrastructure that cost money in order to do that. Specifically CMC what we're doing is, we've we've partnered with Bedford Ambulatory Surgical Center to form what they call a site of service imaging center. What that means is that instead of you going to the hospital and having an MRI for $2000, you go to this Imaging Center and you can get it for $600-700. This MRI is an open MRI, which is the only true open MRI in the state. We're constantly trying to up the quality, up the service, and lower the cost for patients.

Bonica: The healthcare field continues to be a field defined by change. What are the key opportunities that you've identified that are pursuing as a CEO? Where are the growth opportunities?

Pepe: Interesting. I would say that we are ... we feel that the growth opportunities are in the form of having a bigger base. In other words, more covered lives as we like to call it. Because as we move more into ECO's and risk models of payment, you need to be able to mitigate that risk by having more patients. What we have done is, we have a hub-and-spoke model in which we are the hub, and what we do is we put physicians in hospitals all across the state, to help them with services that they didn't have before. So the hospital wins, that community wins, the patients win, because they have access locally. But at the same time, if someone needs a higher level of care, they come to Catholic Medical Center.

Another way we've done it is two years ago we started the first community patient transfer center. We have a patient transfer center, one call does it all, so any hospital in the state can call us when they need a higher level of care and say, "I have this patient that we need help with," and we bring them here and if we can't bring them here for whatever reason, we find a place to send them, where they would get the care that they need. I believe that excelling in key service areas, expanding our geographic reach, and extending our covered lives, and engaging in our stakeholders, is our growth proposition.

Bonica: Probably one of the biggest buzzes now is population health.

Pepe: Yes.

Bonica: What kind of efforts are you working on in your system, or in cooperation with other organizations on population health, and what are the economic incentives to support population health efforts?

Pepe: We are working with Granite Health in their ... we're building a population health base at Granite Health, and we have purchased the Athena system in which we put all our clinical data in, and we can learn from not just our own organization, but from the five organizations together. Before we were only able to get administrative data, which is right from the billing, but now we're able to get clinical data. which is meaningful data. Now we're in the process of turning that data into knowledge, and hopefully someday into wisdom. That is what we're doing and it has been highly successful thus far, we have rolled that out to all the hospitals in Granite Health. Aside from CMC doing many of the other things on their own, we're working with our partners both in Granite Health as well our other partner hospitals that we work with on initiatives that will move us in that right direction.

What are the incentives? Unfortunately, there's not a lot of incentives out there right now, and that's why it's moving slower than many would like it to move, but there is ... CMS or the Centers for Medicare and Medicaid Services, they do have an incentive program called Value-based Purchasing, in which if you have higher quality, higher outcomes, better processes, higher patient experience, and less complications, than you get ... they will give you back the money they took, and hopefully even more. There are incentives in that regard. The other incentive is that there are penalties for example for readmission, and CMC is lucky to be one of the ... actually the only Community Hospital in the state that did not get a penalty for excess readmissions for three years running, so we must be doing something right in the regard to the value proposition.

Bonica: Nice. Let's transition and talk specifically about leadership. How would you define your leadership philosophy?

Pepe: I would say that it is definitely a servant leadership position. I really feel that it's not about me, it's about the position and the organization, and the stakeholders. I don't think a week goes by where I don't make a decision that at least potentially can hurt me, but it's what's good for the patient, or good for the organization, so I make that decision. I think that's truly what we need to do, and it's a tough way to be, but I think it's the best way to lead especially in a non-profit organization. I would also say that the leadership style is one of getting good people and empowering them, and letting them do their job.

I don't believe in micromanaging. I believe the exact opposite. I believe in giving them as much autonomy as I can, and they feel really good because they can actually make decisions without coming to me every time about a decision. They know what I want, they understand the vision, they know what where the direction is. so why not give them the ability to meet with their colleagues outside and internally, and make the decisions that need to be made to move the organization along?

Bonica: What would you say are the characteristics and behaviors of a good leader, and how do you aspire to those yourself?

Pepe: I would say most importantly, a leader has to be a good listener. I would say a leader has to understand that they don't know everything. They need to understand what they don't know, and they need to continue to learn each and every day. Leaders should be humble, because it prevents you from having those blinders. You want to listen to as many different people as possible, at different levels, different stakeholders, because in order to make good decisions you need to hear from people who see things through different lenses. I don't hire people who are yes men, or yes women, I hire just the opposite. I hire people who challenge me, because it's important that they challenge me, in order for me selfishly to be able to make the best decisions possible.

Bonica: How did you come to believe in these particular characteristics? Did you see someone that ... is there someone that you observed? Where did you learn your leadership style from?

Pepe: That's interesting. That kind of gets into ... the usual question people ask me is, "Who's your mentor, and who did you try to model from?" People never liked my answer, because it's not one person. I always feel that no one person has it all, so all throughout my life whether it was with my parents, or my brothers and sisters, or my friends, or the professional people that I know and have met, and work with, I try to take the best of every individual, and I'm in awe that so many people have such great talent in certain areas. The areas that they average or that they're not good, I'll just leave that behind. I have to say that through keen observation of people, I try to incorporate the good of people, and I do feel that most people have these good behaviors, and good talent, and professional behaviors and leadership, and I try to incorporate that. Whether it's someone on TV, a political figure, or someone in our own backyard.

Bonica: You mentioned a minute ago you don't hire yes men.

Pepe: Right.

Bonica: What do you look for when you're hiring a leader?

Pepe: I look for people who have a good work ethic. I look for people who are very loyal. Not necessarily loyal to me but that's important, but loyal to an organization, and put the organization above perhaps their personal needs. I look toward leaders that are open, transparent, and highly ethical. I don't want anyone who can get there by shortcuts, or through unethical ways. I also don't ... there's plenty of good people out there, I try not to hire mean people.

Bonica: What do you look for when you're evaluating your leaders?

Pepe: Well, I look for what they have done and how much risk they take when it comes to judgment and moving the needle. I think that people should be doers. I love teaching, and I love people who are very well organized, and I think those are important, but when it comes right down there need to be deliverables. We need to have goals that are SMART goals, and we know what that is. They need to be achievable, they need to be relevant, they need to be time oriented, but most importantly they need to be specific, and they need to match up with our strategy and organizational goals as well.

I take all of that into consideration, but also the soft areas of how they interact with other people. It doesn't help me or this organization to be good partners to external relationships that we have, if the people I send out are not going to be that way. They are the face of the organization, and we take a lot of pride in being a good partner to our partners, and there's something to that. That is that when they're in trouble, we drop everything and we help them out, and we say what we mean, and we mean what we say, and it doesn't matter if the partnership or the relationship results in them going up 10% and that's going up 5%. To me, if we're going up that's a win.

Bonica: I do want to ask you about mentors. You had mentioned earlier that you didn't have any one particular mentor, but did you have anyone that helped influence your thinking about your career, and where you wanted to go?

Pepe: I would say that if I had to pick one, because everyone wants one, it would have to be my college anatomy professor. What she taught me was ... she started me right from the very beginning with professional behavior, to set your sights high, to achieve goals that were worthy, and to put a lot of time and effort into what you're doing, and to be proud of that. That anatomy professor unfortunately is deceased, but Dr. Barbara Stahl at Saint Anselm College was probably the closest thing to a mentor that I've had.

Bonica: An individual mentor?

Pepe: An individual mentor. Correct.

Bonica: Okay. How do you develop leaders within the organization? What are your expectations specifically for mentorship within your organization, from your leaders to the people?

Pepe: Sure. We have a director of organizational development, and that person holds classes. We have a Leadership Academy, and we put up incoming rising stars into that Leadership Academy. That person also teaches many classes on everything from email etiquette, to professional behavior, and career development of many different kinds and sorts. The Leadership Academy, although that person runs it, every single senior leader takes part in going to one of those meetings, being a part of it, and mentoring during that process. We have to give up a lot of time for these people to go there a full day every week for six weeks, and there were many other types of leadership programs that we hold in the institution. But we also expect that our senior leaders, and our managers, and our directors, that they take people under their wing and they mentor them. When they're not, they get called out. We say you know, "Why doesn't this person in your command know how to do this? Why haven't you taught them how to do this?"

We don't say they have an issue, we say the leader has an issue, if that person doesn't know how to do X. We really try to foster that mentorship, and we do have a succession planning, and that succession planning they need to report that to me. I have a succession planning from day one, and it's not about being afraid of your job, it's being confident in your job and being accountable to the organization that you're mentoring someone or so many people, so that they can take your job when whatever happens. If you get hit by a bus or you retire or whatever.

Bonica: We all get off the bus eventually.

Pepe: Right.

Bonica: Are you a member of any professional organizations?

Pepe: Yes. I'm a member of the American College of Healthcare Executives in ... they changed their name, but it's physician leadership American associations for physician leadership, and so those are the two major memberships I'm associated with. Some others that are less though with the state and so forth, I am a part of member of the New Hampshire Hospital Association and so forth. It's a round table with many Hospital leaders at Granite Health. The five CEOs meet every three weeks for several hours, and it's a commitment, but we all show up in person, in Concord, and that fosters a very professional relationship. I think the professional associations are very important, but they're only one aspect of keeping up with your professional career and development.

Bonica: What do you do to keep up with your professional career and development?

Pepe: Aside from those relationships ...

Bonica: Those and ...

Pepe: ... I read a lot. I read everything and everything, and you name it, when it comes to me. I think people in this organization actually get surprised by how much I read, because I just always loved to read, and I'm fascinating by a whole host of different topics. I don't just read the typical trade magazines, which are very, very important but it's important also to read your local paper, and the national paper, and also other trade journals like Harvard Business Review and so forth. I go to a lot of courses. I still keep up with my CME's medical education. Sometimes I take courses that I may not need for this job, but I always find something out of it that I can take in and incorporate.

Bonica: Why would it be important for a young person who's looking to make a transition into either Healthcare Administration, or maybe a physician looking to make the transition to a leadership role, why would it be important for them to be involved in some sort of professional organization like HCAG or one of the similar physician oriented organizations?

Pepe: Well, I think the most important thing is networking. I think networking is something that I didn't realize how important it was. As a physician you don't have to network. You know it's the typical, you hang out your shingle and patients come, or they don't based on your quality and your personality. But when it comes to hospital administration, you really ... it's good to have that networking. You learn a lot. Everything from the tricks of the trade and what is required to do the job, to that professional attitude, and that professional behavior that needs to be there by your side, when you're advancing in your career. Also, it's about learning, it's about education, and it's about validation.

Many, many times I will go to a week-long course and I will realize that if I could only pick out the stuff that I learned, it would probably be three hours. However, I don't know what three hours it was, so I had to go to the whole thing, but even so it's still okay because the things I'm doing well, or the things I know, it's validating. I think there's something to that validation process of hearing something, and knowing that you're doing that, or you've done it in the past, and you're up to date.

Bonica: Let's close on this. What advice would you have to people just starting a career in health care administration? Either clinicians looking to transition into a leadership role, or early careerist administrators. What should they be doing to be successful? What should they be reading, listening to, organizations they should belong to?

Pepe: Well, I think they should belong to their professional organizations. I think they should be reading everything. The trade journals like Modern Healthcare magazine is important, Becker's Review is an email that you can be a part of. Everyone will find what helps them the most, but there has to be ... they need to organize that reading material, and that education so that it's not on occasion, but it becomes part of your daily routine. Read everything you can, listen to everyone you can, you don't have to take their advice or do what they say, but listen to everyone you can, and active listening not just listening like how our children listen.

I would say that they should put their head down. They should have a work ethic. They should understand the importance of loyalty to an organization in a group of people. When I say that, it's so important that if the people around you have your back and you have their back, it makes your job easier, and it also makes your world much better. Because let's face it, we spend a great deal of our time at work, and so doing to others as you would have one do to you is a very good important aspect of it. I think that master what you do very well, and always ask for more projects.

Get out there and be a little bit aggressive at saying, "I can take on more. I want more." Because we in the leadership we see that, and we say, "That's someone who wants to be a leader. That's someone who wants to rise." It's not ... don't ask for another position, a higher position, ask for the projects. Ask to do more. Ask to be outside your comfort zone, and then the position will find you, as it found me.

Bonica: Thank you so much for your time today. This has been great.

Pepe: You're welcome anytime. Anything I can do to help.

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