INTRO COMMENTS: Hello and welcome to Modern Healthcare’s Next Up, the podcast for emerging healthcare leaders. My name is Kadesha Smith. I'm your host, and I’m also the CEO of CareContent, a digital strategy agency for healthcare organizations.
Today, we’re talking about succession planning. Succession planning is key for ensuring smooth transitions.
On a previous episode of Next Up, we spoke with Nancy Schlichting, who spent 14 years as the CEO of Henry Ford Health System in Detroit. She talked with us about choosing the best person to continue your legacy, and she also offered tips on putting yourself in line for the role.
Succession planning during a pandemic is quite a bit different.
Before the pandemic, a majority of US healthcare industry leaders — including nearly half of the nation’s hospital boards — said their organization did not have a formal succession plan in place. Those who did have plans rarely revisited them, rarely updated them. Additionally, very few CEOs report that they had picked a successor.
On today’s episode of Next Up, we will be speaking with Susan DeVore and Michael Alkire of the healthcare improvement company, Premier. Premier was founded in 1967. It has a network of more than 4,100 member hospitals and health systems. And the company’s Quality Improvement Collaborative includes hospitals from 37 states. It’s saved more than 200,000 lives — and $18 billion — over the last 9 years.
Susan is the current CEO, and she’ll be starting her transition to retirement in May before officially stepping down in June. Her successor is Michael Alkire, who began working with Premier in 2003, and he’s been serving as president since 2019.
Now, let’s jump into our conversation with Susan DeVore and Mike Alkire on succession planning during major organizational changes — and even a global pandemic.
MODERN HEALTHCARE: Hello Susan, hello Mike, thank you for joining. How are you both doing?
SUSAN DEVORE: Doing great.
MICHAEL ALKIRE: Good, thank you for having us.
MODERN HEALTHCARE: Before we get into our discussion about succession planning and transition planning, I just want to read a couple data points.
Modern Healthcare reports in October 2020 that 70% of industry leaders in healthcare say their organization has no succession plan in place — despite the fact that the American College of Healthcare Executives predicts that almost 70% of healthcare leaders will retire in the next 10 years.
Also, in the first quarter of 2020 alone, we saw 43 hospital CEOs resign. That's nearly double the number that resigned the period before.
So, as we talk about succession planning and transition planning, and how important it is, organizations like Premier are vital to the operations of hospitals. And in 2020, you guys went through a restructuring of your company.
Susan, why is now a good time to retire, and how did you do this planning in the midst of a global pandemic?
SUSAN DEVORE: The CEO transition process — it really, at Premier, has been a byproduct of careful and deliberate planning and it's the natural evolution of the company. And I've always thought it's the CEO’s job to make sure they’re building succession planning for a smooth and seamless transition. And certainly in a global pandemic, that's more important than ever.
Premier, as you know, has been at the forefront of really helping our health systems with all the supply chain needs and vaccination challenges, and all the things associated with the pandemic. I'm hoping that by June 30th, when I retire, we will be on the back end of the pandemic.
But the strategy’s set, to your point, the restructuring is done. Mike's ready. Mike's been here a long time. He's going to execute that strategy, and it's really just a natural evolution of the company.
MODERN HEALTHCARE: Well, on a similar note Mike, I can imagine that in the healthcare space, there might be some freak-out moments about transitions because of, just, the year that we had. How has Premier’s succession planning helped you feel confident in stepping into this role, and during this pandemic, being able to kind of hit the ground running?
MICHAEL ALKIRE: Susan has done an amazing job of building a strong foundation here at Premier. Susan and I kind of have had a role over the last — at least since I've been president, so probably the last 18 months or so — where it's been very interchangeable. So, I met with folks on Wall Street, the same that Susan did. I, you know, obviously, have always had very, very strong relationships with our executives in our healthcare system, similar to Susan. Same with our supplier.
So, as Susan described — you know, over the last few years, we've done a pretty focused effort of ensuring that there was interchangeability of our roles. And certainly, she also allowed me, obviously, to work with her and the board to formulate the vision and the strategy going forward. And so, I think that provided the confidence to the board to suggest that I would be a great fit to replace Susan.
MODERN HEALTHCARE: Why do you think so many healthcare organizations don't do this — plan out these transitions, plan out their retirement, and plan out their successions, so that it is a smooth transition?
SUSAN DEVORE: I'm not sure people always know what the retirement planning processes are at a board level, because it's a pretty confidential process. What I would say is, you know, for anybody in a senior leadership role, you know, facing the fact that you want to retire and you want to do other things and you want to position the company well and you want to bring somebody behind you — you have to sort of look at yourself in the mirror and you have to figure out when the time is right. And you have to believe it's your responsibility to make that transition smooth in the best interest of the company.
And I also think you have to genuinely want your leaders to succeed and progress and evolve and be successful after you. So, I've always believed that, and we've had succession planning not only for my job, but Mike's job and everybody on the executive team. And we talk about it twice a year at the board level. I just think it's good governance, and I think it's good management and leadership. And I think they all do need to have it.
MODERN HEALTHCARE: Mike, as you look to the future, there's been a lot of talk about my reforms that are needed to prevent product shortages and public health emergencies. What are some of the changes that Premier recommends?
MICHAEL ALKIRE: From a supply chain standpoint, there's five themes that we think this administration, you know, needs to really think about.
One is, we’ve got to bring a better level of transparency to where products are actually being produced. One of the outcomes of the pandemic is that we saw where there were shortages because we had such dependence. And when I say we, the healthcare system at large, had such dependence on a country or a couple of countries for very critical products.
And so, we think that the FDA needs to sort of step in and understand countries of origin for not just — and I’ll use pharmaceuticals, for example — not just generic pharmaceuticals and their active pharmaceutical ingredients. But what are the key ingredients that go into the active pharmaceutical ingredients and where are the other products that are needed to produce the finished goods — where are they being produced? Because we have a perspective that a high percentage of that is actually produced in China, or, in some cases, India.
But we’ve got to create more resiliency. We’ve got to take that production and spread that to other low-cost countries. As well as, where it's incredibly critical, we need to manufacture more nearshore and onshore.
So, a second area is, how do we do more domestic manufacturing? And I think you’re aware of this: We made, along with a number of our healthcare systems, a couple of investments domestically to produce face masks to include N95s, and then isolation gowns. The way we were able to do the isolation gown program was that we were working with the clinicians and said, “If we were to create these products and could do it in a very, very highly automated fashion — meaning that you can produce these products long term and be competitive to a low-cost country — what would that product look like?”
And so, we got together with the clinician teams of our healthcare systems to design that. That allows us, then, to do more domestic production of products. We think — because pharmaceuticals, finish fill goods are highly automated — we believe that those production capabilities lend themselves to doing more domestic production. Same with API. So, we believe that there has to be more focus on domestic and nearshore production.
We believe we need to use technology differently to be hyper-vigilant. To understand where shortages could exist. So, we happen to obviously understand it with the pandemic, sort of in a real-time mechanism. We have the ability to understand that, you know, using data and some of the infrastructure that we built out over the course of the pandemic, to even bring that to light more. So, we've got to be hyper-vigilant and understanding where shortages exist. And that will allow us, obviously, then, to help inform strategies to either stockpile or build up inventory levels and those kinds of things.
At some point during this process, we had the federal government, the state governments, we had large IDNs, we had small IDNs, we had clinicians — everybody trying to stockpile products. And all that did was put a lot of pressure on this demand-supply imbalance that already exists. And what we're suggesting is, there is technology that exists that actually helps us feel comfortable. You know, we understand what the demand is and we understand what the supply is.
Number four — we do think this whole idea of dynamically allocating products. So again, back to the stockpiling point. As opposed to all these stockpiles being built and then everybody having their own allocation methods, is there not a better way to link that technologically? That technology already exists today. And then dynamically allocate products, either nationally or, depending on the product, regionally. But we do think there's opportunities to leverage technology to do that.
And then finally, we call it infrastructure 2.0. But it's really all about, how do we get the federal government and others to support, you know, the domestic production of products? And very similar to infrastructure 1.0, which was that bipartisan initiative probably 10 years ago — which was about building roads and bridges and getting the folks back to work. Very similarly, let's have an infrastructure 2.0 plan, which is all about building manufacturing capacity in the US where it makes sense long term.
MODERN HEALTHCARE: And this reminds me of a previous episode where we talked with Michael Dowling, the CEO of Northwell Health in the New York City area, where he said, “We were warned about this. We have had issues before where we were warned. You need to produce more domestically. You need to stockpile and you need to plan, because the next pandemic is going to be much worse — and then it happened.”
It sounds like you're describing, sort of, a scramble that we want to avoid in the future.
MICHAEL ALKIRE: You know, it is so interesting. Susan set up a coalition very quickly of GPOs, of distributors, of suppliers, with federal organizations like FEMA, HHS, to some degree CDC, FDA.
But the point is, we had to stand that up very quickly because that entity didn't exist. And we needed to understand where the inventory levels were, so that we could help get the needed PPE and pharmaceuticals to the parts of the country that had the most stress because of the virus.
We actually took a lot of that process. We kind of hard-wired in some technology that we developed. Predictive technology using machine learning. And so, what we learned, for example, on usage patterns for PPE and drugs from the New York Market — we then sort of leveraged our data with other public sources of data to actually create predictive models as the pandemic spread to other parts of the country. We were going to be able to help them understand the necessary PPE and pharmaceuticals that they were going to be required to have.
The point is, there's a lot of technology that already exists today that could be utilized tomorrow to help us be much more effective in terms of fighting this pandemic. And I'll give you one other example.
We actually had a machine learning AI capability that we were implementing with a few hundred of our hospitals to help them with the PAMA regulations, which was all about appropriate utilization of high-cost images. And we took that technology very quickly, because it was based upon natural language technology, natural language processing. Looking at the unstructured data in an electronic medical record, and determining the appropriate use of an image. Well, we could do the similar stuff and say, we could look at the physician notes and identify whether or not there was a high probability that this physician was treating a potential COVID patient.
And the reason that was so important way back when was that that was real-time. And if you remember when this pandemic first started, it took us days, if not weeks, to get results back from tests — if the test even existed. That was so important because we could then inform public officials to say, “Look — in these zip codes, at this prison, in this meatpacking facility — we see higher incidents of people that have these symptoms that would lead you to believe that there is the surgence of the pandemic.” And then provide them the information for them to do what they needed to do, to either close zip codes or keep certain zip codes open because there wasn’t the prevalence of the disease.
But the point of all of it is, we have this fantastic technology and we need to put it to use more effectively in future events like this.
MODERN HEALTHCARE: Your partnerships with health systems have changed over the past year. You've been providing them with medications needed when there were surges, for example. Can you share some of the other great examples of leadership that you've seen? And what are the skills you’re seeing as essential during this period?
SUSAN DEVORE: We have made investments in domestic companies. I think we've also been advising policymakers about the kinds of things they need to do to really incent and drive commitment to diversification of the supply chain.
Mike talked a lot about technology. transparency, using artificial intelligence and other future-state technological capabilities. We have got to modernize CDC and their data and automation. We've got to modernize public health and its automation. And I think Premier sits at the nexus of providers and suppliers of these products and government. So we're in a perfect position to do that. But I think in order to do that, the traits you need are boldness and innovation and tenacity and creativity. And Mike, in taking over the leadership of Premier — he and the team are very growth-oriented, very entrepreneurial innovation mindset oriented, very creative.
And I think that's why you've seen those things from Premier and I think that's why you'll see them going forward. Because once we get past the pandemic, we're all facing huge financial challenges in the Medicare trust fund, and so the focus on cost, the focus on clinical efficacy — all that stuff is going to continue.
MODERN HEALTHCARE: So, can you tell us a little bit about this succession process that you guys have followed? I mean, it seems to be moving along fairly seamlessly, considering all that has changed. Can you tell us about the process you followed and what you consider to be best practices for succession planning?
MICHAEL ALKIRE: The process was incredibly deliberate, right? And so, it was long term. For me personally, it was a humbling experience. So, as we went through the process — it gives me, as the incoming executive, time to sort of think about, you know, the fantastic team that's been built out of Premier.
Susan talked about some of those, sort of, key skills of tenacity and creativity and those kinds of things. And I'll tell you, that the team exhibits that. I'm just so proud to be part of that team and I'm really looking forward to providing leadership to that team.
Secondly, I'll just say that, you know, we've got a really, really strong strategy that we've been building out over the last year. Now it comes down to, really, a focus on execution and living up to those high standards of performance that we've delivered during the pandemic, as well as prior to the pandemic. So, execution and the deliberate nature of the process, I think, were two of the things that sort of stood out to me.
MODERN HEALTHCARE: Susan, anything you want to share about the succession planning process from your end, and what you consider to be best practices?
SUSAN DEVORE: Yeah, there are just a couple. One, it should be done continuously, on an annual basis — not only at the CEO level, but the management team and really all levels within the company. And we've done that.
Two, I think you've got to be really clear about the criteria, and the traits and attributes that you want in the leader. Our board spent a lot of time defining that, writing that down. They wanted growth orientation, they wanted Innovation, they wanted somebody who was committed to diversity and inclusion. They wanted somebody who understood supply chain and technology, they wanted somebody who had great relationships with our member health systems.
And so, they were very clear about the criteria for the job.
And then I think the goal here should be unanimous support from the board. And then the second goal should be the reaction of your customers, your employees, your suppliers, the Street, the policymakers. And I think you’ve got to build your best practices and your process around achieving those outcomes. And I was thrilled that Mike had a unanimous vote of the board. I knew he would, and I was thrilled that he did. But it was a very thorough and well-thought-out process.
MODERN HEALTHCARE: Susan, I am just curious, what's next for you? What role will you continue to play, and then what's next for you in retirement?
SUSAN DEVORE: I have been very blessed to have been able to lead Premier for 12 years and to be at Premier for 18 years.
And so, I love this company, and I'm happy to help strategically or in any way that Mike wants me to help on a going-forward basis. So, I'm going to technically retire, and I do want to retire and I'm excited about retirement. But happy to help because I think this is such a fantastic company.
I also want to give back. I want to give back in other ways. Charitable, philanthropic, advancing the transformation of healthcare. I've got personal interests. I have a huge family, grandkids — so there will be no shortage of things for me to do once I retire.
But I am so excited about the great things that will come under Mike’s leadership at Premier, going forward. You know, everything is in a great place, and so I can turn my attention to doing some different things.
MODERN HEALTHCARE: Sounds good. Mike, how do you see the company changing — or not changing — under your leadership?
MICHAEL ALKIRE: We've got a great long-term strategy, and I think we've got an incredibly strong culture that is anchored in a fantastic vision and mission and great values.
I've got this sort of three-prong focus and it's largely based on technology. First, we want to continue to look at ways to reduce the waste in healthcare. We think there's probably up to 30% of that, so that means we're going to have to continue to evolve our AI and machine learning around evidence-based protocols and guidance and those kinds of things to drive standardization and remove waste, modernize the technology.
We've got to do more of that, and automate more tasks and bring more visibility and transparency and resiliency back into the entire system.
And then finally, you know, we're going to continue to build out the technologies, deploy capital to do that, and build out expertise to help our healthcare systems succeed in a value-based world.
And so, I'm incredibly excited about the future of Premier, as well as humbled about the opportunity of following in Susan's footsteps.
MODERN HEALTHCARE: Well, thank you both for sharing a little bit of your process.
MICHAEL ALKIRE: Thank you.
SUSAN DEVORE: Thank you, appreciate it.
OUTRO COMMENTS: Thank you, Susan DeVore and Michael Alkire, for that insight on succession planning, and how it has changed in the light of events of 2020 and early 2021.
Again, I’m your host, Kadesha Smith. I’m the CEO of CareContent. We help health systems reach their growth goals through digital strategy and digital content.
Look for more episodes of Next Up at modernhealthcare.com/podcasts, or subscribe at Apple podcasts or your preferred podcatcher. Thanks again for listening.