Robert Meyer joined Phoenix Children’s in 2003 and is credited for the rapid turnaround of the hospital’s finances and its successful growth under his leadership.
This year, Phoenix Children’s opened a second hospital and plans to open a third next year.
In this new podcast, Meyer shares the strategy for Phoenix Children’s including:
Maria Castellucci
Hello and welcome to Healthcare Insider, a sponsored content podcast series from Modern Healthcare Custom Media. I'm your host, Maria Castellucci, deputy editor of custom content at Modern Healthcare. It's my pleasure to welcome to the podcast today, Bob Meyer, the president and CEO of Phoenix Children's, one of the nation's largest pediatric health systems. Bob joined Phoenix Children's in 2003 and is credited for the significant turnaround of the hospital's finances and operations. Under his leadership, Phoenix Children's has expanded from a single campus to a growing health system offering services at more than 50 clinical sites across the state. Phoenix Children's is consistently recognized as a top pediatric hospital and will be the fourth-largest pediatric health system by the end of 2025. Bob, it's great to have you here today. I'm really looking forward to our conversation.
Bob Meyer:
Well, thanks for having me. I'm looking forward to it as well.
Maria Castellucci:;
Okay, so let's just dive right in. What is driving your growth strategy at Phoenix Children's?
Bob Meyer:
Well, a number of issues, but primarily the population growth of Maricopa County, Arizona in general, but Maricopa County, it's actually interesting. It's being forecasted to grow by a hundred thousand people a year for the next decade. So it's been rolling in the one-and-a-half percent annual compound growth rate. So it gives you a lot of challenges just to keep up with the growth. So we are expanding a number of services, number of physicians, et cetera, capacity around that. But it's got a number of dynamics to it too, which is just again, the geographic reach of that growth. Most of the growth, which historically has been in the East Valley, is now shifting to the West Valley, which is creating an interesting dynamic because the roadway network, the freeway network, et cetera, is undeveloped over there. So part of it is it's very difficult, like any major metropolitan area to get around, particularly east West.
And so as a result, we've been looking at how we geographically expand. You referenced a number of delivery sites, et cetera, hospitals, things of that nature, and that's really driven by the geography. Then the other, again, it's just the population growth, which is numbers of physicians, nurses, things of that nature. And so again, when we look at it, we're also developing our centers of excellence, our high intensity programs, which are predominantly on the main campus, our Thomas campus, the tertiary quaternary facility, but we're pushing out a lot of things, oncology, chemotherapy, a lot of things of that nature. We're developing a distributed network, which again is in direct response to our family advisory committee. So one of the biggest challenges in this town is travel. The largest actually interesting enough, largest city geographically in the country in terms of square miles. And so you can imagine how that plays with a developing freeway system. It's being built after the city, which is why we're referenced that east West problem with transfer getting around.
Maria Castellucci
Wow, that is really interesting. It sounds like there's a lot of changing dynamics going on in the area specifically. Are there any constraints to that growth, and if so, what are they?
Bob Meyer:
Yeah, I touched on it a little bit earlier. Some of the constraints is as you start to go, the more affordable housing and so forth is moving to the outskirts of the valley, which are the hardest places to get to because that's, the freeways aren't yet built. Most dynamics and healthcare planning follow freeways, including us. Quite frankly, most of our facilities are either on a major freeway or within a mile of a freeway, an exit, et cetera. So I think we've been very, very cognizant of how do you get places, and so we've been distributing, so it's not just hospital beds, which we're increasing, but we've got 50 ambulatory sites across the valley as well. All again, we think pretty well thought out where they sit. And we developed many years ago, the first pediatric clinically integrated network it's referred to at the doctors, they named it Phoenix Children's Care Network, but it right now consists of 500 primary care pediatricians and all of our specialty practices.
So we're really not, per se, in the primary care business. We do that in a collaboration with the primary care pediatricians. And so again, it's a very comprehensive network, but the growth of primary care pediatrics is on those outside rings. I referred to. Our partners on the primary care practices are inside the ranks, and so we're being forced to start to develop our own primary care practices because the private practices don't have the capital to do it. And so again, it's an interesting dynamic, but they're fully supportive of how we're doing it. We're doing it in collaboration with them. And that network now is starting to push 300,000 covered lives in that sort of managed process. And so with very good outcomes.
Maria Castellucci:
It sounds like partnerships are really important to this growth strategy. How is Phoenix Children's partnering with local providers?
Bob Meyer:
Yeah, I mean, it's absolutely part of the strategy. And one we've been working with for quite some time, going all the way back to the original acquisition strategic alliance, what at the time was Dignity Health, where we moved their children's hospital from their flagship at St. Joseph's in 2011 to this campus on Thomas. So you took essentially what were equal in terms of market share, a third, a third, and then Banner had a third. So we went to putting the two together, and we had built that new tower, a new hospital. So we had the physical capacity to do it, and that's what again, allowed us to take off on US News World Report, all the rest of those things. We had the volume to do it. And so again, absolutely, where do our patients come from? Going back to my comment about women of childbearing age, a lot of the kids with chronic illnesses, whether it's heart neurosciences, orthopedics, et cetera, those are evident at birth.
And so we actually developed a high risk system, a fetal care network to identify in utero those children that are going to need us post-delivery and move those deliveries under the auspices of these various NICUs that were managing. And so that has worked incredibly well. So if you go back to that group of very high risk of newborns that are in those NICUs, three to 5% of all NICU admissions are the people I'm talking about, the children I'm talking about, that will ultimately end up at Phoenix Children's for heart surgery, whatever it happens to be. And many of those will end up being lifelong patients of Phoenix Children's because that's the other side, again, getting back to why get involved with the adult providers. So we got a lot of children because of the tremendous success, and this is true of all children's hospitals that are living into adulthood, but still having chronic childhood diseases.
And it's been very difficult to find adult providers that are interested in taking on these types of children because again, if you look at a normal cardiac surgeon on the adult side, they do cabbages, they do relatively straightforward, the anatomy of the hearts intact, it makes sense to a doctor. You look at children that have hearts that have had chambers recreated the plumbing fix, things of that nature. Those adult surgeons don't understand that. And so when you look at it, we do all of the adult congenital heart surgery for both Mayo here in Phoenix, as well as again, the St. Joseph Hospital Dignity system here in the Valley. So again, when you get out, it's very specialized surgery. And so we do it. We do it in their facilities, and we do some of it at Phoenix Children's just depending on what comorbidities that young adult may have. And so again, it's very much a collaborative system. We've been building it for a long time. I think the advent of building our own neonatology program has been accepted very, very well by the adult community that was dominated by the publicly traded physician companies, et cetera, over time and again. So in a four year period of time, we have built the group and now provide services at seven NICUs around the valley.
Maria Castellucci:
We are dealing with a clinician shortage nationwide, but I'd imagine it's a challenge in pediatrics even more. And you have this growing population. Is recruiting and retaining clinicians a challenge?
Bob Meyer:
Yeah, the answer is yes. We are having challenges. We employ today on the physician side, about 700 pediatric specialists in our medical group and an additional 200 to 225 advanced practice practitioners, nurse practitioners, physician assistants. And so when you kind of look at that over time, we have now insourced and or built our entire specialty medical delivery group. As I said earlier, we've really focused on collaborating with the community pediatricians in terms of the primary care side, but we've invested very, very heavily in building education programs. So when I came here, we had a small residency program. So we grew that from 24 a year to 38 residency a year. And again, we had two fellowships. We now have 27 fellowship programs and multiple subspecialties. So we built our own educational system to create the doctor side of the house on the nursing side. It was interesting, I remember this vividly as a group, the Children's Hospital Association, we got together and we're all suffering the same problem with the 50% turnover in first year nurses.
And so we all sat down and said, okay, let's go hire some PhDs org development people to go find out for us why? And it was interesting. We were having one of those executive forums, and it was here in Phoenix, and when the results came in, you could hear a pen drop because the overwhelming reason why the young people were leaving pediatric nursing, they didn't like the interaction with the families. And so keep in mind, all pediatric facilities are built around family centered care. And so we got looking at that a little bit, saying, huh, how can this be? And we did some interviewing additional focus groups of our own. And what we figured out was these young people in Arizona, it be different in other states, but in Arizona you need 70 hours of pediatric clinical rotations to get a nursing license, just 70 hours of which only 30 of those hours have to be hands-on the other 40 can be simulation.
So it became very apparent very quickly is that the people had very little understanding of what they were really getting into. And I hear it from our doctors, everything else constituency, those young moms, et cetera. Everybody's gotten very astute at the internet, second guessing you and everything else. And so we developed a program in a collaboration with Arizona State University School of Nursing to develop a pediatric curriculum and a very specific pediatric curriculum and then invest because we realized that we had something that strategically was valuable was the clinical rotations. So what we did is we built the program, got the state board to agree to it, get CMS to agree to it. And so these kids are coming out now with 550 ish hands on hours of clinical rotation in designated educational units at Phoenix Children's, our preceptors, et cetera. And that thing has grown now from 50 graduates a year to 80.
The upcoming academic year, we'll have 108 graduates coming out of the program. We think it's going to top out around 180 graduates a year because a SU is also expanding. Its nursing school, and right now about 10 to 15% of their students are opting for pediatrics. Now the good news is we're hiring 95% of the graduates coming out of that program, and we're retaining 90% of them now four years, five years into the deal. So it's meeting all of our expectations. And as a result of that, we're expanding the program to the University of Arizona College of Nursing. And so we're very, very focused on the workforce development. We added as a good example to a SU licensed Clinical social workers, which are become mental health therapists. So our current program we've got there is graduating 18 of those a year. And so we're very cognizant you can grow beds, and I make construction people nuts when I say building hospitals, building beds is easy, billing them and staffing them is a whole nother discussion.
And so we're cognizant of both. So our investment in all of our educational programs has been very, very significant. So we're trying to create our own, because again, when you're looking at that growth rate of a hundred thousand people year and about 25% of those are children. So 25,000 a year, you could start to get a magnitude of we're just treading water, we're keeping up, but we're getting better geographic distribution, et cetera. But the physicians per hundred thousand, all those kind of statistics we're just, again, bread and water. We're a little better on the pediatric side. But overall, the state of Arizona is still in the mid 45 ish of the 50 states. In terms of those metrics.
Maria Castellucci:
In the past 20 years as president and CEO of Phoenix Children’s, what was the biggest risk you took that paid off?
Bob Meyer:
Wow. Well, it goes back to when I very first got here. I was a consultant. I was working in Ernst and Young strategic planning m and a practice out of the west coast in la. I had a subset of work, right? Started working with children's hospitals all over the country. So when this place had its issues, got into trouble, people asked me to come over and could we help Phoenix Children's deal with the financial operational problems? Because remember, they were a hospital within a hospital, just like all children's hospitals start when they came out to be free standing. It was a very, very challenging discussion. And so when I looked at it, we did some of the normal consulting stuff. There was a bond default, so could they turn it around, all that kind of stuff. That's how I first got involved with Phoenix Children's, was doing the consultants report, but I also learned a lot about Phoenix Children's, learned a lot about the market doing that report.
And so the conclusion that we basically had was that it would be very, very challenging for Phoenix Children's to turn it around. Management at the time did not agree with us. So in August of 2002, went home and I got a call from the board chair in between the Christmas and New Year's holidays, and the gist of it was, in essence is everything you said was going to happen has come true. Can you come and help us? Can you come talk to us? What do we do now? So came over and I literally, like all good consultants, was sitting by the pool at the Arizona Belt. We on January 1st doing the PowerPoint slides for the next day's meeting with the board. But the gist of it was could the place be turned around? And after a relatively short, quick look, I think the answer was yes.
And the reason I say that is the operational problems were pretty straightforward. There were primarily revenue cycle and some basic nurse staffing issues, things of that nature. But what struck me was a tremendous loyalty and support of the medical staff for the hospital. This place was the brainchild of the Pediatric Society of Maricopa County. This was what the physicians wanted. So based on that, and then like I said, the whole opportunity, the way I looked at the market, the three players that could be rolled up, you could do things to build a real world-class children's hospital here. The riskiest thing I did was taking the job. Everybody I knew at Ernst and Young and every place else said, are you out of your mind? You're going to do this. You're going to leave this, what you got going for that? And I said, well, yeah, because again, there were all these changes going on.
Everywhere you work, things go on. And a change was good for me at that time. I so came in. Then I think the more important issue was based on, I think a lot of good strategic discussion was the gutsier decision the board made, which was to pursue the turnaround and more importantly, in a relatively short period of time, vote to issue $450 million of debt coming out of a bond default and to build the new tower, the new hospital, the capacity we needed to be successful. The hospital that we took over coming out of the parent hospital was 1960s, construction, architecture, et cetera. It was too small. So this gave us a whole ability to do the whole rest of the roll-ups, the strategic alliance with the Dignity Health System, a combination of the two pediatric programs. Part of that was going to being a planning consultant, you put together, if you took what Dignity had and what Phoenix Children's had you put us together, all of a sudden you've got the fifth largest heart program in the country, the second largest pediatric neurosciences program in the country.
Phoenix Children's was already the seventh largest HEMOC program in the country. The one that wasn't as clear, but turned out to be very, very good was between the two facilities was about 80% in terms of orthopedics. So all of a sudden, you have the critical mass to be relevant and get US news and World Report rankings, and so kind of all ran that. But those early days were difficult. We're under a very, very tight bond requirements bond covenants that's, we had to watch Dave's cash on hand, all kinds of issues, but I credit a lot of people that had the vision and the guts at the board level, the physician level to do it. So I took that all as why I should give it a shot, so to speak. I had a professor when I was at the University of Michigan Business School. It was an entrepreneurial business class, and he basically, his comment was, Hey, you guys got to go give it your shot.
Worst thing that happens to you is you fail and you get a job. And he said, you'll have no problem getting a job and Miss Michigan Business School. And so that stuck with me, those little mentor, those little tidbits you hear over time. So risk is not a big issue to me. There's no real downside to it, so to speak. And so, yeah, it was fun. I'll tell you, children's healthcare too. I grew up in the adult side, academic medical centers, that kind of thing. Pediatrics is different. You feel good when you go home. You feel good when you come. It's a different population. And I drank the Kool-Aid, let's just put it that way.
Maria Castellucci:
And here you are 20 years later, more than 20 years later. Very, very cool. Well, thank you so much, Bob, for your time. This was so great. It was so great speaking with you and hearing about all the exciting things going on at Phoenix Children's.
This has been a sponsored episode of Healthcare Insider, created in collaboration with Phoenix Children's. For more information about them, please visit, phoneixchildrens.org. I'm your host, Maria Castellucci. Look for more episodes of Healthcare Insider under the multimedia tab at modernhealthcare.com or subscribe to your preferred podcatcher. Thanks for listening.
