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

and welcome to a HA Associates Bringing Value, a podcast from the American Health. Association In this series of podcasts, we speak with a HA associate program, business partners check in in their efforts and learn how they support a HA hospital and health system members. I'm Kathleen Wes, vice President of Business Management and Operations at the a HA, and today I'm joined by one of those members, Theodore Sheinberg, chief Financial Officer at the Christ Hospital and Health Network in Cincinnati, Ohio.

And Eric Hammer, initial health partner at Guidehouse. Teddy and Eric, welcome to the podcast.

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

Kathleen Wessel (Host): I'm really interested in kind of diving into your experiences. Today's healthcare environment transformation, not easy to navigate. That is an understatement, if I've ever made one. The most successful business transformations happen when hospital leaders, boards staff, and hospital members are fully aligned at Christ Hospital. You launched a mission for transformation.

What was the driving force for that change?

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

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

Going back, pre pandemic agency labor, temporary labor. Wasn't a here at the Crisis Hospital Health Network, we maybe had a little bit of nothing like what we've seen, And we put a little bow around it between 21 and 22. So our fiscal years, we invested almost a hundred million dollars into our workforce, which was around a 20% increase in our salary and benefit costs.

So we went from about a 4% margin in 21 to a negative 2% margin in 22. And we had a 25% decrease in our days cash on hand. And so when you think about what I said at the beginning, this had become an annual exercise for us. Number one, we had taken advantage of a lot of the, I'll call it low hanging fruit, And we understood that we needed to accelerate the pace of change, but a much faster rate.

For really two reasons. You know, number one, we still needed the capital to make sure we're reinvesting back into our mission. And then number two, given that we had had dipped into negative territory from an operating margin perspective, really our 135 plus year mission started to become at-risk. So again, there were a lot of driving forces, but again, primarily the pandemic and like most healthcare organizations.

Some of the after effects really drove this transformation, that effort that we're on, And the pace at which we needed to drive that change.

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

Theodore Scherpenburg: I've been at hospital now for, for 12 to 13 years, and before that I spent a little bit of time at s and Young out of college, a variety of finance leadership roles here at the hospital, but have been the CFO for the last five. And really when it came to the collaboration with, with Guidehouse, there's probably not a lot of, I think, secret sauce.

You know, in this I talked about the, the fact that we thought we needed some help to accelerate the pace of change. Obviously, whether it be me or or many leaders throughout the organization, we've had strong relationship with many business partners that we really leaned on to try to figure out who was the right partner.

I think for us or for change, and like everybody else, you know, we engaged those various partners And in what we're looking for, we engage constituents across the organization, the board positions, and other leaders. Quite honestly, and, and Eric will probably laugh at this, Guidehouse was somebody I probably wasn't as familiar with as some of the other organizations hung into it.

But, You know, our former chief operating officer had worked with Eric And the Guidehouse team in the past and really brought them to us. And again, just through that process, they were the ones that we thought that had a great fit and, and great. Gave us a great chance of achieving the goals that we know we needed to achieve to get things back on the right track.

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

I myself, I'm a partner within Guide House's Commercial Healthcare. I've had the great privilege of working in the industry for almost three decades and serving great organizations and great leaders like, like Teddy and and Debbie. And just a brief about Guidehouse, so we're a. A global professional services firm focused in delivering advisory technology and managed services in both the commercial And the government sectors.

And we serve companies across industries including healthcare, financial services, energy, infrastructure, and even national security markets.

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

Theodore Scherpenburg: Yeah, maybe chuck it out into too, and Eric, maybe I'll touch on some of, I think the, the keys to success and I would also say that I don't think we're. Completely successful yet I would say that it continued to be it and ongoing, but I think the first thing that really drove some of our success was we had a lot of clarity on the why, both short term and long-term.

And actually Eric and I had dinner the other night and I was given credit to one of our board members who really helped us understand the position that we were in. We weren't gonna sort of overcome overnight. So we set very, I think, thoughtful goals financially for what our recovery had to look like, which helped us, I feel like not become.

Overwhelmed with what we're trying to accomplish is we got back to, or tried to get back to profit levels that were consistent with where we were, you know, before the pandemic. And I would say the second thing too, again, we, we take a lot of pride in our mission and, And what we need and, And what we deliver on to the community.

And so not losing sight of tying that, why that financial aspect to that around what that why meant relative to our ongoing success from a clinical quality. Perspective. I would say the second thing too is having great teammates and partners, whether it be internal, the executive team, you know, the physicians.

Many throughout the organization from a leadership perspective, all the way down being great partners in this. And then obviously external partners too, like Guidehouse three, I would say the overall governance model to help us support accountability throughout the organization, whether it be the board, subcommittee of the board, you know, the executive steering committee, which also included position leaders.

As I mentioned, many of the executive team leaders, you know, raising their hand and stepping up to lead various work streams. And then the fourth thing I would just say is the continuous reporting out on the success. Again, if the chief financial officer, whenever you engage on something like this, one worry I have and one excitement I have is when I can actually go find it in the profit and loss statement, which then helps me draw that full circle back to, to everybody, but to the why.

To show them how show the improvement that we're generating is actually being reinvested back into the mission, the people, the capital that makes this, this place so special. Kathleen, in your opening comments, you know, one thing you touched on too, related to experience and quality and one thing too that's I think has helped made us successful.

If we haven't took it, taken our eye off, you know, experience and quality metrics. So all along, one fear you have is by embarking on something like this, will you be damaging something else that makes your organization or what you do so special. We've made sure that our balance scorecard, not only are we reporting out on the financial successes that we have, we've been watching closely, the experience marks that we've set, as well as the quality marks that we've set as we've kind of gone through this whole process.

Yeah. And if I

Eric Kammer: may add a few comments, I, I first wanna acknowledge and recognize Teddy's comments on setting the why. I think as we set forth a couple of years ago on this respective journey, providing the context before the content really allows your broader team to get a sense of the bigger picture and rally around.

The purpose for the transformation And then routinely as Steatotic mentioned, coming back to the why now here we are, You know, roughly two years later into the start of the journey and still coming back to what the initial why of this particular transformation as it related to the future of the Christ Hospital is.

I think the second thing is we acknowledge that. We were gonna prioritize efforts, we were gonna do that early to help us set forth a plan, uh, and a very intentional plan. So we did an initial diagnostic together that provided a portfolio of opportunities for us. And then we tried to be as exhaustive as possible.

So we looked at growth and cost and revenue and capital efficiency. And then we prioritize where are we gonna start and what's gonna happen initially And what might happen phase later. We made that a living and breathing process because we'd acknowledge that things are gonna change and not every plan is going to be executed as perfectly as you said they would need to be.

And so what's the process that we're gonna routinely monitor or discuss and pivot as necessary? You know, a great example, uh, Teddy and I routinely talk about is we had some opportunities that we really wanted to focus on around growth. Um, they have some very spectacular service lines that the Christ Hospital And it's medical staff provides through the community.

Um, and there were some great opportunities to grow, but Grove was complex and some of them just didn't happen as quickly as we were hoping to and seed some of the benefit they were hoping to. And so what didn't change was we. The why And we had goals and outcomes we wanted to achieve.

So we had to pivot. And we had some other areas like what we were doing in rev cycle, that we had some chances to push a little harder and accelerate. And so we created that pivot. And so the prioritization itself was flexible, uh, in a living and breathing process.

And the last I would say that we learned is really cultural awareness. The Christ Hospital, it has a very special and unique culture. You could feel it, and that's really been a privilege to be a part of it and experience it. And as we started the collaboration, we intentionally talked about how do we embrace and work within the culture, not be a blunt object against it.

And we acknowledge that we could drive and challenge change. But we'd have to do it within sort of the boundaries of the culture and take them along the journey with us. And so I thought those were a few things I would add to the comments that Titi offered.

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

So when we think about, uh, meaningful transformation And that not happening in silos, you need all of these groups to be working together. You know, as you progressed over this year and a half, how did you bring all those stakeholders together, like your board position leaders and internal teams to get into alignment?

Teddy, you referenced, um, each one of those groups previously. So you know what approaches help build that alignment into the culture.

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

It's never been a, you know, something that we sort of have done, I would say, off the side of our desk. And, you know, quite honestly, and, and Eric brought this up, you mentioned our CEO. She was our old chief operating officer, and she embarked on something like this, led something like this very similarly, five years ago.

And so she had a lot of, uh, I think advice for us. And I think the first thing was we embarked on a pretty thorough road show, going back to all the same things that we just talked about, you know, with the Y. And we went out, talked to the board, talked to many team members, talk to our management team, talk to physicians, just to create that awareness around the why.

And then quite honestly, then it just got down to putting things on the calendar with the various constituent groups. So to make sure we were keep coming back to them and providing updates. So for instance, you know, at our weekly leadership team meeting, the executive team meeting, it's a standing agenda item.

And so Eric Glass, you know, he goes and meets with Debbie and checks in on the progress and he always comes up and says, sometimes I think that she knows more than than he does about what's going on. But it's that thoughtful intent at those weekly meetings to provide updates not only to to Debbie, but the entire executive team relative to what's going on.

And quite honestly, hear from the executive team because they're leading many of the initiatives, what's going well and what's not Your standard monthly steering committee meetings. A couple of cool things that I think we did. Our medical executive committee meets every month, And we actually had physicians presenting out of the medical executive committee meetings on work streams that they've been a part of, and sharing the successes that they've had, you know, many maybe in the supply chain space or one that stands out was really around some, um, redesign that we did with our block time and, and quite honestly.

One of our physicians came to our most recent board meeting because we present out at the board level too, on the work, and gave an update to the board on some changes with plot utilization. So again, it's just been, I think, a very thoughtful process. We engage everybody and how do we give everybody a chance to really be a part of it and not only be a part of the work, but also be a part of, I think, sharing those successes that have come from it with all avenues of the

Eric Kammer: organization. I really love Teddy's comments because I think it's a testament to a lot of the little things. A transformation that when attended two and package together make a big difference. And one he was referencing, and I'll pull a little bit on, is communication. Right from the beginning, the board, the leadership team was very clear on the need for a very.

Thoughtful, intentional, routine communication strategy. And actually one thing that was very unique about the program that continues to be in place today is the Chief Marketing Officer. Jen Koppe is actually part of our core transformation leadership team, and it's unique. As someone who's done many, many transformations over multiple decades, I've never had a chief marketing officer be one of the key leaders.

I share that because it's been. Extremely valuable because the communication needs change. They evolve through, you know, the various stakeholders that Teddy had referenced, and having someone that leads that function in the organization right there with you to think about, how do we message this and what's gonna be important, what's the context?

And the why really has been a, a really, really valuable, uh, asset to the program. I'd also say around communication, the leadership team pushed hard on, we didn't want communication just to be one way, meaning we're just updating groups and we're just giving status reports. We wanted to embrace conversation and feedback and discussion of there's concerns.

Let's put those concerns on the table. And as Steatotic mentioned. They embedded that within their existing rhythms within leadership team management, team board sessions, And so hats off to those various things. The other thing I really wanna highlight that Teddy, the board Debbie and team have done very well in my opinion, is this recognition that transformation is not a quarter by quarter thing.

There's a long game and it takes time and it's hard and it requires a discipline and a routine and a focus from the leadership team. On that note is we have this executive steering committee, which is generally a monthly governing body that leads and guides our efforts within the transformation.

Teddy starts each one of those sessions with a bit of a reflection on the why, the strategy of the organization, the long range financial plan, And the impact that our transformation could have on the future of the company. So we never sort of lose, like, yes, we're focused on this month And the actions that we need to accomplish this month, but we constantly are tying it back to what's the bigger picture and what's the long run.

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

Theodore Scherpenburg: Yeah. And again, I think as everybody knows, you know, healthcare is not getting any easier, transformation is ingrained in the way we operate and will continue to be. And so we have our strategic plan And we have our long-term financial plan goals that really underpin that strategic plan. And so for us, it's really all about, I would say, number one, sustaining the Manintim of success that we've had in certain areas and revenue cycle.

As Eric touched on earlier. There's one place that we've had success, And what I don't wanna have happen is steps be taken backwards in the revenue cycle space, like we have to hardwire the work that we've done to ensure that that success is sustained, And that could be set about any number of areas across the organization.

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

And then I would say the third thing is too, we have to continue to figure out how we can scale our successes and how we use technology under D to help us do that. So how do we take processes that are maybe manual today within the way that we work, and how do we use technology to make our lives a little bit easier?

So that our resources can spend more time on continuing to identify new opportunities and transform operations for our organization.

Eric Kammer: And I might add a few comments on what I'm hearing and, and seeing in conversations with the leadership team at the Christ Hospital and. As Guidehouse works with other organizations across the country and maybe a little bit of a compare and contrast, and first in the path forward, there's this constant struggle to balance the short term needs And the long-term broader strategy and focus.

Obviously, that becomes more difficult as we see some of the regulatory changes and pressures from the government, of course, but it's so important, as Steatotic mentioned, to connect the strategy. To the long range financial plan, to your capital strategy, to your annual operating plan and your people strategy, and having a consistency of how the pluses and minuses work across those various, uh, plans.

And then routinely measure, routinely adjust, routinely understand our performance. The next is this notion of, uh, no more peanut butter spread. And what I mean by That is. The age old or traditional, we're just gonna have a 10% improvement or cost savings from all of our business units, and that's how we're gonna address any gaps we might have in our annual budget.

I think there's a recognition that that's inadequate. I think it's been proven enough that it's not necessarily a, an approach to sustainability and success. Instead, there's a just a growing interest of how are we more precise. So back to how do we understand where our opportunities are, how do we prioritize?

And then for those areas that we know are the capabilities or the services that fuel our growth or that produce the value for our organization, how do we actually fund them more and put more into those and maybe give them a little bit more of the pie In other areas, we just have to adjust accordingly.

The third is sustainability is

Theodore Scherpenburg: key.

Eric Kammer: Probably the number one question myself and my colleagues at Guidehouse get from CEOs across the country, which is, will these changes be sustainable?

Theodore Scherpenburg: We really need

Eric Kammer: to address the way we work our processes. We cannot continue to just cut a little bit on the edges and and react to the market challenges. And then the last point is there's a growing and significant focus on this. New skills for middle management. So if you think about it, that's the real make or break for sustaining transformation.

'cause these are the individuals that make hundreds if not thousands of decisions to serve patient's, to deploy resources, to put out players, and they also have to see through the new changes. So if there's new technologies that they do embrace and new processes, and if we're not also appropriately modifying and increasing their skills, it becomes a breakdown.

It becomes a barrier that makes it very, very difficult. And the probability for success of, of maintaining the gains, it's just significantly less. And so Those are just a handful of additional areas on top of Teddy's comments that we see in the path ahead for healthcare organizations today.

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

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

Thanks for listening.