Latest / Becker’s Healthcare Podcast / Kathy Donovan, Senior Vice President and Chief Operating Officer at Hospital Sisters Health System

Transcript

Kathy Donovan, Senior Vice President and Chief Operating Officer at Hospital Sisters Health System · Becker’s Healthcare Podcast

• 0:02
  - There's a small circle of people who truly
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  - understand what it takes to lead a health
• 0:05
  - system right now. The decisions are enormous.
• 0:08
  - The variables are constantly shifting, and the stakes
• 0:11
  - of getting a call wrong don't stay contained.
• 0:14
  - That's not a complaint. It's a structural reality.
• 0:17
  - And it's why the most effective c suite
• 0:19
  - leaders are deliberate about where do they go
• 0:21
  - to pressure test their thinking.
• 0:22
  - Becker's fourteenth annual CEO and CFO roundtable
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  - brings together more than 1,500
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  - executive level attendees
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  - and nearly 400 speakers for four days built
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  - around growth, financial sustainability,
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  - workforce strategy, and the leadership questions that don't
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  - have easy answers.
• 0:39
  - Join us November second through the fifth in
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  - Chicago.
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  - For the agenda and event details,
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  - visit beckershospitalreview.com
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  - and click on the events tab in the
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  - upper right.
• 0:52
  - This is Laura Dirdle with the Becker's Healthcare
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  - podcast. I'm thrilled today to be joined by
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  - Kathy Donovan, senior vice president and chief operating
• 0:59
  - officer at Hospital Sisters Health System. Kathy, it's
• 1:01
  - a pleasure to have you on the podcast
• 1:03
  - today.
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  - Thank you so much, Laura. It's my pleasure.
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  - Absolutely. Now I'm excited for our conversation. I
• 1:10
  - know we've got a lot to talk about,
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  - some really cool things you're doing at HSHS.
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  - But before we do, can you tell us
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  - a little bit more about yourself and your
• 1:17
  - background?
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  - Oh, yeah. I would love to.
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  - So,
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  - this answer used to be a pride point,
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  - but now it just dates me. I've been
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  - doing this for close to forty years.
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  - I'm a nurse by background. I came up
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  - the normal nursing track.
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  - Hospital sisters is actually my sixth health system
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  - I've worked for.
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  - I've been in nursing leadership roles and
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  - operational roles. I've worked at for profit
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  - hospitals and health systems and not for profit,
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  - and finally landed here about four years ago
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  - at Hospital Sisters Health System, which is a
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  - Catholic non for profit system.
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  - We sit between two states, Illinois and Wisconsin,
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  - and our service area covers about a thousand
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  - miles.
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  - That's fantastic to hear. And, you know, that's
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  - a huge,
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  - huge area that you're covering and and focused
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  - on. And so I can imagine there's a
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  - lots of different populations you're working with and
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  - and truly, you know, great communities that you
• 2:21
  - serve. So could you give us a quick
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  - state of the union? What's gone well this
• 2:25
  - year so far, and what are you focused
• 2:26
  - on for the rest of 2026?
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  - Absolutely.
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  - I think my key message that I would
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  - send is
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  - progress disciplined
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  - and continued
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  - transformational
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  - work. So,
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  - I would say the state of the union
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  - here has just been one of progress
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  - over the last three years. We've accomplished a
• 2:47
  - great deal at HSHS.
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  - Financially, we've made meaningful progress and strengthen the
• 2:53
  - discipline about how we work and operate as
• 2:56
  - an organization.
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  - We were functioning as
• 3:00
  - 14 different individual hospitals and really coming together
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  - with systemness has been the focus.
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  - At the same time, we've continued to invest
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  - in our future.
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  - We have a significant long range capital plan
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  - underway, which touches each of our three core
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  - markets,
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  - including major facility planning.
• 3:21
  - And we've continued to advance important strategic partnerships
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  - as well to also,
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  - spur our growth initiatives.
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  - Operationally,
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  - I'm especially proud of the work that we've
• 3:32
  - done around standardization
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  - and all of our shared service work. We've
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  - taken a much more system oriented approach to
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  - areas like supply chain, pharmacy,
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  - lab, radiology,
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  - and other support functions.
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  - And this work that we've done is producing
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  - significant savings,
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  - while also improving consistency and frankly quality,
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  - that our patients can feel and touch. I'm
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  - also equally proud of what's going on in
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  - nursing across our system.
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  - So we have accelerated our magnet journey.
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  - We've strengthened nursing and governance
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  - across all of our entities
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  - and focused on professional practice.
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  - We're creating a much greater consistency
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  - across
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  - our ministries when it comes to clinical care.
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  - And we've actually just applied for two of
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  - our hospitals,
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  - to go for magnet status, and it is
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  - a system
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  - initiative. So by the time we're done,
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  - all 13 of our ministries will be magnet
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  - accredited.
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  - And as we move through this fiscal year,
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  - fiscal year twenty seven, the focus is really
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  - about finishing the work that we've started,
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  - continuing to improve our operational performance because now,
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  - you know, the name of the game is
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  - do it faster, do it leaner, do it
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  - more efficient,
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  - executing our capital and growth strategies and advancing
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  - quality and workforce initiatives.
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  - We also need to make sure that we're
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  - building a health system that's financially sustainable and
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  - positioned well for the future.
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  - The system was started by our sisters,
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  - a hundred and fifty years ago, which is
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  - just amazing to say out loud. In fact,
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  - we just celebrated some of our hundred and
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  - fifty year anniversaries.
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  - And trying to create a system that's gonna
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  - last another hundred and fifty years is really
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  - the focus now.
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  - That's amazing to hear. You know, what huge
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  - accomplishments
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  - on growth on all fronts and,
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  - then thinking about, you know, where you wanna
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  - go and where you're headed. So I'm curious.
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  - I mean, obviously, as COO, you play a
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  - huge role in that and,
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  - part of making sure your systems are processes
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  - and are standardized and getting yourself into a
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  - position where,
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  - the entire culture of the organization
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  - is, creating that type of value for the
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  - patients, for the ministry, and more. So,
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  - from your perspective, what has been really key
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  - to to doing that? And,
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  - you know,
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  - I I guess, what do you feel like
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  - the qualities that you're able to bring to
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  - this role that have helped,
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  - the whole
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  - health system really thrive and come to this
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  - point where you've been able to grow and
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  - then see a lot of, opportunities in the
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  - future too?
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  - I think that's an excellent question, Laura. I
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  - mean,
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  - you know, the the things that I learned
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  - from working in a for profit system is
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  - standardization and accountability
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  - is absolutely the key. So one of the
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  - first things that we did here
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  - was develop a market
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  - system
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  - because trying to manage at the time 15
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  - different hospitals with 15 different agendas,
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  - we had hospitals in same markets competing in
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  - against each other for the same patients. And
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  - so trying to work in a more system
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  - approach was key
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  - and driving things through market responsibility
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  - and accountability
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  - with... Is what enabled me to get our
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  - arms around it a lot faster.
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  - And then the second thing we did was
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  - just drop, a standardized operating model for the
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  - whole system and where
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  - we think and move the same based on
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  - playbooks of how we run our EDs, for
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  - example, how we run-inpatient
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  - units, how we run the ORs.
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  - Once you get the playbook in place, then
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  - that drives the metrics that you're gonna measure
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  - and the KPIs you're gonna hold your operators
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  - accountable to. So, essentially,
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  - everyone's singing from the same songbook
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  - and answering to the same metrics.
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  - And once we got efficiency down, I'm talking
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  - about we had left without being seen rates
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  - here in the 10% range,
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  - and now we're below 1%.
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  - So truly driving
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  - metrics
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  - that impact the patients first,
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  - drive quality second,
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  - but make your organization
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  - much more efficient,
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  - is the third thing which then leads to
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  - financial stability.
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  - And we did this across all hospitals,
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  - all clinics, any place that we did business,
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  - and that is how we got to the
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  - point where we're at today.
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  - We took a health system that was losing
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  - more than a $100,000,000
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  - a year. And in less than two years,
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  - we brought the system to break even.
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  - And this year, we're pushing margin.
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  - I love it. Wow. That's that's, you know,
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  - such an incredible road map that you laid
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  - out, and really,
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  - makes a lot of sense in terms of,
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  - you know, just
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  - putting the systems in place and thinking through
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  - how that system is... Could really work and,
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  - you know, having that
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  - that ability to do that and then implement.
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  - You know, that... That's really cool to hear.
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  - And and I love that growth trajectory as
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  - well. I know, a lot of things to
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  - be excited about, but I'm curious too. There's
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  - a lot of headwinds coming up, when you
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  - think about,
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  - you know, some of the different legislative policies
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  - or, financial challenges that a lot of health
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  - systems are looking at and uncertainties around how,
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  - you know, the economic,
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  - conditions will continue to evolve. So what are
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  - some of the big headwinds that you keep
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  - your eye on? What are you preparing for
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  - in the next year or so?
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  - Yeah. Wow. I think
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  - the headwinds that are coming for every health
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  - system,
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  - is a huge challenge right now. And although
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  - we can anticipate and forecast, there's still a
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  - lot of unknowns. So the key here is
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  - we cannot cut our way through
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  - today's challenges and what will be even bigger
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  - challenges in the future.
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  - I think right now
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  - several things are hitting us at the same
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  - time, right? With all the new things coming
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  - down from the feds, things that are happening
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  - at the state and local levels. So we
• 9:42
  - continue to face reimbursement pressure while the cost
• 9:45
  - of providing care continues to rise.
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  - I mean, it's more expensive now than it's
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  - ever been in terms of just managing the
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  - same levels of care that we managed two
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  - years ago, three years ago.
• 9:58
  - Labor remains one of the largest expenses in
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  - healthcare.
• 10:02
  - Drugs, medical supplies continue to increase. And the
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  - overall cost structure of running a health
• 10:09
  - system is fundamentally different than it was just
• 10:12
  - a few years ago and certainly before COVID
• 10:14
  - hit. At the same time, we're also watching
• 10:17
  - the changes in the payer environment,
• 10:20
  - Medicaid, Medicare policy,
• 10:22
  - increasing administrative burden, and all the pressures
• 10:25
  - around access to care, particularly
• 10:28
  - in our rural communities.
• 10:30
  - So how do you provide the same amount
• 10:32
  - of care to these rural communities to ensure
• 10:35
  - that the patients are taken care of
• 10:37
  - at the same time trying to level set
• 10:40
  - your cost.
• 10:41
  - So these are the challenges that we're all
• 10:43
  - facing. For us, the answer is not simply
• 10:46
  - to cut our way through these challenges. We
• 10:49
  - have to create a structurally
• 10:50
  - more efficient organization to get there.
• 10:53
  - That means simplifying how we work,
• 10:56
  - standardizing
• 10:57
  - where the work makes the most sense, and
• 11:00
  - using techno... Top technology, excuse me, and AI
• 11:03
  - more thoughtfully.
• 11:05
  - We gotta reduce
• 11:07
  - unnecessary
• 11:08
  - variations. So this means we don't need to
• 11:11
  - have that particular service line at every single
• 11:14
  - place that we have services.
• 11:16
  - We need to congregate around the hubs and
• 11:19
  - then,
• 11:20
  - you know, in the out markets supply what
• 11:23
  - we need, but then a way to get
• 11:24
  - to the hubs easier for that higher end
• 11:27
  - care,
• 11:28
  - managing our assets differently and being very intentional
• 11:31
  - about where we invest as well.
• 11:34
  - The challenge for leaders is to balance these
• 11:37
  - financial stewardship with our obligation to our patients,
• 11:40
  - our colleagues, and our communities, and here
• 11:43
  - to our sisters as well, who started this
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  - legacy
• 11:47
  - in a mission driven organizations.
• 11:49
  - Those decisions have to be made with both
• 11:52
  - discipline and humanity at the heart of it.
• 11:58
  - Absolutely. I I think that makes a lot
• 11:59
  - of sense. And certainly, you know,
• 12:03
  - thinking about that financial stewardship part of the
• 12:05
  - equation,
• 12:07
  - you know, is nonnegotiable.
• 12:08
  - But I can imagine it gets harder and
• 12:11
  - harder with some of these,
• 12:12
  - different, you know, whether it's policies or different
• 12:15
  - things that you, outlined in terms of headwinds.
• 12:17
  - And so I love your point, though, in
• 12:19
  - in not, you know, thinking that cutting your
• 12:22
  - way through it is gonna be,
• 12:23
  - the best solution for the entire organization and
• 12:26
  - the community. So,
• 12:28
  - I'm curious. When you look at investments and
• 12:31
  - where you wanna actually,
• 12:33
  - put
• 12:34
  - that that money for continued growth, what does
• 12:36
  - that look like? How are you, thinking about
• 12:38
  - investments? Is that...
• 12:40
  - Are there any particular service lines or spaces
• 12:42
  - or, you know, different ideas that you're putting,
• 12:46
  - more resources towards that could really be beneficial
• 12:49
  - as health care, as an industry, quite frankly,
• 12:52
  - is changing a ton?
• 12:54
  - Yeah. Absolutely.
• 12:56
  - I think, you know, folks need to get
• 12:58
  - around the idea that growth is not about
• 13:01
  - just getting bigger. You know, there was a
• 13:03
  - time and place in health care where buying
• 13:05
  - hospitals, building hospitals, expanding in the inpatient space
• 13:10
  - was the thing to do.
• 13:12
  - Now we're kinda seeing a big switch to
• 13:14
  - the outpatient world. So really focusing growth
• 13:18
  - on the right places at the right time
• 13:21
  - versus just getting bigger is better.
• 13:24
  - Consumers
• 13:25
  - increasingly expect health care to be much more
• 13:27
  - convenient and accessible and easy to navigate.
• 13:31
  - Consumers are getting smarter and information is out
• 13:34
  - there readily available at their fingertips. Therefore, strategy
• 13:38
  - has to include
• 13:39
  - ambulatory care, physician alignments, digital access,
• 13:44
  - things like strategic partnerships and new models that
• 13:47
  - allow us to create
• 13:49
  - care for patients but in the right settings.
• 13:51
  - So a good example here, we just recently
• 13:54
  - opened an inpatient rehab hospital
• 13:57
  - up in Green Bay, but it's through a
• 13:59
  - partnership with Lifepoint.
• 14:01
  - So we didn't need to build it on
• 14:02
  - our own. We needed to partner with somebody
• 14:05
  - that does it really well and invest in
• 14:07
  - it to have the access to care for
• 14:10
  - our patients in that market,
• 14:12
  - but also to get the right partner that
• 14:14
  - aligns with our mission and our organization.
• 14:18
  - There's tremendous opportunities to better leverage the scale
• 14:21
  - of the healthcare system. Historically, healthcare organizations
• 14:25
  - have often operated as collections of individual hospitals,
• 14:29
  - which is exactly how we functioned here,
• 14:32
  - just four or five years ago. The next
• 14:34
  - generation of a successful system
• 14:37
  - will truly operate as a full enterprise leveraging
• 14:41
  - shared infrastructure,
• 14:42
  - shared clinical expertise,
• 14:44
  - technology,
• 14:45
  - data, and purchasing power across the entire organizations.
• 14:50
  - I believe AI will play a significant role
• 14:53
  - in that transformation.
• 14:55
  - We're already seeing opportunities
• 14:57
  - to reduce,
• 14:58
  - things like administrative burdens
• 15:01
  - for our clinicians through improved efficiency. So for
• 15:04
  - example,
• 15:05
  - putting AI in the clinics for charting,
• 15:08
  - AI in the patient rooms that make the
• 15:10
  - nurses and the physicians more efficient. They're spending
• 15:14
  - less time behind a screen
• 15:16
  - and more time with the patients touching the
• 15:19
  - patients and their families,
• 15:21
  - which then drives the patient experience higher and
• 15:24
  - makes quality better.
• 15:25
  - So for us, growth is not just about
• 15:28
  - getting bigger. It's about creating a more connected,
• 15:30
  - efficient, and accessible model of care.
• 15:38
  - That makes a lot of sense. And it
• 15:40
  - was a smart way to think about it.
• 15:42
  - And, certainly,
• 15:43
  - especially given,
• 15:45
  - the current health care environment to have that
• 15:47
  - ability to use technology to think about care
• 15:50
  - delivery, think about patients and what their experience
• 15:52
  - is,
• 15:53
  - really truly is an exciting place to be
• 15:55
  - at SKIMS.
• 15:57
  - It is. It's awesome. This is the best
• 15:59
  - time at HSHS
• 16:00
  - right now.
• 16:02
  - It's about turning the corner in a new
• 16:04
  - day and really focusing on long term sustainability
• 16:09
  - for a Catholic health system that means so
• 16:11
  - much to the communities that we're in.
• 16:18
  - Absolutely.
• 16:19
  - Now before we wrap up here, I wanted
• 16:21
  - to ask you about leadership. Who do you
• 16:23
  - admire as a leader really?
• 16:27
  - Well, this may throw you for a loop,
• 16:29
  - Laura, but actually the leader that I have
• 16:33
  - admired,
• 16:34
  - for a while and really in the recent
• 16:37
  - times is Indra Nooyi.
• 16:39
  - So Indra
• 16:41
  - is the former CEO of PepsiCo,
• 16:43
  - which is the parent company of Pepsi Cola.
• 16:46
  - What I admire most about her leadership is
• 16:48
  - that she's demonstrated you can lead
• 16:51
  - a very large complex organization,
• 16:54
  - that's been around forever,
• 16:56
  - with both extraordinary business discipline, but a deep
• 16:59
  - sense of humanity.
• 17:01
  - And that's what attracted me to her in
• 17:03
  - the beginning. She was willing to make long
• 17:05
  - term strategic decisions,
• 17:07
  - even when they weren't not necessarily
• 17:09
  - the easiest or most popular decisions in the
• 17:12
  - moment.
• 17:13
  - She talked openly about the responsibility
• 17:16
  - leaders have,
• 17:17
  - not only to
• 17:18
  - our companies, but also to our colleagues,
• 17:22
  - their families in the communities. And that's what
• 17:24
  - healthcare is all about.
• 17:26
  - The leaders I admire most are those who
• 17:28
  - can hold both things at the same time,
• 17:31
  - high expectations
• 17:33
  - of the folks that work for them and
• 17:35
  - genuine care for the people. And I really
• 17:38
  - see that as my leadership and how I
• 17:41
  - align.
• 17:42
  - I put people and patients first, and the
• 17:44
  - rest usually follows.
• 17:46
  - And that's why Indra was such a special
• 17:48
  - leader and someone that I admire and aspire,
• 17:52
  - to live up to.
• 17:57
  - Absolutely.
• 17:58
  - I love it. Kathy, thank you so much
• 18:00
  - for joining us today on the podcast. This
• 18:02
  - has been such a great conversation. You know,
• 18:04
  - really cool to hear about everything you're doing
• 18:06
  - at House Bill Sisters Health System and it's
• 18:09
  - just you as well, our CEO CFO roundtable.
• 18:11
  - I know you'll be speaking,
• 18:13
  - Ashton.
• 18:14
  - I'll be able to dig deeper as well
• 18:15
  - as some of the themes that you talked
• 18:17
  - about today and thinking about growth,
• 18:20
  - standardization,
• 18:21
  - how you can cope with great cultures and
• 18:22
  - more. So looking forward to seeing you in
• 18:24
  - person and,
• 18:25
  - thanks for your time today.
• 18:27
  - You bet, Laura. Have a great week. I
• 18:29
  - appreciate you.