This interview of Peter Fine, President and CEO of Banner Health, was conducted by Eric Larsen, managing partner, and condensed by Dan Diamond, executive editor.
Q: We've talked to several CEOs for this series who charted interesting career paths. Before he was a CEO, Cleveland Clinic's Toby Cosgrove was a surgeon. Dignity's Lloyd Dean was a teacher and then a pharmaceutical salesman. But Peter, you had an especially colorful background—a taxi driver, a ski bum…
Peter Fine: Well, you've done your homework.
You're right—I lived in Aspen for a year, in my early twenties after college. It would have been easy to stay.
Q: But you left. Now I'm questioning your career choices.
Fine: For a while, I did too.
Q: Why did you leave?
Fine: At a young age, you're not sure what you want to do.
But I had to make a decision when I was living my ski bum life. Do I become one of these old guys with gray hair that's a guide in the summer and a ski instructor in the winter? As fun as that might've seemed, it probably wasn't sustainable—especially if I wanted to do things like get married, have a family, pay for education.
So I made the decision to go back to grad school.
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State of the industry
Q: And went into health care, specifically.
Fine: Yes, my mother managed a physician's practice for 25 years. That’s how I was exposed to the health care field. Once I started to do my homework, my interest in the field of health care grew and I became interested in the management part of the business.
As a young pup, my first real job in health care was at 26 years old. I was an assistant administrator in a 300-bed hospital.
That facility had a small management team—there was the CEO, the CNO, the CFO and me. Everybody was older than me and knew way more than I did.
It was a rude awakening.
I worked for a CEO that spent 35 years in that role. He was a tough, focused guy, and ran a tight ship.
Q: You must've learned a lot from a guy like that.
Fine: Well, he wasn't what I would call a great teacher. But I learned through observation.
He came into the office six days a week at 7:15 in the morning, went out on the floors at 7:30, and didn't come back until 9:30 six days a week. And he went everywhere. Doctors' lounge, laboratory, loading dock.
What I learned is visibility breeds credibility. Credibility breeds trust, and if you want to be trusted you better be visible.
And I tell our new leaders that. It's the first thing they hear from me in monthly new leader orientation at Banner.
It's one of the ways for me to practice what he did in his one hospital, but in a place with 39,000 employees.
Q: You made stops at several other organizations before coming to Banner. Tell me another lesson you learned about leadership.
Fine: When I was at Northwestern, the lesson learned there was "plan the work, and work the plan."
If you don't know what you're trying to get accomplished, you can be sure you're not going to get it done.
At Banner, we are very much a planning organization. We think through what we need to accomplish, then what resources we have to provide to get it accomplished.
Q: And sticking to that plan is also essential—no matter how much criticism you take.
Fine: Back in the 1990s, I worked for a CEO in the throes of building a mega-system. A lot of people didn't like the strategy—especially his competition. So the noise started.
He just tuned out the static and stayed the course. "This is what we're building. This is why we're building it."
It showed me that whenever you try to upset the apple cart and change the status quo as a leader, there's a lot of noise. This will result in a lot of static, and you have to stay focused on the end game.
For Banner, it’s our 20-year plan to industry leadership that we started in 2001.
Here's the lesson I learned. If you pay attention to all of the noise, then you can't differentiate what noise is meaningful and what noise isn't.
You've got to tune out the noise, tune out the static. And stay the course.
Q: What do you think defines your leadership style?
Fine: As a leader, I'm very good at not spending time on things that I don't know much about or can't personally affect. Instead, I delegate profusely to people that are smarter than me, better than me, more knowledgeable than me, and in many cases, can accomplish more than I can.
It helps to have a senior management team that is skilled, very good and that I can allocate responsibilities too based around talent, skill, and capability.
And I only try to spend my time on those things that I can actually affect in some positive way.
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STATE OF THE INDUSTRY
Q: What do you make of the health care industry's current challenges?
Fine: The data on health spending, at least to me, shows that our health care system, as presently constructed, is unsustainable.
So all of the ACA's pressures right now, from readmission penalties to the two-day length of stay issue … these are efforts to force the industry to reinvent itself. The industry won't do it on its own.
I see the ACA not as health care reform, and not as insurance reform. I see it as a purposeful way to force an industry to do what it doesn't want to do.
Q: And that's one reason why health systems are working to transform themselves. To focus on population health and the continuum of care.
That touches on something we've been asking CEOs in this series: How big does your health system need to be? How big is too big?
Fine: To just be bigger isn't valuable. If you can't manage the business to get enhanced clinical outcomes, a stable financial environment, the ability to reinvest in yourself you can’t be successful as an operating company. We feel in the future, that requires an operating company mode. If you are a holding company, I don't know how you get the required clinical results.
Q: And yet some of these super-systems are holding companies.
Fine: A lot of them are holding companies. Their approach has been "we'll provide support, but we want to let the pieces then drive their clinical behavior and performance."
The risk of being a population health management company is so great, that if you don't manage the clinical environment really, really well by reducing variability and increasing reliability, it puts the whole company at risk.
We've taken a different path. We are an operating company. We have been since I got here. We have one board of directors for all of Banner.
It allows us to implement certain things across the breadth and depth of the organization that we otherwise might not be able to do, if we didn't have a true operating company model.
Q: But you're getting bigger too. You just mentioned that you've acquired another hospital.
Fine: We're going to get bigger because we think we still have room to spread our fixed overhead over a bigger base.
I really think there's going to be some big, big, big, big systems nationally, and it's about asset acquisition. But I'm not sure asset acquisition is enough to create a successful organization and a better clinical product.
It's enough to create power. And it's enough to create influence, and maybe be able to contract across a broad geography. For example some of the things that CHI is doing are not very clear to me. It seems, as an outsider looking in, it’s all about asset acquisition for them right now. It’s impressive that they have the balance sheet strength to acquire all of the assets that are being added to the system. It would seem at some point the balance sheet will not support that level of asset acquisition activity.
PERSONAL HEALTH CHALLENGES
Q: I'm sure you get asked a lot about your health challenges—about your diagnosis with cancer six years ago—but it's clear from this interview, you are so planful. Yet you can't plan for what you experienced.
How did that change you as a person? As a leader?
Fine: The cancer treatment was very difficult and grueling, which isn’t unusual for early diagnosed cancers.
For seven months or so, I was not in great shape.
Q: I heard you lost 40 pounds.
Fine: Yes, and virtually all the hair on my body.
The radiation was in my throat and my mouth, so it felt like they were on fire all of the time. Morphine did very little.
As a result, I focused on work, which was the way for me to keep my mind off of my health issues.
Cancer also caused me to create an extreme level of discipline about my daily routine.
For example, the medical team wanted to put a port in my stomach for a feeding tube, when I started my radiation therapy treatment. I told them, "I really don't want a feeding tube" and we went back and forth. They said, “You don’t understand. Ninety-five percent of our patients get feeding tubes and of the five percent who don't, they are all women." I said, “You're kidding right” and they said no. So I said I really don’t want a feeding tube.
They relented but told me, "as soon as you lose 22 pounds, we're going to put a feeding tube in whether you like it or not, because your body needs to focus on the healing process—not your weight loss."
The medical team said I had to have 112 ounces of fluid every day. Ninety-two grams of protein and 2,850 calories.
Q: All that drinking—all that protein—it sounds like a lot more than I consume in a day. Maybe how much I consume in a week.
Fine: There's maybe 10 grams of protein in a cup of yogurt and a bit more in a protein-enhanced bottle of Ensure. I don't know about you, but I don't drink 112 fluid ounces every day.
So I got home and said to myself, "Okay. The only way I'm going to do this is by planning the work and working the plan." And the means to that end was a journal.
I started that first day. My wife was making me half-and-half milk shakes with protein powder in them.
And I recorded every fluid ounce, every gram of protein, and every calorie I was putting in my body every day in my journal.
At the fourth week, I hadn't lost 22 pounds. I'd lost 12 pounds, so we decided I just might be able to make it to the end of treatment.
Q: How did your doctors react?
Fine: They were stunned. Every Monday, I met with the radiation oncologist, the radiation nurse, and the dietitian. They said, "This really shouldn’t be possible considering what we have done to you. How are you doing this?"
So I pulled out my journal and showed it to them. The dietician looked at it and said, "This is incredible." The doctor looked at it and said, "You're neurotic." They actually wanted a copy of it for other patients to show them how to manage the process.
Q: 'We're going for a psychologist.'
Fine: They asked again what the secret was. I said, "It’s no secret, I just don't want a feeding tube." And I never had to get one. The additional weight loss occurred in the three weeks after treatment ended because I had lost my ability to taste during the treatment except for oregano, chocolate and coffee flavors. Everything else was gone. But after two years most of it came back.
Q: I don't want to sound trite, but what did you learn from the ordeal?
Fine: In retrospect, it was so torturous, I probably should have chosen the feeding tube. Even if that would've meant speech therapy for months afterward to learn how to swallow again, and a port in my stomach.
But for me, dealing with cancer wasn't a medical problem. I tried to treat it as a business problem.
So I got a diagnosis, okay. Life sucks. Now what do I do about it? So what I did was plan the work and work the plan. Be regimented and organize my time.
Everyone has problems. A dog problem. A mother-in-law problem. A finance problem. I’m not insensitive to people's personal problems.
But I try to keep people focused on the fact that misery is optional. It's a choice. When you come to work, you have to check that misery at the door and focus on the task at hand.
CULTIVATING THE NEXT GENERATION
Q: You've got two-dozen hospitals…
Fine: Just took over our 25th and we are building our 26th, which opens next year.
Q: …and you mentioned, you've got more than 39,000 employees. Given that kind of scale, how do you mentor Banner's up-and-coming generation of leaders? Can you mentor them?
Fine: I take the opportunity to interact with people wherever I can and however I can. The ability to interact with people in this company, because of how large it is, is clearly becoming harder for me to do.
So whenever somebody asks me to come and speak, to come and present, to be involved, to be engaged, I do that.
The other thing I've done is make sure we've got a group of people [in our sights] from a talent management perspective. Our chief talent officer, Ed Oxford, helped develop a sophisticated program for Banner. We have a written development plan for many leaders in this organization.
Q: How hands-on do you get?
Fine: We will move people around so that they gain new experiences. We have one young executive that was running one of our hospitals. He was doing very well. But we thought he needed a new experience to round out his skills.
We determined that one of the development things we had to do for him was to put him in a hospital with a very tough medical staff.
So we offered that opportunity to him. He took it. He's developing. He's doing a great job. He's on that path to whatever the next role is for him.
Q: Let's say you were advising someone who wants to become a CEO one day. What would you tell him or her?
Fine: This is a tough business. It doesn't follow typical business norms. You can't walk into Walmart and walk out with [something] for free—but you can do that in health care.
You have to have a passion for complexity, and a high tolerance for ambiguity. Otherwise, you're doomed to an unsatisfying life as a leader in the health care field.
It also takes what I would say are "the three Es" to an extreme. Energy. Enthusiasm. Excitement. As leader, you have to bring the energy. You've got to show the enthusiasm. And you have to create the excitement.
But as I learned from a former mentor, at the end of the day you need to do the right thing. And I asked him [once], how you know you did the right thing?
His response was "when you go home at night, look at yourself in the mirror."
"You will know."
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