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October 7, 2015

Cedars-Sinai's CEO survived an earthquake on his first day. Here's what shake-ups he sees for the health care industry.

Daily Briefing

This interview with Thomas Priselac, president and CEO of Cedars-Sinai Health System, was conducted by Eric Larsen, managing partner, Geoff McHugh, managing principal, and condensed by John Wilwol, content strategist.

Question: You got the top job at Cedars-Sinai in 1994, and your very first day was the Northridge earthquake. A few days later, your staff presented you with a T-shirt that said "I survived Tom Priselac's first day." Pretty memorable start.

Thomas Priselac: True story.

Q: I love it. I'm sort of being half-facetious, but I'd love for you to think about other 'wow' moments in your career, those seminal or formative moments in your own development as a leader.

In 1984, I guess I was 34 or 35, I got the chance to be the vice president for administration at Cedars-Sinai Medical Center. It was like, 'Holy cow, maybe I can do this.'

At the time, I knew I wanted to be involved in a significant leadership role, but at least early on in my career I wasn't thinking about being a CEO. So, the 'wow' moment was getting that opportunity. In fact, the older I get, it's actually more of a 'wow' because I don't know that I would have given a 34-year-old that responsibility.

The other 'wow' isn't a moment, per se, but it's just looking back at my life and career. I'm 64. I've been in the field now almost four decades and, the older you get, the more reflective you become about a lot of things. I've been reflecting lately on how lucky I am to have had the opportunities that I've had over my career, to do the kind of work that we do and make a difference in peoples' lives.

Q: Another theme that I'm always keen to explore is mentorship. Can you talk a little about some of your most influential mentors?

Priselac: There've been several, besides my parents—and you've got to start there, and give them 95% of the credit, really.

Q: Of course.

Priselac: But beyond them, from a professional standpoint, four people come to mind.

One is Irv Goldberg, who was the CEO at Montefiore Hospital in Pittsburgh where I started my career, and another is Dan Kane, who was the chief operating officer at Montefiore at the time. First, they were some of the finest human beings I've ever known, and they showed me what leadership in health care was about. And two, they helped me come to recognize that teaching hospitals were where my real interests lie. 

Then, here at Cedars-Sinai, [late former president] Stu Marylander was a great mentor in a number of different ways, including giving me the opportunities that I described earlier. He just taught me a lot of things about leadership.

Beyond those three 'boss-as-mentor' relationships, Yoshi Honkawa, the former vice president for government and industry relations here at Cedars-Sinai, was the most significant mentor in my career.

He kind of took me under his wing back in 1979 or 1980 when we first met, and he did a lot of the real leg work to introduce me to the association world. Yoshi was the one that showed me the ropes. He showed me what that policy world was about, because my other avocation is policy work. He introduced me to that.

Driving change

Q: Let's shift gears a little. In addition to your work at Cedars-Sinai, you're an adjunct professor at UCLA, where you teach a class on the principles of organizational leadership. If you had to distill your insights around leadership, what would those be?

Priselac: Well, by definition, leadership is about driving change. Period. Everything else derives from that.

There's a behavioral part to leadership, and there's a 'technology' aspect to leadership. The technology part has to do with how one goes about driving change and is captured well, I think, by John Kotter, who lays out the essential elements of the change process and, importantly, the nuances that distinguish successful execution of the path.

The personal side, or the behavioral side of it, has to do with the characteristics of an effective leader. Are leaders born or made? I think the answer is both. There are certain key personal characteristics that are important to be a leader, but there are certainly people whose talents in that regard can be developed with proper education and experience.

Q: I've read Kotter, and I do believe there is a science around leadership. Yet, just from a personal, anecdotal point of view, all of the leaders I've worked with in the industry are dramatically different in their styles.

Priselac: What you just said re-affirms one of the most important things about leadership: It has to be authentic. So, there's no one style of leadership. It's as varied and nuanced as the differences in personalities that exist.

There are core characteristics. You have to operate with integrity, you have to be a good communicator, all of those things. But, within that, you have to be authentic and be who you are.

Q: When you look back at yourself as a young leader—especially that 'wow' moment in 1984 when, as a 34-year-old, you were tapped to be VP—what do you wish you knew then that you know now?

Priselac: You know, to be honest, I wish I knew that things would turn out as well as they've turned out. I would've had fewer sleepless nights.

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Getting to the heart of the ACA

Q: Let's talk a little about strategy and policy. You've been quoted saying, "Any law that affects 20% of the population is bound to have fits and starts." How would you grade the Affordable Care Act at this point?

Priselac: It's certainly a substantial improvement over the status quo that previously existed. And yes, any law that affects an industry that represents almost 20% of the GDP is going to have enormous challenges in its implementation. No law of this scale is perfect.

Implementation has been challenged repeatedly to a significant degree because it basically passed on a party-line vote. Any law that passes on a party-line vote is subject to continual second-guessing and criticism regardless of which party moved the legislation forward.

That brings up an important issue about policy to remember: Politics trumps policy. In the end, on the way to whatever policy decisions get made, legislators are highly influenced by the political realities of the decisions being made.

Q: Right.

Priselac: How one grades the ACA depends on your beliefs and priorities with regard to improving the nation's health care system. The ACA set out to expand coverage, reform the commercial insurance market around things like community rating, pre-existing conditions and medical-loss ratios, put in place payment and other mechanisms to address cost and quality in Medicare and Medicaid, and turbocharge similar efforts already underway in the commercial market. The political and policy debates have been a combination of whether some of those goals are appropriate, the methods used to achieve the goals and their effectiveness, and whether the priorities for change were correct. Reasonable (and unreasonable) people can disagree on all of those topics. But emphasizing that the law was not perfect and really represented the beginning of reforming the health care system not the end, my feeling is that the ACA represents as good a potential solution to the problems that existed as could otherwise have been created at the time.

As I recall, RAND did an analysis that indicated given the goals of the legislation, the provisions were largely on the mark from a policy perspective.

Approaching partnerships and maintaining unity

Q: You know, it's interesting, the notion that politics trumps policy; I think, for a lot of markets, politics trumps strategy. There are so many rivalries out there. And yet you've charted a course for Cedars-Sinai that's embraced partnerships over the last few of years. What's your philosophy on partnerships?

Priselac: Every organization has limits—limits of money, and limits of talent and capability. We want to make prudent use of our resources, leverage our strengths and capabilities, and identify partners that can complement those gaps. And all of that work needs to consider: How are we going to best meet our obligation to serve the needs of Los Angeles and how can we also fulfill our broader national missions around advanced patient care, teaching, and research?

That's where the partnerships come in. We don't have unlimited resources, and we have certain core competencies. Our recent partnerships reflect those principles and realities.

Take for example the partnership we formed with Select Medical and UCLA to establish the California Rehabilitation Institute. Both we and UCLA have capacity issues that, given the aging of the population are only going to grow. Select Medical was interested in serving this market. The three organizations could have pursued separate strategies, but reflecting the principles I mentioned earlier it led us to say maybe there's something we can and should do here together.

Q: You're combining a teaching mandate with ambitions to be a technology-driven organization that provides top-notch community care. I can envision a world where it's pretty easy for those things to operate independently of each other. How do you make sure you're operating as a uniform entity?

Priselac: Focus relentlessly on the mission. Patient care, education, research, and community benefit are the mission of the institution. So, throughout the time I've been the CEO, we've constantly reaffirmed: Patient care is primary within the institution's mission, but without the other three elements we would not be the same organization, nor honoring the reason we exist.

Q: That's the unifying piece.

Priselac: That's the unifying piece. There's a 60-year history of research and teaching at Cedars-Sinai that's embedded in a core belief that a vibrant teaching and research mission allows us to provide better patient care.

The community benefit mission is rooted in the historical values of the organization that remain alive and well today. In the Jewish community and Jewish culture, giving back is valued very highly, as it is in other cultures as well. Here at Cedars-Sinai, it's especially important.

Q: But what are the mechanics involved? How do you ensure it actually works?

Priselac: It is basic leadership/management blocking and tackling, data driven in a culture that strives for excellence. We engage in an annual objective-setting process that begins with reviewing where we are in terms of achieving the mission, vision, and strategic plan.

The vision is expressed in a way that it is always something a little bit out of our reach, always something we are striving to achieve more fully and completely. It prompts us to ask the big questions, 'What do we need to achieve over the next 1-3 year period and how will we know in very concrete terms if we got there?' It's that challenging but disciplined pursuit, combined with a highly capable, relatively stable leadership team over the years that has allowed us to benefit from continuity of leadership combined with healthy reinvigoration from the outside.

Predicting the future of AMCs

Q: Getting away from Cedars-Sinai specifically, what's your prognosis for academic medical centers (AMCs) broadly?

Priselac: One thing that concerns me is the policy environment. As value-based payment models appropriately move forward, it's not clear to me that there is or will be the kind of policy framework at the state-level that both hold AMCs fully accountable for the monies they receive, while also recognizing the unique place AMCs occupy and the benefits that accrue to the larger health care system.

In essence, you have 50 different experiments going on in the application of the ACA around the country, and the fortunes of an academic medical center will vary substantially depending on what state it is in.

Q: AMCs tend to be at that high-quality, high-cost intersection, and they're getting excluded aggressively by narrow and tailored networks. This brings us to your partnership with Vivity. What was your thinking there? And how's it going?

Priselac: Being less than a year old, it is too early to make any judgment. Vivity is an effort to develop a market relevant health insurance product built around a payer/provider partnership to initially serve Los Angeles and Orange Counties in which the participating providers and health plan remain separate organizational entities. There is a shared focus on providing high quality, cost effective health care and also recognizes the benefit that the participating AMCs bring to the interest of Vivity and the health care system as a whole.

All of the participating organizations and their physicians believe that integrated, coordinated care creates a better platform to deliver high quality, cost-effective care. And there's a recognition that every organization is going to have to face the challenges of meeting the market.

If Vivity is to be successful, we're all going to have to do what it takes to meet the market from a premium standpoint. It will be our challenge to figure out how to do that and also sustain the financial viability and missions of our respective organizations.

It reflects a respect for the role that health plans have and will play in the system going forward and an opportunity, through aligned economic interests to realign and optimize the strengths payers and providers each play. And I think all of us recognize that, on a certain level, it's an experiment. Something of this type has not really been done here.

Q: Or elsewhere.

Priselac: Or elsewhere, perhaps. So, it starts with those foundational elements. There's a lot of work being done and strong commitment to succeed, but there's no question there will be challenges. It's a competitive world out there.

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