Q&A: Texas Health Resources Incoming CEO Talks Strategy

After 28 years serving THR in various capacities, most recently as COO, Barclay Berdan says he's ready to take on the strategic challenges of leading the 25-hospital health system.

Arlington-based Texas Health's board conducted a nationwide search, but the man they chose to succeed Hawthorne is a familiar face. Compared to outgoing CEO Doug Hawthorne's standards of longevity, Barclay Berdan is almost a newbie, with only 28 years of experience at the health system.

By almost any other standard, he's a grizzled veteran, who distinguished himself from other finalists thanks to his recent work as senior executive vice president of system alignment and performance, and as chief operating officer for the past two years.

Berdan steps into big shoes. Hawthorne has long been recognized as one of healthcare's visionary leaders, and has built Texas Health from a single standalone hospital into a 25-hospital health system that aspires, either through ownership or partnership, to cover the entire continuum of care.

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Many of the system's strategic decisions have been copied by other health system leaders seeking to transform the way health systems deliver, and how they are paid, for care.

I arranged a quick call when Berdan was named Hawthorne's successor last week to get a sense of where he plans to take the organization, as well as his thoughts about the competitive landscape in healthcare and his thoughts about how to guide Texas Health to a prominent place there. He will take over for Hawthorne officially on Sept. 1.

HealthLeaders: Congratulations on the new job. Or, given the responsibilities that have landed on you, should I say condolences?

Barclay Berdan: No, I'm very happy about it [laughs]. I think congratulations are appropriate.

HealthLeaders: Where were you when you were officially offered the job?

Berdan: That's not a very exciting story, I'm afraid. I was in a conference room in our corporate headquarters.

HealthLeaders: Did you always think you'd eventually be CEO of a health system?

Berdan: I always had it on my list as an opportunity I would like to take advantage of, but I've been so in love with Texas Health, that sort of limited my options. But I'm pleased and delighted the board has asked me to serve in this role going forward. It's a privilege to take over after such a great leader of Doug Hawthorne's stature.

HealthLeaders: During your time at Texas Health and its predecessors [since 1986], have you been offered other CEO jobs?

Pretty frequently I'd get emails from search consultants, but quite frankly, we've had plenty of challenges and opportunities at THR and I don't recall ever returning any of those emails or calls.

HealthLeaders: When you and I first met in person for a HealthLeaders Media Roundtable on using population health strategies to build market share a couple of years ago in Dallas, you were senior executive VP of system alignment and performance. What did you learn in that role, and in your most recent role as COO, that you think will help you most as you take over leadership of the system?

Berdan: Well, I think leadership is both a skill and an art. My style is to try and first listen pretty intently to the staff in our system, or physicians, or employers or payers and particularly listening to patients on what all those groups want, and then help drive to a consensus on a clear direction.

Once you have it, it's really important to communicate that direction clearly and frequently. If you have a great organization like Texas Health, with a great group of leaders, you let them run in that direction. You constantly coach and advise and reconcile some turf or leadership conflicts, give them the appropriate resources and then celebrate when you achieve the result or the goal.

If you do that openly and honestly and create what I call "personal capital," which is primarily trust as a leader, that just builds on itself. Topics can change, and emphasis can change, but you have that trust. For example, population health is still getting an awful lot of attention, but not everyone's aligned in that direction.

It's still a challenge to get payers to create mechanisms with organizations like ours to help shift the financial incentives. Sometimes different groups like payers or physicians or health systems want to move at different paces.

My role is in trying to help each party develop an understanding of the perspective of the other parties and work to bring that together. More often than not, that strategy works.

HealthLeaders: You spent a lot of time talking in that Roundtable about giving physicians tools to manage their patient panels in a different way. One example you used was helping docs figure out how to manage the patients who need the most resources, and who might face expensive complications, instead of having physicians be fixated with working 35 patient visits through their office per day.

That's the essence of care coordination. How much progress have you made in turning those tools into reality and in aligning the economic incentives to use those tools effectively?

Berdan: There are a lot more tools available today than back when we talked. Not every tool that's available can integrate properly with your other systems and we've shifted focus on is how to integrate this stuff into the workflows without creating a big burden on the practices.

That implies some changes in processes and IT. Some of that technology is there and some needs tweaking and further development. You have to have a willingness on physicians to reexamine those workflows. Most physician offices are designed historically to be reactive to patients.

We're trying to create a different set of workflows that allows them to be proactive with patients who would benefit from that interaction.

HealthLeaders: Texas Health has a lot of accomplishments it can lean on in developing an integrated physician network, building out its outpatient and market strategy, and in coordination of care. What has been accomplished in those areas, and what's still left to build?

Berdan: In terms of integration and building a network, we still have a quite a bit to do on the post-acute side. We have a great partnership in home health, a great partnership with rehab, a great partnership in imaging with Envision and great partnership that's growing rapidly in surgery centers with SCA.

One of the tough nuts to figure out is the skilled nursing side. That's much more of a cottage industry and in many cases it's very underfunded, so it's hard for some of these organizations to make the investments they need to make in order to retool their workflows so we can create a seamless continuum of care. That's what we'd like to focus on in the next year or so.

HealthLeaders: You're in the final three years of a 10-year strategic plan. That seems like a long time for a strategy plan and a lot can change. How do you keep it relevant over time?

Berdan: 10 years is long. We've intentionally internally called it "Climbing Transformation Mountain." Along the way, every three years or so, we get to a "base camp," to continue the metaphor. We stop, take a rest, reassess, and decide whether we have the right tools, team members and skills. We completed that review at the second base camp in 2013.

Now we're in the last part of the climb to the summit. That helps people get a sense of what we're trying to accomplish and that last climb is the toughest part. When we get there, we'll see another mountain in the distance.

Sometime during 2015, we'll begin to put together a group of leaders to assess the environment again and begin to formulate the next 10-year strategy. Clearly those plans are directional and vision-focused, but if you don't have your eye on the focal point, it's too easy to get distracted or waylaid.

We're really looking at opportunities to fully deploy our population health strategy. We're redesigning care backwards from the outcomes we want. The advantage there is it really allows us to pursue upfront the highest quality- and evidence-based outcomes and the workflows we use to get to those outcomes are safe and reliable almost to the point that we would be comfortable warranting some things from a bundled care point of view.

That said, there's still a lot of variation in performance out there in facilities and practices. We have to understand that variation and coalesce around outcomes.

HealthLeaders: You mentioned that employers want to channel their business to healthcare organizations that can help them not only manage the cost but the quality of care. Given that payers are still trying to make that value proposition too, how has the competitive playing field changed for Texas Health?

Berdan: One of the things we've tried to do is lead in terms of quality. Back in spring, we published online a quality and safety report. That is designed to offer a transparent view of the organization's clinical outcomes. Many organizations themselves have not been as transparent with their quality and safety outcomes. So we stepped out this spring.

Whether we're performing great or not, it's on there, and we have demonstrated that we have a covenant with employers and the public so that they can see how we're doing. One of the bigger benefits is really internal. It motivates our leaders to make sure if there's a gap, they close it. We've not seen any of our competitors follow our lead.

It's scary in some ways. We had an awful lot of folks who were concerned about doing it, but since we've gone public, we've seen people reinvigorate their attention to the process and the outcomes. When asked, local employers felt it was appropriate. That said, I'm not sure employers and payers are yet using the data themselves, but they respect that we've done it.

HealthLeaders: In the medium- to long-term, is Texas Health's main competitive threat from other hospitals and health systems, or are there other entities that concern you more?

Berdan: I don't think there necessarily is a main competitor. The North Texas market is very interesting. We still have a huge number of uninsured. The ACA hasn't fixed that because Texas hasn't expanded Medicaid.

This is a vibrant and growing region but it's aging at the same time. That means a lot of people want to be in this market. We've retained our share in inpatient and grown it in outpatient, but there are a lot of potentially disruptive players in this marketplace.

For example, I worry a bit that in a few years we may have as many freestanding ERs as we do CVS or Walgreen's drugstores. That doesn't make a lot of sense to me. We also have a predominant physician population that remains relatively independent, so there's still a lot of change that has to go on in the marketplace.

There will be traditional and nontraditional competitors. We've differentiated ourselves. We are and have been great acute care company, but that's not the only thing that fulfills our mission of improving the health of the community.

We're great at taking care of the sick and injured and delivering babies, but how do we manage cost of healthcare to make it more affordable? We're trying to make more sense of it from patient's point of view.

Our job going forward is to help them manage and traverse their healthcare journey through a lifetime. And there's a lot of waste. We want to take that out and be a relevant guide and navigator through various stages of the patient's life. In essence, we're concerned with the well-being of populations because that drives value.

HealthLeaders: Doug Hawthorne has been here a long time. In fact, he's been here since before there even was a Texas Health Resources (as you have too). How do you feel about filling such big shoes?

Berdan: They are very big shoes to fill, but it's an honor and privilege to take the baton from Doug and continue down the track he set. He's a unique individual who has taught us all a lot and created a lot. I'm fortunate to work with him and to have the opportunity to carry forward.

HealthLeaders: Sorry to get personal, but how old are you, Barclay? How long do you envision yourself doing this job?

Berdan: I'm 61, which is pretty young these days (laughs). I feel energetic and as long as the board feels I'm providing good leadership, I feel confident I have a good number of years left to contribute.

HealthLeaders: Can you name the top two or three strategic challenges that will be priorities for you as CEO?

HealthLeaders: They are pretty basic. First is to make sure we have a smooth transition and don't lose a beat. Second is to make sure we drive to the highest levels of performance in quality and safety and sustain those to be a reliable organization.

Third, we have to do that and remain affordable. Fourth, we have to continue to look to how we can innovate across health and healthcare, and begin to redesign care delivery and link it to prevention and well-being.