David Klein, MD, MBA, details the California health system's strategic successes and talks about his plans for the organization's future.
Editor's note:This article appears in the March 2023 edition of HealthLeaders magazine.
MarinHealth, an independent health system based in Northern California's Marin County, recently celebrated its 70-year anniversary. Although the organization has gone through numerous membership models over the years, MarinHealth Medical Center, the MarinHealth Medical Network, and the organization's ancillary services remains an independent organization.
CEO David Klein, MD, MBA, has led MarinHealth since September 2020. He describes the hospital as a true, independent, community hospital. In today's landscape, independent healthcare entities may be seen as ready to fail or just looking for a larger organization to swallow them up, but MarinHealth is different.
In a recent interview with HealthLeaders, Klein details the independent organization's strategic successes and looks ahead to the future.
This transcript has been edited for clarity and brevity.
HealthLeaders: You've had experience as CEO of independent hospitals as well as hospitals that are part of a larger health system. In your opinion, what are the pros and cons of being an independent hospital?
David Klein: I have had the opportunity to be in very large organizations, both on the nonprofit and the for-profit side, and also to lead an independent system. One of the real values of being an independent system is that we truly can focus on the needs of the community that we serve.
As the larger corporations determine how they deal out precious resources, sometimes you have to stand in line to get the things that you need. [Here,] healthcare is local; we focus on the needs of our community in the North Bay and are able to meet those needs.
The second thing that is exciting for me is the opportunity to be nimble. I don't have to go through multiple levels for decisions; that allows us to react to a changing marketplace quickly. If we perceive a need to add a service line, or reduce a service line, or expand into an area, or bring in a subspecialty, we can do that promptly and rapidly. The ability from the time a decision is made into executing a growth strategy is much quicker than what I experienced in the larger companies, where you usually need multiple levels of approval, and it needs to fit into the global strategy for the larger organization.
People recognize you as their hospital; they develop loyalties. That can certainly occur in the bigger systems which provide needed healthcare, but as a local hospital, there's a certain amount of comfort that our patients receive in knowing that we're here caring for them.
HL: What key strategies have you implemented as CEO so that MarinHealth can thrive as an independent hospital?
Klein: One of the biggest ones is that we shored up our operations; we made sure that we function with operational efficiency.
We have done a broad geographic expansion. Marina as a county is not growing rapidly, and it's an aging county. It's also quite healthy. We saw the need to expand our footprint into the North Bay, up into the communities to the north of us such as Petaluma, and even over into Napa.
We developed destination clinical programs where we focused on certain key areas that we thought were important, like cardiovascular and orthopedics.
We've done a lot of ambulatory growth and development with ancillaries and looking to move more into the ambulatory market as you see a shift in healthcare from in-hospital to outpatient.
We've improved our digital platform to make it easier for patients to access care. In fact, we just converted the hospital over to Epic after a number of years on an antiquated system.
We've created more of an enterprise approach so that we have synergies between our inpatient network and our outpatient network, where we share good processes and personnel so that we're not duplicating efforts.
We focused on our line partnerships. We have a core competency in how we seek partnerships and also diversification of our strategies. It's pivotal that we work closely with our partners; the most prominent is UCSF. We have an affiliation agreement, and they assist us greatly in recruiting top-notch specialists in tertiary and quaternary areas who probably wouldn't come to MarinHealth if it wasn't for that affiliation. Our ability to recruit the best and the brightest with that affiliation has been amazing. You have to be agile and scale what we invest in, and just in this industry, it's important for us to know who and how to partner with.
We've also done an amazing job at stemming out migration. A lot of people have historically left MarinHealth to get care in the city; we're just across the Golden Gate Bridge. But we've been able to consistently develop and expand our reputation, build on a culture where people feel much more confident in the care that we're providing, and know that they can get world-class care closer to home. That has made a big difference; we've seen it in our volumes and we've talked to patients who have historically gone into the city for care who now stay here. By expanding into some of the areas like Petaluma and the North Bay, we're driving that care down to Marin where we can take good care of those patients.
HL: What percentage is MarinHealth's patient mix and how does this affect you as an independent health system?
Klein: They're predominantly governmental payers: MediCal and Medicare, because it's an elderly community. We do still have a moderate amount of commercial [payers]. Like everybody else, we, from a financial standpoint, typically don't break even on the governmental payers.
Part of our expansion strategy has been to go into those communities that are growing and are younger, that have a higher percentage commercialized [insurance]. When we looked at the out-migration, one of the things that we noticed is the largest portion of people who migrated out of the area to other care providers typically were commercially insured patients, so by stemming out-migration that's helped us to shift our payer mix to maintain good financial strength.
We have positive operating margins and positive earnings and I'm pleased with our financial position currently.
HL: Looking back over your tenure as CEO, what are some of your top successes and lessons learned during the COVID-19 pandemic?
Klein: There was a lot of stuff that occurred during the pandemic. What I noticed about Marin is that we, as an independent, didn't have as ready access to PPE and some of the equipment that we needed. We worked closely with our county health departments to make sure that we could meet the needs of our community. The partnerships that we developed with our county health support apparatus and our fellow hospitals in the area, including some larger systems, was unbelievable.
The second thing that struck me was the resiliency, and I know it's overused, but the bravery of our team, moving forward without a playbook, not knowing what to expect, but putting all that aside and caring for our patients in an exemplary way. It was nothing short of miraculous to see how amazing our staff performed in an environment that was, frankly, scary. We learned how to work together, how to collaborate, how to make the best out of the resources that we had.
We worked on sustaining our already strong culture, which is a culture of caring in our community. We were out in the community, we provided needed support to our nursing homes. We were there when everybody was testing; we have mobile vans that were going out to the areas where people couldn't get to the hospital, including some of our areas that had healthcare disparities. When the vaccines were available, we sent our teams out to help vaccinate in conjunction with our county officials.
We had one of the lowest rates of COVID but also the highest vaccination rate in the country. And so that certainly helped us, but one of the negative consequences of that was that we didn't have a hospital full of patients. With all of our services curtailed and not having any patients to care for, it created some financial strain on the organization. I'm happy to report that we're completely out of that over the last couple of years.
This organization has been here for 70 years. It's going to be here for many more years in the future. It started as a true community hospital, [and] it's a true community hospital today.
HL: Looking ahead, what initiatives are you excited about leading and what pain points are you looking forward to addressing in 2023?
Klein: We are going to continue our growth trajectory, focusing on replenishing our short supply of primary care doctors. We're working on easier access to our organization, meeting the needs of the new profile patients—millennials and Gen Z are seeking healthcare differently. We're trying to have a great digital front door and a digital footprint, working on consumers and being the easiest organization to come to, and one that's familiar and reproducible.
We have a great strategic plan that we launched about a year and a half ago. We've already seen great results and they include, as I mentioned, ambulatory growth and clinical efficiency. We've got evolving payment models and we have economic and payer pressures. We have, like everybody else, labor and staffing shortages that we need to be creative [to address]. We want to be a place that everybody wants to work for, where the culture is good, and just be in a position where we can respond to the economics of the changing market and prepare the organization for whatever the future might bring.
We can't bury our heads in the sand, we need to be prepared for the future, and a lot of it is going to be helping patients seek healthcare with a strong move away from the hospital.
Then internally, making sure we have a strong organization, that we have our positions filled, that we are financially secure to withstand the pressures, that we're innovative and technologically advanced, and all that will prepare us for whatever the future brings.
And then lastly, having a great product that differentiates us from everybody else. You've got to know your business. There's no single strategy for the future, but with the skills of our employees and compassion, we deliver the care that defines who we are. I always say put the patient at the center of everything we do, and do the right thing for the right reason, and we're going to be just fine.
“This organization has been here for 70 years. It's going to be here for many more years in the future. It started as a true community hospital, it's a true community hospital today.”
— David Klein, MD, MBA, CEO, MarinHealth
Melanie Blackman is a contributing editor for strategy, marketing, and human resources at HealthLeaders, an HCPro brand.
Photo credit: Marin Medical Center front desk. Photo courtesy of MarinHealth.