IU Health's new top boss says the ability to withstand constant change will be a mark of success for top health systems.
He's a different kind of leader; ideal, he hopes, for executing a different type of strategy than the man who came before him.
Dennis Murphy, 51, recently took over for longtime Indiana University Health CEO Dan Evans, who retired in April after a 13-year run as the top administrator.
By most measures, Evans' strategy was right for the time. Focused on growth, he built the former Clarian Health from three hospitals in downtown Indianapolis into a 20-hospital, statewide system with annual revenue of just less than $6 billion.
But Murphy, as he sees it, faces a much different challenge.
Instead of growth, IU Health now has to focus on costs and improving efficiency. Under a program begun in 2013 when Murphy arrived as chief operating officer, IU Health continues to reach toward a goal of cutting expenses by a billion dollars over four years.
The kind of leadership needed going forward focuses on costs, efficiency, and adapting to—in fact even forcing—constant change, he says.
As CEO, Murphy almost sees himself as a sort of coach (my words, not his) in that his major challenge remains building a strong team to manage the organization collectively across operations that now extend far beyond the acute care space, where he and many of his colleagues grew up.
I spoke with Murphy recently about the challenges he faces. Following is the transcript of our conversation, lightly edited.
HLM: How are you settling in to the job?
Murphy: It's helpful that I've been here for three years. Not coming into the organization and immediately becoming the CEO has given me a chance to get to know it well.
As COO, I visited all our clinical sites around the state and developed a relationship with the management teams, the boards, and the physicians in those locations.
HLM: How did being COO prepare you for a job where the buck stops with you?
Murphy: As much as the buck stops with you, it's a failure if you're required to do that.
As COO, I saw myself as a chief talent officer more than anything, building a strong team to manage collectively across operations, whether a chief nurse, a CMO, or operating VPs. It's more talent management than core operations.
Those skills are easily transferable to the CEO role. What's new and challenging is being the external face of the organization to the board, to the community, or to folks like you, telling our story.
HLM: The goal to cut expenses by about a billion dollars over four years has gotten a lot of attention. Why is it so important?
Murphy: Even more broadly than cost cutting, it's about our ability to adapt and change. It's not just the cost metric, but the outcomes metric. We talk about resiliency and how to create the organizational capacity to repetitively change.
The key with cost, is understanding how quickly the external market is asking us to adjust.
Like a lot of academic health systems, we're not seen as a low-cost provider. We simply have to manage those costs to be included in key networks, and patients with high deductible health plans are already choosing us not only on value but also on cost. Our rate of cost growth is less than medical inflation, but it is a tough thing to manage.
HealthLeaders: What areas offer the greatest opportunities for improvement?
Murphy: The board does not just want us to be financially successful.
Success is about outcomes, engagement, and quality. We need to be good both in the population health domain and also in the destination medicine domain.
In population health we feel like we've done incredibly well. We have our own health plan that's managing over 200,000 lives.
On the destination medicine front, that's in the sweet spot of academic medical centers and core to their delivery and strategy structures. We're a national leader on Alzheimer's, [and] our cancer program… discovered a cure for testicular cancer. Those programs are hallmarks of distinction in a great academic medical center.
Philip Betbeze is the senior leadership editor at HealthLeaders.