In this episode, Pete McCanna, the CEO of Baylor Scott & White Health, joins Renee at The Table. They discuss external versus internal C suite hires, the health system culture of the future, how it’s the responsibility of leaders to know what is possible, and more.
Peter McCanna oversees operations and finance for Baylor Scott & White Health, the largest not-for-profit health system in Texas. The integrated delivery network includes 49,000 employees, 51 hospitals, 7,500 affiliated physicians, more than 1,100 access points, Scott and White Health Plan, FirstCare Health Plans, Baylor Scott & White Research Institute and one of the nation’s largest accountable care organizations, Baylor Scott & White Quality Alliance. Previously, McCanna served as executive vice president and chief operating officer at Northwestern Memorial Healthcare based in Chicago.
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Renee DeSilva 0:07
Welcome back to The Academy Table. I’m Rene DeSilva, CEO of The Academy and your host. This week I welcomed Pete McCanna, CEO of Baylor Scott & White to the table. When we spoke, Pete was wrapping up his first quarter as CEO, and it was great to unpack early 10-year learnings with him. Broadly speaking, we covered the evolution of Baylor Scott White strategy, vision, and culture, as well as Pete’s thoughts on the necessary responsibilities and skills of the next generation of healthcare leaders. Here are my takeaways from the conversation.
First, Pete shared his reflections on external versus internal C suite hires, and he carries a dual-lens here. First as an external hire as president of BSW a few years ago and then as an internal promotion to CEO. I think he correctly notes that the traditionally external, so-called “Change Agent” mindset is particularly valuable for new CEOs. They need to be inquisitive, to shed bias, and be aggressive in asking the tough questions.
Next, pay attention to work Pete views as the health system culture of the future, a more decentralized model that emphasizes trust, transparency, and empowered local leadership teams, which is a different approach than the legacy hierarchies of the past.
And lastly, I loved how Pete believes it’s the responsibility of leaders to know what is possible, and then plan for it from a talent perspective. He feels the next generation of leaders need a future-oriented mindset paired with a sharp consumer orientation. So with that, join me at the table.
Good morning, Pete. Welcome to the table.
Peter McCanna 1:57
Good morning. I’m glad to be here.
Renee DeSilva 1:59
I am as well. I’ve been looking forward to this conversation. I’ve gotten to know you across the past couple of years during my academy tenure, but I don’t know that I fully appreciate your full healthcare story. So tell us a little bit about some of the early forces that shaped your career path.
Peter McCanna 2:16
Oh, great. Yeah, most of my early forces were really people that influenced me and how I pursued healthcare. I think the first person that comes to mind was when I was at the LBJ School for graduates, the reader of my master’s project, they call it a project was Wilbur, Colin, and he was the first sec, he was the former First Secretary of he W under Lyndon Johnson. So he was very influential and really encouraged me, we had to pick an industry and encouraged me to go into healthcare just because it was it had so many problems. And he said, there’s a lots of opportunity to improve it. And I think that the second person early on in my career that had a huge influence was my first boss. And his name is Dave Cannell, I’ve actually lost touch with him. But it was at Lewin and Associates in Washington, I was a consultant. And I think within the first three months, he had me in front of clients doing presentations and really empowered me to do a lot. And it, it really gave me a lot of confidence. I made a lot of mistakes, but he sort of served a model of what a great boss should be. So I think those two come to mind right off the top my head.
Renee DeSilva 3:37
If you think back for a moment to that teenage version of yourself, what did you think you would be when you grew up? Were you thinking you’d be a CEO at that point? Or how did what did you think you would do as an occupation when you were much younger?
Peter McCanna 3:45
Oh, wow. No, I didn’t think that. I think, as a teenager, huge influence for me as my father and he worked in government. And he worked in universities, and he really emphasized to all of us to find our calling, and really to find a career where you could raise a family, but also do good, do good for society. And he really emphasized really social justice and improving society. So I knew I would be doing something like that. Something that wasn’t just the profit motive, I was really motivated to do something where we’re I’d be doing good as well. So I think that was a huge influence at that time.
Renee DeSilva 4:36
That mission orientation has animated your career. You’ve been in healthcare leadership for 25+ years, at Baylor Scott and White since 2017, you are wrapping up month three as CEO. How are you settling in?
Peter McCanna 4:52
Well, I think fortunate for me, we had a succession plan and I had little over six months to prepare. Air for the three months I’ve been CEO, so that helped me really accelerate into the job on day one. I’ve been very intentional and did a lot of research on becoming a new CEO, particularly an internal candidate for CEO. I really moved rapidly, even before January one to define with the board in with the other members of the senior team, what our strategy will be so really defining the what and then right on the heels of that, that then defining who needs to be on the team? What skills do we need, what leaders do we need and key positions. So by the end of the first month, essentially, we had an outline of what we’re setting out to do over the next three years, and defined who will be on the bus and who will be on the team. Now we’re going through the process of the how, how do we get the work done? So it’s been exciting. It’s been energizing, and just really looking forward to the future. We’ve got a great team.
Renee DeSilva 6:07
You said something that just landed with me that I want to unpack a bit you mentioned just maybe doing some work around what might some of the nuances be for a new CEO that comes in internally versus external? Can you talk a bit more about that? What were some of the things that were just on your mind as you thought about making that transition internally, versus maybe what would have been easier, or harder, had it been an external shift?
Peter McCanna 6:33
I’ve come into C suite roles as an external, on three different occasions. And I think, as an external, you’re, there’s a, there’s a bit of an advantage, frankly, there’s advantages and disadvantages to use. But one of the advantages of an external, is you’re generally brought in and expected to be a change agent. And you’re expected to be in allowed to be very inquisitive and asking all of the tough questions and in gathering information, and so on, and so forth. And I think as you move into the senior role, like CEO, as an internal, I think you have to have an external mindset. And you’ve really got to look critically at the organization and sort of shed some of the biases that have built up over the years you’ve been in the organization, obviously, rely on your knowledge, but there are a lot of things you don’t know, and there are a lot of uncomfortable questions you ought to be asking. And I think, really being aggressive in that regard, and not falling into what I would say kind of a continuous improvement, leadership mindset, I think you’ve got to come at it and say, I’m a change agent. What can this organization do? What are all the tough questions? What are the rocks, I need to turn over that I haven’t turned over fully yet. And what’s great about the CEO role is you’re afforded the opportunity to turn over any rock, you want to turn over and figure it out. So I think that’s one reflection I have on it.
Renee DeSilva 8:11
Yeah, I think that’s really interesting. And maybe just staying on this because I am I feel like one of the privileges of my current role is it’s um, it’s a masterclass and looking at leadership, and then I get to talk to so many CEOs across healthcare companies. I’d love your thoughts or observations on what’s been the biggest surprise for you sitting in the CEO position? I mean, you’ve obviously been in C suite roles across a large organizations for a significant part of your career. What, if anything, feels different about the seat that you occupy now?
Peter McCanna 8:44
Yeah, that’s a really good question. I think for much of my career, I think a lot of it is, is if I describe it, it’s like getting really big things done, like executing, planning, executing, planning, building, executing building teams. And coming into the CEO role, I think I underestimated the amount of time and the amount in the sheer diversity of stakeholders that exist for a large community based, not for profit health system, we function as a market-facing consumer-facing business, which has all of the key stakeholders that a for profit company would have. But then layered on top of that we have a number of other stakeholders and I think I underestimated how many there are and how much time and attention is needed for a CEO to attend to those stakeholders to who can be very important in supporting the organization and very important for me to listen to, to understand how the organization is viewed within the community. So that’s that’s one. That’s one thing that came to me I think I had the fantasy-like for like one day that I could be CEO and president and I followed Jim’s lead on this and immediately reached the conclusion that I needed someone to fill my former role as president. And I was fortunate enough to have Julie creamer and recruit her here very experienced executive from Northwestern Chicago’s looking forward to partnering with her, much like I pardoned partnered with Jim over the last five years.
Renee DeSilva 10:28
That’s great. So you mentioned stakeholder, obviously, one of the biggest or significant stakeholder would be boards. And so I know that you are working on finalizing and drafting you said this sort of new strategic direction. What can you tell us about that? Just broad strokes.
Peter McCanna 10:46
Yeah, I think I think the new strategic direction, it’s, it’s the basis of some of the conclusions or directions we’ve reached, really come from an assessment of trends, and an assessment of what’s happening. I’m a former CFO, 15 years, 10, 15 years ago, and looking at where the money’s flowing. But if you look at trends, there’s a handful of trends that have always been there. They’re just simply amplified today. So issues of the movement from inpatient to outpatient. So we have a firm belief that that’s going to continue, we think we’re well-positioned. But that’s a continuing trend, the challenges of workforce, which today are acute, but they’ve always been there, we’ve known they’ve always been there. And they continue the financial pressures, particularly from those entities, state and federal government, who by about half of the health care, they’re under enormous pressure. So there’ll be price pressure, so those things and the risks shift. So those things are there, and they are amplified. But there are several issues that cause us to believe we’re really at an inflection point. And I know, every strategy that’s ever been done in healthcare, the CEO gets up there and says, there’s an inflection point right now we need to move. But now I think it’s serious. And in those several things are number one is the overwhelming impact of consumerism. Every other part of our lives, we expect our services and our products, when, where and how we want them. So we expect convenience, we expect personalization. And then the second, which is related, is technology. I mean, the confluence of high-speed internet, low-cost storage, cloud storage, and the advent of data analytics and data science, really put those two things together, in many new things are possible. And then on top of that, I mentioned capital flows, massive capital flows coming from big tech, for 1/5 of the economy, they gotta go there, huge capital flows of private equity, moving into healthcare because there are huge opportunities for value creation. And then last but not least, big insurers that are vertically integrated into our space. So massive amounts of capital, you put that all together in the soup and, and it’s big change, and we as legacy healthcare systems, we can tool along with incremental improvement, that could be a pathway and continue to refine our current model, or we can decide that we’re going to embrace the change and become more technologically proficient, with the purpose of being more customer-centric, and everything that we do.
Renee DeSilva 13:44
I think you did a brilliant job of outlining all the macro forces that are sort of influencing the state explicit choices and decisions we have to make as the provider community. I’d love your thoughts on through the lens of the last two years. Do you think that that experience has left the organization with a greater sense of urgency around these things, ability to drive through decisions more quickly? What in your mind has been some of the lasting elements of the pandemic in terms of how leaders and healthcare companies respond, react pivot in the context of all the things that you just outlined?
Peter McCanna 14:25
Yeah. Well, that’s there’s a lot to reflect on in your question. I think a couple of things come to mind coming out of the last two years, I think there is a there’s a real positive culture and individually, that, at least in our organization that anything’s possible. If we were able to get through some of the things that were thrown at us over the last two years. And form teams rapidly solve problems rapidly, basically, with a command and control approach. We can do anything. There’s huge confidence that we can achieve change. Whereas before the pandemic, I think there probably would have been less. And building on that. I think there, there is an emerging, and I would argue necessary cultural change in how large legacy organizations like us operate, I think, in a lot has been written about it, but I think it’s important to note, we’ve operated from very hierarchical leadership structures, one could say they’re kind of mission control where the leaders specify and, and drop the orders down through the organization and, and people execute on those orders. And I think we’re moving to a much more fluid and higher pace, what I call mission command culture, which is that we get really clear at the front end, what we what Hill, what Hills we want to take, but then the command is delegated to local teams, and they decide how the work gets done, what gets done with the destination in mind. And I think that flexibility will be very important in the new environment. And I think, I think an environment with that level of speed, with high levels of trust and transparent transparency with high levels of empowerment, are going to be the cultures that win, and the cultures that actually make the pivot and make the transformation quicker.
Renee DeSilva 16:31
Well, let’s stay on that. As you’re maybe articulating the strategy further, the organizational culture, the people part of that strategy, obviously, is what unlocks the vision that you set. So how do you think about both hardwiring the cultural values and principles that you think are important? And I’m always maybe that’s part one of the question. And then part two, is I’m always struck by large organizations that have to set a strategy, and then distill that down across 30, 40, 50,000 team members. So talk more about how you’re maybe resetting culture across the organization, and how do you think about activating that across your very large team member base?
Peter McCanna 17:18
Wow, that’s another great question. Why don’t I start with the second part? And let me come back to culture? Because I think I think as I talk about how we cascade what we want to get done, it’ll it may illustrate some of the cultural components. I think, as we look at our transformation, I think there’s a very strong theme objective, more specifically, of empowerment, and it really is rooted in, in two aspects of empowerment or two objects of empowerment? How do we empower our employees to solve problems, to focus on our customers and patients? How do we give them the tools necessary to do that? And in how do we empower our customers and patients to get the care they need? And in both cases, in order to do that, it is removing pain points in each of their journeys. So it’s a technique that, from what I can tell from my research, that many customer-facing organizations, do understand their journeys of consequence for their customers. And then they proceed to prioritize those and smooth out those journeys. And in health care, it’s probably the biggest criticism of health care in the United States is how fragmented it is. We’ve done some research that says the issues for people act in health care, for customers are ones of access navigation, if you look at the airline industry, and we’re not even looking at an industry that one could say is super customer-centric. But in healthcare, we do the equivalent of what an airline would do say, Listen, I want to go from Dallas to London. It would be as if we just said, Hey, we got you to Charlotte. But you’re on your own to get to London. And oh, by the way, when you get to London, you need to take your luggage off the plane. Yeah, we’re, we’re terrible at that. And most healthcare journeys aren’t just spot journeys. There aren’t they aren’t just puddle jumper journeys. They are complex journeys. And we need to be committed to that because it just is it’s the really tough part of health care. And in order to do that, you can’t do that all by engineering it from the top. You’ve got to empower employees, they have to feel the purpose, and they have to have the tools and the capability He’s to be able to eliminate those pain points for a customer. So it’s a culture that is pulsing with that desire to do that for our customers. But also is, is got the empowerment of the leadership to do that.
Renee DeSilva 20:16
Yeah, I love that. Essentially what you’re saying here or what I’m taking away from it is if you think about creating a experience for patients, it’s an inside-out job, right? You’ve got to start with your team members and employees and sync everyone to that and that activation and empowerment is key to really unlocking that. That definitely resonates with me.
Peter McCanna 20:40
Yeah. This isn’t about training a bunch of people in customer service, right? I mean, they feel it our employees, they believe it and feel it, it’s the barriers they face, it’s the bureaucracy we create, that is not customer-centric, it’s payer centric, or its regulatory centric, one that example, I give you the very personal example, my, I share this a lot, because I think it really illustrates it. My father, he lives in Rochester, New York, so it’s not our health system. But he has Parkinson’s. One of the symptoms of Parkinson’s is hand tremors. So he go, I take him to the neurology clinic when I visited that specialized in Parkinson’s treatment. And he goes up to the counter, he’s very self-reliant, and the registration person behind the counter, handing them a clipboard, and four pieces of paper and a thin pencil and says, fill this out. Now, I guarantee that person behind the counter is probably patient-centric in what they do. But there is some process, they have been told and required to do that for every patient for some reason. And that is 100% ignores the customer. I mean, it was it’s unbelievable. We do this all the time throughout the US. And the implication, and this is I hope that the payers recognize this and employers. The implication of this is it results in fragmented journeys, limited access, and ultimately higher-cost health care because the patients get frustrated, they don’t follow through on the regimen. And we all know those dominoes. So it’s a very, very important aspect of this.
Renee DeSilva 22:32
Yeah, I love that orchestration is a key part of what you’ve just mentioned. So then maybe to wrap up this, this section, I want to move a bit more on to some of the succession planning that you might share with us is so if you are writing a headline about Baylor Scott and White in 2030, what would you want it to read? What would you want to encapsulate based upon all the various things that you’re pushing on today?
Peter McCanna 22:56
Yeah, that a good question. I’d like it to read something like, you know, Baylor Scott & White leads the nation in employee and patient loyalty. Because the outcome of everything that we’re going to be trying to do results in employees, and results in patients and customers, wanting to stay with us – because they believe that the sum total of everything that we’re doing for them really enhances their well being to the most. And it’s that loyalty, I think, is what a lot of consumer businesses are looking for as well. But I’d like to lead the nation in patient and employee loyalty. And that would be evidence that we’ve removed those pain points.
Renee DeSilva 23:43
All right, I’m gonna invite you back. And in several years, and we’ll see. Okay, see what you report back on. All right. Well, let’s change gears a bit. I have noted and really was struck by the level of intention that you the board of directors, former CEO, Jim Hinton put into succession planning. And in some ways up to me it looked like at least from the outside in best in class approach. Just maybe talk a bit about how that unfolded, as the first part of the question.
Peter McCanna 24:17
I think it started five years ago. I think it was a bold move by Jim to come into a large health system like Baylor Scott and White, be named the CEO and president and shortly thereafter bring in, in this case myself, someone to become the president. I mean, it wasn’t explicitly stated, but I think there was the expectation that whenever Jim moved on to new opportunities are retired, that was the first brick of a succession plan for the CEO. So I think that’s an important piece that an organization looks out three to five years, and says, Okay, what are the skills that we’re going to need today? But what are we going to need in three to five years? And are we positioned internally to fill that? So I think that’s an important piece of it.
Renee DeSilva 25:19
If I just observe CEOs across the country, it feels like that as an opportunity. What do you think gets in the way of more of a time-bound deliberate articulation of that?
Peter McCanna 25:35
I think my observation of some other organizations is there seems to be an indefinite time horizon for the CEO. So if there is no understanding, and if only one individual knows that time horizon, it makes it almost impossible to get definitive in any way about succession. So is the CEO going to be there one year? Is the CEO going to be there? Three to six years? Is a car that you’re going to be in that role for 10 plus years? And who, who decides that? And is the board involved in that? So I see some organizations getting stuck in we’re not sure when succession will be needed? I think in our case, I think Jim had a sense of that. And I think the board had a sense of that. So they were able to establish somewhat of a time horizon of when talent might be needed, like every organization needs sort of “hit by a bus” succession, but this is more, what are these time horizons? And what do they look like? So I think, and what happens, my observation would happens in public companies, succession, sometimes can be smoother, because the outgoing CEO has a direct in long-standing financial interest even after he or she departs. And that doesn’t exist in not-for-profit healthcare. Now, that’s an insight, there isn’t an economic incentive the day after they walk out the door. I mean, it’s totally different. So I think those are just observations I have, I mean, none of these things are, are perfect. They involve individuals and they’re complex. But I think that’s so the assessment of that time horizon becomes key in and I think the deepening of succession is an important issue, too. So organizations get in boards, clearly, because of their role there. They’re very fixated on CEO succession. But I think a lot of attention should be paid to succession and Intel development deeper in the organization as well.
Renee DeSilva 27:59
Indeed, so then maybe the segue might be how are you thinking about applying some of those principles to your broader leadership team at Baylor Scott & White?
Peter McCanna 28:08
Yeah, I think one of my goals is to build out a succession plan. I can’t tell you exactly, I’m still sort of studying it to see what the best way it’s it. There are some pitfalls, I mean, succession plans, if they’re too specific, or too definitive beyond what the organization or the organization is, they can be demotivated, D motivators, right. I mean, you’re right, you can have a lot of people saying, well, I guess I’m not in the plan. I’m out of here. And, and that’s clearly not the intention. But I do think if you, if you go through some steps, some of the conclusions become a little bit easier. So for example, in building my team, every member of the team, including myself, have gone through a very extensive assessment. And using a firm that many, many public companies and private equity companies have used to assess their teams. And is part of that as an outcome of that assessment. Every one of us will have an employee-owned and individual-owned development plan. So I think that sort of sets the stage for there’s some transparency on what people skills interests where they can fit in the organization. So it brings some data to the table. I think another observation in succession is really trying to understand and rewarding those leaders who build great teams. So there is a there’s a tendency to over-index on high achievers, high individual achievers, but do they really build great teams? Do they really redirect the limelight to those teams? Because that’s where all the leverage is it’s not? No great organization. In has become great because they have a fabulous superstar CEO who’s a great player, what I mean? They occur because they have great leaders, great coaches that build great teams. So I think that’s another assessment that needs to go on and say, who’s building the best teams? And what is their skill set? Beyond that, there’s a lot of study on succession. And I clearly don’t, don’t have the best playbook for that. But I want to learn a lot about it and see how I can reach that appropriate balance.
Renee DeSilva 30:30
Maybe one final question on that would be it earlier in our conversation, you talked a lot about legacy organizations of providers, traditional providers, his legacy organizations that need to contend with different competitive forces. And you talked about the capital flow and all the things that potentially disrupt incumbents or legacy from the lens of talent. Do you think about new background skills and capabilities required of leaders of the future versus maybe what we indexed on historically?
Peter McCanna 31:03
Oh, absolutely. Absolutely. And, and there’s, there’s new knowledge and capability. So I think one of the biggest things of responsibilities of a leader is, is really and I remember this, when I first went into a CFO role, I made a lot of mistakes. Because I didn’t fully know what was possible. I think a leader has to understand what heights what achievements are possible for their team. And in the current environment, with some of the factors I mentioned earlier, particularly data analytics, disruption, I think a new leader really needs to understand that so he or she knows what is possible in their area of accountability and responsibility. So fresh thinking a leader that is a continuous learner, who’s aggressively digging into the technological revolution, and to consumerism. And many of these factors becomes crucially important. And then there are some hard skills that don’t exist in cultures that the one, the one that we’re looking at, is really having consumer insights. We were not structured to have consumer insights. We, we know what patient experiences, but that’s measured on one out of if it’s an inpatient, it’s one out of 100 of our customers and in less than 20% of those. So what is that point 2% of our customers, we know what their experiences and we only know it for their experience while they’re in the hospital, we’ve got to get deeper in terms of our expertise and understanding and insight into what our customers want and need. And in measure different things. One that comes to mind is, I worked in a warehouse for a long time. And the measure that was the most one of the most important measures in the cardinal sin was backorders, we have a customer that wants something, and we can’t deliver it to him. In health care. We do that all the time. Customers try to access us. And in fact, in some parts of our healthcare systems, it’s a badge of honor, I got a big waitlist of Dean’s everyone wants to see. Right? And in that orientation really needs to change. And it’s an area of skill that doesn’t exist or exists and in very limited forms in many health systems.
Renee DeSilva 33:33
Really well said. All right, final wrap-up question that I asked all of my guests, and you can take any amount of creative license on this question that you’d like. But if you could invite two people for a conversation at a table that you personally curated, who would they be and why?
Peter McCanna 33:51
Oh, great question. I knew this question was coming ’cause I’ve listened to you.
Renee DeSilva 33:54
Okay. Glad you’ve listened. That’s good.
Peter McCanna 34:00
First person would be someone I really admire. And very interesting biography is Teddy Roosevelt. Teddy Roosevelt, just a quick story interesting tidbits about his life. His mother and his wife died on the same day on Valentine’s Day, on the same day, when he was a young man. And he is a study in resilience from that point forward, of how much he got done, and how energetic he was in how he approached his life, with the vigor and energy that he did, and he ended up being the only us only person in US history to get the medal of honor and the Nobel Peace Prize probably was most instrumental in preserving most of our natural beauty in our country by the establishment of many national parks. So I really admire him. And I think someone of that energy would be great to have around the table. And the second person, I would say would be My grandmother, my grandmother, when I was five, I spent a year with her. I come from a big family, my mother got very sick. And I was shipped off to my grandmother, I spent every day with her. And I learned from her, she was a voracious reader. So she’s a very interesting person. She essentially read one book a day. I mean, she was all over it. And she’s one of these grandmothers, she treated me like, like an adult, like a real person, which I appreciated. So she gave me a lot of freedom. But she had high expectations for me and I, I, that’s sort of a model of, of how I kind of approach my work in many respects. So I think the two of them would be great.
Renee DeSilva 35:40
Sounds like it would be a wonderful conversation. Well, thank you, Pete. It’s always great to catch up with you. I so I’m excited about your tenure. And you’ve been a leader that we’ve had deep respect for at the Academy for many years. So we are cheering you on and know that you’ll do great things with the team at Baylor Scott and White. So thanks for joining us today.
Peter McCanna 35:59
Great. Thanks, Renee. Have a great day. You too.
Renee DeSilva 36:02
Thanks again for joining me at the table. The Table is a podcast produced by the Health Management Academy. Make sure you catch future episodes by visiting our website, TheAcademyTable.com, or by subscribing on the podcast platform of your choice, and if you have suggestions for topics or guests, I’d love to hear from you. Please drop me a note at firstname.lastname@example.org. I look forward to talking with you soon.