Taking The Supply Chain Pulse
St. Onge’s Healthcare Hall of Famer and industry icon, Fred Crans, chats with leaders from all areas of healthcare to discuss the issues of today's- threats, challenges and emerging trends and technologies in a lighthearted and engaging manner.
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Taking The Supply Chain Pulse
From Road to Nowhere to Healthcare Powerhouse
Hello and welcome to Taking the Supply Chain Pulse. This is Megan, with St Orange Company, here to introduce Matt Arsenault, the Executive Vice President and CFO of Baptist Health of South Florida. And now here's our host, fred Krantz.
Speaker 1:Today we have a first. We have our first verified CFO from a major IDN in the country to talk to and it just so happens to be my favorite IDN in the country Baptist Health of South Florida. It's my favorite because that's where I started my career. So we are pleased to welcome Matt Arsenault, the Executive Vice President and CFO of Baptist Health of South Florida. Matt, thanks for coming on our program, happy to be here.
Speaker 1:I was looking today in my big green book that I got from Brian Keeley about the sort of the evolution of Baptist Health of South Florida, baptist Health of South Florida and it occurred to me that we live so much in the present that folks don't know how things got to be where they are. And I want to take people back with you today and I'll probably talk more than I should because of the first part at least and show people how systems evolve, people how systems evolve, and by that I mean I got out of the Navy on June 25th 1969, and was at Baptist Hospital working the next week, and at that time I lived in Coral Gables, was going to go to the University of Miami and I didn't know anything at all about the hospitals. So I'm working at Baptist, my first civilian hospital I've worked in. And then I hear these names about oh Doctors Hospital, I hear South Miami Hospital, you hear all these hospitals all around. The sort of prototypical, stereotypical health care situation was a community with several stand-alone, not-for-profit community hospitals. If you were to ask someone in Miami in 1969, what's the biggest hospital in town, they would have said Jackson Memorial Hospital. It was the biggest. It was the biggest Baptist had the second most active ER and it was way, way, way less active than Jackson.
Speaker 1:So as time goes by and as the system succeeded, it also came up with challenges. And somewhere I was reading something to Brian Keeley, who's your, I guess your president emeritus, I don't know what you want to call him Right, he said that we knew we had to do something or we weren't going to continue to succeed and that hence the formation of Baptist Health of South Florida. And I also, having been at University of Miami Hurricane, I realized that Brian Keeley stole his strategy from Howard Schnellenberger, who said that we will take all the people from Interstate 4 south and call that the state of Miami and we will win the national championship. And I looked at the hospitals here and you have 11 hospitals, three of which are sort of subsets of others. So the the hospitals are baptist hospital, miama boca, raton doctors and coral gables, south miama hospital, mariners and tavernier, fishermen's and marathon, bethesda and Homestead. All of these were standalone, independent hospitals from independent communities along the way that were they were doing all right. And the other thing that Baptist Hospital shares with the University of Miami is that neither of them are in Miami One's in Coral Gables and the other one is in Kendall. So the other thing that's interesting about baptist you've been there since 2006.
Speaker 1:So, uh, you got 19 years of continuity. Brian keely started there in 1969. He started there just after me and he retired. What two years ago? Yep, three years ago. Yeah, uh, the system is only. System is only if the Wikipedia says it was founded in 1960, which means it was Baptist Hospital was founded then. But there have only been four CEOs of the system, for it's like the, let's like the Pittsburgh Steelers. Yeah, three coaches since 1967. So you've got continuity. So could you tell me a little bit about your experience of how the system has grown and your strategy of staying in the same geography? Could you give me a little bit about?
Speaker 3:that? Sure Happy to do that. Yeah, as you said, I started at Baptist in 2006, march 1st 2006. So I've been just past my 19 year anniversary here. But I was actually involved with Baptist prior to that. I was I worked in public my first job. I taught high school. Then I went back to school, became a CPA, went to public accounting and worked for Deloitte and for about two and a half years Baptist was my client client. So I see them on the audit side really understand the finance team and get to know the organization deeper than just being a member of the community where it was so opportunity to kind of come over.
Speaker 3:Did that through the accounting track and at that time, coming in 06, it was a little over 10 years ago, in 95, when the system was truly created. It's when Baptist Hospital brought into it South Miami Hospital and Homestead Hospital and really you know they were struggling financially. You know at the time those hospitals, so Baptist you know, brought them in to the fold. Those hospitals, so Baptist you know, brought them in to the fold. And then really that was just the beginning of just the transformation, of growing, you know, providing care within our community, building a new hospital out in West Kendall growing to the Florida Keys with Mariner's Hospital and Fisherman's Hospital and then Doctors' Hospital was actually an acquisition from for-profit system at that time, hca. So that growth in Miami-Dade and Monroe County was really I was part of that. Doctors was just before then really that growth in in Miami and in the keys. Most of that was, you know, systems that were having some financial distress. Baptist hospital was, you know, operated very well and was had a lot of financial strength. A lot of that. My predecessor, cfo Ralph Lawson, really former Deloitte partner, did an amazing job of really focusing on building the financials of an organization to be generational. You want that generational to last a long time. So how do you manage it in a way for the long term, along with him and Brian Keeley.
Speaker 3:So really that's when I I came on board. I came on board, you know, after some of those acquisitions but before we started building new facilities and it was really you know, a lot of it was growth in the outpatient. At that time it was how do we get out there, how do we be in the community right and be there where patients need us? So huge outpatient growth in urgent care centers, outpatient imaging centers, sort of decompressing the hospital. I think we were really ahead of our time in that concept of, hey, you need to kind of have these smaller satellite locations where people can have better know, have better access to care and it's patient-centered, it just goes. It's easier for people to do that. So really, you know, that was kind of when I came on board, when that was really starting to hit its stride.
Speaker 3:Then, like, the transformation that came from there was you know, south Florida. Miami is an interesting community. You're familiar with it. You know South Florida really is kind of that Palm Beach, broward County at Miami and the Keys area. You know it is kind of a unique place in that it's sort of, you know, the joke with Florida is the south is the north and the north is the south, you know. You know. So you do see a lot of that northeast influence, a lot of transplants from the northeast and sort culture of you know the immigrant exile communities you know of. You know Central South America and the Caribbean Cuban American population. That sort of mix I think really defines a lot of the culture of Southeast Florida.
Speaker 3:Right, so it just made sense for us to, you know, start moving north with our outpatient strategy into Broward County, which is where Fort Lauderdale is. And you know Brian Keeley did a really good job of saying, hey, this community is growing, this is our bread and butter, this is where we have those connections. We know the community, so let's not get distracted by national other parts of Florida. You know, let's just grow at our pace to meet our community need. And he kind of drew those boundaries and said four county area. So we did that and brought on Bethesda Hospitals to hospital system. They had some financial challenges. Boca Raton Regional Hospital outstanding system there put their hand up. That they thought that's been, I think, a big success.
Speaker 3:You know part of it is. You know it's a supply chain podcast. You know leveraging scale is important and you know we have a centralized distribution center that we built in Doral, florida, which is pretty centrally located in northern part of Miami-Dade and it just allows us to, you know, do all the things that we need to do to provide care in the community. So that growth just made sense for us. And then the other part I think that is transformational is just the growth of the employed physician group over that time, any employed physicians. Now we have over 600 that are part of our medical group and centers of excellence as we work with academic affiliation and growth in that way.
Speaker 3:It's really super exciting. But you know there are enough people to care for in Southeast Florida. So it was the idea of let's not get distracted, let's stay focused on being the best system in a world-class city and community of Miami and and and the the Southeast region. So it's been, it's been exciting to be, to be part of it. But and that and Fred, I'm sure if you've been down here, I mean the community has changed dramatically, dramatically since when it was just a single hospital at Baptist. But you know, thankfully we've, we've done an amazing job, I think, of growing along with it.
Speaker 1:Yeah, baptist is let's see if I've got the address right 8700 North Kendall Drive, mm-hmm. And when it was founded, with Arthur Vining Davis of Alcoa's help, it was known as being on the road to nowhere, right, because North Kendall Drive was a two-lane road that just shot out toward the Everglades and there was nothing there, and so, but you know how long was Ralph Lawson, the CFO, there, and so, but you know how long was.
Speaker 3:Ralph Lawson, the CFO there. Ralph, I want to say he came on board in the late 80s I don't exactly remember when Ralph was a partner at Deloitte and Touche out in Denver. That's where he kind of you know, super smart, moved to South Florida to lead their health care practice, a partner at deloitte and then came over, I believe, in the late 80s I don't remember the exact time with that, but really uh, and then he, he left and I had the honor of getting the, the role of cfo in 2018. Okay, well, you know, with that, so, yeah, so he, he and brian really, you know, are credited with with a lot of what we've built here well, what's interesting is I well, when you said that I was trying to do the math.
Speaker 1:So baptist has had four ceos. They had the first guy that I can't remember, then they had ernie not, then they had brian ke, and then they have their current CEO. They've had probably only four CFOs.
Speaker 1:I think that sounds about right, the greatest of which, in my experience yourself excluded is Rusty Slay, who was there for the time I was there, and Ralph Lawson and yourself, and then they've had four supply chain leaders. They had a man named Leo Grizzle who was the director of materials management, and then they had Frank Fernandez, and then they had Suzanne Thompson-Quintero and now they have George Godfrey. I don't think that you could find a system in this country that has had key leadership at those positions that has been as long serving and such great continuity as Baptist Health. Is that a fair statement?
Speaker 3:I think so, and I think that's a testament to sort of the culture and the values you know. I think a lot of us here on the senior leadership team or institutionalists, you know we make decisions that you know thinking about hey, this is where we need to, you know, protect and grow this institution so that it's here for our grandkids right to do the great things that it's doing. So I think that's a mindset of everyone here, so that you know, when you're working alongside your colleagues and you're making difficult decisions together and you're strategizing together, when everybody's pulling the same direction, I mean you get great things done. It's a great place to work. You don't want to leave right, and that's really all part of it.
Speaker 3:Part of it's also Brian always had a thing called the no-jerk policy. If you're a jerk, that's your attitude it's just not the right place for you. So when you show up for work every day and you got a bunch of people that abide by that philosophy, it's nice to come to work. So that's why you do have this longevity as well and the commitment for care. It's a commitment to our employees and a commitment to our community. It's… and it's great. It's great.
Speaker 1:So over the years you've had. You know what's interesting is, I spent last week, a couple days, at the clinic. I live in Cleveland and they had a two-day session there. The Cleveland Clinic is, by its own desire, a world-based organization, yep, and they've got strategies for Northeast Ohio, for Florida, for Arizona, for Dubai, for London. I think there are way more systems with 11 hospitals than there are with gigantic outreach like the clinic, and I think that you guys could be a template for those. I would say good-sized systems, but not gigantic. That's number one. But you have had incursions of competition. The not-for-profits have tried to get a chunk out of the South Florida market and the clinic they got their operations in south florida. What is that meant to you folks as a, as an operating, operating challenge, financial challenge?
Speaker 3:um, you know, I, I think you know our philosophy and my philosophy as well, which I think is shared by a lot of the leadership team here is it's kind of the Amazon mentality of, yes, you need to understand what your competitors are doing, but don't let it be a distraction. You just focus on making the best product. You know the best product for your customers and your patients, right, and so that's, I think, what we do, right. I think we know, you know, I think we have a pretty good formula. We get feedback from our community and from our employees, right, that that that we're doing well and we provide great care. So it's. It's really, you know, if you build it, they will come kind of thing. And if we keep doing what we're doing, we don't take for granted the trust that we have in our community, then you know we will do fine with competitors which are great.
Speaker 3:Cleveland Clinic's an outstanding organization, right, you know, and they provide great care, you know. And there are enough patients, are enough patients right for in the community. You know that that both can provide great care. But, you know, that's really kind of how we look at sort of the idea of competitive forces. You know, we just keep, keep doing what we're doing, always continuously improving. You know, and and and spread that right.
Speaker 3:It's definitely different in Miami-Dade County, where we've been for many years, and in Palm Beach County, where not as many people know us as well as people moving into South Florida, which has been huge, especially over the last five to 10 years. So it's hey we got to let people know us, who we are, what we stand for, and then usually when they're cared for by us, then they get it and they go OK, all right, I wear the pineapples in my community. That's where I need to go. For those of you that don't know, the pineapple is kind of our symbol of our organization. So you know that that's kind of been our philosophy in dealing with with, with competition helps us step up our game. You know we have, you need, you need competitors to make sure that you're you're, you don't get lazy well, everybody knows you during the post-game interviews from the dolphins because, uh, the pineapples that's right background all the time, that's right.
Speaker 1:So, that being said, you know what are your major challenges today, right now, and how are you dealing with them.
Speaker 3:You know, obviously, uncertainty with regard to government reimbursement, government payment programs, right, Every health care system in the country is dealing with that. You know we're kind of a little wait and see, you know, on that. Thankfully we are in a position of financial strength right now. You know we're doing well financially and our culture is to have reserves right. So we feel that you know, any storm that comes is not going to be able to impact our, our ability to provide care, uh in the community, but that it, it, it's a concern, the uncertainty kind of.
Speaker 3:Hey, you know what, you know, if we kind of have more clarity on what the path forward is, then we'll come up with a plan um to to uh, to make sure we can keep doing that um, but you know that that's the biggest. And then know, on the supply chain side, right, I mean, what, what is that? The sort of end game? Or, and you know, clarity with regard to tariff Um and, and you know they're obviously like all health systems, we do rely um on imports, um for a lot of um uh supplies and pharmaceuticals. So, again, a lot of that is a little bit of wait and see with that, but you know it could have a pretty material impact on us and a lot of healthcare, all healthcare systems across the country.
Speaker 1:You know, that's an interesting thing that just occurred to me. If I'm a, if I'm selling my Dodge Ram truck that used to cost $80,000, and I don't know who the hell can afford one of those, and now it's at $105,000 or $100,000, I can immediately pass that on to the consumer. But health care is not paid for and reimbursed in a straight line fashion, correct. When your, when your prices go up, you just can't add that onto stuff and pass it on to the consumer. And oh, by the way, you don't get paid in a timely fashion either. So the revenue that you're getting that comes into your place could have been something that you charged for a year and a half ago.
Speaker 3:Yeah.
Speaker 1:How, the, how the hell do you approach all that?
Speaker 3:You know it's not easy, you know, but I think part of it is we just have to be super efficient in our operations and what we do and you just kind of have to deal with it. You know. I mean, the hope is that you know with. You know when, when health care, the cost of health care goes up broadly for things like that. We saw that significantly during the pandemic and especially labor labor costs for clinicians. It's like really making sure that our government officials at the state and local level as well as in the federal level, just understand that impact so that when we rely on government reimbursement, that they acknowledge that and can help systems. So we saw a little bit of that, which is good.
Speaker 1:And then we just have to figure out how to work with managed care. You know as well, you know it does cascade through, and just manage through it.
Speaker 1:Yeah, I like that you just the first. The first sigh was when I started this question and then we just managed through it ends it and you know I got a hand at to you. You know one of the things I forgot when it was maybe about 10 years or so, I was at a conference with brian keely and and for you folks out there that don't know it, brian keely, who was the ceo of baptist, was my boss for five years. So we've been friends for most of my life and the interesting thing about baptist health of south florida once again got nothing to do with supply chain. But it could have something to do with supply chain really.
Speaker 1:I asked Brian at that time what's your turnover rate among RNs? And he said something it's about 11%. I said it's 11%, it's about 40% everywhere else. How come you don't have turnover at that rate? He said because we pay them well, we take care of people, and I would imagine that that probably extends to every department in the hospital. I know that at one time another conversation with Brian was didn't have caps on the salary at a position level. If someone was doing very well and have been doing very well for a long time, they, they might be. Uh, they might be making more money than perhaps the position itself would dictate. And these are. These are just things about. That's why baptist always ends up among the top 100 best places to work. Uh and uh, talking with ge Godfrey, you have one of the finest supply chain leaders, finest, smartest young guys around in the country. How has supply chain contributed to helping you in your challenges?
Speaker 3:Oh, I mean, you can't say enough. I'm glad you said it right. George is just fantastic, you know, like, when you look at all, ok, what are the traits of a great leader? I mean, checks all the boxes, right, great, amazing communicator. Great partner, knows the operations really deeply in what it takes to operate a successful supply chain. Great partner all in on the mission of the organization and just super smart. So you know. So you know the biggest thing, right, and I think a lot of organizations today, it's five, five years ago, COVID started five years ago. It's crazy, it's crazy.
Speaker 3:I, I, I feel like that, you know, kind of tornado, of a pandemic that ripped through the entire country. It's, I think, a lot of health systems, how, how they were able to weather that is kind of an indicator of people's of system strength today, you know, and I, and supply chain was such a key component of that and a big part of it is sort of that. Going back to your point about the employees, right, we are an extremely employee-centric organization. Right, fortune 100, best companies to work for, for, I think it's 24 straight years. Right, comp is part of that. Right, we acknowledge, hey, we need to pay competitively. We have to be. You have to have competitive comp for that, so that's kind of a given. But during the pandemic, the idea of PPE for clinicians was massive. And the supply chain team, the relentlessness of trying to get what we needed, you know. You know, you know it was it just that's where great leaders, that's where people that know supply chain, know how to operate a supply chain, that's where they're so valuable and contributing. And we, you know, like we, you know all these horror stories about reusing of equipment. We didn't really have that, not nearly what you saw at other places.
Speaker 3:You know, being innovative with gowns, I remember it right, where it went, where to go from masks to gloves to gowns, all these shortages, right, they, you know. Georgia's team got together with the innovation team and there was auto supply manufacturers that had shut down, right, and I don't know, I forget how the idea originated, but you know the material that they build airbags out of you know can be used as washable, reusable gowns. So we jumped up, got jumped on that, got all these gowns to the team. They loved it, right. So we just again, it was just that mindset of just got a problem, we're going to fix it, we're going to solve it and that's the mindset of the supply chain team. And again, you know the the.
Speaker 3:I remember, I remember I was on a call I think it was the Florida hospital association during the thick of the pandemic, and they had leaders, I think, from CMS on the call it might have been even a national call and they say, hey, how can we help? Like this is the craziest, how can we help. And one of the CEOs or CFOs, I forget got on the call and says, ok, how can you help? All right, three things, three ways. You, three ways you can help PPE, ppe, ppe.
Speaker 3:Right, our clinicians need to feel safe. They need to feel safe when they're giving care. Right, you know, and and I tell you, george and the supply chain team, just they had that tenacity and I really think our clinicians felt, they felt it, they felt supported and and really, really helped us, helped us through it and built that trust. So now, when you know when, now, when they want to do things and push new initiatives and do things to help out, it's, it's great. You know they've, they've endured that trust or engendered that trust well, matt, we're coming to the end of our time here.
Speaker 1:I um I probably could uh ask you to uh do about two or three more sessions, because I enjoy talking. I think Baptist is an example that people should take a look at, because Baptist is a realizable system size, system structure and I think you guys, you know that the continuity of leadership that I figured out this morning is to me and Brian's right. There were no jerks. We got the jerks were gone, you know. Yeah.
Speaker 2:Yeah.
Speaker 1:And and so it's. It's been my honor to have you on the show. I hope to talk to you again soon and keep up the good work.
Speaker 3:Thank you, Fred, Really really appreciate being able to share again soon and keep up the good work.
Speaker 2:Thank you, Fred, Really really appreciate being able to share our story and chat with you. Thanks for tuning in and don't forget to subscribe to the show. If you have a topic you'd like to discuss or would like to be a guest on the show, you can reach out to Fred directly at F-C-R-A-N-S at S-T-O-N-G-E dot com. See you next time.
