Dan Wolterman, president and CEO of Memorial Hermann rom 2002 to 2016, sat down with William F. McKeon, executive vice president and chief strategy and operating officer of the Texas Medical Center, to discuss the importance of evidence-based practice, health care for the underserved, and how he plans to spend his retirement.
Q | Let’s start from the beginning. What brought you to Memorial Hermann?
A | It was by circumstance, actually. I had been in Houston since ’92 and was responsible for the Sisters of Charity of the Incarnate Word Health Care System of Houston, which was a large, international health system with facilities throughout the U.S. and in Ireland. Their headquarters were in Houston and they owned St. Joseph’s Hospital at the time, as well as a number of other hospitals in Texas. I had just finished merging that system with the San Antonio Catholic system to form an organization called CHRISTUS in 1999. After the merger, the leadership decided to relocate the headquarters to a neutral city that wasn’t home to either of the congregations, so they picked Dallas. The move would require executives to either relocate to Dallas or be away from family during the work week to work out of the Dallas office. I didn’t want to put my family through either option, so I decided to leave CHRISTUS after the conclusion of the merger.
My desire was to stay in Houston for one more year so my son could reach a certain age where it would have been easier to move him to a different school.
By that time, about a year and a half had passed since the Memorial Hermann merger came together and the new organization was struggling a little bit with operations, strategy and integration. Dan Wilford, CEO of Memorial Hermann at the time, asked if I would come and assist him and the System. I said I would be delighted to join Memorial Hermann, but that my tenure would likely be short-term. At the time, I thought I would go back to running national health systems. That was 17 years ago.
The reason I was so attracted to Memorial Hermann was that I had watched and observed it over the years, and I held the System in very high regard for their adherence to their mission and values. They always took good care of all people, regardless of their ability to pay. From a values standpoint, they ran first-class facilities. I really liked their leadership—from Dan Wilford to Ken Wine, on down the line. It was something that was attractive to me. So once they approached me, it didn’t take me very long to consider it. I liked the idea of seeing what Memorial Hermann was really like from the inside.
Q | When you took the helm in 2002, did you ever imagine that you would build Memorial Hermann into one of the largest health care systems in Texas?
A | No, I did not set out for that kind of distinction. The vision was to really turn a relatively struggling system in the right direction with a singular focus. The focus was to be the best health system in the United States from a quality, safety and service standpoint. My belief, and what I sold this organization on, is that if we could get quality and patient safety right and tie that to outstanding customer service, then the patients and physicians will seek us out and the business side will take care of itself. That was the general philosophy in 2002. We were relatively small. We were, at best, average on quality and patient satisfaction, and we didn’t have a strong balance sheet. It was a challenge. What we focused on was stabilizing the System, creating a new culture where people felt they could be successful and setting a new vision that Memorial Hermann would be a preeminent health system. We knew this would take a while, but that’s what we set out to do.
Q | You’ve always been known to be creative, but you’re also known for executing a vision. When I think about the number of programs Memorial Hermann has implemented over the years, specifically in regards to issues of quality, is timing a factor of success?
A | That’s a good question. Yes, it’s all about timing. In the late 1990s, a report came out called, ‘To Err is Human.’ It really came down hard on the hospital industry about causing preventable harm, particularly death, to patients. The bulk of the industry just discarded it by saying, ‘Oh, it’s not true. Our patients are sicker and that’s a factor in our mortality rates.’ They rationalized it away. I read that study and re-read it, and it was disturbing to me. Here are people—our neighbors, our family—who likely know very little about health care services and put their trust in us. Yet, according to this article, the health system was failing them. It didn’t sit well with me.
As an industry, we were not providing a reliable, high-quality product to our patients. I became a believer of the study and article and said, ‘No, we as an industry can do better. We must do better. Why not establish Memorial Hermann as a model?’ The problem was, in 1999, when I joined the organization, and even in 2002, our System was not ready for the change. It’s a significant change. But we did it.
As we started to roll out the execution plan there was some expected resistance. With any change process, you need to find a few people who share your vision and beliefs and use them to assist in the change management process. We identified physicians and employees who had the same passion for safe, reliable care and we invested in their education; we brought them into our internal teams, developed them through leadership programs, and then had them take that back to the rest of the clinical and administrative staff. Over time, the culture changed and the single focus on high reliability care set solid roots in our System.
It wasn’t until we were able to show some progress that things really turned around.
We had great success in the early-to-mid-2000s, and we thought we were pretty good at quality and patient safety. We were winning national awards. Then we had two safety events, and I remember sitting back and saying, ‘Man, we’re not as good as we thought we were. How did this occur?’ When you peeled that onion back, it was basically because we hadn’t changed the fundamental culture of care in our System.
It’s natural for employees and physicians to revert back to old habits of taking care of patients, particularly when they have a very heavy workload. We decided there must be a better way. That is when we decided to get out of the parochialism of the health care industry, which only looks inside itself for solutions to problems, and said, ‘Other industries have figured out a way to have zero harm. What can we learn from them?’
Q | So it was ultimately the realization that you can’t have variability if you want excellence.
A | Yes. The commercial airline industry was one of the industries we wanted to study. I grew up in that era—’60s and ’70s. Planes were going down all the time. I remember three major crashes when I grew up in Cincinnati. It was tough. We also studied the military. How can they take nuclear-powered aircraft carriers and submarines and never have a problem? They’re producing bombs in the bottom of the aircraft carrier, and they’ve got young soldiers assembling them, and they never have a problem. What do they do? What about nuclear subs? What about nuclear energy? We studied all of those industries and then brought some of our findings home. Today, we have Red Rules that clinical teams follow before every single procedure; rules that can never be violated.
To address the cultural change that needed to happen to ensure high reliability and a high-quality care environment, I went to the Board and asked for an additional $28 million in the budget. I wanted to remove people from the floor for one week of culture training in this new world of high reliability, and I needed some dollars to get the clinical teams trained. Once we went down that road, it’s just been a pretty linear ‘up.’ We’re not perfect today, but I’m proud to say that we are well on our way to becoming a high-reliability organization. According to The Joint Commission, we are considered among the best in the country in terms of preventing patient harm. We go months and quarters, and in some locations years, without a single event in our hospitals. It’s a cultural change and people take it seriously. When we do have an event, we ask, ‘What can we learn from it?’ We look into what was the real cause of the problem. We take it seriously and make sure that it doesn’t happen again. Every event that may have caused serious harm is also reviewed in the Boardroom. We don’t hide anything; we practice full transparency.
Q | How would you describe your leadership style?
A | I think the first thing most people would say is that I am a visionary, and a very good strategic thinker. I’m a focused individual—that’s where the execution comes in. I believe leadership is a team game. Once we make a decision, though, we get very focused on the execution side. The other thing people would probably say is ‘intense.’ I’m a pretty intense individual. There’s a strong drive in me to go get things done and be successful.
They also will say that I’m pretty even-keeled and tempered. You will never hear me yell. You won’t hear me scream. But, the team will know when I’m not happy with them. I hope they would also say that I treated them well and fairly, and that I allowed them the latitude to do their jobs. That’s always been my motto: Surround yourself with the best talent possible, give them your expectations and a vision, and get out of their way.
Q | One year, you wrote off $1.3 billion in gross charges for indigent care. Can you talk about your views on health policy and providing health care to the underserved?
A | My passion for the underserved is why I’ve spent my whole career in nonprofit health care. It is why, once I decided this was going to be my professional field, I wanted to be a part of something that was very mission-driven, very mission-oriented.
Memorial Hermann has to be the most efficient operator so that there are resources available to cover all the free care that we have an obligation to provide in the community. That’s one of the attractions of Memorial Hermann. It has 109 years of serving this community with an emphasis on serving everyone.
It became a passion of mine—that the System provide high-quality, safe services to the community, take care of the people in need, and still have strong operating margins. The first thing we did was say that, to sustain the organization, we had to get a better balance sheet and operate more effectively. Those first three years, besides focusing on quality, we really focused on how to become better, stronger operators. Our ratios today are still equal to a lot of what you see in the very best for-profits, from both a salary and wage or supply standpoint. We are very, very efficient. That’s not because it’s a profit motive. It’s actually the opposite. We need to be efficient to take care of the large indigent care commitment that we feel is our responsibility. That’s where we come from.
Q | Looking back on your career, what is your proudest accomplishment?
A | To be honest, you don’t come into leadership to seek out awards. However, it’s always nice to be recog- nized. Anybody who says it’s not isn’t being truthful. The one award that sticks out the most is when I won the Father of the Year award, because being a good father is what is most important to me. It’s great to come to work every day. I’m stimulated to go to work every day and do well there, but being able to be there for your family, raise your family the right way, and be appreciated for that—that’s the one award that stands out. That is the only time I was brought to tears with an award. You’re sitting up there and you’re watching these videos. You’re seeing pictures of your kids growing up, they’re talking on the video about you and my son’s introducing me in front of the audience. That meant a lot to me.
From a career standpoint, what meant the most was the National Quality Forum award. In 2009, Memorial Hermann was recognized as the country’s foremost system when it came to quality and patient safety. That’s what our System set out to do. All we heard about in the early years of that award was Johns Hopkins or the Mayo Clinic. We’d say, ‘Wouldn’t it be nice if a community-based health system that was not a big name in this country rose up the ranks and won an evidence-based, quantitative award?’ That was what we set out to do and when Memorial Hermann finally achieved it that was a major moment for our System.
Q | Let’s talk about golf for a minute. Now that you’re retired, any plans to play professionally with the Senior Tour?
A | No—I learned a long time ago that you can be better than a lot of people at anything in life, including sports, but there are a whole bunch of people who are a heck of a lot better than you. It would be nice, but the reality is, I’m not good enough. I do want to play in national and local senior competitive events. It will be nice to get out, and I love competition. I love pushing myself to see if I can get better, but I’m also a realist.
Q | What is next for you post-retirement?
A | Nothing is set in stone, and the honest answer right now is that I don’t know exactly what I will be doing in this next phase of my life. The only plan I have is to just enjoy life. I’ve worked since I was 12 years old. I’m used to having income come in.
I’m used to being busy. I don’t know how this retire- ment stuff will settle with me. People say, ‘Are you going to ever come back?’ I can’t say no, but I can’t say yes. I have to be true to myself. I’ll see what a year, a year and a half does. If I’m bored and things aren’t going the way I want, then yeah, I could come back. I’m young, I’m healthy.
Q | I think your plate will be as full as you want it to be.
A | That would be nice. I want to make sure I enjoy life. Part of the reason for retiring now is my family. I enjoy coming to work, but I’m the oldest of nine children. We grew up with meager means. We were a very tight family, and I am still very close with my family who are mostly back in the Cincinnati area. I moved away from Ohio in 1979 with the intent to come back, but my career never provided me an opportunity to go back home. The fourth-oldest sibling, my sister, died two years ago. A rare cancer took her, and I look back and say, ‘I really didn’t get to know her very well through her adult life because I was hardly ever around.’
When you are in your early career you are able to return home more often, but when your children start growing up and they have their own lives in their city and you have your work life, there is not much available time to get back to your family in Cincinnati. I began to reflect on the valuable time I have lost with my siblings and my parents. Retirement provides me the freedom to get back to Ohio and spend more time with my family while I still have the opportunity. You will see me spending more time back in the Cincinnati area doing things with my parents and my siblings, just catching up on many, many lost years.
Q | You will be greatly missed here in the Texas Medical Center. You’re loved and adored by many, and have had such a profound impact on patients and their families. There are so many people who are proud to have had you here in Houston for this period of time, so thank you.
A | Thank you for those kind comments. It means a lot, because I’ve always felt that adult-to-adult rela- tionships are the best. If you feel something, say it, but say it nicely. Put your opinions out there. I think most know I’m pretty straightforward and blunt. Sometimes people don’t like direct communication and get offended, so it’s hard to balance my leadership style and still be liked by people. I always strive to treat people with respect and dignity.
Through the years, my communication style has worked. I have a few enemies out there, but that’s OK. If you don’t, you’re not pushing hard enough. I think what the Texas Medical Center is doing now is great— a much-needed, progressive vision and a willingness to complement what the members and institutions bring to the table with innovation, development and go-to-market kind of concepts. Keep pushing.