Avera CEO details strategy for growth amid pandemic surge

Nov. 16, 2020

Bob Sutton had one rule for scheduling meetings as he began to tour dozens of Avera Health locations shortly after becoming CEO: He wanted to hear from the housekeepers.

“That perspective is important to me,” said Sutton, who marks 18 months in the role in December.

“It was critically important to me to realize how important they are in the delivery of health care and how important people are in service jobs in the overall success of our organization.”

Those meetings – and the insight gained – would manifest themselves in Avera’s new five-year strategic plan, which was supposed to be Sutton’s road map for 2020.

Instead it became more of a guidebook for a leader who finds himself at the head of a nearly 20,000-person organization managing through a year of upheaval while trying to stay focused on a future being shaped both by short- and long-term market shifts.

“Our growth may look different than other health systems’ growth in that there are people developing relationships with us and that we are in partnerships with that learn about Avera and find themselves very attracted to the way we deliver care and want to be part of that,” Sutton said. “I think COVID has accentuated that.”

Crafting a plan

In some of those conversations with the housekeeping staff, Sutton likely saw his mother.

Beverly Sutton worked as a custodian in a Sioux Falls manufacturing plant while Sutton and his six siblings grew up. He lost his father in 1973. He and his siblings helped their mother clean houses and offices for extra money.

“She was an amazing woman,” he said. “We had our jobs. You took out garbage. You cleaned desks. So at any time, three or four of us would traipse into an office in Sioux Falls.”

At Avera, he estimates he has met with hundreds of housekeeping staff across 37 hospitals. He left one conversation with a story he began repeating to others.

“This housekeeper, who had been in this facility for quite a number of years, said, ‘You have to remember, there are things a family or a patient will say to a housekeeper that they will not say to a nurse or a doctor. We’re not health care professionals in their eyes. We’re someone they can talk to.’ And that’s invaluable because … it’s how we can improve on the service we’re providing. That really resonated with me, and COVID is a great example.”

Sutton tells a recent story of a patient who had been in intensive care for weeks and didn’t think he would recover. When a housekeeper provided impromptu, unsolicited comfort, the man said he began to find the will to live.

In another conversation, a physician suggested Sutton ask one question at every stop: “What is something I don’t want to hear?”

“And that just resonated with me,” Sutton said. “The response was astounding. It was extraordinary for me.”

Using input from more than 1,000 people, Avera leadership put together its new five-year plan.

Its core values are unsurprising for a Catholic health care organization grounded in more than 100 years of ministry: hospitality, compassion and stewardship.

“We use that as the framework,” Sutton said. “But hospitality isn’t what it used to be. It isn’t people showing up and we take care of them when they show up. It’s about keeping people well. How can we deliver virtual care and take care of people at their home. Our front door is your front door, and your front door is our front door. That reciprocal relationship is incredibly important.”

Compassion should be interpreted as “delivering care the way we do it,” he continued. “Delivering health care the right way. It’s the administration’s job to make sure it works financially. You don’t go into it the other way around. We’re going to deliver care the right way, the way the (Benedictine and Presentation) sisters would want care delivered … and we have to make it work financially.”

But stewardship shouldn’t be seen as only being effective stewards of financial resources — it’s also human ones, he added.

“And in our strategic plan, there’s a specific reference to what can we do to reduce our carbon footprint. That’s important to our ministry and important to our sustainability.”

While the year forced priorities to shift in addressing the pandemic, “we’re extremely fortunate we had the strategic plan in place,” Sutton said. “I can’t imagine going through a pandemic without a foundation for where you want to go.”

Navigating the pandemic

Sutton stopped on the way home from work last week to pick up dinner at a restaurant. He was the only patron wearing a mask in a relatively small space filled with diners, he said.

It’s one moment that captures months of frustration.

“If a nurse drives by and sees this or a doctor dealing with this every day, it is devastating to them,” he said.

“Culturally, we’re not there. We’re just not there.”

With cases climbing in recent weeks, he has watched his system reach capacity and have to start implementing surge measures. Across the system, some clinics have closed so staff can tend to hospital needs. In Sioux Falls, patients in some cases are two per room. Others are monitored at home, in some cases with supplemental oxygen.

As he looks around the room at Avera headquarters where the board of directors meets, he talks about how what happens here has changed.

“There has been this age-old divide (in health care) between administration and physicians, and when it comes to dealing with a crisis like this, the people in the room most knowledgeable are the physicians,” he said. “We’ve used our very strong clinical service line structure to engage physicians in our decision-making.”

Bob Sutton, photographed while in prayer during a pandemic response meeting

There were days when decisions made in the morning had to be “totally different” by the end of the day, he added.

“Because we had new information,” he said. “A physician said, ‘You’re doing what we’re trained to do.’ You make the best decisions with the information you have … and if the information changes, you have to adjust your care plan.”

The long-term ramifications already are becoming apparent.

While the system had projected growth in virtual visits in the next five years, they went from fewer than 50 per day pre-pandemic to more than 1,300 a day during the more restrictive days of it, to leveling off to between 350 and 400 now.

“It’s not going to go back to under 50,” Sutton said. “It became very apparent the need and desire for telemedicine, and the offering of telemedicine became a priority for health systems. Those who had not invested in it had to come to those of us who had.”

That’s a gain for Avera eCARE, which operates in 32 states across various service lines.

“We have been very busy getting hospital contracts in our telemedicine, and that’s a positive sign,” Sutton said. “That will be a driver going forward.”

Financially, Avera’s fiscal year wrapped up just as the pandemic was ramping up – it ended June 30. After what Sutton calls nine months of  “a pretty good fiscal year 2020,” the system began losing a couple of million dollars a day in revenue. With procedures on hold, empty beds and no stimulus certainty, “those were long days,” he said. “And then there started to be some bright spots.”

The passage of the first CARES Act brought some relief, and Avera ended up on budget by the end of the fiscal year.

Now, “there’s no doubt revenue is strong,” Sutton said. “Margin is tougher because you have a considerable number of people – especially health care givers – out with COVID or exposure to COVID, so you have people working extra shifts and working overtime, and you’re going to have expenses. And we’re seeing significant increases in supply costs, especially PPE (personal protective equipment). There’s nothing like a crisis to drive supply and demand.”

Future focus

In the nearly 18 months he has served as CEO, Sutton has started to put his stamp on the Avera organization.

His leadership team is streamlined, with retirements easing the way for minor reorganization. Sutton’s newer direct reports include Tom Clark, chief strategy and growth officer, and Julie Lautt, chief financial officer. There now are four regional presidents where there used to be six.

“We have to be more efficient. We have to operate with more productivity, and you can’t ask others across a system to do that without doing it in your C-suite with your senior leadership team,” Sutton said.

Bob Sutton visiting Avera St. Luke’s in Aberdeen

A system that already counts 315 locations across five states, he sees room for growth “within our geographic footprint and even more opportunities for growth around the outside of our contiguous footprint in the upper Midwest, where there are hospitals or small health systems looking for the type of delivery that Avera is – a fully integrated system,” he said.

“I do believe that the growth will come not for the sake of growth, but the growth will come because people want to receive care the way we deliver it.”

Across town, as Sanford Health pursues growth on a bigger scale with its pending merger with Utah-based Intermountain Healthcare, Sutton sees not so much an operational impact as a branding opportunity.

“I think what it changes is the acceptance of one system over the other as the local provider, or is it seen as an outside provider that’s now in the market,” he said.

“I don’t know that. I’m not a good-enough prognosticator to know what that means, but we will certainly continue to be the 120-year-old health care ministry that’s been here and grown up with you where you were born and where your kids were born. We’re the health care you know and the health care system you’re familiar with.”

While capital plans aren’t locked in for 2021 yet, “our growth is going to occur in and around Sioux Falls,” Sutton added.

“There’s no question. There will be additional opportunities for expansion and growth on the Avera on Louise campus. We’re not going to have that 80 acres look as bare as it does forever. There are clinical opportunities in Sioux Falls where we already own property that will become the home of future clinics and also in surrounding communities. There are exciting things going on in our metro area that will be very, very good growth opportunities for us and increase our presence in those communities.”

A five-year strategic plan is only a start, he added, remembering notes he began jotting down in the boardroom immediately after it was approved.

“It’s my job in my role to start thinking about what the next strategic plan looks like,” he said. “It’s the role of the CEO of an organization to be thinking about what the long-term viability and sustainability is. Five years is important, and you have to have a road map, but you really have to be thinking about the next 10 years.”

But that, too, goes back to the system’s foundation.

“The focus is on sustaining a 120-year-plus ministry and making sure the Benedictine and Presentation sisters see this sponsored work and their commitment to health care and education for over a century is sustainable in the future,” Sutton said. “When there are far less of them around to see the success of that, they need to know their legacy will live on in this health care system.”

Want to stay in the know?

Get our free business news delivered to your inbox.

Avera CEO details strategy for growth amid pandemic surge

Avera CEO Bob Sutton takes us inside 2020 and beyond with a look at how the system plans to grow.

News Tip

Have a business news item to share with us?

Scroll to top