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Executive Summary
Organization. Sarasota Memorial Health Care System Industry. Health care, hospitals Key. New CEO David Verinder has dealt with a variety of challenges in his first year.
David Verinder has learned a lot in his first year at the helm of the Sarasota Memorial Health Care System, a nonprofit community-based hospital that treated more than 800,000 people in 2014.
The biggest surprise in the learning curve for Verinder, promoted from COO at Sarasota Memorial to CEO in July 2014, is how much time he spends on regulations and governance.
That especially includes the potential life-and-death issue that pits public hospital advocates against some in Tallahassee who seek to ensure community hospitals are responsible stewards of public funds. “I think the governor,” says Verinder, “has made it clear that he has an issue with public hospitals.”
Verinder recently spent an entire workday, unplanned, on the phone with lobbyists about a hyper-specific point in the ongoing debate. “I spend a lot more time on the legislative side than I thought,” says Verinder, who has been with SMH since 2006. “I knew that was a part of the job, but I didn't realize how much.”
Verinder, 48, also recently spent a good amount of time on something else unexpected: the waltz. Verinder learned that dance so he could get down with his teenage daughter, Hayden, at the Debutante Ball in Sarasota last December.
The desire to constantly get better, from a dance with his daughter to navigating the finer points of the Tallahassee machine, is a defining Verinder characteristic. That trait, say several who know Verinder, stems from being both a doer and a visionary.
“He's very forward-thinking for the hospital and what it will take for us to get there,” says SMH Case Management Director Colleen Ryan, a trained nurse who has worked at the hospital for 42 years. “But he doesn't work in a vacuum. He really gets out in the community.”
In an interview and public speeches, Verinder often talks about programs and disciplines at SMH that are money-losers for the hospital but needle-movers in helping patients or advancing training for employees. Those programs range from the neonatal intensive care unit to a new trauma center. When he talks up those areas, he starts with “we absolutely lose money on...”
But Verinder says the long-term approach is the only way to go in health care, mostly to stay ahead of rapid changes in laws and technology. “We don't look at things as what our needs are for this year,” says Verinder. “We look at things five or 10 years down the road. We want to be an excellent health care provider, not an average one.”
Quiet, not shy
Addressing regulatory issues isn't the only thing that marks Verinder's first 12 months in what could be the most visible executive position in the Sarasota-Bradenton health care community. For starters, SMH is one of the largest employers, public or private, in the region, with a payroll that exceeds 3,600 people and $292 million. The main facility has 819 beds, and in addition to the core payroll there's 1,000 volunteers. The 2015 fiscal year operating budget is $563.9 million.
Verinder has another challenge in that he replaces former CEO Gwen MacKenzie, a nurse-turned-executive who became one of the most prominent leaders in town — in any industry. MacKenzie was named a senior vice president and Michigan market leader for Ascension Health Michigan. “She was well thought of,” says Verinder, “and rightfully so.”
But where MacKenzie in some ways was a reserved leader, Verinder is gregarious, the chief executive who stops and chitchats with anyone he passes in the hallway. “I think he's had phenomenal success in his first year,” says Sarasota County Public Hospital Board Chair Marguerite Malone, who oversaw the committee that hired Verinder. “We are very pleased with our selection.”
Area philanthropist and longtime SMH supporter Renee Hamad says a lot of Verinder's success goes back to a sometimes underappreciated leadership attribute: listening skills.
Hamad, whose daughter, Dr. Karen Hamad, is the hospital's 2014-2015 chief of staff-elect, says Verinder readily recognizes he's from the business side of health care, not the medical side. “He's very diplomatic. He knows when to stay quiet and listen,” says Hamad. “But he's not shy. When he has an opinion, he says it.”
Big moves
The listening side of Verinder's leadership style came into play twice in his first year as CEO when he oversaw two significant decisions. “I like to get a lot of feedback,” says Verinder. “I like healthy debate.”
One milestone happened in April, when SMH formed an internal medicine residency program, the first allopathic (M.D.) program between St. Petersburg and Fort Myers. The second big-time move happened in May, when SMH opened a Level II trauma center.
Hospital officials expect to treat 500 additional patients this year at the trauma center. While personnel there works with high-stakes immediacy, the months leading up to earning approval from the Florida Department of Health were grueling, say several SMH executives. It involved an orchestra of meetings, research and follow through Verinder conducted. It also needed someone to coordinate efforts between SMH's elected board and the hospital's top medical staff. And, finally, the trauma center required a $3.5 million investment to upgrade two trauma rooms in the ER and the trauma operation suite.
“Everyone wanted to make this happen,” says SMH 2014-2015 Chief of Staff Dr. James Fiorica. “But it took a lot of pull and a lot of people going in the same direction to get it done, and David made it happen.”
The new residency program, while less tangible than the trauma center, is another example of Verinder's go-long strategy. The program is expected to produce up to a dozen internal medicine doctors a year at full capacity.
Rocket son
Verinder, who grew up in Dallas and Baton Rouge, La., is the son of a NASA engineer who worked on the Saturn V rocket project. The younger Verinder's first job was at a shoe store when he was 14. He was studious and into sports, and earned Eagle Scout honors.
That attention to detail showed up early in his SMH tenure, soon after he was named CFO in 2006. Verinder was recruited to SMH from Scott & White Memorial Hospital in Temple, Texas, where he was on the senior executive team.
SMH, owned and operated by an independent taxing district governed by the nine-member Sarasota County Public Hospital Board, was losing money when Verinder was hired. It had been downgraded by bond rating agencies. SMH returned to positive margins within four years, mostly from strategies implemented by Verinder and MacKenzie.
In the four years from 2010-2013, annual operating margins at SMH hovered between 5.4% and 7.6%, according to state collected health care data. In 2014, the profit margin jumped to 10.9%, a trend that has continued in 2015. In the six months ended March 31, for example, the margin was 9.3%, according to unaudited SMH data. That's up from 5.8% in the six months ended March 31, 2014.
The rise in margins, in Verinder's view, provides SMH space to reinvest in new programs and initiatives that make the hospital the top-ranked facility it is. The margin increase stems from several factors, say hospital officials, and includes changes in how the federal government reimburses hospitals for certain lengths of stays. A sharp rise in patient volumes, especially people who no longer are delaying elective procedures, is another factor. Those more profitable procedures range from cardiac care to robotic surgery to interventional radiology.
The factors that led to the rise, in general, aren't permanent, says SMH spokeswoman Kim Savage. “While we expect our margin to remain strong in 2015,” Savage says, “we don't expect a repeat of fiscal 2014.”
Under pressure
But it's those margins, in public and community hospitals statewide, that have come under pressure from Florida Gov. Rick Scott twice in the last four years. In 2011 Scott, a former for-profit hospital executive, created the Commission on Review of Taxpayer Funded Hospital Districts. That panel didn't find any patterns in patient care, better or worse, based on whether a hospital was private or taxpayer funded. The panel, among several recommendations, suggested all public hospitals go through a transparent, competitive and independently verified privatization process.
Scott created another panel earlier this year, with a slightly different mission based on the same premise: What kind of results do patients get at taxpayer-financed hospitals and medical systems?
This second panel, the Commission on Healthcare and Hospital Funding, formed in May. “The more information the commission gathers from hospitals about their outcomes for patients,” Scott says in a June 17 statement, “the better we can target state taxpayer money to get the highest quality from the hospitals their tax dollars support.”
Three of the nine people on the most recent commission are from the Gulf Coast, including the chairman, Manatee County homebuilder Carlos Beruff. Other commission members are retired U.S. Air Force Brig. Gen. Chip Diehl of Tampa and entrepreneur Ken Smith of Estero. Smith, a former senior executive at agribusiness Alico, is now a partner at Integrated Beef Consultants and is on the board at Florida Gulf Coast University.
Verinder follows the doings of the commission. But even though it takes a lot of time, he says the prove-your-worth questions aren't his biggest concern because he's confident SMH provides an irreplaceable amount of services. Verinder's chief executive anxiety, instead, mirrors what many other executives face: surprises.
“Any problem I know about, I'm confident we can handle it,” says Verinder. “But the unknown issue that pops up, that's what worries me.”
At a glance
Sarasota Memorial Health Care System
Year founded: 1925
CEO: David Verinder
Operating budget, fiscal 2015: $563.9 million
Employees: 3,676
Patients: 27,488 in-patient admissions in 2014; 811,399 total patient registrations.
Services: Includes acute care hospital; freestanding ER; urgent care clinics; physician groups; laboratory and imaging centers; and skilled nursing and rehabilitation centers.
Sources: Commission on Healthcare and Hospital Funding, Sarasota Memorial Health Care System
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