Few can claim to have had as big a hand in shaping the business of health care in the Lehigh Valley as Rick Anderson.
Anderson has been CEO and president of St. Luke’s University Health Network for nearly 39 years. He’s not only one of the longest-serving CEOs in the Lehigh Valley, but in the country. He oversaw the growth of St. Luke’s Hospital into a 15-hospital network with more than 20,000 employees. The network under his leadership simultaneously competed with Lehigh Valley Hospital as it grew into a massive network in its own right.
However, the proposed merger between Lehigh Valley Health Network and Philadelphia-based Jefferson Health could change health care in the region in ways never seen before, should the two networks combine. In announcing the merger, both LVHN and Jefferson said it would allow both systems to expand, improve and better serve patients.
Yet, the question remains, how will the pending merger affect the longstanding competition with St. Luke’s?
Anderson recently agreed to a sit-down interview with The Morning Call in his office at St. Luke’s Fountain Hill campus. For two hours, Anderson spoke about LVHN and Jefferson’s merger plans, the role of integration in health, the way St. Luke’s operates and the network’s future.
This conversation has been edited for length, clarity and relevance.
Q: You’ve obviously seen a lot of changes in the dynamics of health care in the Lehigh Valley. Could you talk to me a little bit about whether you expect to see further vertical and horizontal integration as part of the Lehigh Valley’s future?
Anderson: When a hospital system takes over, acquires an organization or merges, however, you want to define it, one of the most important things you can do to ensure the success of that acquisition or merger is to truly integrate.
Let’s use Easton Hospital as an example. They had a different culture, you have to respect that culture when you go in. It’s not “We’re going to do it our way,” meaning St. Luke’s way. They had a union, they had an IT system, different than the one we have. They had medical records, quality, financials, HR and the culture, which is really important. You go in as an organization that’s there to help Easton Hospital because it was going to close; Steward Health [Care of Dallas] was going to close Easton Hospital. We go in and we change IT, we put our quality programming in, we put our financial system in. Integrating means bringing in the St. Luke’s way of doing things and respecting the culture that exists and if you can get those two to mesh together, the two cultures, you hit a home run every time and we’ve done that seven times. We’ve saved seven community hospitals and the reason we saved them is because we respected the culture first. We don’t come in and pillage and burn and lay people off and treat them disrespectfully. We integrate all those programs.
Quality is probably the most important thing we do because who’s the focus of what you do in a hospital? It’s the patient. You got to make sure the patient is getting the kind of care that is state of the art, follows the most practiced medical science. … Our model is we keep the care close to home because health care is really personal. It’s not about how big your corporate entity is, it’s about the relationship you have with your doctor. When you go to see a doctor, whether it’s Lehigh Valley [Health Network] or you are coming to St. Luke’s, you don’t think about Rick Anderson. If you come to St. Luke’s you think, “I’m going to see Dr. Doe” and “Is he or she going to take care of me the way I want?” The first thing you think about is how that appointment is going to be with that physician and that’s what we try to replicate in all of our facilities.
There’s been a lot of consolidation in health care over the last 25 years. Up until December, there were only two good health systems in the Lehigh Valley: There was us and Lehigh Valley. Now Lehigh Valley has been acquired by Jefferson. The deal hasn’t closed but the regulators are going through the details. Once that’s done there will only be one health system that’s Lehigh Valley-based, that’s St. Luke’s.
Q: Are you saying you think it’s an inevitability that this is going to go through?
I think there is an 80% chance it will occur.
Q: Do you think it should occur?
I like the idea that Lehigh Valley is a good health system. Why? Because I’m a competition junkie. I love to compete. I’m a former athlete in the Big 10, I swam at Illinois. Everything is about, “Did you win?” or “Did you lose?” — what does the stopwatch say? That’s why we look at all this data. We competed against Lehigh Valley for my whole time here. And they were good, they still are respectable. That made us compete. Get better. Work hard. How did they do? We’ll do better. Quality, that was the thing that drove us — quality — always quality. Jefferson? I’d say it’s a respectable institution in Philadelphia, but it’s Philadelphia. I never lived in Philly, but I know from being there that Philadelphia culture is different than Lehigh Valley culture. Their focus is to get bigger, our focus is to get better. You asked me the question, “Do I think it’s a good idea?” I don’t know. But I know I want to keep competing. I want them to be the kind of organization that will keep us on our toes and make us better.
The jury’s still out on what’s going to happen. If you read the papers — and I do — it sounds to me like the decision that was made to merge was to get bigger. The talk is they’re going to have $11 billion and 30 hospitals, they’re in two states. We’re scaled the right size for here in the Lehigh Valley. How do I make that claim? Market share. We have the market share, we have the primary care doctors, we have the facilities and our facilities are new. Really our biggest asset is our employees, they’re the ones that make it happen. I don’t make it happen.
Q: Has St. Luke’s been approached for merger or acquisition by a larger network?
Seven years ago and it was Geisinger. My question was and would be again, “How will a merger make us better?” Their quality was not equal to ours — still isn’t. Look at the data. Their administrative structure was not conducive to bringing out the best, i.e. integration. There was not a certain respect that was there for St Luke’s culture. It was a nonstarter from the get-go and I think I said, “Are you crazy? Why would I even think about merging?” Right now, St. Luke’s is a unicorn. We’re not chasing leprechauns and rainbows but we’re an organization with 20,000 employees and we’re doing terrific.
Q: What kind of position do you feel that merger acquisition would put St. Luke’s as a competitor with this new network?
Well, we train 490-500 residents. We have a medical school. We have a four-year program — I call it undergraduate medical education. So we train all those people and after they go to medical school some of them go on to Mayo Clinic some go to Mass. General [Hospital], these really top-notch residency specialty programs. Then they come back here because they trained in our medical school and they liked the culture of St. Luke’s. We treat those students just like they’re our employees and they know that and they like that so they come back.
There is a physician shortage but our physician shortage is nowhere near what other organizations have experienced. We have psychiatry, dermatology. Five years ago, you couldn’t get an appointment with a dermatologist for two years. It’s not the case now. You couldn’t get an appointment with an endocrinologist, not the case. Neurologist? Not the case. Why? Because our financial success, our culture, how we treat people. I’m really excited about the future and what’s going on and our position. I’m just watching and waiting to see what’s going to happen to [LVH-]Cedar Crest. I hope they stay good so I can stay competitive. That’ll make us better.
Q: So St. Luke’s is never going to be acquired?
I shouldn’t say never. We’re not in any mindset to be acquired. I won’t be here if they’re acquired, but who knows in 10 years, 15 years. I would say at the present time and in the near future, there’s no discussion, there’s no talk, there’s no thought of any acquisition.
Q: And that includes acquiring another health system?
If you look in the Greater Lehigh Valley, which is Warren County, New Jersey, Monroe County is not part of the Lehigh Valley but certainly Carbon County is, all hospitals are spoken for. If you go down to Bucks County, there’s only one independent hospital system left and if you go down and look at the side of their building it says Penn Medicine. So for all intents and purposes, all hospitals are acquired. Would we go to Atlantic City and acquire that system? Hell no. There was one time we went to Williamsport — Susquehanna [Health] — we looked at it, but we didn’t acquire it. We talked to Reading Hospital back in 2016 and 2017 about merging. We were the larger, we would have been the acquirer but there was disagreement with the boards of both, here and there, and the CEOs, that’s myself and the guy that’s no longer there, about who would be in charge. Now they’re in a very, very, very, very sad financial condition.
Q: So you feel no pressure to grow in size and footprint in response to this merger?
No. We’re scratching our heads trying to understand why a strong system like Lehigh Valley would merge. Bigger is not better. Better is better. If you read the information that’s been discussed by Jefferson in the paper — not Lehigh Valley, Jefferson — their focus is bigger. Bigger — that’s what they want to do. They want to get bigger.
Q: What are your thoughts on vertical integration within health care, packaging in insurance with hospitals?
A: That’s a really knotty question. I do think that concept — vertical — is on the top of lots of CEOs of health systems’ minds. They believe they should own insurance companies and that might be true in certain markets.
In the Philadelphia market, Jefferson owns Health Partners Plans [Jefferson Health Plans] that markets to Medicare Advantage, which is a branch of Medicare and then medical assistance. What I’ve read in the paper indicates to me that one of the reasons Lehigh Valley is going with Jefferson is so they can take advantage of [Jefferson Health Plans]. … I call it a calculated risk. And I think Lehigh Valley is pushing their chips in the middle of the table and hopefully, that will help them capture more revenue because it’s managed within the organization with [Jefferson Health Plans]. That may work in certain markets. Here in the Valley, this valley is unique and I don’t know whether it’s changing in terms of the dynamics of how health insurance is going to work.
Q: How much longer do you expect to be here?
I still like coming to work. If you’re a golfer, I’m on the back nine. I’m not on the front nine of the 18. I never thought I’d be working this long. I graduated 50-some years ago from the University of Pittsburgh. I have a graduate degree. I was telling somebody recently that when they let me into school I was an experiment — I had no experience in health care. None. “Mr. Anderson, why do you want to go to school here?” I don’t know, I want to try and see if I can work in health care. “OK, well, we’re going to let two of you in this class of 20 and see how it works out.” I’m the only one still working — most of them got out of it after the first 10 years. So I don’t think about how long I’m staying. I just come into work every day.
I’ve got a blue-collar mentality; I do my job, do my best, I leave things on the desk, I can start it tomorrow. I don’t think about when I’m leaving; I think about what’s tomorrow.
I’d probably give the organization a year’s notice if I was going to leave because it’s a big job. I can tell you, whoever gets my job, it will be internal. We won’t go outside. That’s how we hire most of our people now, we train them and get them accustomed to our culture — the St Luke’s way. We do a lot of internal promotions.
Q: Do you feel that stagnates anything?
It could if you’re not paying attention. You always get a stinker. Meaning somebody that’s not getting it done. I didn’t come up with this comparison but cats sometimes get hairballs in their gut and they cough them up — they start hacking and coughing. They cough these hairballs up and it’s not a fun thing to watch and finally, the hairball gets out and the cat’s fine. That’s what happens here. We get a few hairballs and we cough them up and then we move on.
Q: Are there any departments or specialties that need focus or expansion such as behavioral health and psychiatry?
That’s a hot topic. When the pandemic hit, people were cooped up, socially isolated and scared to death. And the average citizen didn’t know anything about COVID. We did and we were secure with some of the knowledge we had. I think it destabilized a lot of people’s relationships. I think some of the issues that were simmering with a lot of people became exacerbated by COVID.
We were already engaged in developing a psychiatric residency. Psychiatry was a dying specialty, nobody wanted to go into it. We’re the third largest in Pennsylvania in inpatient and outpatient. We merged during the pandemic with the Penn Foundation, which is located right across the street from Grandview Hospital [in Sellersville, Bucks County]. That was a catalyst for expansion in Quakertown, which already had inpatient beds. We added more inpatient beds and we moved our inpatient psychiatric beds out there and sprinkled them into some other areas. So our behavioral health program actually expanded when others were contracting during COVID. And do we have it right-sized? I don’t think so. So we’ve got more work to do. It’s growing, it’s developing, we’re paying attention to it.
Q: St. Luke’s recently hired its 20,000th employee. Besides what we’ve already talked about, what has St. Luke’s done to attract and retain employees at this time when most health care companies across the country are experiencing very serious shortages?
Well, we have a school of nursing, which has a lot of enrolled students in it. So we have a steady pipeline. And it serves as a career ladder. We have a series of career ladder-type positions, we go to the high schools and we provide opportunities for people to come in and they can move up. We don’t have approval from regulatory agencies, yet, but we’re going to start a St. Luke’s University program for radiology technicians. There’s a big shortage of radiology techs. We’re going to train some ultrasound people because you can’t find them. We’ll be training people at entry levels to do some of these jobs. That’s the way we’re going to deal with the shortage. We’re not going to sit around, wring our hands and say, “Ain’t it awful?”
