St. Joseph’s Health System: Joe Randolph, Executive Vice President and COO

by HCE Exchange on May 12, 2011

St. Joseph’s Health System is a large system of 14 acute care hospitals, plus home health agencies, hospice care, outpatient services, community clinics and the second largest Medical Practice Foundation in California. The system covers three diverse geographic regions: Northern California, Southern California, and West Texas/ Eastern New Mexico. This diversity has helped the hospital weather the economic storms happening in healthcare throughout the country, said Executive Vice President and COO Joe Randolph.

“When one market is down another is up,” he said. “This geographic diversity gives us strength in terms how different markets respond to regulatory changes, legislation, labor costs, reimbursement, and contracting.”

Becoming part of a large, integrated health system seems to be the future for many healthcare facilities. But even in a system like St. Joseph’s with more than $4.2 billion in revenue, efficiency and innovation are keys to economic survival.

“After the market crash in 2008, we needed to make improvements in operations to rebuild our portfolio and strengthen our financial position,” Randolph said. “We implemented Lean processes at each facility and have seen significant improvement in our value stream. With the Lean process, we empowered managers at all levels to improve operations and reduce waste.”

Some Lean initiatives involved supply chain management, a revenue cycle initiative to reduce denials and increase collections, and a productivity system to improve accountability.

Randolph said the system is looking for ways to become even more efficient in preparation for healthcare reform, particularly in the case of Medicare reimbursement. “We are looking to create our future rather than respond to reform,” he said. “We are focused on trying to partner with physicians to help them through this challenging time of reduced reimbursements.”

Despite financial struggles common to most hospitals, St. Joseph’s hospitals are number one in market share in each region. This has allowed the health system to increase capacity in almost all facilities.

“We needed to retrofit our California facilities to comply with new state legislation, and we took advantage of the opportunity to develop master facility plans for each California hospital,” Randolph said. “We have three new bed towers in Orange County and another near completion.”

Randolph said the system also has plans for a new hospital in Apple Valley, which will include outpatient services and medical office buildings.

Empowering employees to innovate

In addition to efficiency, innovation is a big focus of St. Joseph’s moving into the future. The system is structured traditionally, but the system tries to keep as few management layers as possible.  This has allowed St. Joseph to be nimble and able to make timely decisions.

“Our individual hospitals are able to make decisions and respond quickly to changes in their markets, rather than having many layers of management within the system,” Randolph said. “We also have a tiered governance where many decisions are made at the local level, and capital allocations and budgeting decisions are made at the system level. We have a tremendous sense of team within the health system. When one location needs help, they can find it at one of the other locations or from the system.  The culture is grounded in our heritage as a faith based system”

Communication among all the ministries has been key, and Randolph regularly interacts with the CEOs of each location. Part of this communication has been to seek innovative ways to improve healthcare and operations for the future. St. Joseph’s recently held an Innovation Summit where it brought in speakers from a diverse group of industries – a rocket scientist, a Microsoft employee, a bioscience engineer, a venture capitalist, and others. They formed a panel to inspire innovation throughout the organization.

“Anticipating the future of healthcare, we realize that incremental changes won’t get us where we need to be,” Randolph said. “We need breakthrough change, and that is what the Summit was all about.”  “In the future we will be looking to Innovation to take us to the next level of performance, to improve the health of the communities we serve.

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