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Appointment With: Joe Stewart

CEO, Doctor's Medical Center, San Pablo

Issue: November 2008

On August 14, 2008, Doctors Medical Center (DMC) in San Pablo emerged from Chapter 9 bankruptcy protection, after nearly two years of financial and operational restructuring. Leading the team hired to oversee the turnaround was Joe Stewart, who served as the hospital’s interim CEO beginning in June 2006 and was recently appointed its permanent CEO. Previously, Stewart was CEO of Butler Health Systems (outside Pittsburgh, PA) and Queen of the Valley Hospital in Napa, CA.

We asked Stewart to tell us more about the lessons learned through the restructuring process as well as the challenges faced by the hospital and plans to move forward.

MDN: What prompted you to want to step into the position of CEO for a hospital in the throws of bankruptcy?

Stewart: I’ve always helped hospitals who were troubled or challenged to help get them back on track, help them reset their visions [and] take their place in the community. I’ve always enjoyed those challenges and I believe very deeply in community hospitals, which is where most of us, as Americans, get our healthcare.

MDN: Now that DMC has emerged from bankruptcy, what do you see has the major challenges before you?

Stewart: There are a number of challenges. Our first task is to reconnect with our community. A bankruptcy is a terrible nightmare to go through, I think mainly because it takes a lot of energy to get out of bankruptcy and also, in some sense, you have to take your eye off the ball of healthcare in order to get yourself out of bankruptcy. So our first and highest priority is to reconnect with our community members in terms that our only focus is to resurrect and rebuild patient care for this community.

MDN: What are you doing to reconnect with the community?

Stewart: We’re reengineering our entire department of emergency services, led by our emergency room physicians and nurses. We see 40,000 people per year in the emergency room – it’s probably the place where we meet most of the people in our community. So we’re first turning our attention to redesigning the entire emergency room so that it is much more responsive and easier for our patients to use.

The second area where we are building on is our cancer center. Our cancer center was just reviewed and accredited by the American College of Surgeons, and has received the highest commendation that the ACS can award. We’re also adding a new and expanded radiation therapy program in our cancer center.

We have also begun a major, multi-million dollar campaign to replace patient care equipment throughout the hospital. This year we’re spending close to $7.9 million to build new patient care areas and to improve equipment that’s already here, [e.g.] we reequipped our entire laboratory. This is the beginning of a series of years of multimillion-dollar commitments back to the community, of putting in new and needed equipment.

MDN: How are all of these improvements being funded?

Stewart: We have developed a financial plan of correction. We have improved all sorts of processes inside the hospital in terms of our cost efficiency, our collection capabilities and our efficiencies in how we render services. Also – and this is probably the biggest commitment a community can make - our community health district taxed itself because they did not want the hospital to go under. The State of California provided $12 million for each of the next three years for assistance to rebuild hospital operations. Kaiser Health Systems provided three years of $4 million each for the support of community care here, and John Muir provided three years of $1 million assistance as well.

It was a collection of internal effort, governmental effort and fellow providers of healthcare all coming together saying “this hospital cannot go under.”

MDN: What are some of the lessons learned through this process?

Stewart: While bankruptcy is a bad nightmare it’s also a wakeup call that we really have to pay attention to how healthcare is being delivered in a local and community setting. So one of the lessons learned is that we really have to develop and be successful at relationships, and I’m going to list as number one, relationships with physicians. Medical staff and the hospital have to be successful partners in setting the new destiny of healthcare.

I also think that, while bankruptcy is a bad nightmare, it does tend to bring you all closer, saying, “If we don’t work together we will go under.” I think one of the lessons learned here is that we will truly stick together and find new ways to be successful partners, the hospital and physicians.

MDN: Doctors Medical Center certainly is not unique in having financial difficulties. What is your outlook on the healthcare industry as a whole?

Stewart: Hospitals like Doctors Medical Center, no matter where they are in the country, are like canaries in the coalmine, and, in this case, the coalmine is the American healthcare system. These are real problems involving real people who need real care. So when any hospital such as ours gets in trouble there is real concern and alarm within the community.

I think that we’re living through an experience where the entire financial structure in the United States has had a massive meltdown and requires a lot of action. I believe the same thing is required for American healthcare. Hospitals such as ours are reminders that this is not an abstract problem; it truly involves real people in real communities, 24 hours a day.

MDN: Is there anything else you’d like people to know?

Stewart: There’s a sense of excitement and hope and optimism at the hospital. Sometimes when you go through bad things, on the other side of that there’s a whole new sense of power and capability. You just don’t take anything for granted; you learn new ways to work together.

Once you’ve been on a “fiscal lifeboat,” if you will, you just are much wiser about how to stay out of that lifeboat for the future. And that’s where we are. We’re going to be a place where both physicians and professional staff will want to come to practice because we’re going to be a group of people who pioneer new relationships with each other and with our patients. We’re confident, given the fact of how hard it was for us to get out of bankruptcy, that not only will we do it, we’re going to do it quite well.

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