Chapter 1: What is the main topic discussed in this episode?
Since recording this episode, there have been some important updates.
Chapter 2: What recent leadership changes occurred at BJC Health System?
On June 25th, Rich Leichwig announced that he will retire later this year, following a remarkable 40-year career in healthcare, including the past 16 years at BJC. On the same day, it was announced that Nick Bardo will succeed him as president and CEO of BJC Health System, effective October 1st, 2025.
I've had the great privilege of working closely with both Rich and Nick over the years, and I'm excited to see where their next chapters take them. As BJC enters this new phase of leadership, I invite you to listen to our conversation about the integration of BJC and St.
Luke's, an effort that exemplifies the strategic vision, cultural focus, and collaborative spirit that will continue to shape the organization's future. Welcome.
Chapter 3: How did BJC Health System and St. Luke's decide to integrate?
You're listening to the McKinsey on Healthcare podcast. If you're looking for insights into the issues that matter most in healthcare right now, you're in the right place. Explore wide-ranging conversations with leaders, changemakers, innovators, and professionals who are at the heart of healthcare today. I'm Drew Ungerman, a senior partner at McKinsey.
I also lead McKinsey's global healthcare practice. Today's guests are Rich Leichwig, CEO of BJC Health System, and Nick Bardo, President of BJC Health System. These leaders have recently steered BJC through a significant transformation, completing the combination of St. Luke's Health System of Kansas City and BJC Healthcare of St. Louis in January of 2024.
Chapter 4: What challenges did leaders face during the integration process?
This combination has created a single integrated healthcare organization serving patients across Missouri, Illinois, Kansas, and the greater Midwest region. Rich and Nick were at the forefront of this combination.
This makes them uniquely positioned to discuss the challenges and opportunities of leading in a best-in-class health system integration, combining academic excellence with expanded patient care capabilities across a broader geographic footprint. So we are here to talk about the exciting combination that you all have helped to shape and lead.
And I wanted to start at the beginning, which is what inspired the idea to bring together BJC and St. Luke's together today?
BJC and St. Luke's had a 10 to 12 year relationship prior to us formally joining together at the start of 2024. We had formed an organization called the BJC Collaborative. And so we had worked together for 10 to 12 years. Because of that relationship, because we knew each other so well, Dr. Mindy Estes, the CEO of St.
Luke's, and I had conversations about what we both felt we needed to do, given some of the headwinds that were impacting the industry.
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Chapter 5: How does the integration create value for patients and communities?
And as a result of that, we were able to be very creative. And from that discussion led us to the joining of the two organizations. We quickly shared that with our respective board chairs and had support from both of them as well to proceed. But it really was evolutionary, not revolutionary, given the longstanding relationship that we had with each other.
Just to build on Rich's point, I think we both have long histories and deep leadership within the organizations. And I think both leadership teams, both boards are forward thinking. And really, we'll talk a little bit more about this, but I think we all see change coming in the industry. And I think both boards and both management teams were...
Wanting to stay ahead of any changes that were coming at us. And obviously this has proved to be fortuitous as we've now been together for a year and continue to operate in our current environment.
Probably the most significant opportunity we each envisioned at the time was the need to have greater scale. And we could have done that independent of one another. Again, because of the relationship, it led us to say, hey, why don't we join and really create scale immediately that would serve us well going forward.
Chapter 6: What role does culture play in the success of health system integration?
You all in particular and BJC as a whole is in the business of taking care of people and your communities. How do you think the combination or how has the combination created value for your patients and your communities that you serve?
We each have been in our communities for generations, and you're exactly right. And both are very proud of the exceptional care that we provide in the communities that we're privileged to serve. In coming together, one of the initial goals was to make sure that we're going to be here for future generations. So at a minimum, to continue to maintain the access that already existed.
But then we wanted to take it one step further. We wanted to be able to expand access, access for the communities we serve and those communities that we envision we would be able to serve, given the size and scale of joining together. We also thought through that scale, we could better innovate, better invest capital, better
to ultimately serve our most important customer, and that's, you know, our patients and the communities within which we operate.
That scale, I think, allows you to also attract talent. It allows you to attract clinical talent. It allows you to attract talent in your shared service areas, finance, managed care, supply chain. People want to play for a winning team. And I think that scale and the commitment to being around for the next hundred years and the next generation, I think, creates a great platform to attract talent.
And Rich said it, but I'd reiterate it. You know, the long-term stability of the organization is important for patients, right? If you're investing your time and effort in creating relationships with the healthcare organization, I think knowing it's going to be there for you and your family for years to come is important.
Look, the industry does not have the world's best track record on these combinations. I think you both know that well. As you were headed into the partnership, what were you most concerned about going into an integration of this size and magnitude?
In our case, we... decided, both St. Luke's and BJC, that we wanted to come together. We both were operating two very successful healthcare systems, and we were anticipating what the future might look like if we weren't able to achieve scale. But there was not a real burning platform
And so one of the challenges we had was, one, how do we convince our constituents that this was the right time to take this very bold move? In some ways, it may have been easier if either one of us were obviously not performing as well.
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Chapter 7: What strategies can leaders use to prevent disruption during integration?
And going back to Richard's point about the clinical, being clear with our clinical leaders that... It's not to say we will never have clinical integration, but it needs to be bottom-up. It needs to come from our clinicians.
It needs to be driven through our care organization, not through the top-down approach that you might see in terms of the integration of some of the shared service functions, which, again, we did in a collaborative manner. But at the end of the day, as a care organization, having those ideas bubble up from our clinicians is, from our point of view, a better approach over the years to come.
Drew, the other thing I would add in terms of what we're concerned about and what others should be thinking about, culture is critically important. We had worked with each other for 10 plus years and our cultures were fairly similar as we've now gotten to know each other even better. They're actually extremely similar. But that was the other thing we wanted to make sure that we didn't
sort of destroy or undermine the cultures within the organizations. And actually, through the integration process, we have built on that, the commonality of our cultures.
Chapter 8: How do you build an effective leadership team during integration?
But that's very important to pay attention to early in an integration.
You know, you both just touched upon the importance of culture, the importance of communications. And as something as strategic as it is, there's a lot that could go wrong. There's a lot that you're trying to capitalize on to go right. What are the other secrets that you have found?
Planning early and awesome. Obviously doing that within the rules of the road that come along with doing deals like this, but establishing strategy. your baseline, starting to establish the leadership team that will be involved.
Rich spoke about first doing no harm in terms of our operations, really setting out a baseline of what financial performance is there, what financial, in addition to financial, what employee satisfaction looks like, what patient satisfaction looks like, and really communicating that and committing to not backsliding on any of those operational issues that ultimately make us who we are.
I think also staying within the rules of the road in terms of building on the teamwork. Day one is the first time you can start the integration process truly, building that camaraderie, understanding what some of the hard decisions are going to be after day one and making them quickly and decisively and moving through them, but also doing that in a fair and open way.
clear messaging about what we're trying to accomplish, on what timeline, and communicating that both up into the organization, to the board, and to hold yourself accountable.
I think a lot of times maybe we might be a little bit too opaque with our governance as an industry, but I think here we set out some clear goals around what the baseline was, what we expected from the integration and why we were doing it, and basically asked them to hold us accountable to those metrics. And I think in doing that early planning, You build a lot of trust in the organization.
And I think building that trust through both communication, but also through the planning effort, I think goes a long way if you get into some of the harder decisions you have to make as a leadership team.
We are about a, not quite a year and a half into the integration. And to Nick's point, we set basically a three-year roadmap that had very clear deliverables and mile markers along the way. We end up discussing that, sharing that as a leadership team across the organization.
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