Centennial, Colo.-based Centura Health is on a new path for growth under the leadership of CEO Peter Banko.
Mr. Banko became CEO of Centura Health in 2017, eight years after the system had first developed its 2020 strategic plan. As 2020 got closer, he said the organization's sponsors — Altamonte Springs, Fla.-based AdventHealth and Chicago-based CommonSpirit Health — realized it was time for a revision. Thus, a new 2025 plan was born for the future of Centura, a healthcare network with 21,000 caregivers across Colorado and western Kansas.
Here, Mr. Banko explains the reasoning behind the plan, discusses plan details, and offers advice for other organizations working on their strategic plans.
Question: What prompted a new 2025 strategic plan?
Peter Banko: In 2018, we revisited our 2020 plan in partnership with our board, physicians and leadership. In fact, it was just a few months into my role as CEO in 2017 when our sponsors asked me to refresh the plan. 2020 was quickly approaching and we knew we needed to pivot in some key areas.
Through that process, we identified five things that helped shape our future. The first is the rise of consumerism. Consumers' needs and preferences are becoming more important. Second was ubiquity in data and analytics and being able to use our data both clinically and for consumer enablement. The third was evolving care models and being attuned to them as the world changes. The fourth was competition, both traditional and nontraditional, which is being intensified with more disruption and consolidation in our industry. We felt if we were not No. 1 or No. 2 in our markets then we weren't a player going forward. And the last one is the move from volume to value just hasn't happened. We believe it will, but not in the short term. We are going to take a step back from how we were spending our dollars on value and really focus them on physician and consumer enablement.
Q: What are the biggest changes from the previous plan?
PB: One [revision] is being intentional and deliberate about growth and growing the organization intentionally in areas that make sense. The second thing is physicians now are at the core of our plan, so we're trying to pivot more to be a physician organization that runs world-class hospitals rather than a hospital organization. The third part is starting to operate as a system. Most big national or regional systems are struggling with how to take advantage of scale from a quality, safety, experience and, most definitely, cost perspective.
Q: What are some growth strategies in the 2025 plan?
PB: We looked at how S&P 500 companies are growing over the last 30 years. One-third of our growth is going to come from our current trajectory. Colorado's got population growth, job growth, so 4 [percent] to 5 percent of our growth over seven years — which is about a third of our total growth — will come from our normal operations. The next third will really come from partnerships and acquisitions, similar to companies like Berkshire Hathaway. Then another third will come through market disruption. We looked at companies like Amazon and Google, and we're really going to use physician alignment, centers of excellence and payer partnerships to disrupt the market.
When we started the plan, we were at roughly $3.7 billion. Our stated goal is to be a $7 billion system or more by 2025, so double our size.
Q: What additional financial goals are in the 2025 plan?
PB: We're targeting a consistent 14 percent to 16 percent increase in earnings before interest, tax, depreciation and amortization, through 2025. When I started, we were roughly around 11 percent, and this fiscal year, which started July 1, we're around 14 percent. So, we're already in that zone, but one of the mechanisms we're using through the first three years of the plan is a cost management reduction target of $350 million to $400 million over the three-year period. We're in that first year and we're on target for about $125 million of cost reduction this year.
Q: What areas will be affected by those reductions?
PB: We're looking at supply chain performance, purchased services and vendor partnerships. We're looking at our investment in aligned physicians. And I would say a large focus is on overhead, both system and market overhead, including labor management and management span of control.
Q: What else is part of the plan?
PB: We found that there were varying opinions among our stakeholders about consumerism, but the one universal truth was consumers want affordability and transparency. We've created an innovation center that's focused on consumer enablement around the digital experience, data and analytics. We think there are business opportunities later in our 2025 journey, future revenue opportunities, that are small but growing over time around consumerism and consumer enablement.
Q: How do you see the plan affecting patients and the communities Centura serves?
PB: Our plan is really grounded in our mission and our vision to improve whole-person care — mind, body and spirit — for the patient, and that it helps each of our communities flourish. Everything is driving toward that — making people whole and healthy.
Q: What advice would you give other healthcare organizations as they consider their strategic plans?
PB: Ensure your management structure, your decision-making, your talent management, and your metrics are aligned with your plan. You can't just create a plan and not look at how you're structured and where decisions are being made. That's been the toughest part of our plan — to lean into a new structure and decision-making, to be able to drive this and make it successful. If you're just going to go out there and create a new plan and not develop the structure and processes to support it, then it's not worth doing the plan at all.
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