Cleveland Clinic’s Delos M. Cosgrove: ‘We are in Abu Dhabi to Help a Country Shape its Healthcare Delivery System’

Cleveland Clinic is a US$4.6 billion healthcare system that includes the Cleveland Clinic, nine community hospitals, 14 family health and ambulatory surgery centers, Cleveland Clinic Florida, Cleveland Clinic Toronto, and the developing Cleveland Clinic Abu Dhabi. The Clinic has partnered with Mubadala Healthcare to develop and manage a 360-bed hospital — Cleveland Clinic Abu Dhabi. The hospital, scheduled to open in late 2012, will be a physician-led medical facility, served by Western-trained, North American board-certified physicians. The Clinic currently manages and operates Sheikh Khalifa Medical City, a network of healthcare facilities in Abu Dhabi.

In an interview with Arabic Knowledge@Wharton at the Global Competitiveness Forum in Riyadh, Saudi Arabia, Cleveland Clinic President and CEO Delos M. ‘Toby’ Cosgrove talks about the hopes and challenges of the endeavor.

"I think one of the things that we have learned is that in order to transfer the culture of the Cleveland Clinic, we really have to put the Cleveland Clinic people on the ground," Cosgrove says. "We learned this from our experience in Florida, and then repeated that experience when we went to Toronto, learning that you can’t expect to have a Cleveland Clinic without some Cleveland Clinic DNA."

An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: We want to start by asking you about the Cleveland Clinic’s presence in Abu Dhabi. What do you hope to gain by being in the region?

Delos M. "Toby" Cosgrove: This is sort of a long 10-year story, which goes back to a very large number of people that we had from the Gulf area coming to Cleveland before 9/11. Then 9/11 happened, and all of a sudden that stopped. So we began to think, perhaps we should go where our patients were, and that led to a series of explorations, initially to London and then to Dubai and we settled on Abu Dhabi. We had inquiries from about 70 countries around the world.

Arabic Knowledge@Wharton: How did you make the decision to choose Abu Dhabi? Was it just the resources, the sort of the plan that they have going on there?

Cosgrove: No. I think that the reason we were interested in Abu Dhabi was that they looked at healthcare as an important resource for developing a country and they had the resources to do that, and they really wanted to deliver high-quality care. On top of that, it was a stable country [with] stable leadership, and they were willing to have a long-term relationship.

Arabic Knowledge@Wharton: You are already on the ground managing a facility. Is that something new for the Cleveland Clinic, to take over another facility?

Cosgrove: Yes. We initially looked at it as a stepping-stone, to learn how we could function in that particular area and use it as a staging area for doctors coming in. As we got further into it, we recognized that this is an opportunity to integrate two facilities and work together.

Arabic Knowledge@Wharton: What lessons have been learnt, so far, from working this system?

Cosgrove: I think the main thing is that we are working on integrating these two systems, one run by the government and the other run by Mubadala [the state-owned investor, mandated to facilitate the diversification of Abu Dhabi’s economy] with quite different objectives.

To deliver high quality and cost-effective healthcare, you have to have an integrated healthcare-delivery system. That’s what they’re trying to build.

One of the things we have learned is — and we learned this from previous experiences in expansion — that in order to transfer the culture of the Cleveland Clinic, we really have to put the Cleveland Clinic people on the ground. We learned this from our experience in Florida and then repeated that experience when we went to Toronto, learning that you can’t expect to have a Cleveland Clinic without some Cleveland Clinic DNA.

[It’s the] same thing that law firms have learned, accounting firms and consulting firms have learned. It was important for us to find the people in Cleveland to go and settle there. And that has been a challenge, because it was a totally new enterprise for. And so gradually, we’re building momentum and we think we have about 80 people on the ground in Abu Dhabi now.

Arabic Knowledge@Wharton: Going from Cleveland to Florida, or even Toronto, is one thing; but going to Abu Dhabi? Can you talk about that stretch in bandwidth?

Cosgrove: It’s been a major stretch in bandwidth for us, particularly in terms of personnel. We’re getting much better at it because we’ve improved our communication capability. We’ve got a critical mass on the ground now, so that they feel they have a community of likeminded individuals. But getting those sorts of things off the ground is a challenge. You have to learn about salary, culture, and housing.

And so it’s been a challenge; but my agreement with [Abu Dhabi Crown Prince] Sheikh Mohammed bin Zayed al Nahyan was that this would be a long-term cultural transfer and that we wouldn’t get it done immediately. It would take time to do it, but in 15 or 20 years we hope to have the same thing and the same culture that we have in Cleveland. But it’s a long pull, and to do it you can’t just flip a switch, like opening a manufacturing facility.

Arabic Knowledge@Wharton: You’ve said in the past that quality is really important for the Cleveland Clinic. From a personnel standpoint, the Cleveland Clinic is famous for finding the best people. How are you replicating that experience in Abu Dhabi?

Cosgrove: [Quality] is critical. It took us a long time to have the same quality in Florida that we had in Cleveland. And it’s going to take the same sort of thing in Abu Dhabi. You’re not going to start out by saying, ‘Bang, you got the same thing in there as you do in Cleveland.’

It took us 90 years in Cleveland to grow our culture and our capability, and it’s going to take time to replicate that in another location; it takes time and critical mass. It takes about 200 doctors before you really have the critical mass of physicians to begin the drive for that very high quality of care.

Arabic Knowledge@Wharton: Given the experience of Blackberry and that of Google in China, governments expect different things from foreign entities. It’s not like in the past where you could go in there and say, "We’re here. We will work, but this is the door where your influence stops." That’s no longer the case. How do you address that?

Cosgrove: This has been an ongoing discussion with the government because they are building a new insurance business; they are building a healthcare-delivery system; they are trying to figure out how they can do this with multiple players.

I was in Abu Dhabi a month-and-a-half ago to meet with Sheikh Mohammed and to discuss with him about what I thought needed to happen at the government level. These are ongoing discussions about helping a country shape its healthcare-delivery system. The more we talk, the more we trust each other, and it gets easier to work.

We were strangers and both of us made a leap of faith. But that has to build through an organization now, which is an organizational challenge. I have to lead my organization and he similarly needs to instill confidence, or we have to demonstrate that we get confidence from the people in Abu Dhabi.

Arabic Knowledge@Wharton: What effect will the Cleveland Clinic have on healthcare in the region?

Cosgrove: We’ve talked about the quality of delivering care, everybody knows about that. I think you need to talk about the business of preventing illness, and as you know we’re having increasing discussions at Abu Dhabi about smoking [and now] obesity is a part of it. My wife, for example, works for 23andMe (a leading personal genetics company). She’s having discussions with them about what they can do by looking at the genetic disorders that are there and begin to predict those and again to understand those.

But as we talk about health, we’re not just talking about cutting and sewing or giving pills or listening to hearts; we’re also talking about the whole health of the nation.

Arabic Knowledge@Wharton: What role do you think innovation has played in the success of the Cleveland Clinic?

Cosgrove: Well, innovation is essentially in our DNA. It started with our founders. We’re a different organization than most. We are not a hospital that employs doctors. We are a medical group of doctors that has facilities. So the doctors are essentially the nexus for the organization. We make all the decisions and we’re also doctor-led, which is fairly unusual in healthcare. We have no tenure; we all have one-year contracts. We’re all salaried and we have annual professional reviews with salary adjusted on the basis of that.

We’re different from an organizational standpoint. And then over time things have happened at the Cleveland Clinic that have really propelled it. The one that you probably would be most familiar was the coronary angiography, where you squirt dye in the coronary arteries and see if there are blockages or not. That originated at the Cleveland Clinic 50 years ago. Ten years later, 40 years ago, the first coronary bypass was done. It has just been a series of these things: a recent face transplant, laryngeal transplants and kidney transplants, all things that started there. The dialysis machine first started at the Cleveland Clinic. There’s been one thing after another built on the spirit of we don’t have to do the same thing everybody else does — even from an organizational standpoint.

Arabic Knowledge@Wharton: We’ve read how you failed many times before you succeeded.

Cosgrove: I’m very good at that. I flunked up (laughing).

Arabic Knowledge@Wharton: Its one thing to speak about how failure is a really important part of the process, but failure in healthcare can be a serious matter.

Cosgrove: Oh, absolutely. For example, I have a bunch of patents. And every one of the patents came from a series of steps along the way that didn’t quite get it just the way I wanted it. I’ll tell you about my most recent one, it’s kind of interesting. The heart has the left atrial appendage, and people get atrial fibrillation when blood clot forms in there. That clot breaks off and that sort of thing causes about a third of the strokes.

So I said, "Gee, you know, wouldn’t it be nice to just get rid of the left atrial appendage? It doesn’t seem to do anything." We tried tying, stapling and suturing it off. It didn’t work. You either cut through or something.

About six or eight years ago, I had all my daughters around the swimming pool and I said, "Tell me everything that you use to clip the hair." And [from that], we developed a clip that you put on and get rid of the left atrial appendage. It didn’t cut through, [there’s] no bleeding, no nothing.

But we tried all kinds of things to get it right. We went through one after another, after another, until we got it right. So it’s the process of trying to do something and keep working to find a way to do it.

Arabic Knowledge@Wharton: How has the Cleveland Clinic been so successful with this innovation model and other successes?

Cosgrove: We honor it. We talk about it. We have four cornerstones for the Cleveland Clinic: quality, innovation, teamwork, and service. And innovation is one of the things we talk about; we reward it. Every year we have a US$50,000 prize that goes to the ‘Innovator of the Year’ award. We have a technology transfer organization, which moves doctors’ intellectual property to commercial [use]. Last year we had something like 200 disclosures. We’ve spun off about 35 companies. We just had one purchased, which returned about US$28 million to the Cleveland Clinic. We really try to encourage doctors not just to be doctors, but to also think about how they can make the process better.

Arabic Knowledge@Wharton: What about other organizations? What can they learn from what you’ve done?

Cosgrove: (Laughing.) I would never tell anybody what they could learn from us. We’re very transparent about what we do. We’re perfectly happy to tell people how we do it and they can pick up or not. For example, on that tech-transfer, we just did a partnership with a big hospital chain In Washington called MedStar.

We have also changed how we organize the hospital. Most hospitals are organized around doctors, surgeons, medical doctors, pediatricians, and radiologists. We said "Isn’t it kind of silly to have yourself organized around doctors? Maybe we should organize around patients’ problems."

We took the cardiologists, cardiac surgeons, vascular surgeons, and put them into the Heart and Vascular Institute. And we took the nephrologists and the urologists and the dialysis doctors and put them in the Kidney Institute. We organized around patients’ problems.

Arabic Knowledge@Wharton: When you took over, the Cleveland Clinic had some problems. For example, patients were unhappy with the services they were receiving. What did you do to turn the organization around?

Cosgrove: I have to tell you the story [but] it’s kind of embarrassing. I was at the Harvard Business School and they were talking about the Cleveland Clinic. At the end of the case study, they had the CEO come down. Well, the CEO went down and I was talking and answering questions, and about halfway through, a girl in the second row raised her hand in the left-hand side… I can still see it, it’s sort of etched in my memory… and she said, "Dr. Cosgrove, we know that you do a lot of mitral-valve disease and you’re one of the best known in the country for that." And she said, "And my father has mitral-valve prolapse." And I thought, "Oh, man, here it comes, here it comes; it’s gonna be a big softball, I’ll knock this one out of the park." And she said, "Well, Dr. Cosgrove, we decided not to come to Cleveland Clinic. We decided to go to the Mayo Clinic and because we heard you don’t have empathy. Dr. Cosgrove, do you teach empathy?" Holy smokes. I was speechless.

Ten days later I was in Saudi Arabia for the opening of a hospital we had association with, and the king and the crown prince were both there. And the president of the hospital was standing up and talking and saying, "This hospital is dedicated to the body, the spirit, and the soul of the patient".

I just happened to look over, and here’s the king and the crown prince both weeping, tears rolling right down their cheeks. They were so moved that a hospital should be organized not just around patient’s illness, but also around the whole patient.

So I had a long hard look in the mirror, and I realized what had happened. When I started cardiac surgery about 20% of the patients would die and now the mortality rate is 1% or less.

I spent my whole life in the pursuit of technical excellence, so people wouldn’t die on the operating table and not much time looking after the patients as a whole person. So I said; "I’m not looking after patients anymore; but I have got do something about that." So we formed an office of the Chief Experience Officer, who is looking, and thinking about how the experience of a patient is not just a clinical experience, it’s a physical experience and it’s an emotional experience too. And the Chief Experience Officer was to look after the physical and the emotional aspects.

And so on the physical thing, they have Johnnies (hospital gowns) in the hospital [that] flap in the breeze when they tie in the back and bury it. We redesigned those so that now as a wrap it goes around you so that you’re completely covered. We looked at the hospital rooms, and we did away with visiting hours for patients. And we let the patients read their charts any time they wanted to.

We tried to organize around the patients’ physical aspects, and then we looked at the emotional things. We’re training all 40,000 employees now in what we call the Cleveland Clinic Experience so that you’re greeted at the door by someone that asks you, "Can I help you? Where would you like to go? Do you need help with the wheelchair", et cetera, right straight through to a nurse going into your room every day and every hour and saying, "Is there anything I can do for you, Mrs. So-and-so?" To prayer rooms, to chapels, to dogs visiting — all trying to look at the whole person in a more robust way.

Arabic Knowledge@Wharton: What did you learn from the turnaround and what advice can you offer to other CEOs or other leaders of organizations who come, take over and face these challenges?

Cosgrove: There’s a personal thing that happened to me in the process. First of all, I became a very public person, which I was totally surprised at. I couldn’t even go to the store now without somebody stopping me and asking me. I lost my anonymity completely.

Second thing is you realize as a big organization, it’s mostly about the people that you hire and the quality of the people that you hire because you can’t run the whole thing yourself; you can only get good people and turn them loose.

And then the third thing I would say is that the CEO’s most important job is setting the culture of the organization. And every organization has its own culture, and you have to figure out what you want that culture to be and drive it.

Arabic Knowledge@Wharton: You talked about the need for leadership among doctors. What sort of leadership you see lacking amongst practicing doctors that needs to be addressed?

Cosgrove: I think most doctors have the same sort of perspective that I had as a heart surgeon. My world was about this big, about the size of a heart. And I thought about it all day every day. I didn’t think about the entire society, the whole patient, of how an organization works. For example, we have 3,000 doctors, but we have 40,000 employees. And one employee can screw up a patient’s experience completely. Doctors were not trained to be team players necessarily; they are trained to be very good individuals.

In our medical school now we’re teaching teams, because medicine is so complicated now that no one individual can deliver the care; it’s all about a team. And so we’re trying… that’s why I said the quality, innovation, teamwork and service. You have to get that team concept

Arabic Knowledge@Wharton: You also had opportunities to hone your leadership skills, for example, through your service in Vietnam. Where are the opportunities now for modern physicians?

Cosgrove: I guess it goes back to training. In our medical school, you don’t do it all by yourself; it’s essentially a team that you learn with and from. That begins to set the tone for going forward. And as organizations begin to mature in how they’re delivering healthcare, there will be more emphasis on teamwork and team learning and leadership development. We put high-potential people through our leadership school, and we’re thinking about whether we go on and develop sort of a Crotonville [the site of General Electric’s Leadership Development Center in New York].

The other thing is that we now think that administrators are equally important. So we have put together an international school for international hospital administrators, because there’re lots of hospitals all around the country that don’t have — all around the world, I should say — that don’t have the administrative capabilities.

Arabic Knowledge@Wharton: Some of the reaction in Cleveland that the Clinic was coming to Abu Dhabi was, "Oh, great. It’s not like we need any doctors here." It reflects the raw feeling among some Americans that everything is shifting to the East. Do you feel that coming to Abu Dhabi is part of that trend?

Cosgrove: Well, yes and no. At the end of the day, when you run a large healthcare organization, it’s not just looking after patients, it’s also a business. We have a tripartite mission: research, education and clinical care. In order to continue to have high-quality research, it takes money. All the money that the Cleveland Clinic earns is plugged — there’re no stockholders, there’re no partners — our entire margin goes right back into the organization. As we build the organization, whether it’s delivering care in Florida, Toronto, Las Vegas or Abu Dhabi, we’ve got to have money that we can continue to plug back into the clinical care and the research and the education, all of which essentially go together. This is one way to do that.

Arabic Knowledge@Wharton: There is this notion of the ‘graying of the West’ and, how this is one of the biggest challenges of the generation. So what do you think needs to be done to manage that risk from the healthcare perspective?

Cosgrove: First of all, it’s a question of cost and chronic disease. We are not going to get on top of chronic disease and cost until we begin to do away with the diseases that are caused by behavior: smoking, obesity, traffic accidents, et cetera. Right now in the United States, 10% of the healthcare cost comes from obesity and is expected to go up to 20% in 10 years. Those are the issues that we’ve got to deal with.

Arabic Knowledge@Wharton: If you could pick one unresolved challenge, what would that be? How are you going to resolve it?

Cosgrove: I think I’m always in the process of thinking about developing the next generation of leaders. Everybody is supposed to be doing succession planning and naming your successor and grooming him or her. That’s critical to the survival and health of an organization going forward. I hope someday when I walk out or get carried out, whichever happens, the organization will never even notice I’m gone, but it’ll be better. I think that’s a principal responsibility of a leader.

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