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0:00 - Segment 00B: Interview Identifier

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Partial Transcript: "This is Tacey A. Rosolowski, and today is November 27, 2012. The time is about 3:06, and I am in Pickens Tower on the twentieth floor in the Office of Business Affairs interviewing Dr. Leon Leach for our second interview session. So thank you for agreeing to talk to me again. "

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0:25 - Segment 07: Strategic Decisions and Increasing Patient Numbers

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Partial Transcript: "We were just starting to talk about some decision-making that happened in—I think you said 2007? "

Segment Synopsis: Dr. Leach begins this segment by observing that strategic decisions evolve over a process. He demonstrates his point with examples from 2008-2009, when the administration addressed disturbing reports that MD Anderson was less productive than it should have been. He describes the metrics used to assess productivity and underscores the importance of bringing relevant information to the groups in a position to change matters.

He notes that a key indicator of the institution’s success is the number of new patients seen: this number was slipping in 2008, and this fact was pointed out to the faculty leadership, initiating an eighteen-month difficult process of change that resulted in a broadening of “faculty templates” (the types of patients each faculty member sees). Dr. Leach comments on how academic and corporate contexts respond differently when changes are instituted and notes that MD Anderson no longer has the luxury of such long lag times given an economic climate that demands more responsiveness.

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Subjects: 1. Segment Code - B: The Business of MD Anderson 2. Story Codes - B: MD Anderson History A: Definitions, Explanations, Translations A: Overview B: Institutional Processes B: The Business of MD Anderson C: The Institution and Finances D: Fiscal Realities in Healthcare

12:03 - Segment 08: An Evolving Economic Context: New Challenges for Faculty and Administration

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Partial Transcript: "Yeah, what I’m thinking—of course, what’s in the back of my mind, and I’m sure what’s one of the many things in your mind too, is the issue of research. The faculty part of what they do or the reason they want to travel is not just education, but obviously they’re making connections, they’re finding collaborators, and they’re contributing to their national profile, which is helping the research piece and which is helping MD Anderson be what MD Anderson is. So what are the discussions like when you’re balancing that, because that certainly is not going to go away?"

Segment Synopsis: Dr. Leach states that MD Anderson is defined by its commitment to translational research, and in 2012 one half of funds for research come from operations, with over 250 million spent on research per year. He then talks about factors that shape the institution’s balance between investments in patient care versus those in research. He notes that in the current economic climate, faculty may be required to find a different balance and spend more time in the clinic.

Dr. Leach then explains why the “triple threat” model of a faculty member (one equally devoted to research, patient care, and education) may no longer exist. The institution, he says, may have to depend more and more on specialists, as the economic context is evolving and the institution must respond to be successful. This will demand different faculty roles.

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Subjects: 1. Segment Code - B: The Business of MD Anderson 2. Story Codes - A: The Administrator A: Definitions, Explanations, Translations A: Overview B: Growth and/or Change B: Institutional Mission and Values C: Healing, Hope, and the Promise of Research C: Research, Care, and Education C: This is MD Anderson C: Understanding the Institution D: Fiscal Realities in Healthcare D: On Research and Researchers

21:29 - Segment 09: The Economic Forecasting Model: A Tool for Growth

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Partial Transcript: "So I understand what you see coming and the nimbleness that has to—the kind of nimble quality that MD Anderson has to acquire and perpetuate to address that. What about the situation when you first arrived—various key points during the amazing growth that took place during John Mendelsohn’s presidency? What were some of those processes like in this academic medicine context? "

Segment Synopsis: Dr. Leach begins this segment with comments on how MD Anderson grew under the leadership of Dr. John Mendelsohn and how they worked to balance resources in order to develop research.

Dr. Leach then discusses the Economic Forecasting Model he began to use on arriving at MD Anderson to predict the pressures that specific growth initiatives would place on operating margins. He describes the variables, limits, and uses of the model. In the former economic context, predictions were valid for six years. Now it is more uncertain.

Dr. Leach explains that the forecasting model was his brainchild, developed while he was in the insurance industry, and refined to suit MD Anderson and bring intellectual rigor to the budget for the first time. It is a key strategic planning tool.

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Subjects: 1. Segment Code - B: MDACC Expansion and Retrenchment 2. Story Codes - A: The Administrator A: Contributions A: Overview B: Institutional Processes C: Discovery and Success C: Discovery, Creativity and Innovation C: Professional Practice C: The Professional at Work D: Fiscal Realities in Healthcare

31:21 - Segment 10: Growth Initiatives: Capital Campaigns, Global Oncology

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Segment Synopsis: Dr. Leach begins this segment by explaining that funds from the Capital Campaigns are all factored into the Economic Forecasting Model. He briefly mentions his role in keeping the Board of Visitors aware of what his office is doing to develop the institution. He then moves to the Global Oncology initiative, which was started because of data that indicated that the institution was paid more for patients who came from out of state. He then talks about the international sister institutions and MD Anderson Banner. He explains that the goal is not necessarily to bring these institutions to the level of care offered at MD Anderson, but to raise the level of care as high as it can go. In addition, quality of care at these other institutions is the primary considering; spreading the MD Anderson brand and increasing name recognition is a secondary consideration.

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Subjects: 1. Segment Code - B: Building the Institution 2. Story Codes - A: The Administrator A: Contributions A: Overview B: Beyond the Institution B: Institutional Mission and Values B: Institutional Processes B: MD Anderson Culture B: Philanthropy, Fundraising, Donations, Volunteers C: Professional Practice C: The Professional at Work D: Fiscal Realities in Healthcare

46:22 - Segment 11: Financing the Moon Shots Program; Coming Changes to MD Anderson Structure

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Partial Transcript: "Tell me a bit now about the Moon Shots and how that whole balance of research and funding is going to work with these huge initiatives. "

Segment Synopsis: Dr. Leach begins with general comments on Dr. Ronald DePinho’s Moon Shots Program –a speculative and expensive initiative, he says, designed to move the bar. He notes his belief that the most exciting developments in cancer will be coming in the next four to five years.

Dr. Leach then explains that, with the complexity of research today, a new framework is needed to think about conflict of interest. He then notes that the Moon Shots will reorganize all of MD Anderson, moving the institution to more efficient structures that free faculty members’ time so they focus on what they do best.

Keywords:

Subjects: 1. Segment Code - B: MDACC in the Future 2. Story Codes - A: The Administrator B: Building/Transforming the Institution B: Ethics B: Multi-disciplinary Approaches B: Philanthropy, Fundraising, Donations, Volunteers C: Healing, Hope, and the Promise of Research C: Understanding the Institution D: Business of Research D: On Research and Researchers

57:42 - Segment 12: Bringing Structure to MD Anderson’s Finances; Developing Spiritual Strength

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Partial Transcript: "How would you say the institution has changed since you arrived? "

Segment Synopsis: In this segment, Dr. Leach summarizes his contributions to MD Anderson and the growth his work on higher degrees has offered him. He first stresses that MD Anderson has undergone exponential growth and moved to a more businesslike structure, and he underscores that an institution must be self-sufficient so it is free to reinvent itself.

Dr. Leach then says he has been pleased to have a role guiding the finances and structure for the institution’s accomplishments, which have come through the efforts of fantastic doctors, scientists, and research support.

Dr. Leach then talks about the degrees he earned while serving as Executive Vice President: his Ph.D. in Public Health and his M.A. in Christian Education and what they contributed to his abilities to perform in his role for MD Anderson. The M.A., he explains, helped him develop patience, a quality that takes spiritual strength. He needed patience to deal with complex challenges in strategic positioning, as institutions tend to hold onto the old rather than moving ahead into change.

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Subjects: 1. Segment Code - A: View on Career and Accomplishments 2. Story Codes - A: The Administrator A: Career and Accomplishments A: Character, Values, Beliefs, Talents A: Contributions A: Personal Background B: Building/Transforming the Institution B: Growth and/or Change B: Institutional Mission and Values C: Evolution of Career C: Faith, Values, Beliefs C: The MD Anderson Ethos D: Fiscal Realities in Healthcare D: On the Nature of Institutions

68:03 - Segment 13: A Prescription for Fiscal Health: Be Pro-Active

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Partial Transcript: "From the strategic positioning, there’s a tendency to hang on to the traditional, hang on to the old, and I think there is value in that. I don’t think you should throw out your traditions, but you can’t become a dinosaur either. You can’t be making buggy whips in this market. You’ve got to be progressive. "

Segment Synopsis: Dr. Leach begins with segment by explaining that institutions tend to hold onto the old rather than moving ahead into change. He then talks about activities that will enable MD Anderson behave pro-actively in the current and future economic context. He notes the importance of commercializing technology, of moving science to the bedside, and establishing relationships with other institutions. MD Anderson, he says, does well with managed care companies, as they recognize value, though he is not certain that the federal government will do the same. He says that health care is a current target of the federal government as health care represents 20% of the economy. He expects that the institution will create savings from a more streamlined organizational chart and continued strategic positioning. He discusses his roles with the state government in Austin.

Keywords:

Subjects: 1. Segment Code - B: MDACC in the Future 2. Story Codes - A: Overview A: Contributions A: The Administrator B: Beyond the Institution B: Building/Transforming the Institution B: Growth and/or Change B: Institutional Mission and Values B: MD Anderson and Government C: The MD Anderson Ethos D: Fiscal Realities in Healthcare D: On the Nature of Institutions

74:52 - Segment 14: MD Anderson Presidents, Values, and Teams

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Partial Transcript: "Just a couple of more questions. One of them is, you obviously worked very, very closely with Dr. Mendelsohn, and you’re establishing a close working relationship with Dr. DePinho, and I’m wondering if you could talk about those two individuals as leaders and how you would characterize them with their similarities and differences as leaders. "

Segment Synopsis: Dr. Leach begins this segment with the observation that John Mendelsohn and Ronald DePinho were the right leaders for their times. Dr. Mendelsohn had the courage to invest, he says, and turned MD Anderson into one of the few exceptions to the managed care rule. Now Ronald DePinho is building on John Mendelsohn’s work. He talks about “moral suasion” and the importance of communicating.

Dr. Leach then talks about MD Anderson’s values and the moral responsibility that the institution has to deliver on their promise.

At the end of this segment Dr. Leach names important members of his staff and says that the secret to success is hiring well so one can benefit from the strength created by building a team.

Keywords:

Subjects: 1. Segment Code - B: Key MD Anderson Figures 2. Story Codes - A: Character, Values, Beliefs B: Institutional Mission and Values C: Giving Recognition C: Portraits C: The MD Anderson Ethos

0:00

ROSOLOWSKI:

This is Tacey A. Rosolowski, and today is November 27, 2012. The time is about 3:06, and I am in Pickens Tower on the twentieth floor in the Office of Business Affairs interviewing Dr. Leon Leach for our second interview session. So thank you for agreeing to talk to me again.

LEACH:

Thank you.

ROSOLOWSKI:

We were just starting to talk about some decision-making that happened in—I think you said 2007?

LEACH:

2008 or 2009.

ROSOLOWSKI:

Okay, you were going to take me through a decision.

LEACH:

Yep, your broader question before we got into this was, how are decisions made, and you asked me to kind of point to an example.

ROSOLOWSKI:

Uh-hunh (affirmative).

LEACH:

Well the big strategic decisions are much more of a process than a given point.

ROSOLOWSKI:

Uh-hunh (affirmative).

LEACH:

And if you were to trace the history of the changes we made in 2008 and 2009, why they occurred, and the various decision points, it would start with some concerning financial reports that surfaced—gosh, probably early in fiscal year 2008 probably around the turn of the calendar year—where it appeared that we were getting a little less productive on an FTE equivalent, and we brought that data to the attention of various groups that could effectuate change in that.

ROSOLOWSKI:

And what was the source of that report, by the way?

LEACH:

Those were our financial reports—our monthly financial reports.

ROSOLOWSKI:

Okay.

LEACH:

And we share them with anybody who's interested. It's very transparent—the numbers are out there. The numbers are the numbers. And we, you know—there's so many numbers that sometimes you have to add the analysis to it to give color to what the numbers are trying to tell you. We do try to interpret that. We do try to give the analysis. There's a monthly report that goes out from the CFO. When we become concerned about the trend line with certain indicators and certain metrics that we know our performance is driven by—like the number of initial visits, number of new patients seen, number of consulting services—if we see that going in the wrong direction, we don't rely just on the people reading the financial reports because frankly a lot of people—well, it's not what they're all about. They would rather read the New England Journal of Medicine in the evenings than our monthly financial report. So we will make a concerted effort to make sure the groups that can change these things are aware of what's happening. And we do that usually through standing meetings that are already scheduled on a monthly basis, but our presentation will be more focused on what we see as being a particular challenge.

ROSOLOWSKI:

Can I interrupt you just for a second to ask you for a list of those metrics that you pay really close attention to—you said that there was a list of several that—

LEACH:

Well, the ones that we pay the most attention to I just mentioned. They are initial visits and consultations. They drive so much of our business that if they get—there's a whole bunch of metrics that are available that we look at. It's kind of like running a blood test—you know, it has so many different components—an SMA-12 or an SMA-16. And if you're looking for a disease, it may only be the white blood cell count or one component of those sixteen that you really focus on. Well, these are the couple of components that we really focus on of the major drivers. There's almost an inverse correlation between how well we do financially and how many new patients we see. I shouldn't say inverse—it's direct correlation. We do much better financially when we see more new patients. So in 2008, that was slipping off, and we started pointing that out to faculty leadership. But there are so many other indicators, and there are so many other areas when you're in an organization as complex and complicated as MD Anderson that the numbers can be confusing. And there are other things you could look at and say, "Well isn't this a problem" or "Isn't that a problem." Well, they may be, but they're not going to have the effect on your bottom line that the major drivers can, like number of new patients seen. If we order too many paperclips, that's an expense that perhaps we didn't have to incur, but it's not going to be of the same magnitude as not seeing enough new patients. So we went through probably an eighteen-month period before we actually got traction with that—that action had to be taken there, because it was not a pleasant action. What we did to fix that was we broadened faculty templates so they would see more patients—

ROSOLOWSKI:

What does that mean, "broadened faculty templates?"

LEACH:

Well the templates are—you know, "I see this kind of patient." The analogy I use when we're talking about this to non-faculty folks is, we have people that are so specialized they only see left-handed Australians. You know—well, we think that maybe you could see some right-handed Australians and maybe even some people from New Zealand. So it takes you maybe a little bit out of what your real specialty is and what you really like to do, but you're equipped to do this—you can see somebody that's right-handed from Australia. So we changed the templates so that they did have a broader approach due to patients that would qualify for their care.

ROSOLOWSKI:

And how is that done? Who made the decision on how the template would be expanded for each—?

LEACH:

Well, ultimately the department chairs have to work with their individual doctors to get this done. It's not something that you just throw a switch and it happens. Another lever that was used at the time was faculty travel. It wasn't that the faculty wasn't working hard. They were working hard, but they might be away making speeches about their science, which is—that's a legitimate part of what we do—we're here to educate. But if you're doing that forty percent of the time instead of maybe twenty percent of the time, that becomes more problematic because the financial support really comes from the operations of the hospital and clinics, so we have doctors there to see the patients. So those types of macro-level changes were made—

ROSOLOWSKI:

So you put a cap on faculty travel? Is that what happened?

LEACH:

Yes, we basically put limitations on faculty travel. That was very unpopular as you can imagine, but it solved the financial problem. And there were other things that we did, but they were the two main ones that addressed seeing more patients. That decision wasn't made in one meeting where we said, "Okay, this is what we're going to do." That decision was a process of getting the folks that had to do it to do it, and it took eighteen months. Once the faculty understood the necessity and accepted the necessity intellectually to make these changes and be stronger financially, it got done in about six months' time. It was relatively quick, but it was eighteen months of moral suasion to fix a problem that was fixable in six months' time—that's what our faculty fix was in. You wouldn't see that kind of thing in corporate America. Corporate America has much more command and control. When the problem was identified, it would have been fixed shortly thereafter by throwing a switch, whereas academic medical institutions take a lot more time to massage the—to get to the right answer. That was a luxury that we no longer have. With the managed care organizations and the changes that are coming about, stricter payment controls, and folks wanting to pay less not more, we're not going to have the luxury of debating decisions like that over an eighteen-month period when they can be fixed in six.

ROSOLOWSKI:

What do you see coming in that situation?

LEACH:

I see the time period for discussion—and I think there has to be a time period for discussion—being greatly shortened and starting to mimic what would happen in a business situation when you are faced with these kinds of challenges. Because the world is not going to wait for academic medical centers to change. CMS, the folks that run Medicare, are going to make the changes on their time schedule and not what's convenient for academic medical centers.

ROSOLOWSKI:

For the record, CMS is?

LEACH:

Center for Medicare Services, I think. That's the entity that governs Medicare at the federal level. And you're going to have managed care companies that are going to get a lot more heavy-handed in negotiating because they're under pressure, too. So we've got to be much more responsive to our environment and the factors around us than what we have been. There are always two ways to fix a financial problem. One is to increase the revenue, and the other is to reduce the expenses. We have a particularly difficult time reducing expenses. The easier answer for us seems to be increasing revenue, but you can only do that so much and so far. It's got to be—you've got to use both sides of the sword.

ROSOLOWSKI:

Yeah, what I'm thinking—of course, what's in the back of my mind, and I'm sure what's one of the many things in your mind too, is the issue of research. The faculty part of what they do or the reason they want to travel is not just education, but obviously they're making connections, they're finding collaborators, and they're contributing to their national profile, which is helping the research piece and which is helping MD Anderson be what MD Anderson is. So what are the discussions like when you're balancing that, because that certainly is not going to go away?

LEACH:

Yeah, and you certainly—MD Anderson is who we are today because of our research and because of our ability to translate that research and get it into care. Because ultimately the research serves no end if it doesn't result in patient care—better patient care. So you do have a balance. The money that we spend on research—this year for the first time ever, half of it will come from MD Anderson, and that means from the operations of the hospital and clinic. So one feeds the other. If you cut down too much on research, you're compromising your future because that's how we stay leading edge—stay at the leading edge—and bring our science to bedside and be who we are and have the clinical trials that we do. If you over invest in research without the financial support from the hospital and clinic, you're not going to be able to do that because you're not going to ultimately have the money to pay for it. You may be able to start it, but you won't be able to finish it. You'll have to come back at some point if you don't have the funds to fuel it. So you've got to grow them both in a balanced fashion.

What determines that balance is going to be somewhat the external environment, because if the external environment is saying, "I'm not going to pay you any more money" in terms of the per-unit basis for care and you're costs are going up, even if it's just at the rate of inflation which has not been the history with healthcare—it's been double the rate of inflation with healthcare—so if your costs keep going up at double the rate of inflation and your revenue doesn't, then you've got a problem. That means that bolus of money—that 250 million dollars a year that we spend on our own research from our own resources—250 million plus—that could dry up. So you have to take a balanced approach. A balanced approach in today's environment may mean having to spend a little bit more time in the clinic, or it may mean going to more specialty type of providers.

Folks that gravitate to education and research—they've used the term triple threat, a term from sports—but they could do research, they could educate, and they could treat patients in the clinic, and they would divide their time between such. Well, I was at a forum put on by the Health Science Center right across the street two years back when Larry Kaiser was president there and John Mendelsohn was still president here, and there were a couple of other players, and they had a debate at the forum about, does triple threat still exist? Has science gotten so sophisticated, has education become so specialized, and has the clinical side become so specialized that it is impossible to be a master of all three of them, to be the triple threat? Is a more realistic model somebody spending most of their time in the clinic and someone else spending most of their time doing inside research and the translation of that in between? Which is what we tend to do—we tend to have people who are eighty percent clinicians and twenty percent research and people who are eighty percent research and twenty percent clinicians, and they have educational responsibilities woven in there too. But more and more, the emphasis is going to be on being one or the other. I think we are still strategically advantaged because we have folks that are triple threats, but our triple threats aren't anymore one-third, one-third, one-third. They're more skewed towards one end or the other. And maybe we need more on the clinician side to support the critical few on the research side—that are really good with the research. So we've got to be able to be nimble and evolve with a changing environment.

ROSOLOWSKI:

I'm putting this conversation in the context of others that I've had with other interview subjects about that kind of rare and important creature, the physician scientist, who has been really, really important to MD Anderson. I'm curious how you see that kind of individual fitting into this scenario that you just described where there's got to be a choice made between one or the other.

LEACH:

Yeah, well I'm not saying it's absolute. I'm not saying you can either be left-handed or right-handed. But what I am saying is more and more, you're going to be more research or you're going to be more clinical, because it is getting so difficult to be credibly the triple threat, to have that kind of credibility in those different dimensions. And why isn't it the quadruple threat? Why don't we have tremendous business people who are scientists, clinicians, and educators also? Because without the financial side and without the business acumen, it's what a Catholic nun once said, "no margin, no mission," if you can't produce a margin out of it. So why don't we have the quadruple threat? The reason is very simple working around people like that—it's a bridge too far. It's a range too far. We do have some physicians and faculty members that are talented business folks in their own right, and they probably could be quadruple threats if there were thirty-six hours in a day. It depends on how granular you want to get on any one of these as far as— To really—I believe—to really be the true great scientist, you've got to be pretty granular. To really be truly a great business person, you've got to be pretty granular. Well, you can't be pretty granular in all four of those—education, research, clinic, and the business side. So you're going to have to depend more and more on specialists, and we do that on the business side. Anderson looks to us as specialists in that area. Yet we tend not to deal with the other critical functions that you need for an academic medical center.

So why would the business side be different? There's a valid reason for it. It's you can't be that Renaissance man in all those topics at the granularity that is needed for that. As a society, we have chosen to specialize. We have school teachers. We have businessmen. Academic medical centers bring those together. You can bring those talents together without having them all embodied in one person. And then it would be very difficult to bring them together if you had them all embodied in one person. So this is a challenge that academic medicine is going to have to face because there is an evolution in our external world. And for us to not be cognizant of that and not address that, then we would be the equivalent of the dinosaur.

ROSOLOWSKI:

So I understand what you see coming and the nimbleness that has to—the kind of nimble quality that MD Anderson has to acquire and perpetuate to address that. What about the situation when you first arrived—various key points during the amazing growth that took place during John Mendelsohn's presidency? What were some of those processes like in this academic medicine context?

LEACH:

Well, they weren't terribly different than what I just described. While we did make a lot of progress, it was because we were able to balance those things. We didn't go—we spent a lot of money on research, but we spent a lot of money on growing the clinics and hospitals very profitably that could seed the growth in the research. If one of those wheels get out of balance or had gotten out of balance, we wouldn't have had the growth that we did. And feeding the research comes back in dividends that let you further feed the hospital and clinic side. We're the ones who develop the next new treatment or can get it to the bedside. It's not always our science, but we get it to the bedside. That was one of the— I think part of the magic that made it work with Dr. Mendelsohn was we were able to keep those competing resources somewhat in balance.

ROSOLOWSKI:

And how did that happen? How were you able to do that?

LEACH:

Arm wrestling. No, John understood the business needs. But John's first love was research, and the business function was a means to an end, to feed research. John understood that, but John also understood that we had to keep the financial side healthy in order to feed research. We would have intimate discussions about, how fast can we grow or how much money can we spend on this. We have a planning process that would tee those discussions up.

ROSOLOWSKI:

So tell me about that.

LEACH:

We have an economic forecasting model that is a model of how MD Anderson works.

ROSOLOWSKI:

Is this the Enterprise Forecasting Model?

LEACH:

Yeah.

ROSOLOWSKI:

Okay, yeah.

LEACH:

Well, it's actually called the Economic—I think the patented name—and this was patented—The Economic Forecasting Model. But what that does—there's about 200—as I recall—200 variables, and there are probably about somewhere in the teens of what I would call—what we call primary variables—they're the ones that you change them a little bit, and they move model a lot.

ROSOLOWSKI:

What are some of those variables?

LEACH:

Excuse me.

ROSOLOWSKI:

What are some of those key variables?

LEACH:

Well, the two key ones I just gave you—the new patients seen—

ROSOLOWSKI:

New patients, okay—

LEACH:

—and consultations, and there are a bunch of other variables. One would be the deductions from revenue—how much you can actually—the difference between what you charge and what you actually get. And they're all documented. We can pull that out for you and give you a list of them. And then there's a bunch of secondary variables where it's more or less a one-to-one type of relationship. Then there's a whole slew of tertiary variables where you change them a fair amount and not move the model that much, but still they're important. So we have a model that we could say, "Now if we spend this for a new research building and hire the staff we need and all of that, what kind of pressure does that put on our operating margin? How many patients would we have to see to support that type of thing?"

So each year we would go through a planning process for the next year that would—actually for the next six years. The Economic Forecasting Model looks out over six years. And it's more than just financial. It will give you a balance sheet, an income statement, and cash flow statements. But also it'll give you, through ratios, the faculty needed to handle that kind of volume and space needed to handle that kind of volume. So we used it—and we ran it out past six years for purposes of new buildings—what's going to be the facility needed? But frankly, the credibility of the model is pretty crystal-ballish if you get it out much past six years. And even at six years, you can pretty much bet money on the first year and second year, but after that you start—and that's why we would refresh it each year because things would become clearer as to what's going to happen. We still use that. The model has gotten increasingly more sophisticated year after year.

We still use it, but it's probably a little less reliable now. It's not that the model is any less reliable, but the model looks a lot at trend lines and says, "This is what it was, and this is what we would like it to be." The purpose of the executive committee was to have a subjective interference in that where we would say, "No, what's happening out there in the world is going to look more like this." Today we're becoming more reliant on that subjective interference because the world is so tumultuous, and the subjective element is just that, subjective—what is most likely to happen? Do we really think we're going to fall off a financial cliff in January? Because if we do, it's going to look like one way and if we don't, it's going to look like something else. So because of the uncertainty in the world—or in the United States in particular—on a number of fronts, the model just can't be as accurate. It's still, I think, very useful. It gives us a kind of ranges, if you will, but with less certainty. So that makes it—living in an uncertain world makes the experience factor that much more valuable.

ROSOLOWSKI:

When did you begin using this forecasting model?

LEACH:

The year after I got here.

ROSOLOWSKI:

Oh, okay. Who was it that selected this model? Did you go out and search for some kind of forecasting model that was around?

LEACH:

No, it was homegrown. It was an Excel spreadsheet. It was based on—you know—I talked about the primary, secondary, and tertiary. It was made up of primarily the primaries. We're just getting it into the secondary drivers. It took us a number of years to get it to the point where it is today. I mean, we've moved it off—I think we were on an Excel spreadsheet for probably five years or so, and we moved it off of that to a more sophisticated software base. What we use today compared to what we did in the first few years is night and day. It was the first time MD Anderson really had any kind of organized intellectual rigor around a budget. It was the first time we actually ever looked at a model that predicted out into the future. They always did budgets, but it was a different type of mindset. It was more how to break even. And we were more future oriented. How's this going to look over the next five years or six years?

ROSOLOWSKI:

Now did you have a big hand in developing this forecasting model? Is it your child?

LEACH:

It was my baby.

ROSOLOWSKI:

How neat, yeah. And was that something that you brought with you? Had you innovated that elsewhere?

LEACH:

It's something that—yes. I didn't bring one with me that was the size and scope of MD Anderson's, but I had used that type of tool as a CFO in other places. But they were custom made. It was designed around that business to model that business, but the principles are the same. What you're modeling— What we started modeling was just the financials—balance sheet, income statement, cash flow statement. They all look similar for Joe's Body Shop and MD Anderson as far as money in and money out, so it was capturing that. But the level of sophistication and degree of sophistication was appreciably different at an academic medical center and more comprehensive cancer center like MD Anderson because it was just so complex.

ROSOLOWSKI:

So it was really a strategic planning tool, a really important strategic planning tool.

LEACH:

Uh-hunh (affirmative).

ROSOLOWSKI:

Can you tell me about—because obviously when you came in, there was a huge capital campaign that was in progress, and then there were a number of capital campaigns that were initiated under John Mendelsohn. And I'm curious about how the Office of Business Affairs and you were involved with all of that. I know that you go and speak with the Board of Visitors every year, probably more than once a year, and bring them information. So could you tell me about your role with capital campaigns and with the Board of Visitors?

LEACH:

Yeah, well John as the president made the final decisions, but what we would do would be economic modeling, and the forecasting model was factoring that in. If we raised "x" million— First of all, the way the accounting works with gifts is when development says, "Oh, we raised 200 million last year." Well, they might not have gotten 200 million in cash—what they got was the commitment for 200 million dollars. The cash on that may take ten years to come in or longer. It could be an estate gift that will only pay when there's an estate. So you've got to kind of figure out what the cash flow is going to likely be from these promises that are out there. And our cash flow—we have an amazingly good record of people honoring their promises. So what we would do is just come model it out as to if we raise this in a certain amount of time, we would do that in conjunction with people in development and what their thoughts were. It would all come together as far as the sources and uses—where we're getting the money from and how we're using it. It would all come together in the Economic Forecasting Model, which then the executive team—that would be John and the three EVTs—would bless, and that's what we would strive to achieve. That's what we would manage to that. So if we came up short on the philanthropy, we would have to do something somewhere else to recognize that we don't have that money to spend. If we came up over, well that was good news. Maybe next year or the coming year, we could spend a little bit more aggressively in some other area. The main thing I did with the Board of Visitors, or that I do with the Board of Visitors, is just keep them aware of our financial position. The presentations I make to them are largely the same as what I would make to our faculty leadership. It's more, here's how we're doing it, and just keeping them apprised of it. And through that lens, they can see how important their role is in helping us with philanthropy.

ROSOLOWSKI:

And I suppose you provide some hard numbers which, of course, help them very much in their promoting and communicating what the needs of the institution are.

LEACH:

Absolutely.

ROSOLOWSKI:

Is there a back and forth between the Board of Visitors? I know that Dr. Mendelsohn said that he had some very useful conversations with the business leaders who were on the Board of Visitors, who obviously brought expertise he didn't have. Do you find that you have conversations with them as well?

LEACH:

Absolutely, we've got formal committees of the Board of Visitors—one is MD Anderson as a business—that help us in certain areas. The thing is, it's a Board of Visitors; it's not a fiduciary board. The governing board is the Board of Regents. That's who we have formal presentations to, and they approve or disapprove our budget. The Board of Visitors doesn't have that power, but you have brilliant businessmen and businesswomen on that board that can really help us in different aspects of running MD Anderson as a business. So we will use that resource. It's like free consulting, if you will.

ROSOLOWSKI:

What are some instances in which you have found that resource to be very, very helpful?

LEACH:

What were some issues?

ROSOLOWSKI:

What are some instances?

LEACH:

Well, I found them to be very helpful back in 2008 and 2009 when we had to make certain difficult changes, because they understood why we had to do this and were confirming, "Yeah, you need to do this because things don't look good." They're an excellent sounding board. They're very innovative. They're very much for MD Anderson, and they're very supportive. And we do work closely with them more as an advisory team, and we would be idiots not to. There is so much wonderful experience there. Now, we may not always do what they suggest because there may be other extenuating circumstances that we have to consider, because ultimately we're the ones responsible, and we're responsible to the Board of Regents, so we have to follow their directions and their lead. But the Board of Visitors has been very helpful in helping us think through and thinking through with us different business challenges that we're facing and what the options are and what the next steps might be.

ROSOLOWSKI:

Another—well I have a little brain jam right now because I really wanted to ask you about the Moon Shots obviously. But before we get to the now and the future, I kind of wanted to ask you about strategic planning in the past because I know that another set of projects that you undertook to help secure MD Anderson financially were the remote locations, MD Anderson España, and all of the pieces of global oncology. So I wonder if you could tell me about that a bit, what the rationale was and what you brought to that.

LEACH:

Well, again it's a team sport. Nobody has a monopoly on good ideas. But in just studying their data, it was pretty clear that there was a relationship between how well we were paid and the distance the patients came.

ROSOLOWSKI:

What do you mean—more the farther they came?

LEACH:

Yeah, we would get paid more for people who came from further away, and there's a whole bunch of reasons for that. Typically Medicaid doesn't travel for services, so they're here, so that's going to be lower paying. Medicare is lower paying. Managed care companies pay better. If you have large volumes of—like—the Texas Blue Cross Blue Shield, they're our biggest provider of managed care patients, and they drive the sharpest contracts, but if you have somebody in the Pacific Northwest who we don't have a contract with, they will call you up and try to do what we call a one of, and we will do a contract for that patient. Well, they don't have quite the same bargaining power as Texas Blue Cross Blue Shield because they're delivering an occasional patient where Texas Blue Cross Blue Shield is delivering tons of patients. So we do better on a per-patient basis with those that are from out of state. We were cognizant of that, and we tried to attract more of that business. I don't know what the numbers are today. I looked at them a few years ago, and then we had over 600 one ofs, and I imagine the number is closer to 1000 now. These are folks who are coming here for a specific cancer trial or whatever. Oftentimes they've used the computer to find us, or it's been their daughter or son or someone who is more up on how MD Anderson ranks in healthcare who would say, "Oh, you've got to go to MD Anderson." In those situations, the managed care companies will generally pay more because they don't have the ability to demand less.

So going to regional networks, I think that's been a very positive thing. Internationally we've— I think our international centers and our sister institutions, that's worked well. That's been largely research and educational based. It hasn't been a whole lot about patient care, and it hasn't been financially driven. MD Anderson España is producing nicely now. They went through their ups and downs as they—and even now with the economy what it is in Spain, we're doing okay. The owners of that center—actually they're doing okay, too. It's the hospital chain that we partner with there, and they're doing okay also, but it's tougher times because you've got a lot more unemployed in Spain now. But overall, it's been a very worthwhile strategy—with the Banner relationship. These are things that help bring out quality of care—our level and excellence of care—into communities that may not have that level of excellence.

ROSOLOWSKI:

I know that Dr. Mendelsohn said that there were some real challenges when MD Anderson first started working with MD Anderson España and that there were some bumps with raising the level of care. What is your philosophy about that? He told me what his philosophy is about coming into a new environment and raising the level of care, but how do you see that relationship? If MD Anderson goes to a region where they're not capable really of delivering the level of care that one would find in Houston, what's that?

LEACH:

Well, I think the goal here is to raise the bar, and if we can't raise the bar, then why would we want to be there? We certainly don't want to dilute the value of what we do. If it's not going to be appreciated or if it's not going to be implemented, we don't have any reason to be there. So to me, while it may not be easy and it may be a challenge, will you ever get them to the status of 1515 Holcombe? Probably not. That's not really the goal. The goal is to raise the level of the bar to improve the services and give access to, when things that are really difficult, 1515 Holcombe Boulevard. If folks were to look at what we do internationally and think that we're somehow going to recreate what we do here in Madrid—no. But we can certainly move the bar up, and we can certainly give them access to what we do here. And I think that's occurred, but I think John was right. It was a rough road getting there. But it has occurred—and that's the only reason in my mind for us to be doing this. We had four rules that I made up at the time. I can't recite them now, but John probably could because he would remember them. And one of them, the fourth rule, was we're going to make a profit off of it. We're going to make money off of this. But the first rule was to deliver quality of care—improve the quality of care. It's all predicated upon that, but again we can't be a charitable institution for the rest of the world. We have to be able to cover our costs and return some profit to MD Anderson for doing this. Profit is not the right word—we use the word operating margin. It has to be a positive operating margin because profit in a nonprofit organization is shunned. But we need to do this on a basis that increases our net surplus.

ROSOLOWSKI:

And to what extent do you feel those regional centers and international sister institutions have worked strategically to brand MD Anderson and to create name recognition? How has that all worked?

LEACH:

Well, that's secondary to delivering quality care also. In my mind, there is more importance in delivering quality of care. If you do that, then yes, your brand value goes up. People perceive that they would rather go to MD Anderson España than the local alternative. So I think that has had a positive impact, but it's a positive impact because of the quality of care.

ROSOLOWSKI:

Tell me a bit now about the Moon Shots and how that whole balance of research and funding is going to work with these huge initiatives.

LEACH:

Well, I think we're in the process of modeling it out now, so anything I tell you at this point is more speculation than it is history. So I just want to be clear about that. The history of this is Ron [Ronald DePinho, MD] getting together our scientists and saying, "If we focus our efforts, where could we truly move the bar getting us back to moving the bar and making that difference? And we identified several opportunities where we thought—or the MD Anderson scientists think—that there is enough in place that with enough focus, we could reduce a disease to something that is manageable over a reasonable amount of time. So if we put the money into doing that—focus translates into dollars—and it could be pretty expensive to do that. We're talking 3 billion dollars over I think a ten-year period, or a six-year period—I think it was a six-year period. But part of it is, if we commit to Moon Shots in various disease areas, as the world starts learning about what we're doing, we're going to have more and more people with those diseases that want to come here, because if we're making that effort to push this disease into the manageable category and you've got that disease, what better place would there be to go to?

ROSOLOWSKI:

Right.

LEACH:

So I think some of the funding will come from people coming here from not only Texas but the nation and the world, and I think that will help with some of the funding. But I think the initial funding is going to come from philanthropy, people who are excited about what we're doing, and different grants and contracts we may be able to obtain with industry, and I think some of it will be from our own reserves just to get it up and kick-started, but I think it will over time. And like I said, we are in the process of modeling that out now, what does that look like? But over time, I think it will be self-sustaining as more people come in for care for those particular types of cancers where we've made progress.

ROSOLOWSKI:

Let me just read them for the record—acute myeloid leukemia, myelodysplastic syndrome, chronic lymphocytic leukemia, melanoma, lung cancer, prostate cancer, the type of breast cancer known as triple negative, and ovarian cancer. So that's quite the list. In terms of the modeling, what can you tell me about what that looks like in terms of needs for new faculty, buildings—what is it looking like? Is there more growth that we're looking at?

LEACH:

Well, there is certainly going to be more growth. You can't do this without growing. We're using the Economic Forecasting Model that I just described. It's flexible enough that we can plug in different components, if you will, different modules for the different Moon Shots. I could only speculate at this point. We haven't presented it to the Executive Committee. I have seen it. It is very much a work in progress, and I'd rather not speculate. But I can tell you that it does need more growth—that's clear.

ROSOLOWSKI:

Does that just jazz you?

LEACH:

Well yeah, and there's a lot of things that have me jazzed because, in the years I've worked in healthcare, the most exciting years are going to be the next probably four or five because of what's happening environmentally. We've got incredible pressures and changes that are happening environmentally. Then because of our strategy, the Moon Shots, we've got a chance to cure—cure is a big word—but we've got a chance to reduce some cancers to a lesser stage of disease to something that is manageable. We're probably the only folks on the face of the planet that can bring all those things together to make that happen. And we can't do it singularly. We're going to have to enlist others in this crusade. So it's a very exciting time. I don't see in my crystal ball anything more exciting or a more exciting place to be. But it's going to be exciting, and it's going to be a bit tumultuous because we are going to have to deal with the external environment while we're trying to cure cancer here in a bubble.

ROSOLOWSKI:

Are there some internal challenges that you foresee as well instituting—

LEACH:

Oh absolutely. It gets back to academic medical centers are not, by their nature, nimble creatures. Forgetting about the Moon Shots and just looking at the external pressures, that's going to force us to be much more nimble, and that's not a natural thing in academic medical centers. Add in the Moon Shots where we're going to have to be much more decisive about what science works, what science doesn't work, get it in the right orders, and move ahead and drop those that aren't getting us there, that's a real challenge in itself, too, because that's not—again, the nature of academia isn't to move through these things. What Ron brings to the party is that he's done this at Dana-Farber. He's gotten cures out there in the forms of companies. All the rhetoric that you read in the paper about the conflict of interest, that's because he's on the board of companies he started with his science to cure cancer. So we're looking at progress through an archaic lens. We've got to have a different framework for looking at progress and accepting progress and managing the conflicts. There is a general assumption that conflict is conflict and you can't manage it. Well, that's not necessarily true.

ROSOLOWSKI:

What would that new system look like? What would that new framework look like from your perspective?

LEACH:

I think it's going to be much more nimble. It'll be more overtly data driven. The facts are going to be important, and there will be more clarity around the facts. It'll be harder to argue the numbers, and I think there will be more real-time data. Information systems and information technologies will play a big role in that. It's going to be well informed and better informed on a more timely basis—the decisions that will be made. A lot of that will be because of the power of the computer, but what we have to rely on is the power of mankind to respond to it, and that means stepping away from the old and stepping into the new and our willingness to do that on a fairly responsive and fairly quick basis.

ROSOLOWSKI:

To what extent do you think these Moon Shot initiatives will reorganize MD Anderson? Do you think that it's coming, that it will take a different structure?

LEACH:

Yeah, I think first of all, organizations aren't a static thing—they're constantly changing. You've got the formal organization, and you've got the informal organization. The formal organization is what you see on a piece of paper. The informal organization is how it really works. Oftentimes if you try to diagram out how it really works, it's not worth putting it on paper because it's based on interpersonal relationships, trust, years of working together, and a whole bunch of other factors. So yes, organizations are living, breathing, dynamic things. They are going to change. I think part of what you're going to see at MD Anderson is a move towards more efficient organizational structures that basically free up people's time to do what they do best. If we have that physician scientist who really is better at being the scientist than the doctor, hopefully we can free up his time to follow what he's best at, or her time to follow what she's best at. I think that's the optimum. The same thing can be said on the business side. We've got business people embedded in clinical operations because they have business functions there. At times they may report directly to the clinical function. They may not have as much of an appreciation for what the business needs are or may have greater appreciation for the needs are. They are first stymied by a bureaucracy that is not responsive to them. So we've got to create more responsive structures, and I'll think you'll see changes in that regard.

ROSOLOWSKI:

How would you say the institution has changed since you arrived?

LEACH:

Well, just the numbers alone— There were 7,000 people when I got here, and now there are 18,300. The square footage, I forget the numbers. I can't rattle them off, but it's like a threefold increase in square footage. The revenue numbers, oh gosh, I think it was around 700 million the year before I got here, and now we'll be 3.6 billion this year. So that's about a fivefold increase roughly—

ROSOLOWSKI:

A fivefold increase in philanthropy—

LEACH:

So I think that just in size, it's been exponential, but I think more importantly the way we conduct ourselves. We have—what I'm fond of telling people is we've moved to a more businesslike structure, not to be confused with a businesslike structure. We've moved in that direction. We are more businesslike in what we do, but we're not a business per se. We are in many, many ways, but the way we're run—we're still an academic entity at heart, which is the way I think it should be. I think if you were to run this as MD Anderson, Inc., you would lose a lot of what's important to making MD Anderson MD Anderson. It's not all about the bottom line, but the bottom line has to be sufficient enough to let you reinvest in yourself, and we've been able to do that over my years here. That is going to become more challenging. That's going to be—this is where the external factors—the government and managed care companies—are going to perhaps have more control and influence. If our funds are reduced, then we could be in a more difficult position as far as reinvesting in our own success.

ROSOLOWSKI:

As you look back over the time that you've spent here, what have you been most pleased to have participated in—? What have you been most pleased to have participated in? What have you been gratified to have worked on and pushed forward?

LEACH:

Just to be able to be in a position where I could help guide what we've done with the place in fifteen or sixteen years—guide the financial and the structure for that, the business infrastructure for that—to be able to support that. We have just fantastic doctors and scientists, world class, and I think we have world-class business support and financial support for them, and I think that's important. Just being involved in that process in a position where I could help guide that process has been the capstone of my career.

ROSOLOWSKI:

What if you—? It seems sort of trite to say what have you learned? But how have you—? You came here with enormous experience, but how did this institution help you to continue to grow and become more sophisticated?

LEACH:

Well, it has helped me in several ways. Since I've been here, I've completed a PhD. I've also completed a master of arts in Christian education. I guess in short it's developed the humanistic side of me. When I came in, I was a businessman, you know. I'm still very much a businessman, but I'm probably a lot more rounded than what I was, or at least I like to think that I'm a lot more rounded. People would probably disabuse me of that pretty quick, but I think I'm a kinder, gentler version of the person that came here. I think what I've learned is— I was very used to the command and control model of the business world, and here you have to get a lot more things done by moral suasion. So it's the weight of your argument and the weight of your ideas that carry the day, not because I said so.

ROSOLOWSKI:

I was curious—why did you do the MA in Christian education? What drew you to that?

LEACH:

Well, I went to Southwestern Baptist Theological Seminary, and I've always had strong religious beliefs. I just really didn't have a plan to use that degree, so to speak. It was more the curiosity. I already had a masters degree, an MBA—that's what I do every day. And that was more of an intellectual curiosity thing. Now the PhD was a little bit different. The PhD was one part intellectual curiosity and something that I use. Because what I wrote on—I think we—

ROSOLOWSKI:

Yeah, yeah, Uh-hunh (affirmative).

LEACH:

—those studies we did at Baylor and MD Anderson. When you asked me about the one decision point, well there were fifty-some—I think it was fifty-three—different presentations given to different committees and faculty leadership in that eighteen-month period that we were trying to convince folks they had to change—fifty-three . Now what I've learned is to not let my blood pressure go up quite so much when that happens because the world that I came out of, you would not do fifty-three. You would get fired for doing fifty-three presentations in eighteen months to try to convince people to change. You would just issue an edict and away you go. The chief financial officer was truly the chief financial officer. Here you've got to bring people along with you. You've got to convince them of your ideas, and you've got to do it in a fashion that is timely so you don't burn through the resources. Baylor didn't do that—they burned through their resources.

ROSOLOWSKI:

This was with their hospital project.

LEACH:

Yeah, with their hospital project they burned through their resources. We had to make the changes, and we really should have made them sooner than what we did, but we just—as it was told to me by one of the folks that I interviewed for the PhD, you really didn't have a burning platform. You were still making money. Well, we were essentially breaking even. We had a little bit of an operating margin, so he was right. We were still making money. But you know, the world I came out of, if your bridge catches on fire, you get fired. Your job is to keep the bridge from burning. So it's two different mindsets. Here, I didn't have a burning bridge, so therefore I shouldn't have made the changes. We made them too soon. Part of it was suggested that we did too much too soon. And my religious studies taught me that only one person has gotten it right in 2000 years, so I'm either going to be too much too soon or too little too late. Guess which one I'm going to pick—too much too soon. I didn't want my tombstone to say, "Leon Leach, he did too little too late," because that would not make a good tombstone. I want one that says, "Leon Leach, he did too much too soon." I can live or die with that.

ROSOLOWSKI:

That's funny. I've any number of interviews where people have mentioned what they would or would not want to have on their tombstones.

LEACH:

Yeah, "He did too little too late" really bothers me.

ROSOLOWSKI:

Is there anything from your MA or your time at the theological seminary that you feel you draw on?

LEACH:

Yeah, I draw— I mean, it needs a lot of spiritual strength to have the patience to— One of the things my wife said to me—you know—I had this kind of fantasy about being a pastor in a West Texas church somewhere, and she said, "You might as well give that up. You don't have the patience to do that. The next time Bubba comes in with a drinking problem, you're going to tell him to get a life. You don't have the patience." And she's right, I don't. But I had to develop a lot more patience in dealing with things here, and I'm still probably viewed as being somewhat impatient because I want the changes to happen tomorrow. I view it as more of a sense of urgency than impatience, but there's a thin line between the two. Academic medical centers—if you're in the clinics, there is distinct sense of urgency—if you're in surgery or something like that.

LEACH:

From the strategic positioning, there's a tendency to hang on to the traditional, hang on to the old, and I think there is value in that. I don't think you should throw out your traditions, but you can't become a dinosaur either. You can't be making buggy whips in this market. You've got to be progressive. You've got to react to your environment. What I preach is a proactive environment. Another line I've used a lot in presentations and stuff and in the paper—I quoted all these great writers on strategy and strategic positioning and all of that, but the best explanation of strategy I've heard—Gordie Howe claims to have said this, and Wayne Gretzky claims to have said this—but it's skating to where the puck is going to be. That's what we need to do—we need to skate to where the puck is going to be. So that means strategically repositioning yourself before you have to. You need to get to where that puck is going to be, not to where it is or to where it was. So we need to be thinking ahead about what's going to happen with these external pressures, take our best guess, and get there before anything happens.

ROSOLOWSKI:

What are some ways in which MD Anderson could be doing that now?

LEACH:

Well, we are. Remember the things we've talked about—the regional centers, what we're trying to do with commercializing our technology. One of the main reasons why Ron was so attractive to the Board of Regents is he's got experience in moving science to the bedside, literally in commercializing it—the Banner-type relationships and some of the things we're looking at certainly with the Moon Shots. And if you do those things, the business will come. If we can move the bar significantly on those eight cancers that you just read, the business will come. Now whether or not it's business that you can handle on a profitable basis having that surplus, that's going to be more determined by the federal government and by managed care companies and how you can fare with them in negotiations. I think we can do reasonably well with managed care companies, because I think they do perceive that value and will pay for value. The federal government—I'm a lot less comfortable with them in this environment because we basically have a huge financial problem that we have to solve. We can't keep spending more money than we have year after year and run up a huge federal deficit without there being some repercussions.

When you take up twenty percent of the economy, which is what healthcare does—just rounding off slightly, I think it's like 18.7 or something like that—when you're one out of every five dollars that is spent in this country, you're going to be a target. You've got to fix something about healthcare if you're going to fix the economy. So you're going to be a target, and whether or not society lets us grow to the point where we can continue to reinvest and continue to move forward trying to cure cancer, that's a decision that we don't control. That's a decision that is going to be made more on society's terms, but we're going to have to live with whatever comes out of that. So we've got to skate to where the puck is going to be and figure out what is most likely to happen and where do we need to be delivering the services that will help support what we need to do longer term in order to stay at the very cutting edge of cancer care, and that means investing in research. So how do we do that?

ROSOLOWSKI:

What are some projects that you are going to be taking on in the immediate future?

LEACH:

Well, I think the administers say things could come from a cleaner organizational chart—simpler organizational chart. I think that's one that I'll be involved with closely over the next couple of years. I think the continued strategic repositioning of MD Anderson to keep us in front of the curve, in front of the wave, so to speak—skating to where the puck is going to be—I'll be very much involved in that. The planning for those things—the Economic Forecasting Model that ties it all together, and the governmental relationships in Austin and DC—I think I'll be involved in those quite a bit.

ROSOLOWSKI:

What about those governmental relationships? How will you be involved with that?

LEACH:

Well, I already sit on the Executive Committee of the Alliance of Dedicated Cancer Centers. That's a group of the twelve comprehensive exempt cancer centers exempt from the DRGs. They have been very involved in financial and legislative issues in Washington and Austin—I'm going there Thursday. There's always—I sit on the Health and Human Services Counsel. I was appointed by Governor Perry several years ago. This is my—I'm in my second term now, near the end of my second term actually. It's those types of things. Dr. DePinho will be very much involved in those, too. He's the face of MD Anderson obviously. But when it comes to the business and financial and how decisions that are made in Austin or Washington can affect our ability to operate, then that falls a lot to me.

ROSOLOWSKI:

Just a couple of more questions. One of them is, you obviously worked very, very closely with Dr. Mendelsohn, and you're establishing a close working relationship with Dr. DePinho, and I'm wondering if you could talk about those two individuals as leaders and how you would characterize them with their similarities and differences as leaders.

LEACH:

I think they were both the right person and the right leader for MD Anderson for the time that they were here. I think John—his record of growth in what was a relatively stable time where we could look at the trends and say it's probably going to go like that—John had the courage when he came in here to invest, and frankly there were a lot of reasons to be concerned about that because managed care was still an unknown. They actually had a consultant come in who suggested laying off a number of people, a consultant from northern California where managed care really got a lot of traction. It didn't get the same kind of traction in Texas. The other thing is MD Anderson—there are a few exceptions to the managed care rule where you can leave somebody out of the program and not be hurt. Anderson in Texas is probably one of those few exceptions. I think both of them had great visions for the time. If Ron came in when John came in, with his vision, it wouldn't work. It would have been viewed as Buck Rogers and Star Wars stuff. The base that has been built by John propels that next—the Moon Shots—it gets you to the point where the Moon Shots are a credible strategy. It's still very visionary and very futuristic, but it's within the realm of reason. It's doable—we can get there. It's challenging, and it's invigorating. And Ron has done this in his personal career. So I think there were two different eras that called for two different leaders, and I think the Board of Regents has done a superb job in both eras, picking the right person to get MD Anderson to the next level. When John came in, you probably couldn't even define what we needed fifteen years later or sixteen years later as we can't define today what the next leader at MD Anderson will need to deal with, but I think they were both the right people for their time.

ROSOLOWSKI:

Is there anything else that you would like to add about your role in institution financial health?

LEACH:

Well, it's just—there are several hats I wear, but I think the bottom line is making sure we're vibrant—financially vibrant. And I can't do that alone. I need the cooperation of tons of people, and the moral suasion comes in. You've got to bring people along.

ROSOLOWSKI:

You've used that term a number of times—moral suasion—and I haven't heard that before. Where does it come from?

LEACH:

Well let's Google it and see.

ROSOLOWSKI:

I was wondering if it was your own.

LEACH:

Well, I'm sure somebody used it before I did, but to me it's descriptive of the environment where you have to build consensus, whereas I use command and control when I talk about the business world. Now there are a number of business leaders out there that have much more input and do things more in a—based on a consensus fashion, but that's not really the norm. But they've done well.

Well, we'll go to the ultimate authority, Wikipedia. "Moral suasion (a phrase from the Latin words moral and suasio which denote respectively conduct or character that is right and virtuous and to present in a pleasing manner, sometimes known as jawboning), is defined in the economic sphere as the attempt to coerce private economic activity via governmental exhortation in directions not already defined or dictated by existing statute law. The moral aspect comes from the pressure for moral responsibility to operate in a way that is consistent with furthering the good of the economy."

ROSOLOWSKI:

So you're kind of putting your own spin on that.

LEACH:

Well, I think it's just relevant to here, and I would say— I'm not sure about the—if I go through and read it again, "a phrase from the Latin words moral and suasio which denote respectively conduct or character that is right and virtuous." So I think that it's what I'm talking about. I don't know—and it says, "and to present in a pleasing manner." I don't know how pleasing my manner is. I won't comment on that. "Sometimes known as jawboning." Well, I would view jawboning as something else, something different. It's defined in the economic sphere as the attempt to coerce private and economic—that doesn't really fit. "The moral aspect comes from pressure from moral responsibility operating where there is consistent with furthering the good of the economy." I think that's very consistent as it pertains to MD Anderson.

ROSOLOWSKI:

Absolutely, and then also I guess that I was assuming that added on to that would be the assumption that there would be a responsibility to act in a way that was also consistent with the values and mission of the institution.

LEACH:

Well yeah, I think that is implicit if not explicit. When you talk about moral suasion, our values are well known—caring, discovery, and integrity. If we're going to continue, we have a responsibility to deliver—I'll use business terms to deliver a product to a world that needs it. And in some cases, we're the only ones that can deliver it. So if we have to do certain things to enable us to do that, then I think there's a certain moral responsibility that we do. I think the way I'm using it—it is in contrast with what I would call control and command—you know, command and control where you can do things by fiat or you can do things by moral suasion where you're asking people to do what would become later recognized as the right thing. I don't know when I started using the term, probably back when I was—this is probably a latent influence from them of arts in Christian education, but it's a term I had heard before, and it's a term, as this says, that comes from the Latin.

ROSOLOWSKI:

It makes sense. Is there anything else that you would like to add?

LEACH:

I think you've pretty much covered it all. One of the things that I've been blessed with is an excellent staff. Sometimes I'm asked—well, I'm asked a couple of different questions. One is what do you do—what does an executive vice president do? And I've been asked that by my sons, and I tell them I go to meetings, which is largely what I do. If you follow me around, that's what I do—I go to meetings. It's what I do at the meetings that hopefully makes a difference. But the reason I can do these things—I can go to Austin and I can go to Washington—is I have a tremendous staff and have had for years. Dan Fontaine and I have worked together my whole career. He preceded me by about six months. Dwain Morris, I think all but four years, the first four years or maybe three to four years, of my career—he wasn't here. I hired Ben Melson, who is now the CFO of Texas Children's, to be the CFO when I took over responsibilities about three years in or three and a half years in to my career here. Ben brought Dwain with him, and Dwain has risen through the ranks to be the CFO now. So I've got very capable people. Chris (inaudible) (???) 1:24:50 basically runs my office, so I don't have to worry. There are a lot of things I don't have to worry about that frees my time to worry about the really important stuff or think about the more important stuff. There are so many people that I see in executive positions that don't have that luxury. The secret to success in my mind is hiring well, hiring good people. And I could go on. I just gave you a few examples.

We've had some tremendous people and facilities. We've had huge demands upon—there's no other healthcare institution that I know of that has built what we have. Bill Daigneau did a lot of that, and I never had to worry that much about it. Bill was a consummate professional. Spencer Moore, who we now have, worked for Bill and got a promotion to go to the University of Houston, and we were fortunate enough to hire him back to take Bill's—he's of the same caliber, the same ilk. Gerard Colman—he doesn't work for me, but a lot of the things that we need to get done through the clinical side, he carries the torch. Tom Burke and Tom Buchholz—I've always had good partners with the executive committee level, and that's real important because you have to have certain trust and confidence that your partner at that level is going to be there for you when you need them. So we've been fortunate in that regard.

ROSOLOWSKI:

So excellence at every level and in every niche.

LEACH:

Yeah, and we've got a strong bench. There are meetings that, if I can't go to, I'm comfortable if Dan, Chris, or Dwain goes to them. We're interchangeable parts in many ways, and that produces a synergy that is not always there in other organizations that I've worked at. So I think part of it is just the team that we've built. The things that we've talked about, I can't do alone. The changes that we're looking at and positioning the institution, I may the one who has more time to think about these things, but the execution belongs to others and a lot of others. I guess, you know, "It takes a village," to quote one of our former president's wives.

ROSOLOWSKI:

Is there anything else you would like to add at this point?

LEACH:

No, I appreciate the time. I guess this is the kind of process where I'll get another look at it, and if there is anything that is unclear to you, feel free to call me.

ROSOLOWSKI:

Okay.

LEACH:

Okay.

ROSOLOWSKI:

Well I'm turning off the recorder at 4:34.