Ep. 21: Conversation with Board of Trustees member Jim Cain

Investment banker with health care experience helps steward Sanford Health resources

Jim Cain headshot

Episode Transcript

Courtney Collen, Sanford Health News (Host):

Welcome to this episode of Innovations, a podcast series by Sanford Health. I’m your host, Courtney Collen with Sanford Health News. In this episode, we catch up with a member of the Sanford Health Board of Trustees. Jim Cain first joined the board in 2016 and, together with 12 additional board members, helps to oversee governance for the health system and provide oversight for the strategic direction as well as financial and operational performance.

Jim joins us for this conversation from his home in New York. Jim, great to meet you. Thanks for being here.

Jim Cain:

Thank you.

Courtney Collen (Host):

In some research before this interview, I learned you graduated from Harvard college. You have more than four decades of investment banking. Co-founding Cain Brothers based in New York City. If you would expand on your professional background, including when and where you met Sanford Health and tell us how your work experience brings value to governing the organization.

Jim Cain:

We only have 20 minutes? <laugh>

So, you know, I had a kind of a circuitous route to my current career. I was on the wrestling team in college and after my sophomore year, they discovered I had a medical issue which restricted my participation in wrestling going forward. So, I ended up actually taking on a coaching role at a couple of local schools at private school in Belmont, Massachusetts and then then the public high school in Brookline and augmented my meager salary by bartending in Cambridge. So this was in the sort of the early 1970s, I graduated in 1972. So in March fast forward in March of 1974, my brother – who was working at Merrill Lynch at the time – kicked me in the butt and said, ‘listen we’ve got to get you a real career’.

So he twisted somebody’s arm to hire me at an investment banking firm in New York in March of 1974. We stayed at that firm for roughly five years and then left to join Solomon Brothers, which was a very prominent investment bank in New York at the time. And then, at the end of 1982, we decided to venture off on our own and we formed Cain Brothers in December of 1982. My mother told us that we wouldn’t last the week. So we started on a Friday and we made it through that week. But anyway, it’ll be 40 years in December that the firm has been in existence. And it’s really been amazing to watch its development consistent with the development of the healthcare industry.

Read: Investment banker helps steward Sanford Health’s resources

When I first got involved you know, every community with 50,000 people had, you know, three hospitals: they had a community hospital, a Catholic hospital, and, you know, maybe an osteopathic hospital. But with consolidation that has taken place and continues to take place, you’re seeing a much more complex industry than certainly was in existence in the early seventies when Medicare reimbursed hospitals for interest in depreciation. So even if you built the Taj Mahal and nobody, came to be treated there, the federal government would reimburse you your interest in depreciation on that building. So it was impossible to really lose money but many providers figured out a way to do that anyway.

Now, what I think what we’re seeing over the last you know, 40 years is kind of a, a movement from healthcare being, particularly in the hospital sector, a community service to more and more, really a business and you see the sophistication of the management teams at these organizations has really developed dramatically. Many of the C-suite executives have MBAs or law degrees and unlike the early seventies when the typical CFO at a hospital you know, maybe had been with Blue Cross and he moved over to be on the provider side, but now they’re very sophisticated, very refined in terms of understanding the direction of the industry. But in spite of that, it continues to get very, very complex and the entry of you know, new types of delivery systems has really pressured, I think the hospital system, the health systems in particular, you know, to continue to stay nimble because there are you know, many providers and payers that are looking for ways to cannibalize the core hospital systems and take the services out of those facilities into lower cost settings.

So, you know, that’s a challenge that today’s C-suite executives are facing much more than they did when my career started in the early 1970s.

My background, in particular, focused on raising capital for hospitals in the primary way that the not-for-profit sector has raised external capital… two ways: one was through philanthropy, but the other was through the debt markets and they would go off and issue bonds to provide resources for, you know, their building programs. So, that’s really where I have focused my career in raising capital through the bond markets and bank financings, et cetera over the last over the last 40 years.

My relationship with Sanford Health started around 2010.

I’ve been on the board now I guess six years. So in 2016, they invited me to join the board. And it’s been a great a great experience because, you know, I, I can bring some of the things I’ve learned over the, the last 40 years to them and, and, you know, bring some of the things I learned from them over to, to my career on the other side. So it’s been a win-win for me. The people at Sanford are exceptional in many ways. They’re smart, they’re hardworking but they’re genuine Americans and easy to work with. And so I’ve really enjoyed it. I’ve got, I think, three years to, to go and unless they kicked me off, I’ll look forward to continuing to, to serve on the board.

Courtney Collen (Host):

Well, thanks for that. And of course, for your service on our Board of Trustees.

With four decades of investment banking experience, what is your philosophy or approach as a board member and what you bring to the table at Sanford Health?

Jim Cain:

You know, I think what I probably bring more than anything is… one is sort of a general understanding of the industry, how it’s shifting, how it’s becoming more competitive, more challenging for management teams. And I think what I’ve learned specifically by being on the board at Sanford Health is: nobody knows everything and nobody knows you know, what the right or wrong answer is with great certainty, because everything is changing quite rapidly actually. And so what, what I’ve learned really on the Sanford board is not to sort of second guess management team about what it’s doing, but only maybe provide you know, some objectivity to their analysis. To, you know, question what they’re doing, why they’re doing it, how they’re doing it… not so much to impose what I think is the right thing, but just to make sure that they’ve thought through, you know, all the pros and cons of what they’re doing.
As much as I’ve been in this business for a long time, I find it, you know, very unclear in terms of approaches or not unclear, but with not enough confidence that every, you know, everybody knows the right thing to do, and we can look at models at other systems of how they’re doing it. But then, then you kind of overlay that with that healthcare is still a local business. So for a long time, I thought Sanford was really in the catbird seat because I really didn’t see any of the competitors kind of moving into their market between Sanford and Avera. Those markets were very well served by Sanford and Avera. And really nobody else was going to push into the market. One is because it was so well dominated by those two players, but also it was not a you know, it, it was not a highly populated marketplace, but I’m really now stepping back and saying, well, maybe given, you know, given technology and virtual, you know, medicine, that there will be, there will be threats and challenges from, from players that basically see technology as a way to get into that market without physically, you know, be being there and building large you know, large facilities to provide services.

The legacy health systems and hospitals, you know, are, are burdened with a very large capital commitment in plants and facilities that they’ve built over, you know, a hundred years in some cases. So they’re sort of weighted down. They don’t have the, you know, all the mobility that some of these startup companies have to move in and out of markets. So I think that’s a threat that, that that I know Sanford’s management team is, is very much focused on, is how it makes sure that it’s serving its population, that its reputation for quality is maintained. And that will hopefully help it prevail, you know, over the long run. And so you know, Sanford has a lot of opportunities to grow and expand. They have to be selective in, in, in what approaches they take. But I’m confident that with management’s insights and, and maybe board’s oversight you know, we’ll get to the right to the right spot.

Courtney Collen (Host):

Yeah. Quality care is key. Appreciate your insight on that. Thank you. What about Sanford Health is different or exciting to you as a board member?

Jim Cain:

Well, you know, there’s a number of things. I think it’s a large enough and complex enough organization that it’s very interesting to me that the, the different segments of healthcare that it’s exploring. We had a really good presentation at the last board meeting on behavioral health. And it was really enlightening an eye-opening for me to hear of the challenges in the rural communities in Sanford’s footprint, you know, that really don’t have access to the right providers and services for behavioral health. And there’s some impediments that, you know, that are sort of built into the fabric of, of, of those communities. You know, basically acknowledging whether, you know, there is a behavioral health issue. A lot of people don’t want to acknowledge that they have a, you know, they have a need for that. But in addition, the scarcity of providers in those rural markets to provide that service is was really eye-opening for me. I think virtual care is probably the only answer, but then you have the challenge, you know, do those markets have access to quality internet services that, you know, that you might find in Fargo and Sioux falls. But anyway, I think the complexity and the, and the, the, the growth and the selective growth of, of Stanford is what I find, you know, challenging. I have a high degree of confidence in management that they’re going to look at, at ideas and options, you know, carefully, present those openly to the board for, our consideration.

Courtney Collen (Host):

Your Cain Brothers Industry Insights newsletter is a go-to source for industry leaders. Tell us about how that got started and how has your audience grown since.

Jim Cain:

Well we have actual data that indicates that it you know, the first additions of that were in the mid-1990s, maybe 1996. I recall that my brother had a we really didn’t have a formal sort of marketing or advertising strategy. So he used to, we used to put together, you know, conferences and, and send out you know, letters occasionally not with the same frequency as, as they are now. So Industry Insights really, I think, was formalized, as I said, in the, in the mid, in the mid-nineties. The audience grew I think initially we, we viewed it as a marketing technique. It would go PRI primarily to providers, but now you have law firms, other consultants, payers governmental agencies bond issuers, the audience has really grown.

I don’t have the statistic of how many people get it, but it’s more than I can count on my 10 fingers and 10 toes. So it’s a pretty, pretty broad audience. We think we get, you know, good traction. We we don’t use it as, you know, as a way just to advertise what Cain Brothers is, but there’s attachments to the meat of those, of those publications that, that highlight some of the transactions and engagements we’ve had. So I think it’s been effective. I think it contributes to you know, market reception and confidence and credibility that people have with the firm. So we’ll obviously continue to do that. And it, and it’s largely written and, and produced by our internal people. We don’t have a marketing department per se. We lean on a fellow by the name of David Johnson from time to time to publish some, some articles, but largely it’s our own bankers that produce these pieces.

Courtney Collen (Host):

Well, it is a fantastic publication, and matter of fact, I’ll link it in the episode show notes, so our listeners can check it out for themselves. As you alluded to earlier, Jim, healthcare is a complex and ever changing industry. What are some of the emerging trends in your mind that are most impactful for consumers?

Read: Industry Insights by Cain Brothers

Jim Cain:

Well, I think, you know, everybody puts a premium on their own time now. And I think technology is you know, fueled in part by COVID and the fact that, that that everybody became more comfortable with virtual the virtual delivery of medical attention because that’s what we had to do during, you know, during COVID in 2020 and 2021. I think now it’s sort of a you know, secondhand nature now for people to get medical services and advice through technology. And, you know, I can tell you as a 72 year-old baby boomer, I’m now realizing how technology is used as I go to my different doctors and they produce reports that I get at the end of my session with the doctor that describes exactly what was wrong with me or <laugh> or right with me, if that happens from time to time. You see that data and the collection of data that, that providers, particularly the larger systems here in New York, whether it’s New York Presbyterian or NYU Langone, they have very sophisticated systems for really giving the consumer, the patient information that maybe we don’t always understand, but at least it’s available.

And you can ask questions and establish a dialogue through this technology to get clarity on what exactly is meant by these, by these reports. So I think it’s great. I mean, it doesn’t totally eliminate the need to have the doctor lay his hands on you and find out, you know, that, that knee doesn’t bend as much as it used to. But, I think with doctors, there’s a tremendous amount of pressure on physicians now to see patients rapidly. And I think technology allows them to see the patient in an efficient process because the scheduling that they, they have and they’re under a tremendous burden now to see patients and see ’em quickly, and there’s not much small talk when you go into for a patient visit. They find out what’s wrong, they give you an explanation of how to deal with it, but they’re not interested in talking about what you’re doing for the weekend or how your golf game is. And that’s just the nature of the beast. They they’re under a lot of pressure so they put a lot of premium on their, on their time as well

Courtney Collen (Host):

In discussing the technology piece, so many companies and organizations are adopting technology, including AI (artificial intelligence) to better serve consumers. This is due in part to COVID 19 and the need to adopt, but can you also talk to the increasing number of tech-enabled delivery channels that are fast becoming the norm?

Jim Cain:

Yeah, I think primary care is one area. There’s a scarcity of primary care docs. There’s a feeling that that, that they are kind of the gatekeeper in many respects to how healthcare is delivered and where it’s delivered. So there’s a focus in the technology in the private equity world now about, you know, gathering up these primary care docs and giving them the respect and consideration that they so deserve. So I think primary care is an area but you know, what Sanford is doing with the virtual care hospital is another avenue that I think is being duplicated around the country by providers, because they see this as the future. And they don’t want to lose the systems, don’t want to lose these patients to, you know, third party organizations that are providing no services. So sort of keeping the consumer in their network with their doctors in their locations and providing the technical support that they need to continue to be affiliated and associated with, you know, with Sanford as is essential to continue continued success. Sanford, you know, is, is roughly a 50/50 market with Avera and especially in the Sioux Falls area and we don’t want to lose that, you know, lose that advantage that, that they’ve, that they’ve established over a long period of time.

Courtney Collen (Host):

Yeah, absolutely. Again, appreciate the insight circling back now to your service on the board of trustees. I’m curious, what goals do you have for your time as a member?

Jim Cain:

Well, I think the thing that I continue to be focused on is I’m very in interested in what the management team is thinking in terms of strategy. The financials speak for themselves. You can look at the numbers and the volumes, et cetera, and make a determination. Those numbers are kind of in black and white, but strategy is, is increasingly important in terms of where they go, what markets they grow into, what they give up by jumping out of their footprint into another market. I don’t have all of the answers, but I think that’s something that I’m going to continue to be interested in. As Sanford entertains options for, for growth and strategies, I want to make sure I have my arms around exactly what they’re doing and, and why they’re doing it, and whether it’s the best use of, of their resources and time, because everybody only has 24 hours in a day and you want to make sure you’re spending your time and resources wisely. So again you have to start with confidence in management that they’re, that they, that they want to do the right thing. And you want to make sure as fiduciaries that we understand what they’re doing and why they’re doing it. And that, you know, once we’re all on the same page, you know, it makes it much easier to kind of get behind, you know, the strategy.

Courtney Collen (Host):

Yeah. As one of the largest rural healthcare systems in the country, we have a lot of patients and residents in the communities we serve and we’re so grateful for that. Yeah. So speaking directly to them, Jim, what do you want them to know about the work you and other board members are doing collectively to help advanced care and create the best patient experience?

Jim Cain:

I think what I want them to have an appreciation for is how dedicated all the employees – the 48,000 or 50,000 employees that that Sanford has – it’s been a challenging, you know, two and a half years getting through COVID and the uncertainty of when it would end and what it would really mean and what we would look like coming out of the other end of it, if we ever do come out of the other end of it. I think we would want the consumers to realize that, as I said earlier, healthcare has turned from a community service and heading more towards a business and that it has to be run as a business. We have to use our resources efficiently. We have to make sure that there’s enough cash generated to support the services.

But when you step back, everybody that I’ve come in contact with at Sanford is incredibly dedicated toward the patient and making sure that the patient, whether it’s somebody in Sioux Falls or somebody out inlands is getting, you know, the best medical education, the medical attention that they can and that and that that’s a real priority for the Sanford team. It’s not just something that they’re looking at a way to make, you know, make it extra money because a lot of those initiatives out in the, out in the rural markets are lost leaders, frankly, they’re not, they’re not profitable, but again, it’s part of the mission. It’s the goal of the organization. I think it’s the view of Mr. T Denny Sanford to, to support that mission and make Sanford you know, the best it can be. And I think, again, I’m, I’m confident that that’s the direction everyone’s taking.

Courtney Collen (Host):

Do you have a north star that guides your decision making when maybe the path forward isn’t clear?

Jim Cain:

Yeah. I think it’s just what the tradeoffs are. As they explore new markets, new initiatives, what does it take in terms of resources, both human and financial? Do we have the bandwidth to address these new, these new initiatives without jeopardizing the core business and the footprint that that’s already been established? So again as I said, I’m confident that management is always trying to do the right thing and is willing to explain clearly why they think what they’re doing is in their best interest and allowing us to, to vet you know, as well as, as we can so that, again, we may not have 100% assurance that it’s the right strategy, but we have confidence that it’s been thought out.

I think the board as a whole is comprised of people from different backgrounds, different careers but all of them seem to be pretty practical in terms of, of you know, making sure that we’re thinking, we’re thinking logically about what we’re doing. And and that makes me feel good. Not everybody has all the answers, but again everybody has the right intentions and, and a pretty good perspective on… everything’s got to pass the smell test and I think it pretty much pretty much does.

Courtney Collen (Host):

Jim, thanks outside of your work, founding Kane brothers, your extensive experience up to now as a member of our Board of Trustees to everybody else who is Jim Cain?

Jim Cain:

I’m glad you’re asking me and not my wife, because she has a different, a different perspective.

<Laugh>

I hope not. But, I like people, I like being busy. I’ve had great opportunities throughout life. I mean, I feel very lucky though Lou Gehrig, I feel like I’m the luckiest man on the earth. I really feel I’ve had a blessed life. I’ve got a wonderful family. I’ve had a great career seeing Cain Brothers grow from three people to 120 and have a bank want to buy the company. You know, it’s, it’s been a blessing. So again, you know, my wife always says, ‘well, geez, you know, your dad died when you were nine, but you, you somehow have a very rosy viewpoint of life’. And I do. I mean, I I’ve been blessed.

Courtney Collen (Host):

Well, we certainly thank you for all that you do for Sanford Health and really appreciate your time.

Jim Cain:

Okay, great. Thank you.

Courtney Collen (Host):

Our Sanford Health innovations podcast is available on your favorite podcast apps like apple, Spotify, and Google Podcasts, as well as our website, Sanford Health News.

I’m Courtney Collen. Thanks for listening.

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