Tower of Torrance: Torrance Memorial CEO Craig Leach
Torrance Medical Center CEO Craig Leach. Photo by David Fairchild
Two years ago, Torrance Memorial Medical Center CEO Craig Leach, 62, and his counterpart at Cedars-Sinai Medical Center, Thomas Priselac, 63, entered negotiations to affiliate their respective medical centers.
The two knew each other through decades of medical association meetings. Leach joined Torrance Memorial as its director of finance in 1984. Priselac joined Cedars-Sinai in 1979.
The two non-profit hospitals are among the oldest in Los Angeles County. Torrance Memorial was founded with 32 beds in 1925 in downtown Torrance by the hospital’s and its city’s namesake Jared Sidney Torrance. Cedars-Sinai dates back to 1902, to a 12-bed hospital in a Victorian house in Angelino Heights in downtown Los Angeles.
“Tom and I would sit next to each other at meetings and talk about the changes in the market and how at some point being by ourselves might not be the best strategy for the future,” Leach said during a recent interview in his modest, third floor office overlooking the Walteria neighborhood where he grew up. He and his wife Judy and their three sons moved to Palos Verdes Estates in 2004
“It was great to be independent. But as our board looked at how Providence Little Company, UCLA Health, Long Beach Memorial and other competitors were expanding in our market, we knew we needed a larger footprint. Cedars was under similar pressure,” Leach said.
Torrance was the dominant hospital in one of the country’s most affluent markets. Cedars-Sinai had an international reputation as a teaching and research hospital. And as the “Hospital to the Stars.” George Burns Road and Gracie Allen Drive lead to its Steven Spielberg Pediatric Research Center.
Torrance Memorial CEO Craig Leach. Photo by David Fairchild
Position of strength
Leach was appointed CEO of TMMC in 2006 and immediately embarked on an ambitious building program. In 2007, he announced plans to build the 256 bed, $480 million Lundquist Tower. It was completed in 2014, $10 million under budget and six months ahead of schedule. During its construction the hospital acquired 16 acres for employee parking, adding to its existing 24 acres on Lomita Boulevard.
This month the hospital will break ground on the $30 million, 36,000 square foot, Hunt Cancer Center.
The building program has been funded by endowments nurtured by Leach that rival those of major universities.
Peninsula residents Melanie and Richard Lundquist have contributed over $100 million, the most ever given to a private community hospital in the U.S. Manhattan Beach resident Priscilla Hunt contributed $22 million for the cancer institute, to be named in memory of her deceased husband Donald.
“When donors are giving millions of dollars, they want to meet the president. Craig is very strategic and very honest with them. He treats the Lundquists the same as the people who clean the bathrooms. He doesn’t have a fancy office or even a reserved parking space. He parks a quarter-mile away in an employee lot,” said Laura Schenasi, who has headed fundraising for the Torrance Memorial Foundation for the past 17 years.
Over the past five years, Torrance Memorial admissions have increased despite overall admissions decreasing in the South Bay because of the emphasis on outpatient care.
Last year, 55 percent of Peninsula residents who entered a hospital went to Torrance Memorial. The hospital was also the first choice among beach city residents, with 34 percent of hospital admissions.
Born and raised
Leach attended St. Lawrence Elementary and Bishop Montgomery High, where he met his future wife. He still serves on Bishop’s Principal Advisory Committee and chaired the building committee during construction of its new gym. He earned his CPA at Loyola University (now Loyola Marymount University) and then worked at the Big 4 accounting firm of Deloitte Haskins & Sells before becoming Centinela Hospital’s controller in 1981.
After joining Torrance Memorial in 1984, he quickly caught the attention of George Graham. Graham had been the hospital’s CEO since 1975, when its financial condition appeared terminal. “We were on COD with Coke,” Graham joked in a recent interview. When Graham retired after 35 years, he anointed Leach as his successor.
“I never doubted Craig would succeed me. In our type of business there are a lot of educated people. You can’t just make a decision and expect the medical staff to get in lock step. You need to be analytical and able to convey how you arrive at your decisions. Because Craig was both honest and analytical, everyone trusted him,” Graham said.
Chasing market share
The pace of change in hospital administration rivals that of the medical services it provides. When Leach was named CEO, the landscape had been disrupted by a shortage of primary care physicians, the rise of managed care and millennials’ preference for the convenience of urgent care centers.
One of Leach’s responses to these changes was to acquire a 400 doctor, South Bay IPA (Independent Practice Association) in 2012.
“We needed to grow our primary care base of doctors to capture patients so we could grow market share. Or not and watch our competitors grow,” Leach explained with characteristic candor.
The maneuver did not go unnoticed. The new Torrance Health IPA was almost immediately targeted for takeover by UCLA Health and HealthCare Network.
The doctors rejected the advances by a nearly unanimous vote.
“When I became a physician,” recalled Dr. Mark Lurie, director of the Lundquist Lurie Cardiovascular Institute, “my brother-in-law, who was already a physician, told me, ‘Never trust an administrator.’ Craig is the exception to that rule. He doesn’t let ego get in the way. He brings in the doctors before he makes decisions. You can’t find a more integrated administrator.”
During the 2008 recession, Schenasi recalled, Leach leveraged his relationship with employees to get them to agree to reduced hours in exchange for no layoffs, except through attrition.
“Craig makes rounds at the hospital almost daily and knows everyone’s names,” Schenasi said. During the rounds he shares letters of appreciation the hospital receives with the employees the letters praise.
Another tactic adopted by Leach in response to the increasingly competitive South Bay medical market was opening hospital-affiliated urgent care centers.
“Millennials prefer after-hour and weekend doctors visits,” Leach explained.
Providence Little Company, UCLA Health, and Kaiser Permanente all have multiple urgent care centers in the South Bay. Even the CVS MinuteClinics in Torrance, Hermosa Beach and Manhattan Beach offer vaccinations, physicals and treatment for minor injuries.
Torrance Memorial opened urgent care centers in Manhattan Beach in 2010 and in Torrance in 2012. It will soon open a primary care doctors office with evening and weekend hours in Palos Verdes.
“The more urgent care centers we are associated with, the more we can grow,” Leach said.
Game changer
But of all the changes Leach has executed, the most consequential is the affiliation with Cedars-Sinai. His decades long relationship with Cedars-Sinai CEO Priselac led to the formation of strategic affiliation committees in 2016, which reported monthly to their respective boards.
The affiliation was announced in January of this year. The medical centers will retain their respective CEO’s, boards of directors and fiduciary responsibilities. Torrance Memorial’s 400-member physicians group and Cedars-Sinai’s 800-member physicians group will remain separate, but will collaborate on patient care, or what Leach calls “warm handoffs.”
A new umbrella corporation, with a board of directors that includes Leach and Priselac, was given the name Cedars-Sinai Health System, an acknowledgement of Cedars-Sinai’s worldwide reputation.
Already, the affiliation has led to Dr. Lurie’s cardiologists working with Cedars-Sinai cardiologists, who perform more heart transplants than doctors at any other hospital in the world. When the Hunt Cancer Center is completed next summer, Torrance Memorial and Cedars-Sinai will both have their names on the outside and their oncologists on the inside. Research collaboration between the medical staffs is also planned.
Melanie Lundquist cited the affiliation with Cedar-Sinai as validation of her and her husband’s confidence in Leach’s administrative and visionary talents. Lundquist spent 10 years as a volunteer at the hospital’s front desk during Leach’s early years at Torrance Memorial,
“It dawned on me then,” she said, “that if I had a heart attack at four in the afternoon, I would be DOA if I had to drive up the 405 freeway to Cedars.” PEN