At a moment when the financial and operational pressures facing U.S. health systems show little sign of easing, CommonSpirit Health CEO Wright Lassiter III is confronting the future with equal parts realism and resolve.
During an interview with Rhoda Weiss, PhD, National Healthcare Consultant and Author, at Becker’s 13th Annual CEO+CFO Roundtable, Mr. Lassiter underscored the mounting headwinds reshaping the nation’s largest nonprofit health systems
“It’s a really challenging time for the healthcare sector and for healthcare delivery organizations,” said Mr. Lassiter. “When we think about HR-1, the annual impact on just provider fees and state directed payments and DSH is $1 billion-plus in annual loss revenue, so that’s a significant issue for us.”
Like all health systems, CommonSpirit spent the last few years recovering from the COVID-19 pandemic. The health system reported total operating revenue of $40 billion in the fiscal year end in June, up from $37 billion the year prior. The health system reported $224 million operating loss for the fiscal year, an improvement from $875 million loss in 2024.
Despite the headwinds, Mr. Lassiter is tackling the future pragmatically.
“This isn’t the first time we’ve faced challenges that seem insurmountable,” said Mr. Lassiter. “We’ve got to do a few things. First and foremost, we have to focus on ensuring we understand the landscape and start planning today for what we believe the landscape will be.”
CommonSpirit’s leadership team has aligned around the presumption that on a state by state basis, the amount of revenue the system has to fund our organization will not be more than it is today on a unit-by-unit basis. But costs are projected to continue increasing over the next few years at a rapid clip.
“If that’s the case, you’ve got to think about what’s your ability to transform your cost structure? What’s your ability to use technology to transform how you deliver care and where you deliver care, and who delivers that care?” Mr. Lassiter said. “What’s your ability to use transformation to change how you operate? You have to start with that belief that doing just what you’ve done, but doing more of it, is likely not a winning solution.”
The transformation is critical to the system’s success. Since he took over in August 2022, Mr. Lassiter has focused on the One CommonSpirit culture, which means using the most efficient operating model as a foundation in everything the system does. Though he didn’t initially develop the idea, he is committed to manifesting it for the betterment of future generations.
“We are large, but being large in and of itself is not interesting,” said Mr. Lassiter. “Frankly, it’s what do you do with the size, and what do you do with the scale, and do you use that to your advantage? Do you do things? Do we do things as a $40 billion organization that we couldn’t do as a $5 billion organization? And if we don’t, then the fact that we’re big is interesting, but not wildly relevant.”
When Mr. Lassiter arrived at CommonSpirit, the operating model was still evolving from a holding company into what it is today. Mr. Lassiter started the transformation by identifying areas to simplify the organization first at the national corporate office level, and then trickled down from there. The system shrunk from nine divisions to five regions and reduced administrative overhead to focus around markets. The leadership team looked at how efficient each division was and identified areas to challenge and change.
Then they focused on outcomes.
“We don’t exist unless we’re improving health in the communities we serve,” said Mr. Lassiter. “We serve 36 communities across 24 states, so how do we focus on the markets? Then we started to say, how do you push decision-making to the lowest possible level where it makes sense? But then also, how do you clarify what happens at all those levels? Those are the things we’re trying to do to begin taking full advantage of size and scale.”
Over the last three years, CommonSpirit has been able to improve financial stability and performance, but Mr. Lassiter said the system is still working on the foundation for sustainable success in the future. One of those initiatives recently went public: Project IMPACT.
“We set a fairly aggressive goal that we wanted to try to drive between $5 billion and $6 billion worth of value creation across the organization over the next 36 months and we believe that while we’ve achieved a lot of synergies and a lot of operating model improvements, there were still a lot of value we’ve not unlocked in the organization,” said Mr. Lassiter. “We also believe strongly that you can’t cut your way to success and that we can’t say, let’s just reduce costs by X and that will get us there. Project IMPACT is an initiative that’s all hands on deck, 36 months initiative across the organization and we’ve said, ‘we still have sacred cows in the organization.’ We have corners of the organization that haven’t been touched like they need to be from an efficiency perspective. So let’s look at everything; nothing is off the table.”
Mr. Lassiter hopes to achieve between 8% and 10% EBITDA as a result of Project IMPACT, which would be significant financial improvement from the 4.8% EBITDA last year and negative EBITDA in 2022.
“One of the things I talk about a lot is what’s good enough versus what’s our potential, and let’s move towards our potential versus getting to good enough,” he said.
To achieve these goals, CommonSpirit is leveraging AI applications across the board and recently reported generating $100 million in combined annual value as a result.
“Artificial intelligence, whether it’s at the lowest level, robotic process automation, or the highest level with agentic AI, has the potential to transform everything about our organization from employee engagement and resilience and burnout by creating efficiency to improving safety and improving our customer engagement,” said Mr. Lassiter. “We did create our own proprietary AI assistance tool called Insightli and we’ve got a large number of users using it.”
Insightli keeps data and information within CommonSpirit’s network and protects against the privacy risks of AI tools. Since launching Insightli 18 months ago, Mr. Lassiter reported about a million instances of projects submitted and developed about 230 scalable AI interventions enterprisewide focused on business process automation, customer engagement, improving clinical care and more.
Over the next two years, the system aims to save $500 million.
“Our AI teams are working on creating financial value for the organization,” said Mr. Lassiter. “I think we’ve identified a quarter of a billion dollars worth of value enhancements thus far across our initiatives, and our team feels confident that by June of next year, they’ll be pretty close to the half a billion dollar goal. Obviously I set the goal too low. We’ll have a new goal by that time we get through 2026.
