Centralizing Harrison Medical Center’s operations at the Silverdale campus, improving preventative care and keeping an eye on the costs of running a hospital are a few of the biggest challenges that Harrison’s new president, David W. Schultz, said he’ll be dealing with.

Schultz’s first week on the job began Dec. 15 and he spent much of that time becoming familiar with his new coworkers and surroundings.

Previously, Schultz served as executive vice president and chief operating officer at Overlake Medical Center, a 349-bed hospital located in Bellevue.

Schultz said he took the job at Harrison because it was a great opportunity and because serving in an executive position as president was the next logical step for him in his 18-year-long healthcare career.

“This was a pretty unique opportunity for me to be able to stay in the Puget Sound (region). Harrison has a great reputation,” Schultz explained.

Schultz succeeds Scott Bosch as president of Harrison. Bosch retired in July 2014 after nearly a decade with Harrison.

Schultz has a master’s degree in health care administration from Trinity University in San Antonio, Texas, and is a Fellow in the American College of Healthcare Executives. He has a BA in economics from the University of Texas at Austin.

As a UT alumnus, Schultz is a fan of the Texas Longhorns football team and he also played for the Plano Senior High School Wildcats football team.

“I grew up around football. ‘Course I grew up in Texas, so you don’t really have a choice,” he said.

Schultz brings with him a bit of advice he learned from one of his teachers, James D. Harvey, who ran the Hillcrest HealthCare System in Tulsa, Oklahoma.

“Some of the advice he would give was: just focus on your core business and pursue excellence. And if you stick to those two things, chances are you’re going to be successful.”

Thus, providing “exceptional” patient care was a core focus, Schultz said.

“That’s my first and foremost priority. My second is to really focus on creating a healthier community (via preventative care) … can we do some things from an education and primary care standpoint to keep people out of the acute care setting?”

Schultz said he wanted a hospital culture where everyone holds each other accountable for their performance and which is also enjoyable to work in.

“If you can combine those things and you have a culture that supports it that’s how you have a great organization and that’s my job.”

On the centralization of Harrison at the Silverdale campus, Schultz said a balance needed to be struck between what services were needed at Silverdale and at Bremerton to improve the health of both communities.

“Being able to centralize on a single campus all your acute services is going to help the value proposition for the Kitsap Peninsula community as a whole. I truly believe that, just because there will be some efficiencies that we naturally gain,” he said.

“The whole team feels a lot of pressure to do what’s right with the development of the Silverdale campus and then, again, what services are going to remain and be developed in Bremerton.”

“Sorting through that is something that we’ll engage the community in doing.”

Schultz said adapting to the changes related to healthcare reform will also be a challenge, especially in regards to how the hospital would be compensated.

“Because now we’re paid to just treat an illness as opposed to figuring out a way if we could keep you from getting sick in the first place.”

“Don’t get me wrong, I think expanded insurance is great. It’s just a matter of the next wave of change is to put providers at risk to keep people out of the hospital, for instance. And that’s going to be quite a challenge for all of us, not just Harrison but all of us as we figure out how to play in both worlds until that is settled even by CMS (Centers for Medicare & Medicaid Services), the federal payer system.”

Schultz said that Harrison did a good job of meeting the basic and special needs of the community, and that the hospital could coordinate care with its affiliate CHI Franciscan Health or other healthcare systems should a patient need services not available at Harrison.

Fiscal issues are also a concern. Former president Bosch said in May that net operating income dropped from 7.5 percent in 2008 to about 3.5 percent today. Bosch said he estimated that number could drop to 2 percent by 2020, creating a challenging financial outlook for Harrison and other hospitals.

“That’s true, there’s a lot of tension with being fiscally disciplined,” Schultz said.

“I do think we’re in that 3.5 percent margin. It will be our charge to try and stay there. You do that through focus on utilization of your services. You do that through cost discipline.”

With the larger purchasing power of Franciscan, Schultz said, “We perhaps can get supplies at a lesser dollar amount; that’s already starting to occur.”

“But that (fiscal) challenge isn’t going to go away. And that’s why you’re seeing hospitals consolidate, quite frankly. And trying to prepare … because to be an island unto yourself it’s much harder to develop services, to recapitalize yourself.”

Most hospitals needed at least a 3 percent margin to keep reserves healthy, Schultz said.

“A 501(c)(3) not-for-profit … you should be generating close to 5 percent. And again that’s so that you can recapitalize yourself in order to be able to support and provide the community benefit that you’re obligated to do.”

Three to 5 percent is the sweet spot, but “If you can swing upward in any given year, great. And you may swing downward.”

Schultz said that in regards to labor negotiations there has to be a balance of salary and benefits and with running a fiscally efficient hospital.

“You really have to look at both sides of the equation. You have a revenue stream, so can you grow services and expand your level of services so that you can grow your revenue base?”

“We have to maintain a competitive salary and benefit structure to be able to attract the talent that you need to be able to take care of patients,” he said.

One of the first things Schultz said he would work on was team-building.

“Try to make sure that we’re all on the same page and that we’re all supporting each other and then moving in the same direction.”

Schultz said that regardless of its affiliation with Franciscan, Harrison would make no changes to how it deals with abortion, birth control and end-of-life issues.

“With regard to the ethical and religious directives, we’re a separate entity so we’ll remain secular and so we’ll continue to follow the processes that Harrison has always had,” he said.

Shultz pointed out that his title is formally “president,” not “CEO,” to avoid confusion with Franciscan CEO Ketul J. Patel. But Schultz’s duties are still those typical of a chief executive officer.

Schultz and his wife Becky have been married for 18 years.

“We actually met at a hospital,” he said. They have two teenage children. The family pets include an English bulldog and a Boston terrier.

Schultz said he’s moved into a Kitsap area apartment already and the rest of the family plans to move here from Issaquah at some point.

“I’m very excited to be here,” Schultz said. He liked the sense of community pride and support for Harrison.

“I expect to be here, hopefully, a long, long time and really truly learn the community.”