‘You have to grow your way through this’: Sutter CEO on tackling industry headwinds

Sacramento, Calif.-based Sutter Health is leaning into growth — not cost cutting — as the primary path forward amid mounting industry pressures.

“You have to grow your way through this. You can’t shrink your way out,” Warner Thomas, president and CEO of Sutter Health, said during an April 13 presentation at Becker’s Annual Meeting.

That philosophy is shaping a broad strategy focused on ambulatory expansion, digital transformation and leadership development, alongside a planned multistate expansion through a proposed deal with Minneapolis-based Allina Health.

Sutter and Allina have signed a letter of intent for Allina to join the system, creating a combined nonprofit spanning California, Minnesota and Wisconsin.

If completed, the deal would create a 39-hospital system with more than 400 care sites, serving more than 5 million patients. The combined organization would include about 18,000 physicians and 88,000 employees and generate roughly $26 billion in annual revenue based on 2025 figures.

Sutter currently serves more than 3.5 million patients across Northern California, while Allina operates more than 90 clinics and 12 hospitals across Minnesota and western Wisconsin. The proposed transaction would significantly expand Sutter’s geographic footprint and scale as it executes its growth strategy.

Expanding access beyond the hospital walls

At the core of Sutter’s growth strategy is a decisive shift away from hospital-centric care toward outpatient access points — a trend echoed by several other large systems at Becker’s Annual Meeting, including St. Louis-based Ascension, Chicago-based CommonSpirit and Livonia, Mich.-based Trinity Health.

Rather than relying on traditional inpatient expansion, Sutter is investing heavily in outpatient access points — including urgent care centers, ambulatory clinics and physician networks — to meet patients closer to home and at lower cost.

“We want to have a large, ambulatory-oriented network,” Mr. Thomas said.

The approach is already reshaping Sutter’s footprint. It has opened dozens of new clinics, hired more than 2,500 physicians and clinicians in the past three years and expanded training programs to build a sustainable workforce pipeline. The goal is to improve access, reduce wait times and move patients out of higher-cost settings, such as emergency departments.

The strategy is also resonating with payers.

By shifting care to lower-cost environments and improving coordination, Sutter is positioning itself as a more attractive partner to insurers focused on value and cost containment.

“Insurers like what we’re doing … [because we’re] driving the cost of care down, we’re keeping people out of the ER, and continuing to move people from the inpatient to the outpatient environment,” Mr. Thomas said. “We see more and more insurers want to work with us, because they see this as a competitive differentiation.”

Operational improvements — such as reducing length of stay — are also helping the system unlock additional capacity without costly hospital construction. Even incremental gains can have outsized impact, with small reductions effectively adding dozens of beds across the system.

Building a digital, AI-enabled care ecosystem

Sutter is also investing heavily in digital infrastructure, including a “digital front door” to streamline scheduling, virtual care and patient engagement.

“How are you building virtual connectivity to your patients? What are the ways that you’re making that easier for them?” Mr. Warner said. “We’ve been very focused on growing online appointments, working with our physicians to move more appointments online.

“We’re almost at 5 million this past year. We think that’ll grow by another million to 2 million in 2026. We have the highest number of online appointments from a percentage perspective, in the ecosystem, and we’re continuing to double down and push hard in this area, because we think access, simplification and reducing friction in the system is a winning strategy.”

Unsurprisingly, AI is another key pillar, with applications across clinical care, operations and revenue cycle. Tools such as ambient documentation are reducing administrative burden for physicians, while AI-driven scheduling is improving throughput.

Sutter is deploying AI across clinical, operational and administrative functions — from predictive modeling and diagnostic support to scheduling optimization and revenue cycle improvements. Tools like ambient listening are already reducing physician documentation burden, saving millions of hours annually, while AI-driven scheduling is helping optimize capacity and increase patient throughput.

But Mr. Thomas stressed that technology alone is not the differentiator: Execution is.

“It’s not the technology. It’s how are you adopting it? How are you scaling it? How are you teaching people to use this?” he said.

Beyond efficiency, Sutter is also using digital tools to move upstream in care delivery, particularly in managing chronic conditions such as hypertension and diabetes. By using data and predictive analytics, the system plans to shift from reactive care to proactive and preventive interventions, a key capability as more financial risk shifts to providers.

Leadership, culture and the ‘learning organization’

While strategy and technology are central, Mr. Thomas repeatedly emphasized that leadership and culture are the ultimate differentiators.

“Leadership is the gating factor to success,” he said.

At Sutter, that has translated into a deliberate effort to build a high-performance operating culture. The system has increased investment in leadership development and is working to build a “learning organization” focused on accountability, transparency and continuous improvement.

“We’ve tripled the leadership and development budget at Sutter,” Mr. Warner said. “We’re tripling down on our people. We want to have the best leaders, period. And whether it’s a supervisor or manager or our new executive academy, we want to make sure we help people continue to develop and look better.”

Equally important is establishing a consistent operating rhythm — with clear metrics, regular performance reviews and open communication channels — to ensure alignment and accountability across the organization.

In an environment where no clear playbook exists, he argued that the health systems that learn fastest — and act decisively — will come out ahead.

“No decision is a decision,” he said, underscoring the risks of inaction in a rapidly changing landscape.

Ultimately, Sutter’s strategy reflects a broader mindset shift: embracing uncertainty, investing in growth and building the capabilities needed to thrive amid disruption.

“The environment is going to be what it’s going to be,” Mr. Thomas said. “The question is … are we going to be decisive and act?”

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