Merging large and disparate investment programs is a tough task at any time, but doing so during a pandemic and in an industry hit the hardest by COVID-19 increases that pressure significantly.

Add to that the work of improving on financial outperformance and focusing on an organization’s mission, all while working remotely, and you start to get a sense of Alyssa Rieder’s challenges during the past two years.

She led the investment program merger for the largest-ever nonprofit health care merger in the industry’s history, combining two equally large and complex organizations, Dignity Health and Catholic Health Initiatives, to form CommonSpirit Health. The process started in February 2019, and now CommonSpirit Health is one of the largest nonprofit health care systems in the United States, with $33 billion in revenue and more than 1,000 care sites in 21 states.

As a result of the combined investment program, Rieder oversees about $50 billion in assets, including $20 billion in defined contribution (DC) assets. She’s well-equipped to handle such a massive program. When she started as the first full-time investment professional at the now-named CommonSpirit in 2010, (when she joined, the organization was called Catholic Healthcare West, then Dignity Health), the investment program had $4.5 billion across five pools of capital and 30 managers with limited alternatives exposure.

Prior to the merger, Dignity Health’s assets grew organically to $11 billion, invested across 120 managers in a variety of asset classes, including hedge funds and private equity. Through September, in the 10 of the past 12 fiscal years that she’s been at the helm, the investment program has exceeded the organization’s policy benchmark.

Rieder and her team are wrapping up the complicated investment program merger just now, but already the streamlined program shows positive results. In its first year, CommonSpirit’s program delivered outperformance net of fees versus the benchmark.

Starting With a Blank Slate

The two predecessor organizations’ investment programs were similarly sized, but had different structures and different pools of capital. Rieder needed to revamp the legacy programs to serve new needs. She took a blank-slate approach to make the combined program more efficient by streamlining, but also to make clear and assuage concerns in both predecessor organizations that this was a merger of equals, rather than one organization dominating another.

“We wanted to be open and collaborative because that’s part of our group’s culture, and also our corporate culture, to say, ‘Hey, let’s figure out together what the right thing is,’” she said.

She increased the original team size by 50%, conducting interviews at a time when people were working remotely and social distancing was required. She held a lot of Zoom interviews, but she and her team wanted to meet potential new hires in person, so they held outdoor meetings at a distance. Rieder is proud of her expanded team’s diversity, as the team is made up of more than 50% people of color and more than 60% women.

Among some of the key activities Rieder and the team completed were creating new portfolio structures, including establishing a new legal structure, an LLC, to optimally serve all CommonSpirit nonprofit entities and affiliates. They also worked with partners to create a glide path to customize and liability hedge several smaller closed Employee Retirement Income Security Act (ERISA) defined benefit (DB) plans using separately managed accounts.

They integrated and combined similar legacy capital pools, such as combining three self-insurance pools into one and merging two trusts into the newly established Operating Investment Pool. The team also enhanced portfolio management and reporting by reassessing asset allocation and risk and return goals for each pool of capital, implementing new policies for each. They also refined and optimized the asset manager lineup; aligned new investment options for the DC plans, which improved plan quality and costs for more than 200,000 participants; and implemented a new risk-management system.

After two years, the major work is nearly done, and now Rieder and her staff are transitioning the last of the dozen or so local hospital foundations into the program. That includes visiting each of those boards and explaining the new program, which takes some hand-holding. “They get nervous about it [and say] ‘What if it’s not locally managed? Will our donors be worried?’” she said, so she explains the benefits of improved financial management and efficiencies.

Staying Connected to the Mission

Everyone has felt the stress of working and living during a pandemic, and the health care industry was especially hit hard by COVID-19. Throughout the pandemic, Rieder said she has worked on teambuilding and maintaining morale, which was hard to do remotely. To build camaraderie and communication, she has weekly check-in meetings with all team members to share non-work discussions, and she started a speaker series, inviting different and diverse leaders from across the organization to talk to team members about how their department fits into the organization.

“Initiatives such have these have been crucial in our ability to hire and retain talented staff,” she said, which she noted has intangible bottom-line benefits.

It’s also important for her staff to feel connected to CommonSpirit’s mission, which provides more than $5 billion annually in charity care and community benefits. Although the investment staff members aren’t on the front lines, she tells them they are supporting those who are, ensuring that the doctors, nurses, and janitors in the system can count on the retirement benefits promised to them.

“Our work in investments is vital to the success of our organization and to the health of our country, and I want to make sure my team understands that and is inspired by that,” she said.

—Debbie Carlson