2024 Industry Innovation Awards

Health Care/Hospital Plans

Stefan Strein

Cleveland Clinic, CIO
Cleveland Clinic
Stefan Strein, Cleveland Clinic

With 20 to 24 people, Stefan Strein’s team at the Cleveland Clinic is organized in a hybrid-generalist model, focused on growth-oriented strategies. Within the team, one group focuses on defensive assets such as fixed income, absolute return hedge funds and real assets. Another segment focuses on risk and reports directly to Strein, working with data, analytics and performance teams.

The generalist model works for the team running a $13.4 billion portfolio (excluding all retirement assets) for two primary reasons, Strein says.

“It’s the best way to give young and mid-career professionals exposure to the widest variety of investments that will prepare them for future senior-level roles” inside and outside his organization, he says. “Great ideas can often be applied across asset classes, and I wanted a staffing structure to facilitate that.”

Strein also stresses the importance of each team member having the freedom to “think like a CIO” and regularly step outside their assigned asset classes or specialties.

“We’re striving for a collaborative, high-performance culture, where the best ideas can come from anywhere and anyone,” Strein says, noting the approach aligns with Cleveland Clinic’s renowned “team of teams” approach to solving the most complex cases in health care.

Because of the organization’s success, from both investment and operational perspectives—the portfolio has grown 101% since the Cleveland Clinic’s investment office began operations in April 2017—Strein says it has experienced very low turnover, except for those leaving for major opportunities.

“But that obligates the CIO to train and prepare his/her staff for opportunities that will likely arise outside of the organization,” Strein says. “I now have seven former direct reports that have become CIOs at other organizations.”

In the last two years, the investment team helped the overall system navigate unexpected operating losses in 2022 and 2023, largely related to start-up operations in London and to new hospitals that joined the Cleveland Clinic system. In addition, the group provided funding for research and education, in line with the system’s mission, while maintaining a double-A rating, which allowed the system to access the credit markets to fund strategic growth initiatives.

The investment decisions that helped make that possible included the addition to the portfolio of private credit assets, which have grown to a 5% allocation over the last decade.

“We like the private credit sector and look at it as an alternative to high-yield bonds or ‘spicy’ fixed income … and we’re targeting returns of 11% to 13% net that compensate us for both the illiquidity premium and idiosyncratic risk at the issuer level,” Strein says, adding that the asset class has also provided the team better understanding of the sector. “One of the insights from investing in special-situations funds is that the opportunity set for the traditional distressed credit hedge fund is much smaller today. … Several of our niche private credit strategies toggle between investments in public and private securities, and that’s been highly informative to the relationships that we have with traditional fixed-income funds.”

Technology has also played an important role in how the CCIO has developed.

“When we started the investment office nine years ago, we implemented a position-based risk system on the assumption that data would only get more ubiquitous,” Strein says. “This has allowed us to build an enormous data warehouse with daily, weekly and monthly feeds from our investment partners and a variety of other sources. We have overlaid this with several analytical tools and data visualization functions that have resulted in a series of 200-plus dynamically updated dashboards that are used within the team to monitor and manage all aspects of the portfolio.”

—Amy Resnick

Health Care/Hospital Plans Finalists

  1. SSM Health
    Mark Cagwin
  2. Indiana University Health
    Josh Rabuck
  3. AdventHealth
    Rob Roy
  4. Hackensack Meridian Health
    Donna Snider
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