HealthCare Voice

Customer Satisfaction Programs: There Is No Silver Bullet

Success of a brand-name customer service/satisfaction initiative is not based on which pricey program a healthcare organization buys, but the commitment, the passion and the skills of the Chief Executive Officer.

Healthcare organizations looking for the magic silver bullet, should understand that it does not exist.  

Quint Studer was a very successful President of Baptist Hospital in Pensacola, Florida, not because of some template or costly consulting package.  No, he succeeded because of his commitment, his drive and deep understanding of common sense leadership principles. There is nothing magical about his very popular approach, or of those promoted by his able competitors.  They provide a solid framework for cultural transformation.  But without a strong CEO, no army of cosultants can produce an environement that fosters clinical excellence, patient safety and exceptional patient satisfaction scores.  

There is no substitute -- none whatsoever -- for a dynamic leader who can craft and communicate their vision, and who can successfully build a strong leadership TEAM that, day in and day out, delivers exceptional results.  

If you need to believe that there is a silver bullet, then there it is -- hard work and personal involvement by the CEO.

© 2011 John Gregory Self

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A Champion For Public Hospitals And The Challenges He Faces

Parkland Health and Hospital System CEO, Dr. Ron Anderson, one of the nation's staunch defenders of the important mission of America's public hospitals, is concerned.  Very concerned.                                

Healthcare reform, with its promise of coverage for about 30 million uninsured Americans, is under attack. The newly elected majority in the House of Representatives is planning an all-out assault on this legislation -- from outright repeal to significantly hamstringing implementation by denying funding.

To complicate matters, new surveys show that the number of uninsured Americans continues to grow. According to USA Today, that number is now 50.7 million. 

Meanwhile, in Texas, where the GOP now has a virtual super majority in the House that would enable them to pass their agenda without too much difficulty, one member has proposed that the state withdraw from the Medicaid program.  Facing an estimated budget deficit that could reach $25 billion and a constitutional mandate for a balanced budget, even legislators who have been more moderate in the past, are saying this idea should be considered.  The Governor, Rick Perry, seems to agree. The legislature, which meets every other year and will convene this January, already has House staff members developing cost-benefit scenarios for the Medicaid debate.

Dr. Anderson and other Texas healthcare executives know this could devastate hospitals, particularly those tax-supported safety net facilities like Parkland whose charity care costs exceed $500 million each year. In a struggling economy, those numbers could get worse. Dr. Anderson told a recent meeting of the ACHE of North Texas, that he is most concerned that the legislature will cut spending across the board, severely compromising federal matching dollar programs and hampering Parkland's ability to fulfill its mission.

In virtually every state, voters who went to polls this month, were angry.  Primarily they were focused on the federal deficit and the long-term debt. Republicans, who now dominate the U.S. House of Representatives where all spending bills originate, have not yet specifically listed how they will they eliminate the budget deficit and reduce the debt. But given that national defense, Medicare, Social Security and interest payments comprise more than 70 percent of the federal budget, it does not take a mathematical wizard to realize that at some point additional reductions in Medicare spending will have to be on the table since that is the single biggest time bomb in the government's total of unfunded liabilities.   For the record, as of this writing, the federal government's unfunded liabilities -- commitments that have been made but for which there is no money set aside for payment -- total $53 TRILLION. Medicare far and away is the largest component of that number.

Not many will argue against the economic and national security necessity of balancing the budget and, over time, dramatically reducing our national debt, especially since nearly 50 percent of the U.S. debt is held by overseas parties like China.  But just as the U.S. economy is improving -- albeit ever so slightly -- draconian cuts in healthcare programs to help those in our society who need it the most -- the least among us -- seems poorly timed.  

And that is why Dr. Anderson is so concerned.  

© 2010 John Gregory Self

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Hospital CEOs: Building a Community Legacy In Challenging Times

On Thursday I spoke to the Texas Organization of Rural and Community Hospitals (TORCH) near Austin.  I spoke about the importance of empowering employees, a strategic imperative for navigating the very challenging times that lie ahead for hospitals and other healthcare providers.  Sorry for the delay in  filing this post, but this was an enlightening experience.  I left the conference center convinced that my projections -- and those of many others who are far more wiser than me -- that the perils that lie ahead for healthcare organizations (no fault of the recent health [payment] reform measure) are spot on.  As I drove back to Dallas, I kept thinking about the challenges that CEOs will face.

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Hospital Chief Executive Officers have a tough job.  Over the next seven to 10 years, it will become a great deal more difficult.  Here is why....

There is no way the healthcare industry can avoid significant reductions in Medicare reimbursement.  With 78 million people flooding the program over the next 20 years we are looking at deficits of nearly $2 trillion in Medicare and Social Security alone.  Even if Congress reins in spending on discretionary programs -- and that is a gigantic "IF" -- the federal government still will not be able to afford the social safety net promises that it has made to senior citizens.  We are already borrowing money to pay some part of Medicare payments now.

Reductions in reimbursement will mean that hospitals -- not Congress -- will be forced to develop plans to restructure how care is delivered more cost effectively with a higher rate of quality and safety.

Making those painfully tough decisions is not a solo act.  Hospital CEOs will need the support of their boards, leadership teams, employees and physicians.  They must all work together in a common purpose -- with a shared vision and a combined willingness to make sacrifices.  In other words, the CEO must empower his executive team colleagues, board members, employees, physicians and community stakeholders to work together to make these really hard, wrenching decisions.  

The good news is that they have seven to 10 years before the real deep financial crunch hits.

Empowering employees and stakeholders is the most effective way to leverage an organization's most important asset to deal with these challenges, but it is not an overnight process.  There will be the inevitable push back, the blind resistance to change based on a passionate hope-against-hope belief that somehow this country's financial problems are not as serious as is being reported and that it will somehow all work out.  It won't.

As CEOs face these incredible challenges, they must also keep their eyes on strategies for maintaining their hospitals as respected, trusted community assets. 

Remember all this the next time you read a news story with an attitude – indignant about hospital CEO pay.  Are there excesses?  Yes.  But by and large these leaders are grossly underpaid, and no where more than in rural and smaller community hospitals.

© John Gregory Self

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A Simple Answer for Silo Management

Management Silos are a regrettable fixture in far too many companies.  They are particularly egregious in health care where these ego-based fiefdoms drive up costs, frustrate employees and harm patients.

That far too many CEOs are reluctant to tear down these barriers is a sad reflection of how institutionalized these artificial divisions can be. What is depressing is that these silos are more about executive arrogance and ego, not improved efficiency, value innovation, or customer service and satisfaction.

There are two types of management silos.

1. The elephant in the living room variety.  Everyone can see it and smell it, even if they are reluctant to talk about it for fear of attracting attention and retribution by the guilty executives who control the silos.

2.  Passive/aggressive model.  This type of silo management is actually more dangerous for the organization because it is easier to ignore. The turf barriers are disguised until a well-meaning employee tries to make a change.  That is very common in healthcare organizations and that may be good reason why so many hospitals talk about improving quality of care and safety and far too few actually achieve meaningful results.  You cannot achieve improvements in quality and safety when executives are more interested in hoarding influence (read: silo control) than the common good of the organization and its customers.

Management silos are the structural equivalent of  the "shareholder first" business strategy, one of the dumbest ideas ever created, Jack Welch once said.  The MBA oath strikes a blow against placing the needs or greed of shareholders and corporate executives who make decisions solely on short-term factors that will drive the stock price against well being of customers, employees and the communities they serve.  If executives stay focused on those priorities, the argument goes, the shareholders will be well taken care of.

In healthcare, we need to tear down the walls, empower our employees and focus on the needs of our patients.  Early in my healthcare career, when I was flying around the country selling and implementing hospital-based helicopter ambulance programs, a wise old hospital CEO explained that if you take care of the needs of the patients and their physicians, you will be very successful.  "Ego and arrogance do not have a role in the show," he said.

That is a blinding flash of the obvious. However, for many leaders that answer must be wrong because it is just too simplistic.  Hospitals are among the most complex business organizations ever devised, Peter Drucker said. Truer words were never spoken.  But the complexity of the organization is not made less complex by silos.  It is only made worse.

Perhaps the simple answer is the right answer.

(c) 2010 John Gregory Self

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The Consolidation Myth: Being Nimble Matters

"If your hospital is attractive financially, has a good payer mix, makes a margin, and dominates its local area, it's a fat target for larger systems that see growth and scale as the way to thrive under healthcare reform."   -- HealthLeaders.Com

In anticipation of ongoing reductions in reimbursement and additional legislative attempts to change the way healthcare services are delivered, the consolidation of community hospitals into larger  regional healthcare systems is frequently touted as an answer to controlling costs, having access to capital, and improving quality.  

The problem with the consolidation scenario is that it rarely, if ever, results in reduced costs and bigger does not guarantee improvements in quality, safety or service.  The only possible advantage, assuming the independent hospital has done a good job in managing its operations, is improved access to capital, but that too can be misleading.  Well run, financially stable hospitals with solid balance sheets can get capital.  

Consolidation often occurs because the local leadership team and board have not done  a great job managing their operations and, over time, positioned their hospital in such a hole that selling out is the only answer. However, the days in which regional systems will step in and invest in a sinking community hospital are nearing an end. 

The regional systems are eying new sources of revenue, not dogs with fleas.

Consolidation eliminates competition.  The lack of competition allows prices to rise, which is exactly what has happened in metro market after metro market, when consolidation occurred (competitors were eliminated).

No one knows for sure what the future holds for healthcare reform, but I believe that we will see significant structural change along with the inevitable reductions in reimbursement. In this scenario, who has the best chance of surviving?  The large system with substantial overhead and the inability to change on a dime?  I don't think so.

I am putting my money on the well-managed smaller, nimble providers that can anticipate change and quickly respond. 

Running a big health system, one CEO confessed, is like managing an aircraft carrier with a fleet of support ships and systems to keep it on course and safe.  

In tough economic times with a threatening regulatory environment, think of that large health system as an aircraft carrier in the narrow Houston Ship Channel, trying to turn around.

(c)John Gregory Self

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Help Stamp Out Silos

Management silos kill organizations. They destroy collaboration. They foster gamesmanship when there should be cooperation. They encourage valueless battles over turf issues at the expense of customers.

In healthcare organizations, management silos contribute to avoidable medical mistakes and to increased risks in patient safety.  A company's management structure becomes more important than the mission.

Executives who excel in silo management do not care about their employees or their customers.  In the end, their exhaustive games to justify a management culture with the potential to do so much harm is a fool's errand.

Changing a management culture is never easy.  It takes determination.  It takes time and patience.  However, the benefits for the customers -- the patients -- are undeniable.  

So why do CEOs tolerate a culture that compromises the company and hurts customers?

 © John Gregory Self

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Feds Charge 94 Suspects in Five-city Medicare Fraud Sweep; New Arrests Planned Over Weekend

With Medicare fraud estimated to cost taxpayers between $50 and $60 billion annually, the federal government is moving aggressively to identify and prosecute physicians, nurses, billers, patient recruiters and business owners who are suspected of defrauding the government.  

Federal officials said arrests in a five-city sweep that was announced on Friday will continue over the weekend as agents move to shut down operations that were charging the government more than $225 million in fraudulent claims.

Reducing Medicare fraud is included in projections to fund the healthcare reform bill.  

In addition to criminal fraud cases, justice department officials and CMS investigators are stepping up investigations of hospitals, particularly hospital-physician financial agreements that might violate fraud and abuse provisions. These include physician recruiting contracts and  hospital payments to doctors for certain types of medical director arrangements.

For details on the raids and arrests announced on Friday, click here to read the HealthLeaders.Com report.

Feds Charge 94 Suspects in Five-city Medicare Fraud Sweep. Seed Newsvine

VALUE INNOVATION: More for Less in Executive Search

Times are tough.

Healthcare organizations, like other industries, are taking a hard look at their expenses. 

Executive search is one of the many service providers under the expense reduction microscope.  Search firms reported significant declines in revenue in 2009 due in part to a reduction in executive hiring and a shift by some systems to rely on internal recruiting.

Historically, search firms won new business based solely on relationships and the reputation of the company.  Today, hospital CEOs are asking questions: At what price the relationship?  At what price the accountability?  At what price the quality? At what price the value? These are fair questions regardless of the economic climate, and clients deserve clear answers.

Discounting fees is the scourge of professional service firms.  If your fee is below the industry standard, the conventional wisdom says, you must not be as good as the larger, name brand recruiting companies.  Right?  Wrong, there is a new breed of search firms exploring ways to change the approach.

Most of the larger search firms operate with a business model that is more than 50-years- old.  It is a transactional model.  Their marketing pitch reads something like this:  Hire us.  We are big.  We do a lot of searches.  We know everyone.  We can do a better job.  We have access to the best candidates.  Then, when they present the recommended candidates, the accountability shifts to the client.

In this new economy, with hospital CEOs facing pressures to improve performance and demands more increased accountability perhaps clients should consider asking their search consultants to back up their claims regarding quality with a 36-month placement guarantee. "If you are really that good, a three-year placement guarantee for C-suite engagements should not be much of a risk at all," seems to be a reasonable observation.  But the major firms shy away from this level of accountability.  In the transactional model, they see their role as identifying a client’s needs and requirements and filling the order with a panel of qualified candidates.  It is up to the client to select the candidate and most of the responsibility shifts from the firm to the client in the process.  Most major search firms will provide a 12-month guarantee, a fairly safe bet when you consider that most of the risk of candidate failure does not emerge until the second year.

Forty percent of all candidates recruited from outside the organization leave, are forced out, or quit within 18 months.  Heidrick & Struggles, the world’s second largest search firm, disclosed that rather embarrassing “stick” rate following a review of 20,000 of their senior level searches.  Major job boards and human capital organizations who monitor executive turnover have confirmed this rate of failure.  “It is the dirty little secret of our industry,” said a prominent search firm partner who specializes in healthcare.

The rate of failure is embarrassing.  But it does not have to be that way.

Transformational Recruitment, a true partnership with the client where financial risks are shared, is the way forward.  Through value innovation, search firms are embracing the risk-model and incorporating proven onboarding strategies into their performance model and in the process are challenging the seemingly wrong-headed conventional wisdom of the outdated transactional model.

Value innovation is NOT about discounting fees and cutting corners.  It is about search consultants, with a passion for their client's success, identifying and recommending candidates and then standing behind their performance.  It is about innovation that allows them to offer more services for lower costs.

Some agencies are cutting corners to reduce costs and preserve profits. 

The value innovation search firms are offering more for less.

©  2010 John Gregory. Self

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Feds Probe Alleged Fraud at UT Southwestern, Parkland

Whether any real fraud was committed remains to be seen.  I certainly do not want to engage in the blog equivalent of piling on.  Nor do I want to suggest that UT or Parkland leaders knowingly ignored warnings from their internal auditors as part of a plan to maintain "revenue as usual."

Based on extensive conversations with hospital CEOs, medical educators and consultants around the country, it is clear that CMS and the Justice Department, after years of  lackadaisical enforcement, are now pursuing Medicare/Medicaid fraud cases with a vengeance.  We should not be surprised.  Medicare faces a shortfall of epic proportions.  Something must be done to narrow this deficit.  Aggressively pursuing fraud investigations, imposing significant fines, and in some more egregious cases, prosecuting and imposing actual jail time, is one way the federal government can shout out:  'Hey, pay attention.  We are serious this time.'

For years fiscal conservatives have complained -- rightly so --  that the federal government was not doing enough to protect taxpayer interests from fraudulent billing such as invoicing the government for duplicative, unnecessary, or phantom tests.  Now the government's philosophy regarding how the rules will be enforced seems to have changed amid the Great Recession and the political fear on Capitol Hill that has been created by the massive deficit crisis. 

Hopefully, this particular case as outlined in the following Dallas Morning News article, will end with limited consequences for the parties.  They are both important healthcare providers whose reputations for outstanding clinical care, medical education, and cutting edge research are above question.  But healthcare providers, including the leading organizations, can no longer claim confusion or ignorance of often complex or conflicting payment regulations.  That defense will simply will not be good enough this time around, the government lawyers seem to be saying. 

In those cases where the government can show a conspiracy to knowingly break the law or just ignore the rules, the consequences could be startling for some.  In New Jersey, physicians are beginning significant jail time as the result of guilty pleas and convictions in connection with hospital payments for physician medical director services.

Healthcare leaders and physicians who ignore this change in enforcement policy will do so at their own peril. 

I worry that this is a huge problem and that UT and Parkland are only the tip of the iceberg.  

READ MORE

Feds probe alleged fraud at UT Southwestern, Parkland | News for Dallas, Texas | Dallas Morning News | Latest News 

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The Importance of Message and Communication Points

George Bradt, founder of PrimeGenesis, a consultancy that focuses on executive onboarding programs with the goal of accelerating the success of a new leader, is a true innovator in helping executives successfully navigate the transition to a new job.

In this posting, George once again touches on a point that I have made several times over the past year: that leaders are more effective in building relationships with their two most important constituencies -- their employees and their customers -- when they use a weekly communications plan.

The importance of message and communication points.

The importance of message and communication points

This is a short post and I recommend that you subscribe. 

The JohnMarch Partners search process is built around the principles of onboarding.  Healthcare clients are increasingly looking at onboarding as a way to overcome the problem that companies in other sectors are experiencing:  up to 40 percent of new executives recruited from outside an organization are fired, forced out or quit within 18 months, according to several national studies.

Our search process has produced results that are four times better than the national average. Healthcare organizations that combine this type of executive search process with an integrated onboarding program will see an improvement in their overall performance.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners.  He is a Co-Founder of the Firm.  

 

Employing Doctors: Smart Strategy for Next Decade?

As I travel across the Midwest and East Coast, healthcare leaders are talking cautiously about the future of healthcare and what the patient care delivery system will look like in the next decade.  These are thoughtful leaders who understand that continued growth in the cost of healthcare will produce huge unfunded liabilities.  They know that the federal government will continue to cut spending – Medicare provider payments – and that they must be prepared to reduce their operating between five and 10 percent of current Medicare payment rates.

 

While the economy is improving, the underlying challenges facing healthcare executives remain.  There may be improvements in economic indicators, but healthcare CEOs will face another year of uncertainty.  This uncertainty will contribute to continued inaction for many organizations.

 

There is evidence that large providers like HCA, Tenet, Life Point, and Community Health and many of the nation’s largest not-for-profit community healthcare systems and hospitals realize that the current hospital business model will change.  They see the writing on the wall and they are already responding strategically and financially. 

 

One telling strategy development is the accelerating trend of employing physicians.  This is not the first time health systems and hospitals have skipped down this strategic pathway.  The decade of the 1980s brought the notion that system integration was the golden key to the pathway of success.  Some corporate executives who had successfully run hospital companies felt they could successfully roll up physician practices into a large corporation, and improve profitability through improved efficiencies and enhanced managed care contracting.  The results were, for the most part, catastrophically bad.  With one or two exceptions, most of the roll up physician practice companies failed, and hospital systems consistently lost about $100,000 to $150,000 per employed physician.  The take away from this expensive experiment is that running a physician practice and a hospital are NOT the same thing.  Those lessons, if well learned, will determine whether this time around we get it right. 

 

The big companies and systems are well organized and are recruiting for employment physicians from hospitalists to family practice.  They understand there will be a serious physician shortage and they are moving ahead of the wave.  They are investing significant capital to get ahead of the curve, industry analysts say.

 

The move to physician employment, hospital CEOs agree, reflects a broader challenge:  an across-the-board war for talent in every market.   

 

That is why an organization’s recruiting brand – how they recruit and relate with employees at all levels – is so important.  It is why onboarding with gold-plated recruiting processes will be more important than ever in the new decade.

 

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HEALTHCARE REFORM: Fewer Hospitals, Fewer Executive Jobs

Hospital executives will face a daunting challenge in the post-reform business climate. Career management.

Competition and ongoing reductions in Medicare payments to healthcare providers will doom financially weaker hospitals resulting in fewer jobs at a time when more executives are looking for work.

This once comfortable industry, characterized by cost-based Medicare reimbursement and physicians who viewed competing with the hospital where they admitted patients as being unseemly, is about to experience a prolonged period of turmoil that one analyst described as having all the pain and impact of combining DRG reimbursement and the Balance Budget Act of 1998. Both events created an unprecedented periods of financial instability and executive turnover. Some senior healthcare observers argue that post-reform will be more tumultuous.

Those who survive this perfect career management storm will be the executives who deliver exceptional results and who are adept at managing their careers, including the thorny political challenges posed by concerned board members and restless physicians seeking to protect their incomes. The more CMS cuts from physician reimbursement, the thornier those issues will become. Managing one’s brand, expanding one’s personal network of industry contacts, and continuous education for professional development, will be essential tools for success or career transition.

CEOs and other senior executives who become too comfortable are at the greatest risk of being pushed out of their jobs. The experience, skills, and style that helped an executive achieve success in the past may not work in this new healthcare economy. “What Got You Here Won’t Get You There,” Marshall Goldsmith’s book on adapting leadership styles is a great resource for leaders who are serious about change. It is not the typical management book filled with big ideas and new buzz words. With regards to networking, Harvey McKay wrote what I think is still the best book on the subject:. “Dig Your Well Before You're Thirsty : The Only Networking Book You'll Ever Need.”

Regardless of which healthcare reform bill reaches the President’s desk for signature, the estimated reductions in federal healthcare costs will probably fall short of those needed to reduce the current deficit projection. The proposed savings in this reform measure are only a drop in the bucket when you look at the very big and very bad numbers that graphically highlight the federal government’s longer range fiscal crisis which is being fueled by the 78 million new Medicare beneficiaries that will enter the program over the next 20 years. There will be more people on Medicare than are paying taxes to fund the cost of their care.

The reimbursement cuts that the hospital industry agreed to make in return for their support of reform are not a one-time shot. There will certainly be more reductions in reimbursement. Rationing of services through “case management” will continue to occur under the radar of most consumers and politicians as CMS installs new rules and continues to reduce payments to healthcare providers.

Healthcare leaders will face some of the toughest times of their careers over the next 10 to 15 years. Managing their careers will require more focus than ever before. There will be less competition in some markets. There will be fewer hospital management jobs in all markets.

As one CEO prepared for early retirement, the local newspaper reporter asked why he had decided to leave now? “It is just not fun anymore,” was his response. This CEO was no underperformer. In fact, his hospital consistently was one of the best in the state and routinely earned high marks for clinical performance and patient safety. He had simply reached a point in his life where he realized that the success he created for the organization would be difficult to sustain. “This job will require more energy, intensity and focus than ever before. I have had a great career. I have a wonderful family. It is time.”

On Monday I will outline some of the career management tools that I routinely share with candidates in transition and young graduate students who are beginning their careers.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm.

A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders.

John is a highly rated speaker on inspirational leadership, career brand management and the future of healthcare in America. To contact Mr. Self regarding a speaking date, contact him at JohnMarch Partners.

You can contact Mr. Self at 214.220.1234 or [email protected]. He is an active member of LinkedIn and a frequent editorial contributor.

Or, you can follow him on Twitter at Self_JohnMarch.

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Hospital CEOs At Nexus Of Fight Over Federal Budget Deficits, Fiscal Survival

America’s hospital Chief Executive Officers are going to be asked to do something that will be exceedingly difficult and very unfair.

This request is based on a national economic necessity. Some fiscal conservatives would argue that it is a national security imperative.

America’s hospital CEOs, who run what management guru the late Peter Drucker described as among the most complex of all businesses, must dramatically reduce their operating costs to below Medicare’s current rates. If hospitals are to survive, CEOs and their employees must operate with much less money, not more, for every Medicare admission.

Since health insurance companies usually base their payments on Medicare rates, they, too, will work to reduce what they will pay hospitals. In other words, the anticipated reductions in Medicare spending could produce a cascading effect with financially crippling consequences.

Why are we asking hospital CEOs to make these potentially career-threatening decisions?

Because America is going broke and Medicare spending – driven by this nation’s high healthcare costs – has emerged front and center in the battle to control our country’s deficit spending. Our growing national debt has become a virulent form of cancer that is spreading so fast that we must begin today to treat the problem if we want to preserve this nation and our way of life for our children and grandchildren.

In all likelihood these cuts in Medicare reimbursement will come regardless of what happens on Capitol Hill and at the White House.

Why is it unfair to ask hospital CEOs to make these dramatic and in some cases draconian expense reductions? Because it may not be possible for them to achieve meaningful reductions that are necessary to reduce healthcare costs. As a Chicago healthcare executive put it: “America’s healthcare system is built around a post-war hospital-centered model with clinical and operational processes that cannot yield the level of savings that we will need to save this country from a Medicare-induced bankruptcy.”

Ironically, hospital CEOs will be forced to make these tough decisions at a time when everyone – from the hospital industry itself, insurers and pharmaceutical companies, to physicians, patients, employees and community stakeholders all want more, not less. There are some notable public statements regarding cooperation to reduce costs, but the lobbyists are hard at work to protect their respective clients.

Our current healthcare reform debate has become part of a larger contentious dispute spurred on by the Great Recession and the government’s role in solving the problem: America’s long reliance on deficit spending – from the federal government down to individual households. At the federal level we look for investors like the Chinese government to buy our debt. At the household level, we look to the banks and credit cards to fund our desire or need to live beyond our means, or just to live.

This crisis is compounded by our loss of national will to make hard choices, our diminished collective discipline, and a profound loss of appetite for shared sacrifice to achieve a greater good.

The biggest threat to this nation, says former Comptroller of the Public Accounts David Walker, is not some terrorist hiding in a cave on the Afghan-Pakistani border, but our government’s deficit spending. We have gone from budget surpluses in the Clinton Administration to record deficits and exploding debt, he says. Lest we begin pointing the political finger, the record shows that deficit spending has become a true bipartisan habit, an addiction that we must control if we want to prevent Chinese from becoming our second language.

Sen. Max Baucus’ reform bill may help reduce the budget deficit by $50 billion over the next 10 years, but that is only a drop in the bucket when you look at what Medicare’s unfunded liabilities will be within 20 years. Beginning in two years, and for the next 20 years thereafter, more than 78 million Baby Boomers will become eligible for Medicare coverage at a time when there will be fewer wage earners to pay for their care. At the current rate of healthcare spending, there will be a staggering unfunded Medicare liability.

Yet, Republicans and Democrats keep approving new spending that we cannot afford.

Hospitals are the biggest beneficiaries of Medicare payments. Many hospital CEOs are making the argument that currrent Medicare reimbursement is not covering their costs, that their organizations need higher reimbursement, not less. The practical economic reality is that while there may be some marginal adjustments on a DRG basis, overall, hospitals are going to get less money for Medicare cases – over time substantially less. As the ranks of the Medicare population swell, and government payments for their care becomes a bigger part of a hospital’s revenue, the only way hospital CEOs can save their organizations will be to reduce operating expenses to levels below what Medicare pays them for each admission.

This will be very hard, if not impossible in some cases. More and more hospitals are developing financial cost accounting and revenue modeling systems to monitor the impact that shrinking payments from the government will have on their financial health. For many large tertiary care medical center hospitals, their analysis of the proposed Medicare cuts have produced alarming forecasts – big losses unless they undergo a major, painful restructuring.

There are no easy solutions this time around. There is no room to kick the can down the road unless we are willing to say that we do not care what happens to our country and our healthcare industry. However, when the hospital CEOs start making these hard decisions, and when these decisions impact staff, unions, vendors and, most especially the physicians and their patients, there will much yelling and screaming. And finger pointing. Far too many CEOs will be blamed for trying to resolve a crisis which they did not create and over which they have less control than they would otherwise want to admit.

There is not a hospital CEO in this country who wants to be put in this very bad place – at the nexus of our national fiscal survival.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm.

A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders.

You can contact Mr. Self at 214.220.1234 or [email protected]. He is an active member of Linked In and a frequent editorial contributor. Or you can follow him on Twitter at Self_JohnMarch.

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Dysfunctional Recruiting, Clinic Management Adds To Healthcare Costs

A valued CEO colleague and friend recently shared an amazing story. A multi-specialty clinic that is located adjacent to his 140-bed community hospital had recruited more than 40 physicians over the past ten years, an impressive number given the rural nature of the community.

Unfortunately, 30 of the 40 left the practice and the community. Others are on the verge of calling the moving van.

The reasons for the turnover are among the top 10 in the annals of dysfunctional physician recruitment: a compensation plan that clearly favored the senior partners whose productivity was slowing as they enjoyed their status, a misdistribution of Medicaid and uncompensated patients to the new recruits, and an arrogant managing partner who refused to listen to reasonable advice from the hospital’s leadership team, all the while bullying his partners into silence.

The clinic’s leaders were only too glad to take the hospital’s help when it came to providing hundreds of thousands of dollars in net-income guarantees and relocation assistance, but when it came to listening to the counsel of the hospital’s leadership team regarding strategies for eliminating or dramatically reducing the turnover, well, the managing partner was not interested. In fact, you might say they were downright rude.

What a shame. The hospital no longer is willing to underwrite the cost of recruiting for what could have been a powerhouse multi-specialty clinic. They are building their own group despite the angry protests from the clinic board that the hospital is engaging in unfair competition. The clinic’s senior partners, who seem to know everything they needed to know about management, clearly had not thought this issue through.

I am betting they never bothered to calculate their financial losses from such a horrendous turnover: more than $10 million down the drain.

That loss must be one of those hidden expenses that seem to drive up the costs of healthcare.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm.

A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders.

You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch. He is an active member of Linked In and a frequent editorial contributor.

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Onboarding For Physicians: An Overlooked Opportunity

This post is the final installment in a series of columns on Onboarding, the process of acquiring, accommodating, assimilating, and accelerating new team members, whether they work within the organization or, in the case of physicians in private practice, are independent contractors. Today’s question is why would a health system or hospital invest in onboarding a physician they recruited for private practice?

There is obviously a host of reasons. For the purpose of this column, let’s focus on the obvious: that it makes economic sense. We are entering a healthcare era of increasing competition where the battle for talented physicians is intense and shortages are a reality. This competition will produce a new range of expensive challenges for health systems and hospitals that could affect market position or even their very survival.

While some hospital executives struggle with the question regarding who their customer really is – the physician or the patient – for the time being, we need to cut this debate short.

It is the physician. Occasionally the patient, but primarily most admissions come from physicians who are members of the active medical staff. Yes, these same physician customers can be our competitors, frequently in the same day. The physicians become our competitors when they actually admit patients to the specialty hospital, or ambulatory care or imaging center in which they have invested and realistically expect a distribution of profits versus the dreaded cash call.

This changing physician/customer landscape is frustrating for hospital CEOs. Hospital leaders seeking to solidify their physician relationships should focus on the physician’s underlying need – to improve financial security for their families and to enhance the quality of their medical practice experience.

While it is not realistic to assume that all of the physicians you recruit will forever resist the investor-owned lure of promises of higher profits and a more efficient work environment, CEOs are beginning to realize that an effective onboarding program – backed by a real commitment to a physician/customer-centered business model – will mitigate the risks. Like executive or employee onboarding programs, a physician program should not be a one-day, one-time experience. The first day should include a review of the hospital’s strategy, including their medical staff development plan, and a review of the organization’s mission, vision and values in terms of how those elements of the organization’s culture are integrated into all levels of the organization on a day-to-day operations and decision making. Meetings with key members of the leadership and management team with whom the physician will interact on an ongoing basis can be another productive part of a first-day schedule. Lunch with the Chiefs of Service and Medical Executive Committee who will emphasize the organization’s focus on quality and safety, and a special end-of-the-day dinner with key physicians, executives, and wives is a nice way to complete the first day of what should be an ongoing, relationship-centered process.

All physicians – but especially new recruits – should be assigned to a member of the executive leadership team who will take ownership of the relationship, much like bank officers nurture customer relationships.

Physicians, especially younger physicians and those who are starting out in practice are typically not equipped with necessary business skills. They do not always understand the importance of banking relationships. Practice and human capital management are generally not included in the pre-med degree plan and certainly is not part of the medical school curriculum. My 33 years of healthcare leadership experience has shown that the wizened physician practice veterans do not always take the time to coach the new recruits. In one rural group practice that has recruited 40 physicians over the past 10 years, more than 75 percent of the doctors who were recruited to the community at great expense have left the organization and the community, as the result of a strong non-compete provision in the employment contract.

Like executive and employee onboarding, a similar program tailored to the needs of your new physicians is an important strategy to maximize their community benefit and eliminate costly turnover.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm.

A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders.

You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch. He is an active member of Linked In and a frequent editorial contributor.

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Peter Principle Is 40, Alive And Well

It is Sunday morning. After 5 PM on Friday, Sunday morning is my favorite day and favorite time of the week. It is a quiet period for reflection and regeneration – of ideas, values, and beliefs.

My Sunday morning routine begins with the morning newspapers. I gradually move to all types of other readings before heading out into the city to pursue the more mundane responsibilities. I typically start early. Today it was 5:30 AM. With a cup of steaming black coffee in hand, I began my weekly journey.

In and amongst the newspaper and blog columns that were, yet again, harping about the hypocrisy of the radical right or the out-of-touch left, I found an interesting article from the April 2 edition of Business Week entitled The Peter Principle Lives. It was penned by Robert I Sutton, a Stanford professor of management science and engineering, who wrote the forward to the 40th anniversary edition of the book, “The Peter Principle,” the seminal work written by former teacher Dr. Laurence J. Peter and playwright Raymond Hull. Their premise was, “In a hierarchy, every employee tends to rise to his (or her) level of incompetence.”

The late Dr. Peter argued that we ask for more and more until we ask for too much, Mr. Sutton writes. “Then these individuals -- promoted to positions in which they are doomed to fail – start using a bag of tricks to mask their incompetence. They distract us from their crummy work with giant desks, replace action with incomprehensible acronyms, blame others for failure, cheat to create the illusion of progress.”

One paragraph stood out as if highlighted by a high-powered strobe light:

“If Dr. Peter were alive today, he’d find that a new lust for superhuman accomplishments has helped create an almost unprecedented level of incompetence…Perform extraordinary feats or consider yourself a loser.

“We are now trying to stay afloat in a river of snake oil created by this way of thinking. Many of us didn’t want to see the lies, exaggerations, and arrogance that pumped up our (financial) portfolios. Instead we showered huge financial rewards on those who fed our delusion,” Mr. Sutton wrote.

Is there a cure for this malady, Sutton asks? Yes, of course. “Return to what Dr. Peter envisioned when he co-authored the book: rewarding extraordinary competence and being wary of feats that come too easily.” He believes that Ray Kroc is the right role model for our society today.

“One of his first steps in building the McDonald’s empire was to run his own outlet – he cooked, he cleaned bathrooms, picked up the trash. The focus on doing the ordinary things well was key to McDonald’s success.”

Then there was Captain Chesley Sullenberger, III, who commanded U.S. Airways Flight 1549 who successfully ditched his crippled Airbus 320 in the Hudson River on a cold day in January. Capt. Sullenberger’s comments speak to the essence of competence:

“I know I speak for the entire crew when I tell you we were simply doing the jobs we were trained to do.”

Mr. Sutton concludes, “As Dr. Peter might have observed there were no pretenders, blowhards, or shared delusions that day, just the deftly coordinated actions of people who had not reached their level of incompetence.”

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders.

You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch. He also is active on Linked In.

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Main Street Vs. Wall Street: A New Day?

HOUSTON (Aug. 16 2009) – Some economists and business strategists are beginning to make the case that the U.S. economy that we have known through the decade of the 90s, extending through the Bush White House years, will be dramatically different as we emerge slowly from this deep economic recession.

We started the decade exceedingly hopeful. We thought the years of hyper-partisanship were behind us. A conservative President began his tenure with a budget surplus. Then there were the terrorist attacks on 9/11 and that seemed to set the stage for even more change. Unfortunately, not all of it was good.

At the end of 2008, we were in the grip of record deficits, a staggering mortgage meltdown, and a financial services/banking crisis that reminded some of the beginning of America’s great depression. As events unfolded, average Main Street Americans learned what many perceptive business leaders already knew -- that Wall Street was infected with a mentality of greed, entitlement and a shortsighted addiction to the drug of profits-now regardless of the cost. That greed and a focus on profits over all else infected a wide range of other businesses.

Now that the immediate banking emergency has past, aided by the Bush administration’s decision to shove the bank’s greed-sponsored problems onto the backs of the U.S. Treasury (read: taxpayers), the surviving Princes of Wall Street and some of their colleagues at mainline public companies, appear to be more than a little anxious to return to business as usual as soon as possible, as evidenced by Gretchen Morgenson's column in today's New York Times: The Quick Buck Just Got Quicker.

While I profoundly doubt that Wall Streeters have learned their lesson, I am hopeful that things will change. There are certainly strong indications that Main Street business leaders are ready for a change. These Main Streeters – many of whom run smaller businesses and who know that they are the real engines of the American economy -- are angry that their life's work could be derailed by the avarice of bankers and traders who operated in the bubble of entitlement. It is the Main Streeters who can and should lead the creation of a “new economy.”

Implicit in creation of a new business climate is a renewed commitment to ethical conduct and the formation of a new paradigm of accountability. This standard for accountability is based on the belief that successful businesses can be built on a vision of doing what is right for the customers, employees, shareholders/investors, communities in which we toil, and the environment on which we all depend.

Last month I wrote about Harvard MBA students and many of their counterparts around the world who signed an MBA oath. For me, what was so shocking about the oath was the implicit rejection of the shareholder-first way of thinking that has shaped, controlled, and, over time, allowed for Anglo-American values of business to be twisted in a way that bred greed and corruption. Former GE CEO Jack Welch, a consistent opponent of the shareholder-first mentality, called this mentality one of the dumbest business ideas he had ever seen.

Graduate business students from dozens of schools around the globe pledged to “…safeguard the interests of my shareholders, co-workers, customers and the society in which we operate. I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and societies it serve” and includes a commitment to pursue “…sustainable prosperity” while promising to “…take responsibility for my actions, and that I will represent the performance and risks of my enterprise accurately and honestly.”

By signing the oath, I hope the next generation of business leaders is really signaling that they get it and that they will not repeat the mistakes driven by a me-first mentality and, of course, one of our seven deadly sins: greed.

So what are your thoughts on what this new business climate should look like?

Some of my cynical venture capital friends think I am dabbling in the world of Pollyanna idealism. They argue that the only that thing that matters in business – the only thing – is profits.

In her book, Pollyanna Principles, Hildy Gottlieb identifies some important truths, including:

We accomplish what we hold ourselves accountable for
Walking the talk of our values means more than paying lip service

I agree. I believe that unless we fundamentally change the way we conduct business – following the ideas being championed by Main Street business leaders as well as the values contained in the MBA Oath – we are destined for a downward spiral from which we will not be able to recover.

Like 2000, I saw much hope for 2009. Now I am not so sure. The permanent political campaign mentality of the Clinton and Bush eras that has so poisoned our national discourse – and our ability to govern following an election – today is as problematic as the shareholder-first philosophy.

This is a GOP failing. It is a Democrat failing.

And we are the victims.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to select consistently the right leaders. You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch.

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Recession Be Damned: RN Shortage Looms, Hospitals Scramble

DALLAS (July 30, 2009) - We are the middle of a deep recession. The staggering job losses – and the rising unemployment rate – seem to be in direct conflict with this factoid: hospitals need RNs. This issue may have fallen from public view, but healthcare organizations know that this is a real problem – today and for the future.

Cheryl Clark, one of HealthLeaders Media’s excellent writers, reports today negative trends that may surprise those who are not involved with patient care on a day-to-day basis.

“By next year, more than half of the nation's registered nurses will be over age 50 and many will be considering retirement.

“Surveys reveal that 116,000 registered nurse positions are now unfilled in U.S hospitals; another 100,000 job vacancies exist in nursing homes. Although the recession has caused some nurses to delay retirement, the aging demographic means an increasing demand for nurses looms, and may outpace the supply of nursing school graduates.”

Ms. Clark reports that it cost more than $36,000 to replace a departing RN. Other industry staffing specialists say that cost can be more than $50,000 when you include the cost of recruitment. Highly specialized nurses in areas where the shortage is more profound, the replacement costs may approach $75,000. These so-called “soft” costs can, in reality significantly impact an organization’s bottom line.
Hospitals have dealt with this challenge for years. However, many are now investing in creative retention strategies to address the looming crisis that, in fact, has been looming for so long, no one can remember when we weren’t concerned.

What are your thoughts? What is your organization doing to reduce the rate of turnover AND improving the professional satisfaction for your RNs?

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders.

You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch.

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President Obama's Jell-O

DALLAS (July 19, 2009) -- Reforming healthcare is one of the most complex, daunting and important tasks of this decade.

What began with great hope and good intentions to avoid the reform mistakes of the past is now going badly. Sadly, what we are watching in Washington is a bunch of very smart people trying to hold a handful of Jell-O that has not quite jelled. It is not a pretty sight and they are making a very big mess.

As of today, the two or three Democrat plans seem to be focusing more on increasing access for the uninsured and the underinsured, and benefit portability, all of which are major problems. However, these provisions translate into higher costs, a result we do not need. Healthcare in America is already the most expensive in the world, by any measure. These costs affect the cost of our goods and services and therefore our ability to compete in global markets.

The Republicans seem content to argue that additional tax credits and cuts while unleashing the forces of the free market will solve the problem. They have yet to put forth a wide-ranging solution, unless you consider a four-page summary with no mention of costs or savings, a comprehensive alternative. There are some exceptionally bright and creative minds in the GOP but at this point in the “debate,” they seem to be looking forward to the next election cycle. The Democrats, with their own political agenda, are wrong in their approach and the GOP appears to be running away from introducing thorough proposals that reflect the innovation and creativity that this debate so desperately needs.

Earlier today, on NBC’s Meet the Press, Senate Minority Leader Mitch McConnell, R-KY, refused to concede that there is a problem with quality and patient safety. This, in the face of overwhelming evidence to the contrary. His source of all knowledge on this issue: some public opinion poll in which the majority of those surveyed believe our “system” is the finest in the world.

I do not believe that President Obama’s current effort will achieve sustainable change – improved access, enhancements in quality of care and patient safety, and better operating efficiencies – without attacking the structural deficits that plague America’s healthcare system, which is not a system at all but just a series of unconnected silos. These operating silos exist at the macro level and within most individual health systems and hospitals in the U.S. These structural defects create costly inefficiencies and are responsible for far too many preventable deaths and serious mistakes that prolong hospitalization or lead to permanent disability. That there is a serious problem with quality and safety is precisely why so many health systems and hospitals are focusing resources on this critical challenge.

What we are seeing today in Washington is an attempt to reform the existing silos, the boxes inside of which all of us in the healthcare provider segment toil. Sustainable change will require that we take a step back and look at the way healthcare is delivered in this country. There is a real opportunity for innovation and creative redesign. But let’s face an important reality -- that structural reform cannot happen in five months, especially since Congress will recess for the month of August.

We must begin with the way we educate our physicians, hospital leaders, nurses and other ancillary personnel, tasking them to create new models for the delivery of care and to establish new standards of performance and accountability.

Now to an important underlying problem: entitlement. Americans want what they want, when they want it and that includes access to healthcare. Any reform measure that appears to restrict access -- regardless of how medically or morally sound -- is viewed by many Americans as rationing. That is one reason why the thorny issue of who really pays for the healthcare in this country is a debate we consumers always want to push off for another day. After all, when you have group health coverage – for which most American’s do not bear the full cost -- or the existence of safety net hospitals that will provide care for modest or no payment, there is little motivation on Main Street to get too interested in structural reform. Hence, the recent poll numbers on the public’s declining support.

I admire President Obama’s vision and his idealism, his desire to deliver change that will improve our lives. However, Change You Can Believe In can quickly become nothing more than hollow words that breed more voter cynicism if the change you adopt creates more problems than it solves or if there is no discernable improvement in the costs, quality, and safety.

Of equal importance is our current economic mess. Now is NOT the time to add significant new costs to healthcare when one of the goals of reform should be to reduce costs. You can further reduce payments to providers. Or, you can eliminate payments for certain services. But wouldn’t these approacheslead to de facto rationing? Are these reductions in reimbursement just “budget neutral” offsets? Is it really cost reduction if hospitals and physicians write off the differences between what they bill and what they are paid by the government or managed care companies?

What is going wrong with this noble effort for healthcare reform? Overall, it is timing. In one sense, the time is right because the President and his advisors know that if they do not get a bill before year’s end, they will lose momentum. The closer we get to the mid-term elections, the stronger the influence of the lobbyists and special interests.

Finally, the underlying problem is the corruption of honest political debate and the act of governing. Candidates are elected based on sweeping themes and inspiring rhetoric. They take their oaths of office and then immediately return to the campaign trail mentality. What happened to governing?

Scott McClellan, President Bush’s press secretary who was forced out following the embarrassing Valerie Plame misadventure, argues that American politics on the national scene has deteriorated into the permanent political campaign. Issues are kicked down the road; laws that are passed more often than not are shaped by the immediacy of the next election cycle.

President Clinton’s feisty White House political team introduced permanent campaign mentality to governing. President Bush and his political advisors perfected this concept. Now, President Obama apparently is working to improve the perpetual campaign playbook while pushing bold change -- on a tight schedule.

We have arrived at a very bad place in our history. The permanent political campaign approach to governing -- where political gain is more important than good policy or the common good – is driving all aspects of our public policy discourse, including the effort to reform healthcare and will further push our nation into the hole of mediocrity. I am not optimistic that Congress can achieve comprehensive, sustainable healthcare reform that fulfills the objectives of lower costs, improved access, and improvements in quality of care and safety given this mentality.

We need a cleanup on reform aisle 2009. There is Jell-O all over the place.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his consistent ability to select the right leaders. You can contact Mr. Self at 214.220.1234 or [email protected]. Or, you can follow him on Twitter at Self_JohnMarch.

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The Gospel of Service, Accountability

MOUNT PLEASANT, Texas (July 3, 2009) – When Ron Davis arrived at Titus Regional Medical Center (TRMC) in 2003, life for the organization and its employees was anything but good. Finances were a wreck, service was, at best, uneven, and the community was quickly losing confidence.

A national management company had been running the 164-bed hospital for years. The CEO who was assigned to the contract was a Monday through Friday Mount Pleasant resident and was not connected to the community in any meaningful way. The Chief Nursing Officer, a former Joint Commission surveyor, was seen as “distant” and the staff was not engaged. In fact, the hospital’s performance with quality care, patient safety, and satisfaction was less than stellar. Physician satisfaction was poor.

The Chief Financial Officer was splitting time between hospital business and a private audit practice, Mr. Davis later learned.

Representatives of the management company attended board meeting after board meeting as losses mounted. Nothing seemed to change.

The elected board, an extraordinary group of business and civic leaders, finally had seen enough. They terminated the management company, ending the tenure of the CEO who was on the payroll of the Plano-based organization. Directors began to take decisive steps to solve what they saw as clear-cut problems that were seriously threatening the hospital’s future.

After a rigorous nationwide search, the board appointed Ron Davis, as their new Chief Executive Officer. Mr. Davis, an engaging former pastor who earned a graduate degree in healthcare management after retiring from the pulpit, was previously the CEO of Southwest Iowa Regional Medical Center, an 80-bed hospital in Creston, Iowa.

With the reputation of a leader who could build Titus Regional into a respected regional hospital and armed with strongly held values that patient care, safety and customer satisfaction should be the organization’s number one priority, Mr. Davis began to rebuild a new culture of performance and accountability.

With his positive outlook and an infectious enthusiasm for TRMC and Mount Pleasant, a city of more than 15,000 residents 115 miles northeast of Dallas, Mr. Davis epitomizes the same values espoused in the new Harvard MBA Oath – honesty, a focus on service, a commitment to do what is right for the hospital, his employees and the community and a belief in leadership transparency.

With a new Chief Financial Officer and CNO, he launched a plan to stabilize the organization’s shaky finances. Physicians, who were skeptical of his ideas concerning growth – they feared he would dilute their existing practices – stepped up their criticism when the inherited financial crisis required layoffs. These were tough times but Mr. Davis was convinced that there was extraordinary untapped market potential. The TRMC board agreed.

The leadership turnaround plan moved this public hospital from a $6 million loss to financial stability, producing 8 to 10 percent margins over the past four years.

They established a foundation that raised more than $4 million for a new cancer center named in honor of Lonnie “Bo” Pilgrim and his wife. Mr. Pilgrim is Chairman of Pilgrim’s Pride, a national poultry producer. Patient volumes for this newly constructed state-of-the-art center, operated as a joint venture with U.S. Oncology/Texas Oncology Physician Associates, have doubled market forecasts.

Meanwhile, Mr. Davis and his team are completing a $33 million expansion and renovation, including expansion of the emergency department, updating ancillary departments and redoing the patient tower.

Working with his medical staff, who are much happier with TRMC today, Mr. Davis has dramatically expanded services and grown patient volumes. Surprisingly, Mr. Davis said that he enjoys a secret advantage over his larger competitors in Texarkana and Tyler. Pediatrics. “Our group is phenomenal. They offer extended hours and they see patients seven days a week. They may not generate a lot of direct admissions, but they support our efforts because they help us capture the family.” The group is continuing to grow to keep up with the increasing volume. Mr. Davis credits his excellent primary care physicians with supporting a growth into specialty care including more sophisticated types of surgery and cardiology services.

In the interest of self disclosure, my firm, JohnMarch Partners, recruited the turnaround team for TRMC – Mr. Davis as well as the Chief Financial and Chief Operating Officers. We specialize in helping hosital boards recruit turnaround executives, a much more cost effective alternative to the national firms whose fees range from $2 - $12 million per engagement.

He believes that the key to his success is really no different than for any other CEO. “You have to be authentic, you must set a clear vision that people understand and support, and you must be consistent.”

He stresses service and accountability. The community knows that if something is amiss with service at the hospital, Mr. Davis wants to know. “I am accountable and the community knows that. They prove it when they call me at home,” but he admits that these calls come much less frequently than during the early days. The hospital, with the enthusiastic support from the Board, adopted the Quint Studer principles of service and delivery. “The board set the example when they insisted on attending the training programs.”

There are still challenges, Mr. Davis admits, but his outlook for Titus Regional as an independent community hospital is very positive. “Our community is growing. There is a can-do sense of pride here that is remarkable and that is reflected with our outstanding hospital board,” Mr. Davis concluded.

Mr. Davis’ days in the church pulpit may be over, but he is still preaching the gospel of leadership – quality care, exceptional service, customer satisfaction and the importance of being accountable.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders. You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch.

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MBA OATH: A Worthy Pledge In Troubled Times

CHICAGO (June 28, 2009) -- “…my purpose is to serve the greater good…this oath I make freely and upon my honor.”

At first read, I thought these words must have come from an oath for politicians, far too many of whom will eventually succumb to the temptations of public office or the corrupting influences so inherent in the re-election process.

No, surprisingly, these words come from the Harvard-inspired MBA oath that more than 1,100 MBA graduate students around the world have signed as of last Tuesday, according to Financial Times Columnist Michael Skapinker.

That these students felt compelled to write such an oath in the first place clearly shows how far our nation has slipped over the past four decades. But here we are.

The Oath is a remarkable document, and worthy of your review. It exudes a fervent hope that these future business leaders can help us move to a better place, away from the business shenanigans of the past 4 decades.

A startling theme of this Oath is the implicit rejection of the shareholder-first way of thinking that has shaped, controlled, and, over time, allowed for Anglo-American business values to be twisted in a way that bred greed and corruption.

Graduate business students around the globe have pledged to “…safeguard the interests of my shareholders, co-workers, customers and the society in which we operate. I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and societies it serves” and includes a commitment to pursue “…sustainable prosperity” while promising to “…take responsibility for my actions, and that I will represent the performance and risks of my enterprise accurately and honestly.”

“It would be easy to dismiss it (the Oath movement) with an indulgent smile. Easy but wrong. The MBA oath comes at a time when capitalism’s claims to efficiency and legitimacy have been shaken,” Mr. Skapinker writes.

While the Oath was conceived and written by Harvard MBA students, they were inspired by business professors Rakesh Khurana and Nitin Nohria who argue “… that the answer to business’s crisis is to turn management into a profession like medicine or law”, according to Mr. Skapinker.

While physicians and lawyers may cross the ethical or legal boundaries by putting moneymaking ahead of patients and clients’ interests, they have codes of conduct by which they must abide if they are to continue to practice, the legal consequences notwithstanding.

There is no question that there is a measure of idealism at the core of this Oath, but keep in mind that MBA students tend to be considerably less idealistic than their graduate school counterparts in the liberal arts. The key to the success of this Oath movement will be how these students react when, upon entering the real world of Wall Street, for example, they confront a boss who, with an eye on his bonus, agrees. Then he smiles and winks while crossing his fingers.

It will take a long time to override the me-first entitlement culture that is so pervasive in business today. That assumes that our acceptance of the greed, patterns of bad behavior and ethical lapses can ever be reversed.

BRAVO HARVARD! I am hoping this Oath will become a driving force in business, not a passing fad. Some idealism may help us reach a better place.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders. You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch.

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HUMAN CAPITAL: Time To Invest Is Now

DALLAS (June 14, 2009) -- As I think about the best Chief Executive Officers and senior executives with whom I have had the pleasure of working, there are several qualities that come to mind: their depth of understanding, their attention to detail, their ability to communicate ideas and their passionate emphasis on recruiting and developing their team.

Some of these leaders are tough. They establish high standards of performance and do not suffer mediocrity gladly. Subordinates who do not perform at a high level will hear about it. These leaders know the detail and are comfortable deep diving to get the information they want, when they want it. They can be very specific about how they want certain things accomplished. While their direct reports may feel like they are being micromanaged, the CEO justifies this style based on his or her self-confidence and, of course, the results they achieve. That they occasionally chastise or ream out a vice president or other direct report in front of their colleagues is the price of an honest open dialog. When things are going well, this type of leader has no incentive to change. “This is just who I am,” is a favorite response. Leaders who rely on this model may get results but they rarely earn the trust of the people they lead. Nor do they see leadership development as an essential strategic initiative for success.

Can you imagine how much more successful an organization could be if the foundation of the leadership culture was built on respect and trust? That is a foundation with exceptional downstream value for the organization. In healthcare, it will foster improved quality of care, patient safety and satisfaction.

Outstanding leaders spend the vast majority of their time communicating with and developing the team. Jack Welch, one of the twentieth century’s most successful executives, certainly understood that point. He frequently said that developing his team was one of the most important things he did as a CEO, and the time he spent teaching at GE’s leadership development institute, which is located on 53 acres in Crotonville, N.Y., remains as evidence of his profound passion and commitment.

There was no confusion about GE’s vision, mission, or values. There was no mistaking its cultural pillars of execution and accountability. “Best effort” – an excuse for not achieving corporate goals -- cannot be found anywhere on GE’s web site or in its education materials. It is not surprising, then, that today, years after Mr. Welch left the scene, 90 percent of GE’s top 600 leaders are promoted from within.

Far too many CEOs are not engaged in leadership development. It is no wonder that leadership development is seen as an expense, not as an investment.

Last year as the seriousness of our current recession emerged, I wrote that it was time for CEOs to dump weak leaders and their poor performers and to strengthen their teams to weather the coming storm. While there is ample evidence that many organizations shed what they felt were marginal performers, or executives who were not essential during a period of no growth, there is little to suggest that healthcare organizations made widespread investment in their leadership engines.

Now, as the economy appears to be on the verge of a long and arduous recovery, CEOs who are prepared to act to invest in and strengthen their leadership teams will emerge as strong winners. For some this may seem counter intuitive in tough economic times, but, believe me, it is one of the best decisions a CEO will make in his or her career.

Now is the time to invest in human capital, one of the most frequently overlooked assets on an organization’s balance sheet.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders. You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch.

Consulting Fees & Conventional Wisdom

LOS ANGELES (June 8, 2009) As I travel around the country visiting with chief executive officers at health systems and hospitals, I am hearing that consultant accountability is a subject that is increasingly on their minds. Faced with the continuing slide in their payor mix driven by the deep recession, and the reality that they must do more with less, CEOs say they are looking for true partners – people with exceptional expertise or a portfolio of relevant products and services – who are willing to guarantee that the work they sold will deliver the measureable results they promised.

Increasingly, CEOs also are acknowledging that they are equally responsible for the success or failure of a consulting engagement. They are taking a more aggressive approach is defining their expectations for service, quality of the work and measureable results that will be derived from the engagement. This is certainly consistent with many of the comments that I received on a recent blog I wrote: Professional Fees: Entitlement Versus Accountability (Scroll down to read). One CEO wrote that I probably should have titled that column: Accountability: Biting the Hand that Feeds.

Healthcare CEOs know that the political, financial, regulatory and leadership landscape is changing under their feet. They realize that continuing with the mindset of business as usual is a bad option that could be career limiting. Relationships are important. Results matter. Now, so do the professional fees and expenses they routinely pay their advisors.

Not surprisingly, this emerging press for lower fees and tighter expense management is moving to the forefront in defining future business relationships in healthcare. Last year I lost a project because the professional fee I offered – one that would ensure that the engagement was comfortably profitable for our firm (versus really, really, profitable) apparently was not high enough. The consultant who represented this health system in the selection process explained that board members were concerned that I could not deliver a quality project for the price I promised even though our reputation and our varied references said that we have consistently delivered on our commitments. The selection committee picked the most expensive firm in the bidding and then clashed with the partner throughout the engagement. They did not follow his advice. In the end, the Board made the right choices but there was no financial alignment, there was no real partnership with their highly paid consultant.

Historically, the conventional wisdom in business – especially in consulting – has been that you get what you pay for. Okay, I admit there is certainly a history of CEOs who are willing to pay more to be “safe.” However, it is important to note that conventional wisdom is rarely right. There are so many examples where price is not a guarantee of value. Price is important but measureable value is essential. Innovative firms who understand this shift in the consulting landscape are moving to create new ways to meet client needs.

Discounting professional fees is not the answer. Simple discounting does not address the critical issue because simple discounting fails to align the needs of the client with the financial interests of the consultants, the quality of their work, and the value of their recommendations. The answer is, and will always be, shared risk and reward: partnership.

CEOs with whom I visit understand that we have entered a new era of management. That performance and accountability of consultants – indeed all vendors – is more important than ever and that partnership must be more than mere words in a marketing brochure or advertisement in Modern Healthcare.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders. You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch.

Professional Fees: Entitlement Versus Accountability

DALLAS, Texas (May 17, 2009) – Long ago, before I became a consultant, I was a client. And as a client I learned some very important lessons that today shape the way I look at my business and the values on which my Firm, JohnMarch Partners, was founded. This is a column about my thoughts on our existing consulting business model, the fees that are charged, and some questions regarding how we should marry the concept of entitlement and accountability.

Some of my lessons as the client of consultants were embarrassing. I will always remember being summoned to the CEO’s office who was outraged at an expense invoice he received from a consultant that he had hired but I was assigned to manage. The offending expense was a rather costly dinner – with wine that the consultant selected – at a high-end steakhouse. I was stunned, evidence of my obvious inexperience in the dealing with clever consultants. The consultant had invited me to dinner. He had picked the restaurant. But alas I got the bill – and a severe lecture from my boss – a month later. Never again, I resolved.

In another case of what I consider consulting run amok, a North Texas health system was interested in acquiring the services of consultants to help evaluate strategy and financing of a new business venture. We selected a nationally recognized firm for the work based on the knowledge, experience, and reputation of the partner who led the presentation. He made a compelling presentation. However, as the engagement unfolded, the partner was AWOL except for an occasional whirlwind site visit, or in a service recovery mode in response to telephone calls from the CEO. Even that improvement in visibility was short lived. I have learned over the years that the definition of partner is “bringing in new business;” the actual client work is all too often relegated to junior staffers.

While my experiences as a client working with consultants occurred during relatively robust economic times and may well have been the exception to the rule, I have noted that the one thing that is absolutely certain about our current deep recession is that it causes the smart leaders to take a step back, re-examine expense management and ask some basic questions:

1. Do we need to spend this money now?
2. Do we trust our judgment or do we need outside consultants to confirm our options and validate our judgments?
3. Do we have the resources and talent to execute the work internally? If we use outside resources, what value – what measurable benefit – will flow to the organization?

As the economy continues its profound slump, healthcare leaders are looking at the very real possibility that some type of healthcare reform will pass Congress this year (read: reimbursement will be cut again). I am hearing current and potential clients begin to ask questions about the linkage between the professional fees paid to consultants and the concept of entitlement and accountability. The underlying principle for the consulting business model is much like any other service business: we performed the work; ergo we are entitled to our fee. So far so good. Consultants, auditors, strategic advisors and, yes, executive recruiters, should be paid for the work they perform, and the advice they give, assuming they delivered their services according to the terms of the engagement. That is simple enough.

Now this is where it gets a little dicey. What about the value proposition? What value does the client derive from the work performed? Did the client benefit from the advice? What about the quality of the work product? Did the report, recommendations, or the panel of recommended candidates have credibility with the organization’s employees, customers or other stakeholders? Should we connect the idea of fee entitlement with the concept of holding people accountable for the quality of their work and the results? In other words, if the critical value benefits do not present themselves, should the clients be paid as much? Should consultants and search firms be willing to share this risk?

Another way to look at this interesting proposition is to ask ourselves should we expand the scope of how consultants define a successful engagement? For example, in executive search, should the client hold their search consultant responsible for developing a panel of qualified candidates as well as the tenure and performance of the successful candidate? Most top-tier firms currently receive a final payment based on a percentage of the candidate’s bonus. This “true-up” payment is typically tied to the same rate used to calculate the processional fee, usually 30 to 33 percent of the first-year cash compensation. Should we consider shifting more of the fee to the back end, tied to the candidate’s performance?

In the case of a turnaround firm, should they be paid as much if they fail to return the organization to profitability, assuming that is what they proposed to do in the course of a very costly engagement? If they make tactical missteps or botch an MIS implementation that will cost the organization millions of dollars, shouldn’t a portion of their professional fee be denied?

We have all received bad consulting advice – on strategy and marketing, in law, with our taxes, or the money we invest. Is it possible to shift the various consulting or professional service business models so that consultants are willing to share financial risks?

Perhaps this concept of accountability is not practical but I do think that it is a conversation worth having.

These tough economic times are forcing clients to question their consultants in ways that would have never occurred two or three years ago. Moreover, I sense that a larger question is emerging. Are we going to surface from this turbulent economic period with a new set of beliefs and values that will forever change how we look at these issues?

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, and business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to select consistently the right leaders for a client's organization. You can contact Mr. Self at 214.220.1234 or [email protected]. Or, you can follow him on Twitter at Self_JohnMarch.

A Culture Of Hiding Mistakes?

DALLAS, Texas (April 26, 2009) -- As I continue my series of blogs on leadership, I read a story on the HealthLeaders.Com web site that once again brought into focus the important role a health system or hospital CEO plays in setting a leadership culture that ensures that his or her patients are safe.

DON'T HIDE YOUR MISTAKES

Philip Betbeze, for HealthLeaders

“Nobody wants to harm patients, especially the CEO, but according to Rick May, M.D., an orthopedic surgeon (who)consults for HealthGrades, it's likely your hospital has a culture of hiding mistakes. And it's lurking, just waiting to bite you.

“According to a recent study by the healthcare ratings organization, a Medicare beneficiary experiences a patient safety event every 1.7 minutes. And the innocuous nature of the word "event" doesn't effectively describe that it's a synonym for mistake, sometimes one that ends a life prematurely. Some 913,215 patient safety events occurred during the scope of the study, which was conducted from 2005-2007. That means approximately 2.3% of the nearly 38 million Medicare hospitalizations resulted in an error.” (To read the entire article, visit the HealthLeaders site. It is a great resource for ideas and information.)

This story is disturbing but NOT surprising.

If you look at the number preventable mistakes that lead to death or complications, if you look at the number of deaths from failure to respond, it is clear that there are a multiple of barriers at hospitals across the country that limit our ability to improve the quality of care and patient safety.

A good leader must own the responsibility of creating a culture that breaks down these dangerous barriers – a culture that does not tolerate anything that might result in harm to a patient.

My days of hospital operations are over but I still have a responsibility for helping to improve my industry’s performance. At JohnMarch Partners, we have added an entire section to our already extensive candidate screening interview process that focuses on prior performance, attitudes concerning transparency, and experience in changing an organization's patient care-safety culture. In short, we want to know, conclusively, whether they walk the talk.

CEOs cannot rely on quality of care /safety “programs” or “initiatives” to achieve sustainable results. A CEO who strives to be a great leader will invest emotionally and physically in this effort.

This is not a challenge that can be solved sitting behind a desk, out of sight to those taking care of patients. Everyone in the organization must clearly understand that quality and safety are THE two most important elements of the organization’s mission. They must understand that that there can be no excuses. They must understand that there are consequences for the dangerous organizational silos that exist in virtually hospital in the country. They must know that there are consequences for the silly turf wars that executives and managers sometimes engage in. They must believe that there are consequences for not paying attention to the details or following basic practices of delivery care. The list of things that can go wrong is long. Preventing mistakes is a complex process but there are consequences if we fail to reach our goal of defect-free care. A patient dies or suffers pain. Or, at best, incurs more expense.

These consequences are why it is important for the CEO – the leader – to own the results, to make quality care and patient safety more than a program or an initiative but a way of EVERY day life in their health system, hospital, nursing home, or healthcare delivery venue.

I have had a very personal experience with a preventable mistake -- a never event -- and I never want to experience that again. Sadly, I am joined by hundreds of thousands of people – from industry colleagues to people from coast to coast who trusted that the care they would receive would do no harm.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and consistently selecting the types of leaders who will succeed. You can contact Mr. Self at 214.220.1234 or [email protected]. Or you can follow him on Twitter at Self_JohnMarch.