Unconventional Leadership

by Nancy M Schlichting

  We needed to show visible signs of improvement on a shoestring budget. With that in mind, I laid out a 30-60-90-day game plan around creating symbols of change that everyone could see. For example, in the first month we replaced the old wheelchairs and stretchers and focused on cleaning and improving our appearance. I took a tour of the building with our head of plant operations (a wonderful manager named Dan Murakami) and we catalogued the problems. We found, for one, that some of the elevators were run on relays that Henry Ford himself had probably put into place. People were waiting on all seventeen floors of the Clinic Building because the call buttons weren’t synchronized. We fixed that. We also put greeters at the front doors to welcome patients and guests.

  One of the critical lessons learned during this time was that the improvements that reengaged patients also reengaged our employees and raised morale. After that, I took every penny of contingency money that I could get and we did a lot of little things. We had parties outside at lunch with food and music. The front of the hospital didn’t look very good, so we gave out flowers and gloves and everyone went out and planted. I remember that I wrote an article for our internal employee newsletter about the fact that it doesn’t cost anything to smile and to be kind. Often, for patients as well as employees, it is those moments of kindness and personal interaction that enhance their experience tremendously. Between cost reductions and insourcing, we started to see our financial results improve and we were able to invest further in the facility. Eventually, we put in over $300 million.

  Small improvements clearly made a major difference. But that’s not all we did to invest in our growth. One of the commitments we made, which completely changed the trajectory of the system, was a major one.

  In the early 2000s, the chair of the urology department at Henry Ford was my friend Dr. Mani Menon. Dr. Menon had a dream, and it was a big one. He wanted to use robotic technology to revolutionize the treatment of prostate cancer. Specifically, he wanted to partner with da Vinci, the robot maker, to pioneer a far less invasive procedure that yielded superior outcomes for prostate surgery. After struggling to gain traction with the previous leadership, he came to me and said, “Nancy, I really believe this is going to make a big difference and here’s why . . .” After our conversation, I decided I was going to take whatever risk was involved and find a way to support the effort. But it was big money and a tough sell. He needed to outfit a brand-new operating room with updated technology for robotic surgery. The resources required were significant for us at that time, and it wasn’t clear whether this was going to work—it had never been done.

  In the end, we funded a large part of the project ourselves, and Dr. Menon also secured a large outside donation. This was a groundbreaking advancement that attracted considerable attention in the medical community worldwide. In addition to revolutionizing care for prostate cancer, the advancement gave HFHS its mojo back. In fact, I credit Dr. Menon and the Vattikuti Urology Institute, in large part, for fueling our turnaround. And all the positive recognition from the medical community for the Institute, together with innovation and investment, brought patients back. At a time when we were unsure people would drive to our hospital from across town, we were suddenly seeing patients coming to Detroit from all over the world.

  People at HFHS were enormously proud, and the tenor of the organization changed for the better. Employees started to believe, in effect, “Innovation is being rewarded here. Nancy and the team are taking some risks.” And, as the cultural tide changed, the turnaround really started to take hold.

  Anticipate the Next Turnaround

  The most significant aspect of HFHS’s turnaround was simply that we got through it and became stronger than ever. Industry turning points and disruption are going to happen from time to time, and sometimes organizations lose their way—and it’s necessary to just deal with the situation head on. The second most significant aspect of the turnaround at HFHS was that we never wanted to go through it again. That mind-set has been a tremendous motivator for managing costs and maintaining our focus on quality and service.

  The outside events that started the problems for HFHS in the late ’90s were complicated and largely outside of our control, but they didn’t happen overnight. The beginning of the end, one might argue, was a failure to anticipate what was coming down the pike. The challenge we all face in health care, and in every other competitive industry from media to automotive, is to gain foresight and be prepared for whatever the future may bring. Yet, prior to my arrival, HFHS did little such preparation. One problem was that Gail Warden, a remarkable leader, had other responsibilities, including serving as chair of the American Hospital Association in 1995, and was often absent. His number two, who had been the chief administrative officer, had left the company around that time to take a position in Texas. There was a gap in leadership and no one was planning for this incredibly difficult situation resulting from the many complex forces described above. As a result, we were losing money.

  Henry Ford said, “Before everything else, getting ready is the secret of success.”1 I adhere to that same belief and have put it into practice. After the HFHS turnaround, for instance, we have always paid attention to the potential threats coming at us, alongside our everyday plans and priorities. Recently, for instance, when we began to see some troubling indicators in regard to our financials, I worked with COO Bob Riney to get us back on a cost-reduction path. At the time, we were implementing a new medical records system for the entire system, to the tune of $350 million. Simultaneously, we were dealing with updated Medicare and Medicaid reimbursement changes stemming from the Affordable Care Act. We implemented a three-year strength and sustainability plan for the health system that had a $60 million impact in year one. That’s money in the bank, literally.

  One thing that has helped me anticipate changes in the landscape is being extremely broad in what I read, in developing networks of people that span industries, and in participating in health-care conversations, both nationally and locally. I’m always scanning for broad trends and watching for what may trip us up. When you do that over the course of a career, you get better at it. You begin to see what metrics are most important—the things that may be devastating to the business if they’re left unaddressed.

  At Riverside Methodist, we decided to make some big changes because our cost structure was too high. We did this while we were still very profitable because we wanted to avoid the real trouble that would come if we failed to act. Part of what I’ve done at Henry Ford over time is to introduce what I call leading indicators. These are the things we pay exceedingly close attention to. I watch cash every single day, for example. When I came on there was no cash metric whatsoever, and we went through $250 million in cash in about a three-year period. I thought, “That can never happen again.” I also watch volumes like a hawk. If I start to see a decline, I call people together fast and we put a plan into place. What else? While some people monitor budgets, I monitor year-over-year trends. Budgets can be very misleading, depending on whether they’re overly aggressive or not aggressive enough. In other words, you can be doing great on your budget and be failing miserably.

  Another leading indicator, for me, is national and federal trends—especially in terms of what the federal government is focusing on in health care, including payments and funding. With the high level of poverty and uninsured people in Detroit, we are very reliant on the government for payments. We spend a lot of time advocating and making arguments to keep all of our payment streams in place. We also spend time in Washington and Lansing advocating for what is best for our community. But we always know that the government could throw a boulder in our path around the payment issues. We pay close attention because it impacts our people and our ability to deliver the highest level of care. This is the thing I can’t control and it’s the thing that can keep me up at night. For the last few years, for example, we have seen that medical education payments are a likely target for federal budget reform. As a teaching hospital
, that line item change stands to affect us in a major way. I can’t say that we have an effective response just yet, but we are preparing for it. What happens in 2017 if we face a $50 million or $100 million reduction in medical education payments? How are we going to train residents? Are we going to have the same number of programs?

  These are the types of things that I keep people focused on—including our boards. There’s an anticipatory mind-set that is required for looking at the world and constantly trying to discern the current context around relevant issues and how they may affect the organization in the future. It’s worthwhile to cultivate that mind-set. Being a turnaround specialist does not mean that I ever want to do it again. As extraordinary as those days were in many ways, no one in the system wants to relive them.

  CHAPTER THREE

  Use Quality to Achieve High Performance: The Baldrige Framework

  The thing is to keep everything in motion and take the work to the man and not the man to the work.

  —Henry Ford

  On November 21, 2011, I got a call at home to say that Henry Ford Health System had won the Malcolm Baldrige National Quality Award. Winning such a noted prize was the proudest moment in my career, and it was made even better because it was my birthday. But it had been a difficult couple of weeks. My partner, Pam, had lost her mom the day before, after several long weeks taking care of her in our home. We had her family staying with us as well, and people were coming and going.

  I knew the Baldrige call was coming; I just didn’t know if we had won. If we lost, I was told, we would receive word from a gentleman who was charged with reaching out to the runners-up. If we won, the deputy secretary of commerce, who was a woman, would call with the good news. When the phone finally rang, I saw the Washington, DC, area code and I froze for a second. Pam was standing in the doorway with a questioning expression, one thumb up in the air—she wanted to know if we got it. I remember picking up the phone, saying hello and hearing a woman’s voice on the other end. After that I don’t really remember what she said—but I knew we had won and it was pretty thrilling.

  The news was exciting, not only for me but for the entire health system. It was an incredible validation of the work we had accomplished and the vision we had for the organization. But winning at a time when Pam was losing her mom poignantly underscored, for me, the importance of quality in health care and the amazing difference it can make in people’s lives, and even at the end of life.

  “Quality” sums up pretty much everything I have tried to do at HFHS, and all that Gail Warden did before me. In fact, HFHS began working on quality improvement twenty years ago when Gail and former senior vice president Vinod Sahney first brought total quality management into the system. Gail and Vin were pioneers in the healthcare quality movement and two of the founding board members for the Institute for Healthcare Improvement, which was incorporated in Michigan. Vin was the person who first introduced me to Baldrige when I was working in Akron, and I was hooked.

  The bottom line, in health care, is that quality is an expectation of clinical performance. That’s the main reason I started us on the Baldrige journey—and it was rigorous and incredible from start to finish. The application process is a challenge unto itself, and that’s where most companies halt the effort. But the challenge involved more than just the logistical resources required—the initiative forced us to identify our priorities and focus on them. Over the seven years that we participated, we received continuous feedback from the Baldrige examiners and we kept getting better and better as a result. The effort had a cumulative effect with every attempt. Our metrics improved, our system integration got better, and our service was enhanced. Not many organizations have the patience and perseverance to apply year after year, but I was convinced this could be an important ingredient in our success.

  Between 2004 and 2011, we spent two years learning the Baldrige framework and preparing to apply, and we applied for five consecutive years. If you think about Michigan at that time, it was a very rough environment. We began to see the auto industry slipping into decline, the nation went through the great recession, and Detroit was experiencing a population slide that decimated the city. Even so, HFHS managed to win the Baldrige equivalent quality award at the state level in 2007. That fueled our desire to win nationally. But there were plenty of people who felt we had too much on our plate already. We were continually faced with potentially competing priorities. The Baldrige was a challenge every year, particularly when we were building a new hospital and acquiring two others. I had people say to me, “Nancy, we should just take a year off. We have other things to do.” I just said no, because I knew that if we paused we would lose momentum and our focus on performance improvement would diminish.

  Over the years, internal support for winning the award snowballed. We even had more than twenty-five people in the organization volunteer for the laborious training needed to become a Baldrige examiner. They were fully engaged in the program and it gave me a lot of support. These folks did not want to see us falter or give up—and their determination was contagious. During our site visit in 2011, a team of examiners came for a week and met with 1,200 of our employees. They looked at our leadership systems, clinical results, and financials—and every aspect of the organization. We needed all 23,000 employees to be on the same page and you just can’t fake that.

  I remember talking to a security guard after we announced that we had won. He told me he was the first person who greeted the Baldrige examiners when they arrived. I asked what he told them and he said: “I said that every day I try to do the very best job that I can for our staff and patients.” I said, “Well, then you’ve won the Baldrige award for us, because you obviously created an amazing first impression.”

  It felt the same all across the organization. Every single person had won the award. It was an iconic moment for us. At the time, we were the largest, most complicated, most academic organization in health care to ever win the designation. The entire system benefited in a number of ways that we inculcated into the corporate culture over that seven-year period and every year since.

  What I learned from Henry Ford about quality is that without it everything else crumbles. Because of that tendency, quality and ongoing improvement needed to be hard-wired into the culture—just as Henry Ford promoted quality by making assembly line manufacturing a centerpiece at Ford Motor Company. This culture of continuous improvement helped the organization control quality as well as cost. At HFHS, the cultural underpinnings that we developed during our Baldrige journey enabled us to build a culture that strives for quality. I will offer some details about how and why we won because I believe they may be instructive. The fact is that the Baldrige model served our needs extremely well, motivating us to improve performance and instill quality across the organization.

  A Framework for Improvement

  Most people apply for the Baldrige with the obvious goal in mind—to win the prize. It’s a badge of honor that bestows prestige and serves as a seal of approval. Regardless of the associated glow for the recipient, very few companies apply as many times as we did. Again, the need for a carefully conceived, well-organized fifty-page application puts most people off. It reminds me of what Bill Ford from the Ford Motor Company said when introducing me at an event in Michigan: “You know, at Ford Motor Company we didn’t do all that well in filling out the application, let alone winning.” He was making a joke, of course, but his message was that simply making your way through the process is a challenge.

  And that was precisely the point for us. The process of participating requires the same level of coordination and involvement that the award is designed to recognize. We spent two years learning about Baldrige and five years applying—because we were using the process as a mechanism for change. This push was happening just after the turnaround, so people saw the activity as an organic part of our performance improvement effort. In fact, over the course of five years we didn’t use the word “Baldrige” much around the organi
zation. We borrowed the framework as a structure for operating, but we didn’t talk about the award. We were so focused on improvement that when the Baldrige site visit was at hand, in 2011, people were scratching their heads and saying, “Well, what’s Baldrige?” We had to do some quick educating!

  For me, the rationale behind applying was twofold. First, I wanted the system to continue to get better. Baldrige judges an organization based on every aspect of its business and operations, and I felt the exercise would give us a solid framework for improvement. Second, the application process would force us to think deeply about efficiency. Designed to improve processes, Baldrige looks for consistency and minimal variation throughout all elements of the operation. This was especially appealing to me because I knew we needed to further integrate our offerings. With that in mind, we decided to apply as a system. It would have been far easier to win if we had applied as a single hospital or business unit, but I wanted Henry Ford to operate in concert. Going after the most challenging prize, then, held the greatest upside.

  There are a number of things that chasing the Baldrige brought to us, and in many ways they, along with a culture of innovation, are what define us and continue to sustain us as an organization. What these elements add up to is quality, which we can look at in a number of cross-sections, including efficiency, safety, and performance.