Hospitals are notoriously cautious; leaders aren’t inclined to take risks when lives are, quite literally, at stake. Hospitals are also notoriously cash strapped; their operating margins are small, and not infrequently negative. So how do you manage an organization that is intrinsically resistant to innovation but whose very survival depends on it?
You maintain a fierce focus on earning stakeholders’ trust and understanding their needs.
Entrepreneur and native Kuwaiti Fahed Al Essa, a recent graduate of UC Berkeley’s MBA and MPH programs, started his career as a hospital strategist. Brought on as Taiba Hospital’s youngest executive, he realized that he would only be able to effect change by getting to know the people, from executives to nurses, and demonstrating that he was there to learn and help.
Here are three lessons any business leader can learn from his efforts to turn around Taiba Hospital:.
First, be inquisitive and strive to better understand your organization.
Essa stresses the importance of showing interest but staying humble. “Everyone in your organization has something valuable to teach,” so leaders should frame themselves as an ally who is interested in better understanding someone’s role, rather than an executive who is out looking for problems.
Being able to demonstrate a deep knowledge of how Taiba worked and having a cadre of allies across the hospital gained Essa trust among his executive team. So, when he went to pitch his first idea, leadership knew he was driven, not by personal ambition but by an informed analysis of what would most benefit the hospital.
The need to back up your proposals with evidence is echoed by another hospital turnaround veteran, Mark Hillard. Hillard was the CFO and then CEO of Maricopa Integrated Health System in Arizona. After conducting a formal assessment of core hospital operations, Hillard’s team needed to develop an action plan that involved some controversial decisions. To mitigate discord, his team presented clear evidence behind all of their decision making. “We tried to make sure that what we presented to both the board and the staff was absolutely bulletproof,” Hillard said. “Once you have a reputation for being nonpolitical then it’s easy to get people on board.”
Second, invest in a cohesive workforce.
When Essa began meeting Taiba staff, he immediately noticed that there seemed to be no cohesion among the workforce. While understandable, considering there were over 20 nationalities of employees who spoke 13 different languages, Essa realized that the hospital lacked a clear mission that could unite its workforce around a set of shared values.
Culture in new companies is almost always driven by the founder. But mature organizations don’t have the luxury of being small and new, and culture is often the first item to fall off leaderships’ priority list. In that scenario, leaders should spend time absorbing the organizational norms and values that have been developed over time by the front-line workforce and incorporate them into a clear organizational mission that employees can get behind.
Other hospital turnaround pros have also commented on the importance of clarity around organization-wide goals. Mark Laret, CEO of UCSF Medical Center, worked to cultivate common values among his management team and worked to get everyone on the same page – “the entire organization, not just the staff, but the medical staff and academic leadership.” This was his first step in turning around the medical center from an annual loss of $60M in 2000 to an annual profit of over $60M in 2010.
While counterintuitive in the midst of a financial turnaround, using financial resources to strengthen your workforce community can be a smart investment. At Maricopa, Hillard explained, “We didn’t have enough resources to do everything we wanted, but we made sure we put some money back into our facility and staff as quickly as possible. It generated real commitment out of the staff who remained.” After listening to your staff and codifying organizational mission, vision, and values, it is important to close the loop and let them know that they are valued. Not only can this increase retention, but according to Essa, “if you can create an environment of trusted friends, only then can you see productivity increase and creativity shine.”
Third, focus on small changes that will have an outsize impact on patient experience.
It wasn’t just the staff at Taiba that was incohesive. The hospital itself had grown organically out of an outpatient surgery center, so the buildings lacked the cohesive image of a single organization. Once you’ve put the intangible pieces in place to align your staff, it’s time to put the physical pieces in place to align your facility.
This doesn’t mean that a hospital turnaround necessitates a new tower or other large capital expenditure. Instead, focus on the patients, and view your facility through their eyes. What minor investments would make a big impact on experience?
At Erie County Medical Center in New York, CEO Michael Young invested in a new lobby, adding a coffee shop and replacing aging elevators. “Several relatively inexpensive cosmetic changes in public areas made the hospital look clean and inviting,” said Young, having led the hospital from a $30M loss to a $17M profit in two years. Laret of UCSF agrees, claiming that “if you’re losing money, a few changes can give you a big turnaround.”
As for Essa’s first turnaround project, he chose to focus on the hospital’s biggest revenue generator–the ER. With the blessing of the CEO, he comprehensively redesigned what had previously operated like a private clinic; he changed operations, layout, design, and even employee incentives to transform the department into a feeder for the rest of the hospital.
The project generated immediate wins. Patients were happier with the service provided, and the CFO was thrilled with the enhanced financial performance of the clinic and its downstream impact on the hospital’s bottom line. After operating in the red for several years straight, Taiba turned a profit.
Why was this project so successful? “That question is easy,” said Essa. “Focus on the patient. Even outside of healthcare, successful companies design around the customer and their needs. If you start there, everything else aligns – it’s as simple as that.”