Leading Through Change

The pace of transition can be breakneck or slow and measured; but in either case, some senior leaders are proving old dogs can yet learn new tricks—because they must.

This article first appeared in the March 2015 issue of HealthLeaders magazine.

Healthcare is changing in significant ways. The industry is migrating to a highly connected world that is growing more transparent. Meanwhile, the very measures of success for healthcare organizations are shifting.

In such an environment, physicians, nurses, and other employees look to the C-suite to make sense of it all and to help them understand their organization's place in healthcare's future. But effectively developing and translating a strategy into a new set of policies, expectations, and desired results would be difficult for anyone, especially those who have reached their lofty positions by excelling at a business model that becomes more outdated and irrelevant with each passing day.

The pace of the transition can be breakneck or slow and measured; but in either case, some senior leaders are proving old dogs can yet learn new tricks, because they must.

A change in mind-set
First, CEOs must understand the major shift around the concept of value, says Al Cornish, system vice president and chief learning officer at Norton Healthcare, a Louisville, Kentucky–based system that includes five hospitals, 12 immediate care centers, and more than 90 physician practice locations. Cornish built and developed the leadership development component of Norton University, which provides education, organizational development, and training for the system.

Then, CEOs have to translate that understanding into actions they expect other leaders in the organization to undertake, even if the course may be risky and experimental.

"The value proposition really depends on patients and their perspective about the care they receive," Cornish says. "That's different from the way we've always looked at things. But value looks at cost of the service and the amount of satisfaction the patient receives. Healthcare execs of today really need to focus on that."

Cornish says Norton University and the system as a whole try to focus on skill sets that all healthcare leaders will need in the future, and on developing those leaders internally. Skills include instruction on strategic thinking, change leadership, and inside of that, concepts of flexibility and adaptability. The curriculum is structured around team-building and relationship development and orientation.

"You have to wrap your head around the idea that less is more, and less is good."

"Execs will need to be collaborative because they will need to create partnerships," he says.

A culture of innovation
For Nancy Schlichting, CEO at Henry Ford Health System, a six-hospital system based in Detroit, the crux of navigating through healthcare reform isn't so much new skills but open-mindedness, a culture of innovation, and a non-punitive orientation associated with attempts at innovation.

Schlichting says Henry Ford has long been "changing the game" by integrating its own large physician group practice and a health plan, among other offerings along the continuum.

"Most systems are hospital-centric, driving inpatient, surgical, and ER volumes; but today it's becoming a very different game because we're trying to change that mind-set," she says. "You have to wrap your head around the idea that less is more, and less is good."

Hospital-centric organizations that are looking to better integrate a continuum of care into their system with an eye toward population health management are collaborating and working through difficult, sometimes seemingly intractable problems.

"You're going to be working with people whom you've probably never talked to," she says. "You're going to be working with physicians in a different way, as they are looking to take on risk. So you have to have very strong collaboration skills, while at the same time bringing your management team together."

In that endeavor, she recommends finding people who have done "difficult things" in their career, and who have demonstrated courage in risk-taking and an ability to "change it up and try new models and new designs."

"Obviously there are different ownership models, but most were created to serve the community, so I've been doing this—including cooperation with competitors even when it was strange—for 35 years," she says. "Mentors taught me and we are continuing to get better at it."

She says part of the management of such change includes a thoughtful process on demonstration projects, where anxiety is high, and so are the risks of getting it wrong. But that's the only way to learn what works in an interconnected and value-driven world.

She credits David Nerenz, PhD, the director of Henry Ford's Center for Health Policy and Health Services Research, as a key decision-maker on determining with which projects the health system could succeed and which could wait. Then, she says, all senior leaders take on a particular project as leader to try to understand better why some innovations work and some don't. For example, she led the system's readmission work personally, which she calls a "game-changer."

"For the first three years of five, it wasn't going really well, and I learned about the complexity of it. You have patients without any support at home, for example," she says. "It's been really tough, but we've just kept at it and I've become a better leader because of that commitment. My work with the readmission team was a deliberate strategy to learn and help lead the change process."

Developing a culture of innovation sounds daunting, but doesn't have to be, says Cornish, who brought in a guest speaker two years ago to run a workshop on innovation for the senior leadership team at Norton. The purpose arose from a recognition that healthcare generally hadn't been forced to innovate around business and clinical processes in any meaningful way in the past, and even senior leaders were intimidated by the concept. He says that is changing rapidly.

Turns out that many of the leaders believed that innovation required insights and talents they didn't have, including a creative temperament. The "teacher" used some simple examples of things those leaders were currently doing and walked them through the innovation process.

The response: "'This isn't as difficult as I thought it was,' " says Cornish. "If you asked most people if they are innovative, most say they aren't, but we all have it in us. So providing a framework to practice innovation was very helpful to us. In order for us to continue to be the leader in our region of the country, we need to out-innovate our competitors in the marketplace."

"Teamwork must start at the top and be structured to operate that way at all levels. It's the only way to improve care in a system."

Cornish says one reason for this particular exercise is that any behavior that senior leadership wants replicated throughout the organization starts with the top leaders modeling that behavior.

"That's crucial to better managing population health because, at its crux, it's about having a fully integrated group of caregivers working together to manage that population," he says. "Teamwork must start at the top and be structured to operate that way at all levels. It's the only way to improve care in a system."

That shift to team-based care is an important cultural change, which usually happens slowly; but in the current environment, it must be done quickly because no healthcare system has the luxury of time.

"You have to set the environment where people can take calculated risks and not be in fear," Cornish says. "We're blessed with a president who stands before the senior leadership team and says we're not going to be punitive to people if things don't work, because that's how we grow a healthcare organization: 600 leaders must be on the same page."

Though other organizations create urgency around an innovation by naming czars to lead certain initiatives, Norton has not done that, instead favoring an approach of making population health management integral to the current roles of leaders in the organization.

"For us that has worked very well. Other companies have created these czar roles to coordinate the functions," he says. "My only concern about that is that it sometimes makes people in the organization feel they can abdicate their responsibility to be involved because we have these czars. That's one thing to guard against."

Crucial communication role
Today's healthcare CEO is demonstrating a new focus in managing the uncertainty associated with healthcare reform. For the organization's internal audience, the CEO must have a communication strategy that packages the new vision in a clear and compelling way so staff can find and understand their individual place in a new paradigm, as well as the organization's.

"This may involve staffing up on the senior leadership teams to manage that interface, but there's also a lot of working with external speakers and training departments on awareness building on what this change from volume to value, from sick care to healthcare, really is going to mean," says Andrew Garman, PsyD, CEO of the National Center for Healthcare Leadership, a Chicago-based nonprofit, and also professor of health systems management at Rush University in Chicago. "It's not so much that CEOs need new competencies as much as emphasizing to a greater degree the vision and why certain decisions are being made, thus ensuring people develop and maintain trust in the senior leadership team."

Top leaders also need to forge external relationships that didn't exist in the past. This can be done through mergers, partnerships, and relationships with public health-providing entities or the emerging trend of working with nontraditional providers of services. But leaders shouldn't think that collaborative work is the goal in and of itself.

"There's broad recognition that we need to move to a team-based care model but you can't think it's the magic bullet," says Garman. "As soon as you have a team, you run the risk of expanding cost. So figuring out that balance between providing that coordinated service on behalf of the healthcare consumer while at the same time maintaining efficiency is a big challenge."

He says senior executives largely understand that healthcare is moving toward a value-based system, but at the same time, there's a lot of uncertainty about optimal timing on moving various parts of the business toward a value-based approach, and there's concern regarding the risk in dismantling parts of the operation that contribute significant income to the organization.

"They want to be ahead of the game but they don't want to risk running out of resources needed to make the transition," he says. "They're coping by bringing in outside expertise to, as best they can, get a third-party, objective perspective of the markets they're in and what they'll look like as they transition to a new model. You merge that with information from the policy climate and timing and make your best educated guess on the impacts of these type of things. That's the reality of environmental uncertainty—there is guesswork involved."

Paul Macek, who as CEO led a once-independent hospital into a merger with UnityPoint Healthcare, a 10-hospital, 28,000-employee system based in West Des Moines, Iowa, says internal communication and transparency can't be overdone given the seismic changes top executives are asking other leaders and employees to buy into. Macek now serves as UnityPoint Health Peoria's vice president, affiliations and partnerships.

"While there were some board members who felt we could continue to remain independent, trends dictated it would be a very tall order," he says of the work that led him to his current position. "But to make it work, the process to evaluate alternatives for our organization involved a lot of people: physicians, key leaders, leaders on the staff, key community leaders, and everyone else who had a stake in our organization; so it wasn't just a CEO or executive team plan. Taking that time to hear from them on the front end of the strategy was extremely important."

One of Macek's favorite sayings is that a CEO needs to be willing to have his or her position be influenced. One example proved the importance of this belief. In a prior CEO role in a turnaround situation, Macek had made up his mind on relocating clinical programs from one campus to another because of low utilization. One particular sore spot was with a behavioral health program that he was determined to close.

"The CFO came in and asked me to rethink my position on behavioral health," he says. "She told me if you do that, it will significantly reduce the disproportionate share payments to the hospital by several million dollars in the midst of a $19 million turnaround. I had been convinced the best thing to do would be to close it." But with that input, behavioral health remained.

Inspiring confidence
CEOs should never underestimate the importance of attitude and conviction in selling the work associated with transformation, says Garman. "The CEOs I've seen who are really effective in keeping folks working and optimistic about the future are the ones who live and breathe this perspective of the organization's mission, which is supporting the health of their consumers," he says.

Through their actions and their visible optimism, such leaders—and they don't always have to be the CEO—are conveying the message that yes, the future is unclear, but we're on the path to making things much better for our patients and we'll reach a very exciting future. There's an opportunity to do what's never been done because of the adverse incentives, says Garman. Part of that culture of optimism involves recognizing publicly to prepare people for the reality that their jobs will change, income levels may change, and the nature of the way they get paid for things will change, but the mission of the organization can finally be fully realized.

To achieve that lofty goal, says Macek, organizations have to have a leadership team that shares the same values, is transparent with each other, that's willing to be a little vulnerable, and that has a coach in the CEO who is recognizing, rewarding, and celebrating as the staff tackles the complexity of the transformation.

"We're going to be okay," he says. "People need to feel safe in high-risk environment—that their team has got their back. If they stub their toe, the CEO is going to support them. We're working in and leading multidisciplinary teams. Care coordination is going to take a lot of work on the part of those teams and leaders of the future are going to have to comfortable working in that environment. This includes physicians, insurance execs, and other partners we never thought we would be sitting at the same table with."

There is good news for senior healthcare leaders. Even with massive consolidation that seems poised to continue, opportunities in senior healthcare management aren't consolidating with them, says Garman, who recently completed a study on healthcare executive trends for the American College of Healthcare Executives.

"In general, senior leadership jobs in freestanding hospitals are expanding rather than contracting, with respondents reporting they added 1.6 positions for every one they removed over the past two years, and on average planning to add 2.8 positions for every position being removed in the coming two years," writes Garman in the report.

Limitations are that hospitals that comprise the study are 32% of the total hospital population, and represent only ACHE membership. Garman found that there is little standardization of job titles across healthcare management, often because titles represent coverage of one or more senior roles, and are designed around the talents specific individuals bring to them.

Such individuals can blaze their own trail, but industry job growth centers on efforts to manage the complexity and environmental uncertainties in which the sector currently finds itself, he says, and although the net overall picture for senior leadership is one of growth, results still point to substantial changes at the individual position level, with roughly three positions being removed for every five that were added.

One of the most important challenges for senior leaders can be getting out of the office and understanding the work that's being done on the front lines, says Garman, adding that the value can't be underestimated.

"This is managing through walking around or rounding, which I would put in the same bucket," he says. "There's no substitute for having that direct experience and understanding the work that's done on the front lines, the care units. The CEO who never hears this is operating with a significant information deficit."