Novant Health CEO Carl Armato Touts Work Culture, Employee Bonuses

'Caring for our team members is one of the most important things the executive team does.'

This article appears in the July/August 2018 edition of HealthLeaders magazine.

Not only does Carl Armato, CEO of Novant Health, headquartered in North Carolina, want his health system's employees to read his blog, more importantly, he wants them to engage with him through it.

He blogs about everything—from folksy stories to healthcare industry information—but every Monday edition of his blog focuses on the 14-hospital nonprofit health system's mission, vision, and values, and how he's observed employees' contributions to achieving them.

Armato uses the blog to remind the system's more than 26,000 employees about systemwide goals for the year. The goals help determine employee bonuses that are distributed companywide.

He credits the two-way communication the blog fosters with his employees to big improvements in team member engagement. For example, last year, Novant's team member engagement score improved from the 49th percentile to the 74th. [See correction.]

Another goal was to improve CMS quality indicators to greater than the 80th percentile. The organization finished the year in the 87th percentile, and achieved an 83% reduction in serious safety events. 

Following are the highlights of Armato's recent conversation with HealthLeaders about Novant's culture, its employee bonus program, its consolidation under one brand, and the seven-year CEO's struggle to achieve engagement and alignment with both patients and employees. 

"Every Monday I post a blog to stay connected with team members. It's one of the best decisions I've made because it's one of the things, along with frequent rounding, that makes me accessible. The blog has a chat feature so people can chat back. Since I've been CEO, I've written between 300–400 of them. I remember writing about our employee bonus program early in my [seven-year] tenure. Caring for our team members is one of the most important things the executive team does. A challenge with an old version of our incentive plan was that some of the factors the clinics were evaluated on were different from those in the rest of the organization. That wasn't wrong on its face, but it didn't foster team unity, and our team members shared that with me. I probably got 100 other comments about what they'd like to see different. So, I took that advice and made changes."

"When we're doing well financially and hit the strategic imperatives, it's due to the team members. It's their efforts in saving dollars every day with their intentional efforts. We decided to reinvest much of those savings in employee bonuses. That's how we began the discretionary bonus that aligns every team member around the organization's overall success. When I took over, there were hundreds of brands throughout the organization. We brought all that together to become Novant. There were also probably that many incentive plans, so basing the incentive plan around organizationwide goals brought alignment around what was really important. For example, we've rewarded our team members for improvement in engagement and quality."

"Every now and then I get feedback on compensation, where people talk about how much went to executives versus team members. But 80% of the bonuses are for director and below titles. So, if you think about that, that's a lot of individuals who received a bonus. All eligible team members, whether part-time or full-time—if they're not facing disciplinary action—they received a bonus."

"We've got everyone in our 500 clinics and our 14 medical centers focused, and they're aligned to what's important to our consumers. We have to be world-class at caring for our employees so they can be world-class caring for the patients we serve. Why? We're committed to the remarkable patient experience. We focus on more consumer-centric digital engagement with consumers. We have 840,000 people using our portal, but we're focused on how we can use more predictive analytics to partner with them before they have a health crisis. So, we're investing there. For example, we have 90,000 diabetic [patients who] we're working on predicting the likelihood one will enter the ER, and also partnering with external companies to figure out how to use predictive analytics to keep people out of the hospital and safe."

"My background is as a CPA/MBA, and when I was with what is now [global consulting firm] EY and then with another health system for 10 years, I was what I might call the fix-it guy. I was one of the people they sent to difficult situations. I thought I had to micromanage that and I felt the weight of doing that personally. My early learning was to empower others. Now, I don't mind sharing the stage and giving people the authority to do their jobs. I've watched people and our organization soar because I focus on cultivating culture. It's where I spend a lot of my time: rounding, answering the blog, ensuring we're addressing issues like physician and nurse resiliency. Or how we're handling health disparities. I want to cultivate culture where people can have a voice in how we're going to transform healthcare in a transparent way."

"I'm proud of our resiliency in the face of change, particularly with our clinicians. They've changed their delivery model to open up access and be more affordable. As for me, I'm 53, I started this job young, and I'm having fun engaging the workforce. I'm excited about what I do."

Correction: In the fourth paragraph of this article, "patient experience" was replaced with "team member."