MarieAnn North

I "live" in the lovely city of Charlotte, N.C.

That means I make occasional weekend visits to make sure my house is still standing and to collect the mail. Something I always look forward to receiving is Charlotte Magazine. It's a well-written and informative publication. It keeps me in touch will all the fun I'm missing since I'm never home.

In July 2008, a column written by Charlotte Magazine editor Richard Thurmond (and quoted here with his permission) caught my attention. It was entitled "How NOT to Get Fired as Wachovia CEO" and offered "a few tips for the new guy, whoever he or she may be." Thurmond's five points, although written about banking, apply also to the C-suite in health care (regardless of which C-suite position you occupy or hope to occupy) as both industries face turbulent times.

Stop the Bleeding

Many hospitals have enjoyed a more favorable bottom line over the past five years. Yet physician practices (my industry focus) continue to drain valuable resources out of our health systems. Money needed for initiatives such as physical plant upgrades, IT and automation, improved technology and treatment modalities, care delivery to underserved communities, and funding for teaching programs that train future generations of physicians is instead going to subsidize poorly performing physician practices-whether they be academic departments, hospital-owned practices and/or ambulatory care operations, contractual relationships, or any other form of arrangement involving physicians.

After a short hiatus following a failed strategy, hospitals are back in the "physician business." We are no longer seeing the primary care networks of the 1990s. The future is uncertain, and if we truly haven't learned from the mistakes of the past, we are likely to have the same outcomes. This time around, the bailouts may be more costly as hospitals focus on hiring specialists.

Having focused most of my career on restructuring organizations and improving performance, I can attest to the fact that when it comes to stopping the bleeding, there is no magic cure. After the analysis is completed, the solution always involves a lengthy list of seemingly small items that when executed with enormous focus, attention to detail, strict timelines, and even stricter accountability, results in remarkable improvements. Stopping the bleeding always involves addressing both revenues and expenses. Former clients, who have sustained their performance-improvement targets year after year, have found this to be a 50-50 proposition. Rarely can we grow our way out of challenging situations. In fact, as we know, growing the wrong line of business leads to worsening financial performance in spite of volume increases.

Likewise, cutting expenses and resources in the wrong areas can lead to worsening financial performance. Understaffed physician practices lead to poor patient access and throughput in a high fixed-overhead business. Work shifts from support staff to physicians, thereby decreasing productivity. Quality and patient satisfaction decline. Not funding needed space, equipment, updated operating suites, intensive care units and emergency departments (EDs), needed IT, etc. is shortsighted, leading to loss of both physicians and patients.

That said, there isn't a health system that doesn't have opportunities to cut costs. This may mean examining "hard to get at" areas such as medical malpractice and employee benefits. A major cost driver in physician practices is the variability that physicians demand. Running a 100-physician group is much more like managing 100 lemonade stands than one group practice. Physician demands (e.g., customized scheduling templates, medical record forms, exam room set-ups, staff protected from pitching in and helping others) increases complexity and cost. Rarely does a different colored chart folder for each physician add value (readers may insert their own "silly but true" example).

Get Back to Basics

Hospitals understand the basics of their businesses. Metrics such as occupancy rates, nursing ratios, main operating room and ambulatory surgery cases, case mix index, ED throughput, discharges before noon that directly affect the bottom line. Daily flash reports and dashboards provide management information in a timely manner. Rarely is this rigor in managing to the metrics seen on the physician group side where it is desperately needed.

To put it in the simplest of terms, the basics of physician group practice management involves two parallel processes. One is getting the patient through the system. The other is getting the claim form through the system. It's that basic. Both processes have associated measures, metrics, and work flows that can be tracked. Dashboards and metrics show unfavorable trends long before financial statements disclose suboptimal results.

The basics of running a hospital are, in fact, quite different from the basics of running a physician practice. Hospitals, medical schools, and ambulatory care organizations all desperately need to recognize physician practice management as the profession it is. Practices need qualified professional managers just as other parts of the organization have. I am convinced that the subsidies we pay to our physician organizations would diminish greatly if our organizations recognized and sought out the unique skill set required to be a physician practice executive. (Can your physician practice leaders pass the American College of Medical Practice Executives certification exam?)

Get the Right Team and Culture in Place

Running the physician enterprise of our organizations is a complex, high maintenance undertaking. Most of the time, one must serve many masters with competing agendas-a university, a school of medicine, a particular department chair, a "superstar" physician, a hospital, a payer. Often, our energies are absorbed by the crisis of the day, created more by big egos than market needs. It's easy to forget that it's about the patient! A worthwhile exercise is to assign an executive team member a one-day task: In all the senior leadership meetings attended any given day, count how often the word patient is spoken. Has your organization lost its focus?

Many of our organizations need to do a better job of serving patients and communities. Case in point: I often see organizations whose own staff go elsewhere for their personal care.

Culture is created at the top levels of organizations. If the C-suite is doing its job, a patient-centered culture permeates the organization. However, it takes a team for this to happen. Whenever I see great teams that believe in open communications, healthy conflict, holding each other accountable, delivering results, supporting each other personally, and sharing the credit for successes, I see great organizations. When the inner circle at the top level of the organization is dysfunctional, nothing works. Well-meaning management and hard-working staff cannot make up for the fatal flaws at the top of organizations that haven't put the right team and culture in place.

Hedge Your Bets

If we recognize that good decisions do not always result in good outcomes, and bad decisions do not always result in bad outcomes, it takes some of the pressure off leadership. A crystal ball just isn't that good in an era of rapid change. Your best idea may not work. Hedging your bets means when you fight hard for a certain outcome, someone on your team should make their best argument for the opposite decision. But that's not how organizations work. We put all of our energy into supporting our own position. Or fear of failure paralyzes us, and we do nothing at all. In our planning processes, we need to have the courage to state the worst-case scenario and to have a plan (an exit strategy) should the worst occur. Jobs are lost, and organizations suffer when leaders hold onto their programs, ideas, and people much longer than they should.

One of the most painful things I ever had to do in my career was to take apart something I personally built. I absolutely believed in the program I had brought from concept to reality. It was my "baby," and I was proud of it. I agonized over how a shut-down decision would affect peoples' jobs and lives. I grieved over the loss of my own dream. But in the end, continuing to subsidize something that was no longer mission-critical would have caused other programs to suffer, and would have limited resources needed to be applied where the greatest good could result-for the patient.

Good Luck. You'll Need It.

Maybe Wachovia should have listened to Thurmond's wisdom. Perhaps the healthcare industry will. We, too, need to stop the bleeding, get back to basics, get the right team and culture in place, hedge our bets, and when all else fails, hope we have some good luck.


MarieAnn North, FACMPE, is CEO, Posada Consulting, Charlotte, N.C. (

Publication Date: Thursday, January 01, 2009

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