What would you do if your best employee quit tomorrow? Anton Gunn shares the secrets to effective succession planning.
Anton Gunn: If you don’t use, your talents and the role that you have to leave the organization better after you’re gone than when you found it, you might be successful as a leader, but you won’t be significant.
Erika Grotto: Succession planning from the top down, today on HFMA’s Voices in Healthcare Finance podcast, sponsored by Red Dot.
Happy New Year, and welcome to the podcast. I’m your host, Erika Grotto, and if you haven’t chosen a New Year’s resolution yet, I’ve got one for you. Today, we’re talking about the importance of succession planning. If you’re not in a leadership role, you might think this isn’t for you, but succession planning is something everyone should be doing for themselves, and maybe for others. My guest today has a lot to say about this, and you’ll hear our conversation after HFMA Senior Editor Nick Hut and HFMA Policy Director Shawn Stack cover what’s happening in the news.
Nick Hut: Hi, everyone. Happy New Year, and welcome to the first Beyond the News of 2022. In this segment, Shawn and I are looking at what lies ahead this year as far as healthcare disruption. As most people know, some of the biggest names in retail and commerce have been making a place for a slice of the healthcare dollar. You’ve got Amazon, Walmart. There was a partnership just announced in early December between CVS Health and Microsoft. So, Shawn, what do you think this is all going to mean for the legacy provider in the year ahead?
Shawn Stack: Thanks, Nick, and Happy New Year to you as well. We continue to see a number of private healthcare companies, and established companies breaking through those barriers of healthcare delivery. They seem to be continuing to focus primarily on maximizing efficiency, outcomes and expanding healthcare delivery across the U.S. Bernstein analysts have recently identified this shifting to value-based care is most likely going to be the largest disruption to the U.S. healthcare system. The current value-based care sector is estimated to grow from $250 billion today to nearly $900 billion by 2030. So the potential increased in the value-based care sector is estimated to reduce healthcare costs by $1 trillion in the future. So that is, I think, one of the key areas a lot of these folks, and a lot of these companies are focusing on as they come into healthcare.
Hut: Yeah, absolutely, and that really kind of quantifies what’s at stake. You know, as we look at some of these players, Amazon is one of the biggest names that stakeholders are watching, if for no other reason than they just tend to make a splash in everything they do. Obviously, they were a major player in Haven, and that kind of fell by the wayside in 2021, but they just announced that they were consolidating their pharmacy diagnostics and telehealth operations into one structure, and with respect to their telehealth services, they’re now offering those to all of their employees nationwide and have started to branch out to employees of other companies as well. I think maybe the most intriguing possibility is that they could use their virtual assistant Alexa to provide basic home healthcare, at least in terms of triaging and initial diagnostics. Obviously, you know, you wonder, could that over time cut down on the evaluation- and management-related revenue that healthcare providers expect? Among retailers, one of the biggest players in healthcare is Walmart. Shawn, what do you see that might be on their radar for the coming year?
Stack: In 2021, Walmart started rapidly building primary care offices as kind of a bolt-on modular unit in their stores. So they just bring these units in, drop them, bolt them on, and then begin staffing them with actually physicians. So they’re expanding quite a bit in addition to their dental and vision services. They now plan on providing primary care to communities and their employees in those—a lot of times—rural areas that really see and need primary care a lot. Another company that’s really targeting that rural sector in the U.S….we’re seeing Dollar General talk about focusing on telemedicine and prescription delivery services in areas of the country that they are identifying as health deserts, keeping in mind that about 65% of Dollar General stores, which is 75,000+, are located in rural areas, and 75% of the U.S. population lives within five miles of a Dollar General store. So they could be big players in this rural market for primary care and prescription drug services moving forward.
Hut: For sure. So, absolutely another entity that bears watching this coming year and in the years ahead. Alright, and so, Shawn, a lot of our hospital and health system representatives who are listening may be thinking, well, what does this mean for me? Where should we go from here? What would you say to them?
Stack: Well, talking to a lot of our members, I mean, many of the hospitals and health systems are already discussing collaborating with some of these disruptors and using those as a referral point, keeping in mind that most of these disruptors are not going after true hospital acute care services. They’re on the periphery. They’re offering primary care, which I understand some of our hospitals have, but there is opportunity in some of these communities where healthcare is sparse to partner with some of these disruptors and really impact care to the community populations. So I think we’re going to see more of those conversations in the upcoming year on partnering with some of these disruptors and finding our place in working with them.
Hut: Alright. Well, great insights, Shawn. It certainly should be an interesting year. Stay tuned, as we’ll definitely be keeping you apprised of some of the disruptive trends that are more and more manifesting themselves in the industry.
Grotto: Imagine for a moment that you win the lottery tonight. Congratulations. You’re off to Tahiti, and it’s goodbye to the day job. Have you thought about who’s going to take your place? Now, imagine your boss has bought a lottery ticket and pulled you aside to say, “If I win big, my job is yours.” Do you want that job? Have you even thought about whether you’d want that job? My guest today will help sort out all of this and more. Anton Gunn is a leadership consultant and the former head of the Office of External Affairs at the U.S. Dept. of Health & Human Services. He’s served as an elected official. He’s written books. And if you’re an HFMA member, you might have heard him speak at any number of events, including our Leadership Training Conference, in 2021. I’ve heard so many great things about his presentation there that I had to invite him on the podcast to share his thoughts with our audience.
You’ve held a variety of leadership positions. You’ve worked with some influential leaders, including President Barack Obama. What do you see good leaders doing right when it comes to succession planning, and what do most leaders do?
Anton Gunn: The thing that I would say most leaders do is that they’re focused on being successful and leading in the moment. So they have the title, they have the role, and they’re focused on having an impact. And so, it’s understandable as a leader that you want to have an impact. You’ve been given the opportunity. You want to lead and take your organization to the next level. That’s what most leaders do, and it’s an appropriate thing to do. But the successful leaders are the ones who plan with the end in mind. And what do I mean, “the end in mind”? There’s a great quote from Dr. Myles Monroe that I use very often. And that quote is, “Success without a successor is a failure.” And if you don’t use your time, your talents and the role that you have to leave the organization better after you’re gone than when you found it, you might be successful as a leader, but you won’t be significant. And so, I tell leaders, and I show leaders, that the most successful and influential leaders that I’ve worked with, they plan with the end in mind. They start working for their succession on the day that they get the leadership role.
Grotto: It almost feels counterintuitive, but it also feels like it has to be. I’m thinking about elected officials in particular, particularly those with term limits. You have to think of that because you know you’re not going to be around, and what kind of situation are you going to leave for the next person who comes into that role? How do you get in that mindset if, you know…if you’re talking about an elected official for example, you know you’ve got so many years, you know, or maximum so many years. But what if you are, like, a C-suite executive who would love to be in this job for the next 20 years, but who knows? How do you start planning around that, or do you need to really think about, something could happen to me tomorrow?
Gunn: Yes. You should think about, something could happen to you tomorrow. So the operative word that I always start with is, every CEO—whether you’re CEO of the Boy Scouts or your neighborhood soccer club or the CEO of the largest health system in the country—you’ve got to start thinking about your legacy. And, you know, we all hear the word “legacy,” but again, I’m thinking about, what are people going to say about you when you’re long gone? So you’ve got to think about whether you win the lottery tomorrow, the Powerball, and you win $600 million and you can walk away, or God forbid, you know, something happens to you with your health and you’re not there anymore, how do organizations continue to thrive in your absence? And so as a leader, I would say, you’ve got to start thinking about, who are the people around me who could potentially be my successor? And when I work with clients and I’m working with the executive team around succession planning, the first thing that I ask everybody in the room: Can you write down the names of three people who work for you now who can do your job just as good or better than you can right now? And if you can’t name three people, that is a problem. And so you’ve got to start working on identifying who those three people might be and also, if they’re not ready to do your job better than you can right now, how do you start developing them in that framework? And I think that’s what the best leaders do, is that they’re always looking for the person who’s going to be up next, because we know we can’t live forever or lead forever. So whether it’s two years as a CEO or 25 years as a CEO, you’re not going to be there for the life of the organization. So the smart leadership move is to start developing people around you to eventually prepare them to take your role. And I have another process we can talk about a little later that I think the best of the best think about their leadership life in seven-year increments. And sometimes at the end of seven years, it may be time to move on and let somebody else lead.
Grotto: So let’s talk about some of those other people, because if we’re talking to the CEOs or someone who’s high up, you don’t just want to be thinking about your own succession planning, right? You need to think, like, what if my CFO leaves? What if my CFO retires? What if, you know, this other person—and I imagine that it goes down from there. So, who needs about succession planning for themselves, and who do they need to think about succession planning for?
Gunn: Everybody needs to be thinking about succession planning, because—I’ll put it to you this way. If you’re the CEO, and let’s say your CFO and your COO or your chief nursing officer are all phenomenal. They’ve been given their title and their position and they’re doing an incredible job of it. What makes you think that the whole country is not going to figure out how great they are and not make them a sweet offer to leave to come work somewhere else? And so if your CFO is phenomenal and they get offered a bigger or a better job to go work somewhere else, and they leave you, you may have had a talented person, but you didn’t think about who’s going to be the next CFO in their stead. And so, it doesn’t matter your role, you’ve got to think about succession planning for every senior-level leadership role and then every senior leader around you should be thinking about it in their organizational chart. And so the smart organizations, again, can go literally five levels deep in their organization and say, you know what? Tommy down in supply chain is not ready to be a CFO today, but maybe in the next 10 years he would be, and we’re going to start developing Tommy now. Or Sarah may be a nurse manager on 6 West, but, you know, a decade from now, 15 years, we want to put her in the position to not only be a director but to be in line to be an associate chief nursing officer, to eventually go into that role. So it doesn’t really matter what role it is. Everybody should be able to answer the question, if I quit tomorrow because I won the Powerball, can I name three people who could do my job just as good or better than I can? Everybody should be doing it.
Grotto: And I can think of people—and they aren’t necessarily the senior leadership, although certainly that could be true as well, but—if there’s no plan for the absence of a person, I mean, sometimes even somebody going on vacation sends an organization into a tailspin. There are places where people are getting phone calls when they’re on vacation because there’s no else to answer this question.
Grotto: So if that person says, “I don’t want you to call me on vacation. I quit,” what happens next?
Grotto: And what happens if that person is, like, in charge of your IT or something? You know, you could take down an organization pretty quickly I think, if one thing is not getting done, and it doesn’t necessarily have to be the senior leadership.
Gunn: Correct. It doesn’t have to be at all, and I think, you know, you raise a great point that is really important to elevate here. If your organization has to call people while they’re on vacation with their family, taking time off, to find something, to fix something or to do something, then your organization doesn’t have a good culture, because we have to have the kind of culture where we’ve built the kind of team environment where people can succeed no matter what’s going on, because you’re going to face all kinds of adversity. So maybe that person’s gone on vacation, or maybe they happen to be, you know, sick with some illness and they can’t come to the phone or they can’t do the IT, you’ve got to have a culture where people are resilient enough and able to get the job done in their absence. And I think it is a wise move to start thinking about it, not just for the biggest fish in terms of the pool of the organization, but everybody, because, you know, Joe who manages the switches in every IT facility is a person that’s going to be the most supportive person if you have any kind of power outage, right? So he might not have a title, he may just have a job description. So you’ve got to start thinking about, how do we build these redundancies into everything that we do as an organization? And it really turns your organization into a training and development organization. So, a friend of mine, Walter Bonn, always says, “Smart companies are training and development organizations masking as their real business.” So, you know, whether you’re, you know, let’s say you’re a financial reporting agency. Everybody thinks you’re a financial reporting agency. No, you’re really an agency who trains and develops people to do financial reporting. So how do you get good at training and developing people? And that’s really what succession planning is all about.
Grotto: I heard you say, “training and development organization,” and I bet that some of the people listening are shaking a little bit because the first thought is, “but if I develop my people, they’re going to find better jobs somewhere else.”
Gunn: To be honest with you, that’s what you want. You want to develop people and build a system where you develop people where they go to other places and have a bigger impact. But if you actually have a good system of doing it, you’re not at all concerned about losing one person to go work somewhere else because you’ve developed a whole army of people who can duplicate that process over and over again. I’m going to use an example that may throw a lot of your listeners into left field, but I’m going to use it anyway. I’m a college football guy—played college football, I love college football and I love professional football as well in general. And I will tell you one name who never worried about losing an assistant coach but has one of the biggest legacies in sports, and his name is Bill Walsh. Bill Walsh was a coach of Stanford University in California, later, the San Francisco 49ers head football coach that won four Super Bowls at the 49ers. Bill Walsh has more than 40 assistant coaches who all left him after one or two years and got better jobs, got head coaching jobs, and if you look at the number of successful NFL coaches that have won Super Bowls, more than half of them worked for Bill Walsh at one time or another. So his legacy is cemented forever, and he never lost a step, and he never was a losing coach. He never had bad seasons before he retired. And he lost almost every assistant that went on to win Super Bowls in so many other places. So you get good at training and developing people as leaders—yes, they’re going to leave you, but you’ve got to be OK with that because if you’ve got a great system of training and developing them, you’ll find the next best person that comes along that might take your organization to a higher level because you actually let that person, the previous person, go. So get good at training and developing people. Inspire them, empower them and support them to go to other places for bigger opportunities, and you’re just creating your legacy ripple effect in other organizations all around the country and around the world.
Grotto: That’s such a great example. It really illustrates your point, and that’s, you know, that’s why I brought it up, because, yeah, I mean, I hear a lot of, like, the “Well, if I develop my people too much, I’m afraid they’ll leave.”
Gunn: You can’t have a scarcity mindset about these kinds of things. I mean, just, we all want talent, right? So imagine if you’ve built an organization where you are training and developing the best talent in the industry, and you can look up, you know, 10, 15 years later at the end of your tenure and see your literal fingerprints or your footprints in so many other organizations that are finding success. And we all go to those organizations to chase success. I mean, why do you think so many people want to find staff from Kaiser Permanente? I mean, like, you know, there’s a love/hate relationship with Kaiser Permanente in some spaces, but everybody recognizes what they’re doing in terms of population health and community health and how they’ve been able to manage their resources. People take talent from them every day, and, you know, want to bring them into your organization because they do a good job of training and developing people in their model and their system that people want to duplicate and replicate in their own way. And so, it’s a hallmark of a great organization if you literally train and develop your people so much so that they go to other places and find success.
Grotto: I imagine, too, that when you engage in that kind of development of your people, it actually makes a lot of people want to stay, right? Because then they know that they’re able to grow, and sometimes you can grow your career in your organization. You don’t have to go somewhere else to get a better job. You could get promoted. You could take on a different type of role. But if you kind of stop that, then the people who work for you are going to say, “Well, I’ve taken this job as far as I can,” and it works the opposite of how you think it might. “I don’t want to develop my people because I’m afraid they’re going to leave.” Well, guess what. If you don’t, they’re going to leave.
Gunn: Yeah, without a doubt. You know, we’re in this period where we’ve called The Great Resignation. In all of 2021, I think there were like 4 million people a month that were quitting their jobs. Some of them were going to other places, and other people were just leaving because people were so fed up with the fact of not being valued and respected and transformed in their organizations. And what do I mean, valued? I know you value me if you continue to develop me as a talented member of your team. But if you don’t develop me, then you’re telling me that I’m not valuable to you to invest in. And so, so many people left jobs in 2021 because they weren’t valued. So how do you change that? You change that by, again, showing your people that they matter to you because you’re going to help them to grow, right in real time, and it will keep them there. But if you don’t value them, if you don’t show them that you respect them in a way that will help them continue to improve, they will leave you, and they’ll go work for somebody else that will. And let me tell you this: They’ll even leave and go make less money somewhere else if they’re more valued and respected because they get developed than you just paying them a large salary and a bonus every year. Money has been shown in this whole pandemic environment, that money is not everything to everybody. I’ve talked to, literally, CEOs and CFOs and others who have quit jobs in the last year because the money didn’t matter as much anymore when they thought about the mission or the values or the way they got treated by their superiors and leaders. And they’ve walked away. And it’s so sad to see people invest in a career and go through all of this to get to the senior level and then they work for a board chairman or a board of directors who doesn’t value them, and they say, “You know what? I’ve already got my stock options. I’ve already got my cash or whatever. I’m going to go and volunteer in this industry in another year because I don’t really need the money because I’m not working for the money. I’m working for the value and the respect.” And it’s a hard lesson for organizations to learn, and that’s why we’ve got to learn it now.
Grotto: Yeah, definitely. So, I know we need to wrap up here. I do want to hear, though, about what you mentioned about the seven-year increments and the planning.
Gunn: Yeah. So let me just very quickly tell you. So I fundamentally believe that no matter what your leadership role is, you should think about, you only have seven years to do that job. Now, you might end up being there for 21 years, or you might end up being there for 25 years, but I want you to think about it in a seven-year framework. So that is, you get hired today. You’ve got the first 18 months to figure out what you’ve gotten yourself into. You’re learning the job, so I don’t care, you know, if you’ve been in the organization. When you get into that role, you’re still trying to figure it out. So you’ve got 18 months to figure out what you’ve got yourself into. And then the second 18 months is you setting the plan of where you want to take that organization. And so you’re putting together your plan, your blueprint, your strategic framework of how you want to take the organization to the next level. And then that’s three years in, and then in year four is execution year. This is the year when you achieve the goals that you laid out and the plan to take the organization to a higher height or to a deeper depth. And so now that’s year four. You’re in the game. You’ve gotten it to that new level and you achieve what you set out to achieve. But then you should start thinking about who my successor might be. And so you spend 18 months engaging with subordinates, mentoring people, even coaching people and hiring them, putting them on committees and giving them opportunities to succeed, and hopefully to put their name on the list of one of those three people that could succeed you at your role. OK? So you do that for about 18 months and then the next 18 months, or the last 18 months if you will, you start to figure out what your next opportunity will be. What’s the next role in which you want to lead? So that may mean moving out of the organization to a bigger and better organization, or maybe it’s just changing positions in the organization that you’re in, seeking a higher leadership role or stepping into some other kind of opportunity. And that’s the last 18 months, is figuring out what your transition plan is to something new. And I think the healthiest organizations are the ones who do that, because here’s what I’ll close with when I think about the seven-year strategy for that. If you’re really good at leading, in seven years somebody should come calling to offer you a bigger and better opportunity anyway. And if they’re not, then maybe you’re not as good as you think you are. But you always got to be thinking about, how do I develop people behind me so that over my seven-year journey into this role, I can name three other people who could do my job better than I can. And if you’re not ready to leave, your job is to find them a role and support them being in that bigger and better role. So I personally will tell you that I’ve had subordinates for me that were number twos of me that I developed over that timeframe who literally, instead of me getting out of the way to give them my job, I helped them to become my peer at another organization. So I really did, you know, push my talent out the door into a C-level role in another organization because I thought they were worthy of it, and it wasn’t necessarily time for me to move on because I had bigger challenges that I had to overcome in my organization. So I wasn’t afraid to see my talent go to work at another organization, and yes, I’ve also stepped out of the role, gotten completely out of the way and told them it’s their time to lead. And I, you know, I made that decision in my most recent leadership role that after six years—I didn’t even make it to the seven years—it was time for me to move on. I moved out of the way, and now that person is leading and doing phenomenal stuff in their own right. So you’ve got to be OK with it.
Grotto: If you are one of those people who’s being developed, it might be, you know, said to you that, “Someday I’m going to leave this organization and I have you in mind to take over,” and it might not be said. So if you are a person, though, who has a leader who is engaged in help you develop, what is, you know, your best response, and how do you kind of figure out your own path? Because it could be that your boss is developing you to take over for them, and you don’t want that job, but you want to be developed, you want to be able to see what’s next for you. So if you’re that person, how do you handle that?
Gunn: Yeah, very good question. So, in two parts. The first part is, if your boss comes in and says to you, “I’m grooming you to take over for me,” that’s a great thing to hear, but your response should be, “OK, give me the timeline.” If they don’t give you a timeline and they just tell you indefinitely, you’ve got to be a little cautious to wonder, are they just telling me this in hopes that I don’t leave and go get an opportunity somewhere else? But if they tell you that, they should be able to give you a timeline—five years, seven years, three years—whatever the timeline is, you should be able to know that and then that way you can hold them accountable to what they said that they would do. Now, if you’re in a circumstance where you get told that or maybe you don’t get told it but it’s been implied that they want you to take over, and that’s not what you want, then you have to be real clear about what you do want, OK? And when I say clear, it’s not necessarily you have to tell them all the intimate details of what you do want, but you’ve got to start staking out your own development path to go after that which you do want. And so, for example, if you’re, you know, in the financial chain of command, let’s just say, you know what—you don’t want to be the CFO of an organization, you want to become the CEO. So that might mean a little bit different learning and development path that you need to be on if you want to become the CEO versus a CFO. So in that regard, you may say, “Boss, thank you for investing in me. I really am happy to take these courses to become certified in this thing or the other that’s going to help me to be a great CFO, but you know what I’d really like to do? I’d really like to take a couple classes or attend this conference for, you know, CEOs to really understand that job because if I’m going to be a good CFO, I’ve got to learn how to support the CEO.” So maybe you find a way to bifurcate your learning and development so you can continue your pursuit of those things that you’re passionate about and then when the time is right, you literally have the conversation and say, “Listen, I really see myself as a CEO and not a CFO, and I want to know, would you help and support and develop me along that path?” And if your boss is worth their weight in any way, shape or form, they would value that you have to be passionate about that which you want to be good at, and they will help support you along that path and continue to groom other people to take over as CFO. That’s the way that I look at it.
Grotto: Definitely some good takeaways here for really everyone listening. You know, again, succession planning, as we’ve talked about, is not just for the leadership. I really appreciate your coming on the podcast to talk to me about this, and I hope that some of the listeners are thinking about this in maybe some new ways.
Gunn: Yes. I hope they are too, and so happy to be with you.
Grotto: On a recent episode of this podcast, I interviewed Michael Bumann, CEO of Red Dot, about how leaders can improve performance by thinking like first responders. Today, I am thrilled to welcome Michael back on the podcast as our podcast sponsor. For the next several episodes, we’ll be talking about Red Dot and what they do and how they can help provider organizations and patients. Welcome, Michael.
Michael Bumann: Thank you, Erika.
Grotto: Tell me a little bit about what Red Dot does.
Bumann: Sure, happy to. Red Dot, at its simplest, is a one-of-a-kind solution for hospitals to convert their self-pay MVA accounts into significant bottom-line revenue, improving the patient’s overall experience by avoiding debt collection activity. Really, it’s a first in the industry.
Grotto: So we have a lot we’re going to be talking about over the next several weeks, but knowing we’re talking to a finance crowd, I want to start strong with two big questions: What is this going to do to my revenue, and what will a partnership with you look like for my organization?
Bumann: Great questions. First, the revenue part. Our MVA solution provides a significant [unclear] of bottom-line revenue right from the start. And we do that by converting a trailing 30-month pool of aged accounts. So that first revenue hit’s significant. When you couple that with taking on all the new accounts in that first year, when you really combine those two, that first-year bottom-line revenue is significant, and again, it’s right to their bottom line. As for what a partnership looks like, really what we’ve done is focused on making our partnerships both simple and painless. We do this by not requiring any kind of documentation. There’s no cost to work with us. We utilize the existing EHR system of our clients. There’s no IT lift. We’ve really spent a lot of focus making sure that partnering with Red Dot is as simple as it can be, and we’ve succeeded.
Grotto: Alright. Well, I definitely look forward to hearing more about Red Dot. So until next time, thank you so much for joining me.
Bumann: Thanks for having me.
Grotto: Red Dot is the best technology-enabled acquisition solution for hospital self-pay motor vehicle accident accounts. Hospitals can now leverage Red Dot’s solution to improve their bottom-line revenue while dramatically improving their patient relationships by avoiding debt collection activities. Red Dot: Good for hospitals, good for patients. To learn more, visit reddotmgmt.com.
Voices in Healthcare Finance is produced by the Healthcare Financial Management Association and written and hosted by me, Erika Grotto. Sound editing is by Linda Chandler. Brad Dennison is our director of content strategy. Our president and CEO is Joe Fifer. Thanks again to our sponsor this week, Red Dot. Please rate, review and subscribe to our podcast. It helps get us noticed, which helps us create bigger and better content for you. And if you want to have a say in that future content, send us an email. You can reach our team at email@example.com.