bulletin of the national center for healthcare leadership

L e a d i n g 2 1 s t C e nt u r y H e a l t h c a re

E D U C A T I O N A L A N D A D V E R T O R I A L S U P P L E M E N T T O M O D E R N H E A L T H C A R E

Bulletin of the National Center for Healthcare Leadership

www.nchl.org

3 Letter from NCHL

5 Survey Stresses Value of Leadership Development for Healthcare Organizations

7 Reinventing Healthcare Leadership

9 Leadership and Successful Financial Performance in Healthcare

Kenneth KaufmanLisa Goldstein

23 Commentaries on Leadership and Successful FinancialPerformance in Healthcare

Creating Unified, Inspired Levels of Greater Accountability and LeadershipJohn F. Hogan

Common Ingredients to Creating a Successful OrganizationThomas F. Zenty III

27 Inspired Leadership: Dr. Patricia Gabow Talks about Pursuing Transformation and Why Mentoring Matters

31 Preparing the Leadership Pipeline for 21st CenturyHealthcare

November 2008

F O R T H E

The North Shore-LIJ Health System

alutes the

NCHL National HealthcareLeadership Award Recipient

Patricia Gabow, MD

We celebrate youroutstanding leadership and

lasting contributions tohealthcare systems nationwide.

Saul B. KatzChairman, Board of Trustees

Michael J. DowlingPresident and Chief Executive Officer

11652-7-08

About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Please see www.deloitte.com/us/about for a detailed descrip-tion of the legal structure of Deloitte LLP and its subsidiaries.

About the CenterThe Deloitte Center for Health Solutions (the “Center”), located in Washington, D.C., is part of Deloitte LLP and was formed to further research on and develop solutions to some of our nation’s most pressing health care and public health-related challenges. Please visit www.deloitte.com/centerforhealthsolutions for more information.

Copyright © 2008 Deloitte Development LLC. All rights reserved.

The Deloitte Center for Health Solutions congratulates Patricia A. Gabow, MD, CEO, Denver Health Recipient of the 2008 National Healthcare Leadership Award for her significant and lasting contributions to health care.

Visit our web site to learn about the Deloitte Center for Health Solutions research on important health care issues: www.deloitte.com/centerforhealthsolutions

Congratulations.The Blue Cross and Blue Shield Association and

Blue Cross Blue Shield of Massachusetts

are proud to honor Dr. Patricia A. Gabow for her

tireless commitment to delivering quality, affordable health care.

3

Dear Reader,

An era of unprecedented economic change and ambiguity is upon us, and healthcare

is certain to face new challenges in the months and years ahead. In these uncharted

waters we believe the industry will be pushed to achieve greater levels of organizational

excellence, with higher standards for quality, patient care, efficiency, and higher levels of

transparency and accountability. To succeed, healthcare leaders must focus ever more

attention on innovating delivery of services, strengthening commitment to workforce

development, and sustaining optimal financial results.

This issue of the Bulletin of the National Center for Healthcare Leadership explores the

relationship between healthcare leaders and excellent organizational performance. In

NCHL’s white paper entitled Leadership and Successful Financial Performance in

Healthcare, authors Kenneth Kaufman of Kaufman, Hall & Associates and Lisa Goldstein

of Moody’s Investors Service identify five key factors that are present in financially

successful not-for-profit healthcare organizations that year-in and year-out achieve

strong financial results and maintain consistent quality. It’s an excellent roadmap for

leaders seeking improved performance.

Dr. Patricia A. Gabow, CEO of Denver Health and the recipient of the 2008 National

Healthcare Leadership Award has a history of innovative thinking that has resulted in

sustained profitability and consistent quality at her organization. Inspiration for her

transformation program was gleaned from global best practices in a variety of markets.

In an interview with the Bulletin Dr. Gabow explained, “I felt we needed a broader vision,

to learn beyond our industry. . . so we went outside healthcare to get it right.”

Getting it right is what we all strive for. Through NCHL’s research of best practices, our

work with the Leadership Excellence Networks, and our national demonstration projects,

we continue to make important advances that benefit the field. The Graduate Health

Management Education Demonstration Project, now in its fourth year, has significantly

improved curriculum methods in the first four sites—University of Michigan, University of

Minnesota, Simmons College, and University of Washington—using the NCHL Health

Leadership Competency Model. Our recently launched Diversity Leadership

Demonstration Project, sponsored by Sodexo, will contribute important insights in

diversity leadership and its impact on organizational performance. And exciting

achievements are being seen at healthcare systems utilizing innovative leadership and

strategic management programs from the NCHL and GE Institute for Transformational

Leadership, which are now broadly available to the field.

In our role as an objective and authoritative source on leadership and through our

nationwide collaboration with leading healthcare organizations, NCHL continues to

provide the knowledge and tools that will strengthen management’s capacity to thrive

in these daunting times!

Michael J. Dowling Marie E. SiniorisPresident and CEO President and CEONorth Shore-LIJ Health System National Center for Healthcare Leadership ChairNational Center for Healthcare Leadership

NCHL BOARD OF DIRECTORS

John BabiarzARAMARK Healthcare Management Services

Janis P. Bellack, PhD, RNMGH Institute of Health Professions

Patrick E. ConnollySodexo

Janet M. Corrigan, PhDNational Quality Forum

Joanne M. Disch, PhD, RNUniversity of Minnesota

Michael J. DowlingNorth Shore-Long Island Jewish Health System

Richard P. GustafsonHeidrick & Struggles

Cleve L. KillingsworthBlue Cross Blue Shield of Massachusetts

David C. Leach, MD

William E. MoellerUnitedHealth Group

William H. NelsonIntermountain Healthcare

Stephen M. Shortell, PhDUniversity of California, Berkeley

Marie E. SiniorisNational Center for Healthcare Leadership

Joseph R. SwedishTrinity Health

Gail L. WardenHenry Ford Health System

B u l let i n o f t h e N at i o n a l C e nte r fo r H e a l t h c a re L e a d e r s h i p


November 2008 3

EDITORSJanet M. Corrigan, PhDNational Quality Forum

Timothy R. RiceMoses Cone Health System

MANAGING EDITORJoyce Anne WainioNational Center for Healthcare Leadership

CONTRIBUTING EDITORLisabeth WeinerLisabeth Weiner Consultants, Inc. www.lisweiner.comChicago

ART DIRECTORLisa Klein Pisa Design, Inc.www.pisadesign.comChicago

PHOTOGRAPHY Courtesy of George Sinioriswww.georgesiniorisphotographyworld.com

JOURNAL COMMITTEEJanet M. Corrigan, PhD, Co-chairPresident & CEONational Quality Forum

Timothy R. Rice, Co-chairMoses Cone Health System

Janis P. Bellack, PhD, RNMGH Institute of Health Professions

David L. BerndSentara Healthcare

Margaret EllisJohnson & Johnson Health Care Systems

John R. GriffithUniversity of Michigan

Michael D. HaysNational Research Corporation

David C. Leach, MD

John M. Lowe, PhDSimmons College

Marie E. Sinioris (ex-officio)National Center for Healthcare Leadership

Mark D. Smith, MDCalifornia HealthCare Foundation

David TiltonAtalntiCare Health System

National Center for Healthcare Leadership515 North State Street, Suite 2000Chicago, Illinois 60654telephone: 312.755.5017 fax: 312.755.7498

For more information about NCHLvisit our Web site at www.nchl.org.

Copyright © 2008

Bulletin of the National Center of Healthcare Leadership.

All rights reserved. No part of this publication may be reproduced or

transmitted in any form or by any means, electronic or mechanical,

including photocopy, recording, or any information storage and

retrieval system, without written permission.

The American Hospital Association

is proud to salute theNational Center for

Healthcare Leadership2008 National Healthcare

Leadership Award Recipient

For her commitment in

improving health care leadership.

Patricia A. Gabow, M.D.Chief Executive Officer

Denver Health

5November 2008


Leadership development at all levels of healthcare organizations

is widely recognized as a linchpin to success, but in the

National Healthcare Leadership Index survey conducted by NCHL

in partnership with the National Research Corporation many

healthcare systems and hospitals were highly deficient in succession

planning and talent management for top administrators com-

pared to benchmarking organizations from outside healthcare.

“These results underscore an important disparity in leadership

development in healthcare,” NCHL President and CEO Marie E.

Sinioris said. “First, the survey found that on a seven-point scale

rating a succession planning process that incorporates talent

management at all levels of the organization, not just the very

senior levels, Fortune 100 organizations averaged 6.7, NCHL

Leadership Excellence Networks (LENS) averaged 5.3, while

all other hospitals and health systems were at 4.2.” LENS also out-

paced the rest of healthcare for the involvement of senior man-

agement in succession planning and talent management

(Chart 1).

Overall, the survey also showed that 17 percent of administrative

leaders received a great deal of talent management compared

with 6 percent for medical leaders and 9 percent for nursing leaders.

Additionally, while 14 percent of administrators were provided

with a “great deal” of succession planning, medical leaders

received it 7 percent of the time and nursing leaders 8 percent.

And while 18 percent of administrators participating in the

survey used 360-degree feedback a “great deal” of the time

that was true among 13 percent of nursing leaders and

6 percent of medical leaders. According to the survey

findings, LENS organizations are more likely to use metrics to

measure their succession planning and talent management

processes compared to both benchmark companies and the

rest of the healthcare industry (Chart 2).

Survey Stresses Value of Leadership Development for Healthcare Organizations

C H A R T 1 : C H A R T 2 :

L E N S M E M B E R S S CO R E W E L L O N K E Y L E A D E R S H I P D E V E LO P M E N T M E A S U R E S

S E N I O R M A N AG E M E N T AC T I V E LY I N VO LV E DI N B OT H S U CC E S S I O N P L A N N I N G A N D TA L E N T P O O L M A N AG E M E N T

S P E C I F I C M E T R I C S U S E D TO G AU G E R E S U LTSI N S U CC E S S I O N P L A N N I N G A N D TA L E N TM A N AG E M E N T P R O C E S S

A Great Deal 7

Not at All 1

2

3

4

5

6

Fortune 100BenchmarkCompanies

LENS Other Hospitals& Health Systems

6.05.7

4.2

5.0 5.2

3.3

A Great Deal 7

Not at All 1

2

3

4

5

6

Fortune 100BenchmarkCompanies

LENS Other Hospitals& Health Systems

While overall healthcare companies significantly lag non-healthcare companies on key succession planning and talent management attributes, which are considered to be essential best practices for leadership development, healthcare organizationsthat belong to the LENS performed on par or exceeded the Fortune 100 benchmark companies in a recent leadership survey.

Source: Study conducted by NCHL in collaboration with the National Research Corporation released in 2008.

The women and men of Catholic Healthcare West

provide quality health care services 24 hours a day,

seven days a week. Delivering quality health care is

what we do every day. It is our mission. Our calling.

And we are committed to doing it well. In addition to

being passionate about patient care, we are committed

to community outreach, ardent advocates for the

underserved, and dedicated to ensuring that quality,

affordable health services are available to all who

need them.

Visit us online at: www.chwHEALTH.org

Healing People,Strengthening CommunitiesTM


Bulletin of the National Center for Healthcare Leadership6

Indeed, similar themes were common among top performers:

it starts with people—hiring the best, creating a caring

culture, linking mission and values first.

Organizations responding to the survey also said that despite

their strong belief in the importance of succession planning,

talent management, and 360-degree feedback, the lack of

financial resources, time, and senior management motivation

could be barriers to implementing such programs. In open-

ended comments, some survey participants explained what

happens when leadership training is left unattended:

• “We have in the past just promoted people to ‘fill spots’ with-

out training and we are paying the price for that now. We are

in a remediation plan with many of our mid-level managers.”

• “We say that leadership development is important; but our

actions do not match that. “

“One of the most important things NCHL is researching is increasing

the effectiveness of senior leadership teams,” Sinioris said. “Not

only will healthcare organizations benefit greatly when all mem-

bers of management receive leadership development, but

the teams themselves benefit from the opportunity to work and

grow together.”

The National Healthcare Leadership Index survey was devel-

oped and tested in 2007, and it will be circulated annually to

healthcare systems and hospitals to raise awareness of leader-

ship best practices and to provide these organizations with the

ability to examine their relative strengths and opportunities

with regard to leadership development. The individual sys-

tem/hospital results can be compared to other healthcare

organizations and non-healthcare Fortune 100 organizations.

The next National Healthcare Leadership Index survey, which

will be distributed to all hospitals and health systems across

the U.S. this winter, is based on 59 questions related to critical

leadership issues, including Leadership Competencies,

Governance, Diversity & Cultural Proficiency, Succession

Planning/Talent Management, Recruitment & Selection,

Leadership Learning & Development, Performance Management,

Leadership Reward & Recognition, and Job Design/Work Systems.

For more information about Leadership Excellence Networks

or the National Healthcare Leadership Index, contact NCHL

at 312 755 5017 or visit www.nchl.org.

If there is any question in your mind that healthcare leadershipneeds to be reinvented, consider these statistics:

• CEO turnover in United States hospitals has ranged from 14 to 18 percent per year over the past decade.1

• The average tenure of CEOs in their current position is 5.5 years; the median is 3.6 years.2

• 67 percent of 3,572 CEOS in hospitals affiliated with theAmerican College of Healthcare Executives are 50 or older—indicating a large number of retirements in the next five to 10 years.3

• Two out of five new CEOS fail in their first 18 months on the job.4

• 62 percent of the CNOs responding to a survey said theyexpect to make a job change in less than five years.5

The unprecedented challenges facing healthcare demand newleadership approaches and a reinvention of the supportingmanagement systems. The NCHL and GE Institute forTransformational Leadership (Institute) represents an importantstep toward reinvigorating leadership and creating a revolutionin safe, high-quality, cost-effective, and efficient care. The Institutehelps healthcare organizations strengthen their leadershipteams and set in place long-term initiatives that enable themto recruit, develop, reward, and retain leaders at all levels. Theseprograms produce leaders aligned with the strategic goals oftheir organizations—leaders who are able to build strong teamsand are empowered to drive and manage transformationalchange. Succession planning processes identify top performersin the organization and get them ready for progressively biggerroles. Development programs emphasize action learning, inwhich participants learn best practice methods, study key com-


November 2008 7

Copyright 2007, NCHL and GE Institute for Transformational Leadership

Competency-based, cross-professionalLeadership Development Programs for healthcare leaders to be successfulthroughout their careers

Leadership & Strategic Management Systems to accelerate change and sustain a performance culture

Institute for Transformational Leadership

Reinventing Healthcare Leadership

8 Bulletin of the National Center for Healthcare Leadership


petencies and behaviors, and practice new skills by working onprojects, supported by thought leaders, experts, and coaches.

Formed in 2007, the Institute is a collaboration of the NationalCenter for Healthcare Leadership (NCHL) and GE Healthcarewith a vision to help develop leaders who can quickly andbroadly improve healthcare efficiency and quality. It combinesthe proven leadership development systems and practices, forwhich GE is globally admired, with NCHL’s healthcare leader-ship research, evaluation, and benchmarking expertise.

The Institute’s growing portfolio of consulting services anddevelopment programs develop and empower leaders—fromnewly promoted front-line managers to seasoned senior exec-utives—to focus their organizations on improvement with pro-grams that:

• Are competency-based, with specific applicability to healthcare

• Emphasize an appropriate mix of trained trainers, faculty,use of practitioners, content experts, and mentors

• Utilize blended learning, including appropriate use of technology, e-learning, experiential learning, and actionlearning to solve real-time challenges

• Support participants’ learning with coaches and/or othercontent experts throughout the experience

• Are evaluated for learning outcomes and performanceimprovement

For more information about the Institute, please visitwww.nchl.gehealthcare.com

References

1. The Impact of Hospital CEO Turnover in U.S. Hospitals, Final Report.

Prepared for American College of Healthcare Executives by

Department of Health Administration and Policy, University

of Oklahoma, College of Public Health, 2005.

2. Ibid.

3. Membership Department, American Hospital Association. Special

data tables. January 1, 2007. Data compiled with membership

database of the American College of Healthcare Executives,

which provided the ages of the identified CEOs.

4. Charan, Ram, Ending the CEO Succession Crisis. Harvard

Business Review, Feb 1, 2005.

5. Chief Nursing Officer Retention and Turnover: A Crisis Brewing.

American Organization of Nurse Executives, 2006

FOUNDATIONALComprehensive,

Level/Role-SpecificCourses

Individual Contributor

Front-LineManagers

Manager of Managers

Senior Executives

SPECIALIZEDTopical, Deep-Dive

Courses(Most will vary in complexity

depending on targetrole or level)

Advanced Leadership Devopment Program

Emerging Executive Program

Advanced Management Course

Essentials of Leadership Excellence

Strategic Human Resources

Advanced Facilitation Skills

Change Management (CAP & Work-Out)

CAP for Leaders

Copyright 2008, NCHL and GE Institute for Transformational Leadership

An Integrated Curriculum for Healthcare

9November 2008


Kenneth KaufmanManaging PartnerKaufman, Hall & Associates

Lisa GoldsteinSenior Vice President/Team LeaderNot-for-Profit Healthcare RatingsMoody’s Investors Service

INTRODUCTION

During the past decades, a significant body of literature hasbeen published on the subject of leadership and organizationalperformance. Most authors infer a positive correlation betweenexcellence in leadership and organizational results. Asexpressed by best-seller authors,1 transforming leaders movetheir organizations from good to great and sustain such performance in continuous search for excellence.

Top-notch leadership appears to correlate tightly with above-average organizational performance in many peoples’ minds.Leadership attributes and activities that engender high-performance organizations have been the subject of consider-able research, but an exploration of causality is often elusive oraltogether absent. In this instance, causality is the relationshipbetween a leadership activity, such as building a strong team,and another experience that is a direct consequence or result ofthe team building, such as improved competitive performance.Causality explores why and how having a strong team reallymatters to competitive performance.

The body of literature specific to hospital/health system leadershipis developing rapidly as healthcare assumes center stage onthe nation’s agenda. Increasing costs and competition andsafety and quality imperatives challenge healthcare executivesto identify and apply successful leadership approaches commonin other industries. Best practices in hospitals that use suchapproaches are increasingly available from associations andorganizations serving the field.

This white paper aims to advance this process by identifyingfive leadership activities that consistently occur in financiallysuccessful not-for-profit healthcare organizations. We definesuccessful organizations as those that achieve strong financial

results year-in and year-out. How do the leaders of these organ-izations achieve such results? Like other works before it, thewhite paper assumes a positive correlation between actionsand results, and as much as possible explores the linkages orcausality between these.

To identify the management activities that really matter inhealthcare, we turned to some of the best and brightest executivesin the industry. Chief executive officers and chief financial officersof ten not-for-profit hospitals and health systems granted usinterviews, which occurred in July and August of 2008. Threesenior executives of the credit rating agencies, who evaluatemanagement and organizational performance on a regularbasis, also participated in this project in order to provide a capitalmarkets perspective (see sidebar on next page for full list).

The healthcare executives lead organizations that vary in typeand size, ranging from small regional systems, to urban academic medical centers, to large multi-state health systems.Each organization experiences healthcare’s current challenges,including increasing competition, reimbursement constraints,and significant capital requirements. Some of the organizationsare in healthy markets with a good payer mix and patientdemographics; some are not. Most experience competitionfrom other hospitals in the region and from physicians andother for-profit players.

Independent of similarities or differences, the executives provided remarkably consistent input regarding what theyconsider the most important aspects of their jobs and, withinferred causality, the key factors contributing to organizationalsuccess. The activities were as follows:

1. Visioning in partnership with the board

2. Building and sustaining a strong and accountable executive team

3. Developing a high-quality, integrated plan

4. Skillfully executing the plan and managing the fundamentals

5. Building and maintaining credibility

We organized the white paper around these five activities and how these activities contribute to financial success.Whenever possible, the paper’s key points are made in theexecutives’ words.

Leadership and Successful Financial Performance in Healthcare



1. VISIONING IN PARTNERSHIP WITH THE BOARD

The development of an organization’s mission and vision is theresponsibility of its governing board, while the CEO and seniorleaders are responsible for assuring that the organization livesthe mission and vision. There is broad agreement that high-quality boards provide effective management oversight andthat exceptional leaders understand how to get thousands oreven tens of thousands of people moving in the same direction,with the same vision and goals, and a shared sense of purpose.

Collaboration Plus Accountability

We believe that board governance and the relationshipbetween the board and the executive team are primary issuesthat frame organizational success in the current healthcareenvironment. Financially successful organizations have leaderswho can envision, engage, and execute. They also have boardsthat govern around explicit expectations and metrics, guidedby an attitude that senior management will deliver expectedresults on a consistent basis.2

Both partnership and accountability are required. “We look atour boards as partners, but the board’s role is also to hold manage-ment accountable,” says Robert Stanek. “Whether conductedlocally at an individual hospital level or on a system level, thegovernance approach at Catholic Health East focuses on strategicdirection and on oversight of performance, as measuredagainst the mission, values, and goals. Specific performanceindicators, with metrics, targets, and measurement tools areidentified, implemented, and monitored.”

Distinct Perspectives and Roles

The board’s ability to question senior management and not to“rubber stamp” whatever the CEO wants to do is critical. Thesuccessful organizations profiled here have populated theirboards with financial and industry experts who are using theirexpertise from their own professions to question manage-ment’s strategies. The board members educate themselves onthe challenges in the industry and establish appropriatebenchmarks to measure key financial and quality outcomes.3

The rating agencies look closely at board education, wanting tosee a robust process, whether in the form of regular trainingsessions or executive presentations on some aspect of hospitaloperations. Target setting, such as days cash on hand or patient satisfaction scores, should occur jointly with the boardand executive team, with stretch goals reflecting what can be achieved given the organization’s past track record andfuture challenges.

Hospitals/Health Systems

Joel T. AllisonPresident and CEO Baylor Health Care SystemDallas, Texas

Kenneth L. Davis, MDPresident and CEOMount Sinai Medical CenterNew York, New York

Peter L. DeAngelis, Jr.Executive Vice President and CFOCatholic Health East Newtown Square, Pennsylvania

David KirshnerCFOChildren’s Hospital BostonBoston, Massachusetts

Alfred B. Knight, MDCEOScott & WhiteTempleton, Texas

James Mandell, MDCEOChildren’s Hospital BostonBoston, Massachusetts

Peter J. McCannaExecutive Vice President Administration and CFONorthwestern MemorialHealthCareChicago, Illinois

Edward Murphy, MDPresident and CEO Carilion ClinicRoanoke, Virginia

Ralph W. MullerCEOUniversity of Pennsylvania Health SystemPhiladelphia, Pennsylvania

William H. NelsonPresident and CEOIntermountain HealthcareSalt Lake City, Utah

Charles W. Sorenson, Jr., MDExecutive Vice President and COOIntermountain HealthcareSalt Lake City, Utah

Rulon StaceyPresident and CEO Poudre Valley Health SystemFort Collins, Colorado

Robert V. StanekPresident and CEOCatholic Health EastNewtown Square, Pennsylvania

E X E C U T I V E S I N T E R V I E W E D

Rating Agencies

Martin ArrickManaging DirectorNon-Profit Healthcare RatingsStandard & Poor’sNew York, New York

Lisa Goldstein (co-author)Senior Vice President/Team LeaderNot-for-Profit Healthcare RatingsMoody’s Investors ServiceNew York, New York

Jeff SchaubSenior DirectorU.S. Public FinanceFitch RatingsNew York, New York

11November 2008


Although the board-executive partnership involves a high levelof interaction, “a clear distinction between board responsibilitiesand management responsibilities is vital for success,” commentsRulon Stacey. “On an annual basis, our management team andthe board talk about specific responsibilities to assure thateveryone is clear about who does what and everyone has trainingin their respective roles,” says Stacey. “Broadly speaking, ourboard sets policy; our management team implements that policyand runs the organization on a daily basis.”

A successful CEO learns how to build a board that challengeshim or her—not one built in his or her own image. A successfulCEO keeps the board informed, using language that all trusteesunderstand, and learns how to collect and give the board badnews. The communication between the CEO and the boardachieves the right balance between high-level strategic issuesand operational implementation details. The CEO recognizesthat he or she is different from anybody else in the organizationbecause he or she is “the board in residence.” Some CEOs makethe mistake of trying to be in the same club as their board. Theyare not one of them, but they are of them. There is a big difference,notes the partner of a leading executive search firm,4 and thisdifference drives personal and organizational success.

2. BUILDING AND SUSTAINING A STRONG AND ACCOUNTABLE EXECUTIVE TEAM

Without exception, a key activity that executives cite as criticalto how they achieve financial success is building and sustaininga strong team. “Success has little to do with me, but more to dowith how we function within the organization as a team workingtoward our mission and vision,” says Peter DeAngelis.

Given the complexity of healthcare organizations and the tur-bulent environment in which they operate no one person canpossibly possess the requisite insight, intellect, or knowledgebase to position an organization for success. Reflecting thisreality, interviewed executives rarely use the word I. “Use of theword team is pervasive in all we do, from planning throughstrategy implementation. These efforts are not the result ofindividuals working alone,” says William Nelson.

All of the CEOs described the importance of establishing anenvironment that enables the senior executive team to achievesuccess and then supporting the team on an ongoing basis.“Leadership is about creating a culture where people feelencouraged and energized to take on difficult things, rewardedfor successes, and not fearful about prudent failures,” saysEdward Murphy.

F R O M T H E L I T E R AT U R E

A study of the impact of leadership characteristics on corporate stock return performance indicates that, in a turbulent environment, organizations with teams that have a CEO who dominates within the top manage-ment team performed worse than those without a dominant CEO.

Source: Ashley, Allan and Jayen B. Patel: The Impact ofLeadership Characteristics on Corporate Performance.International Journal of Value-Based Management 16:211-222, 2003.

Who’s on the Bus

Executive team building starts with having the right people inthe top spots. Intelligence, alignment of values, and diversity ofperspectives and ways of thinking are key criteria cited by thehealthcare executives interviewed in our study. “Our most valu-able asset is talented leaders whose personal values align withthe values of the organization,” says Charles Sorenson. “Theright competencies and a proven track record are also impor-tant, but we can’t compromise on values; it is paramount.”

“Group think happens real fast, so we take a lot of time to makesure that we have people who use different thought process-es,” says Robert Stanek. We tease these out during the inter-view process, through watching the individual in his/her job, orby talking with colleagues who interact with the candidate. Theintensive process for selecting senior executives at CatholicHealth East involves multiple interviews with multiple people,who share their impressions thereafter. The only person whocan approve the hire is the person to whom the candidatewould report, but anyone interviewing the candidate can haveveto power. Vetoes occur sparingly, but reservations areexpressed more frequently and sometimes these knock a candidate out of the running at the discretion of the superviso-ry executive.

Kenneth Davis describes the need to recruit people whose per-sonalities mesh together well in a task-oriented group: “Abilityto work efficiently in a team and to see the bottom line areimportant. People with personality characteristics, such as aneed to assume full credit for something or to fight with othersabout resources, are not good-fit candidates.” Other personalcharacteristics are important: “It’s easier to make nice peoplesmart than it is to make smart people nice,” says Rulon Stacey.

“We always look for a combination of institutional mindedness,sheer brilliance, and drive,” comments James Mandell.

The interviewed CEOs carefully shape their senior teams, usingindividuals from within the organization and beyond.Generally, the management teams are not afraid to bring innew talents or new areas of expertise when needed to comple-ment current skills and strengths and to make changes in sen-ior management until the right team is in place. “Key for me hasbeen recruiting and developing the senior leaders that canenable this organization to achieve maximum productivity andgrowth,” says Alfred Knight. “My efforts as CEO during the pasteight years have been focused on getting and keeping theright people on the bus.”


A recent survey in the corporate sector indicated thattwo-thirds of executives believed a CEO’s top job is toensure a steady supply of the best management talentstemming from a clear business strategy.

Source: “The ‘Where’ not ‘How’ of Leadership. StrategicDirection 20(6):33-35, 2004.

Decision Making

After assuring that the right people are in the top spots, theinterviewed executives give team members their areas ofaccountability and let them manage those areas, delegatingdecision-making authority to the appropriate level. “Each seniorexecutive is the CEO of his or her department,” commentsRulon Stacey. “They staff the department and make the decisionsin the department.” Kenneth Davis notes this: “When I go onvacation and, because managers have so much authority andcompetence, no one realizes I’m away, I will have achieved mygoal of being the best CEO in this region.”

Team decision making is present in each of the profiled high-performing organizations. “I have an unwritten rule in mytenure as CEO,” says Robert Stanek. “I want to be able to count onone hand the number of unilateral decisions I’ve had to make.”

Unlike consensus decision making, which can be “cripplinglyslow” in a complex, multi-state organization, constituents in theparticipative decision-making process used at Catholic HealthEast are invited to provide input in the dialog. “Because we’revery clear on our overall structure as an organization, the rightpeople are at the table and involved with this process, but theend-result doesn’t have to be a consensus, just a comfort levelabout what’s been involved in making the decision,” says Stanek.

Effective leaders allow others to participate in and/or makeimportant decisions, recognizing that engaging others activelyin making organizational decisions yields better outcomes.Because no one person is all-knowing, the interviewed execu-tives of high-performing hospitals act on the axiom that manyminds are better than one. Teams operate as a cohesive group,with no one member dominating the discussions.5

Goals, Incentives, and Accountability

The interviewed executives cited the importance of inter-dependent goals, aligned incentives, and individual accounta-bility for the executive team and staff organization wide.

In a number of the hospitals and health systems, multiple insti-tutional goals, as articulated through an integrated planningprocess described later, cascade throughout the organization.“Our performance management and incentive programs atBaylor are connected to our four pillars, which are achievingbest in class for quality, service, people, and finance,” describesJoel Allison. “We identify and monitor core measures for each ofthese, and tie everyone’s individual goals to the pillars, holdingthem accountable for goal achievement.” The board sets thetargets and percentage incentive awards for achievement oftargets at 30 percent for quality, 35 percent for service excel-lence, 25 percent for finance, and 10 percent for people.

At Northwestern Memorial Hospital, three high-level organiza-tional goals—best people, best patient experience, and excep-tional financial performance—each have defined deliverables,which in turn have identified strategies, tactics, and milestones.“These board-approved goals ultimately drive individual com-pensation, which aligns goals, incentives, and accountabilityorganization wide,” describes Peter McCanna. Without suchalignment, organizations are at risk for warring agendas.

A five-year study of “must-have” management practices in successful companies indicates that “winning” organizationsdesign and support a culture that encourages outstandingindividual and team contributions, holding employees—not just the executive team—responsible for success.6 Ninetypercent of the companies in the study tightly linked pay to per-formance. “The winners were scrupulous in setting specificgoals, raising the bar every year, and enforcing those bench-marks. No bonuses, stock options, or other rewards were givenwhen targets were missed,” note the authors.6

Intermountain Healthcare provides a good example of suchbehavior. In 2006, the board established the target of achieving80 percent of 25 different stretch goals for clinical best practices.If achieved, the performance improvement program wouldhave provided an incentive payment for executive and clinicalstaff. The organization came very close to the goal, achieving



76 percent completion. “Falling short of the goal resulted in adecreased incentive payment for a significant number of oursenior administrative and clinical staff,” says Charles Sorenson.“But that wasn’t the most painful thing for them. Rather, themost painful thing was professional embarrassment that theyhad not accomplished what so many at Intermountain havecome to recognize as our first priority—demonstrating signifi-cant improvement in clinical quality.” The result was increasedresolve to improve performance in 2007. “That year, for the firsttime, we achieved 100 percent of our stretch goals in clinicalquality. It was a matter of professional pride in doing a goodjob,” comments Sorenson.

The expectation of being a straight-A student is pervasive”when things don’t go according to plan and there’s a perform-ance gap. We try to instill the fact that the best thing you cando once you identify a gap or problem is to share it and reachout for help. Accountability remains with the individual, but ina supportive culture, teams solve the problem more efficientlyand effectively than individuals,” observes McCanna.

Executive Team and Staff Development

Interviewed executives cite the importance of developmentinitiatives for senior leaders and the entire staff. Given the relative newness of leadership development practices inhealthcare, as cited in the literature,7,8 their emphasis indicatesthat these high-performing organizations are early adopters ofbest practices from other industries (see sidebar).


While some aspects of leadership, such as core personalityand values, are more or less fixed at an early age, otheraspects can be developed even well into adult life andare the most likely to be changed through leadershipdevelopment efforts. Such aspects include understand-ing the big picture, effective communication, leadinginnovation, directing change, and building trust.

Source: Tubbs, Stewart L., and Eric Schultz: “LeadershipCompetencies: Can They Be Learned? The Business Review,Cambridge. 3(2)7-12, Summer 2005.

As described by the executives, leadership development takesmany different forms, including regular (i.e., weekly) coachingor mentoring sessions, 360-degree feedback, skill-based training,quarterly leadership development institutes, business schoolmanagement programs, or sessions for clinical and executiveleadership, and many other educational initiatives.

Educational and stretch opportunities, such as job trainingoptions and job assignments in areas beyond normal responsi-bilities, and low turnover are indicators that these hospitalsvalue talent management, seeking to groom their employeesthroughout the ranks. For example, the senior vice presidentresponsible for strategic planning and the quality agenda atNorthwestern Memorial Hospital is now leading an initiativefor revenue-cycle process improvement. Making it onto thelocal, regional, and national lists of the best places to work, governance participation, and job empowerment are amongthe many indicators that the hospitals are doing an excellentjob of employee professional development, note the ratingagency executives.

A thorough development program for all staff is in place atCatholic Health East, with a competency model that definesgoals and tactics for development at the executive/vice presi-dent, director, managerial, and supervisory level (see Table 1 fora portion of the program’s goals). In addition, a talent manage-ment group, consisting of members of the senior team andCEOs of system hospitals, reviews the profiles, skill sets, and

B E S T P R AC T I C E S I N H E A LT H L E A D E R S H I P TA L E N TM A N AG E M E N T A N D S U CC E S S I O N P L A N N I N G

• Linkage to organizational strategy and business priorities

• Multilayer succession planning and talent development

• Streamlined talent reviews and follow-up processes

• Rigorous, repeated assessment of potential

• Integrated use of a leadership competency model

• Emphasis on on-the-job experience and highly customizedemployee development

• Talent pool management

• Active involvement of senior management

• Dialogue with potential future leaders

• Tight linkage between talent management and external recruiting

• Executive “on-boarding” (devoting resources to assimilating new executives or executives in new roles)

• Tight linkage between talent management and compensation

• Establishment and tracking of metrics

Source: Sinioris, Marie E. (Ed.): Best Practices in Health Leadership TalentManagement & Succession Planning. Chicago: National Center forHealthcare Leadership, 2006.


November 2008 13

M O R E S T R AT E G I C F O C U S M O R E TAC T I C A L F O C U S

LO N G E R T E R M / F U T U R E F O C U S M O R E I M M E D I AT E F O C U S



Building Organizational Talent

Diagnoses capability and developmental needs—Determines the mix and level of capability required by the business to support current andfuture objectives; assesses the key strengths anddevelopment opportunities of groups.

Scans environment for developmental assignments—Identifies developmental assignments and thepotential learning in the assignment; matchesassignments with individual developmental opportunities.

Champions talent management—Provides high visibility to individuals with potential;offers challenging managerial assignments thatbuild confidence and credibility; provides such individuals with a personal vision for this future.

Creates a learning culture—Aligns support systems, accountabilities, and incentives, which ensures a learning environment.

Ensures differential reward systems and processes—Supports and advocates deserving individuals;actively pursues appropriate recognition, rewards,and resources for strong performers; when necessary,defends strong performers, even in the face of challenges.

Aligning Performance for Success

Sets performance goals—Collaboratively works with direct reports to setmeaningful performance objectives; sets specificperformance goals and identifies measures forevaluating goal achievement.

Establishes approach—Collaboratively works with direct reports to identifythe behaviors, knowledge, and skills required to achieve goals; identifies specific behaviors,knowledge, and skill areas for focus and evaluation.

Creates a learning environment—As necessary, helps secure resources required tosupport development efforts; ensures that oppor-tunities for development are available; offers tohelp individuals overcome obstacles to learning.

Collaboratively establishes development plans—Collaboratively identifies observation or coachingopportunities, training, workshops, seminars, etc.,that will help the individual achieve important goals.

Tracks performance—Implements a system or uses techniques to trackperformance against goals and to track the acquisition and use of appropriate behaviors,knowledge, and skills.

DEVELOPING PEOPLE:

Commitment to ensuringthat others reach their fullpotential, including designand execution of effectivedevelopment strategies.

C O M P E T E N C Y E X E C U T I V E / V P L E V E L S U P E R V I S O R Y L E V E L

TA B L E 1 : S A M P L E P O R T I O N S O F CO M P E T E N C Y M O D E L

Source: Catholic Health East, Newtown Square, PA. Used with permission.

training and development activities of more than 200 execu-tives across CHE.

Continuity or succession planning for senior executives alsovaries from informal to highly structured. Baylor Health CareSystem’s high-end approach uses a customized multi-raterassessment tool to identify and develop successors for eachkey management position and a leadership inventory tool,which provides a rich picture of personal attributes that under-lie executive performance and is key to creating self-awarenessand motivation, notes the system’s senior human resourceexecutive. The University of Pennsylvania Health System usesacuity, ability to work in teams, accomplishment, and other criteria from the organizational development literature and

rates 30-40 people to be groomed for leadership every twoyears. “The process forces us to be more objective and some-times identifies people that may not have been at the front ofour minds,” says Ralph Muller.

Most of the interviewed executives cited the importance ofsuccession planning many years in advance of retirement forthe CEO and other top executive leaders in order to minimizestrategic and organizational disruption. A long-planned andseamless CEO transition occurred at Northwestern MemorialHospital in 2006 and will soon occur at IntermountainHealthcare at year-end 2008. Poudre Valley Health System hasa well-developed succession plan for both management andthe board, whose members have four-year terms. The rating

M O R E S T R AT E G I C F O C U S M O R E TAC T I C A L F O C U S

LO N G E R T E R M / F U T U R E F O C U S M O R E I M M E D I AT E F O C U S

15November 2008


agencies typically probe for whether the organization has asuccession plan when evaluating management and gover-nance functions. The development and execution of successfulsuccession strategies over a multiyear period assures continu-ity when there is management turnover.

3. DEVELOPING A HIGH-QUALITY, INTEGRATED PLAN

We believe that disciplined planning is a chief characteristicand common thread of the most successful hospitals andhealth systems. Driven by the board of trustees and executiveteam, such planning assures appropriate analysis, integration,and coordination of mission-based and strategic endeavors.Ingrained in the culture and occurring organization wide, rigorousplanning in fact provides the framework to achieve positiveresults in all dimensions—strategy, clinical quality, physicianengagement, operations, staffing, and financial performance.

Board Involvement, Mission-Driven, With a Long View

Executives at the profiled organizations cite the critical impor-tance of planning in assuring the organization’s continued abilityto meet its mission in the community. The planning theydescribe starts with an engaged board of trustees and CEO,who set the tone for the organization, establish managementexpectations, and engender broad participation, ensuring thatthe organization makes a real commitment to planning.

“To meet our responsibility of being good stewards of ourresources, we’ve put in place a very specific planning processinvolving a long-term capital and operating plan,” notes JoelAllison. “While our margins compared to other industries arethin, planning enables us to identify the financial targetsrequired to achieve our vision, reinvest in our people, and meetour mission into the future.”

All the executives cited a long vision (five to thirty years) asimportant. For example, according to David Kirshner, Children’sHospital Boston takes a 15-year view of the uses and sources ofcapital to establish the context for the hospital’s long-term success.Profitability is not the be-all-and-end all, but the means to theend, executives note. “We would never set goals to maximizefinancial returns because we’re focused on helping peopleunderstand that great care is terrible care if nobody can affordit,” says Charles Sorenson. “Great financial performance allowsus to enhance mission, and, as one of our board members artic-ulated, ‘mission is part of our DNA,’” comments Robert Stanek.

Strategy and Finance Linked

Planning guides the profiled organizations toward strategiesaccomplished within the constraints of financial capability. Forexample, Intermountain Healthcare’s capital planning model

enables executives to forecast strategic capital needs and theincome required to support such needs over a 30-year period.From this planning model, the system’s leaders develop a five-year financial plan, which is integrated with the long-termstrategic plan, and updated each year. “This planning processhas been at the core of being able to manage our organizationin a financially prudent way,” comments William Nelson.

Capital market players want to see an effective planningprocess with a long time horizon and realistic projections (seesidebar). Additionally, an organization that links strategy tofinancial projections demonstrates that it is using a disciplinedprocess to set priorities and make tough decisions aboutrequired profit margins, capital expenditures, debt levels, andother financial issues. The absence of such financial projectionsthat prove affordability completely discredits an organization’sstrategy.9 Plans that include sensitivity analyses related to keyprojections and assumptions are helpful in evaluating projects,note the rating agency executives. This enables the organizationto understand best-case and worst-case impact of specificstrategic scenarios so that contingency plans can be developed.

Cyclical, continuous planning occurs in all the organizationsprofiled here. “We plan 12 months a year; it never really ends,”comments Peter DeAngelis. “And the better we plan, the betterwe can be at executing.”

Data-Based and Quality-Focused, with Clinician Buy-In

The interviewed executives identified the importance of collecting and analyzing data to “interpret the signals” from a

A C A P I TA L M A R K E TS’ P E R S P E C T I V E O N I N T E G R AT E D P L A N N I N G

“Many organizations are now integrating their strategic, financialand capital planning into one process. In years past, these analyseswere often done independently with little integration. Overall,management teams continue to become more skilled and sophis-ticated in their planning with more information technology tools at their disposal to assist with forecasting.

“The hospital industry continues to be challenged by the ever-present threat of regulatory, policy and funding volatility, which webelieve necessitates a strong commitment to planning. We haveobserved increased board oversight and engagement in planningactivities as well as a greater effort by hospital management toinclude physicians and nurses into the planning process. We viewthese enhanced planning efforts favorably and believe that theintegration of strategy, finance and capital will help reduce negativecredit effects during periods of future uncertainties in the industry.”

Source: Moody’s Investors Service. Not-for-Profit Healthcare Sector:2008 Industry Outlook, Jan. 2008

very complex environment. “Whether looking at data related toMedicare and Blue Cross payments, demographics, or competitors,we assess what we should be doing over a multiyear period inlight of our capabilities and mission,” says Ralph Muller.“Leaders have to do everything they can to understand thebusiness; this requires constant learning predicated on reallyunderstanding the organization’s current reality in its market-place and bigger environment,” remarks Peter DeAngelis.

In describing an important leadership competency, a numberof the executives noted “the ability to interact sufficiently withthe macro-environment in order to understand major trendswhile simultaneously dealing with internal operations and theorganization’s microenvironment. The quality of data analysisrelated to both environments is vital. So is the ability to flipback and forth between the big picture and organizationalspecifics in order to understand how external factors might beaffecting the organization.

Due to the significant strategic, competitive, and financial ramifications of clinician alignment/engagement (or not),physician input and participation in the planning process arecited as critical by all interviewees (see sidebar for one ratingagency’s perspective). “Physicians and clinical staff are vital toour mission and strategy of providing safe, high-quality care, so we truly engage clinicians in our planning and decision-making processes,” remarks Joel Allison. David Kirshner comments that more than 100 clinicians are involved in businessplanning at Children’s Hospital Boston, which gives these

clinicians “a deep understanding of strategy and finance,including the level of cashflow required to adequately reinvestin the organization.”

The executives commonly mention assuring that quality initiativesare integrated within the strategic financial plan and puttingquality “first on the agenda” operationally. Physician and nursing leaders shape the quality program at the profiledorganizations. “Quality is a must for competitive and financialhealth,” describes Peter DeAngelis. “If you cannot offer a qualityproduct in a particular service line or area, take the resourcesand use them where you can create a quality product.” WilliamNelson describes the benefits of Intermountain Health’s long-timestrategic focus on best clinical practices: “As we reduce variationin clinical care processes, outcomes improve and costs decline,resulting both in improved care for our patients and, webelieve, in improved overall performance for the organization.”“High quality, safe care is cost-effective and financially prudent,”notes Rulon Stacey. It must be part of an organization’s plan.

In evaluating the leadership team and an organization’s per-formance, the rating agencies look at service and cost efficien-cy, patient satisfaction, ability to recruit and retain highly com-petent physicians and nurses, and other attributes commonly ascribed to a “high-quality organization.” Such fac-tors can differentiate one organization from another, therebyaffecting market strength, competitive differentiation, and over-all financial performance, they note (see sidebar).

Consumers, payers, employers, and other stakeholders accessnational averages in infection rates, medication errors, andother safety-related data to determine whether the organiza-tion and its caregivers provide high-quality care. “It’s easy for a

E F F E C T O F P H YS I C I A N R E L AT I O N S O N H E A LT H C A R E C R E D I T

While the nation struggles with questions over healthcare reform,changes to the industry are forcing U.S. not-for-profit hospitals toanswer a more immediate puzzle: how best to manage operations as relations with physicians continue to evolve.

In general, physician relations have become significantly more complex,and hospitals face greater risk of losing patient volumes due to shiftingphysician loyalties or competition from doctors performing servicesin their offices, outpatient centers, and physician-owned inpatientfacilities. Hospitals have reacted to the increased complexity in a varietyof ways, including employing more physicians, shifting to an employedclinic model, and forming joint ventures with physicians.

As physicians will always be an integral part of healthcare operations,their relationships with healthcare organizations—whether positiveor negative—will continue to have an affect on not-for-profit creditratings for years to come.

Source: Standard & Poor’s: Evolving Physician Relations Continue to AffectU.S. Not-for-Profit Healthcare Credit. Special Report, March 19, 2007.

Q UA L I T Y A N D T H E B OT TO M L I N E : W H AT T H E R AT I N G AG E N C I E S A R E S AY I N G

“Quality improvement is not just a goal unto itself, but alsogood for the bottom line.”

— Standard & Poor’s

“A strategy aimed at quality can result in improved marketshare and volumes, better ability to recruit and retain staff,lower nursing vacancy/turnover rates, improved financial performance and better credit position.”

— Moody’s Investors Service

“Fitch continues to believe that investment in capital projectsrelated to quality and patient safety will be a differentiatingfactor in hospital credit quality ratings going forward.”

— Fitch Ratings



hospital to say that its stands for excellence in patient care, butdelivering such excellence requires relentless measurementand data analysis,” remarks Kenneth Davis. “Tracking infections,bed sores, falls, and other adverse occurrences by unit, makingsure that staff is accountable for those numbers, and never giv-ing up on performance improvement requires dedication anddiligence. Assuring that quality is more than lip service meansmaking quality part of the culture and the plan.

The key output of the planning process described here is a fis-cally sound business plan that provides the platform for bothlong-term and day-to-day decisions, enabling staff at all levelsto respond to opportunities and challenges in a flexible, coor-dinated manner, note the interviewed executives. The plan out-lines the organization’s growth strategy and how it will pursue,fund, and monitor initiatives. It includes contingency planning,which aims to maximize outcomes while reducing businessrisk of failure and generating a profitable bottom line.


In a research study aimed at determining the associationbetween hospital strategic planning processes and financialperformance, three dimensions of the strategic planningprocess were found to be positively associated withfinancial performance. Having a strategic plan, assigningthe CEO responsibility for the plan, and involving theboard in planning positively correlated to financial indicators of net income and profit margin. “Further longitudinal studies are needed to evaluate the cause-and-effect relationship between planning and perform-ance,” concludes the lead author, Amer A. Kaissi, PhD, ofTrinity University in San Antonio.

One survey published in the literature indicated thathigh-performing not-for-profit organizations also haveboards that focus attention on strategic “matters of significant magnitude.” These “strategic boards” developplans to enact priorities and consistently monitor theimplementation of priorities into action, notes William A.Brown of Arizona State University.

Commenting on the leadership skills needed to achievehigh-quality care, Bruce M. Bartels, President of WellspanHealth said, “The ability to couple the use of resourceswith the attainment of quality is a critical leadership skill.This means managing finances without disrupting thequality of clinical service or customer service. The financialpressures from limited resources and more rapidlyincreasing expenses affect all aspects of service delivery.

Balancing these opposing forces requires developingmethods to constantly evaluate operating practices and policies.”

Sources: Kaissi, Amer A., and James W. Begun: “StrategicPlanning Processes and Hospital Financial Performance.”Journal of Healthcare Management 53(3): 197-209,May/June 2008; Brown, William A: “Exploring theAssociation between Board and OrganizationalPerformance in Nonprofit Organizations.” NonprofitManagement & Leadership vol. 15, no. 3, Spring 2005;Bartels, Bruce M: “On Leadership in Healthcare.” KaufmanHall Report, Fall 2001.

4. SKILLFULLY EXECUTING THE PLAN

Having an integrated plan is essential, but it is not the wholepicture, remark the interviewed executives. “Plan execution iswhat separates the good from the great,” says Robert Stanek. “I would suggest that if you read the strategic plans of 50healthcare organizations, you would probably find more than85 percent consistency in the outlined strategies. The real lead-ership difference emerges with who can implement theirplans, translating these into very, very detailed operationalactivities that enable the organization to achieve its targets.”

Managing the Fundamentals with Attention to Performance Indicators

The interviewed executives each describe the importance ofday-to-day, month-to-month, and year-to-year management of“the fundamentals,” an activity that Edward Murphy describesas effective blocking and tackling. “We set our targets and buildour budgets based on our plan, monitor our performanceclosely, and provide for adjustments or corrections that need tobe made in order to stay on course,” notes Joel Allison. Keepingthe organization on track as the plan is executed requires whatPeter McCanna calls “a heavy dose of management discipline”and a willingness to “not duck the ugly and to be direct aboutwhat we do,” adds David Kirshner.

Physician CEO Alfred Knight structured the senior executiveteam for maximum attention to operating fundamentals. Theorganization’s chief medical officer is also the chief operatingofficer at the system level. “Truly integrating operations withthe medical performance piece has been powerful for Scott &White,” says Knight.

Established as part of the planning process, target financialmetrics for all of the profiled organizations include those used


November 2008 17



to establish creditworthiness in a particular rating category. Forexample, Children’s Hospital Boston uses Aa2 mediansachieved by other similarly rated organizations as its standardto monitor organizational performance relative to peers, saysDavid Kirshner. Financial ratios tracked closely by the leader-ship team at University of Pennsylvania Health System includeoperating margin, days cash on hand, debt-to-capitalization,and other indicators used by the agencies to set appropriatedebt ratings. “Our goal is to assure that we maintain the infla-tion-adjusted real value of the organization’s financial assets bygrowing revenues more than expenses,” says Ralph Muller.

All organizations also closely monitor operational metricsusing historical benchmarks and national data. For example,because growth is a key goal for Scott & White, Alfred Knightand the management team carefully review productivity indicators. “Department heads and senior executives examinenursing hours per adjusted occupied beds, average daily census, throughput, and other indicators on a frequent and rigorous basis,” says Knight.

Benchmarking and Best Practices

Benchmarking in the profiled organizations often occurs acrossmany performance domains. For example, during quarterly half-day meetings with each department chair at Mount SinaiMedical Center, every metric of the organization’s performanceis reviewed in “microscopic detail,” including fiscal, quality, utilization, referral, and many other measures. “The senior management team selects from a long list of metrics those thatare most relevant to our critical activities,” says Kenneth Davis.“Valid and reliable internal and external benchmark data drivethe process. “No excuse is accepted for not succeeding andproving ourselves with selected benchmarks, whether coremeasures established by the Centers for Medicare & MedicaidServices or our own patient satisfaction scores.”

“Challenging the status quo” should occur in all organizations,whether considered highly successful or struggling, commentsPeter McCanna. “Part of our job as leaders is to not becomecomplacent, but to raise the performance bar by always asking‘how do we make performance better?’” James Mandelldescribes the in-depth self audit performed at Children’sHospital Boston to “ask the tough questions, and look not athow great we are, but where we can improve.”

The effective sharing of best practices is one technique forimprovement cited by numerous executives. “One of the mostvaluable aspects of being a part of a large system is the abilityto share best practices,” comments Robert Stanek. “Our role asleaders is to figure out how to mine those practices and spreadthem across the organization.” CHE has established best practice

Web sites, and councils where professionals of like disciplinesacross affiliated hospitals come together to discuss specificpractices. Many of the profiled organizations also look for relevant best practices from fields beyond healthcare.

In summary, we believe that successful healthcare organiza-tions define metrics for the achievement of strategies, measureperformance against these indicators, and effectively deviseand implement plans to respond to less-than-anticipated performance. The success or challenges an organization experiences in executing its strategy are borne out in its competitive performance, as reflected in utilization trends andmarket share, its care/services performance, as reflected in clinician and patient satisfaction, and its financial performance, asreflected in balance sheet and income and cashflow statements.

5. BUILDING AND MAINTAINING CREDIBILITY

None of the four activities described up to this point—visioning,team building, planning, and executing—would be possiblewithout leadership credibility with key constituents, whethertrustees, physicians, patients, employees, payers, employers,community leaders, capital market players, or others. As reflectedin its definition, credibility has both an objective and subjectivecomponent—trustworthiness and expertise. However, accordingto the executives interviewed, both components are critical toorganizational success. They advise that credibility can andmust be established and maintained through regular, honestcommunication, transparency, doing what you say you aregoing to do, and openness to change.

Communication and Transparency

Communicating with constituents is how leaders spend muchof their day and, according to the leaders interviewed, and howthey move the organization toward the achievement of mission,vision, and goals and successful performance (see sidebar onnext page). “Hospitals and health systems are relational places,and relationships are built through communication,” com-ments Robert Stanek. ”It’s not possible to over communicate.”“Our ability to communicate in an open and transparent way, ineffect, makes our job executing strategy easier because our colleagues and other stakeholders understand why things arebeing done,” comments Peter DeAngelis.

“Credibility is about walking-the-walk, rather than talking-the-talk,”comments James Mandell, who practices at the hospital as apediatric urologist two half days each week. “Building credibilityin the organization is a constant, daily activity for senior leaders.”

“Transparency with patients, potential consumers, and payers isimportant,” comments Joel Allison. “For example, we post our

19November 2008


quality outcomes so that everyone can see how we’re doing.”Committed to meeting or exceeding any standard that is set by anexternal organization, Baylor participates with Texas PricePoint, aWeb site that provides hospital quality and charge informationfor consumers, and other information-exchange forums.

Regular communication and transparency build credibilitywith the credit rating agencies and investment community.Interviewees communicate both good and bad news aboutperformance on a regular basis and more frequently if thingsare not going as previously projected or as significant financialand nonfinancial developments occur. The rating agenciesview continuing disclosure practices as an element of manage-ment quality (see sidebar).


Writing on what “really works” in winning organizations,Nitin Nohria and co-authors note as follows: “Certain CEOskills and qualities do matter. One is that ability to buildrelationships with people at all levels of the organizationand to inspire the rest of the management team to do thesame. CEOs who present themselves as fellow employeesrather than masters can foster positive attitudes thattranslate into improved corporate performance.”

Source: Nohria, Nitin, William Joyce, and Bruce Roberson:“What Really Works.” Harvard Business Review, July 2003.

True to Word, Open to Change

Doing what you say you are going to do builds credibility with all audiences. “With the capital markets, it’s crucial for us toset realistic projections and then to meet those projectionsyear in and year out,” comments Rulon Stacey. A track record of under promising and over delivering or over promising and under delivering destroys credibility, note the ratingagency executives.

Consistency and predictability are critical leadership behaviorscited by the interviewees. Stakeholders must know who leadersare and what they stand for, but leaders must articulate howthey are being true to principle while simultaneously beingflexible in a rapidly changing environment. Predictable andflexible are complementary words in this respect, notes one executive.10

Ability to stay on course with mission and vision and ability toshow how selected strategies tie to the mission are hallmarkattributes, but so is a willingness to listen and change course, as needed. “When there’s push back, we need to listen to it, be

CO N T I N U I N G D I S C LO S U R E G U I D E L I N E S F R O M A R AT I N G AG E N C Y

High quality managers adopt a spirit of cooperation and an attitudeof openness with the capital markets.

On Completeness and Contents: Fitch expects credits to disclosenot only material events as defined by bond documents, but “significant” events as well. Significant events include all debt financings, small or large, off balance sheet ventures, acquisitions or divestitures, large scale nonroutine capital expenditures, and significant changes in major contract terms. Fitch defines a signifi-cant event as any activity that could affect financial performance,either short term or long term.

On Management Responsiveness: Above all else, managementresponsiveness to Fitch’s questions and requests for information is most valuable. Cooperative, forthcoming, and responsive manage-ment will be noted as such and viewed as a credit strength forbondholders.

Source: Fitch Ratings: Continuing Disclosure Guidelines for Health Care and Senior Housing Credits. Health Care Criteria Report, October 24, 2002.

I N T H E I R W O R D S : A D AY I N A L E A D E R ’ S L I F E

Variability is the norm: If you’ve seen a day in my life, you’ve seenone day in my life.

The week starts on the weekend: I carve out an hour or two to layout the priorities of the week.

The day starts with exercise: If you’re in healthcare, you ought tobe setting the example for living a healthy lifestyle. You have to payattention to your physical self to keep your mental self well.

The first hour or two are mine: My first hours in the office are spent with quiet time to reflect on big issues and decisions.

Communicating is what I do: I spend an enormous amount of time communicating in person, via email, and by phone. I do a lot of writing of individual notes to people.

Meetings are a fact of life: It’s a long day, and meetings, which usually start at 8 and go through 5, are the primary vehicle for getting things done. But if I’m not careful, meetings will consumeme, so I have to block out time to walk around the organization to talk with people in each department.

What would I do with an additional three hours in each day?I would spend more time with the family. I would communicateeven more, checking in with my team more frequently. I wouldspend more time reflecting about important decisions and directions. I would walk around the organization more. I would read, read, read.



nimble, and be willing to redirect if the criticism is deemedvalid,” comments James Mandell.

A summary of advice offered to other leaders by the inter-viewed executives and of indicators of successful management ofnot-for-profit hospitals from a rating agency appear as sidebars.

CLOSING COMMENTS

The ability to address uncertainty in a complex, changing envi-ronment while generating positive financial results appears intheory to be central to effective healthcare leadership andorganizational success. The link between these variablesremains uncertain. It is clear from our experience and review ofthe literature only that different leaders have different styles,strategies, and approaches, and that there is no one path to success.

We did find consistency, however, in use of five specific activitiesby the healthcare executives interviewed for this white paperand in the perspectives offered by rating agency executives.

Through a collaborative partnership, involving distinct roleswith distinct accountabilities, healthcare executives andtrustees shape an organization’s mission and vision, whichframe organizational success. With careful deliberation aimedat getting the right people in the right spots, CEOs build astrong executive team with aligned goals, incentives, andaccountabilities. CEOs then let team members manage theirareas of accountability, participate in decision making, andgrow themselves and their staffs. Through collaborative develop-ment of a data-driven, integrated strategic financial plan, leadersbetter assure their organizations’ ability to provide mission-based, quality-focused services in their communities into thefuture. In executing the plan with skill, senior executives manageorganizational fundamentals, paying keen attention to performance metrics and to the identification and implemen-tation of best practices from healthcare and beyond.Communication and transparency build leadership credibility,which senior leaders sustain through being true to their wordand open to feedback and change as warranted by the input.

Perhaps some day, there will be a reliable and accurate way toquantify a causal relationship between excellence in leadershipand organizational results. Until then, your comments are welcome.

Kenneth Kaufman is a managing partner of Kaufman, Hall & Associates. Lisa Goldstein is senior vice president and team leader of Not-for-Profit Healthcare Ratings at Moody’sInvestors Service.

L E A D E R - TO - L E A D E R A DV I C E

• Teams solve problems, not individuals

• Understand what’s happening in your environment

• Keep mission, vision, and quality front and center and stay involved

• Stick with the process, maintaining a “long view” that includes growth

• Stay “on message” amidst heavy opposition, taking critical feedback seriously

• Be open to change

• Pay attention to leadership and team development

• Stop blaming the outside world

• Execution matters, so manage the fundamentals

I N D I C ATO R S O F S U CC E S S F U L M A N AG E M E N T F O R N OT - F O R - P R O F I T H O S P I TA L S

• Mix of newer and tenured members to provide broad and diversified experience levels.

• Cohesive approach to managing operations with all senior members being able to articulate key financial and strategic objectives

• Balance of mission and financial strength with recognition of the need to satisfy various constituent groups while allocating limited resources and generating adequate cashflow

• Identification of potential operating risks and challenges and articulation of strategies to address the issues; acknowledgementof weaknesses

• Timely implementation of strategies, including reversals of strategies if warranted

• Establishment of conservative and consistent accounting practices and financial policies

• Development of a long-term strategic and financial plan with realistic assumptions and the flexibility to respond to unforeseen events

Source: Moody’s Investors Service: Indicators of Successful Managementfor Not-for-Profit Hospitals. Special Comment, Aug 2005.

21November 2008


References

1 Burns, James MacGregor: Leadership. New York: Harper & Row, 1978;

Collins, Jim: Good to Great: Why Some Companies Make the Leap, and

Others Don’t. New York: HarperCollins Publishers, 2001; Peters, Thomas

J., and Robert H. Waterman, Jr.: In Search of Excellence: Lessons from

America’s Best-Run Companies. New York: HarperCollins Publishers, 1982.

2 Kaufman, Kenneth: Best Practice Financial Management: Six Key Concepts

for Healthcare Leaders. Chicago: Health Administration Press, 2006.

3 Moody’s Investors Service: The 10th Anniversary of AHERF Bankruptcy:

What Have We Learned? July 2008.

4 Gustafson, R. “Leadership Issues for CFOs.” Kaufman Hall Report,

Winter 2001.

5 Moody’s Investors Service: Indicators of Successful Management for

Not-for-Profit Hospitals. Special Comment, Aug 2005.

6 Nohria, Nitin, William Joyce, and Bruce Roberson: “What Really Works.”

Harvard Business Review, July 2003.

7 McAlearney, Ann Scheck: “Leadership Development in Healthcare: A

Qualitative Study.” Journal of Organizational Behavior. 27:967-982, 2006.

8 Sinioris, Marie E. (Ed.): Best Practices in Health Leadership Talent

Management & Succession Planning. Chicago: National Center for

Healthcare Leadership, 2006.

9 Grube, Mark E. and Wareham, Therese L. “What is Your Game Plan?

Advice from the Capital Markets.” hfm Magazine, Nov 2005.

10 Bartels, Bruce M: “On Leadership in Healthcare.” Kaufman Hall Report,

Fall 2001

Improving healthcare delivery...all together

Cerner Corporation salutesPatricia A. Gabow, M.D.

Denver Health

Congratulations on a lifetime of contributions and achievements supporting healthcare leadership. Your commitment to excellence is influencing the future of the industry.

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“We have saved about$2.8 million during thelast year without layingoff a single person andwithout cutting onepenny of care. We savedmoney by doing it better.There is no health carefacility in the nationtrying as broad anddeep a transformation.”

Congratulations!

NQF congratulates Patricia A. Gabow,CEO of Denver Health, on winning the

2008 National Healthcare Leadership Award.

– Patricia Gabow, interviewwith the Denver Post(1/13/07)

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© Johnson & Johnson Health Care Systems Inc. 2008

In conjunction with its proud support of theNational Center for Healthcare Leadership

Johnson & Johnson Health Care Systems Inc.honors

PATRICIA A. GABOW, MD2008 recipient of the nchl national healthcareleadership award

THE GAIL AND LOIS WARDEN FUND would like to congratulate Patricia A. Gabow, MD, CEO, Denver Health on receiving the 2008 National Healthcare Leadership Award. Her vision and commitmentto improving healthcare are an inspiration to the entire field.

CONGRATULATIONS to PATRICIA A. GABOW, MD

cong

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We honor

your

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and your

commitment

to best

practices.

Creating Unified, Inspired Levels of GreaterAccountability and Leadershipby John F. Hogan, President, Johnson & Johnson Health Care Systems

The role of effective leadership in managing and addressingthe major healthcare challenges of today has never been morecritical. With the rate of growth in major chronic diseases pre-dicted to grow faster than general population over the nextdecades, the cost and burden of caring for patients will challengeexisting models for managing, financing and delivering care.

Healthcare providers continue to recognize many of the keychallenges affecting our fragmented system and must changeand adapt their course to improve patient care: the changingrole of the primary care physician, caring for the under- anduninsured, healthcare access and financing, impacts of innovativetechnologies and treatments, emerging healthcare deliveryand financial models, data management, regulation, emergingdisease states, capital investments, and patients’ engagementand willingness to participate in their own health manage-ment. Effective strategies must be employed that address eachof the major challenges, while continuing to fulfill the primaryrequirement of effectively meeting the medical needs of the patient.

The five key factors contributing to organizational success outlined in the white paper provide a framework upon whichan effective healthcare strategy can be developed and executed.Creating, mobilizing, and caring for the mission and vision ofthe organization is a critical role of not only the CEO and theboard, but also a vital role of all members of the healthcaredelivery model. It is important that the board involve multi-stakeholder coalitions to effectively develop and implement avision and mission that reaches beyond just those elementsthat are considered attainable goals by hospital administrationand clinical staff alone.

Building and sustaining a great team reaches deep into theeffective organization. Leaders must profess and live the visionof the organization and draw members of their teams tobecome effective stewards of implementation. The concept of effective stewardship is critical in times of change anduncertainty. Hiring profiles, competency models, and goals and

objectives throughout the organization should be clear andunderstandable and directly tied to the realization of the mission.

Diverse constituencies within an organization (and evenbeyond the official boundaries of the organization) can bepowerfully united by a shared commitment or set of operatingprinciples that are deeply ingrained into the culture of theorganization. Such a shared statement of commitment (forexample, “Our Credo” at Johnson & Johnson) describes theorganization’s obligations to serve patients, employees, andcommunities with the highest integrity. Doing these thingswith excellence and fiscal responsibility will, in the long run,result in the requisite financial health of the organization forgrowth and reinvestment. (In the case of for-profit institutions,one of the stakeholders for this success is clearly the share-holder.) To instill and maintain this key cultural element, ratherthan allow it to become a framed document on the wall, is aprimary responsibility of executive leadership. When done suc-cessfully, members of the organization, high and low, are uni-fied and inspired to levels of greater individual accountability and leadership.

Developing and executing the plan to achieve the mission ofthe organization requires skillful management and dedicationby the executive team. Open and honest evaluations of measured progress versus plan must be held frequently. Thecore principles of the mission and vision must stay true.Through a dedicated and mission-committed managementteam, effective outcomes relative to the patient should remaina top priority. Positive financial results are a likely product of aneffective mission dedicated to the primary mission of improvingpatient health, outcomes, and the healthcare experience.

In summary, this white paper discusses five valuable elementsof leadership. We might suggest supplementing them with theexecutive’s accountability for setting the tone and enabling thepersonal leadership and decision-making capabilities of eachemployee, driving a clearer focus on the patient and community.This action ultimately fosters the creative engagement of thewhole stakeholder system in successfully accomplishing themission in a way that is financially sustainable.

23November 2008


Commentaries on Leadership and SuccessfulFinancial Performance in Healthcare

Common Ingredients to Creating a Successful Organizationby Thomas F. Zenty III, President and CEO, University Hospitals

Kaufman and Goldstein have successfully synthesized andbrought into focus the common ingredients to creating a suc-cessful organization. Clearly, the participants interviewed forthis article are world-class executives who represent veryimpressive and geographically dispersed organizations of allsizes showing consistent results against virtually all performancemetrics. As such, there are only a few minor observations thatcan be added in response to the article’s content:

Visioning in Partnership with the Board—For leaders involvedin board relations, it would be instructive to glean more organizational information regarding board selection, devel-opment, and organization. Effective, engaged, and organizedboards are a prerequisite to a successful visioning and imple-mentation process if a true board/management partnership isto be achieved. In today’s environment where boards are calledupon to be more actively involved in strategic and tacticaldecision-making processes it would be valuable to know how successful organizations select, develop, and engage community leaders to serve as effective board members.Successful CEOs together with board leadership build a strongboard, which is increasingly difficult to accomplish, and hearinghow successful organizations complete this initiative wouldgreatly contribute to the literature.

Building and Sustaining a Strong and Accountable ExecutiveTeam—Successful teams quickly realize that a values-driven,mission-focused team that functions within a leadership climate of open, honest, direct communication will prevail inprosperous and challenging times. It would also be interestingto better understand the alchemy where “it’s easier to makenice people smart than it is to make smart people nice.” Absentthe ability to make this alchemy occur, Steven Sample’s book,The Contrarian Guide to Leadership, is a succinct summary ofhow to hire the best executives. Further clarity around the benefits of identical, shared group goals versus individualgoals, and the success or shortcomings of establishing a limitedset of goals versus multiple goals (as identified by Northwesternand Intermountain) would benefit the reader as well.

Developing a High Quality, Integrated Plan—In the area ofstrategy and finance it would be helpful to know how, withintheir five year plans, these successful organizations choose thekey “levers” to monitor on a consistent basis that bring thegreatest potential for success, or failure, if not successfully managed. In large organizations with multivariate operational

requirements, it would appear essential to narrow those variables to a vital few to increase the probability for success.

Skillfully Executing the Plan—This section was helpful in creating an understanding that an unrelenting focus on achievingpredetermined temporal and external benchmarks, best practices,and performance metrics are the hallmarks of these successfulorganizations. To enhance the readers’ understanding of thisattainment of these goals it would be beneficial to see examplesof the processes used to create and measure achievement.

Building and Maintaining Credibility—This section clearlymade the point about the value of trust, communication, visibility, and presence of the senior leadership team through-out the organization. Although implied, it would have made a powerful statement if active listening played a part inenhancing organizational effectiveness.

In conclusion, Kaufman and Goldstein captured the intent andessence of the characteristics of a successful organizationregardless of their for-profit or non-profit status. They have created the foundation for empirical research that provides relevant, timely, and replicable practices in organizations thataspire to reach consistently higher levels of achievements.



www.uhc.edu

THE POWER OF COLLABORATION

Patricia A. Gabow, MDRecipient of the 2008 National Healthcare Leadership Award

Thank you for your remarkable dedication to academic medicine, performance improvement, and

the next generation of healthcare leaders.

The University HealthSystem Consortiumand its members proudly honor:

T P NOITAROBALLOCFOREWOPEHT

We serve together in Trinity Health, in the spirit of the Gospel,to heal body, mind and spirit, to improve the health of our communities and to steward the resources entrusted to us.

Mission

Core Values

T rinity Health is proud to honor

Patricia A. Gabow, MD for her significant and lasting

contributions to healthcare.

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to healthcare.

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Association ofAmerican Medical Colleges

Congratulations!

The Association of American Medical

Colleges and AAMC President and

CEO Darrell G. Kirch, M.D., proudly

honor Patricia Gabow, M.D.,

recipient of the Fourth Annual

National Healthcare Leadership

Award.

www.denverhealth.org

Congratulationsto

PatriciaA.Gabow,M.D.Winner of the 2008 NCHLNational Healthcare Leadership Award

from theDenver Health Board of Directors

Denver Health Foundationand the entire

Denver Health FamilyBecause of your vision and leadership as Chief Executive Officer at Denver Health,the integrated delivery system that so ably serves Denver, the State of Colorado,

and the RockyMountain Region, has become a model for the nation.

27November 2008


For the past 16 years, Dr. Patricia Gabow has run one of the country’s most successful safety-net hospitals. Denver Health, with500 beds, 245 full-time physicians, and 5,000 employees serving150,000 patients annually has consistently earned a profit since1991. Her transformation of the institution, from the time she tookover as CEO in 1992, was not incremental. It began with a changeat its very core when she recognized that running a highly competitive business like healthcare—and improving the qualityof services provided to patients—could not occur as long as it waspart of government. It was Dr. Gabow’s leadership abilities thatallowed her to convince Denver’s mayor to agree to an amicabledivorce and to successfully lead the organization and its employeesinto the future.

How did you separate from Denver city government?

Persistence. When I took the job 16 years ago, we were $39 millionin debt. When you are a poor organization, people think youare incompetent so I understood no one was going to write usa check. The first step to our success was to get out of debt onour own. With the help of the Mayor and the state government,we worked to change the state’s Disproportionate ShareFunding program to enable more federal dollars to support thecare we provide to the uninsured. This was essential but notsufficient. We were part of government and it was clear to methat government didn’t have the agility, flexibility, or speed ofaction required if we were going to improve and succeed in ahighly competitive business like healthcare. So I kept going toMayor Webb (Denver Mayor Wellington E. Webb) and saying wehave to get out of city government. He initially did not embracethis idea. Finally, he asked me if I was going to ever get off thisissue, and I said no. Persistence counts because people under-stand that it is important to you. Mayor Webb also understoodbecause he had a deep-rooted commitment to serving the disenfranchised. Once he became convinced that the only wayfor Denver Health to thrive and meet its mission as a safety-nethospital was to be private, Mayor Webb spearheaded the effortand he became our champion. That took a lot of couragebecause he had to convince fellow elected officials that severingthe relationship with the city’s second largest department wasimportant for Denver Health’s future.

The National Center for HealthcareLeadership is proud to present the2008 National Healthcare LeadershipAward to Patricia A. Gabow, MD, ChiefExecutive Officer of Denver Health, forleading the transformation of herorganization into a highly successfully,profitable, integrated healthcare systemthat remains committed to its missionof caring for uninsured and vulnerablepopulations and providing Level Onecare to all its patients. Under Dr.Gabow’s leadership, Denver Health, asafety-net hospital that has providedover $3 billion of care for uninsuredpatients since 1991, has become amodel for the nation and has been

cited by The Commonwealth Fund as a high performance health care system.Dr. Gabow is also recognized for her commitment to mentoring, her innovationin going outside healthcare in search of new management ideas, and hercommitment to best practices. For her dedication to advancing the nation’shealthcare, NCHL salutes Dr. Patty Gabow and thanks her for her inspirationto the next generation of healthcare leaders.

Patricia A. Gabow, MDChief Executive OfficerDenver Health

EducationBA Biology, Seton Hill College,Greensburg, PA

MD University of PennsylvaniaSchool of Medicine

Internal Medicine at the Hospital of the University of Pennsylvaniaand Harbor General Hospital (nowcalled Harbor-UCLA Medical Center)in Torrance, CA

Nephrology training at San Francisco General Hospital and the Hospital of the University of Pennsylvania

CareerDenver Health

1973 Chief of Renal Diseases

1981 to 1991 Director of Medical Services

1992 – 1997 Manager and Medical Director

1997 – Present CEO and Medical Director

Boards and other affiliations• Member of The Commonwealth

Fund Commission on a High Performance Health System

• Numerous committees of the Institute of Medicine addressing policy issues

• Common Good Colorado/ Council of Advisors

• Selected by the International Women’s Forum for its annual Women Who Make A Difference Award in 2005

• Named by Modern Healthcarein 2006 as one of the Top 50 Most Powerful Physician Executives in Healthcare, one of the Top 25 Women in Healthcare , and top 100 Most Powerful People in Healthcare in 2005

• Recipient of $5 million grant from W.K. Kellogg Foundation on Health Care for the Underserved

• Author of numerous articles, editorials, and abstracts

Inspired Leadership: Dr. Patricia Gabow Talks aboutPursuing Transformation and Why Mentoring Matters

To lead the transformation of Denver Health, you lookedoutside healthcare for answers. What inspired that idea?

I felt we needed a broader vision, to learn beyond our industry.Healthcare has suffered from the idea that we are completelyunique. Certainly there are unique aspects about us, but wealso share similar things with other large, complex models. Sowe went outside healthcare to get it right.

How did you implement your transformation?

After we separated from city government, we asked how wecould provide the perfect hospital experience for our patients.It drove me crazy that we were still doing things the same wayfor the past 40 years—our core processes were unchanged. We received a grant from the Agency for Healthcare Researchand Quality to explore ways to change things, and that includedcreating a steering committee with representatives from FedExCenter and Microsoft, among others. We gathered informationand eventually came up with the Getting It Right: Perfectingthe Patient Experience plan that focused on getting the rightphysical environment, the right people, the right processes, the right communications and the right reward as a means of incentivizing and rewarding people for the right behaviors.We “stole” the reward idea from FedEx and the Ritz Carlton.

How would you describe aspects of the Getting It Right plan?

For the right physical environment, we wanted our buildings tosupport quality, safety, efficiency and offer broad support forthe needs of our families and workforce. Our buildings arebeautiful, but they also need to support care in the appropriateway. So our new OB floor is three times larger than the olderone, but our nurses walk 45 percent fewer steps. To get to theright processes, we looked to Toyota to learn how to get rid ofwaste, which is expensive and disrespectful to patients andourselves. Initially, people think of getting rid of waste as cut-ting costs. But at its core, it is about respect; our employeeshave embraced this. We have saved about $13 million using the LEAN tool without cutting jobs. We trained about 160 employees including trauma surgeons. All of our nursemanagers are “Black Belts” in Toyota LEAN. We have grown by30 percent in square footage yet have reduced our supply costsby 50 percent as one example of the power of LEAN.

As a physician, what leadership skills do you bring to yourposition as a CEO?

Being a physician—especially being an academic physician inresearch—is very good training for being a CEO, because I amcommitted to data and understanding the data and analytics.

Taking care of administrative issues is just like taking care ofpatients. First you have to assess the situation, make a diagnosis,create a treatment plan and then monitor outcomes. If the out-come isn’t what you want, you have to change the diagnosis orchange the treatment. In management, there is often a tendencyto treat symptoms without making a diagnosis. Having been apracticing physician really helped me to avoid that pitfall. Andmy background in research has given me a commitment tounderstanding and innovating rather than saying, “We’ve beentreating this disease for ten decades, let’s not think of a newway.” I am used to looking for new and better solutions. Andthat is useful in approaching administrative challenges as well.I love to analyze data, but not to the point of being immobile.That’s true with both management and with treating patients.When you don’t have all the data, you have to be able to moveforward with ambiguity.

What combination of skills do you bring to your leadership position?

One thing I would say is that leadership and parenthood arevery similar. You have to care about people you are responsiblefor, you have to want them to do well, you have to set highexpectations and you can’t let them go astray. As soon as people deviate from where you think they should be, you haveto be willing to tell them. I am able to have a frank conversationwith people that male colleagues often are unable to do. Like being a parent—delivering the tough message withoutgetting emotional or unsupportive—is critical as a leader. My COO has often said I have perfected the technique of combining battery acid with whipped cream when I need tohave these conversations.

Does academic medicine conflict with leadership?

In academic medicine, the idea of challenging and arguing inthe search for new knowledge is part of our process. But whenrunning an organization the idea that every decision can bechallenged doesn’t work. So in leading very smart academicphysicians, I need to be able to say we are going to agree andproceed for now, without challenging every decision. That’soften hard for academic physicians to learn, but it is important.But I think being a physician CEO is particularly useful in a safety-net institution where resources are scarce because there isconfidence from the other physicians that decisions are beingmade from the perspective of patient care, not just from theperspective of the bottom line. That’s important because in asafety-net hospital the bottom line is so fragile.


E D U C A T I O N A L A N D A D V E R T O R I A L S U P P L E M E N T T O M O D E R N H E A L T H C A R EE D U C A T I O N A L A N D A D V E R T O R I A L S U P P L E M E N T T O M O D E R N H E A L T H C A R E


ntermountain Healthcare would like to

congratulate Patricia A. Gabow of Denver

Health for her achievements, leadership and

continued commitment to serve the underserved.

Thank you for your example of medical

and organizational excellence.

Patricia A. Gabow, MD.You’re an innovator, mentor and leader.


November 2008 29

What is Denver Health’s most distinguishing characteristic?

Denver Health is an integrated model of care. We really show a true integration. We are a hospital, a neighborhood healthsystem; we have school-based clinics; we have an HMO, correctional care, a detox unit, and call center; and we haveimplemented a complete information technology system thatlinks orders to pharmacy to labs to radiology to billing thatreduces errors and improves efficiency. All of this allows us toprovide a continuum of care for the prevention and treatmentof disease throughout our patients’ lives.

What were the greatest influences in your life?

My family. Everyone came from Italy and my mother and Imoved in with my grandparents and uncle after my father waskilled in WWII when I was a baby. My grandfather had a tremen-dous influence on me. I have his pictures on my wall with someof his favorite sayings. He always called me “my girl,” and hewould say, “My girl, the great thing about America is that if you get an education, there isn’t anything in this world you can’tdo.” But he also told me, “My girl, if you have a gift and you don’tuse it, no confessor can absolve you.” So I have always under-stood that I have a responsibility to help make the world better.

How would you describe your management style?

I have a high need to know and I am extremely involved ineverything that goes on here. We are a very top-controlledorganization. What I mean by that is that the vision and driveare in place, so that everyone knows where we are going andwhat we are doing. My job as a leader is to inspire others,because you can’t do things by yourself and you won’t be successful. So it is critical to engage everyone in the organization’svision with a passion. And you need to feel that passion yourselfand then it has to be communicated to the workforce. I do havea need for control and that is a plus and a minus. Because I havebeen here for 35 years, I know everyone. I am also an incrediblyhard worker and that is a strength and a weakness because I expect everyone else to be like that. I do think my drive pushesothers. We have a close executive team; they are my barometer.It is important for leaders to be surrounded with those who willbe frank and open with each other.

What will it take to reform healthcare?

First you have to understand we have no system of healthcarein this country. We do not have a comprehensive, cohesiveapproach. We have failed to define what we want from health-care in America. We have failed to define a floor, which is whateveryone would get. We have failed to define a ceiling. We havefailed to create a clear system of incentives. It is not a rational

system. There are lots of conflicting messages and conflictingincentives. The other big issue is that a lot of entities make a lotof money off the current system and that will present a majorbarrier for anyone who wants to make a change. Change won’thappen without political will. And then it will take politicalleaders with vision and courage.

You are adamant about sharing information and learnings withother healthcare organizations. Why is that important to you?

Our goal is to be a model for the nation for what healthcareshould be. And as an academic institution we are keenly interested in sharing what we know. We don’t look at our successes as something to keep to ourselves. Sharing and mentoring are really the keys to developing future healthcareleaders. But mentoring really must start with a great family andthe passing on of values. Our children need to be educated, and education is in more trouble than healthcare. If the nextgeneration isn’t educated, it’s a little late by the time they are adults to develop leadership skills. Those things are bedrock.Education is important to create skills, but mentoring is impor-tant to create the philosophy and leadership. You can teachmanagement, but you have to mentor leadership.

CongratulationsDr. Patricia Gabow

CEO, Denver Health

Recipient of the 2008 National Healthcare Leadership Award

Modern Healthcare commends your leadership

and commitment to healthcare.

Modern Healthcare is the industry’s most trusted, credible and relied-upon news

source. In print and online, Modern Healthcare examines the most pressing healthcare

issues and provides executives with comprehensive information they need to make

the most informed business decisions and lead their organizations to success.

For this reason, Modern Healthcare is a “must-read” by the who’s who in healthcare.

To subscribe, please call Modern Healthcare at

888.446.1422 or email us at [email protected].

360 N. Michigan Avenue | Chicago, IL 60601 | 312.649.5499 | ModernHealthcare.com

The need for significant improvement in healthcare, includingthe importance of leadership in the health professions, hasbeen widely addressed in the Institute of Medicine (IOM)watershed reports, as well in numerous other recent publica-tions.1-13 The IOM report, Health Professions Education: A Bridgeto Quality5 argued that enhancing the quality of care in theUnited States through leadership would not be achieved without reforming education and professional developmentacross the health professions.

As part of its commitment to career-long leadership develop-ment and with the initial support of The Robert Wood

Johnson and W.K. KelloggFoundations and ongoingcorporate sponsor sup-port, the National Centerfor Healthcare Leadership(NCHL) has championedinitiatives to enhancegraduate health manage-ment educational out-comes over the past fiveyears. In 2004, NCHL’sResearch and EvaluationCouncil oversaw a criterion-based process for selectinggraduate health manage-ment programs interestedin the improvement oftheir educational practices,processes, and outcomes.

Four institutions were selected for the first phase of theGraduate Health Management Education DemonstrationProject. In spring 2006, six additional sites were selected for further extension of this national initiative. The participatingPhase I and Phase II universities are shown in the sidebar.

Project Overview

Goals for the demonstration project are to:

• Foster the attainment of leadership competencies among graduates

• Advance learning and assessment methods

• Enhance student lifelong learning and career planning

• Incorporate student recruitment and selection processesbased on behavioral competencies for leadership

• Evaluate program improvements using uniform methodsand measures

• Disseminate and promote utilization of best practicesincluding teaching/learning methods and materials, evaluation approaches, and assessment instrumentation

The NCHL Health Leadership Competency Model and evaluationframework served as the foundation for educational advance-ment goals (Figure 1). Prior to initiating the demonstrationproject interventions, faculty at each of the demonstrationsites reviewed their core course offerings and syllabi in relationto the 26 leadership competencies and their teaching andassessment practices.14 During the course of the project, thegraduate students have been using the Lifelong LeadershipInventory, a self assessment of their leadership competencies,and the NCHL 360-degree assessment after their summerinternship. They also receive feedback coaching and areencouraged to develop leadership development plans to sharewith mentors and to guide their post-graduate work.

Findings to Date

Initials findings were presented at the Association of UniversityPrograms in Health Administration 2008 Conference inWashington, DC. Competency-based strengths were found in relation to Innovative Thinking, Organizational Awareness,and Strategic Orientation at nine to ten of the sites. However,

TRANSFORMATION

Achievement Orientation

Analytical Thinking

Community Orientation

Financial Skills

Information Seeking

Innovative Thinking

Strategic Orientation

EXECUTION

Accountability

Change Leadership

Collaboration

Communication Skills

Impact and Influence

Information TechnologyManagement

Initiative

Organizational Awareness

Performance Measurement

Process Management /Organizational Design

Project Management

PEOPLE

Human ResourcesManagement

InterpersonalUnderstanding

Professionalism

Relationship Building

Self Confidence

Self Development

Talent Development

Team Leadership

HEALTH LEADERSHIP

The NCHL model providesbreakthrough research anda comprehensive databasefor defining the competenciesrequired for outstandinghealthcare leadershipfor the future.

© Copyright 2004 National Center for Healthcare Leadership. All rights reserved.

Figure 1: NCHL Health Leadership Competency Model

Phase I Sites

University of Michigan, Ann Arbor, MI

University of Minnesota, Minneapolis

Simmons College, Boston

University of Washington, Seattle

Phase II Sites

University of California, Los Angeles

University of Missouri, Columbia, MO

University of North Carolina, Chapel Hill, NC

Rush University, Chicago

Texas A&M, College Station, TX

Texas Woman’s University, Houston


November 2008 31

Preparing the Leadership Pipeline for 21st CenturyHealthcare

pervasive gaps in relation to curricular focus and coveragewere revealed by eight or more of the sites in relation to fourearly-careerist “differentiating” competencies: Financial Skills,Impact and Influence, Process Management and OrganizationalDesign, and Project Management. Other gaps at six or more ofthe sites included Achievement Orientation, CommunityOrientation, Initiative, Professionalism, and Self-Development.

Preliminary outcome analyses also revealed that across theprograms there was an emphasis on lower retention teachingand learning activities, as well as more traditional faculty-focused assessment processes. Both career-like and work simu-lation learning and assessment methods were used less oftenacross the sites collectively. A preliminary analysis of the fourPhase I sites’ progress has revealed some promising trends thatindicate achievement of the project goals (Figure 2).

Ongoing Efforts

This initiative will continue to be assessed for short and long-termimpacts in relation to educational outcomes, accreditation standards,professional practices, and organizational performance in the field.With support from NCHL, major accomplishments have beenachieved in the transformation and enhancement of graduatehealth management education, profession-wide curricular reviewand redesign in line with current competency-based educationmethods, pedagogical principles, and learning best practices.

NCHL believes that improving leadership development across allcareer levels (entry, mid, and advanced) and across the disciplinesof medicine, nursing, and administration is pivotal to long-term,substantive improvements in clinical care and the delivery ofhealthcare services in the U.S. Extension of these educationaltransformation efforts will be developed in line with the IOMrecommendation for significant enhancement in inter-professionaleducational linkages.

The project team includes Judith G. Calhoun, PhD, associateprofessor at University of Michigan; Marie E. Sinioris, NCHL pres-ident and CEO; Marita Decker, NCHL curriculum specialist;

Joyce Anne Wainio, NCHL vice president; and Laura Brandsen,University of Michigan research assistant. This project is one offour national demonstration projects sponsored by NCHL,including the nurse-team leadership project, diversity leadershipproject, and leadership development system project. For moreinformation about NCHL’s research and demonstration initiatives,visit www.nchl.org.

References:

1. Amalberti R, Auroy Y, Berwick D, Barach P. Five system barriers to

achieving ultrasafe healthcare. Ann Intern Med. 2005.

2. Asch SM, Kerr EA, Keesey J, et al. Who is at greatest risk for receiving

poor-quality healthcare? N Engl J Med. 2006.

3. Asch SM, McGlynn EA, Hiatt L, et al. Quality of care for hypertension

in the United States. BMC Cardiovasc Disord. 2005.

4. Committee on Quality of Healthcare in America, Institute of

Medicine. Crossing the Quality Chasm: A New Health System for the 21st

Century. Washington, DC: National Academy Press; 2001.

5. Greiner AC, Knebel E, eds. Committee on the Health Professions

Education Summit, Institute of Medicine. Health Professions Education:

A Bridge to Quality. Washington, DC: National Academy Press; 2003.

6. Institute of Medicine Board on Healthcare Services. Advancing

Quality Improvement Research Challenges and Opportunities Workshop

Summary. Washington DC: National Academy Press; 2007.

7. Jha AK, Li Z, Orav EJ, Epstein AM. Care in U.S. hospitals: the hospital

quality alliance program. N Engl J Med. 2005.

8. Kimball R. Cultural transformation in healthcare: a white paper that

describes the complex nature of organizational culture and its role in

healthcare organizations. The Robert Wood Johnson Foundation; 2005.

9. Kohn LT, Corrigan JM, Donaldson MS eds. To err is human: Building a

safer health system. Washington, DC: National Academy Press; 2000.

10. Mularski RA, Asch SM, Shrank WH, et al. The quality of obstructive

lung disease care for adults in the United States as measured by

adherence to recommended processes. Chest. 2006.

11. Pham HH, Coughlan J, O’Malley AS. The impact of quality-reporting

programs on hospital operations. Health Aff. 2006.

12. Shrank WH, Asch SM, Adams J, et al. The quality of pharmacologic

care for adults in the United States. Med Care. 2006.

13. Williams SC, Schmaltz SP, Morton DJ, Koss RG, Loeb JM. Quality of

care in U.S. hospitals as reflected by standardized measures, 2002-

2004. N Engl J Med. 2005.

14. Decker M, Calhoun JG, Sinioris ME, and Wainio JA. Guidebook 1:

Curriculum Mapping, Analysis, and Planning. Chicago: National Center

for Healthcare Leadership, 2006.

• Increasing the use of compentency-based education

• Elevating the level of learning objectives to higher cognitive levels

• Increasing higher-retention (experiential) learning methods

• Incorporating self-assessment and reflective learning methods into curriculum

• Increasing attention to affective domain learning outcomes

• Facilititating exploration and utilization of technology-based and simulation learning activities

Trends IndicatingStatistically Improvement

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Figure 2: Phase I Sites—Progress to Date



We believe health isn’t an industry—it’s a cause. And there’s no bet-

ter feeling than working together for a worthwhile cause. That’s why

we’d like to thank The National Center for Healthcare Leadership and

congratulate our partner in health, Patty Gabow, MD, for her visionary

leadership towards a healthier Colorado. Together, we help make our

communities a healthier place to be.

kp.org

We believe in a healthy future.



So many want to make the world a better place.

Here’s to those who actually do.

Congratulations to Patricia A. Gabow, M.D.,

on receiving the 2008 NCHL Leadership Award

www.cedars-sinai.edu

bulletin of the national center for healthcare leadership

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