From the start, Patricia Maryland knew it was going to take a team effort.
In early 2008, several months into her tenure as president and CEO of St. John Health System, Maryland and her leadership team had crunched the numbers, taken a long look at the downward trend of the Michigan economy and arrived at a hard-to-swallow conclusion.
“I had to launch a transformational effort almost immediately,” Maryland says. “Specifically, I had to trim about $85 million in operating expenses in order to move the organization to a reasonable operating margin.”
It was a problem without a simple solution. Expenses needed to be reduced, which would require the elimination of some jobs, but Maryland and her management team also needed to develop creative ways to increase revenue.
At the center was Maryland, who was charged with uniting the entire St. John organization and keeping its nearly 17,000 employees focused on the health system’s core mission of patient care — and do it all as the system underwent a metamorphosis, becoming leaner and more able to weather the oncoming economic storm.
“Believe it or not, out of the challenge came major opportunities,” she says. “I was able to bring together the leadership team and management at all levels of the organization and look at some things we could do differently to address our needs. We put together teams of individuals that we felt had the talent to think outside the box a little bit and who weren’t uncomfortable with looking at their own operation from a different viewpoint.”
Maryland needed to form a new mindset, she needed people throughout the organization to embrace that mindset, and she needed new ideas on how to improve the system’s budget.
Maryland wasn’t just facing a budgetary issue. She knew that to truly make the health system run more efficiently and effectively, she needed to perform a cultural shift.Plan, then take action
To help reach the goal of $85 million in cost savings, Maryland and her management team identified 22 areas that presented opportunities for savings.
The number of areas was important, but not as important as the fact that most of the areas in question were on the corporate side of the organization.
“Focusing on our core business of patient care was fundamental as to how we moved forward,” Maryland says. “So we took a look at how we were managing our corporate functions on the shared services side. Much of this transformation involved looking at the overhead, looking at the nonclinical areas first.”
In order to gain support for the developing program, Maryland wanted to find ways to assure employees at the hospital and facility levels that their ability to do their jobs would not be compromised or hindered in any way. If anything, Maryland’s organizational transformation was aimed at giving medical staff more freedom to serve patients.
“We said at the start that our goal was to reduce the burden on our hospitals, on those individuals who were providing direct patient care,” she says. “We wanted to free up resources and dollars to reinvest in our patient care. That was a component in helping to sell the concept of why this transformation was so important.”
Transformations like the one undertaken at St. John are rooted in the dollars-and-cents reality of a faltering economy, but that’s not necessarily the way employees will digest it. Employees will see the staff cuts and increased burden placed on them before they’ll see the financial ramifications to the company.
Cutbacks might be first and foremost a financial issue to you and your top management team, but it will become a cultural issue to your employees. If they start to believe that you aren’t enabling them to do their jobs, you will damage morale. If they get the feeling that you aren’t living your mission statement and culture, it will damage your credibility.
To help give your company room to react to whatever the economy throws at you, Maryland says you need to become vigilant about scenario planning.
“As you think about the future of your organization, you have to do scenario planning,” she says. “You need to come up with best-case, most-probable-case and worst-case scenarios. You need to be able to anticipate and stay ahead of the curve. Leaders need to do that all the time.
“As of now, it looks like our most-probable-case scenario will actually fall closer to our worst-case scenario. So going forward, we’ve already started to do our scenario planning for the next year. We’re going to work with the state leadership to get some ideas from them in terms of their forecast. We have all of the data that we’ve compiled through our scenario planning and have anticipated what it might do for us in terms of overall buy-in and the potential increase of uninsured patients we might expect.”Engage and cascade
In a time of transition, Maryland says you should tell everyone in your organization as much as you can, starting with your leadership team and cascade messages throughout the organization.
It’s the approach Maryland uses to communicate her messages at St. John.
“It’s clear that we had to engage all the leaders first and foremost and we had to explain some of the data,” she says. “I’m very data-driven as a leader, so that’s how I approached it. I told them ‘Here are the facts; here is what the implications are.’ So I started with the leaders, engaged them, and we provided open and honest communication with all of our employees.”
Managers at St. John must meet frequently with their staffs to keep information flowing. Maryland holds her managers accountable for communication by setting an example and performing regular check-ins.
“Consistency of communication is very important,” she says. “And part of that is encouraging and holding accountable the executive team. I schedule time to meet with them and ask them to do the same with their teams. We call it ‘straight talks,’ and I ask them if they’re making time to schedule those meetings with their teams. In addition, I make time to attend those meetings so I can hear what people are saying.”
Transparency from management is another key component in building trust among all levels of your organization. The time might come when you have to deliver some bad news to your work force, and if it’s unavoidable, the best course of action is honesty and full disclosure.
“Transparency is critical to this process,” Maryland says. “You want people to be a part of the solution, and if you’re honest with them and you’re sharing the data, it helps create a sense that we are in this together. It helps employees realize that management needs the minds and efforts of everyone in the organization to help you with this challenge that might be very significant.”
Along with communication that cascades downward, you need to develop channels through which communication can bubble up from the lower rungs of your organization. Feedback avenues are another component in showing employees that they have a collective voice in your company, and that their input and opinions have the ability to influence the direction of the organization.
“You need to create a safe environment within each of your departments to allow employees to be able to share their concerns,” Maryland says. “It could be something a little bit controversial that they have to share, but you want your leaders to continue to empower their associates.
“Creating that safe space that allows employees to freely share their concerns and ideas is what empowers them. Through our associate feedback channels, anyone can communicate directly to me. I follow up with them. I have to reply to all their questions and give them honest responses — and they can have that contact with me through phone or e-mail or personal contact when it’s possible.”
Recognition is another ingredient in soliciting feedback and involving employees in shaping the direction of the organization. Employees value the gratitude of management, whether or not management can ultimately implement the idea.
“We give credit to the associate that came up with the idea,” Maryland says. “We acknowledge and recognize the person appropriately as we track the results of the idea. Another thing we’re doing is encouraging our managers to empower their associates to implement their ideas. If they’re straightforward and easier to implement, it doesn’t need to go all the way up the ladder for approval. One simple example is that one of our associates suggested that we could save money by printing pages double-sided. That is now something we have implemented across the entire organization.”
As an additional step, St. John has composed a transformational group charged with taking employee ideas, researching and examining them for their potential to enhance the organization.
“It goes back to the idea that our transformational effort has been a cultural change that we created,” Maryland says. “It wasn’t one-time, one-shot, reduce the cost, improve the revenue base and just get everything better for this year. It was that we are culturally changing the organization, and it’s an ongoing process.”Develop new leaders
St. John is now positioned well to weather the current economic downturn. Maryland and her staff have succeeded in realizing about $70 million of the $85 million they sought to trim from the budget last year. The health system reported revenue of $1.9 billion in 2008.
But in order to keep this kind of momentum rolling, you need to keep developing leaders to carry your culture and policy of fiscal responsibility into the coming years. That means both recruiting and developing high-potential employees.
You can help your cause by developing the kind of organization for which people want to work.
“It starts with, No. 1, the person,” Maryland says. “Your interview process has to be such that you can screen individuals for some of those qualities. But you also need to set the tone for the organization, set the tone for what your expectations are.
“People can choose to come to your organization or not based on how consistent you are with the expectations you have of your leaders. If you bring people in and find behaviors that are not consistent with the expectations you have set, you need to deal with those individuals quickly. If they don’t change, they shouldn’t be in your organization. In the end, it’s what you are willing to tolerate in your organization. That is why you need to deal quickly with individuals who exhibit behaviors that are inconsistent with your values.
“You are not defining the organization around the needs of any one individual. You’re defining the organization around the needs of the people you serve. In our case, that is our patients. You’re also defining the organization around its long-term financial viability. People and culture comprise your mission.”
How to reach: St. John Health System, (586) 753-1155 or www.stjohn.org