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Healthy outlook Featured

7:00pm EDT January 29, 2008

Matthew Gutwein might have been the only person to see any hope for Health and Hospital Corp. of Marion County upon his arrival in 2003. The company had just lost $77 million in 2002, and there was little reason to believe that trend was going to change.

In fact, it appeared as though the situation was only going to get worse. In addition to losing money, patients were not being served according to the health system’s own high standards and the employee work-to-volume ratio was one of the lowest in the nation.

“We were sinking like a rock,” Gutwein says. “When I arrived, Plan A for getting out of the financial hole we had was to scale back the mission, scale back the organization, eliminate people, eliminate services, eliminate beds, become smaller and provide less service.”

Health and Hospital Corp. operates both Wishard Health Services and the Marion County Health Department. Speculation was if the plan to scale down operations didn’t stop the bleeding, the company might very well shut its doors.

“We were losing tens of millions of dollars a year,” Gutwein says. “We had to stop that immediately or else we weren’t going to be in a position to meet our mission.”

And so it was under these dire circumstances that Gutwein took over as the company’s new president and CEO.

One of the first things that caught his eye was the talent that existed among the company’s 4,000-plus employees.

Unfortunately, it was not the right set of people to launch the rapid and radical turnaround the company needed to make in order to survive.

“Certain kinds of people can be very good at maintaining an organization,” Gutwein says. “But it’s a different set of skills that were needed to have the financial turnaround we needed. We didn’t have those skills in place the way we needed them.”

But the biggest challenge wasn’t the employees. Gutwein was convinced that this was a company gasping for a dose of strong leadership that could maximize the potential that was being wasted.

“The big thing was to project hope and optimism and offer an alternative to what was a pretty bleak and unappealing option at the time,” Gutwein says. “We had terrific people here, and they were eager, indeed craving an opportunity to really succeed and perform at the highest level. They just needed a little help from senior leadership to do that.”

Gutwein needed to convince everyone that he could supply the leadership and vision that was needed to unearth this potential. He had to earn the faith of his employees and prove to them that if they worked hard, things would get better and they could be part of the new tomorrow.

“It wasn’t just telling people, ‘Yes, we can do better,’” Gutwein says. “It was also then being able to put it up on the board and say, ‘This is exactly what we have to do, and here is the time frame we have to do it, and these are the exact steps we have to take on a daily basis to get there, and if we do all this, it’s going to work.’ People could see that there was a real sound basis for having that hope.”

Build a team

Gutwein was convinced Health and Hospital Corp. was a patient worth saving and not euthanizing.

“I was not convinced that we had done every single thing that was possible before we would have to take those kinds of draconian measures,” Gutwein says. “I thought there was another way.”

One of the first steps he took was to bring in new leaders. Some were promoted internally while others were brought in from the outside.

Gutwein set up meetings with small groups to find out who was committed to the company’s future and who was not. He also had to find out what the company needed to turn around.

“It was seeking broad input on whether the people that we had in place would be able to get the job done,” Gutwein says. “I’m responsible for those decisions, but I wanted there to be consensus on who those people would be.”

Communication extended across all forums, from one-onone meetings to small group sessions to town-hall-style gatherings. There were also postings on the Web site and small-group brown-bag lunches to get people talking and exchanging ideas and information.

Extending outside the organization, Gutwein called on peers across the country. He was searching for advice and counsel on their experiences in hopes of gaining a better idea of which strategies would work.

“It certainly wasn’t just me,” Gutwein says. “It was a whole variety of people.”

Often, the key to getting a turnaround effort moving forward is to have people who can view the situation with an objective eye. By calling on outside consultants and experts who had been through similar problems before, Gutwein got what he was looking for.

“If we didn’t make the investment, there was a possibility we were literally going to close our doors,” Gutwein says. “They had that unique expertise that is not something you normally would have on staff because hopefully, most hospitals are not constantly going through turnaround.”

As his team began to come together, Gutwein launched a comprehensive analysis of the entire organization. The goal was to figure out exactly how each unit was performing, right down to every detail.

“We baselined the organization and then very quickly put in management action plans that were a collaboration among each unit,” Gutwein says. “We worked on them together with everybody. We looked at objective data and set very clear goals based upon the objective data making sure that everybody understood where we had to be.”

The key was being completely transparent with the data presented, the goals set and the targets that the organization needed to hit.

By taking these actions in an open manner, Gutwein provided reassurance to employees that he and his team wanted to fix the company’s problems.

“It is very important for leadership to be hands on and to be visible and for the people to know that we are engaged in hopefully all aspects of the organization,” Gutwein says. “We had a burning platform, so people’s attention was pretty focused. All of us as a management team hopefully projected the attitude that we were absolutely committed to turning the place around.”

Get your people involved

Employee input is critical to gaining buy-in on broad changes in an organization.

But if you can get them actively involved in the dialogue and decisions about what changes to make, you stand a much better chance of getting them to buy in to your vision.

“Ensure that all persons in the organization have a strong voice in the organization and know that their particular roles have great value,” Gutwein says. “For the head of the organization, it’s completely within their control to be able to communicate and seek the input and views of everybody so that people know they have a real stake in the success of the organization.”

To that end, Gutwein and his executive team created value-added teams within each division of the hospital. Each team had a senior vice president, a manager, a director and a staff member. Their job was to look at how things were done in the organization and find a way to do it better or more efficiently.

One of the units noticed that there were four different kinds of cups on a particular shelf.

“Someone asked, ‘What are the costs of these cups, and why do we have four different cups sitting here, and what do we actually use them for?’” Gutwein says.

They studied the cost of each cup and learned that while the plastic cups with a line on them were close to a penny apiece, the Styrofoam cups were far less than a penny each.

“In this particular division, they were using hundreds of thousands of cups a year,” Gutwein says. “By only using the more expensive plastic cups when you absolutely had to and using the Styrofoam cups for almost everything else, that individual unit saved $78,000 annually. That is the cost of a nurse. They said we’d rather have another nurse in our department than these nice little cups.”

Gutwein says he never would have thought to examine the cost of cups. But the work inspired the rest of the organization to look for ways to save money in their own divisions.

“We literally saved millions of dollars through those value-added teams,” Gutwein says. “What we also did with those teams was we said, ‘All you have to do is save $1,000 and we will give you a $100 check.’ So you have an economic incentive. People didn’t do it for the economic incentive, but it was fun.

“Those value-added teams, overall in our financial improvement, were a relatively small impact. But I think they were important nonetheless, both for the dollars themselves and also for the mindset and the culture they created.”

Look for alternatives

By involving employees in the thought process on organizational changes and being transparent about the moves being made, Gutwein helped ease many of the fears they had about their jobs when he took over the company.

“Had we come in and exercised in great secrecy, I think it would have been a different story,” Gutwein says. “We viewed it as our obligation to build the trust and establish the trust.”

Gutwein did not shy away from the fact that the number of employees at the company would need to be reduced. After focusing first on natural attrition and then looking at people who had significant performance problems, Gutwein gave his employees a say in who would leave.

“It’s sometimes called Reverse Monte Carlo,” Gutwein says. “Say there is a unit that has 25 people in it and we needed to reduce the number of people in that unit so it would be down to 15. So 10 people had to leave. We would give those 25 people the option of bidding on what it would take for them to leave.”

So you could have one person say they would want one month’s severance pay in order to leave, another would want five weeks and another would want three weeks.

“We have the opportunity to take the 10 lowest bids,” Gutwein says. “We got volunteers to leave, so we didn’t have to make those hard choices.”

Within six months of Gutwein’s arrival, things at Health and Hospital Corp. of Marion County began to turn around.

“We’re now essentially on the same patient base collecting over $60 million a year more than we were before,” Gutwein says. “That was just improving the nuts and bolts of our revenue cycle. That’s collecting money that we should have been collecting, but we just weren’t before.”

By 2005, the company was $23 million in the black. In 2006, the company posted $661 million in revenue, up from $363.9 million in 2002, the year before Gutwein’s arrival.

Productivity improvements were reflected in the company jumping from the bottom 25th percentile to the 86th percentile in the number of full-time equivalent hours to volume that goes through the hospital.

Cost per patient has improved from the bottom 25th percentile to the 90th percentile.

“In prior times, we didn’t even measure those things,” Gutwein says. “Now we measure them very carefully, and people know what the standards are, and they are eager and delighted to hit those on a daily, weekly and monthly basis. It’s a matter of them having a clear direction on what the measures are that need to be met.”

HOW TO REACH: Health and Hospital Corp. of Marion County, (317) 221-2000 or www.hhcorp.org