St.Vincent Health has gained a reputation as a leader in cardiac care both in the state of Indiana and across the nation. But in December 2000, CEO Vincent Caponi faced a scenario that would have placed that standing in jeopardy.
A group of about 100 cardiologists who had worked exclusively with St.Vincent for the past 25 years informed Caponi that it was going to end the partnership, join with the for-profit company MedCath, and build a brand- new heart hospital.
The defection would have decimated St.Vincent Health. “We’d be a much smaller organization,” Caponi says, speculating as to the effect the loss of the cardiologists would have had on the organization. “We would have struggled financially, and I don’t know if I would be here. I think it would have been a major problem.”
Caponi says he and his team began questioning what they had done to prompt the cardiologists, who operated as The Care Group LLC, to consider leaving St.Vincent.
“The second thing was what is it that we could do to listen to them better to make sure we did not lose the relationship that had been established,” Caponi says.
“Sometimes, you get in the position where you’re saying, ‘I’m going to fight you out in the streets.’ I just didn’t think that was an option for us. I thought collaboration and cooperation was going to be a much better tactic and strategy to follow rather than getting into a major conflict.”
Caponi was given time to respond to The Care Group’s proposal, so he and his team set out to develop a counterproposal that would simultaneously save the partnership and help take St.Vincent to a new level of health care service.
He also came to the conclusion that the best place for him was not at the head of the boardroom table where negotiations between the two groups would take place.
“Jeff Immelt from (General Electric) told me when the CEO enters the room, all creative thought ceases,” Caponi says. “If the CEO is in the room and he says, ‘This is the way I’d like it to be,’ then the willingness of the other people that are representing you in negotiations, they usually don’t feel as free to use some of their creative thought processes.”
Such detachment requires a lot of faith, and even with that, still presents a certain level of anxiety for the CEO.
“For those of us that were not in the room, I think we had a lot of anxiety,” Caponi says. “We knew that we wanted to have a relationship at the end, but we didn’t want to sell our souls in the process. I think there was a lot of integrity in the process, and we tried to communicate throughout the process at the appropriate intervals and keep people informed. I think that allayed a lot of fears.”
In any deal where delegation of authority is involved, there must be faith between the CEO and those who represent him or her in the negotiations.
“I had faith in the executives that were working on this that they were doing what we were asking them to do,” Caponi says. “They kept me well informed. If there were issues that they were really struggling with, they would have a break in the negotiations and they would huddle within their group or call me, and we’d have a discussion. If I had something where I said, ‘Hey, we’re not going to go there,’ they appreciated that, and it really helped us.
“At that granular level where things really had to be talked about and you had to throw a lot of things on the table, we tried to get the most senior leader out of the room so things could evolve over time.”
While the CEOs were not in the room, their input was felt in a list of bedrock principles approved by both parties that was kept on the table during any talks that took place. The principles served as a guideline for the discussion.
“We said whatever we come up with, and we didn’t know what that was going to be, these are the principles it is going to adhere to,” Caponi says. “Those were principles that you could develop and then you could take back internally within the organization and socialize them. ... If you’ve really listened to one another, what’s really important to each of the sides are in those principles.”
In this case, Caponi says the principles were rooted in the mission, vision and values of both organizations and were developed under the premise of mutuality, economics and sustainability.
If significant changes in a business partnership are being considered, a list of principles becomes a critical foundation on which to base the talks.
“I don’t see how you do it without it,” Caponi says. “You’re just going to fly around and you’re never going to have anything to agree to. ... What are the non-negotiables? What are the deal-breakers? You just try to get those upfront and put in there. If you can’t get an agreement on that, your chances of getting to the other end with something probably are not likely. What you find out is you’re probably more alike than different.”
One of the most important negotiation skills is decisiveness. That means knowing when to say ‘no’ and not being afraid to do it, especially if saying ‘yes’ would go against the principles that were agreed to at the start of the process.
“You need to take a stand,” Caponi says. “If the answer is no, then go ahead and tell them it’s no. It’s not the end of the world. If you can’t do it, make sure that they understand why you’re not going to do it or what things have to happen in order for you to do it. You just have to be very straightforward. What I see a lot of senior executives do is they waffle. They flip from whatever they think is going to be the most politically advantageous for them. I think that breeds mistrust.”
In business relationships, Caponi says there is a difference between mistrust and distrust.
“Distrust is, ‘I know you and I don’t believe you,’” Caponi says. “Mistrust is just, ‘I don’t know you.’ If you are going to have these relationships, you’re going to have these partnerships, you’re going to have these working relationships, you really have to allow people to know you and know who you are at the core.”
Caponi says he picked up a saying not too long ago that says that while people like to think of themselves relative to their intentions, others judge you based on your actions.
“There is a big difference between the two,” Caponi says. “You really have to know the people that you work with. You’ve got to know what’s keeping them up at night. And whatever you do, you’ve got to make sure you take that into account and you have a much broader look at things rather than just from your own position.”
Caponi credits the spirit of partnership and open communication that St.Vincent had built with The Care Group for their ability to reach an amicable solution.
“We spent a lot of time on our side trying to understand why the doctors wanted to do this,” Caponi says. “That also afforded them the opportunity to further examine why we might want to do it. It’s only through that understanding of each other’s reasons and purposes that we could come to an agreement.”
The solution was a new hospital, but one that’s part of the St.Vincent system, not a competitor.
The St.Vincent Heart Center of Indiana opened more than four years ago and now handles more than 5,500 admissions each year. It is the first freestanding medical campus in Indiana devoted entirely to the diagnosis, treatment and prevention of cardiovascular disease.
“It’s been very successful,” Caponi says. “The unique part of it is that not only did we have the Heart Center, but we also kept our heart program at our 86th Street facility. On the one hand, we were partners, and then on the other hand, we were competitors. Keeping that balance has worked out well.”
“We’ve continued the relationship and we’re doing things now that we probably wouldn’t have done if we didn’t have this partnership.”
“Too often, as CEOs, we think we know all the answers, and quite frankly, that is arrogant on our part. I think that what I’ve learned in this is that there are a lot of great ideas and there are a lot of different ways to get it done. What you have to find out is not only what is right for you but what is right for your partners, as well. If you’re open to that possibility, you’ll probably end up with much better results.”
St.Vincent has $1.6 billion in annual revenue and is Indiana’s largest health care employer, with 12,000 employees and 17 hospitals serving 45 counties in the central part of the state.
The successful negotiations with The Care Group solidified the organization’s leadership position in health care. But none of it would have been possible without the core culture that produced people capable of comfortably handling high-level negotiations with everything on the line.
It requires the setting of clear and identifiable benchmarks for those who wish to move up in the company and become executives.
St.Vincent came up with a list of 10 leadership competencies, including things such as demonstrating integrity, the ability to clearly communicate expectations, a passion to succeed, accountability and self-awareness.
In addition to the competencies, executives must integrate a defined set of virtues into their leadership style and prove that they can lead holistically, promoting and enhancing the continued development of associates.
Success in meeting these standards is tracked and a report is shared with the individual being judged.
“Each executive receives a report that outlines the strength of their values and spiritual balance for each of the success factors,” Caponi says. “The report describes values and judgment strength as either optimal, proficient, vulnerable or cautionary.”
Executives are also rated and get direct narrative feedback from their colleagues, peers, subordinates and business partners on the consistency of their leadership behaviors against the success factors.
Presentations at St.Vincent are made by the person who came up with the idea, even if that person is not the head of the department.
“If there is a specific project that people are working on that needs to come to the most senior level of the organization, we usually encourage that the people that are working on the project and know it the best be the ones that come and present, rather than their senior executive,” Caponi says.
“What we like to do is give people the framework of what we need to get done, but don’t be so prescriptive that there is only one way to do it. People get energized by that.”
He also makes the time to get around to different parts of the organization to get a first-hand view of what he calls his company’s “up-and-comers.”
Communication with those who have worked with the individual being evaluated, whether it was in a supervisory, subordinate or equal role, is essential to gauging how closely this person fits in with the values and philosophy of the organization.
“The people reporting to our leadership, they are probably our best barometer to determine how well or not well they are doing on things we feel are important. If they are struggling with some of that, it gives us a great opportunity to work with them to improve in those specific areas.”
HOW TO REACH: St.Vincent Health, www.stvincent.org