In the lead Featured

8:00pm EDT August 26, 2008
Taking a company to an industry leadership position and keeping it there is a feat many CEOs never accomplish during the course of their careers. So achieving the top spot among U.S. health care staffing firms makes Susan Nowakowski, AMN Healthcare Services Inc.’s president and CEO, an anomaly among leaders.

But the achievement is even more astounding when you consider that AMN Healthcare is in an industry composed of hundreds of competitors that has evolved from infancy to adulthood in record time. While the industry continues to eke out organic growth, its maturing status encourages consolidation, so larger competitors are making acquisitions and nipping at AMN Healthcare’s heels.

Nowakowski’s secret for maintaining the lead is never looking back in the rearview mirror at the competition and always striving to be the pace car that others must follow.

“To maintain an industry leadership role, you have to be constantly looking forward, earn the business every day, make long-term investments and take chances with people,” Nowakowski says.

She likes to offer people career opportunities because, at one time, she was given that all-important first chance to prove her abilities before she had all the requisite experience, and she grew through the process. Nowakowski also differs from many of her peers in that she was promoted to the CEO position from within the organization. Starting as the company’s first chief financial officer in 1990, she later became division president, then company president and finally CEO in 2005. Now, she’s the leader of a NYSE-traded company that generated $1.16 billion in revenue in 2007.

Under Nowakowski’s leadership, AMN Healthcare has grown by increasing its service offerings and global recruiting strategy, and in addition to driving organic growth, the company made five of its eight acquisitions under her leadership. Today, AMN Healthcare operates under 12 distinct brands as a way to recruit the highly coveted nurses, physicians and allied health professionals it places on contract assignments.

Create brand diversity

Nowakowski joined what was called American Mobile Nurses in 1990, a growing privately held provider of travel nurses. Clients were beginning to express an interest in contract allied health professionals, and the industry was growing by expanding the contingent work force concept to other health care disciplines. The following year, the company grew organically by launching a mobile therapist division, and in 1998, the company launched the AMN Healthcare name. The expansion phase has continued including overseas nurse recruitment and the more recent acquisitions of MHA Group, a provider of temporary physicians and physician direct-placement services, and Pharmacy Choice, which provides temporary and direct placement of pharmacists.

“Clients were asking for contract physicians,” Nowakowski says. “The key is to listen to them, anticipate the market, and then get into the space quickly. Otherwise, someone else will offer the service. To be an industry leader, you have to be a single-source service provider to clients or else you give a competitor an opening.”

Today, AMN Healthcare provides a full range of staffing services under a multibrand recruiting model. While there’s an increased cost and a few challenges associated with executing the strategy, each brand attracts a different group of health care professionals, so there’s value in retaining the inventory of health care professionals and the placement team who garners relationships with the contingent workers, following an acquisition. Sometimes, there are multiple suitors for health care staffing firms, so how the CEO handles the transaction and the integration of the brands often dictates success in maintaining the brand identity and retaining the work force.

“The key to managing multiple brands and keeping them intact is to respect each organization’s differences,” Nowakowski says. “You can’t expect to change everything overnight, and you shouldn’t change everything. You should author the integration plan before the acquisition closes and involve the key leadership of the prospective acquisition in the assimilation strategy. The process builds trust and eliminates surprises. Agree upfront which functions and decision-making processes will be consolidated and which will remain autonomous.”

Agreeing about the future operating model as part of the due-diligence process keeps the acquisition from unraveling once the investment is made. Each AMN Healthcare brand has its own president and its own profit and loss statement, which ensures operating independence, and the structure appeals to selling entrepreneurs. Nowakowski favors integrating back-office functions, like accounting and risk management, while providing new acquisitions with tools that enable growth, such as improved Web sites and technology capabilities.

“Each brand has its own operating plan, which is approved by the board,” Nowakowski says. “Of course, we’re looking for them to fit in to the long-term company goals and cohesiveness around things like pricing and the types of disciplines they are providing, but they have a great deal of autonomy in how they conduct business. That maintains the brand’s independence and its ability to appeal to a different segment of the contingent work force.”

Put people first

While people are a vital component in the success of most businesses, in the staffing industry, the key is the quality of the workers placed on assignment. In addition, clients rely on the expertise of recruiters to make critical placement decisions. With people dictating the company’s success at every turn, relationship prowess and execution consistency not only sustain the AMN Healthcare operating model, they directly impact the company’s industry leadership position. Because AMN Healthcare must compete for acquisitions, contingent workers, recruiters and clients, Nowakowski is adept at handling people and leading the way with her talents.

“We were vying to acquire MHA Group and closing the transaction was a critical step for our organization because having physician placement capabilities was vital to becoming a full-service provider,” Nowakowski says. “There were several times during the negotiations when the deal was off the table. I think what finally helped move the process forward, is that I envisioned the deal through the eyes of the other party. The contract included a post-acquisition earn-out bonus for the owners, if certain results were achieved. They were concerned they wouldn’t earn the minimum bonus, so I finally agreed to a guarantee. I think, sometimes, you have to put your ego aside when things get off course and come back to what makes a good partnership, which is trust.”

Each brand has its own sales force, so it’s important to keep the business development team focused on winning the battle against outside competitors, not merely diluting revenue generation by competing for the same business against other AMN Healthcare representatives. Clients can also be confused when multiple brands are offered under a single company umbrella — a reason why many executives often favor brand consolidation following acquisitions. Nowakowski relies on her people management skills to build a cohesive team focused on taking down the company’s outside competitors — not each other.

“I think it’s important to discuss how the sales teams will work together as part of the acquisition discussions and involve the managers and the sales teams in the strategy,” Nowakowski says. “We use a cross-selling model, and the sales teams’ incentives are aligned, which encourages the representatives to help their counterparts. They visit the client in teams, presenting our offerings only under the AMN Healthcare brand. Going to the client as a unified team creates trust between the sales groups and message uniformity with the client.”

Building and developing an internal staff has been vital to executing the company’s growth plan, which includes competing for the attention of the more than 2 million nurses in the U.S., who have their choice of jobs. Nowakowski says the company went from 800 associates to 2,000 seemingly overnight, in part because staff chose to remain with the company after acquisitions but also because she delivers on her promise of providing career opportunities to up-and-comers. Last year, 40 percent of the company’s promotions were awarded to internal staff in accordance with Nowakowski’s belief that talented personnel should be given the opportunity to spread their wings.

“I moved one consultant from Deloitte over our payroll and billing system, and he created the entire infrastructure that pays and bills our 7,000 assigned clinicians every other week,” Nowakowski says. “I gave him the opportunity to run our allied health division, even though he had no sales experience, because I was so impressed with his work. Sometimes, passion and commitment can make up for a lack of experience.”

In addition, having the staff and resources to assimilate acquisitions effectively and continually assessing the adequacy of the company’s infrastructure to sustain growth is something she reviews every day because both are vital to maintaining the lead.

“You can’t effectively integrate an acquisition with staff who can only dedicate themselves to the task part time,” Nowakowski says. “It’s a full-time job to do the job correctly and to make sure people are working together cohesively. CEOs should evaluate their staff and infrastructure before attempting an acquisition to make certain there are enough capable resources to assure a seamless transition.”

Investment in continuous improvement

When staffing industry customers procure services, they have many options, so customers must be satisfied or else they will defect to a competitor, and there’s certainly no room for error when contracting health care personnel care for patients. Nowakowski says that continuous improvement and continuous investment go hand in hand, because error reduction and client retention allow CEOs to reduce overhead and rework costs, which frees up investment funds.

“Quality and continuous improvement are the fabric of the organization,” Nowakowski says. “To create a culture of continuous improvement, CEOs have to constantly talk about the importance of quality, monitor metrics and quality ratings, and provide staff with incentives that support the quality mission.”

To demonstrate her commitment to quality, Nowakowski explains each of her decisions to the company’s staff by illustrating how her choice supports her commitment to quality, especially when her decision supports quality but not increased revenue. For example, Nowakowski says she could lower the selection criteria for contingent staff, enabling recruiters to fill more requisitions, but that would send the wrong message about the importance of quality to the team.

In addition, AMN Healthcare conducts anonymous quality surveys among client and contingent professionals and Nowakowski monitors those results along with data that measures the company’s basic deliverables, such as the percentage of filled orders, completed assignments and order cancellations.

She also uses feedback from client and contingent worker focus groups to craft the company’s investment strategy. AMN Healthcare maintains 20 different Web sites geared toward the recruitment and professional education of each brand’s contingent workers. The company’s latest investment, supported by focus group feedback, enhances each site’s social networking capabilities, creating a portal that will get into the lives of the health care professionals.

The concept and the investment decision were partly influenced by industry leaders outside of staffing. Nowakowski says she learns from observing what leaders do in all industries to keep their companies in the lead.

“We watch Nike and Google and bring some of their best practices to the table here,” Nowakowski says. “I think CEOs can learn a great deal from looking outside their own company and industry for ideas and what keeps them ahead of the competition.”

Under Nowakowski’s leadership philosophy, there’s no doubt that growth requires capable people and ongoing business investment, but she says those things are even more important if the CEO wants to maintain an industry leadership position, which is garnered through a blend of organic and acquired growth.

“While I think long-term investment is vital to sustaining growth, so is remaining steadfast with your values,” Nowakowski says. “As time goes on, strategies will evolve, but a commitment to respecting the individual, quality and continuous improvement are the things that keep companies at the top of their game over the long haul.”

HOW TO REACH: AMN Healthcare Services Inc., (866) 871-8519 or www.amnhealthcare.com