When Mark Laret stepped in as UCSF Medical Center’s new CEO in April 2000, it was just two weeks after the health care system had ended a bad three-year relationship.
The center had merged with Stanford Health Services to become UCSF Stanford Health Care in 1997, and everything seemed so promising. But three years later, a culture war was still raging within the combined organizations, and recognizing that the merger was a major mistake, the two centers separated.
“There were a couple of years of work to bring the organizations together, but when they decided to split, it happened in a matter of months,” Laret says.
The quick break left the organization reeling.
“It was a fairly grim situation on a number of fronts,” he says. “First, and the most obvious thing, was just how distressed the employees were.”
They had been promised certain benefits that weren’t fulfilled, and they were angry that all of this effort had gone on the past few years and hadn’t benefited anybody in any way. They were also mad that management had focused so much on the merger that quality of care had dropped.
Then there were the financial challenges, as the hospital was losing $1.25 million a week. “We were running out of cash, so there was some urgency to act,” he says.
On top of those two issues, operations were a mess. Many functions, such as payroll, were still housed at Stanford, so UCSF had to ask Stanford to do its first payroll checks after the split. Laret also had consultants in pretty much every major role in the hospital.
“There was no chief operating officer, no chief financial officer, no chief anything, no chief information officer, nobody running ambulatory care, so it was a big set of holes here,” he says.
Seeing all of this, he knew the hospital was on life support, but he also thought it could one day breathe on its own again if he could re-engage the employees, build a management team and control the finances — but it all had to be done simultaneously.
“It wasn’t a pleasant set of circumstances, but on the other hand, I knew that the fundamentals here were strong, and that was what we really built on over the next several years.”Re-engage employees
One of the first three things Laret had to attack was rebuilding confidence with his employees.
“First, and I think most important, was to re-engage the work force here and get them focused on what we could do together to develop a positive attitude about the future, to have confidence in a vision of the future,” Laret says.
He started by writing weekly e-mails to the whole staff, telling stories about patients and the great things done at the hospital.
“The first thing I needed to do was remind them of what kind of organization we are,” he says. “We had gone through a trauma, but fundamentally, we were still one of the great medical centers in this country. We needed to get back and focus on those issues related to what we’re really about as an academic medical center and spend less time talking about the trauma.”
He also spent between one-third and one-half of his time talking with employees at brown-bag lunch sessions and departmental meetings and listening to their complaints and problems.
“As much as anything, giving them a sense that management was listening to them probably did more to re-establish confidence,” he says. “ … That is a key ingredient. People need to feel that management is there and is accessible and is respectful.”
He heard many problems, such as the hospital didn’t have linens and that the gases used to power their lasers were no longer being delivered.
“We needed to go back through and sort out where we were on our accounts payable — how do we manage this?” Laret says. “It was dealing with issues one at a time, from the bottom up, but with the idea that you ultimately get there.”
He also had to prioritize these problems, so he first dealt with anything related to patient care.
“That’s more important than the budget and more important than any of the other things we need to deal with,” he says. “That actually provided some clarity to the organization — ‘OK, we’ll take care of patients first and foremost.’”
After patient care, anything that could cripple the business if not solved got precedence, so he cleaned up some audit and other issues. Everything else could wait.
Next, he revisited the hospitals mission and values.
“Historically, they had these statements, but they were in a book, and nobody knew what they were,” he says. “They weren’t really guidelines for daily decision-making or strategic planning or anything else.”
So Laret started rethinking these things. He asked his management team to talk about concepts for a mission. Then he talked to different leaders and department chairs. Out of that came something short and easy to remember — caring, healing, teaching, discovering.
Through that process, he also developed values to lead people in their daily activity — professionalism, respect, integrity, diversity and excellence, or PRIDE. To get people embracing these values, he started by communicating them in every new employee session. He asked employees to give examples of behavior that both exemplified and didn’t exemplify each value. He put it on internal materials to hammer it home and would ask employees about them during luncheons, round-table meetings and any other opportunity he got.
“They all knew I was going to ask about this, so everybody kind of learned it,” he says.
He also started giving out five PRIDE awards a month to employees nominated by their peers as best exemplifying the values. Emphasizing UCSF’s new mission and values helped heal the employees.
“You need to turn all those employees into advocates, allies, supporters, believers, if you will, in the new vision,” Laret says. “ … Get them on board with it, and if you can do that, then I think all these other things, it’s easier to solve them. If you have an employee work force that is not on board with management, it’s going to be very tough.”Build your management team
While employee re-engagement was going on, Laret also had to work to build a team of senior managers to replace the consultants that UCSF had in those jobs. But given the state of the hospital, it wasn’t easy.
“I had a lot of selling to do because people knew this was a place that was in bad circumstances after the de-merger — after the divorce,” he says.
He told candidates that UCSF was going to be great and the potential was fantastic, but he was also honest and said it wasn’t a place for the faint of heart.
“This is not a place where you’re going to be able to phone it in,” he says. “You’re really going to have to be energized by this challenge.”
He also needed people with good values.
“When I looked for all my lead people, I was looking for people who had a track record of success in demonstrating those good values in other organizations,” Laret says. “I needed the right people reporting to me, and then I charged them with making sure they had the right people reporting to them.”
He used search firms to hel p him and says he interviewed scads of people.
“I wish I had some great questions, but as much as anything, I asked people to talk to me about what their greatest accomplishments were and obviously about their failures and circumstances they felt didn’t go well,” Laret says.
He listened about what they had contributed and what they felt to be fundamentals of success or, on the other end, fundamentals that led to setbacks. He also asked about what they learned from those circumstances. This entire process took him close to a year to accomplish.
“I wasn’t interested in people coming in and telling me how great they were and all the fabulous things they had done, and when I asked about problems, it was they worked too hard,” he says. “I was looking for people who had another level of insight into themselves and had a level of confidence in themselves about how to lead in these kinds of circumstances. That would be what I’m still looking for today.”Control finances
While Laret was starting to heal the emotional pains and filling vacancies, he also had to work on healing the financial pains.
“As we started to calm the place down, to move people off the trauma and into the present and thinking about the future, we knew our future was going to depend on getting stronger financially,” he says. “You can’t achieve much if you’re losing money.”
It starts with figuring out where the money was being spent.
“The first thing is, you want to find out who has the checkbook and who has access to your bank account,” Laret says.
In the university setting, departments often submitted recharges against each other, so he implemented actions to control who could submit recharges and in what circumstances they could do so.
He also increased efforts to make sure that the hospital was billing and collecting everything that it was owed to increase the money coming in.
Growth needed to be top of mind, so he started by doing an analysis of where the organization was losing money, where it was making money and what service lines contributed to both of those.
“In a place like this, there are probably 100 different service lines, and you need to look at each one of them and see what’s contributing and what’s not,” Laret says. “Which ones can you grow without too much difficulty? Which ones can you shrink without too much difficulty?”
For example, one of the big problems was the amount of patients coming in on Medicare and Medicaid. Many staffers didn’t realize that the hospital loses a little money on every Medicare patient, a lot of money on every Medicaid patient, and it depends on the commercially insured to make up for those losses.
Laret likens the experience to being Robin Hood in Sherwood Forest, “Because we’re trying to get enough rich people coming through the forest to cover the cost of the poor here, a lot of our leaders didn’t fully understand those economic issues,” he says.
Laret also looked at available benchmarks to see what other hospitals were doing.
“If Stanford Hospital or Cleveland Clinic or New York Presbyterian can provide this service at this cost with these goods and services, why aren’t we doing that?” he says. “ … Benchmarking is obviously important, but customize it to your specific circumstances.”
UCSF is mostly a referral hospital, so it ramped up marketing efforts to increase its referrals by sending staff to educate doctors across the region about its strengths in organ transplants and how it is the leading brain tumor center in the region. He also worked with health plans to make sure that when doctors did refer patients to UCSF, the patient would be covered.
It’s one thing to get more people coming through the doors, but he saw another problem that would affect growth — service.
“You tend to treat people in a fairly consistent way,” Laret says. “And if you tend to treat them in a sloppy way, with mediocre customer service, you’re going to do that for everybody. Maybe you’ll improve for someone really important coming through, but in general, you kind of do things in a consistent way.”
He implemented a patient concierge program to help make the experience more pleasant.
“What has happened, over time, is as we start to treat more and more patients like they’re special, that has become the norm in more areas,” Laret says. “We’re not No. 1 in patient satisfaction in the country, but we’ve come a long way from the bottom quartile to almost the top quartile in patient satisfaction, and that’s really this effort of really focusing on service.”
On top of increases in patient satisfaction, as a result of his efforts, business has grown, as well, and what started as an approximately $60 million loss the year Laret joined became a $70 million gain within five years. Today, the organization is not only breathing on its own, but it’s also running, jumping and enjoying its health as a profitable operation with nearly $1.5 billion in total operating revenue. It’s now also consistently recognized as one of the nation’s top 10 hospitals by U.S. News & World Report — and all of this success is the result of lots of little things adding up to a large change.
“Lo and behold, those things, after awhile, they really start to work,” he says. “Our business in volume has grown over 30 percent in the last nine years. I think it’s fundamentally a result of those kinds of initiatives.”
How to reach: UCSF Medical Center, (415) 476-1000 or www.ucsfhealth.org