King of the hill Featured

7:00pm EDT February 28, 2007

In 1993, Steve McDermott felt content with his company’s success, but thought maybe he should do more. He hired a PR firm to see if Hill Physicians Medical Group, an HMO with 3,000 physicians serving more than 350,000 patients, should have any marketing work done.

The firm started by surveying the physicians who comprised the group, and the results were surprising.

“They don’t feel very good about you,” the firm told him.

McDermott, CEO, wanted to find out why, and what he could do to change the situation, so he surveyed the doctors to gauge their likes and dislikes and to see exactly what he needed to do to make them happier. When he tallied up the results, he found that only about 57 percent of the doctors were satisfied.

“We had nowhere to go but up,” McDermott says.

The low rating indicated physicians were frustrated with certain procedures, and improvements needed to be made. Happy doctors mean better efficiency and more satisfied patients, so McDermott set out to change the company to increase its satisfaction rating.

“You look at the surveys, and you look at what they say, and you start to pick apart what you need to do to improve,” he says. “It’s right there in front of you, and you get to work on it.”

Building a team
McDermott saw great possibilities for the group to build on its success and help the doctors become more satisfied, but he also saw a clear barrier, one that stuck out like a blinking neon sign. “There was so much more that we needed to do, and to take it to the next level, it was too much,” he says. “It was more than I could consider pulling off. I realized I had to build a team to do it.”

The team he had at the time was too narrowly defined and too narrow in scope to succeed, so he built a new team, growing it from just him and two others to a team of eight, all of whom have their own teams, making the organization geometric in shape. He also hired people to balance out the organization and to create a different perspective for the business. And he brought in outside people to administer personality testing to make sure the company had a good mix of people and styles.

And he made the tough decision to let go of someone who wasn’t fitting in and instead brought on people who didn’t have any experience in health care. “We wanted a different orientation — outside perspective and a more strict business orientation,” McDermott says. “Our view was, health care was too narrow-minded, and one of the problems in health care and one of the reasons it’s stuck is that it’s not applying good, solid business principles.”

Once he got people with more of a business mentality, he then needed to ensure that they had a healthy, nurturing culture to operate and flourish in. “It’s creating an environment where they feel they can thrive and do their own thing and be accountable for their effort but simultaneously be a part of a team, something larger,” McDermott says. “Each of the folks feels like they’re running their own show, but they are simultaneously conscientious that they’re part of a team and part of something larger, and all the parts need to work together to make it effective.”

Part of that empowerment is encouraging creative thinking and challenging people to innovate and dream up new ideas to improve the business. “Be supportive,” McDermott says. “Encourage risk. Be open to new ideas and, conversely, don’t be dogmatic. I don’t like, ‘If it’s not broken, don’t fix it.’ I don’t believe there’s any one way to do anything. Try to steer away from those kinds of dogmas, so atmospherically, what you do is try to create a very open, stylistically, environment.”

To do so, McDermott starts with how people address him and the image he portrays to his employees to make them see him more as a normal person rather than as a CEO. “I’m Steve; I’m not mister,” he says. “I go see them. I walk the farm. I deliberately dress down and am in casual mode. It helps to drive an old car. I’m just a regular person. I allow myself to be used for comical relief, and that’s easy to do with me.”

He encourages casual dress to make people feel more at home and also celebrates holidays to add fun and excitement to the office. He wants people to enjoy the warmer weather in the summer, so he and his management team give employees an abbreviated schedule on Fridays. He also encourages a family-friendly environment, so the company offers flex time and telecommuting. On top of that, he makes chocolate chip cookies with his children to bring in to the office and share with his fellow team members. “The thing about it is, it’s one thing to do it when you start it up, but it’s to keep it and nourish that and not lose it,” McDermott says. “You have to work at it and stay with it.”

He says the key to retaining a fun work culture is to retain a sense of fun, even as the company grows and becomes busier. McDermott says his wife is a big football fan, and while they watched a game one week, he saw a story of a young quarterback who had been in the league about five years and who was coming off a rough period. When asked what caused his poor performance, the young athlete said he was working too hard at it and had lost the fun and enjoyment of the game.

“When he started paying more attention to having more fun and the pleasure he took from the game, he started being better again,” McDermott says. “I don’t know that that’s the only thing, but particularly if you’re in it for the long run, it’s really important to enjoy it. And if you enjoy it, it’s infectious.”

Open to change
It was just another day of business in 1980 for Steve McDermott when, as he prepared to chair a board meeting, he received a phone call that forever changed him. It was the woman he was in a close relationship with, calling with a quick message. “Just so you know, when you get home tonight, I’m not going to be here,” she said.

She wasn’t just going out with girlfriends for dinner and drinks — she was leaving him. Frantic, he ran in and out of his board meeting, calling her and trying to convince her not to leave, while the board wondered why he kept hopping in and out of the room. And true to her word, he was greeted with the silence of an empty home that evening. “I was, frankly, devastated. It caught me short,” McDermott says. “OK, what is life? Is life just work?”

That experience propelled McDermott to advocate for work-life balance, both in his own life and in the lives of his employees. But work-life balance extends beyond the boundaries of the group’s offices. McDermott decided to try something a bit nutty — he decided to promote work-life balance with the physicians that comprise the group to help ease the stress in their lives and improve their sentiments toward the group.

“You’re trying to create an environment where innovation and new ideas can be tried out, and sometimes it works, and sometimes it doesn’t,” he says. “This one seemed a little bit far out.”

He and his team arranged a weekend retreat for physicians and their significant others, where they learned about meditation and how to create a balanced life despite their hectic schedules. “When I saw it, I said, ‘This is New Age stuff that the docs will never go for,’” he says.

Despite his reservations, the retreat sold out, and the doctors even requested that he and the team create a similar program for their office staffs.

The doctors’ retreat was just another example of how innovative thinking can create a more positive work environment, but McDermott hasn’t stopped there. He and his team also created a data warehouse to help physicians better track patients. It allows them to see which patients are at risk, and notices are sent to doctors communicating when patients need tests done, so that doctors can contact patients and conduct preventative health care instead of treating the outcome of letting diseases go unmonitored. “We didn’t think doctors would like us looking over their shoulders like that, but with a couple exceptions, they really liked the help and asked for more of it,” McDermott says. “It helps the docs be more effective with their patients.”

He and his team also successfully instituted initiatives to reduce emergency room visits. Additionally, they’ve created groups for patients to participate in, where they work with a doctor in a group setting to discuss problems with their disease, which have allowed patients to heal more than they had been able to on their own. “They started to help and empower and enable each other,” McDermott says. “It was more the context than the content — the context, the environment was such that they could hear the content for the first time.”

That theory holds true for communicating with employees, as well. When the environment is right, people are more receptive to the message, so McDermott operates with a transparency mentality. Employees can access an an intranet site that gives them a gauge of how they are doing compared to the goals for the year. It also shows them how their annual bonuses will fare, based on the company’s progress toward reaching its goals at that given point. “It’s very hard to engage people and be committed to something if you are closed, but if you are open and you have belief in what you’re doing, then that transparency provides an opportunity for people to become committed and engaged in the same effort,” he says. “We’re not trying to hide anything here. Here’s how we’re doing, good bad and whatnot. That helps back to the innovation. It’s not just about us up here — ‘We’re going to make all the decisions, and you just do your job.’”

The sum of the efforts of McDermott and his team is a higher satisfaction score among the physicians in the group — 92 percent, up from 57 percent just over a decade ago. The company is growing each year and in 2005 posted $414 million in revenue, a 26 percent increase over 2004, and McDermott credits his team, employees and the physicians with making Hill Physicians Medical Group successful. He says that when he sees them succeed, he feels he has succeeded, as well. “We had an outside speaker, and we had a couple hundred doctors in the room, and he made an anti-managed care joke, and nobody laughed,” McDermott says. “He said, ‘Wait a second — aren’t I in a room full of physicians?’ One of them stood up and said, ‘Yeah, but we like managed care.’ Then another said, ‘I practice better medicine because of Hill Physicians.’ “Whoa, man, that made me feel good.”

HOW TO REACH: Hill Physicians Medical Group, or (800) 445-5747