Strategic thinker Featured

7:00pm EDT January 29, 2008

Eleven years ago, when Daniel J. Hilferty arrived at the AmeriHealth Mercy Family of Cos., the organization had carved a niche as a small, regional provider of Medicaid and Medicare managed health plans.

It would have been fine to stay that way, says Hilferty, the president and CEO, but he soon realized the company could do much more if he could expand its reach.

But it wasn’t as simple as opening a few more offices. Hilferty wanted to change the entire scope of AmeriHealth Mercy from a regional company that focused almost entirely on a southeast Pennsylvania client base to a national company that served clients in many markets around the country.

“You have to start with our mission as a managed care organization to serve our population in Medicaid and some Medicare,” Hilferty says. “We realized we were so successful at it on a regional basis that we could go after opportunities in various states. We did it state by state, and as we grew, we developed a strategy based on what we needed as far as personnel, operational infrastructure, and we would build that way.”

From those initial steps came a strategic plan that still serves as the guiding principles as AmeriHealth Mercy grows. But the strategic plan was just a starting point. From there, Hilferty and his management team had to get everyone in the company — which now employs more than 2,000 associates — to buy in to the idea.

The results have been impressive. AmeriHealth Mercy now has $2.5 billion in annual revenue, up from $275 million when Hilferty took over.

Here are the lessons Hilferty learned during that growth process and how they continue to influence how he leads the company and communicates with his employees.

A team effort

Growth needs to occur along the lines of a template. In most cases, Hilferty says that template is going to be some form of a strategic plan that outlines where you want to take the company, who is going to be involved and what resources you have to get there.

The more people who can be involved in creating that road map for growth, the better.

Companies that start down the path toward a major organizational shift without a detailed road map are far more likely to set themselves back with mistakes.

“You can’t bite off more than you can chew,” Hilferty says. “Growth and scaling the organization must be done as part of an overall strategic plan that has a strong financial underpinning. That’s No. 1.”

He says the best plans start with input from across your organization. Hilferty meets frequently with his senior management board, and it was through those meetings that his leadership began hammering out a plan it could present to the rest of the company.

Your senior leadership is a good place to start forming a brain trust because those people will likely bring different backgrounds and areas of expertise to the table.

“It goes back to my view of executive leadership,” Hilferty says. “I have a certain skill set and others in the management team have other skills, be they the CFO, the person in charge of medical management or the person in charge of operations. I believe that group-think is much better than individual leader-think.”

Once the executive leadership team had drawn up the general outline for a strategic plan to expand AmeriHealth Mercy’s borders, Hilferty and his management staff started getting out among the associates, pitching the ideas and gathering feedback.

“We spent a lot of time talking, and it was around that table of discussion that we were able to develop a strategic plan,” he says. “Then we agreed that we needed to go to the next level of management and include them in the discussion. It was through everybody’s skill sets and perspectives on the industry that we were able to develop a plan going forward.”

As the CEO, you have the advantage of high visibility within the company. Hilferty says that when considering a big change that will affect the entire company, you should use your perch to the benefit of both your employees and the company itself.

People want to talk to the person in charge. They want to know what is going on and make their opinions heard. By walking the halls of your company and having your senior managers do the same, you won’t have to go far to get new ideas and feedback.

“I believe in managing by walking around,” Hilferty says. “When you walk around as the CEO, you get an opportunity to talk to a lot of people and engage them in discussions. That’s the informal approach I take. I seek out people in the lunchroom and in the hallways. I’m available at all of our receptions. Folks around the organization e-mail me on a regular basis, so there is a dialogue there.”

It’s perhaps the most important communication-related lesson Hilferty says he has learned during AmeriHealth’s expansion: Communication needs to be a two-way street between management and employees.

“Good communication goes both ways,” he says. “It’s not only leaders talking to associates. It’s also associates talking and leaders listening. There are many operational issues that leaders aren’t focused on that could cause us problems, so there has to be that back-and-forth dialogue with the people who deal with those issues.”

When you’re trying to refocus your organization on a new strategy, Hilferty says you need to be able to isolate several basic principles and values from that strategy that every person in the company can latch onto, and then start communicating them repeatedly and consistently.

“You have to remember a couple of things about communication,” he says. “One, whatever your vehicles are, they need to be consistent and have a regular message. You can’t communicate consistently for two months and then skip out. The second thing is that you have to keep it simple.

“In our case, our mission is to serve those who are most in need and to be recognized as the best Medicaid managed care company in the country. Our strategy is built on that mission and vision. If people see communication within that context, it’s clear, concise and consistent.”