Dr. Christopher Olivia turns around West Penn Allegheny Featured

8:00pm EDT August 26, 2010

When Dr. Christopher T. Olivia arrived at West Penn Allegheny Health System, the organization was bleeding money. Nearly $100 million was lost in 2008, the year Olivia was named president and CEO.

The trained ophthalmologist and surgeon was hired to stitch closed the spewing cash flow and provide a clear vision for the system to prosper.

“The broader challenge is, like in any organization, you have to motivate people to change, because particularly in distressed organizations, people stay committed to what they know as being comfortable,” Olivia says. “One of the advantages you have is that you have a burning platform — if you don’t change, you may not survive. Still, people are committed to the familiar, to what they know. You have to show the organization why it needs to change, and then you have to show the organization what it may need to change to.”

Olivia did just that as he began what continues to be a turnaround situation. To get nearly 13,000 employees and six hospitals to buy in to an organizational overhaul, he started by keeping the lines of communication open and collaborating with employees to define the West Penn Allegheny of the future.

“The key is to really show them what’s going on today and explain very clearly why the organization needs to change,” Olivia says. “Then get them to help develop that future collectively with you.”

Communicate the need to change

Olivia made stops at three organizations in need of major changes before arriving at West Penn Allegheny in March 2008. One thing he learned along the way is that a successful turnaround starts with a foundation of openness and honesty.

In an effort to communicate throughout the entire organization, Olivia stood in front of his board of directors, he stood in front of his direct reports, and he stood in front of his employees in town-hall meetings. He presented the facts and then explained that, as an organization, together, they would move forward.

“You have to engage them in creating the future of the organization, you have to get them to see why what they’re doing now is not working,” Olivia says. “That means talking to them directly.”

If you need employees — or an entire organization — to change the way things are being done, you must show them that the current business path isn’t sustainable and certainly won’t lead to success. If employees don’t understand why change needs to happen, then why would they buy in to what you’re asking of them?

In distressed organizations, employees often don’t understand the company’s financial stance or strategic direction. When you’re communicating to each group, be clear with facts and point out the problem areas. Those could be how the organization is structured, a dead-end direction or, maybe, the budget.

“It’s surprising how often organizations will not face reality because it’s painful,” Olivia says. “That reality may mean you have to close certain things, it may be necessary to lay people off, it may be necessary to move the business or relocate it or change the way that a business is operated. All of those things have consequences to them, so, oftentimes, people don’t like to face those consequences.”

The truth isn’t always pretty, but neither is what could happen if it continues to be masked.

“You have to start by showing them the basic facts about the business: Here is what is not working. Here is what is working. Here is why we need to change; here is what we need to change to,” Olivia says. “You have to tell them the reality of what is there today, and then you have to help them envision the future. Then you’ve got to get people to move to that future collectively that you’ve just envisioned.”

The most important part of the conversation is that it must be a collaborative effort — you’re telling them you’ll be asking for their help. It’s not Olivia’s plan for the future. It’s not the employees’ plan for the future. It’s the organization’s plan for the future.

“Be open and honest in your communication about what has to be done,” he says. “People can handle things if they know the truth. I have found that people have remarkable abilities to adapt if they know the truth. But they’re not going to follow you if you don’t tell the truth.”

Involve employees in change

You’ve outlined your reasons for why change needs to occur. Now you need to get employees to develop what the organization should become.

Olivia quickly realized upon arriving at West Penn Allegheny that the health system wasn’t only facing financial problems, but it didn’t have a clearly defined purpose, mission, vision or set of values. If the hospital and its employees were going to move collectively in one direction, the organization needed to clarify what it stood for and where it was headed. Olivia included employees in the process to piece together those questions.

“You have to involve them in the decision-making, that’s how you get people motivated,” he says. “Leaders define the boundaries of what has to get accomplished, and then let employees show you the way to get it accomplished.”

Obviously not every employee can be included in the process, so Olivia started by gathering a representation of the staff.

“You can’t put everybody on the team,” he says. “You have to be selective and put the people on the team that can add to the process and the people on the team that are key to making the process happen after you make the decision. We got the doctors involved, management, nonphysician people involved and some of our operating people.”

Involving multiple people in trying to form a consensus is valuable because the unpopular opinions tend to get squashed during the process, making for a better result.

“You eliminate outliers in broad deviation and decision-making; that’s one benefit,” Olivia says. “The other benefit is you get buy-in because the people that actually have to carry through the policies that come out of the process are the ones who design the outcome.”

All told, several hundred people were involved in defining West Penn Allegheny’s purpose, mission, vision and set of values.

“Purpose and mission, our people develop those,” Olivia says. “The vision — what we need to become — that’s where leadership and I weigh in a little bit more on the direction. The last component is the values. Leaders drive the values; values drive behavior.

“As far as our purpose, mission and our vision go, it’s not something that I have some external consultant bring to the organization or, frankly, I even brought to the organization. It was here already. People know why these hospitals were founded. People know what we do every day. People know what behaviors we want to see. My role is to help unlock all of that, but that was developed by our people.”

Olivia says your employees hold the answers. Once you have a team in place, you need to set boundaries and guide the group through the process.

“‘Here is what you have to get done; here is the time frame for it. You help me define the way to get it done,’ ” Olivia says. “People will put something together that they have ownership of, and you may not always get a process exactly the way you want it, but generally you get a better process than if I stand over you and say, ‘Here’s how it has to be done.’”

For example, when Olivia assembled a team to define the organization’s purpose, he posed the question: Why are we here? In defining the mission, the question was: What do we do? When it came to developing the values, Olivia and about 200 others went off-site for two days and walked through the questions: What type of characteristics do West Penn Allegheny employees need to possess? What values? What behavior should be expected?

When you’re defining such important organization fundamentals, the idea is to ask for a broad range of input and narrow the thoughts based on popular views.

“You have to get your purpose, mission, vision correct, and then I would add the values,” Olivia says. “Getting all of that right ultimately is critical in getting your business aligned. Again, what you don’t want to do is go outside and bring somebody in who is an expert with a bunch of slides. ... What you want to do is get your people organized inside to help develop these things and then they have ownership.”

Communicate the changes

You obviously can’t involve each employee in every decision. But employees must be clued in on the process that is taking place.

“You have to communicate while you’re (making changes),” Olivia says. “You have to be consistent.

“You can’t ever give up and quit. You have to communicate with people why you’re doing it and why (goals) have to be accomplishable throughout the organization. You need to get enough people on board to really move the organization forward. You’ll never have 100 percent agreement with what you need to do — nothing will ever be accomplishable if you have to have 100 percent agreement — but you have to have enough key people to believe in the direction of the organization in order for it to be successful.”

As changes were coming to fruition, Olivia presented them. To get employees to buy in to the newly formed vision, he scheduled a series of town-hall meetings and outlined a path for becoming a superior organization by the end of the decade. He pointed to specific goals, such as becoming a leader in quality and patient safety, and challenged employees.

“I appealed to them and said, ‘Do you want to be part of an organization that you can take your family member to and say this organization provides the highest personalized care in the safest environment in this country? Because that’s what I’m asking you to do — I’m asking you to do it for the patients that come in, and I’m asking you to do it for yourself and your family because you use our services,’” Olivia says. “That, I think, is a motivator. You can’t motivate people to come to work and say, as some do in the health care industry, ‘Come in here and make us as much money as possible.’

“Every business has an ennobling purpose. You have to find out what that is and get your people engaged in that because that’s really why we’re here.”

That motivator, that ennobling purpose that allows for buy-in, becomes evident when you ask employees to help you develop the organization’s purpose, mission, vision and values. And those same people who helped you define your direction, must also help you communicate it. As the leader of the organization, communication can’t be left up to you and your direct reports. You need multiple levels of key stakeholders to help spread the word, as well as multiple forms of communication. Every other week, Olivia sends out internal communication detailing the system’s progress and where improvements are needed.

“You have to be consistent, and you have to be repetitive with your message,” Olivia says. “How do you build trust? Trust builds with deeds over time. It’s built with honesty and consistency.”

Olivia continues to work toward turning around the health system. In June, the organization announced the consolidation of Allegheny General Hospital and The Western Pennsylvania Hospital, which could cost as many as 1,500 employees their jobs. The announcement came after West Penn Allegheny reported an operating loss of $11.6 million for the nine months ending March 31.

For fiscal 2009, the system had total revenue of $1.6 billion, up 7 percent from the previous year. That same year, it also posted an operating loss of $38.5 million, an improvement over fiscal 2008, when the operating loss was $88.8 million.

In all, there’s been serious financial and directional progress.

“We have a much clearer direction now as an organization,” Olivia says. “Put aside our financial improvement; we have a clear direction on where we’re headed and why.”

How to reach: West Penn Allegheny Health System, (877) 284-2000 or http://www.wpahs.org/