Leading a Hospital Turnaround

This week I’d like to bring to your attention another key resource for hospital executives. It’s a book that’s part of the ACHE Management Series, titled, “Leading a Hospital Turnaround: A Practical Guide.” Whether or not you may be currently involved in a turnaround situation, this book is an excellent resource that will also help you recognize the early warning signs of impending financial problems.

The author, Anthony K. Jones, has served as CEO of two health systems and COO of four large medical centers. He also has extensive experience improving the performance of hospitals in financial difficulties. To learn more about what this book has to offer, visit the ACHE website via the link below.

Also on the subject of turnarounds, Becker’s Hospital Review published a brief article this week about the traits of a successful “Hospital Turnaround CEO.” In the article, Raji Kumar, CEO of Dallas Medical Center, shared her thoughts on five key traits that helped her transform the hospital. When she accepted the CEO position in 2010, the medical center was losing approximately $2 million per month. Last year they reported a $5 million profit.

During the turnaround, Dallas Medical Center added service lines, including cardiovascular, spine, and gastroenterology, and they recruited nearly 100 physicians to join their staff. Here’s a brief summary of Ms. Kumar’s thoughts about leading a successful turnaround:

Have a Clear Vision – Establish a plan/roadmap for attaining the vision and then follow through to implement the plan.

Communicate Effectively – Use the plan/roadmap to engage employees, communicate the big picture, and inspire them to buy into the strategy.

Make Decisions – Avoid “analysis paralysis” and take prudent risks based on available information.

Recruit and Develop the Right Staff – Assess the need for changes in management when departments prove to be problematic.

Manage Resources Efficiently – Find ways to empower employees and inspire them to take ownership of problems.

For more information, visit these websites:

ACHE: https://www.ache.org/publications/Product.aspx?pc=2240

Becker’s Hospital Review:
http://www.beckershospitalreview.com/leadership-management/what-makes-a-great-ceo-5-thoughts-from-dallas-medical-center-ceo-raji-kumar.html
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Hospitals to Increase Focus on Executive Compensation

At the ACHE “Congress on Healthcare Leadership” this week, a key presentation discussed the issues surrounding increased scrutiny of executive compensation. The presenters, F. Kenneth Ackerman Jr. and David A. Bjork, chairman and senior vice president at Integrated Health Strategies, stressed the growing importance of establishing a compensation committee to improve governance. The speakers referred to a report (link below), issued by the Alliance for Advancing Nonprofit Health Care, which helps healthcare executives answer a simple question: “Among all of the 50–100 ‘best practices’ that permeate the literature, which are the ones that are likely to make the most difference in achieving excellence in governance?”

In the concise report, titled “Great Governance,” the authors provide recommendations on how to establish and improve compensation committees and other governance practices. Seven benchmarks are listed in the report, along with “key action steps” to consider when addressing the benchmarks.

Appendices in the report provide checklists to evaluate board meeting practices and other governance activities. It’s a great document that will help CEOs and other executives address hospital compensation plans. The proactive planning discussed in the report will also help executives respond to challenges from board members as well as from the media regarding executive compensation.

The bottom line is that it’s important to educate board members before questions arise—and by strengthening the compensation committee, the board will help protect the hospital, the CEO and the board itself.

You can access the “Great Governance” report at http://www.integratedhealthcarestrategies.com/documents/articles/378.pdf
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Hospital CEO Turnover at All-Time High

In a March 10 press release, ACHE reported that CEO turnover occurred at one out of every five hospitals in the US during 2013. The 20% figure is the highest turnover rate recorded by ACHE since they started reporting the annual data in 1981. For 2013, ACHE reported 4,546 total hospitals in the US, which included general medical, short-term and non-federal hospitals.

President and CEO of ACHE, Deborah J. Bowen, said, “The increase in the turnover rate may be indicative of a combination of factors, including an increased number of baby boomers seeking retirement, the emerging trend toward consolidation in our industry and the complexity and amount of change going on in healthcare today.”

On its website (link below), ACHE provides a state-by-state list showing the percent of CEO turnover. States are ranked by high-turnover, medium turnover, and low-turnover. Among states with the highest turnover rates are Oklahoma (33%), Arkansas (30%), Virginia (29%), Florida (27%) and Louisiana (27%). States with the lowest rates include New Jersey (10%), Oregon (13%), Pennsylvania (14%), Wisconsin (14%) and Minnesota (15%).

In 2013, Black Book Market Research reported that the average tenure of a hospital CEO is less than 3.5 years, and that involuntary termination accounted for 56% of that turnover. Other findings reported by Black Book include the following:

A) 87% of Chief Medical Officers are replaced within two months after a change in CEO.

B) 94% of new CEOs who come into their position without extensive hospital experience say they don’t think healthcare expertise is needed when replacing other senior executives during an overhaul of management staff.

C) 89% of board members involved in hiring an “outsider” indicate that “broad business operational expertise and singular vision pays off with fresh perspectives on efficiencies, value, cost savings, and the goodwill to the community.”

Commenting on the accelerated rate of hospital CEO turnover, Ms. Bowen remarked, “The increase in the rate reinforces the need for healthcare leaders to work with their boards to ensure appropriate succession plans are in place.”

The complete list of state-by-state CEO turnover rates is available at:
http://www.ache.org/pubs/Releases/2014/hospital_ceo_turnover_rate14.cfm
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Adding the second leg to the three-legged stool by welcoming Jim Morell

As promised, we are introducing another new program we have talked about for months. We believe that transition is more than just finding another job, it's learning new skills along the way. With the arrival of healthcare reform, we have developed the concept of the three-legged stool. Each one of these legs is extremely important for any healthcare executive to be successful in their careers. These are: quality, strategy and finance.

Our second program is focused on finance.
The process will work as follows. Each individual that we work with at the appropriate level will be assessed by our expert. Once the assessment is completed and reviewed by our expert, he will meet with that individual by telephone one-on-one. During that meeting he will review their results and make suggestions that may include additional training in the area of finance. If any additional training is needed, this individual can create an agreement with our expert. The assessment part will fall under the Wiederhold & Associates program. Any additional training will be handled by the individual and our expert.

I do not think anyone can disagree that finance will be a major focus of healthcare reform and that anyone who lacks in that area will have his/her challenges. We are very fortunate that we have located an expert in this area who brings a long history of success in healthcare. Let me introduce you to Jim Morell  Please review the short bio below.
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Jim Morellis an acknowledged industry leader with over thirty-five years’ experience as a consultant, administrator and patient care provider.  His knowledge, integrity, and objectivity are reassuring for organizations seeking to develop and implement winning strategies, improve operational performance, and plan for the most appropriate healthcare facilities and sites.

JCM Advisors, LLC (JCMA) and its predecessor firm Morell & Associates (MA)
JCMA is the preferred source for healthcare providers seeking a strategic advantage in today’s unsettling environment.  Jim integrates years of experience in strategy formation, operations improvement, facilities development, and financial feasibility to effectively formulate viable solutions for the toughest management challenges facing today’s healthcare organizations.  This experience is also helpful to vendors to the healthcare industry as well as the courts in the areas of bankruptcy and medical malpractice. Jim also applies these years of experience in his coaching of boards and management teams.

Ernst & Young, Chicago, Illinois
Jim was an up through the ranks Partner in the Healthcare Management Consulting Practice. Early in his career he worked in the finance practice performing financial feasibility studies primarily for hospital bond offerings. He eventually assumed responsibility for the review and sign-off on all of the demand note sections of each financial feasibility study issued by the firm. During this period of default risk every organization successfully met their debt obligations, much to Jim’s and the firm’s relief.

Following these assignments Jim assisted healthcare provider and vendor organizations in the development of their business strategies for a number of years. With this background Jim shifted his focus to the development and leadership of the firm’s operationally focused facility development practice. This consultancy looked at the site and facility needs of healthcare providers through the perspective of strategy formation, operations improvement, and financial performance. Throughout Jim’s tenure at E&Y he worked with both audit and non-audit client organizations ranging from academic medical centers to small rural hospitals, stand-alone hospitals to healthcare systems, faculty practice plans to small physician group practices, and for-profit as well as tax exempt providers located throughout the country.

In addition to his own consultancies and his tenure in public accounting, Jim has also provided management consulting services with two boutique healthcare firms.

Signature Leadership Qualifications
Jim serves as an Adjunct Faculty member at DePaul University, Chicago. He teaches the capstone Strategic Analysis course for both MBA and undergrad business majors at the Driehaus College of Business. As the capstone name implies, this is the final class for each student before graduation at both the MBA and undergrad levels. The curriculum is designed to bring the real world into the classroom with a curriculum that includes the following activities.

  • Classroom presentations and discussion focused on the text, the research project, the simulation, and career development
  • Text study and related quizzes
  • Research project designed to prepare the students for interviews through a comparative study of targeted firms of their choosing in the same industry. The analytics address each company’s strategy, operations, management reports, and financial statements looking for alignment or dissonance. Depending on the size of the class, students are required to make one or more presentations relative to their research.
  • Capsim computer simulation team competition. The students form teams to operate a high tech company. Each team competes against other teams in the class as well as against an equal number of computer operated teams. This exercise is designed to have the students work together to apply what they have learned in class, through their respective research projects, and the body of knowledge and experience they have developed to date in their careers. Each team makes a presentation discussing their performance at the end of the competition.

Jim is a former federal auditor having served as an Inspector General – Audit for the U.S. Army. During is active military service Jim conducted financial audits of hundreds of military units through the Office of the Inspector General, 2d Armored Division.

Jim is a frequent speaker at the ACHE’s Annual Congress on Administration, the AAHC’s Fall Conference as well as various national, state and local professional associations. Jim has published articles on a variety of healthcare management issues.

Prior to making the commitment to management consulting Jim served as an administrative resident and administrator at The Ohio State University Hospital & Clinics, now The Ohio State University Medical Center. Jim also worked as a certified nursing assistance at the University of Minnesota Hospital & Clinics, now the University of Minnesota Medical Center.

Education and Certifications

  • Jim holds a Bachelor of Arts in Economics and Psychology (with a focus in Organization Design) from Case Western Reserve University, Cleveland, Ohio and a Master of Science in Hospital and Health Services Administration from The Ohio State University, Columbus.
  • He is a Fellow of both the American College of Healthcare Executives (ACHE or the College) and the American Association of Healthcare Consultants (AAHC or the Association). He is a Past Chair of the Association’s Board and has chaired many of the Association’s committees. He is also a Past Chair of the College’s Consulting Special Interest Area, now the ACHE’s Healthcare Consultants Forum.
  • The program Jim has prepared for those individuals needing additional assistance in the development of their financial acumen is multi-disciplinary and based in part upon results of the 2012 WA Financial Acumen Survey, his experience across a broad range of healthcare organizations, and his work at DePaul University. Elements of the Financial Acumen program include an assessment process, a customized skills development plan, associated learning modules, as well as individual coaching and consultation.
  • This program is designed to be customized to best meet the needs and goals of the individual executive. The goals of the program are to (1) assist each executive in their preparation for their upcoming interviews and (2) provide the financial acumen tools necessary to more effectively lead their new organization through these turbulent times.
  • If you have any questions or comments. Please do not hesitate to reach out to me. On an additional note, we will offer Jim Morell's services beyond just those individuals involved in the Wiederhold & Associates transition/career development program.
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