10 Ways Leaders Can Sink a Health System
Organizations don't always have the longest of lifespans, and this isn't limited to healthcare organizations. For instance, the average "life expectancy" of a multi-national Fortune 500 company is between 40 and 50 years. One-third of Fortune 500 companies from 1970 had completely vanished by 1983, either through acquisitions, mergers or failure.
These statistics fascinate Russ Jones, CEO of Oak Brook, Ill.-based First Transitions. He began to analyze the behaviors that can cause entire organizations to fail, and said the commonalities span across the board. "I don't think the healthcare business is immune to this," he says. "It doesn't really matter whether you're looking at technology, transportation or other industries. The rules of leadership are pretty much the same."
It's not always turbulent waters or a storm that sinks the ship — sometimes it's who happens to be standing at the helm. How do they address or react to problems? Do they see the icebergs ahead, or are they still riding high on their prior accomplishments? Answers to questions such as these can determine a hospital or health system's long-term viability — whether it will join the rest of those Fortune 500 companies that burned out, or survive and thrive in this challenging environment.
Here are 10 dysfunctional behaviors and management habits that will drive a hospital into the ground.
1. Leadership is enamored by their success. Inflated egos can wreak havoc on organizational decision-making. The builders and owners of the Titanic took pride in a "practically unsinkable" ship, only to disregard the mere possibility of disaster. When leaders are still taking comfort and pride in their past accomplishments, they may fail to ask tough questions about the issues at hand today. This estranges hospital leadership from employees and leaves the hospital in the dust as competitors advance their strategies.
2. Leadership ignores negative reports about the organization. This can pertain to a variety of "reports" — complaints from employees, news reports about the state's shrinking budget or criticism from the hospital board. Failing to devote enough attention and time to address reports and issues from sources outside of the hospital's senior management can result in at ticking bomb.
3. Management is fearful of their bosses and the board. This is especially problematic when hospital leaders fear their own board and bosses more than their competition. "I've seen organizations where people ignored what their competition was doing and weren't tough enough with their boards," says Mr. Jones. "When the board told them no, they wilted under the pressure and said, 'Oh, maybe we shouldn't build that surgery center,' only to have their competition build it in their own backyard."
4. Hospital leadership takes excessive financial risk. There is a building boom in healthcare right now, but hospital leaders should resist the eagerness surrounding capital projects or expansions. Smart leaders consider the long-term financial repercussions of these projects, especially in a time when the industry is transtioning to a new payment model. "When you go from deciding you want a new hospital, to putting a shovel in the ground, to opening the doors — that could be 10 years or longer. The whole economic climate could change. Sometimes organizations just risk too much," says Mr. Jones.
5. Leaders are consumed by undisciplined acquisitions. The energy surrounding hospital construction is similar to that surrounding physician-hospital alignment, as systems merge with and acquire private practices to expand their reach. This trend is much more competitive in certain markets, with some leaders even nick-naming it "physician poaching." Mr. Jones said physician acquisitions shouldn't be driven by a defensive mindset. "If a competing hospital organization is buying physician practices like crazy, you can get caught up in the acquiring, but not necessarily acquiring things that fit within the organization's strategy or may not meet its profitability requirements," says Mr. Jones.
6. Leaders listen more to the press than employees. Putting employees first can help hospitals' and health systems' employee morale, patient satisfaction, safety and quality of care. "You have to really think through things and realize the media doesn't always have all the answers," says Mr. Jones. Successful organizations recognize the link between employee satisfaction and patient outcomes and don't take it for granted.
7. Leadership relies on quick fixes for major problems. A hospital CEO might start his tenure by making some drastic changes. Even though they may be in the hospital's best interest, the manner and timing in which they are implemented can determine whether or not his stay at the hospital will be cut short. "Not very many CEOs can come into an organization where there has been stagnant leadership, make significant changes quickly and survive," says Mr. Jones. It is hard for a leader to transition from roles as a "bearer of bad news" who announces significant organizational changes to a well-liked and trustworthy leader within the lifespan of the organization. Instead, he recommends hospitals consider interim management groups to take care of unfortunate changes, such as layoffs, and then bring on a leader for the long-term.
8. The organizational culture lacks responsibility. A lack of accountability can come in various shapes and sizes. It may be the lack of regular meetings for some senior leaders. For other, it might be skipping out of the office early. "On Friday afternoons in healthcare, it is not uncommon that there is no senior leadership to be found anywhere," says Mr. Jones. "We don't send all the patients home at 4 p.m. on Friday, but it's uncommon in some hospitals to find anyone from senior leadership in the hospital on Friday afternoons. What kind of example are we setting?"
9. Hospital leaders can't handle negative news. This is where delusions can come into play, as leaders deny stark realities and allow the organization to fall out of control. "It's one of those things where you look at bad financials and say, 'That'll be ok, this will get better.' Or, 'We haven't received any funds from the state in four months, but I'm sure they'll pay us next week,'" says Mr. Jones. It is unpleasant to recognize new and developing problems, but the entire organization and its patients are counting on senior leaders and hospital management to do so.
10. The organization is led by a dysfunctional board. Mr. Jones says one of the major symptoms of a dysfunction board is the lack of decision-making. "There are so many organizations where the board members either lack the leadership or are controlled by someone that has so much power that other board members cower in the corner," he says. "That's not a functional board. It's about having a multitude of moving parts that all work together." He emphasizes that board members from various backgrounds and professions may disagree, but it is crucial that they respect one another.
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