How NYU Langone went from $120M in losses to 10% operating margins

When Robert Grossman, MD, became CEO of New York City-based NYU Langone Medical Center in 2007, the institution, which includes multiple hospitals as well as NYU Medical School, was not only facing an operating loss of $120 million, but was saddled with aging infrastructure and a culture of complacency, according to Strategy + Business.

Through a three-pronged approach that included creating an inspiring stretch vision, promoting data transparency and highlighting the importance of top talent, Dr. Grossman has led NYU Langone, to an operating margin of 10 percent while also investing in new infrastructure, including a children's hospital, and improving quality of care.

When he first assumed the role of CEO, Dr. Grossman and his senior leadership team drafted a "Statement of Strategic and Organizational Direction," and asked for organizational input. While many people agreed with the proposal's ideas, they were left wondering how the system would be able to accomplish their goals. Dr. Grossman responded with a one-page "50,000-foot" strategic roadmap that more clearly outlined the sequencing of the system's new initiatives, and enlisted his leadership team to undertake a 60-day drilldown to develop plans for each of the system's core missions: research, education and patient care.

This strategic plan was followed by multiple group follow-up meetings with various stakeholders meant to not only get more input from across the organization but generate buy-in among key stakeholders.

"Building belief in the vision was critical," Dr. Grossman told Strategy + Business. "I also wanted to show the institution that it was much better than what [critics] perceived, yet at the same time, [I wanted stakeholders to] embrace the brutal facts."

In addition to developing his stretch vision, Dr. Grossman utilized data transparency tactics that compared the clinical performance of NYU Langone departments to other top departments across the country. Instead of casting performance goals from the top-down, Dr. Grossman allowed departments to set their own goals based on the performance of their competitors. This approach is part of what has led NYU Langone to receive top quality benchmarks across the board in recent years, including four consecutive years of top rankings for overall patient safety and quality of care from Vizient.

Dr. Grossman knew that he would have to shake up a complacent faculty if he was going to be able to achieve his ambitious goals, and he established six-year terms for the center's 33 chairs, many of whom had ascended to their roles based on their clinical and research merits as opposed to leadership abilities. By 2015, 30 of the 33 chairs had been replaced.

A benefits structure with no official retirement age left many of the center's research faculty in lifetime positions, even though 25 percent of them were not attracting any research funding. Using external benchmarking, the new leadership team instituted a three-year phase-in of productivity measures while also instituting a retirement incentive program. They began to hold the department chair accountable for the productivity of their researchers, and since Dr. Grossman became CEO, NYU Langone's NIH research funding has grown from $122 million in 2008 to $189 million in 2016.

Through his commitment to an organizational vision, dedication to data transparency and emphasis on accountability and top talent, Dr. Grossman has led NYU Langone Medical Center to a turnaround that other hospitals and health systems can learn from.

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