"Nut Island Effect": The Challenges of Hospital Leadership

When Paul Levy became CEO of Boston-based Beth Israel Deaconess Medical Center in 2002, he inherited a lot on his plate. The hospital was in deep financial trouble (losing more than $50 million the year prior to his arrival), the quality of patient care was questioned and the staff morale was considered to be low — and he was viewed as someone who could manage a turnaround.

Mr. Levy left his position this past January, but during his tenure, BIDMC's net worth increased by nearly 300 percent while its patient performance and employee satisfaction grew considerably. This did not happen overnight, though, and Mr. Levy will be the first to admit there were numerous challenges along the way. Successful hospital leadership was found in an unusual source for Mr. Levy, and it was based off his experiences that had nothing to do with healthcare and everything to do with managing value-laden people.

The "Nut Island effect"
Mr. Levy was the executive director of the Massachusetts Water Resources Authority from 1987 to 1992. Upon visiting the wastewater treatment plant on Nut Island in Quincy, Mass., he was impressed by the quality of the employees and teamwork. From what he saw, the sewage plant personnel were the exemplar of a team and were driven by a "wonderful set of values." "The place was immaculate, and when people needed support — for example, somebody's family member was sick — everyone would band together," Mr. Levy says. "At that level, it seemed like a hugely successful team."

After leaving the MWRA and teaching at the Massachusetts Institute of Technology, he began to talk with an engineer and explained what made the wastewater plant so great. He soon found out that the employees he thought embodied the spirit of a team had actually been doing some important things wrong. "They were not running things correctly, and they were discharging sewage much more often into the Boston Harbor than they should have," Mr. Levy says. Several interviews and discussions later, he found out the tight-knit group of people became isolated from the wastewater treatment plant's central administration, in part because the administration did not pay attention to them and did not give them the resources they needed.

Realizing this, the employees thought the central administration did not understand them, and the employees concluded they did not need the administration's help. "That isolation results in the team making their own sets and rules of thumb on how to do work with no oversight by anyone else," Mr. Levy says. "There's a high chance that how they decide to do their work is not the most effective way and could be wrong, and it even could undermine the very mission of the highly mission-driven team."

"To me that was a marvelous irony that you could have a team and see how well they function, and then you say, 'Wait a second, it's failing?'" he adds. He coined the phrase "Nut Island effect" to describe this phenomenon where value-driven employees who are isolated from central administration actually create systemic problems.

Nut Island at hospitals — and remedies for it
When Mr. Levy became CEO of BIDMC, he explained the effect to several people, and he found that the "us versus them" behavior was rampant in healthcare. "We have a team of people that's motivated by the best possible values — physicians, nurses, operating room staff, people in the pathology lab — and they get isolated the same way the guys at Nut Island did," he says. "You can go into any hospital in the world, and I bet if you described this syndrome to five or 10 people, they'd look at each other and say, 'That happens all the time.'"

Hospital staff can easily become resentful of the central administration if the administration remains hands-off and refuses to give the staff the resources it needs to remain efficient. Instead, Mr. Levy revolved his hospital leadership around Toyota's "lean manufacturing" practices. Lean principles are centered on preserving a group's value-based motives but reducing the waste that sometimes becomes a byproduct.

For example, a nurse may need a pump to administer morphine for a patient, but she may not be able to find one. Because the nurse is a task-driven individual, Mr. Levy says she thinks a missing pump is an inconvenience in her work to treat the patient when, in fact, a missing pump is an indication of a systemic problem. The nurse will go to the next floor, find a pump and proceed about her tasks albeit with time wasted. Instead, Mr. Levy says the hospital leadership must train the staff to identify immediately when something goes wrong. "It keeps the Nut Island effect from happening," he says. "Instead of blaming the central administration, employees say, 'I will call out this problem.'"

Similarly, managers and supervisors must be trained to be polite and supportive of calling out those problems instead of brushing them aside, which could be a challenge. "It's hard to train managers to understand their job as managers had changed," Mr. Levy says. "It was no longer 'strictly hold your people accountable.' They need to be a resource for their people now."

Once frontline staff members are trained to report setbacks and managers act on those calls, hospital leadership can map out the processes in question, diagnose the problems and reduce the waste that is bogging down production. For example, redesigning how pumps are bought and where they are stocked can save significant amounts of time for those frontline staff members. Instead of a nurse spending a half hour four times a day looking for pumps, the nurse can retrieve a pump in a few minutes because the process has been refined. "It may have created one-and-a-half hours a day for the nurse and hundreds of hours for her colleagues to do other things much more interesting and valuable, such as being available for patients," Mr. Levy says.

He says there is a bevy of benefits from this type of systematic hospital improvement based on lean principles: Employees are not as tired; employees are less likely to make a medication error because they are not as rushed; staff morale improves as more people get to know each other; there is less staff turnover; there is an improvement in overall quality of care; and money is saved as the waste in all processes gets weeded out.

More challenges for hospital leadership
The nation's budget deficit is going to cause problems for hospital leaders, problems even beyond potential Nut Island effects. Mr. Levy says those issues revolve around the levels of payment for Medicare and Medicaid. Reimbursement levels are going to cause hospital budgets to be tighter than ever, and the leadership must be able to balance those budgets knowing their revenue curve is flattening out. "What I concluded before this budget debate: If you were running a hospital going forward, you had to plan on revenue increases that would not exceed the consumer price index going forward," Mr. Levy says. "Society, for political and economic reasons, is not willing to pay much more."

One of the ways hospital leaders can offset those shrinking reimbursements and budgets? Making sure the Nut Island effect doesn't infiltrate its departments. "It makes it all the more important for people to work on lean approaches for reducing waste in the system," he adds.

Related Articles on Hospital Leadership:

291 Hospital and Health System Leaders to Know
Creating an Outcomes-Based Culture: How to Engage Front-Line Staff in Process Improvement
How Hospital Executives Can Use Performance, Negotiations to Increase Earning Power

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