In my first facility in Glendale, AZ, I was eager to prove myself as the best leader my staff had ever seen. One problem with that was … that I wasn’t. But, I’m getting ahead of myself. In my AIT program (Administrator in Training) I learned as much as I could about the departments I was to oversee. But, I failed to dive deep enough into the nooks and crannies of the facility which resulted in insecurity in me, the new leader, when it came to supervising department heads and holding them accountable and teaching them.
So, instead of investing in building a relationship of trust with my department heads who could then, in turn, do the same with their staff, I felt much more comfortable working out on the floor with the line staff. I would show how much I cared for them and the residents by staying out of my office and walking around. I would be visible. I would get to know everyone by name. I would get to know their lives. It didn’t occur to me at the time but my department heads resented my behavior. I’m saying they resented me being visible and out of my office. We all should do that. The ED who’s stuck in his office all day becomes out of touch, ineffective, and won’t be employed very long.
BUT … what they resented was that I was spending the necessary time to hold them accountable, invest in our relationship, and help them succeed. Some of them felt like I was ‘going over their head’ or ‘undermining’ them. What I learned, the hard way, was that when the ‘line staff’ feel so comfortable with you/me as the administrator, that can threaten their direct supervisor’s relationship with them. And, their supervisor (your department head) feels it and trusts you less.
It happened to me. Don’t let it happen to you.
Of course we should know everyone by name. We should have an open door. But, we should direct them to talk to their supervisors first before rushing in to solve problems. And, we should make time, at least once a week, to have a meaningful status review with each department head. That tweak to my management approach made a huge difference in my effectiveness and results in my next two facilities.
So what do leaders in long-term care have to learn from Hotwire? I just found out during my trip to Texas. I went to Texas (Dallas & Houston) to introduce our company to 2 skilled nursing facilities that we were about to acquire (another post on those culture integration/introduction meetings later). My flights were booked for me correctly and I booked my hotel/car weeks later, the day before the trip. I got my cities mixed up. I landed in Dallas and started walking to the car rental and then suddenly had a flash of panic hit me when I realized that I’m supposed to continue on to Houston. I looked at my itinerary and discovered that, luckily, my next flight was in 30 minutes. I rushed to the other terminal. I had about 15 minutes before boarding. I called Hotwire.
I explained my situation. I admitted that I made the mistake when I booked the hotel & car for the wrong cities. What are my options?
‘No problem, Mr. Sedgwick, I can take care of that.’
With your permission I’ll cancel your reservations, book your hotel & car for the correct dates and cities, and waive the reservation cancellation fee.
So … this isn’t going to cost me any penalty or fee? You’ll just make it right for me?
Yes. You’re a loyal customer of ours and we’d like to keep it that way.
She did. I am. And, you should be too. Does travelocity, orbitz, expedia, etc. treat you like that? I don’t know … and, I have no interest or intention to find out. I’m Hotwired for life.
How does that relate to healthcare? One of the main problems with long-term care approaches to customer service is that, systemically speaking, our policies are usually drafted to reflect or agree with the regulations. So, we end up with very cold guidelines. Have you heard this exchange?
My mom lost her earrings.
I don’t know. I can’t find them anywhere. They were expensive.
Were they on the inventory list?
I don’t know.
Well, I’m afraid if they’re not on the list, we can’t do anything about it.
The saying of stepping over dollars to pick up pennies also applies. The reality of these types of breakdowns is that it’s usually the facility’s fault. What an opportunity to exceed expectations! Where customer satisfaction is involved, the regulations come no where near a guideline. Rather, asking the simple question, ‘how would I hope to be treated?’ is all the guideline you need. Follow it. Always. You’ll turn around digruntled, distressed, disapointed customers and build loyalty and promoters.
Just like that one guy who became so loyal to Hotwire, he dedicated a blog post to sing their praises …
McKnight’s is a long-term care industry magazine that I’ve read for years. Several months ago, I read on their site the words of an administrator who expressed a wish for more empowerment at the facility level. I contacted the Editor of McKnight’s to see if I could contribute an article about my company since our business model is exactly what that administrator was looking for (empowered, decentralized, entrepreneurial). Instead of talking about my company, The Ensign Group, he invited me to talk about the principles behind the different corporate structures.
Thank you to McKnight’s Jim Berklan for the opportunity. I’ve received a lot of positive feedback from the piece. Here it is …
What the long-term care world needs now
April 27 2010
The Centers for Medicare & Medicaid Services’ shift to a prospective payment system in 1998 sent shock waves through the industry and claimed the financial lives of many prominent long-term care companies.
The current combination of recession, Medicare cuts, RUGS IV, MDS 3.0, state budget crises, QIS, RAC, and the unknowable final shape of healthcare reform have today’s leaders feeling déjà vu.
What do long-term care companies need in order to avoid last decade’s casualties? Here are a few very important things:
An organization’s culture—its structure and values—is the single most important factor for overcoming acute challenges and for transforming the industry one facility at a time.
Centralization vs. decentralization
Speaking generally, there are two types of corporate structures: centralized and decentralized. The most prevalent structure in long-term care is the centralized model. To be blunt, the primary need for a controlling, top-down, large corporate bureaucracy is to make up for incompetence at the facility level.
If this is not so, then why pay for all of those corporate puppeteers?
Imagine that your best regional and corporate nurse consultant led each and every facility in your company. Would you need the same amount of corporate overhead (divisionals, regionals, consultants, VPs, executive VPs, senior executive supreme VPs, etc.)?
Don’t get me wrong. I’m not saying that having better leaders at the facility means no support is needed. I’m also not saying there aren’t great administrators in traditional corporate settings. But I am saying that if you hope to attract a different breed of administrator and director of nursing, you have to cut the puppet strings—empowering the facility leaders to lead.
A decentralized model attracts the type of leader who is entrepreneurial and innovative, and has an ownership mentality. When the puppet strings are cut, facility leaders no longer say, “I have to check with corporate.” They own their problems and solutions. When major tests to a market or an industry happen, a decentralized organization has many creative partners attacking the problem in the trenches instead of a small handful of “know-it-alls” at corporate.
A decentralized model also attracts the type of support people who believe in the creativity and responsibility of local leaders and love to help them grow.
One of the main arguments against decentralization is that it is too risky—clinically and financially. The centralized mantra is “Thou shalt do things our way” in order to ensure “things” are done right. To avoid risk, decisions are made at the corporate level: vendor contracts, hiring, firing, compensation, policies, forms, etc.
The trade-off for operating that way, of course, is that you get a culture that attracts “employees” instead of “owners” and you promote the “all-stars” out of the facilities where our staff and residents need them most.
In order to mitigate the inherent risk of decentralization, a company must have deep-rooted shared values among its facility leaders.
Without a fanatical commitment to core values, a decentralized structure is too risky. But if a decentralized company hires, trains, and measures based on shared values, it has the potential to outperform its centralized competitors because it has infused top talent throughout the company and where it’s needed most.
Almost every company has a written culture statement (mission, values, motto, etc.) But, the difference between those that will be able to overcome major tests and those that won’t will be how real those values are to the facility leaders themselves. Too often, mission-type statements collect dust as decorations.
The structure will shape the true values and feel of a company more than anything. When shocks to the industry hit, our companies’ culture (structure & values) will be tested.
The testing of Johnson & Johnson
One of the prime examples of a decentralized company’s culture leading it through crisis is Johnson & Johnson. In their 1981 annual report, they state:
“Johnson & Johnson is not one company but many . . . The largest has 6,300 employees; the smallest, at year-end had six. . . .
“Whatever their size or location, they share a commitment to meeting the special needs of a well-defined customer. In doing so, they create a wide variety of innovative ways to successfully run their businesses.
“We feel that the secret to liberating that productivity is decentralization— granting each company sufficient autonomy to conduct its business without unnecessary constraints. In short, we believe decentralization = creativity = productivity.”1
Do we see companies in long-term care that are structured that way? Rarely. But, therein lies the key to both attracting and retaining a different breed of facility leader.
These statements by J&J were soon put to an extraordinary test.
In 1982, cyanide-laced Tylenol pills killed seven people in a few days in the Chicago area. J&J’s reaction was extraordinary. In spite of requests from officials to not recall the product, J&J called for a nationwide recall of 31 million bottles with a retail value of $100 million. Their market share went from 35% to 8%. One month later, they reintroduced capsules in a new, triple-sealed package, and within several years, Tylenol had reclaimed its top spot in the market.
Speaking in 1983 about that major crisis, James Burke, J&J CEO from 1976 to 1989, said the following:
“I do not think we could have done what we did with Tylenol if we hadn’t all gone through the process of challenging ourselves and committing ourselves to the [culture]. We had dozens of people making hundreds of decisions and all on the fly. And they had to make them as wisely as they knew how.
“And the reason they made them as well as they did is they knew what the set of beliefs that the institution they worked for were. So they made them based on that set of beliefs and we made very, very few mistakes…. “2
Creating new cultures
What lessons can we learn from recent long-term care history and companies like J&J? In order to be prepared for the significant tests ahead, we need to have efficient, nimble, talented organizations fanatically committed to its core values.
Companies with centralized, top-down, bloated bureaucracies needing to justify their position and authority are slower to react to the shockwaves that will come.
Not only will a decentralized organization of many owners and partners come up with better ideas than a centralized few, but it also will be able to act quickly, like J&J.
Empowering the field and eliminating bloated bureaucracy is for many an impossible pill to swallow. Yet, if you were to ask the dozens of beaten companies from the late 1990s if they would try that medicine if given the chance, I bet they would.
1 Harvard Business School, Case Study: Johnson & Johnson (A): Philosophy & Culture, pg. 3
2 Video, Philosophy & Culture, A Question & Answer Session With Advanced Management Program Participants at Harvard University, December 1983