Becker's Hospital Review

40 Sign up for the COMPLIMENTARY Becker's Hospital Review CEO Report & CFO Report E-Weeklies at www.BeckersHospitalReview.com or call (800) 417-2035 PowerPoint slides, "just like they would show to the board of directors." The CEO should hold town hall meetings with managers to discuss the CFO's slides, healthcare policy topics and other documents in the information packet. A combination of resources presented in different formats will accommodate visual and audio learners. 2. Vividly illustrate what will happen to the organization if performance stays the same. This dynamic occurs every day in hospitals and physician offices across the country. Medical providers clearly outline the risks patients face if they do not improve their diet, increase their daily exercise or stop smoking, among other habits. It's up to CEOs and other leaders to routinely do the same thing for their organizations in terms of economic health. "Physicians are really good at this," says Mr. Studer. "They might say to a patient, 'You don't have to change, but if you don't, there will be serious consequences.'" Like physicians, members of the C-suite need to provide leaders with specific and data-driven forecasts. The fact is, people resist organizational change. To counter this tendency, leaders need to clearly show the repercussions their hospitals face if changes aren't made. For example, one hospital CFO took financial data for his organization and deconstructed the outlook into simple terms for managers. His forecast turned out to be quite eye-opening. "He said, 'If we continue to work the same way, tomorrow we'll have a 5.2 percent operating margin. In three years, we'll break even. In four years, we'll lose money. Five years? Our bond ratings will lower. And in six years, we'll be in a death spiral,'" recounts Mr. Studer. After presentations such as this one, leaders will return to their work with a clear understanding of where they are headed if their performance, habits and productivity do not change. 3. Demonstrate changes managers must make and acknowledge how uncomfortable the transition will be. Leaders cannot just tell people the future is gloomy and expect that fear to drive change. Senior-level leaders and members of the C-suite must take caution and not overwhelm the workforce. There is a difference between creating a sense of urgency and creating a sense of anxiety. "If senior leaders are overwhelmed, the rest of the organization feels it," says Mr. Studer. Instead of expecting dire forecasts to drive performance improvements, you also need to give people actions they can take after they get afraid. For example, if you're working on patient safety, say 'Here are the steps we can take to ensure patient safety.' Giving them something to do, something that's proven to get results, makes all the difference." Register Today! Becker's Hospital Review CEO Strategy Roundtable November 14, 2013 The Ritz-Carlton Chicago Co-chaired by Scott Becker, Publisher, Becker's Hospital Review, and Chuck Lauer, Former Publisher, Modern Healthcare To register, visit www.BeckersHospitalReview.com/novhospitalevent.html, email registration@beckershealthcare.com or call (800) 417-2035. 4. Reevaluate and redesign leader evaluation tools. Over time, Mr. Studer has learned that most hospitals' evaluation tools do not include weights or prioritizations. This is a mistake: Treating goals evenly creates confusion. Weights can help reduce anxiety and clarify what leaders should focus on. A manager might have anywhere from 20 to 30 goals. Mr. Studer says, ideally, managers should have no more than seven, and each of those should be weighted. For example, one organization might be experiencing too many cases of hospital-acquired pneumonia. If 30 percent of the CNO's performance evaluation is based on reducing hospital-acquired pneumonia by a certain percentage point, the CNO will understand the urgency of the problem. This is something that requires more of his or her time and effort. Leaders should create an understanding among managers that if their performance remains the same as in years past, they will not have the same evaluation results. Continuing to give positive results when clinical quality has not improved or costs haven't been reduced reinforces the idea that there's no need to change. "In the past, a leader might have been able to manage labor at a certain cost and received a good evaluation for managing labor at that cost," he says. "But now, knowing costs need to be reduced, the hospital might take 3 percent out of that manager's expenses. So if that manager performs the same as last year, his or her evaluation will reflect the lack of improvement." 5. Look at the "door-openers" in incentive pay. Incentive compensation usually includes two or three door-openers. These goals, if achieved, ensure eligibility for incentive pay. The amount of incentive pay each leader receives will differ depending on his or her contribution, but mere eligibility is reliant upon these door-openers. If hospital leaders are frustrated with what they consider to be a lack of urgency throughout their organization, it's time to reexamine what goals will trigger eligibility for incentive pay. In fact, Mr. Studer has adopted a new door-opener for his own organization this year. For the first time, Studer Group will document whether it saves organizations at least $3 for every $1 spent on the company's services. To determine whether the company meets this three-to-one ratio, client CFOs must sign off on documentation. "Unless we get three-to-one, 160 people won't be eligible for incentive compensation," says Mr. Studer. "Every employee is in the same boat."   Hospital leaders may want to build HCAHPs results into their incentive compensation by turning specific metrics into door-openers. For instance, unless HCAHPs results hit a certain level for "patients who rate hospital nine or 10," incentive compensation will not open. "That's my recommendation," says Mr. Studer. "When you do that, it really shows you're serious about it." Mr. Studer cites John P. Kotter, former professor at Harvard Business School in Boston and author of "A Sense of Urgency," when he said that the biggest mistake people, and inherently organizations, make when trying to change is this: They didn't create a high enough sense of urgency among enough people to set the stage to make a challenging leap in a new direction. Hospital and health system executives must strike the perfect cord by igniting a sense of productive urgency within their organizations while preventing anxiety, panic or defeat. To achieve this, executives should bridge gaps in information regarding the external environment, concisely communicate a data-driven forecast for the organization if improvements aren't made, acknowledge the discomfort that lies within change, restructure evaluation metrics and redesign door-openers in incentive compensation to mirror the organization's biggest obstacles. "These five strategies will help hospitals avoid complacency and forge ahead as engaged organizations prepared for a demanding healthcare environment," says Mr. Studer. n

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