stewardship: the noblest form of leadership, part i · about the uva medical center’s future....

Profiles in Healthcare Leadership

Stewardship:The Noblest Form

of Leadership, Part I

An Interview with R. Edward HowellChief Executive Officer

University of Virginia Medical Center

Compass Clinical Consulting’s “Profiles in Healthcare Leadership”

These profiles are the result of interviews with transformational leaders in today’s healthcare industry—men and women who have demonstrated courage, ingenuity and the hard work needed to create dramatic, measurable and sustainable improvements in their hospitals. They challenge assumptions, see things differently and enable remarkable breakthroughs. These leaders freely convey insights that we all can use to improve the way we deliver healthcare, and in the process, give us new ideas on how to make better American hospitals.

Compass Clinical Consulting

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Key Lessons for Hospital Leaders

LEADERSHIP

Stewardship is not about keeping the organization intact; instead, you must make it better than how you found it. Stewardship is about being accountable. It is future-tense thinking and decision-making with only one goal: leaving your organization better than it is today to serve those who come to us for care.

CHANGE

Recognize that you will create turbulence and discord when implementing change initiatives. Your job is to maximize the amount of change for the turbulence and discord created. It’s a part of true change-agent leadership.

THE FUTURE

• The balance sheet is just as important as the income statement. Limit your debt. Don’t mortgage your future.

• Great achievements are not children of marginal successes. • What’s your plan for leaving your organization better than

you found it?

An Interview with R. Edward Howell, Part I

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A Daunting LegacyThe old man sat down to write. His time was short. He thought back through the events of his life. From any perspective, it was a life of turbulence, war, love, grief, joy, industry and 50 years of public service. He’d been a writer, horticulturist, lawyer, philosopher, architect, political leader and revolutionary. Many world-altering moments and events in which he’d been involved would be inked into the history books for the ages—but not into this document.

He began to write. Short. Concise. His criterion was simple. How had he made the world a better place? When he was finished, he realized that there were only two things: He was an author and a father. This was his epitaph, and it was to be inscribed on his tombstone. What was remarkable was what he left out—that he had been the third President of the United States and had served two terms.

“HERE WAS BURIED THOMAS JEFFERSON, AUTHOR OF THE DECLARATION OF INDEPENDENCE, THE STATUTE OF VIRGINIA FOR RELIGIOUS FREEDOM AND FATHER OF THE UNIVERSITY OF VIRGINIA.”

He put the pen down. Those things had made the world a better place. But … it would take the greatest of leaders with courage and skill to protect, grow and steward them through the ages. It would take noble people that could put aside their own self-interests.

Thomas Jefferson founded the University of Virginia (UVA) in 1819, and he considered it to be one of his greatest achievements. It was envisioned to have a distinctive national character and stature. At the first board meeting, a School of Medicine was authorized, and it officially opened in 1825.

Fast ForwardIt was into this legacy in 2002 that a new CEO stepped. He was a former high school biology teacher from Zanesville, Ohio. He’d also coached football, basketball and track. He is an educator, coach, team-builder, visionary. This CEO was mindful of Jefferson. His presence permeates the institution from the terraced green space surrounding the residential and academic buildings to


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the majestic rotunda at the north end of the lawn, which Jefferson himself had designed.

But this CEO was now eight years into his leadership role and was concerned about the UVA Medical Center’s future. Yes, they were nationally ranked as one of the top hospitals in America by U.S. News and World Report. Yes, their doctors were some of the best in the world—providing the highest quality care. But there are big challenges on the horizon: healthcare reform, physician shortages and technology and operational efficiency issues.

By most standards, the UVA Medical Center was a successful and high-performing organization. They were good ... very good. But were they the best of the best? Did the UVA Medical Center have the national character and stature Thomas Jefferson envisioned?

The CEO knew it would be easy to coast until retirement. No one would notice. But this was not your typical CEO. He quotes Emily Dickinson and Ralph Waldo Emerson then segues into the wonders and opportunities of the molecular age of medicine.

Yes he could coast, but would that leave UVA a better place than he found it? Change brings discord and turbulence. The risk was that the changes he was contemplating might backfire and make things worse than they were—which was “pretty darn good.”

What would Thomas Jefferson do?

The Interview—Part ICary D. Gutbezahl, MD, Chief Executive Officer of Compass Clinical Consulting, sat down with University of Virginia Medical Center Chief Executive Officer, R. Edward Howell, to find out—in his own words—what he decided and why.


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Dr. Cary Gutbezahl (CCC): You’ve led the University of Virginia Medical Center (UVA) for many years. It’s been quite successful and has a tremendous national reputation. But you decided that you needed to make operational and leadership changes. What led you to that belief?

R. Edward Howell (REH): It was a combination of factors. By most standards, we were a high-performing organization; we had strong market share, real volume-growth, good quality and solid financial performance. But at the end of the day, we weren’t in the leadership position that this university deserves, or that the people we serve deserve.

We hadn’t become that source of national pride, which is one of the goals this institution has. By most standards, the University of Virginia is regarded as one of the finest public universities in America. So if the medical center functions at a level that the best university is prideful of, then that’s a level of achievement that no one could argue with.

Additionally, the environment was changing for us. We’re talking about health reform and a market that’s going through considerable consolidation. It occurred to me that we could take the easy way and coast for three to five years or more, but if we did that, we would never achieve what we need to achieve.

The Two Roles of CEO: Management and StewardshipREH: At the heart of that is a belief that I serve two roles: management and stewardship. Under the context of management, by all of the standards and benchmarks one looks at, we were a high-performing organization compared to other academic and community health systems.

But under the concept of stewardship, I was concerned that I might not actually leave this place a little better than when I found it. That’s the template for stewardship—leaving this institution in a better place than when I first arrived.

Therefore, I felt that we needed to make a change. There was not a clear or present danger that I, in my leadership role, faced—but my successor might.


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Courage to ChangeCCC: Making changes in that light, takes courage.

REH: I didn’t think of it like that. It was more about a commitment and leadership decision you have to make when you’re truly trying to lead by stewardship. I don’t view it as courageous as much as being responsible. It was the right thing to do.

CCC: I think that’s a characteristic of courage. When you talk to people who’ve done heroic things in battle, they never say, “You know I thought about this.” But what they usually do say is, “This is the only thing I could do. It was the responsible thing to do, and it’s what I had to do.”

Accountability Sometimes Requires RiskREH: I never thought of it as being courageous; I thought of it as being responsible and committed to the future of the organization. I understood there was a certain amount of risk. It isn’t necessarily being courageous; it’s being accountable for what the organization expects you to do.

CCC: There are a lot of people who confront similar situations and allow themselves to be satisfied with the status quo—to think that they’ve done enough. Responsible may be a better word because it’s more comprehensive. But you can be responsible and still have a fear of getting started. I think that’s where the courage comes in. It’s the willingness to take those risks. Those risks are different for a brand-new CEO than one like you who has been in place for 10 years.

REH: I think that in our case, clearly the news clippings (the positive press) were there—awards, successes, high-quality care and solid financials. I did, however, think this could all go horribly wrong and fail. I might actually make the situation worse when it was already good. There was a clear understanding—risk that was involved.

Inflict Challeneges on Your PeopleREH: All of us who serve in an executive leadership position have a stewardship role as well as a management role. It was that stewardship belief that drove me to


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make changes—to inflict some challenges on the people I work with, and to say, “Let’s create some disruption.”

Much of what we read about the value of organizational disruption looks at management expectations from the perspective of solid management. We do need solid management, but we also need solid stewardship. I believe, particularly in healthcare, that we have to fulfill that stewardship role.

Leadership has to be accountable, but not just leadership—all of us have to be more accountable. The concept of accountability to those that we serve is a responsibility of management and of stewardship. I was accountable for leaving this place better than I found it. That’s really what prompted me to make the changes.

CCC: Any time you create changes, especially at the senior-management level, you run the risk of people taking their eye off the ball and becoming more involved in internal politics than focusing on organizational performance.

REH: Yes, but there’s one way to fix that. Be committed to make the change so clear and crisp that no one misunderstands it on any level. Do that, and people will keep their eye on the ball.

Honest Self-Appraisal is ToughCCC: You said you looked at your organization and it wasn’t at the same level of reputation that the University of Virginia deserves and could take pride in. Was that a difficult thing to acknowledge?

REH: Yes, very difficult. It flew in the face of our self-image to some degree. We’ve been a Top 100 Hospital for eight out of the 10 years I’ve been here. US News and World Report ranked seven of our services in their reports. To say we weren’t meeting expectations was at odds with what we believed in many regards. In reality, if you asked 100 or 1,000 people across the country to name an institution that you think represents top-line quality and specialty care, UVA probably wouldn’t be listed very often across the country—certainly in Charlottesville. But we aren’t the University of Charlottesville; we’re the University of Virginia.


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So that’s the kind of stature the University enjoys when you talk about top institutions.

The reality was that we were pretty good, but we’re talking about being part of a great institution and a great national enterprise. Pretty good is not great.

The Commitment: No Sliding AllowedREH: We weren’t meeting the goal of being a great institution and a great national enterprise.

I didn’t think we would ever meet that goal unless we made changes and was convinced we would slide if we left in the current structure and management. I decided to not permit that slide. Time was on our side. We had resources. We had solid, consistent operating performances. Our balance sheet is among the strongest in the country, so … we had the capacity; we just needed to make the commitment.

CCC: For a lot of people, making that commitment is hard. It’s hard looking in the mirror and seeing something you don’t like. It’s a lot easier to just look at the positives. What is different about you, or the culture of UVA that said, “We can’t rest and enjoy the successes we’ve had; we have to push ourselves to achieve more”?

Future-Tense Leadership: The Stewardship QuestionREH: In part, for most every leadership issue I look at, I tend to look at it in the future tense. Almost every decision I make, by the time it actually has its full impact on an institution, it’s at least 18 months into the future. From that perspective, I didn’t think we could become fully realized as a great institution unless we made changes.

When you look at things with an eye not for today, but for the future, it allows you to objectively and realistically exercise stewardship for your organization. A great part of leadership, I believe, is having the integrity and guts to make your decisions on this one principle:

Will this decision leave our organization better than we found it?


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Great Achievements are Not Children of Marginal SuccessesREH: Realistically, from a future perspective, we had to make the changes. However, I would tell you that I tried a number of approaches with the previous organization to change the performance and enhance the direction. They weren’t failures, but they were only marginal successes. You can’t tolerate marginal successes if you want to achieve great success. We had to make fundamental changes.

CCC: It’s interesting that you had other, multiple attempts to bring about the results that you mention. Even had they been failures, were they really failures if you learned something? And the organization learned something? Weren’t they more like experiments?

REH: Yes. Many of the change attempts were perceived as innovative, but they really weren’t significant enough to move the organization to where it needed to be.

Succession Planning is Not Succession ManagementCCC: One of the things you did to help make this change process quick and as painless as possible was to install someone on an interim basis to hold your new change concept together, although you knew all the time you would eventually hire someone to fill the position.

REH: All of us understand that we sow the seeds and reap the harvest. We sowed the seeds early so that the new person coming in didn’t have to begin with tilling the soil. I’m using a lot of metaphors, but I thought that was an important part of what we were trying to do—not scorch the earth. Sow the seeds—let the person get to work and not have to do the fundamental work of tilling the soil. That’s succession management.

We often talk about succession planning, but we don’t always think through succession management. To have succession, you need both. Allow whoever is making the decisions to decide to bring someone in from the outside or utilize internal talent; but success doesn’t end when you make that decision. You have to manage the succession process as well.


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CCC: You mentioned earlier that you had attempted to make changes, and they were minimally successful. You also talked about how sometimes leaders initiate projects then results don’t turn out as anticipated. That’s a more common story than most would like to admit. How, as a leader, do you keep the organization positive and willing to keep driving forward? To try new things in the face of prior experiences that were less than optimal?

Encourage Progress and Stop Punishing Good DeedsREH: All too many organizations recognize the idiom of “no good deed goes unpunished.” Keep your organization from punishing good deeds. That’s an effective tool in keeping people positive and driving on.

When you make big changes, you have to understand that people are going to be impacted. I made a concerted effort to be very respectful and supportive of the people who might be negatively impacted. That’s a responsibility of leadership—when the organization sees that you won’t stifle creativity and initiative.

You have to handle changes in a respectful manner. If you don’t handle those changes respectfully, you scorch the earth that you’re asking someone else to plant and harvest the benefits from. There’s no sense in scorching the earth.

CCC: In many organizations, there are certain parts that lag in comparison to others. People get used to that, and it’s just accepted for what it is. That’s not the case here. How do you fight the tendency of organizations to accept a persistent problem instead of actively trying to fix it?

REH: Quite candidly, I tend to want to try to give too many things just one more try.

I’ve been criticized by some of my leaders who said, “Well, I didn’t know you were really going to terminate that program or that initiative.”

And I would respond, “We had a conversation that it wasn’t working. How many of those conversations did it take to make you conclude too that it wasn’t working?”


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Their answer was, “Well, yes, I got the message that it wasn’t working, but I didn’t know that you were going to terminate the program now.”

I realize that the decision of when and where to terminate unsuccessful programs or leaders is one that I haven’t developed a good barometer on. For me, it’s too instinctual. I suspect that could be a little unfair to the people sometimes, although I think our organization does a good job of evaluating and giving feedback to unsuccessful programs.

It’s just that point where you make the change that is almost always a little uncertain. That’s something this organization and I personally will have to do a better job of—creating greater predictability and a clear understanding of if and when the change will take place.

CCC: How would you assess the effectiveness of the organizational change you initiated from a stewardship perspective?

REH: The fact that we’ve had two very good financial years that have strengthened the college of medicine and university as a whole is good. That’s investing forward, so from that vantage point, it would receive some pretty decent stewardship marks.

We needed to implement a new EMR, but we had a lot of organizational fatigue from the failed effort in the past. The fact that we hadn’t implemented EMRs had disadvantaged us competitively. That was one of the driving forces behind trying to do it all in one year. And we did do it in one year. We endured the financial impact during implementation. Now it’s looking like we’re going to have another good year financially, so you’d have to call that a success.

We now also have a very structured and clearly articulated plan to get our quality to where we need and want it to be. Those were the real critical drivers behind the change.

Because of the changes made, we discovered some individuals within the organization whose candle was hidden under a bushel. These changes allowed us to remove that bushel, and their lights burn brightly now. That’s been very


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good for the organization. Looking back, we can say with objectivity that it was absolutely the right thing to do.

Three Feet from the GoldREH: You asked me about when to pull the trigger and say that what you have done is a failure—let’s terminate that effort and move on. That is the question isn’t it? What if we quit three feet from the gold—and never discover it?

It is one of the biggest challenges for any leader—when to hold or when to fold.

In retrospect, we may have held onto the trigger longer than we should have. There’s an old adage about three physicians going bird hunting. One says, “Ready—aim, aim, aim.” Maybe we aimed just a little too long, but we did pull the trigger and achieved what we hoped to achieve.

We’re a much stronger organization because of it. Better than we were before.

The Five Golden WordsREH: Those five words, “better than we were before,” are the true measure of successful stewardship.

End Part I.Click to continue to Part II..


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About R. Edward Howell, CEO of University of Virginia Medical Center

Ed Howell has been the Vice President and Chief Operating Officer of the University of Virginia (UVA) Medical Center since February 2002. He oversees all operations of the university’s hospital and clinics, the UVA primary-care network, the UVA Transitional Care Hospital, the UVA HealthSouth Rehabilitation Hospital, and the UVA dialysis network, as well as business development and finance, marketing, strategic planning, and information technology functions for the UVA health system.

For over 30 years, Mr. Howell has dedicated his life to academic medicine. He served for eight years as Director and CEO of the University of Iowa Hospital and Clinics; as Executive Director of the Medical College of Georgia Hospital and Clinics for eight years; and, prior to that, ten years on the administrative staff of the University of Minnesota Hospitals.

Mr. Howell has served as a member of the Executive Committee of the Association of American Colleges, a member of the American Hospital Association Long-Range Policy Committee, Chair of the Council of Teaching Hospitals, Chair of the Accreditation Council for Graduate Medical Education, Chair of the University HealthSystem Consortium Board of Directors, Co-Chair of the Advisory Board for Clinical Research at the National Institutes of Health, and Chair of the Novation Board of Directors. He currently serves as a member of the Virginia Hospital and Healthcare Association Board of Directors.

Mr. Howell is appointed Professor of Medical Education at the University of Virginia School of Medicine and Clinical Professor at the UVA School of Nursing.

Mr. Howell holds a Bachelor of Science degree in Biological Sciences from Muskingum College and a master’s degree in Hospital and Health Services Administration from The Ohio State University.


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About Cary D. Gutbezahl, MD President and CEO of Compass Clinical Consulting

Dr. Cary Gutbezahl understands what it takes to make better American hospitals. In addition to being a seasoned consultant, he has worked as interim hospital CMO in three different organizations, as well as served as medical director for two multi-specialty medical groups and several HMOs. He has a solid history of leading medical staff through improvements in utilization management, changes in peer review practices and corrective-action procedures. As Chief Executive Officer of Compass Clinical Consulting, he is armed with a diverse background in hospital, medical-group and managed-care settings and has immersed himself in developing the strong knowledge base and extraordinary skill set needed to successfully improve today’s hospitals.

While Dr. Gutbezahl served on active duty in the U.S. Navy, he was Head of the Quality Assurance Department of the Navy Medical Command, National Capital Region, in Bethesda, Maryland. He board-certified and completed a laboratory medicine residency and an immunohematology fellowship at Washington University in St. Louis. In addition to his numerous national speaking engagements, Dr Gutbezahl has authored a number of publications including “Hospital Service Recovery” in the Journal of Hospital Marketing and Public Relations. He also has been published in Hospital & Health Networks Magazine, Trustee Magazine, SmartBusiness Magazine, and The CEO Refresher.

About Compass Clinical ConsultingCompass Clinical Consulting has helped hospitals and health systems improve performance and overcome obstacles to providing safe, quality patient care since 1979. Compass is clinically focused, driving change toward a goal of creating better American health systems through three services lines: clinical operations performance improvement, accreditation and regulatory compliance, and interim executive leadership.

We bring decades of experience to every engagement with an understanding that change must fit the organization, or it’s the wrong approach. Working in close collaboration with us, our clients have achieved remarkable results.

© 2011 All Rights Reserved.

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Profiles in Healthcare Leadership Email: [email protected]

Profiles in Healthcare Leadership

Stewardship:The Noblest Form

of Leadership, Part II

An Interview with R. Edward HowellChief Executive Officer

University of Virginia Medical Center

Compass Clinical Consulting’s “Profiles in Healthcare Leadership”

These profiles are the result of interviews with transformational leaders in today’s healthcare industry—men and women who have demonstrated courage, ingenuity and the hard work needed to create dramatic, measurable and sustainable improvements in their hospitals. They challenge assumptions, see things differently and enable remarkable breakthroughs. These leaders freely convey insights that we all can use to improve the way we deliver healthcare, and in the process, give us new ideas on how to make better American hospitals.


1

Key Lessons for Hospital Leaders

LEADERSHIP

Stewardship is not about keeping the organization intact; instead, you must make it better than how you found it. Stewardship is about being accountable. It is future-tense thinking and decision-making with only one goal: leaving your organization better than it is today to serve those who come to us for care.

CHANGE

Recognize that you will create turbulence and discord when implementing change initiatives. Your job is to maximize the amount of change for the turbulence and discord created. It’s a part of true change-agent leadership.

THE FUTURE

• The balance sheet is just as important as the income statement. Limit your debt. Don’t mortgage your future.

• Great achievements are not children of marginal successes. • What’s your plan for leaving your organization better than

you found it?

An Interview with R. Edward Howell, Part II

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This is the second and final part of the Compass Clinical Consulting Profile in Healthcare Leadership with University of Virginia Medical Center Chief Executive Officer, R. Edward Howell. To review Part I, go to “Stewardship: The Noblest Form of Leadership.”

The Interview—Part IICary D. Gutbezahl, MD, Chief Executive Officer of Compass Clinical Consulting, sat down with University of Virginia Medical Center Chief Executive Officer, R. Edward Howell, to discuss stewardship and legacy goals at the University of Virginia (UVA).

Building StewardshipDr. Cary Gutbezahl (CCC): You’ve made it clear that you have a very strong obligation to the future, talking about future tense and your sense of stewardship. Could you give us a few aspects of the things you tried to build into the organization from a stewardship standpoint?

R. Edward Howell (REH): First is to develop leaders. We take all of the management positions and devote a half-day to developing leadership skills for them. This is ongoing throughout the year.

Our focus for the next session is accountability. Frankly, accountability is a concept of both management and stewardship, but especially stewardship. We’re developing those leaders within the organization with a skill set around being accountable for their actions and holding their staff accountable to enhance the care we deliver both from an efficiency and effectiveness perspective. Many of those leaders will be here long after I’m gone, and I believe that is real stewardship.

The second thing that needs to be done is to look at the balance sheet of the organization to be just as important as the income statement. Our balance sheet is part of the university. Although it’s separate when considered by the bonding agencies, it’s a part of the university’s overall financial performance.


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We’re the only public university in America with a wholly owned, academic medical center that has a triple-A bond rating by all three of the rating agencies.Many colleagues have challenged me on limiting debt, especially my colleague who was the Dean at the University of Iowa when I was there. He said, “Why do you limit yourself in terms of your use of debt? Why do you think that such a strong balance sheet is so important? You could leverage your organization much better to do what you want it to do.”

If I did that, would it be good stewardship? Putting off the consequences of a decision to leverage our organization to my successor is not good stewardship.

Our debt-to-equity relationship is 0.227. Look around our facilities. When you parked your car, you saw our:

• New cancer center

• New transitional-care hospital

• New ICU bed tower

And we’re breaking ground for a new children’s hospital. We’re able to do all of that without over-leveraging our institution or mortgaging our future. That’s good stewardship.

I don’t know that I will personally benefit from the strength of that future organization, and that’s okay. It’s not only okay, it’s good. It positions UVA for the future—to serve the needs of our communities.

In return, I can then say I left it better than I found it.

CCC: How significant is leadership development to the Medical Center right now?

REH: The current environment is perhaps the most turbulent in American healthcare history. I haven’t had the experience of all of America’s healthcare history, but this is my 34th year in the industry—25 of which I’ve been a CEO. So, I’ve seen a lot of changes. I don’t know if this is the most turbulent or not,


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but the rhetoric that describes it has gotten leadership feeling like it’s being buffeted by hurricane-force winds of uncertainty.

This isn’t the first time we’ve had federal legislation that changes our world, but it’s the first time we’ve had legislation that’s created more questions than it has provided answers. So I think that healthcare leaders across our industry are feeling uncertain.

We have a responsibility to support the leaders in our organization and give them the skills we think will be needed in the future despite the uncertainty—skills and capabilities that will help them do their jobs better. But skills and capabilities alone won’t cut it. There has to be a personal commitment to the continual reinvention of this organization—and themselves. This rapidly changing environment demands it.

Continual reinvention is challenging; it’s difficult. But ultimately, it’s immensely fulfilling. I’ve reinvented myself four times in my career.

I started in cost-based accounting. I tell my students that when I was in their shoes, we really didn’t have an income statement. We managed according to the expense report. It was all about what you put on the cost report, because if you didn’t identify it as an acceptable cost, you received no reimbursement.

So, borrowing funds was an interesting concept because in reality, there was very little that a rating industry could do to measure an institution’s credit worthiness. I was fortunate to have believed in ratio analysis and benchmarking from the beginning because a professor I had—Bill Cleverly—created the concept of ratio analysis for the hospital world.

I’ve gone from cost-based reimbursement to prospective payment and now to how can we survive under DRGs.

Next it was managed care. The world was going to be ruled by HMOs, and we were all going to be part of a system. Well, I learned to deal with managed care and even learned some of the insurance industry and how important “Incurred But Not Reported” was when you’re accountable for a predetermined payment.


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This taught me how to work and develop the structures across organizations that are characteristic of a healthcare system.

We’re now at a point where we’ll have to reinvent ourselves once again. I think the concept of collaboration is going to have to be an essential skill for organizations looking into the future.

The answers to the questions are unclear in many regards. The fundamental issues in how we’re delivering healthcare today is “less.” We don’t know quite candidly if we have to deliver more with less, or deliver less with less. But less is the common denominator in either regard.

So, this all-out frenzy to own and control everything when there may not be enough in the environment to make it meaningful to own, means that you have to partner and collaborate.

Collaboration is Not CooperationREH: A lot of people talk collaboration, but I’m not so sure everybody understands it. It’s not cooperation; cooperation is working together agreeably. Collaboration is working together aggressively, making sure you understand what you are going to do together and what you want to achieve.

As we talk about leadership development within our organization, we have an obligation to give our people the knowledge, skills and mindset to help them reinvent themselves as the healthcare industry changes. This includes intense training on collaborative efforts.

How does this help you prepare for the future?

The real message is that all of us need to be held accountable for what we do.

We have to make sure that the patient is better off and healthier because of what we’ve done. So at UVA, we’re focusing heavily on two items: quality and efficiency.


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If we use our resources well, we’ll have a more efficient organization and one that can handle the outcomes that the public is going to increasingly expect.

The question is, will we have our own system of an Accountable Care Organization (ACO) be part of a larger system of an ACO or be multiple parts of a larger organization?

We’re going through a strategic-planning process that will help give us some ground to work on. But as we go into that process—getting back into the concept of stewardship—we do so from a very strong position because of the changes we have already made. Being able to have the organization deal with challenges from a position of strength is, in my mind, the definition of stewardship.

Our balance sheet is solid. Last year we had a record operating margin, and we’re going to have a solid one again this year. We understand that we’re always improving quality and making strides toward quality-improvement activity, so we’re going into a strategic-planning process from a position of strength.

CCC: What about the position of academic medicine in this rapidly evolving healthcare environment?

REH: I am very optimistic about the position of academic medicine in the future healthcare environment. Here’s why …

I can recall the managed-care consultants saying that academic medical centers were going to become irrelevant. We not only didn’t become irrelevant, but many of us have enjoyed stature and strength never experienced before. The previous president of UVA would often say that there are seven organizations that have been around since the time of the renaissance. One is the Vatican, and five are universities. This talks to the stability and durability of the university.

Academic medical centers that recognize their missions of patient care, advancing new knowledge and developing new knowledge are always going to be relevant. I’m very optimistic on two fronts.


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The Knowledge FrontREH: First, new knowledge—we are going into the molecular age of medicine. In some respects, how we cared for patients in the past 34 years has changed dramatically, and in others, it’s not changed at all.

What we know about disease is changing exponentially. Do you know that today’s medical student learns more about the cause of disease and characteristics of disease at the cellular and sub-cellular level than they do at the structure and physiological level? It’s a real change.

Much of how we go about what we are going to do is fundamentally changing. We’re about to embark on the next golden age of medicine, and it’s driven largely by cellular and sub-cellular interventions.

The Physician ShortageREH: The second thing that causes me to be optimistic is that we are facing one of the greatest shortages of physicians that this country has ever seen. It’s already occurring in many communities—often small, one specialist at a time. Whether it’s a dermatologist in Arizona, neurosurgeons in Virginia or primary-care physicians in Los Angeles, we’re already seeing shortages.

Now, why should that make me optimistic? Where do those physicians come from? They come from academic medical centers. We, the academic medical centers, are the place that trains the medical students and the residents that go into practice. That’s the fundamental resource at the heart of what we do.

Hospitals don’t admit patients, physicians do.

We’re the manufacturing engine for training the next generation of physicians. Unfortunately, this country has not been willing to deal with the reality of this shortage. It’s like the old oil-change commercial that says, “Pay me now … or pay me later.” We haven’t paid now. We will pay later. Places will need us for the training of the physician engine that will drive their organizations.


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Look, we know more about the human body and its care than at any time in history. We add to that body of knowledge every minute of every day. But the physician shortage is a crisis. We need new physicians that know and retain the core skills that are at the heart of the medical profession—the healing arts—but also be prepared for an age in which robotic surgery, telemedicine and molecular-based treatments will be the norm.

Legacy GoalsCCC: When we first met, one of the things you presented that really impressed me was the concept of legacy goals. They seem closely linked to your concept of stewardship. What are legacy goals and how did they originate?

REH: Legacy goals are the direct link to stewardship. They result from going to the end and asking the question, “What do we need to be, and what is the end game?” They are different from annual performance plans and strategic plans.

Strategic plans are a way to achieve legacy goals. They are a means to an end. But I find that a lot of places never talk openly about the end. You have to think about the end game with some caution. Make sure your goals are big enough, achievable and understandable. Don’t put them in the way of annual performance plans and strategic plans. They serve as a backdrop to remind us all as we embark on this journey, where do we want to end up?

Sailboats are driven by the wind. Sailors understand that to get from where you are to where you want to be will often not be a straight line. And so the concept of “tacking,” where you sail in a direction that makes it look like it’s not in line at all with your goal; but it allows you to “come about” and get to where you’re going.

I view legacy goals as that reference point where an organization tacks—recognizing the changes within and on the outside to help us get to that end point. I, as the leader of the organization, should be able to identify this.

That was the reference point that brought me to say, “We’re doing well, but in our tacking back and forth, I think we’re off course.” The issues that initiated the changes weren’t really earthshaking. As I said, one of them was to be a source of


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pride within our university. I felt that if we were the best part of the best public university in America, what others did would be interesting, but we would be fine.

A second point goes back to what one of our real missions is, and that’s creating new generations of healthcare practitioners. If we can attract the very best residents to get their training here, we will have the best training program in the country.

So, the second legacy goal is to be the most attractive site for residents to do their training.

If you’re going to train good residents, you have to have faculty.

The third legacy goal is to be a place that’s attractive to a clinical faculty—a person who devotes their career and their life to caring for patients and teaching others how to care for patients.

If we became the most attractive place in the country for those people to work, we would have a high-quality and highly efficient organization. I talked earlier about being the University of Virginia and serving the country to be recognized as a top organization.

Our goal is that if you walk down any street in the region and ask who you think of as top quality and highly sophisticated in healthcare, the unaided response would say “UVA.”

The final legacy goal is the end game and stewardship. When it comes time for me to hand over the keys and turn out the lights, that what we created would be the most desirable job of its kind in America.

Legacy goals for future generations to follow—let’s think about each independently.


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PrideREH: If we are seen as a general source of pride as America’s best public university, we’re likely to have a capacity to do what we need to do and the resources we can call upon from the rest of the university—from engineering to business.

The collective strength of the organization that results from being a source of pride leaves the next generation of leadership with the ability to deal with all of the uncertainty they are likely to find.

PeopleREH: If we have great individuals in training and great faculty, whatever happens in the future, we will be well-positioned. If we’re top of mind and earn that reputation every day, there will be a reason for people to come here. That’s called clinical differentiation.

CCC: How did you prepare the organization for the type of change that you were embarking on? You made a pretty significant structural change in the organization, and obviously there were some people that weren’t going to be happy with it. Beyond the individual impact, there was also organizational impact.

REH: We did a lot of questioning, talking and investigation. We sought input. The input wasn’t so much to determine what to do, but more as an affirmation of what needed to be done.

Talking with leadership within the organization, university and governance, all through the process was an affirmation that we needed to move this organization to the next level, and a recognition that there was going to be some turbulence that resulted from it.

Creating Turbulence REH: I teach health management in the classroom, and one of my topics is managing change. I don’t think that leadership in healthcare has studied the basic concepts of change management thoroughly enough. Frankly, some of the best


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work and research in change management came from Kurt Lewin, a professor at MIT back in the late 1940s and 1950s. His research on the interaction between turbulence and change is stellar.

“Turbulence” is a word he used to describe the discord in an organization when you bring about change. When you introduce change, almost any kind of change, you get some discord. That’s what he called turbulence. Even with the smallest change—change in the line for your cafeteria in terms of whether you put the utensils on the right or left side or the front or back—you get discord. After you introduce that discord, you get a level of stability, and you can introduce a lot more change without a lot of discord. But the real challenge for the leader is to make sure you don’t take it too far because it can get out of control, and this is what we call chaos.

So, for all of us who are change agents, we need to realize that we have a responsibility to our organization that when we introduce change and we create discord, we maximize the amount of change we get for the discord we create.

And so I recognized when I was going to make these changes, we needed to make all of these changes at the time I created the discord. We spent a lot of time planning and getting a comprehensive picture of what needed to be done. We announced it and then did it in a very short period of time.

I brought in interim leadership, had a number of sessions that were very structured, and planned well in advance to making the change so that when it happened and we created turbulence, we maximized the change. We were ever aware that there was only so much we could do before chaos reigned. We wanted to avoid that.

CCC: One of the things that may hold some leaders back from getting started is not knowing where that chaos departure point is.

REH: I think that what holds a lot of leaders back is another element that I call the journey through hell. Others have different terms for it, but every change looks like a mistake in the middle of the change. You can graph it. There’s the point where you embark on the change journey.


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The second point is that you have to get early adopters. Then what happens when you embark on the change and go into this valley—feedback valley—and you find out everything you’ve done is bad?

Give Change a ChanceREH: What too many leaders do when they get negative feedback is that they fail to follow through on the change they initiated. They go back to doing things the way they were doing them. They never give change a chance to work. Not every change is going to work, but leaders have to recognize the possibility of failure.

There is a concept in leadership of courage, and accepting the possibility of failure is a necessary courage of leadership. What we need to do is go through the valley of hell and get to the other side to see if what we have done works. Has it achieved the results that were needed? Do we need to make modifications? Or, worst case, go back to what we were doing?

What I’ve observed all too often is that in the middle of the valley of hell, organizations want to go back to the good old days. It almost takes on a spiritual nature of the good old days, but almost never were the good old days ever that good.

Making Real Change Happen—Electronic Medical RecordsREH: We undertook a different kind of change here in the last year—implementation of electronic medical records (EMRs). I know a lot of other organizations are going to have to go through implementations of EMRs.

We had previously attempted to implement—unsuccessfully—EMRs. We reconfigured our attempts, took a new direction and went with a fully integrated EMR—inpatient, outpatient, 147 different clinics and 68 different sites.

How did we do this? We got together and discussed what we wanted to do and what the ramifications might be, going back to the change and turbulence we talked about earlier. When you put in a new screen and look at the information about your patient, you create turbulence.


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We discussed two possible scenarios:

1. Flip a switch and change all of our clinics in one day. 2. Flip the switch over time and change all of our inpatient units so we could fully convert inpatient and outpatient within a five-month time period.

We knew the minute we flipped that switch that the leadership would be in the valley of despair.

We knew turbulence and discord would reign, but we were committed to get through it. Recognizing that you will create turbulence and discord is a part of true change-agent leadership. I use the biblical analogy of the parting of the Red Sea. I’m sure that somewhere in the trek across the Red Sea there were some folks that thought, “this just isn’t working out.” But Moses didn’t take them back.

CCC: One of the things I was impressed with as you went through the reorganization of UVA is the element that you had of bringing in people who will eventually be groomed for succession. So it wasn’t a new car that just drove in and started driving the organization, but a person who had the opportunity to be groomed under your tutelage.

REH: Actually, I looked for a person who had skill sets that I didn’t have but that the organization needed. I’m committed to quality, but I appreciate that quality has evolved into a science and there are whole skill sets required to support that science—the statistical analysis and the systematic approach. We needed someone with skills that complemented mine—fiscal responsibility, strategic vision—but also some I didn’t possess and we didn’t have anywhere else in the organization. That requires a pretty frank assessment of the individuals in the organization to ask, what are our strength and weaknesses? What do we need to take us to that next level?

CCC: What one lesson would you like to leave us with?

REH: Stewardship is a noble style of leadership. It is not easy. In fact, it’s very hard and against normal human inclinations. But it is the best. To be a good


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steward, you have to have a mindset of a faithful servant. In healthcare, we may have lost sight of the concept of servant.

We are here to serve those who come to us for care. As I look back on my career, cost-based reimbursement was such a very bad way of paying for healthcare. I know it was politically expedient, but it resulted in no incentive for efficiency. It insulated healthcare from everything else that went on in America, which was market-driven.

With time, costs got out of control and we concluded that healthcare should be a business. I’m not sure that conclusion was correct. The conclusion that healthcare should be run on sound business principles is correct. But if you look at the driving forces behind health reform today, it’s recognition that in many respects, a pure business model isn’t working.

Forty eight million Americans are uninsured. Maybe healthcare should be a social good that is run according to sound business principles. A social good that all Americans need but that it should also be run according to sound business principles is a different mindset.

As an individual responsible for a social good—caring for our loved ones—what comes with that is a service to the public. Part of that service is stewardship—leaving the place better than you found it. No one has ever said it better than Ralph Waldo Emerson:

“To laugh often and much; to win the respect of intelligent people and the affection of children. To leave the world a better place. To know even one life has breathed easier because you have lived. This is to have succeeded.”

A noble goal for any healthcare leader.

End Part II.


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About R. Edward Howell, CEO of University of Virginia Medical Center

Ed Howell has been the Vice President and Chief Operating Officer of the University of Virginia (UVA) Medical Center since February 2002. He oversees all operations of the university’s hospital and clinics, the UVA primary-care network, the UVA Transitional Care Hospital, the UVA HealthSouth Rehabilitation Hospital, and the UVA dialysis network, as well as business development and finance, marketing, strategic planning, and information technology functions for the UVA health system.

For over 30 years, Mr. Howell has dedicated his life to academic medicine. He served for eight years as Director and CEO of the University of Iowa Hospital and Clinics; as Executive Director of the Medical College of Georgia Hospital and Clinics for eight years; and, prior to that, ten years on the administrative staff of the University of Minnesota Hospitals.

Mr. Howell has served as a member of the Executive Committee of the Association of American Colleges, a member of the American Hospital Association Long-Range Policy Committee, Chair of the Council of Teaching Hospitals, Chair of the Accreditation Council for Graduate Medical Education, Chair of the University HealthSystem Consortium Board of Directors, Co-Chair of the Advisory Board for Clinical Research at the National Institutes of Health, and Chair of the Novation Board of Directors. He currently serves as a member of the Virginia Hospital and Healthcare Association Board of Directors.

Mr. Howell is appointed Professor of Medical Education at the University of Virginia School of Medicine and Clinical Professor at the UVA School of Nursing.

Mr. Howell holds a Bachelor of Science degree in Biological Sciences from Muskingum College and a master’s degree in Hospital and Health Services Administration from The Ohio State University.


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About Cary D. Gutbezahl, MD President and CEO of Compass Clinical Consulting

Dr. Cary Gutbezahl understands what it takes to make better American hospitals. In addition to being a seasoned consultant, he has worked as interim hospital CMO in three different organizations, as well as served as medical director for two multi-specialty medical groups and several HMOs. He has a solid history of leading medical staff through improvements in utilization management, changes in peer review practices and corrective-action procedures. As Chief Executive Officer of Compass Clinical Consulting, he is armed with a diverse background in hospital, medical-group and managed-care settings and has immersed himself in developing the strong knowledge base and extraordinary skill set needed to successfully improve today’s hospitals.

While Dr. Gutbezahl served on active duty in the U.S. Navy, he was Head of the Quality Assurance Department of the Navy Medical Command, National Capital Region, in Bethesda, Maryland. He board-certified and completed a laboratory medicine residency and an immunohematology fellowship at Washington University in St. Louis. In addition to his numerous national speaking engagements, Dr Gutbezahl has authored a number of publications including “Hospital Service Recovery” in the Journal of Hospital Marketing and Public Relations. He also has been published in Hospital & Health Networks Magazine, Trustee Magazine, SmartBusiness Magazine, and The CEO Refresher.

About Compass Clinical ConsultingCompass Clinical Consulting has helped hospitals and health systems improve performance and overcome obstacles to providing safe, quality patient care since 1979. Compass is clinically focused, driving change toward a goal of creating better American health systems through three services lines: clinical operations performance improvement, accreditation and regulatory compliance, and interim executive leadership.

We bring decades of experience to every engagement with an understanding that change must fit the organization, or it’s the wrong approach. Working in close collaboration with us, our clients have achieved remarkable results.

stewardship: the noblest form of leadership, part i · about the uva medical center’s future....

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