Washington Medical Center has over 1,000 beds, more than 5,000 employees, and gross annual revenues of over $300 million. It is part of an academic health center with more than 2,000 faculty members and has a mission of excellence in teaching, research, and service. Technology and mission is complex at Washington Medical Center, and the hospital is therefore less susceptible to being centrally managed. Because of its ample resources and strong reputation, Washington Medical Center is believed to face relatively little threat to operating finances or market share.
Tim George is 64 years old, was educated as a physician, has worked at the medical center for more than 30 years, and has been in his present position for more than 15 years. He was interviewed on January 20, 1985, and May 20, 1986.
Interview
My job immediately before being appointed CEO was as acting chairman of a department. I viewed the hospital as a place where we took care of a lot of sick patients, educated medical staff and house officers, and conducted clinical experiments-an academic setting in which we took care of our patients. Any institution at any time has strengths and weaknesses. Some clinical departments are on the up-swing or downswing, so you look at the ones which aren't doing so well and try to improve the situation with the chairman or get a re-placement. We had a lot of changes in department chairmanships when I came into the job. In consultation with the dean [of the medical school], I was heavily involved in recruiting, providing support for, and launching new chairmen. The most important things you do in this job are recruiting chairmen and assisting them in recruitment. I think the dean would say the same thing. It sets the tone, and if we make a mistake, we suffer for it for a long time.
The board didn't give me a specific charge. These issues I've been talking about emerged in our discussions. The members felt I had lived in this kind of environment and in this specific academic health center long enough to have a basis for my opinions on strengths and weaknesses. So they were comfortable in having a non business leader for the hospital. I don't recall what they said about financial affairs. The assumption was that the hospital would run modest deficits-it always had because of the free care it provides. They hoped the financial situation would improve but not at the expense of the mission of the hospital. The bottom line had never been positive and wouldn't be so long as we provided free care. We have sufficient income from gifts and endowments to cover the operating losses. We were not eroding principal, but we were not building it through operations either. We have never had a year when the net-net was in the red.
I approached the job with the idea that our institution would be one of the best. I thought the hospital was one of the best and I intended for it to stay that way. You can't prove that you are number one or number two, so why get hung up on it? Most of the evaluations of the "best" hospitals are done by mass circulation magazines. But there is a sense as to which are the best institutions. You get a feel for it. At the medical school there are more quantitative measures for assessment than at the hospital, like how many NIH grants did you bring in? How much was it for? For the hospital you can't use crude measures like the mortality rate. You sense quality from communications with peers. You can't ignore beauty magazines, but I don't take them seriously. We've always been on their lists, which keeps me from having to answer a lot of questions.
The weakness in measuring lies in the hospital's primary mission, taking care of patients. It's difficult to say patient care is better in one institution or another. The indices are too crude. Rates must be adjusted for case mix. Other indicators tend to be in the educational framework, the house staff we recruit. You know-of those you wanted to recruit, which ones did you get? I pay a lot of attention to that, and I go over this with the chiefs after the matching results come out. I ask, what’s your reading of the performance? Not, did we get the top 10? They tell me what the last ranking was of the 10 we got (for example, number 30). Did the 10 choices fall between 1 and 10 except for one, or between 20 and 30? If so, where did the first 10 go? If the result was not as good as I would have liked, I ask the head of the department what we need to do to improve the situation. It may result from the experience that house staff have here-they can either get the appropriate experience at this hospital or rotate elsewhere. There may be a lack of leadership in the house staff program. Are we keeping in touch with our peer institutions to get the right kind of interest at the medical-school level? Do we need more elective programs? Are we getting students in to see the place early enough? There is an enormous grapevine among medical students, and these things change from time to time.
We've had to face the problem of our location. Primarily, I think, there is the perception that we only take care of rich people. Students are surprised that we have a substantial number of the same kinds of patients who are found at [public institutions]-we have a substantial clinic and ER patient population. Resident recruitment is all done by the departments. How much time do the departments spend on this process? They spend a lot of time on it, deservedly so. They are up front if they are disappointed, and we can usually agree upon what's missing, it's usually not too mysterious. [This city] is both an advantage and a disadvantage. Some love it here because they want to be part of the scene. Others don't want to put up with the hassle. My impression is that more look upon it as an advantage, and that's a change from when there was a negative image of the city.
This place, like most medical centers, is organized departmental, so whenever you ask specifically about objectives, you get into departmental review and objectives. [A chairman of the hospital board] told new business types on the board, "This isn't the same as your business, and you don't do things the same way." I wasn't there, but my guess is that he was saying it's a much more collegial relationship-you must work with the chiefs to develop objectives that are consistent with institutional objectives but uniquely tailored to the needs of the departments. The department chairmen are ignorant of what their colleagues are up to.
It took me a while to sense the individuality of each of the departments. I knew a lot of the players, but I had to learn a lot. I knew the institution, so I didn't find the departments were doing something that came as a jolt; rather, I was learning the details of how they operated. The chiefs' objectives weren't out of line; they just didn't know the objectives of their colleagues. That's one of the things we have attempted to change by developing institutional objectives. We bring all the departments together and summarize plans and objectives for each other. This is not done on a scheduled basis, but periodically, when there's enough change to merit it. It was last done five years ago. We're updating plans now and will bring the chiefs together again.
The biggest change has been the effort to organize planning in a more systematic and orderly way. This is done in conjunction with the medical school, so it's an across-the-board plan-for patient care and for academic activities as well. (I was chairman of the planning committee-I've been here longer than the dean.) Before, there was no organized approach to planning. With our financial concerns (reimbursement and cutting back of research) we had to be more detailed and sophisticated. We set up a planning office and hired consultants. We involved faculty and staff in a detailed and lengthy procedure, probably because we hadn't done it before. We also did a detailed financial plan. We completed that plan about five years ago. The broad outlines haven't changed, but the details have, which is why we are redoing it. Results have been reassuring up to this point, but change is taking place more rapidly now.
There were three important aspects of the plan. First, we had to convince those who work here that the planning venture was important. There was a great deal of skepticism that there was any point to this; the planning exercise was bureaucratic and a waste of time. Gradually they began to realize there was something to be gained. They saw it best in dealing with their own departments, setting objectives and making plans to meet the objectives. There is less trouble now in talking to departments about this. They need staff help but not prodding. Second, the plan reaffirmed the overall hospital mission, which everyone agrees is to provide high-quality patient care, education, and research. This has to be reaffirmed and thought through. Should we place an equal amount of emphasis on these three aspects or no? After considering the alternatives, we came down with an equal emphasis. This was an important decision, and it was made at all levels. It was especially important for the dean and hospital director. Such a mission required that neither emphasize one of these areas over the others.
Third, we had, for the first time in an organized fashion, plans for each clinical department. That, plus the overall institutional goals, permitted us to work out a strategy for implementing the plans, setting up a timetable for carrying out the plans, setting priorities in terms of what to do in what sequence, and devising a financial strategy for achieving them. Planning anything beyond five years is iffy, but we laid it out for ten years to accomplish the objectives. It's been important for us in our fund-raising efforts. These would otherwise be unguided, and if people are left to their own devices you can get into some awkward situations. Mrs. Jones may have different priorities in fund giving, so what do you do with her if she wants to give us money? We must keep bringing out our priority list and timetable for those raising money.
Ask other people [about my job]-and I'm not sure I want to hear the answers. It's a matter of style as much as anything. I've never lived in any other environment; I very much believe in the collegial approach to whatever we're doing. I have an open-door policy. People come in and talk about whatever is on their minds. I wander around to people's offices and in the hospital to see what's going on and to talk to people. I have certain set routines in terms of meetings, but I try not to have my time filled up that way. I have one-to one-and-a-half-hour meetings weekly with the administrative staff. The rest are individual and unplanned meetings. I don't like it when secretaries fill up my calendar with assigned appointments. I want to do things on the spur of the moment and for others to wander into my office. I don't know if they like it, but they get used to it. For example, I don't like to go to all the Christmas parties (there're so many of them), but I do. They know that I show up only briefly, but they'd know if I didn't show up too. It's important to greet all and wish them well. Big as we are, there is a remarkable family feeling here. The floor cleaners talk to me and address me; they feel its okay, and that's how I want them to feel. I don't know how you can take care of patients in any other way. Everyone in the hospital should feel they're doing the same thing, taking care of the patient. If we are collegial, the patient will benefit. You've got to get out of your office. You can't allow shuffling papers and answering the phone, which is easy to keep doing in this business, to take over.
Being effective means being in contact broadly with the people who work here, having a feeling of family and a collegial approach to caring for patients. Not everyone has the same idea of how to do things. If an individual's approach is getting good results, you tolerate it because it works. If not, you've got to get it changed. I also do not believe in making end runs-if someone is not performing, I tell his or her supervisor what I have encountered and get the supervisor to fix it. I want everyone to be collegial, but there has to be organization. People hear from me if they try to make an end run around me.
The CEO must be aware of the external environment and anticipate changes that must be made. I spend a lot of time outside the institution. I have to be outside a good deal to sense what's going on in the environment and bring it back to the institution. I try to be involved in activities which give me early warning, such as hospital associations-local, state, and federal. They bring in legislative people. I spend one-third of my time outside the institution or on outside matters.
Take as an example HMOs, which are big and moving rapidly. We didn't rely only on our own personnel; we got a consulting firm in to assist us in dealing with managed care. We're still working on it. Each of us in administration is learning about managed care and seeing how other institutions are reacting-managed care has great significance for us. You have to go out there and talk with others facing the same problems and prospects. We keep the departments informed; a departmental task force of non chairmen is following this along. When we have meetings with the chiefs, we go over what the task force is doing and significant events. My concern is that it's difficult to get to all the physicians fast enough. Communications from the chiefs down to attending isn't fast enough.
Personnel decisions are the toughest. People are the most important thing you're dealing with, and your decisions will have an impact on the hospital. People are not inanimate things; you must be concerned with how they are affected. It's toughest when somebody is not doing the job and remedial approaches haven't worked. It's the worst part of the job.
It's happened with a department chairman-then I share that grief with the dean. Who is dean affects this job a lot. In dealing with clinical departments, anything of significance to the hospital is of significance to the dean too. We must reach agreement on whether it should be supported, how much, and by whom. We have two scheduled meetings a week and many conversations in between. We tend to divide where the meetings take place for symbolic reasons.
[The present] dean was prepared to be a dean, and he knew how faculty think who don't like administration. Deans have a lot of frustration, but he's doing the job and doing it well. He's reasonably tolerant of the faculty and their whims. We get along, although we don't always agree because we look at things differently. Medical schools live in a timeless world, while hospitals must respond to crises.
In this job you have to listen a lot to what the chiefs are talking about. It's a mistake to think you will direct these people. You can influence them, but you don't tell them, this is what you're going to do. If the chairmen turn against the guy in this job, he's finished. They're more likely to get him than governing boards, which are more tolerant. You must exert your influence indirectly. You must be working with them. A Harvard dean said, Make them think it's their idea. And it's true.
You also must address the concerns of the board. A few members lead it. Here, the board's concerns have been the same as the administrations. At times you see a different emphasis; you sometimes must play catch-up ball and address that. For example, we assumed that we had paid adequate attention to DRG reimbursement and had communicated this to the board. We then had to make an effort to tell the board in greater detail what we were doing. I did say that I didn't feel comfortable with the budget. We are preparing avidly for DRGs, but we aren't leading the board to believe that we can predict our budget with certainty. Board members have also been concerned with quality assurance. It's easy to overlook that issue in board meetings because we deal with it every day. They wanted to know how we keep tabs on our doctors, so we explained it to them. That may be more of a problem with an M.D. director-I may assume things because I am an M.D. that a non-M.D. would not assume. I do think we should have an M.D. as CEO here. Board members think that doctors are lousy businessmen. It's a widely held perception. I don't know if it's true. The most important aspects of this job have to do with quality of patient care and enough understanding of and participation in the academic side to ensure that it is held up as well. You must know qualities you're looking for and how to judge in recruiting. The physician familiar with academic medical centers is what is needed in this job.
We've been looking at succession planning. The corporate world is much better at this than we are; corporations figure it out for the next decade. We've been looking at who our backups are. I hope the result will be very able people down the line when I do leave this job. We need a spectrum of ages, too, so that not too many people leave at once.
Financial viability goes without saying. We've gone from a $40 million to a $300 million annual budget since I've been here. The hospital is financially sound; it has a good endowment by hospital standards; we still run an operating deficit which I'd love to get to break-even. We did it last year, but we won't this year or the next. We have enough non-operating income to cover the deficit. We can take some degree of buffeting with all the changes, so I feel good about that-but I can't take credit for it.
To be an effective manager in the organization here, it is important that the individual have an academic medical center background, preferably as a physician. What distinguishes teaching hospitals is the inclusion of research and education with patient care. We have to educate medical students, residents, and technical personnel and do research and bring it to the bedside. That gives an individual who's grown up in that environment a real advantage. You must deal with clinical chiefs and sub chiefs principally. You must talk to them on a peer basis. An academic physician doesn't need an interpreter.
The style that works best is a collegial one. You've got in front of you a constellation of departments and their heads. You don't hand down orders. You talk about problems. I carry that approach over to the nonprofessional side too. I try to solicit their views and am influenced by them. When you talk something through like that, the decision becomes apparent. Otherwise, you say, I think we heard from everybody; I'm going to put my vote in this direction; let's get on with it. Consensus is easier to reach than people think it is. If a clinical chief wants to do something new and different, we don't require other chiefs to approve. The problem with that is the others don't know what is going on. Communication becomes a problem. If one of my administrative department heads came forward, I would use the same approach. Frequently you forget to tell the other people.
When I came into this job, [evaluation] was strictly qualitative. I thought about it more in terms of patient care than business. Recently, because of the attitudes of the board president, we have a more quantitative assessment, one based on what we have projected. Now I would grade what I am doing in terms of how well we achieve those objectives. The advantage is that you have something quantitative to talk about. The disadvantage is that it doesn't allow for qualitative features, which are very important-they're the judgment call. I look at the quantitative factors, and I use the qualitative factors as adjustments. I make up an objectives statement for myself. I aggregate administrators' goal statements and include things that I think are particularly important. I found that my objectives were included in others', and I wanted to give them credit. What would happen if I went on sabbatical? It might make less difference than I might think. At some point the hospital would take a different tack because someone else who became dominant would emphasize different things. The CEO probably gets around more than anyone else so you have more observations to make on certain issues. Most everyone else spends most of their time inside.
The chief barriers [to managing effectively] relate to people. They don't all perform up to what you would like to see. Things don't get done with the speed and precision you'd hope for. It's not lack of resources. You've laid out things you thought were important, you thought the plan would be implemented, but it wasn't. Why not? You listen to the problems. Sometimes they're right. The objective was unrealistic or something unpredictable happened. You live with that or you make a change. At what point do you decide that you have to make a change, which your adjustments aren't working? These are usually well-motivated, loyal, well-meaning people. This makes it hard.
The opportunities [for managing effectively here] are more than you can cope with-pretty unlimited. The problem is you don't take the time to assess them and set priorities for them. You see an opportunity and jump at it. Only later do you recognize that you could have spent your time and resources better. But maybe you shouldn't worry about it too much or you wouldn't do as much. If something sounds good to me, my tendency is to say, let’s go! Nobody has unlimited resources-money, certificates-of-need-but that's relatively minor.
I probably wait too long to make necessary personnel changes. I hate to confront this type of decision and will procrastinate in a situation that is obvious, hoping for a miracle to occur. I may be a little too easygoing, not being emphatic when I feel emphatic about something, leaving my associates uncertain. Sometimes they say that- which they are unclear about where I stand or what I want.
I have become better able to assess and deal with a situation in a short period of time. That's experience! I have a feeling that in most situations that affect this hospital I can, in a brief period of time, assess accurately the significance of what I have observed and feel confident of what to do about it. It's a feeling I didn't have in the beginning. It's dangerous because it may not be justified and I may jump to conclusions that in the past I might have been more thoughtful about. A degree of inflexibility in approaching things can also develop, which is why someone maybe shouldn't stay in the job for 20 years. There are tremendous advantages to staying-you know the job- but maybe that keeps you from thinking generally or flexibly or creatively about what ought to be done.
We control costs in the budget process, set realistic targets and monitor them. If revenues are lower because occupancy is lower, we try to alter the expense side to bring it closer. If you don't want to cut quality or standards, there comes a limit, unless you're going broke. What I've learned from bitter experience is that, once you cut personnel, you run the risk of a snowball effect. This is particularly true in nursing. The others quit-There's no way we can carry that load-and they can get a job somewhere else.
The way we influence quality from this office is to constantly emphasize to the chiefs that quality is their primary responsibility at this hospital. What are they going to do about low performers? Prevention is most important. Don't bring anyone on the staff that hasn't been checked out carefully. That's why we tend to keep our own; we run the risk of inbreeding because we want known quantities. It's not a bad system. Actually, to call it inbreeding is not correct. There are two periods of mix and change: when students come to medical school and when interns are chosen.
Everyone thinks that what's coming will be different from what's happened. I don't know that that's so. Changes may be great, but not that different in terms of the challenges hospital directors confront. When I took this job, no one asked questions; you gave them the bill, and they made up the difference. That lasted three years. Then we got cost-containment regulations, which hit hard by the middle 1970s. That was a worse period than the present.
