Van Buren Hospital has over 500 beds, more than 1,500 employees, and gross revenues of over $85 million. It is the smallest of the four observed organizations. Van Buren Hospital is believed to be lower in organizational complexity than the other organizations in the sample be-cause it provides primary and secondary care only and does not emphasize the teaching or research mission. Van Buren provides a broad range of ambulatory care services in high volume and serves a low-income, as well as a middle-income, population. The hospital is believed to face a relatively stable environment because most of the residents in its two primary service areas receive hospital service at Van Buren and because most of Van Buren's services are provided to such residents.
Larry Martin is in his mid-fifties, has a master's degree in public health, and has been CEO for more than 15 years. He was interviewed on October 7, 1985, and May 19, 1986.
Interview
When I took over, Van Buren Hospital was a terrible loser. Everything that could be wrong was wrong. I asked myself, Could I have a personal impact? I didn't look like a candidate for a job like this- rather for the job of CEO in a major medical center. What's missing in that kind of job is the ability to have a dramatic personal impact- you spend most of your time tinkering. But if a strong person goes to a weak place, he or she could do something. The reputation [of Van Buren] was that the board interfered a lot. It has had a succession of administrators who couldn't cope.
I think the board hired me because they thought I was a good technician. 1 came from a nearby hospital which they thought highly of. They hoped [Van Buren] could be like it, stronger and more stable. They got that. I spent the better part of my first two years here doing what I had learned how to do as a technician in order to improve the operation.
What I got was a blank sheet from an institution that had run out of energy and ideas. That blank sheet allowed me to rewrite what the institution was. If you look at a speech that I made in 1970, you will see that I began by dealing with what a community service institution is, with health as well-being, with the hospital not simply as a group of patients but as an energetic and committed staff as well, with the hospital as a partner of the community, "us against the world." That's what I came for-to articulate a different view of what a place like this is, that it is not a physician's workshop. There was hardly anywhere I could go to do a thing like that-I couldn't have done it at [an academic medical center]. I have been trying to define a different kind of community hospital.
Everything had to be changed. [The staff's] attitude was defeatist: they knew they were going to lose every game. Their goal was to not embarrass themselves. I had to implant the notion that they could win, win, win. They lacked a proper sense of dignity. For example, the first day I walked in, I saw that the front entrance had a little plot of dirt on each side and a wrought iron fence. There was no grass there, and part of the fence was down with a pipe propping it up. I came in July and put sod in for instant grass and replaced the whole fence. It is important to realize that everyone walked in and out of the hospital yet had never seen what I saw. One of our senior M.D.'s liked the new entrance so much that he made a contribution covering the entire expense.
M.D.'s on the [Van Buren] staff had known me at the other hospital and said that I wasn't a bad person. I demanded a high salary, which equals respect. Then they pay attention to you. If you're paid average, they think you're average. After I finished the interview process and reached an understanding with the board that their behavior would change-they would stop overseeing everything and having crisis meetings-I said that I wanted to spend time with the medical leaders before saying yes. I did that. I told the medical leaders, "I want to interview you before I accept the job. I'll tell you what a hospital administrator is and how he relates to the medical staff. Now, I'm putting this appointment in your hands. If you don't want me to come, I won't come. This is the basic deal." I put it in their hands. Not only did the board think they had got someone they ordinarily couldn't have attracted, but the medical leadership had the sense that I had given them the power of appointing me and that I had a view of a very strong CEO.
Attitude is personal. I acted as if I knew what I was doing. I did things that had visibility. For example, I had some areas of the hospital painted. Van Buren had cost reimbursement then, and we couldn't raise capital to repair things. So we hired our own construction people, who would be reimbursable. All of a sudden, all kinds of work got done. The way you dress, the confidence with which you speak, are crucial to this whole thing. I am in the business of turning grays into blacks and whites, knowing that if I guess wrong often enough I'll get fired. I'm still doing that. I'm very careful about style. I shave before each board meeting. I arrange every detail of important meetings myself-the way the table is set up, for instance-everything should look right. You change attitudes that way.
At [Van Buren] we don't have policies in the real sense. I tell an honest, continuing story about what we're trying to do. We hold conversations in our board meetings about [Van Buren's] reason for being. The way policies are decided here is that I talk about our effort to serve our neighborhood-what we ought to do. I ask the board for support of me and of this philosophy. The members can speak up if they don't like it.
To change [Van Buren's] attitude, I did two things. First, I asked the city government to give us one of their hospitals. This is outside our area of services. It never worked out, but it showed I was trying to get something going. Second, we were aware of this three-acre property, and we put a few dollars down to hold it so we could consider rebuilding the hospital there. This was never a real possibility: there was no money and it was in the wrong neighborhood, but we created the impression that we were trying to change our situation. Then we came up with the idea of converting this building. We had the other property, and we were making interest payments on it. What were we going to do with it? I looked around and came up with senior citizen housing. I knew about the local community and the excessive number of aged. I found a mechanism to get our money on the property back and more, and at the same time to do a good thing for our neighborhood. I took my idea to the board, and everyone thought it was terrific. This is how we get our policies.
I can hardly believe the record myself. Almost everything we tried to do we did, with no money, no endowments, anything. We've created a very large, federally funded neighborhood health center.
Aside from improved housing, participation, and zoning, the basic health issues in our community were (1) lack of access to a physician delivery system, in one area, and (2) in an area with a rapidly aging, middle-class population served by fee-for-service practitioners, lack of a decent inpatient facility.
Being more effective in my job means I am serving the neighborhood better. That's what I get paid for, I think. I am in a terrific position to convert resources for the neighborhood. The better I do that, the better I am at my work. I am this neighborhood's hospital administrator, not the doctors' or the trustees' administrator. I ask the trustees to see me in those terms. It used to be called community need, now it's called market demand. In those terms, we've penetrated and captured the market. People in the neighborhood receive their care through us, and this represents a substantial part of our business.
That doesn't mean that you don't need the confidence of the trustees and the medical staff or that you mustn't create an environment in which others can have fun and use their imaginations. I'm good at these things. People here are not only smart; they're nice people and have remained at Van Buren a long time. I think their stability has been important to our neighborhood.
The toughest decisions were all in the area of risk. The first NHC grant was for $785,000. We got the check, and we didn't have a thing- no space, no medical direction, no experience. If we failed with this- and you can fail-it would have been awful. We needed neighborhood participation that no one understood in those days. Second, we decided to convert this building into a modern hospital. No one in his right mind could have approved of that decision. Everything about this job was hard. The most difficult decision was taking the Van Buren job and perhaps screwing up my career. All the odds were against success.
The major pitfall in this job is that you don’t know what you're doing. I thought it would be fun to redefine an institution, but I did know the nuts and bolts as a technician. You must also keep up with the way things work, such as changes in the reimbursement system. You can't get away with not knowing how the system works, and it takes a lot of time to keep up.
There is a fine line, in leadership, between being arrogant about your knowledge and work, and being arrogant toward people. As arrogant as I may appear about the details of my work, I apologize if I'm five minutes late. I do this all the time. You can't get to believing you know the work so well that you can forget common courtesy. As CEO, everyone treats you as special. It's okay so long as you don't believe you are special. Being CEO doesn't give you a right not to stand in the cafeteria line, or not to hold the elevator door for women waiting. They defer to you, but you must say no to such deference.
No matter who comes in next, it will be hard for that person to turn his or her back on this institution's promise to be responsive to the neighborhood-at least not in the short run. We've made it too many times in too many places. I do the best I can until the day I leave. After that day, I won't be able to get into the parking lot. I'm proud of the physical buildings and the idealistic definition of who we are. I also leave behind the sense that the CEO is really the key: he sets the style, attitude, and spirit, signals whether it is a risk-taking place or not, defines institutional choices. And I think that's good. Sometimes it goes too far-an institution can be too dependent on an individual-and I'm not sure how you balance that out. The right person gives the organization energy, honor, imagination-things only an individual can do. A board of 30 meeting once a month can't do that.
I wish I could make our hospital clinically more excellent. I'm not satisfied here. But we're doing as well as we can under the circumstances. Where we are is not considered a good place to serve by most physicians. This limits our attractiveness to the very top people in medicine. We can't be on the edge of new technology. We must wait until it becomes routine enough and the cost of having it moderate. To the extent that medical education attracts better physicians, we fail because we lack the resources to do medical education really right.
This is a tax-exempt institution. Others have forgotten what an incredibly idealistic thing a hospital is. A nearby hospital worries (in considering a merger with us) because we treat so many poor people. They ought to be proud of us-it's the American thing to do. It's what the founders of this hospital said it should do when its doors were opened in the 1880s. No one knew what to do with poor people then. Rich people were treated at home. Taking care of the poor is in the hospital charter.
For example, it used to be that we didn't get automobile license plates by mail but had to go to the license bureau. I always did it at the last minute. I had to go at the end of February, and the office was set up in two storefronts. There was a long line when I got there. Inside were a counter and five clerks. There were three people standing in front of each clerk. Seventy-five people were standing outside. I asked the guard to let more people in. He said the clerks didn't like the noise and confusion. I said, I think we own this place and you don't. That's what the problem is. I believe that-the people we serve aren't a nuisance. It's easy to think in the hospital that you serve doctors and trustees, and it's easier to act that way than to deal with community groups and problems.
The easiest way to be a CEO is to be weak. That kind of system looks good on paper-shared responsibility, committees and stuff. But it slows everything down. A fast pace means you must work harder, which is the way you achieve goals. It's easier to work through committees: no single individual can be held accountable; it eliminates risk; it can't be "your" mistake, only "our" mistake. I believe in individuals, not groups. Only individuals have imagination, take risks, and make grays into blacks and whites. Doing stuff is all there is. If I wanted the other thing, I wouldn't have chosen such a hard job.
There must be a match between the environment and the individual. Van Buren is different from a sophisticated medical center. A competent person can do either job, but Van Buren is homier. The level of sophistication of M.D.'s and the board is different. The managers here have much more administrative responsibility. We don't spend too much time wandering among the various power groups; we have a more corporate arrangement. This place depends on administrators more than a place in which authority is more diverse, confused, and diluted (as in an academic health center, where the university president is involved and the department chairmen have independent powers).
You can only know how good you are after a while, when you look back and see what happened. I believe that even after the first year things appeared well, from improved emergency care in an underserved area to improved institutional morale and a sense that we could do better, we wouldn't be losers anymore. You can look at the record. After 19 years you can see more clearly than you can after 2 or 3 years. Is the institution's ability to serve stronger than it was?
I can't think of any barriers to managing effectively here, other than insufficient funds to do what conscience tells you to do. If you're poor enough, this can be bad too. I don't see barriers at the moment. That could change overnight-the board of trustees could lose con-fidence in me and feel a need to monitor micro behavior, so I would spend all my time on that. The medical staff could change things too, if they chose to be truly non-supportive instead of raising questions, blustering a bit. Insensitivity to the community would cause me problems.
The barrier is being so busy defending yourself against what's going on that you have no imagination to do the things you ought to be doing. Any of those groups could create that barrier. Too much oversight by the board creates too much concern about the politics of relationships. You focus on the relationships, not on the organization or the objectives. That's how it works for administrators too. Being so accountable at the micro level eliminates risk taking: you can't operate on instinct or "let's take a chance." The board stays at a macro level here, so the opportunities are marvelous. Our board is well informed on the environment in which we serve. My board chairman gives me the feeling that I can make a mistake. When I came here, the board was oppressive-no administrator had been at Van Buren for more than 3 or 4 years. The medical staff was decent, and they knew it and were strong.
The whole reason I came here was to seize an opportunity born in disaster-to redefine an institution, to broaden the concept of what an institution could mean to a community. I spent 10 years as the chief operating officer of the hospital nearby and was good at the details of my work. You can't be good imaginatively if you don't understand the work at the micro level. I had strong feelings [about health services] because I had received medical care at the local municipal hospital; that was my family doctor. It's no accident that we have a large federal grant for an underserved community-I understand these problems first-hand. This hospital is a neighborhood center of health and well-being services.
My agenda is to understand neighborhood need and adjust re-sources to meet it. That is both my short-range and long-range agenda. Services for older people are a dominant feature, and we are devel-oping a strong staff of people who can manage social support-that will continue. So will the health center. Some of our neighbors will choose a different way of buying care, so we must remain open to contractual relationships with HMOs. Some loyal doctors are asking me, why negotiate with HMOs and make them stronger? I tell them the hospital must negotiate if some of our neighborhood people so choose to buy their health care-they own the institution. Doctors can refuse to negotiate as private businessmen, but we are a community-owned institution. In some other hospital, doctors might say they don't believe in this. The administrator might say it could hurt the hospital financially if it doesn't negotiate. But no one in the room would say, we are boycotting some of our neighbors because of the way they want to buy care. The CEO should be more thoughtful and force the board to be more thoughtful-the contribution that I make.
We're talking about merger possibilities and acquiring a long-term care unit as a partner. Also, we are trying to improve the performance of the diagnostic center and our for-profit company. The most difficult thing is maintaining everyone's confidence and trust to allow one to do all these things. It's what one does each and every day that maintains these. I'm perceived as a strong administrator, but the line between strong and arrogant is anybody's choice, particularly if you're on the other side of the fence and don't like what I am doing. I need enough self-confidence for people to think, If he says it's good, it's a good thing to be doing.
I don't think my job is changing; nor is my effectiveness. You can only judge effectiveness in hindsight. On a daily basis, it goes up and down with regard to controversies-if your basic situation is good. When you lose confidence and trust, the controversies get more intense and diverse.
What I fear about the merger situation is that the honeymoon is over in terms of what I've built here-I will have to set up new relationships and redefine the role of the institution. There's nothing in this but trouble for me, but that's what I get paid for. I have the deal I want right now, what any administrator might want to have-with a little less pressure on the money side.
I think that institutional costs are insignificant. What is important are the costs of health care to the society. I always think in those terms. When we built the housing complex for independent older people in 1975, we were going to be more than landlords, although the rules weren't set up for that. I am the president of the complex. It allows people to live outside of institutions and contains costs.
Inside, because of our never-ending money problems, we have no fat built into the budget, and the doctors have never dominated the budget process. Our cost per day reflects this. This is an advantage in managed care. Our capital cost of $65 million is very low too. That was one of the most important things we've done here. All institutions take their existing institution and add to it little by little. I said that we should get it all done at once or close it. And the building is holding up well. Our operating cost per day is low, and so will our capital cost be-it is-the neighborhood hospitals have spent more like $100 million.
I influence quality through our procedures for putting the right people in the right spots. The board of trustees appoints clinical di-rectors on the recommendation of the search committee (which is composed of other clinical directors plus the CEO, who is president). I always feel I have an independent responsibility, the heaviest weight of responsibility. If they all voted to appoint an individual I didn't approve of, I would tell the board I didn't agree and I think the board would pause. Knowing that to be the case, the discussions of the search committee are altered. You won't find a search committee here who says, this is a medical matter. The questions would not be on the clinical side. For example, all the applicants for a certain position had the right credentials. I felt one of them lacked substance, and I said so. Then we discussed that we had been an all-Italian institution with Italian chiefs and that maybe in this service another Jewish chief would not be right, politically. The candidate lacked ambition. I struggled with these factors and considered whether I should let this person be hired. My view is that the clinical directors report to me and I influence them like another administrative person. I do not play amateur physician. I get stuck with the differences that develop between them. For another example, we must decide whether to extend a chief's appointment beyond age 65. We recommended against it for one individual.
Mine is a great job, I think. I believe in individuals and not in committees. I believe in getting advice. Other people have information and perspective that you need, but you need people who feel individually responsible and accountable. If the board said, you have too dominant a position, and then I would say, If you want me to, I would be glad to take it easier. To have committees dilutes my responsibility and risk-no one can be blamed for things that go wrong. This is why groups are created. If we do that, I will have to work half as hard; it will slow the pace down. When things are sent to committees, nothing happens.
Health is one of the things that make us civilized; it's at the top of everyone's priority list. Good health is all there is. Without it you don't have anything. It's too important to leave to those who make a living out of it. I accept regulation, therefore, by public officials, theoretically elected, who then appoint others to carry out that responsibility. And it shouldn't be left solely to those who buy medical care. I have to live with those regulations, and I deal with them as best as I can. I just accept them. I try to take care of the things I can take care of.
