When Cost and Culture Collide

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Editor's note: This new feature highlights the best of the online news and analysis from the HealthLeaders Media Web site and e-newsletters. This month, an excerpt from Philip Betbeze's piece on Grady CEO Michael Young's unapologetic layoffs to achieve a cultural transformation at the Atlanta hospital.

Michael Young recently cut about 140 employees from Grady Health System in Atlanta. But the hospital's layoff announcement was not accompanied by typical public relations blather about none of the layoffs affecting patient care, and that most of the positions eliminated were from "administration."

Indeed, Young made a special effort to mention that the cuts—which ranged from groundskeepers to top managers—weren't solely because of the poor economy, government cuts, or an increase in the uninsured, all of which are problems at Grady.

They were about culture.

Not only do layoffs that weed out poor performers in any organization get rid of many of the problems that hinder innovation, but they also put the rest of the staff on notice that someone's paying attention to who's on board with the turnaround and who's just collecting a paycheck—a move that's likely to inspire the achievers in the organization and frighten the rest of the low-performers into action.

In an April 2, 2009, story in the Atlanta Journal-Constitution, Young mentioned that keeping such employees on board represents "an old and unsuccessful way to run a hospital." Critics of the hospital, according to the story, say the so-called "Grady culture" tolerates inefficiency and hampers patient care.

And it's not as though the problem workers weren't warned. Last October, shortly after Young took the reins at the troubled public hospital, he sent a memo to staff complaining about the entrenched culture of getting by that many employees seemed to tolerate.

He's making progress. I'm assuming that those on the newly created nonprofit Grady board knew he would make such tough decisions when they hired him. There was predictable opposition to the decision for layoffs, but if they were smart, the board gave plenty of leeway to Young, who is the hospital's sixth CEO in three years. When I see a record of hiring and firing CEOs like that, I smell last chance for this hospital—unless Young is allowed to do what he was hired to do. His record demonstrates that the turnaround everyone says they want for Grady stands a good chance under his watch.

He's providing leadership—something Grady sorely needs.

Philip Betbeze is senior leadership editor for HealthLeaders Media. He may be contacted at pbetbeze@healtheadersmedia.com.

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