"Across the system, you have to learn to share resources, and the key to that is you have to have more and clearer standards—in other words, a CHI way of doing things," Rowan says.
For example, he notes that the organization once had 18 different definitions of an admission. Exercises as simple as determining a systemwide definition of an admission force a different kind of integration and cooperation around a set of standards. And standardization doesn't just affect the business and administrative side—systems also have to hold clinical providers to certain standards. Rowan says this is because, as you take risk with populations, you have to deliver care at a high level within a fairly narrow range of outcomes and costs.
"You can't afford a heart surgeon, for example, who does a bypass that costs $35,000 when you can go next door and a different surgeon is doing the same procedure for $18,000," he says. "You can't have that variability."
Leadership roles are no different, as far as variability is concerned. Such leaders, at least at CHI, must operate administratively within a narrow range of variation. The key challenge, Rowan believes, is that CHI and the healthcare industry have to come to grips with the fact that healthcare is moving from being a cottage industry with local standards to a big business with, in CHI's case, an altruistic mission, which means dealing with complexity in a much more sophisticated manner.
"In the past, if you were the CEO, you had a lot of room and authority and autonomy. That's being significantly narrowed. When I got here in the '80s, if you were the local hospital CEO you were probably king of your community. You contracted locally. There was a lot of influence because you could throw around service contracts and things like that, and you were a very significant business leader in the community. As we've evolved, as a local CEO, you might have moved from being president of your autonomous local hospital system to, now, one of 45. So you don't have that flexibility."
Rowan admits that CHI has lost a certain element of executives who have said this new type of work isn't what they signed up for.
"Execs react to this very similarly to physicians," he says. "The world has changed substantially, and some have taken well to it and some have not."
While the loss of experienced leaders who dislike the new role may have a downside, that natural selection has allowed CHI to recruit, by and large, leaders outside traditional areas, younger people who come in with a different set of expectations and skills. There is a certain drawback to the transition, however. Some elements of local character may be lost.
"Some say all healthcare is local, and historically that's been true; but it's been a mixed blessing because there shouldn't be different standards of care depending on where you are and what hospital you go to," Rowan says. "The other challenge is that the U.S. is made of many regions that are very different. So it's different when you put someone from the Northwest into the Deep South. Culturally those places function differently. We do begin to lose some of that local character, and there's probably some disadvantage in that."
Centralizing support functions
St. Louis–based SSM Health Care also is undergoing a rapid evolution of leadership roles. President and CEO William P. Thompson rolled out a reorganization plan last October that not only changes roles of many top leaders, but also, he believes, better integrates SSM's recent acquisition of Dean Health System. Among Dean's assets is a Wisconsin-based health plan that provides SSM the foundation platform for its efforts to manage the health of populations in the four states and 18 hospitals in which it does business.
The reorganization also removed some of the local support CEOs have had in the past in favor of corporate consolidation of those roles. A year ago, Thompson and the board decided to consolidate all major functional support areas.
Now, a central department of planning, finance, human resources, and communications for the entire system takes over for what were functions, and jobs, traditionally handled by local leadership. Some local control still exists, with local executives reporting to senior vice presidents at SSM. The goals are to ensure SSM has a consistent level of service in those areas in each of its markets. Second, it provides a means to transfer discovery of best practices across the system as quickly as possible.