What healthcare leaders need to know now

 

One in a series of interviews with Modern Healthcare's Top 25 Women in Healthcare for 2015.

 

Nancy Schlichting has become known for bold, unconventional leadership during her tenure at the Henry Ford Health System in Detroit, where she’s served as the CEO since 2003. She’s won numerous awards and led major initiatives, like the process that led to Henry Ford winning the prestigious Malcolm Baldrige National Quality Award in 2011.
But the key to great leadership, she says, is developing and nurturing relationships.

 

“I think you have to understand that every interaction matters,” she says. “Leaders are under a spotlight all the time, and so consistency and interest and openness are things that go a very long way. Smile. Lift people up.”

 

For example, when Schlichting eats in the cafeteria, she will sit with anyone.

 

“Unfortunately, I don’t get to the cafeteria as often as I should, but when I do go, I think everyone in the cafeteria must go out and tell everyone I do that. It’s always amazing to me how your reputation gets built, and it’s not by promoting it yourself. It’s just the fact that everyone around you observes.”

 

Her peers in the healthcare industry would probably make the observation that Schlichting is a forward-thinking, fearless leader. Schlichting herself merely says that she has less trepidation about taking risks.

 

“What I’ve found in life is that the most important things you do are probably the hardest, and I think that’s why a lot of people don’t do them. It’s hard sometimes to do the right thing because you’ve got to deal with the potential conflict, the risks that come with it. If I had felt that way when I came to Michigan, we probably wouldn’t have done half the things we’ve done because they weren’t easy. Sometimes the hardest things are the right things, but they’re not the things that everyone will gravitate to.”

 

When Schlichting decided it was time to retire, she brought in her handpicked successor, Wright Lassiter, for a two-year transition plan that is scheduled to end in December 2016. “I told my board when we started this process, ‘If you think I need to go sooner, just tell me.’ I want what’s best for the organization, that’s my Number One goal. I do not want this to be an abrupt, disruptive transition.”

 

Schlichting had met Lassiter on a U.S. News & World Report healthcare panel at a conference. She was so impressed by what he had to say on the panel that she went back to her hotel room and Googled him to learn more about him. Thus began a yearlong process in which the two executives and the Henry Ford board began to explore whether Lassiter might be a fit as the next CEO.

 

When Lassiter arrived from the Alameda Health System, where he had been the subject of a glowing cover story in Fast Company about the turnaround he and his team engineered at Alameda, Schlichting restructured the organizational chart so all the major divisions of the health systems now report to him.

 

“He has really jumped right in working with the senior leaders, and that is what’s really making this work,” she adds. “The other thing is that we’re in the midst of a lot of strategic change going on in our industry, so he is leading our major, strategic decisions moving forward.”

 

Lassiter’s arrival was far from the only succession plan moving forward at Henry Ford. Ed Chadwick also recently arrived as the new chief financial officer, and Schlichting installed Peggy Burns as the new senior vice president of development, in addition to several new chairpersons in the medical group.

 

But Schlichting says Lassiter’s leadership is making the transition to a new generation of executives much more seamless.

 

“I think some of our leaders had been saying to themselves, ‘I’m going to retire when Nancy goes,’ ” she says. “But now, I think they’re delaying that a bit because they really like working with Wright. So some of those transitions may now be staggered, and that’s to the benefit of the organization.”

 

Schlichting is moving on perhaps a few years earlier than the typical CEO – she’ll be 62 when she leaves – but says she knew it was time.

 

“I have been in either a CEO or COO role in very large hospitals or health systems for 32 years. I also happen to believe that, after about 10 years in any position, you’re not bringing the same level of creativity and energy that you did in the early years. It’s just human nature.”

 

At the same time, there are other interests she wants to pursue.

 

“I watched all of my extended family pass away before I was 16,” she says. “I’ve always known that life is short. I’ve put a lot of interests on the back burner for a long time and I want to move those up on my list of priorities.”

 

That would include more time with her partner Pam, playing the violin, gardening cooking, golf, and volunteer work.

 

“I sit at a lot of board tables and that’s great, but you don’t have the same rewards you have when you get closer to the action,” Schlichting says. “I want to do things that are more front-line, working with kids or working with people in need in our community so that I can feel that sense of connection.”

 

Beyond her leadership style, she says she hopes her legacy will include a reputation as a champion of diversity.

 

“Diversity enriches an organization,” she says. “All types of diversity have been shown to improve the performance of an organization, and the reason is obvious – you’ve got a very diverse workforce and when you have people at the top that represent the diversity in your world, everybody can look to someone and feel inspired by that.”

 

When Schlichting arrived in Detroit, only two of Henry Ford’s senior leaders were women. Today, there are 16, and that is one change she is proud of.

 

“That’s pretty cool, but it was not a strategy. It was about women looking at this organization and saying, ‘This is an enlightened place. This is where I want to be.’ ”

 

Schlichting is very involved as a civic leader in Detroit’s slow renaissance – she’s staying involved after her retirement – and says the city’s challenges have made her a better leader: “There were a lot of years where people looked at Detroit and said, ‘Why would I want to come there?’ If you didn’t create an environment where people loved working here and loved being part of the leadership team, we could not have succeeded as we have.”

 

 

 

One in a series of profiles of Modern Healthcare’s Top 25 Women in Healthcare (sponsored by Furst Group)

 

The journey to winning the Malcolm Baldrige National Quality Award was just as important as the final destination for CEO Nancy Schlichting and the Henry Ford Health System.

 

The honor, bestowed by the office of the President of the United States, goes to a limited number of organizations each year for quality and innovation. Yet Schlichting suggested it as a goal to her team a full seven years before the system won the award in 2011. In fact, Ford didn’t merit a site visit from the Baldrige investigators until the year it won.

 

“I started bringing the Baldrige application process to our team because I wanted us to get better as an organization focusing on the important things,” says Schlichting. “The framework helps you to be a strong organization, and it forces you to become more integrated.”

 

Yet midway through those years, she and the organization had some doubts.

 

“At the same time we were going through the Baldrige process, the U.S. had its economic collapse. It was a very challenging period,” Schlichting remembers. “There were moments along the way where I think my team thought we should take a year off, but I said no because it really was more about the journey than the award.”

 

As the system persevered, Schlichting says she took another look at how Ford was presenting its story to Baldrige.

 

“I remember talking to Bob Riney (Ford’s president and chief operating officer) and said, ‘I don’t think we’re telling our story right. I don’t think people understand us. We have to include the fact that we’re in Detroit. We’re a unique safety-net organization, yet we have all these expanding suburban markets. We work differently than a lot of organizations.’ ”

 

So the application was revised. The Baldrige team was interested, and sent its team out to take a look. An exhaustive look. In all, the examiners interviewed more than 1,200 Henry Ford employees. Though Schlichting’s leadership team had put together a booklet of talking points for employees, it was pretty obvious that no amount of coaching could make an army of workers fall into step with the depth of the Baldrige visit.

 

“You can’t fake it. You can’t plan for it. That was pretty obvious,” Schlichting notes with a chuckle. “What must have come through is that we have an amazing culture and a commitment to excellence.”

 

The last couple years have brought challenges to Henry Ford as well. A planned merger with Beaumont Health System fell through earlier this year when Ford backed away after a lengthy investment of time, manpower and money.

 

“The merger was very challenging, but at the end of the day, we knew we were not aligned around culture and our values and visions of healthcare,” she says. “We had 600 people, including 10 members of our board, all working on this for a year. That was tough; I felt very responsible. But it did re-energize all of us because we realized, perhaps even more than we did before, who we are, what we stand for, and what we want to accomplish.”

 

Along with its standard of quality, Henry Ford also has gained a reputation for doing the unexpected. In Schlichting’s tenure, for example, the system has closed three hospitals over a 10-year period, yet doubled in size. As a math equation, that doesn’t make a lot of sense, but Ford made it work.

 

“We had some small hospitals that, frankly, could not get to the scale where they could be profitable,” Schlichting says. “They didn’t have the clinical strengths to compete in a very difficult marketplace. When you have hospitals that are lagging, they drag down the rest of the organization. The truth is, doing a lot of things doesn’t mean you’re doing the right things.”

 

During the same period in which the closures occurred, the system’s flagship hospital grew by 30 percent in volume in Detroit (a city that shed 30 percent of its population over the same time period) and became a destination hospital for patients worldwide, especially in cancer treatment and robotic surgery. It acquired Macomb Hospital and opened West Bloomfield Hospital. It doubled the size of its community care division and grew its ambulatory network from 23 to 30 sites.

 

But beyond numbers, Schlichting is proud of the way that Henry Ford treated the people affected by the closures in the Detroit region that has endured many economic setbacks.

 

“When we closed the hospitals, we did a better job of it each time, especially around the people. We found jobs for almost every one of those people within our system, because I did not want to lay people off at a time when unemployment in this market was over 10 percent. A lot of our employees were the sole breadwinners because their spouses had lost their jobs. The last thing we needed to do was to make their lives even more difficult.”

 

Schlichting credits her own long-term success to having good mentors. In fact, she was promoted to her first COO position when she was just 28. She’s not sure that today’s millennials could get such an opportunity in today’s market.
“Unfortunately, too many baby boomers are hanging on too long today,” she says. “It was a different time when I was coming up through the ranks. And while there certainly were a lot of older people in jobs, I think there was a greater openness to younger people.”

 

Schlichting has written forcefully about the need to provide more chances to young healthcare executives.

 

“I hear a lot of complaining from my generation about millennials, and I keep saying to them, ‘You’ve got to be kidding me! These people are fantastic,’ ” she says. “They are more community-minded, they are more interested in the urban core, they embrace diversity, they connect better with people easily and seamlessly even if it’s through different technology.”

 

She sees similar obstacles for women executives. Her work at Henry Ford has earned her many awards, including Modern Healthcare’s Top 25 Women in Healthcare and 100 Most Influential People in Healthcare, but she is impatient for gender equity to become more of a reality.

 

“I’m still disappointed in our industry,” Schlichting says. “There are a lot more women working in our health systems, but not very many women leading them. One thing I’ve tried to do is help young people and women understand what it takes to succeed. I don’t sugarcoat it.

 

“I was raised by a mom who said, ‘I don’t care what other people do; I care what you do.’ So if somebody else was getting a break that I wasn’t, I tried to focus on myself and not worry about everyone else’s career.”