Whenever two established leaders get together, you know you’re in for something notable. Odds are they’re articulate, knowledgeable and have lots of insight to share. We found all of this to be true when Root’s CEO Jim Haudan sat down with Ken Matzick, retired president and CEO of Beaumont Hospitals, a suburban Detroit organization consistently recognized as one of the best hospital systems in the country over the past 20 years by U.S. News and World Report. Only three percent of the nearly 5,000 hospitals analyzed for Best Hospitals have earned that national ranking! Today Beaumont Hospitals has evolved into Beaumont Health, having merged with two additional hospital systems in southeast Michigan.
JH: Ken, during your tenure as CEO at Beaumont, you led the organization through a number of changes: acquiring and integrating new hospitals, forming a new school of medicine, and expanding the ambulatory care footprint to name a few. What was the most challenging change for you as a leader?
Excerpt of audio interview
KM: In 2005, after 50 years of success without any meaningful competition, two of the region’s largest competitors moved into our market with new hospitals. Up until that point, we had been focused on quality patient care and graduate medical education, and encouraged competition within the organization as a means to motivate people to strive to keep doing better and better. All of that changed in an instant. We had to quickly move away from internal competition between our own hospitals and medical staffs as our model, and refocus the entire organization on the new reality. I had to unite two separate hospital and medical staffs together that were used to competing with each other in order to have them now perform as a singular force against the threat of new and very capable external competitors.
The problem was, I was the Beaumont leader that had created the culture of internal competition. A defining moment in my career had occurred 30 years prior when I was charged with launching a satellite hospital about 13 miles away from the mothership, Beaumont Hospital – Royal Oak, a highly acclaimed and world-class teaching hospital. As the satellite location, we were always the stepchild. But I wasn’t going to let that challenge beat me. I told the staff, “When you are a stepchild there are two ways you can get attention from the parent. You can become a juvenile delinquent … or you can outperform the natural offspring.”
And it worked. Beaumont, Troy, became a major healthcare resource in the area and was similarly recognized by U.S. News and World Report for its service, staff and quality of care. Subsequent CEOs of Beaumont, Troy, continued this culture and have continued to experience success as well.
JH: How would you describe your style of leadership? How did you engage disparate parts of the organization in a vision connected to your leadership?
Excerpt of audio interview
KM: In a word, I’d say my style is pragmatic. Leaders want to get things done. But we also need to understand our limitations because we all have them. And so it was important for me to surround myself with people smarter and more talented than I was and then motivate them to do the best they could do.
In my opinion, being an effective CEO is not about having big ideas and plans, it’s about executing those big ideas and plans, regardless of whose they are. Healthcare is a team sport. You need a team of health professionals working well together to deliver quality medical care, and you need a team working well behind its leaders to move an organization in the right direction. That’s how and why I embraced your principles and Root’s methodology so much – Root taught me that the key to execution is engagement. Your methods and visual metaphors, coupled with Socratic dialogue, helped us engage the entire organization. When you let everyone participate in the planning process, confront the same “stubborn facts” the organization is dealing with, and critique and contribute to the strategy, it becomes their plan, not yours, and they are fully engaged and anxious to execute. In my opinion, it is the best way to move ahead quickly, especially in difficult times.
JH: One of the most common challenges we hear from CEOs of large health systems is the difficulty of getting people to believe in the whole – in acting like a system, as opposed to a confederation of individual parts. What does “systemness” mean to you, and how did you engage key stakeholders at Beaumont in that conversation, the mindset and the execution?
KM: Systemness is team play. If you take the best attributes of each player, it adds up to something bigger than any one player can accomplish. That’s the understanding I had of how the system would work. I knew that in order to unite the multiple Beaumont facilities and divisions into “One Beaumont,” we had to think big. Yes, we needed some basic equipment, like the technology to enable everyone to have access to the same information at the same time, but we also needed to do something to ensure that people understood and believed and supported the concept of working together as one large entity.
Root came in; your conceptors worked alongside my leadership team and created visuals. These were modified and became the tools used to engage over 14,000 people in one mission. It wasn’t a small job, but over a five-month time period we did it. We sat groups of people at a table with a trained facilitator, about 10-12 people across all levels, divisions and roles – doctors, nurses, housekeeping staff, technicians, etc. Together they reviewed the visuals and discussed the facts and the challenges. We asked for opinions and ideas. We welcomed honesty. The conclusion – reached by the employees, not dictated to them by management – was that we’re all in the same boat. It wasn’t the Royal Oak facility versus the Troy facility. They could see the “Big Picture” and where they fit in, they realized they were a team and were dependent on each other to do their jobs and they realized they needed to support each other, and the entire organization, in order to hold our own against the new competition. It was really impactful.
JH: If you could go back in time to your first year as CEO, what advice would you give yourself?
KM: The advice I would have given myself is the same advice I would give any CEO today – be agile. I’ve been known to tell my people, “Don’t confuse the plan with what we’re going to do.” The reality is that things change fast.
Just look at my career. I had been with Beaumont for 35 years before becoming CEO. During those 35 years we grew every single year. We had tremendous success. Then the market changed. The competition arrived and the recession began. All of our big plans were put on hold because, for the first time in our history, we were losing money. So I called a timeout and crafted what would become a very successful recovery plan. We never could have implemented the recovery plan without the engagement and support of the troops.
JH: What change were you able to accomplish that you are most proud of?
KM: Without a doubt, it was the creation of the Beaumont Medical School. Four years after my retirement, I was invited to the first commencement. Across the aisle from me sat 50 graduates – 50 new exceptionally trained doctors. Behind them was the second year class of 75 med students. Behind them was the third year class with 100 students. And then the fourth year class with 125 students. 350 highly trained doctors who would be soon treating patients across the country. It was the proudest moment of my career.
JH: What change frustrated you the most?
KM: I’d have to go back to the time of the recession. We had all these great plans and had to put everything on hold. We had to conduct massive layoffs. I gave the entire executive staff, including myself, a 10 per cent pay cut in order to save jobs needed so as not to impact patient care. It was heart wrenching. Despite all of this, we were able to follow through with the critical elements of our plan: we secured the acquisition of another health system; in partnership with Oakland University we created the Oakland University William Beaumont School of Medicine; we launched an ambulatory care division; and we installed an electronic medical record system in all three hospitals, the ambulatory care division and in the physician network. While we were able to salvage most of the plan, it was frustrating that I couldn’t bring people that I had worked with for 30+ years along with me on that ride.
But, we survived – I survived – because we were all united as One Beaumont. The whole organization was behind me, even during the worst of times. In fact, people that I had to lay off actually came back to thank me for the opportunity to work at Beaumont. It was humbling.
JH: It is really apparent to me that you have a fundamental belief that everyone deserves to understand the “why” and if given the opportunity, they’ll surprise you with their talent. Would you agree?
KM: It really comes down to the fact that none of us are as smart as all of us. I understood the value that others can contribute. And that was critical to my career, to the success of the hospital, and to the care we provided patients.