He may perhaps become best known in Minnesota as “the $6 billion man,” given his success in launching what is expected to become the state’s largest-ever development project: the transformation of downtown Rochester into a “Destination Medical Center.” When the project is completed, patients and visitors to Mayo Clinic’s facilities, as well as the physicians and staff working there, are expected to find the same community amenities and attractions—if not better—than if they were to go to Mayo competitors in places such as Baltimore, Boston, Cleveland and Los Angeles.
But the Destination Medical Center (DMC) is just the tip of the iceberg Mayo Clinic president and CEO Dr. John Noseworthy is carefully navigating through churning economic and industry waters. He’s methodically, yet swiftly, leading change within a 150-year-old institution that heretofore made changes more slowly and modestly, while quietly becoming a world-renowned health care system providing medical care, research and education. Mayo has also grown into the state’s largest private-sector employer, with more than 40,000 employees (roughly 33,000 in Rochester alone). DMC is expected to nearly double that headcount by the time it’s completed 20 years from now. Mayo has pledged to contribute $3.5 billion, and to attract up to $2 billion in private investments to make it happen, in exchange for about $585 million from taxpayers for improved roads, sewers and other infrastructure.
Asking the state for financial support was something Mayo Clinic would never have done in the past. But it’s part of the new era that Noseworthy is ushering in, one in which Mayo needs to be more vocal and proud of its history, its importance in the world of health care and its significance in the economy of Minnesota. It’s also part of a change in thinking that must permeate Mayo for it to be successful in the future, given industry changes and advances by its competitors. And it’s all being driven by a passionate yet demanding individual who’s skilled at mixing mild-mannered, intellectual prowess with a warm bedside manner.
It’s for these reasons Noseworthy was selected as Twin Cities Business’ 2014 Person of the Year. What he’s doing—and how he’s going about it—is sure to leave significant, lasting effects on Minnesota’s economy, culture and society.
In addition to asking for state and local financing to support the DMC project, Noseworthy has aggressively set a course for Mayo to serve 200 million people a year (including online) within six years, up from 63 million today. He’s asking Mayo physicians to share their knowledge—and increasing amounts of their time—electronically, through the new Mayo Clinic Care Network. He and his executive team are leading Mayo’s entire workforce through a “working differently culture,” complete with 400 quality-improvement projects. And there’s more, all designed to expand Mayo Clinic’s reach in ways that are more disruptive, and faster-paced, than any it’s ever experienced—even when Mayo expanded from a single medical clinic in Rochester to a fully integrated, national health care system with 67 locations during the 1990s.
Medical degree: Dalhousie University in Halifax, Nova Scotia
Residency and internships: Dalhousie University; University of Western Ontario; University Hospital, London, Ontario
Fellowships: Massachusetts General, Harvard Medical School
First position at Mayo Clinic, 1990: Leading neurologist specializing in multiple sclerosis
Positions at Mayo before becoming president and CEO in 2009:
Chair, Dept. of Neurology
Medical Director, Dept. of Development
Vice Chair, Rochester Executive Board
Family: Wife, Patricia; children, Peter and Mark; dog, Sam
Pastime: Spending time with his family, reading, listening to music, playing golf and tennis, and oil painting
“It’s a major cultural transformation that Mayo is making,” says Bill George, former chairman and CEO of Medtronic, who joined Mayo’s board of trustees in 2012. As a professor of management practice at Harvard Business School for the past 10 years, he’s studied corporate cultural transformations and points out that “it’s much easier to change [a culture] when a company is in deep trouble, because you can bring in new people to make it happen. In John’s case, you need to involve the people who are already there.”
Noseworthy is indeed doing that. He has surrounded himself with a team of leaders he considers smarter than himself. They work with others throughout the organization to discuss challenges, gather ideas on solutions and roll out ways of doing things better than before. The challenge in all of this, however, is for Mayo to adapt to multiple changes without changing what’s made it so successful over the years—primarily its all-staff-focus on patients first, and its model of paying physicians salaries rather than by the number of patients they see in a day. This is particularly sensitive given that Mayo is a physician-led organization.
“It has to become more efficient and competitive on a national and international scale, while taking some costs out without harming the physician-patient relationship,” George says.
The changes led by Noseworthy thus far have proven successful on that front, as well as financially. Since he took the helm in 2009, Mayo Clinic’s annual income has risen 84 percent to $612 million, while revenue increased 24 percent to $9.4 billion in 2013. Mayo’s operating profit margin has thus gained steam, coming in at 6.5 percent in 2013, compared with 4.3 percent in 2009. Such results are stronger than those reported by its biggest competitors.
“Working differently” is paying off as well. Through the end of 2013, Mayo’s workforce of 59,509 was down 2.6 percent, or about 1,620 positions, compared with a year earlier (due primarily to attrition), and up only 6.4 percent from five years earlier. Meanwhile, the number of patients served increased 8 percent from 2012 and more than doubled since 2009.
Mayo’s financial results from the first six months of 2014 indicate these trajectories will likely continue through the rest of this year. But what’s remarkable in all of this is that Noseworthy is achieving such results despite lingering effects of the Great Recession, industry upheaval caused by the Affordable Care Act (ACA) and Mayo’s history of slow, gradual change.
Because of changes in how health care is financed, and due to advances in technology, Mayo’s physicians are being asked to do things they (and physicians in general) haven’t done before—and really haven’t wanted to do, according to neurologist Charles (Mike) Harper, who is Mayo’s executive dean for practice, the operational equivalent to a corporation’s chief operations officer.
“They’re having to go from the traditional face-to-face visits to more electronic and less-traditional ways of providing information, guidance or care to patients and now, to [online] consumers as well,” he says. “This includes electronic consultations to service our non-Mayo Clinic-owned providers, and getting together in groups electronically to concisely represent pieces of our knowledge in our knowledge management system. We’ve asked them to do a lot that’s new, while continuing to see a steady flow of new patients.”
And it’s not just surgeons; just about everyone at Mayo is being asked to do things differently in one way or the other. The changes haven’t necessarily been easy for some.
“The last staff survey has shown that some of our people, particularly our medical doctors more than surgical, have been struggling with those changes. About one-third indicated they’re burned out by that change,” Harper says. “John [Noseworthy] heard that—from the survey as well as from hanging out in doctor’s lounges and listening during feedback forums. As a result, he’s had a number of groups figuring out what we can do to either slow down the rate of change in selected areas, or to help people better manage the change that’s taking place in their area. He’s listening, trying to figure out the areas that are struggling and doing whatever can be done to help, but he’s not taking his foot off the gas.”
Dr. John Noseworthy talking with the E-Tumor Board for Lung Cancer to discuss the most difficult cases, and explore options for patients who seem to have defied standard care.
Noseworthy also knows when to hit the brakes.
“We’ve had a lot of cool opportunities come up that sounded great on paper”—including some that were implemented but turned out not to work, Harper says. “The one that sticks out most prominently was our foray into consumerism at the Mall of America. It was a creative idea—let’s set up a store in a high-traffic area, help people realize Mayo Clinic is in Minnesota and shake up the provider market in the Twin Cities a little to let it know we’re aware of this great pool of potential customers only 90 miles away from us. But at that time we didn’t know much about the consumer space.”
What Mayo discovered after about nine months was that it wasn’t going to achieve useful results in the retail arena by providing advice and information. “Most people who came there wanted to find out how they could book an appointment rather than to buy something,” Harper says. Noseworthy saw it wasn’t working and quickly moved to shut it down.
“John didn’t look at it as a failure; we learned a lot from it,” he says. “A lot of other people in his position might have kept it going longer, and they would have looked for someone to blame.” Everyone working on the Mall of America project was moved back into other positions within Mayo. “The Mayo culture is pretty good—if people go out on a limb for the organization, they don’t risk their career.”
About Mayo Clinic
Mayo Clinic is made up of three core operations.
Mayo Clinic’s complex care, research and educational facilities are located in Rochester, Scottsdale and Phoenix, Arizona and Jacksonville, Fla.
Mayo Clinic Health System consists of more than 70 hospitals and clinics throughout Minnesota, Wisconsin, Iowa and Georgia that Mayo has acquired since the mid-1980s.
Mayo Clinic Care Network provides qualified health care providers access to Mayo Clinic’s electronic medical database, and electronic consultations with Mayo Clinic physicians. It allows care to be provided to individuals closer to where they live when the need does not require that they travel to a Mayo Clinic facility.
The changes Noseworthy and his team are making within Mayo are based on a combination of two major planning processes. The first is one that he led before he became president and CEO, when he headed the group tasked with assembling “The Path to 2020,” a roadmap for Mayo’s future. The goals were to strengthen Mayo Clinic’s reputation as the destination for complex health care, expand its reach to patients unable to get to a Mayo Clinic location and to do more to keep people well so they don’t become sick in the first place.
This helped set the stage for the Mayo Clinic Care Network, which launched in 2011 and enables Mayo to reach people through 30 other health care organizations, and Mayo’s three hybrid centers focusing on regenerative medicine, the science of health care delivery, and individualized medicine. It also called for more partnerships and affiliations with other organizations; Mayo’s partnership with UnitedHealth Group’s Optum, for example, adds to the data that can be analyzed by that Center for the Science of Health Care Delivery.
The second planning process involved pulling together a group of about a dozen of Mayo’s top leaders a few years ago to develop a six-year plan to help steer it through 2019. This plan dealt more with adjustments based on the recession and industry changes brought about by ACA. This included remodeling Mayo Clinic’s practice enterprise-wide to drive up quality and safety, while sending hospital patients home faster and with fewer complications.
“That sounds easy if you say it fast, but knowing that innovation and teamwork and standardization and technology can help you get a diagnosis more quickly, to do only the tests and procedures that are needed, and then ultimately produce safer care—you end up saving a whole lot of money,” Noseworthy says. “You may throw away some revenue; in the old model where hospitals were inefficient, you ended up doing a whole lot of tests and that was great for your revenue but it wasn’t good for patients. At Mayo, the nice thing was that people realized that should our revenue drop because we’re doing fewer tests, that’s OK; it’s the right thing for the patient. So the culture allowed that to happen.”
That said, there are plenty of times where discussions on change can run into resistance. “When you come in and say we’ve been very successful at what we do but we have to change the way we work, that’s not easy to do. People could say, ‘You’re going to ruin the culture because we’ve always done it this way,’ ” Noseworthy says. “What I’ve tried to tell the team is, no, you would never let us ruin the culture. We’re going to take advantage of your commitment to the patients to find better ways to work in teams so the patients will benefit more than they ever have.”
There are still those with doubts, but that’s the case with every company, he says, and the goal at Mayo is to listen to such individuals as much as possible.
“Those boat-rockers or naysayers, we’re lucky here: Almost every one of them is committed to Mayo, they want Mayo to be successful. They don’t want us to fail but they see it from a different perspective, and we listen to that,” Noseworthy says. “And honestly, quite often they have good input and we say ‘You’re right about that, and we will try to build it in.’ ”
“It’s a continuing conversation,” he says, not only among his leadership team but especially with and between Mayo’s physicians and administrative leaders. “We’re not done yet. We have a lot more change that we have to put into place.”
A Few Questions for Dr. John Noseworthy
What was your first experience as a leader?
It was when doing research on multiple sclerosis in the mid-1980s. We needed to bring a group of nationally based research programs together and learn from the group. I realized from that experience that I find it rewarding to be surrounded by really committed people who were much smarter than I was, but collectively we could do more. And that became a pattern for other things I did in research and indeed in this organization: making certain that the people around me have the expectation and freedom to have their own ideas and help move us forward. I’m certainly a better CEO than I would ever be because of the people around me.
How have you hired the top people within your circle?
In general, Mayo looks for people who are committed to the primary value of our organization, which is to meet the needs of our patients. In my own circle of folks who help me, I’m really eager to bring in people who are courageous, are willing to work hard and are willing to disagree, but are also willing to be responsible and/or accountable for the output of what they’re doing. Am I demanding? Probably. But I think that’s good for Mayo, and most people with whom I work are demanding because we have a very important piece of work to do here.
If you had only two questions you could ask of someone when screening them after HR has said they’re fantastic, what would they be?
The first would be what is the purpose of your life? What is it you want to accomplish? Secondly, how do you like to work? Do you like to work alone; do you like to work with others? That gets at the passion behind “Are they committed to the mission and would they work well in teams?”
In terms of your leadership, what has been your hardest-learned lesson?
To not only recognize, but to also demonstrate that you realize people are able to do more than even they think they can do. You can recognize that yourself—that you’ve asked that person to help you because you know they will be successful—but they have to know that you believe in them as well. Conveying that trust and that willingness to listen, I’m not sure it’s a hard lesson, but it’s an important lesson.
How did you learn this?
I received some feedback at one point that I didn’t encourage a lot of independent thinking around me. Candidly, I thought that was always one of my strengths. But evidently somewhere along the way I had lost the ability to convey that openness. And this brings up a story. Somebody asked me, “Why do you answer when someone asks a question?” I thought that’s what you’re supposed to do around the table. That person said, “No, what you want to say is ‘Thank you for that question; what do the rest of you think?’ and try to get a conversation going here.” It sounds like Management 101, but when you’re a doctor, and a patient asks what’s going to happen, you give them the answer. When you’re leading people, you have to be more in tune to the fact that these people ask you a question for a reason. How do you pull that out of them so you get the most out of them? I didn’t realize I might have been shutting people down, people I valued enormously.
Who’s been your best mentor and why?
I don’t think I’ve had a single mentor as a main go-to person. My mom mentored me in the value of humor. My dad showed me the importance of purpose in life. The tough scientific and medical physician-leaders I’ve had have been very demanding and showed me the benefits of having a demanding career and expecting nothing less than excellence. And the previous leaders at Mayo who I went to have been very helpful in making sure I had a Plan B, making sure I listen to others and making sure I was humble enough to understand when I had made a mistake.
Do you ever turn it off and if so, how?
I sleep very well because I’m confident in our direction and I’m confident in our people. What you’re really asking is how do I turn it off when I’m awake? Being with my family is important to me. I’ve also taken up oil painting in the last year. I don’t really have a talent at it, but I find when I paint, I don’t think about anything else than what I’m doing, and I think that’s a good thing. My wife said to me when I came down from the attic the other day after painting, “You’ve been up there for three hours and you look like you’ve been on a vacation.”
Dale Kurschner is editor in chief of TCB.