Mayo Clinic’s Reformer-October 2011
“I'm an adrenaline junkie,” says Shirley Weis, chief administrative officer for the Mayo Clinic.
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When she says this, she is sitting in a beige conference room located on Mayo’s Rochester campus. It hardly looks like the haunt of a thrill seeker.
But if her remark seems to clash with the sterile environment, it is true to Weis’s history. As a young nurse, she worked in and managed emergency rooms at hospitals in her home state of Michigan.
“I wanted to be with the sickest people,” she says. She liked working with assault victims and car crash survivors. “I wanted to be near the chaos . . . . I thought I could make more of a difference there.”
Her attraction to the Mayo Clinic was different, of course. It’s no critical-care patient. At 140 years old, Mayo is a pillar of the health care industry, with a coveted global reputation, more than 56,000 employees, and campuses in Rochester; Jacksonville, Florida; and Phoenix and Scottsdale, Arizona. Each year, Mayo cares for more than 1 million patients. Weis joined the administrative group at the Rochester headquarters in 1995, becoming chief administrative officer in 2007.
Now she oversees all of the Mayo Clinic’s business operations: marketing, finance, insurance reimbursement, human resources, and 13 other departments—everything but the medical and research practices of Mayo’s physicians.
“Because I’m the person accountable for the business models,” Weis says, “I’m the one looking to the future and trying to understand what health care reform can mean.”
That’s where her experience in crisis management is still useful. Together, the recent recession and the approach of reform have meant 12- and 14-hour workdays for Weis—reorganizing tradition-bound business units, asking longtime employees to take on new roles, and being constantly vigilant about expenses.
Like a nurse with impeccable bedside manner, she leans in and says,“I want to help our employees be brave . . . I want them to know everything will be okay.”
“It’s a scary time in health care,” Weis says.
$250 Million in Cuts
Industry analysts project revenue losses for health care providers due both to recent cuts in Medicare and Medicaid and to increased pressure to reduce costs under the 2010 Patient Protection and Affordable Care Act. If organizations like the Mayo Clinic are to weather the challenges ahead, they’ll need to tighten their operations.
“And let’s face it, most of the expense in the health care system is people, the staff,” Weis says.
Weis has already been in cost-cutting mode for some time. In 2007, the year she took on her current job, the not-for-profit Mayo Clinic was running at a modest operating margin of 2.9 percent: $197 million in income on revenues of $6.9 billion. By midyear 2008, however, the economy was in freefall. Millions of Americans were losing their jobs and finding themselves without health insurance. Others were saddled with pay cuts and higher copayments for health care. Mayo’s patient volumes stayed flat that year, but income from patient services dropped by $88 million as people opted for fewer services, and hires that were made just before the crisis increased operating costs. Mayo’s operating margin dropped to zero.
“These were pretty challenging times for us financially,” says Mayo Chief Financial Officer Jeff Bolton, who reports to Weis. In addition to the drop in income from patient services, the clinic took an 18 percent hit to its investment portfolio in 2008, a loss of $700 million. The organization’s pension fund started the year fully funded, but was running a deficit of $1.2 billion by year’s end. Bolton says Mayo is always looking to gain efficiencies, “but we picked up the pace in the second half of 2008.”
Weis spearheaded a monumental effort to reduce costs. “She and [Doctor John Noseworthy, Mayo’s president and CEO] did a number of town-hall meetings,” Bolton says. They asked Mayo employees to help identify waste within their departments. Many employees followed up with personal e-mail messages to Weis.
“Shirley responded directly in most cases,” Bolton says. “A lot of expense reduction was drawn directly from these employees’ perspectives.”
There were no layoffs, but some employees had their hours cut, and others were asked to switch jobs. Mayo’s retirement and benefit packages were reduced for current employees and retirees alike.
“We talked to our employees and shared our thinking,” Weis says. “Nobody liked it, but they understood. They could see the changes were necessary.”
She scrutinized the ordering and use of medical supplies. She curbed capital spending projects. In total, the ideas Weis put into play eliminated $250 million of expense during 2008, preventing the organization from running a deficit.
With continued cuts, Mayo’s operating margin recovered to 4.4 percent on revenues of $7.58 billion in 2009. And as reductions were carried forward into 2010 and revenues saw a small bump to $7.9 billion, the operating margin rose further, to 6.5 percent.
Was 2008 merely a disaster drill for future problems? “That’s an excellent question,” Weis says, with a nervous chuckle. “What I tell our employees is this: If you think 2008 was a challenge, well, we’re just getting started.”
Are HMOs Part of the Answer?
Weis’s start at the Mayo Clinic in 1995 is noteworthy, given the current environment of reform in health care. She was hired to be executive director of Mayo’s managed care division, and she came with 10 years’ experience in management roles for the Blue Care Network of Michigan, a health maintenance organization affiliated with Blue Cross Blue Shield of Michigan.
Most people will recall that health management organizations, or HMOs, took a public-opinion beating in the 1990s. (Think of actress Helen Hunt’s profanity-laced rant in the 1997 movie As Good As It Gets.) What fewer people realize is that HMOs were a quantifiable success at slowing the rise of health care costs. A 2006 study from Harvard University’s Kennedy School of Government shows that the rate of health care inflation dropped from more than 10 percent annually in the early ’90s to less than 5 percent annually in the late ’90s, the heyday of HMOs. Then, costs assumed their steep ascent as HMOs fell out of favor.
As the U.S. tries to reform its bloated health care system, could it be useful to remember the short-lived experiment in managed care? Weis believes so.
“I was hired because I have the background in managed care,” she says. “Building on that experience plus my nursing background, I know health care inside and out. I know insurance. I know how the payers work. And I understand the concept of providing a continuum of care, from birth until death.”
Weis has taken the lead in convening Mayo’s senior leadership for regular discussions of health care reform. Early on, the group solidified the official Mayo Clinic perspective on reform: It supports universal insurance coverage and advocates for consumers’ freedom to choose their health care providers.
The group is also trying to anticipate how the health care industry will operate in a post-reform world. In discussions, Weis prods her colleagues to shift their focus away from present-day “fee-for-service, episodic care.” Eventually, she believes, reform will push the industry to take a longer view. Like the HMOs of yesteryear, she says, the health care industry will need to adopt a more global approach that considers lifelong wellness.
In truth, she acknowledges, nobody really knows exactly how reform will look or how it will play out. The only certainty she sees is that health care services will need to cost less.
“Check out the debates in Washington,” Weis says. “They’re not talking about giving providers more money. They’re talking about giving us less.”
By the time Weis left nursing, she had earned an MBA at Aquinas College in Grand Rapids, Michigan. She had run everything from a small emergency department to a major HMO. Doctor Al Schilmoeller, the Mayo administrator who lured her to Rochester, says, “Put those things together and you have the attributes of an ideal administrator.”
Weis thinks about different attributes when she describes her job, speaking often about “delivering high-value experiences.” Another idea that frequently recurs in conversation with her is “driving out expense, over and over again.”
“Pull the Hardest Cases to the Front”
Weis’s grassroots outreach to employees for cost cutting is both her own style and the Mayo Clinic’s.
“Mayo’s culture is pretty unique,” she says, characterizing it as a place where teamwork is valued above individual achievement.
She has recruited a few outsiders to the organization, but even Jill Ragsdale, Mayo’s chief human resources officer, who came from Sutter Health in Sacramento, California, had worked earlier at Mayo. “We already have world-class physicians and scientists,” Weis says. “I want to be sure we have world-class administrators, too,” so Ragsdale was the product of a nationwide search. “We looked far and wide, and she was absolutely the best,” Weis says. Most often, however, she finds talent within Mayo’s own ranks.
Ragsdale says, “Shirley is very transparent about succession planning,” and has developed a mentoring program to spot and cultivate emerging talent at Mayo. Teams of top young employees are assigned an administrative puzzle to solve—how to integrate a new technology into an existing system, for example—to show what they can do. Meanwhile, Weis helps them network with executives throughout the organization. One of the program’s graduates, Mary Jo Williamson, was recently tapped to run the Mayo Clinic’s new affiliated practice network, a set of varied partnerships with other health care practices and facilities in the Upper Midwest. The network extends the Mayo Clinic’s reach in the health care marketplace without the need to put up costly new buildings.
Weis’s outreach—whether to promising young employees or to others she wants to engage in change at the Mayo Clinic—is never just a feel-good tactic.
“She’s disarmingly authentic,” says her current boss, Mayo CEO Noseworthy.
“She can be brutally honest,” according to her former boss, Jim Epolito, who led Michigan’s Blue Care Network. “With Shirley, the open dialogue isn’t always pleasant. But she has this ease with communication.”
Ragsdale says, “In an emergency room, the nurses pull the hardest cases to the front. Shirley does that with administration. Things most of us don’t want to talk about, Shirley immediately puts them out there.” She says Weis is quick, for example, to share observations about an individual’s strengths and weaknesses, and to intervene to help an employee seek the right training opportunities.
Maybe more unusual, Weis “manages up” in a similar way. According to Marilyn Carlson Nelson, chairwoman of the Mayo Clinic’s board of trustees, Weis “somehow lets Dr. Noseworthy take the lead, yet she has the sensitivity and capability to identify his strengths, while knowing where she can help him reach his goals.”
Employees say that Weis is equally direct about her own administration’s failures. The Mayo Clinic recently made a reduction to the short-term disability insurance it offers its workers. Human resources prematurely posted the information to the organization’s intranet, before managers throughout the clinic system had been properly briefed. “Shirley called it a ‘sentinel event,’” Ragsdale says. In health care, the term is used to describe an unexpected and potentially preventable event that causes serious injury or even the death of a patient. “She takes clinical discipline and applies it to administration,” Ragsdale adds. “As a team, we broke down how the event happened. We did a situational analysis.”
As a result of that sort of discipline, according to both Bolton and Ragsdale, there’s a bit more swagger these days in Mayo’s administrative ranks.
“It’s always a delicate balance with the physician-administrative partnership,” Ragsdale says. “I think there was a time when administrators were unsure about speaking their opinion . . . . Shirley is very clear—it’s important for administration to fully participate, to speak up.”
“Hit the Retail Level”
One of the administration’s boldest endeavors is the new Mayo Clinic marketing strategy.
“Fifty years ago, Mayo Clinic wouldn’t have used the word ‘marketing’ in a sentence,” says John
La Forgia, Mayo’s chief marketing officer and a 20-year veteran of the organization. Under Weis’s leadership, he sees innovation in everything that involves the clinic’s “external touches.” Not only does the clinic now unabashedly engage in marketing, it has become aggressive about reaching more potential patients.
“My vision has always been to hit the retail level,” Weis says. “We want to be affordable, relevant, and helpful to people not only when they’re sick, but also when they’re trying to stay healthy.”
“Mayo Here, There, and Everywhere”—an umbrella name for a set of initiatives that evolved from the Mayo’s year 2020 “visioning” process several years ago—includes new wellness services for employers to roll out to their employees, and social networks for sufferers of various chronic diseases. Some programs are available not only in English, but in Spanish or Arabic.
But the most unusual element
of Mayo Here, There, and Everywhere—at least in the Mayo Clinic’s scope of experience—is surely the new health care laboratory it opened at the Mall of America in August this year. Rather than clinicians, the lab is staffed with “health-care experience navigators.” Rather than checkups, it offers classes, books, and health related products to the mall’s 40 million annual visitors.
Translation: Weis wants the Mayo to gain a role in more consumers’ lives without taking on the entanglements of third-party payers, especially Medicare.
“With changes in the world of reimbursement, we’ll need to reach people at the individual, personal level,” Weis says. She is one of many observers who believe that as insurers and government payers cover fewer services going forward, consumers will take a more active role in their own health care decisions. The Mayo Clinic plans to support patients in this endeavor by providing some information for free, such as the basics of nutrition. But at the same time, Weis believes patients will be willing to pay for personalized products, such as the Mayo Clinic’s new smoking cessation plan. That’s the strategic thinking that underlies the communication-heavy Mayo Here, There, and Everywhere initiatives.
“The point is to engage people directly,” La Forgia says. “That way, Mayo isn’t so dependent on the government.”
With her broad experience in the health care industry, and her impressive track record so far at the Mayo Clinic, people are starting to wonder what Shirley Weis’s future might hold. “I’ve heard some of the rumors,” says Epolito, Weis’s former boss. “Shirley’s constantly being recruited. I think she’d be the perfect person to head up health care reform for the Obama administration.”
Dee Thibodeau, a consultant who specializes in health care analytics and cofounded Charter Solutions, Inc., in Plymouth, has observed and befriended Weis in recent years. “Shirley’s already proven herself at Mayo,” Thibodeau says, noting that Weis has been raising her profile lately—speaking at industry conferences and hosting national Webinars on health care economics and marketing.
Says Thibodeau, “Shirley’s one of our top leaders in the U.S. She’s ready for the national stage.”
Shirley Weis would be the first to say she didn’t do these things alone, but she cites these turning points from her tenure at the Mayo Clinic as ones the organization can be proud of.
• Financial turnaround: Mayo had record operating income and cash flow in 2009, nearly erasing the damage of the 2008 financial crisis—and did it without layoffs, cancellation of key mission-related activities, or emergency borrowing.
• Creation of the Mayo Clinic Global Products and Services division in 2008: a consolidation and build out of Mayo’s Web sites, call-in phone services, books, newsletters, and other media channels to expand Mayo’s market presence.
• Formation of the Mayo Clinic Center for Social Media in 2010: accelerating adoption of social media by Mayo’s clinicians and patients to improve health; includes the new Mayo Clinic Connect social network, which links patients and caregivers who have a shared interest, such as diabetes. More than 6,200 people have joined since the July 2011 launch.
• August 2011 opening of Create Your Mayo Clinic Health Experience, a consumer “laboratory” at the Mall of America for exploring health issues.
• Being named to Fortune’s “100 Best Companies to Work For” for the eighth consecutive year in 2011.