going radical

GERARD VAN GRINSVENPresident & CEO

Henry Ford West Bloomfield Hospital

GOING RADICALGOING RADICAL

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HFHS Mkt ShareHFHS Mkt ShareHFHS Mkt ShareHFHS Mkt ShareHFHS Mkt ShareHFHS Mkt ShareHFHS Mkt ShareHFHS Mkt ShareHFHS Mkt Share

> 50%> 50%> 50%> 50%> 50%> 50%> 50%> 50%> 50%303030303030303030%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 505050505050505050%%%%%%%%%101010101010101010%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 303030303030303030%%%%%%%%%555555555%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 101010101010101010%%%%%%%%%

< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%

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Columbus CtrColumbus Ctr

Henry Ford WB Henry Ford WB and Novi and Novi Medical CentersMedical Centers

CHSCHS

HFMH-WHFMH-W

HFHS/Consortium HFHS/Consortium Proton Beam Proton Beam

Therapy CenterTherapy Center

A Competitive and Crowded Market

> 50%> 50%> 50%> 50%> 50%> 50%> 50%> 50%> 50%303030303030303030%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 505050505050505050%%%%%%%%%101010101010101010%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 303030303030303030%%%%%%%%%555555555%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 101010101010101010%%%%%%%%%

< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%

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Medical School with

Oakland Univ.

Beaumont Independence. Twp Medical Center

Henry Ford WB and Novi Medical Centers

CHSCHS

HFMH-WHFMH-W

Beaumont Proton Beam Therapy Center - $160M

HFHS/Consortium Proton Beam

Therapy Center

Beaumont children’s surgery center

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< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%

McLaren: Health Care

VillageHFMHHFMH

POH: trauma center

Providence Park

Medical School with

Oakland Univ.

Botsford Cancer Center

CHSCHS

HFMH-WHFMH-W

Therapy Center

> 50%> 50%> 50%> 50%> 50%> 50%> 50%> 50%> 50%303030303030303030%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 505050505050505050%%%%%%%%%101010101010101010%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 303030303030303030%%%%%%%%%555555555%%%%%%%%% ~ ~ ~ ~ ~ ~ ~ ~ ~ 101010101010101010%%%%%%%%%

< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%< 5%

McLaren: Health Care

VillageHFMHHFMH

POH: trauma center

Providence Park

Medical School with

Oakland Univ.

Botsford Cancer Center

CHSCHS

HFMH-WHFMH-W

Therapy Center

With all of these projects, our delivery of health services to Oakland County residents

will have to be extraordinary.

Are We Prepared?

Value Innovation: The Cornerstone of Blue Ocean Strategy

Cost savings are made by eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates.

Buyer Value

Innovation

The Simultaneous Pursuit of Differentiation and Low Cost

Red Ocean Versus Blue Ocean Strategy

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space. Create uncontested market space

Beat the competition. Make the competition irrelevant.

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off. Break the value-cost trade-off.

Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost.

Align the whole system of a firm’s activities in pursuit of differentiation and low cost.

The Four Actions Framework

ReduceWhich factors should

be reduced wellbelow the industry’s

standard?

EliminateWhich of the factors

that the industrytakes for granted

should be eliminated?

RaiseWhich factors should

be raised wellabove the industry’s

standard?

CreateWhich factors should

be created thatthe industry hasnever offered?

A NewValueCurve

Eliminate-Reduce-Raise-Create Grid: The Case of Cirque du Soleil

Eliminate

Star performers

Animal shows

Aisle concession sales

Multiple show arenas

Unique venue

Reduce

Fun and humor

Thrill and danger

Create

Refined environment

Multiple productions

Artistic music and dance

“If you don’t like change,

you are going to like

irrelevance even less”

General Eric Shinseki

“Doing more of what you are already doing and expecting a different result is a sign of insanity.”

Albert Einstein

Taking Health & Healing Beyond

the Boundaries of Imagination

PATIENTS & FAMILIESCOMMUNITY

Health HealingWellbeing

“Taking health and healing beyond the boundaries of imagination”

Respect for People

High Performance

Social Conscience

Learning & Continuous Improvement

Our Values

Community Center for Well-Being

Commitments

The 4 Filters

Our Framework for Decision Making1. Quality and Safety

2. Compassionate Care

3. Memorable Experiences

4. Efficiency

Healthcare is Undergoing a Seismic Shift Environment is becoming increasingly competitive

– HCAHPS– Rising health consumer orientation

Expanded choice Expanded information

Implication: Healthcare systems must undergo fundamental change in ways they serve patients– Simply “satisfying” patients will no longer be enough– Change in the culture and delivery systems oriented to viewing

patients as consumers who are both “patients” (treated) and “customers” (served) is mandatory

Adapting healthcare service models to be more customer oriented (i.e.,, retail, hospitality)

Measurement only no longer adequate– System of change management driving learning to front-line

Satisfaction Is Not Enough | Three Kinds of “Satisfaction”

1 2 3 4 5

Not at all satisfied

Extremely satisfied

Dissatisfied

“1-4”

EmotionallySatisfied

“5”“5”

RationallySatisfied

Business performance among “rationally satisfied” is no better thanamong “dissatisfied”. Only “emotional satisfaction” delivers superior results

Building Stronger Patient/Customer RelationshipsBuilding Stronger Patient/Customer Relationships

What Is the Solution?

The Right Measures – Systems have been aiming at the wrong target:

“satisfied patients defect.”– They’ve had an incomplete picture of the

patient/customer relationship: “rational + emotional.”

The Right Interventions – Wherever, however, and whenever customers are

“touched.”

CEO’s are moving human capital management to the top of the agenda, recognizing that it is an indispensable element of organization success…For healthcare to survive and prosper in the wake of the worst workplace shortage in years, focused attention needs to be placed on the attraction, development, and retention of employees.

―The Road to Recovery, AON Healthcare Study

Best Practice Human Capital Strategies are

Shifting to the Top…

Talent

Unteachables

Imagine. …Teach

70 3065 3560 3055 4550 5045 5540 6035 6530 7025 75% %

PeopleBusiness/FinanceOutcomes

Team/OrganizationCultures

Customer Loyalty(Guest, Client, Patient)

BY DEFAULT –— TYPICAL ORGANIZATION

Talent-BasedOrganizationSM

(TBOSM)

SustainedExcellence

High PerformanceCulture(HPC)

Customer Advocacy

Vision

Mission

VALUES

BY DESIGN –— WORLD CLASS/BEST PRACTICE ORGANIZATION

Building a Foundation with Impact Concepts, Tools, and Processes

Talent vs. Competency– Understand the foundation of top

performance

KNOWLEDGE—What I know

SKILLS—What I do

TALENT—Natural predispositions, spontaneous, recurring patterns of

thought, feeling, and behavior

( Talent + Fit ) x Investment = GrowthSM

Work Style

People Acumen

Influence

Thought Process

Drives & Values

( T + F ) x I = GSM

( Talent + Fit ) x Investment = GrowthSM& Impact

Location

Organization

Manager / Team

Role/ Position

Pay / Benefits / Working Conditions

Career Needs

( T + F ) x I = GSM

( Talent + Fit ) x Investment = GrowthSM and Impact

Recognize / Reward - Appreciate

Communication – Expectations, Feedback, Dialogue, etc.

Relationships – Mgr., Team, Customers

Support & Equip – Set up for Success

Performance Planning – Maximizing Impact

Train & Develop – Prepare and Grow

Career Pathing – Future Plans

( T + F ) x I = GSM

Engaged NotEngaged

ActivelyDisengaged

30% 54%

Engaged NotEngaged

ActivelyDisengaged

Loyal, Psychologically Committed, More Productive,

Higher Retention

Productive but Not Psychologically Connected, More Missed Days, More

Likely to Leave

Physically Present but Psychologically Disruptive, Unhappy and Insist on Sharing Their Unhappiness with

Others

Three Employees (US)

Associate Retention + 50%

Customer + 56%

Safety + 63%

ENGAGEDWORK UNIT

Meta-Analysis 2003 — Conclusions

Profitability + 27%

Productivity + 38%

+78%Overall Performance

(composite of all five outcomes)

+94%Composite Performance

(composite of direct outcomes)

Engaged work units have higher success rates(improvement in probability of success: above-average performance)

Employee Engagement Outcomes

Top quartile compared to bottom quartile

-51% -51%

12%18%

-31%-27%

30%Turnover

Absenteeism ShrinkageSafety

Incidents

Customer Productivity Profitability

Difference between engaged and actively disengaged employees in unexcused absences

High- Turnover

Low- Turnover

-680,000 employees-24,000 business units-125 companies-37 industries

Companies in the most engaged quartile have significantlybetter performance than those in the least engaged quartile

($600,000)

($400,000)

($200,000)

$200,000

$400,000

$600,000

$800,000

Most Engaged

2nd Quartile

3rd Quartile

Least EngagedQuartile

Employee Engagement Correlates with Malpractice Payments

Hospitals in the most engaged quartile pay $1,120,000 less in annual malpractice claims than hospitals in the least engaged quartile.

3.28 3.33

3.683.80

3.23.43.63.84.0

Year One Year Two Year Three Year Four

Results — Workplace Engagement

Results — Nurse Turnover

Employee Engagement is Directly Related to Nurse Turnover

32.9%23.2%

Year One Year Two Year Three*360 Bed Facility *360 Bed Facility

Customers are not strictly rational – healthy, engaged customer relationships have a significant emotional dimension which must be measured and managed.

“When it comes to customers, feelings are facts.”

-Simon CooperPresident & COO,

Ritz-Carlton Hotel Company LLC.

Understanding Customer Engagement

Simply satisfying customers on a rational basis is not enough to drive financial performance.

Customer Engagement

What is Customer Engagement?– Customer Engagement describes the health of the

relationship between a customer and a brand…the rational and the emotional.

– Great brands and great customer relationships are underpinned by emotion.

– Has a stronger relationship than satisfaction to performance outcomes Physicians (i.e., referrals, share of procedures,

retention) Patients (i.e., return, use of other facilities such as

Wellness Center & Spa)

Per-Customer Revenue

Indexed Performance (100= Average)

Actively Disengaged Not Engaged Engaged Fully Engaged

Customer Engagement DrivesFinancial Performance

23% Premium

13% Discount

36% Net Difference

going radical

therapy center chs5

community center

medical center oakland

health care macombst

crowded market macombst

valuestaking health

low cost

mhfwbhhfwbh henry ford

Health & Medicine

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