Some Thoughts on Leading Beyond the Bottom Line

Take a look at ways to optimize management of a health care organization and learn the four assets that leaders must consider.

There is much emphasis in organizations on the bottom line. We have to lead to the bottom line, of course, but there is so much more that we have to be thinking about beyond the bottom line.1

To think about leading beyond the bottom line, it is necessary to introduce the concept of the four organizational assets. These four assets not only constitute the bottom line, but also enable us to lead beyond it.

1. Tangible assets: Things you can see, touch and feel, including financial assets. Most of them you will find on the balance sheet.

2. Community assets: Our mission is to serve our communities. We are an asset to our communities. There is a flip side. Our communities can also be an asset to our organization.

3. Employee assets: Employees are our most valuable asset.

4. Customer assets: Patients always come first. Our customers are assets without whom all the other assets become irrelevant.

A primary function of leaders and managers is to optimize these four assets. These four assets are all interdependent. Not one can stand alone. You cannot maintain tangible assets without employees and customers. Customers are not customers without employees. And so on. Each of the four depends upon the others. As leaders, we must be continually aware of their importance and the interdependence.

The Tangible Asset

We all would have to agree that the tangible is critically important. “No margin, no mission.” “No tangible, no mission.”

After a leadership career of nearly 40 years, I have come to believe how important it is — no matter your role — to know and understand and respect the financial, the tangible.

The more you understand about the budgets, the more you understand about balance sheets, fixed costs, depreciation, cash flow and capital budgeting, the more effective you will be. If you want to increase your effectiveness, you must take the time to study and learn about finance and accounting.

As leaders, we constantly must be on guard concerning the “inversion problem.” Inversion occurs when mission is lost to financial considerations. The assets are all interdependent. Financial considerations can negatively affect the other three assets. They can affect the mission. Be alert for the phenomenon of inversion. And if you see it happening, don’t relax until it is addressed.

The Community Asset

This is one that most of us don’t think about very often. We need to increase the loyalty of our communities. The community that has a positive attitude regarding your organization can become a very real asset that needs to be nurtured. Every one of us as leaders has to work to influence community and business leaders. We need them to represent us, go to bat for us, defend us and help us. To nurture this asset, we should think about putting “volunteer community contributions” in nearly every salaried job description.

Our communities house potential employees. How many of our providers grew up in our communities and have come back? How many other employees have grown up in our communities? How many more potential providers or other potential employees are out there?

The Employee Asset

How do you develop a workforce of fanatically loyal employees? Here are three thoughts. None can be accomplished overnight. All will take a long-term commitment.

Focus on what is really important to employees. A few years ago a major survey of 50 factors thought to be important to employees was administered to thousands of actual employees.2An interesting twist is that the employers also took the survey and predicted what they thought would be most important to their employees. The most important employee satisfier was appreciation. Employers listed appreciation as No. 8. Big disconnect.

No. 2 on the employees’ list of what is most important to them was feeling part of things. How much trouble is it to help your people feel like they are in on things? Employers ranked this number 10.

When I first went to college, I periodically would encounter the president of the student association at the mailboxes. He would always ask my opinion about something that was going on. Did my opinion mean anything of consequence? No way. Did I, a lowly freshman, feel like I was in on things? You bet.

Try asking your people what they feel they need to know about what is going on in order to do their jobs and be a part of the organization. You will be amazed at what you hear.

No. 3 on the employees’ list was help on personal problems. Employers ranked this one No. 9. A formal employee assistance program is a place to start. Even better would be asking your people about how life is going. What are their dreams and personal goals? What are their personal challenges? And then, a key question — how can you help? If an employee has a problem, the organization has a problem, and it is to everyone’s advantage to get it resolved immediately, before it becomes a customer problem.

Hire the right people based on their attributes, not their resumes. My second thought for developing employee loyalty is selective and skillful hiring. Are we hiring the best people for jobs? Are we putting the right people on the bus? How do we get the right people? So often we hire out of desperation. As is true in many companies, we hire quickly and fire slowly. Big problem.

Customers who have complaints resolved have a repurchase rate of 54 percent. When the complaints are resolved quickly, the repurchase intention rate rises to 82 percent.

We hire people for what they know. We end up firing them for who they are. It needs to be the exact opposite. We should hire people for who they are and worry about the “what they know” part later. Herb Kelleher of Southwest Airlines once stated, “Hiring starts off looking for people with a good attitude … looking for people who enjoy serving other people.”3

Here is a suggestion for interviewing potential employees. Pick out two or three of your best people. What behavior traits about these two or three do you want to replicate? Take these attributes of your best people and don’t be satisfied until you find them in a potential employee.

Provide extensive and unrelenting training and retraining. Employees who are confident in what they do will like their jobs more, will be more loyal and will provide an enhanced level of service. Training is essential in systems such as ours that rely on frontline employees to take responsibility. We cannot expect employees to take frontline responsibility without adequate training. And by training, we are not talking about a single customer service class, though it is a good start. Rather, we are talking big-time, never-ending training.

Hire people for who they are and worry about the “what they know” part later. Herb Kelleher, co-founder of Southwest Airlines, once stated, “Hiring starts off looking for people with a good attitude … looking for people who enjoy serving other people.” | Southwest Airlines

How many hours should be invested in training? The Container Store employees receive 263 hours of training in the first year.5 Much of it is customer service training. Do you allocate nearly six weeks for training of your new employees? What impact do you think that might have on your area of responsibility if you did?

After the first year, The Container Store begins retraining. They believe that kind of investment will produce loyal employees…not to mention satisfied and loyal customers. Their staff turnover rate is less than 10 percent.6

Ritz-Carlton, two-time winner of the Malcolm Baldrige award, provides 120 hours of customer service training during the first year.7 The Dale Carnegie people say that every $1,000 invested in training will yield $4,000 from increased productivity and decreased turnover.8

Building Customer Loyalty

When we refer to customers, for the most part we are talking about patients. We want patients who are always satisfied.

(We have met their expectations.) We want patients who are frequently delighted. (We have exceeded their expectations.) And we want patients who are occasionally dazzled. (Their expectations have been far exceeded.)

But, most important, we want patients who are loyal. Patients who are satisfied may not always come back. In fact, studies show that a significant number of satisfied customers will switch.9 Loyal patients will always come back — even if the most recent visit was not satisfactory.

Financial statements have no ability to calculate the “lifetime value” of a loyal patient; nor can they calculate the cost of lost business due to a patient’s changing providers and never returning.

We have to be careful here not to confuse “repeat” patients with “loyal” patients, because there is a huge difference. Loyal patients will come back even when they have to drive further and wait longer. The repeat patient may change providers as soon as things become inconvenient. Patient loyalty leads to improved profitability.

We need to turn our encounters into experiences. Starbucks turned a commodity (the lowly coffee bean) into an experience. Starbucks is beyond a beverage. One of Starbucks’ guiding principles, by the way, is to develop enthusiastically satisfied customers all of the time.10

In health care we have taken an experience and turned it into a commodity: the patient encounter. We need to turn our encounters into experiences. When thinking about the experience that we need to create for our patients, we should think about the environment to which we subject our patients and the interpersonal interactions between staff and patients.

Look at the environment to which you subject your patients. Think about how you can make it more pleasant. Our patients actually asked for this during focus groups. They asked for a facility that is clean, safe, and soothing. Do you provide a soothing environment?

The other half of the experience factor is the interaction of the staff with the patient. Did every staff member treat that patient as if she/he were our only patient? A study by the American Society for Quality found that 67 percent of customers who leave the organization do so because of the attitude of one person on the staff.11 Patients are loyal because they somehow feel special when they visit. Do you do that?

Take a fresh look at the experience you are providing for your patients and then get busy brainstorming about how you can make it better. Make it a Starbucks experience in the eyes of your patients.

You also need to focus on managing expectations. So many times when there is an issue with a patient, we need to ask, “Is this a real problem or is this an expectations problem?” Actually, patients don’t care whether or not it is a real problem. If we did not meet their expectations, it’s a problem — real or not.

Just as you should look around at the experience and the environment that you are providing, you should take a very serious look at the expectations of your patients. What do they expect when they call? What do they expect when they walk in the door? How long do they expect to wait? In the clinics, which provider do they expect to see?

Talk with each other about patients’ expectations. Better yet, ask the patients about their expectations. Conduct a few focus groups. Then, once you understand the expectations, you must manage them. Be alert to expectations. Deal with them in real time. Unexplained waits always seem longer than explained waits. What can you do about the unexplained waits?

For example, at each of our primary care centers in Indianapolis, I had a full-time greeter position. The greeter was the friendliest, most outgoing person on our staff. If we didn’t have a person like that, we went out and found one. The greeter did not sit behind a desk. She (or he) worked the waiting room and greeted patients as they walked in the door, made sure the patient was appropriately registered, notified the staff that the patient had arrived, chatted with patients who were waiting, often would go back to find out what was happening and then return to let everybody know.

The greeter answered questions and offered fruit juice and healthy snacks. And when the visit was over, the greeter asked how it went, said farewell to the patient and encouraged the patient to keep the return appointment. We had a policy, by the way, that, if short-staffed, we never pulled the greeter. The position is too important.

Customer Service

You should also develop a rapid response customer service recovery system.

When something goes wrong in the eyes of patients, as it inevitably will no matter how good we get, what we do to respond and how soon we do it ultimately will determine our success. The better we are at this, the more loyal our patients will become.

The average company loses half of its customers over a five-year period. Ninety-six percent of dissatisfied customers never complain. Ninety-one percent of those will just switch.12 Sixty-eight percent of customers who stop purchasing at a store do so because an indifferent employee treated them poorly.13

We must encourage complaints. If only 4 percent of dissatisfied customers complain, we have the other 96 percent out there telling others about their complaint and deciding not to come back. We need to make it easy to complain. Patients need to know how to complain when they visit. And then, when we get complaints, we must have a system that will generate an immediate response.

When I first went to AltaMed in Los Angeles, I had the idea that we should strategically place emergency call buttons in all of our AltaMed Centers. Any employee who encountered a dissatisfied patient would press the closest call button and alert the nursing supervisor, the clinic administrator and the site lead clinician that there was a problem. With this idea, an employee who has been already trained and scripted on how to deal with dissatisfied patients, will receive immediate help from the supervisors on the floor and from the clinic administrator.

Customers who have complaints resolved have a repurchase rate of 54 percent. When the complaints are resolved quickly, the repurchase intention rate rises to 82 percent. In fact, customers who complain and have the complaint handled quickly and to their satisfaction become more loyal than customers who had no problem at all!14

How long does it take to resolve a complaint at your organization? We should make it our target to resolve patient complaints in 30 minutes through a rapid-response customer service recovery system. We should empower frontline employees to be a key part of this system.

In my previous CEO life, I authorized every employee to invest up to $50 of the corporation’s money to resolve a dissatisfaction on the spot. They could write off the charge provide movie tickets or coupons to King Taco or perhaps a Target gift certificate. No questions were asked. No one had to approve it. When it happened, I sent the employee a thank-you note.

Ultimately leading beyond the bottom line has to do with building loyalty of patients, employees and community. We all measure patient satisfaction. We should also be measuring patient loyalty. Here are five measures that can be useful in measuring patient loyalty:

1. Loyal customers make regular repeat purchases (visits).

2. Loyal customers will purchase across service lines. It is the brand that is important to the customer. Loyal patients understand that and are willing to cross over service lines.

3. Loyal customers will refer others. Marketing people will tell you that word of mouth is the best marketing. Loyal patients who tell others about how great their provider is become advocates for bringing in new patients.

4. Loyal customers demonstrate an immunity to the pull of competition. It is five times more costly to get a new patient than to keep the one you have.

5. Loyal customers can tolerate an occasional lapse without defecting. Loyal patients will give you more margin for error. First-time patients who are not yet loyal: no margin.

In summary, we have the four organizational assets — tangible, community, employees, and patients. As a leader, you can put emphasis on any of these four assets and you will be contributing to the others. But more importantly, as a leader, you will do well to be thinking about all four and doing what you can to improve each within your area of responsibility. They will enhance your ability to lead beyond the bottom line.

Dale Benson, MD, CPE, FAAPL, is the former vice president of innovation, quality and practice management, and director of the leadership development institute at AltaMed Health Services in Los Angeles, California. He was the founder, and for 30 years, the CEO of HealthNet, a community health center network in Indianapolis, Indiana.

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