Case F: Controlling Performance Management Jacob Victory

1. What is your interpretation of what happened in this case? Assume for the moment that Josh was successful at improving performance and that this was why he was being transferred.

The New Vice President

“He is not a nurse,” smirked the pediatric nurse director. “He’s going to be a piece of cake,” mocked the other with mischief gleaming in her eye. They were referring to Josh Webber, their new boss who was starting that morning as the new vice president of the pediatric division. Josh was not new to the organization. He was a young and eager executive and had paid his dues working for five years as the right hand of the Visiting Nurse Service of America’s (VNSA) president and CEO. Thereafter, he was promoted to operations director of the organization’s highly profitable rehabilitation ser- vices division and then promoted to director of performance management, where he worked for more than a year with the pediatric division’s administra- tor and her team to improve the division’s business and clinical performance.

Josh, holding a box of files and walking confidently with his polished shoes tip-tapping on the tiles outside of his new administrative suite’s en- trance, had heard the exchange between the nurse directors. The comment struck Josh as odd because the two directors had worked closely with him over the last year and recent improvements in the division’s operational per- formance had been highly praised by VNSA leadership.

“Time to don your game face, Josh!” he thought to himself. Sighing gently, Josh put on a toothy grin, turned the corner and greeted the two di- rectors enthusiastically as he entered the suite. The nurse directors didn’t miss a beat and greeted Josh with a warm, “Welcome aboard, Josh!”

The Maternal and Pediatric Service Line

The maternal and pediatric service line was only one part of the VNSA, the nation’s largest for-profit home health agency.

Under the current CEO’s tenure, the VNSA had become a national home care agency. It employed 30,000 nurses, rehabilitation therapists, social workers, and home health aides, and served almost 500,000 patients in six states annually. The agency earned a healthy margin on its annual $5 bil- lion revenue base and, with a conservative management team at its helm, the VNSA was only geared to become bigger and more influential in enforcing federal long-term healthcare policy. Its many divisions and programs focused primarily on the home-bound frail elderly, especially those in the long-term care population who made up the Medicare, Medicaid, and dually eligible marketplace. At an annual growth rate of 8 to 10 percent, the VNSA was a force in the market, offering short-term, skilled nursing and professional services via its adult, pediatric, community mental health, long-term care, rehabilitation therapy, and palliative and hospice programs. It also operated a lucrative managed care company that offered myriad managed care plans to a large market base of elderly and long-term care patients; more than 200,000 members were covered under these plans.

Yet, while the organization’s primary focus was on long-term care and the geriatric population, the agency’s roots had been laid by its maternal and pediatric division, VNSA’s first program, which had been founded more than 170 years ago. Now composed of ten pediatric programs, the division annually served more than 35,000 mothers, newborns, and children via numerous programs that focused on short-term skilled care, pediatric care management, and evidence-based preventive services and family-focused programs. Deemed the largest organization of its kind in the nation, VNSA’s stated mission was to serve the most vulnerable populations, especially those who lacked access to healthcare. Almost 90 percent of the patients served lived below the poverty line and were insured by Medicaid or enrolled in Medicaid managed care plans. Most of these patients had complex illnesses and, more often than not, came from socioeconomically compromised environments. A typical patient profile included a 15-year-old mother with C-section wound care complications; a two-month-old boy with a brain tumor who recently had his left arm amputated; a 14-year-old girl with the mental capacity of a 3-year-old experiencing severe cardiac and respiratory complications and multiple rehospitalizations—and the list continued on for thousands of similar patients. VNSA’s charitable care and community benefit programs were a hallmark of its mission, and the maternal and pediatric service line was at the mission’s core.

With annual revenues of $50 million, the pediatric division was histori- cally under-reimbursed and had a loss of $18 million every year. Seven of its ten programs were grant-funded, and two were funded by VNSA’s board of directors’ Charitable Care Benefit Fund. The program that relied on tradi- tional insurance mechanisms for reimbursement was responsible for nearly all of the division’s deficit.

Despite the annual losses, the VNSA board of directors considered this division untouchable. A subset of VNSA board members and community pediatricians also composed the pediatric division’s advisory board, and these individuals and the division’s chair—a full board member and an influential member of society—were key fixtures with respect to their commitment, sup- port, and advocacy for the maternal and pediatric services the division pro- vided to the communities it served. From a branding perspective, VNSA’s executive management shared in the board’s view and actively used the ma- ternal and pediatric division in the agency’s public relations efforts to market the company as one that focused on community benefit, despite its for-profit status. Moreover, the division was the lead recipient of VNSA’s philanthropic endeavors. Millions of dollars were raised for the program, but not enough to reduce the deficit. Yet because VNSA was a highly disciplined agency in which most of its business leaders annually exceeded their business and clini- cal targets, the pediatric division stuck out like a sore thumb. In internal man- agement meetings, executive leadership notably demanded that the division’s management minimize its financial deficit and had directed a harsh eye and even harsher commentary toward the division because it had not historically met its budgeted business targets. Its clinical outcomes were average at best, although its customer satisfaction ratings were consistently among the high- est of all programs in the agency.

Not surprisingly, the administrators of the pediatric division turned over frequently. In the last six years, there had been four vice presidents be- cause the burnout rate was high. Other issues stemmed from a lack of insti- tutional support in providing the division with adequate business oversight. The program directors in the division were either nurses or social workers who had been promoted up the ladder; these directors maintained the per- spective of frontline clinicians, and focused primarily on ensuring that the sick children were served. Being labeled a “community benefit” program (a euphemism for “a program that makes no money”) and watching their se- nior leaders leave because they were “routinely beat up on at meetings,” as one nurse director put it, made the program’s leaders wary of every new vice president who was brought in to lead the division. “How long will this one last?” was a frequent question.

Josh was wondering the same thing.

Who Is on Deck?

Six pairs of eyes stared at Josh. All six of his direct reports sat in front of him, one next to another. “Welcome to Josh’s Leadership Assimilation,” said the regional head of VNSA’s organizational development (OD) human resources division. “In the next three hours you will learn about Josh, his management style, his goals, and his objectives for the next year,” he continued. Standing in front of the room, Josh stared back and, being a visual person, thought that he was “looking at the living and breathing version of the division’s organization chart.”

The next three hours were eye-opening. The OD representative had asked the group to describe Josh. Words such as young, a man, articulate, competitive, takes-no-prisoner type, poised, ambitious, seemingly courteous, soft-spoken, deep thinker, all-business were only some of the terms used. Then the group was asked what they wanted to know from Josh. Most wanted to know

-how “hands-on” he planned to be in managing their divisions,

-how available he wanted them to be when he needed them,

-how he was going to manage a group of clinicians when he had no

clinical training, and

-how and why he obtained his current promotion.

Only two in the group genuinely wanted to know how he was going to help them perform better, while the other four scoffed. Lorann Stutters, a director who ran two disease-based programs for adolescents, blatantly asked, “We know you’ve been brought here to ‘fix’ this division; how long do you plan to spend here before you position yourself for your next job?”

Did she really just say that? Josh thought to himself. He endured three hours of people venting about the history of the program; of questions about his intentions for the business; of sly glances that questioned his every answer; and of probing questions that had more venom than substance. Only two of the directors remained mostly quiet and asked thoughtful questions about the strategic positioning of the division.

After the meeting, Lucas Red, the OD representative leading the meet- ing, gave Josh a piece of paper that listed the five key impressions the directors had of Josh; this information had been collected prior to the meeting.

1. Josh is a male under 35 years of age, but he looks like he just turned 20.

2. Josh is too ambitious.

3. Josh knows how to present a complex idea in a simple, succinct way. He is a good public speaker.

4. Josh is the “golden boy,” having served as the CEO’s special assistant. It is obvious how he got this promotion.

5. Josh is a nonclinician; how can he possibly understand patient care issues?

“This is going to be a fun ride, Josh,” he said to himself, trying to nurse his bruised ego. Josh walked back to his office, sat down, and started to draw an organizational chart.