Why a Career in Hospital Turnaround Management?

The following article was written by a colleague, Arnie Kimmel. Arnie (for clarity, let's call him Arnie2) is an experienced turnaround CEO currently a partner at Tatum. I want to express my gratitude for Arnie2's contribution to Arnie's CFO Spot, as this is an important and timely topic for the industry.



First let’s clarify terms. I find that people use the terms “interim management” and “turnaround management” interchangeably but appropriately when describing a short term leadership engagement in a hospital facing some sort of transition. Typically such a transition involves a search for a new CEO, a deteriorating bottom line and/or a pending affiliation. Since none of these circumstances could be described as maintenance of the status quo, let’s stick with turnaround management.

Next, the advantages. It’s a virtual certainty that there is and will continue to be a significant demand for these services. Hospitals continue to lag other industries in the application of technology to effectively manage both productivity and quality, the boost from Obama-Care notwithstanding. To the extent that payers, starting of course with Medicare, phase in a hybrid system of payment that takes into account both the quantity and quality of services and to the extent that hospitals and doctors will begin to have partially aligned incentives to provide mutually accountable care, there will be many hospitals and health systems that won’t be able to adapt quickly or well enough.
In my experience, most of the hospitals facing these issues are aware of the need for change, so the time, energy and political chips needed to be spent for education there is minimized. Otherwise, leading the unwilling becomes a most unpleasant and time-consuming challenge. The process of sorting out priorities to be addressed in the short term is both a challenge and an opportunity. Making decisions with incomplete information, trusting one’s intuition as well as intellect and then making a positive difference in an organization that’s not used to positive change can provide the kind of reward that makes the profession of management worthwhile in the very first place.
Finally, the disadvantages and a word (or two) about risk. Clearly the major disadvantage of the kind of work described above is travel and the dislocation caused by being gone during the week for months at a time. There are ways to minimize the dislocation, such as being sure to be home both Sunday and Friday nights and Skyping.

Also, it must be said that turnaround management on an interim basis does not provide the satisfaction of seeing the long term benefits of decisions made earlier.
My advice is that turnaround management is not for the faint of heart. It requires a fair amount of courage and self confidence to believe that one can identify the right issues in what Peter Drucker described as the most complex organization to manage; that is, a hospital. Being able to do that and then “turn” the organization in a positive direction can provide a significant feeling of major accomplishment.

Once a Turnaround Guy/Gal, Always...?

There are a number among us who have had a great deal of experience in turnarounds and restructurings. Our numbers have grown, with the worsening of the economy and its effect on our organizations. As a result we may find ourselves being cast as "a turnaround person". Being pigeon-holed as a "type" (whether turnaround, technician, small or large company, start-up or whatever) is likely to affect the way we're viewed by peers and others in our field.

I thought it would be worthwhile to discuss the skill sets we have developed in doing turnarounds, that create value for diverse organizations. The purpose here is to shine a light on how you should think of your own areas of expertise, and how your experience has prepared you for other challenges, whether within your existing organization or in a new situation.It also illustrates the need to educate peers, potential employers and others that what you have been doesn't preclude you from smoothly transitioning to what you want to be.

Organizations in need of a turnaround are generally deeply distressed. Cash flow deficits may exist. Vendors may be withholding goods and services. Employee morale is low. Management may not have a plan to address the issues. The Board may have lost confidence in management. The community, regulators, and reimbursement sources may have serious concerns. Processes and systems are probably not effective.

Did I paint a gloomy picture? So, forces are gathered to effect a turnaround. What's the common (inaccurate or, at the least, incomplete) view of how a turnaround occurs? Cut staffing and other costs, reduce programs and services...slash and burn! But successful turnarounds are the result of careful, albeit expedited, planning. Strengthening the top line is more effective and less morale-crushing than arbitrarily cutting costs, which can lead to service issues and a downward spiral. I don't argue that productivity should not be reviewed in the context of processes, or that other cost containment measures not be pursued.

Here's the point: As a result of the multiple issues to be confronted in a turnaround, we have developed valuable skills. We're stronger, hands-on strategic leaders, because we need to be. We've developed concise, meaningful timely financial reporting and established metrics to measure progress toward strategic objectives. We've been innovative and creative, in order to "operate in the grey" and to team with the rest of senior management to develop a turnaround strategy.

Our communication skills have been honed by the necessity to communicate with all internal and external constituencies, and to convince them the strategies devised by management are the right course of action to turn the ship around. We've developed mentoring and team-building skills, and re-designed functional teams, because we've had to, in order to be effective. Not least, we've developed a sense of humor to help deal with the tribulations of a turnaround, and a flexibility in the way we approach strategic, operational and financial opportunities. Finally, if we have achieved a successful turnaround, we have strengthened our confidence to accomplish what we set out to do.

I liken turnarounds to setting your hair on fire and putting it out with a hammer. Does that mean we wouldn't be comfortable and effective applying our skills in an organization that is, or has become, stable and poised for growth?

These skills would be of as much value in a stable, profitable organization, as they are in a distressed situation. We have skill sets we've developed in the course of our careers. It's up to each of us to recognize, utilize and communicate those skills, as circumstances dictate.

Interview with Brin McCagg, Co-Founder of OneWire.com, a unique finance employer/candidate matching service

I sat down with Brin the other day, to explore how he developed this job search site, what made it unique and what tips he might have for those searching for a finance position.

What is your background?

I started off in investment banking. Shortly after business school at Wharton, I started an environmental services company that we grew into an industry leader and sold out in 1997. I then formed an internet-based asset management company backed by GE Capital, Goldman Sachs, JPMorgan and others. That company was sold in 2002. Next, I worked as a senior executive on the turnaround of two private equity backed companies. Two years ago I co-founded OneWire.com.

How was your background helpful, in creating this business?

20 years of experience in developing an early stage company has been very helpful. I also was taught at a very young age to work hard and stay focused – both essential skills in business.

• Tell me about OneWire.com. How did the idea come about?

My partner ran a headhunting firm and had the initial idea. At first, I thought we were late to the market, but after meeting with a number of top investment banks I concluded we had an enormous opportunity. Two years ago he and I dropped everything and started OneWire.com.

• Briefly, how did you get the business off the ground, financially?

Initially, we covered the costs and were uncompensated. However, we fairly quickly needed to raise what amounted to a considerable amount of funding as a seed round.

• What is your vision?

To be the dominant platform where individuals manage their careers and stay connected with highly relevant opportunities.

• What’s unique about OneWire.com?

While there is competition, there is no application comparable to OneWire. We utilize structured data for candidates to build their profiles, which results in precise matches against searches (All other sites use Boolean or fuzzy search logic). Candidates always control their confidentiality and reveal their profile details only when and to whom they want. Employers can manage all aspects and stages of recruiting, including sourcing, screening, communication, interview scheduling and on-boarding, in one seamless application. Campus recruiting is also an integral focus for us. We guarantee better candidate results and a reduction of recruiting time and expense of at least 75%.

• What has been your growth pattern?

We officially launched the site six months ago and 65 top firms are utilizing our service. We expect accelerating growth in both firms and candidates signing up.

• Where do you see the business in 5 years?

As the dominant platform where individuals manage their careers and stay connected with highly relevant opportunities

• What is your opinion of the ideal CFO candidate?

That depends on many factors including what stage the company is at. The right CFO for IBM is not the right CFO for a startup and vice versa. That said, a good CFO universally must have excellent accounting and math skills, have a conservative disposition and be highly organized.

• As someone in the job search industry, what would be some tips you would give job searchers?

• Build a detailed profile on OneWire.com immediately. If you’re out of work, you should try to get employed as soon as possible, even if the position is not optimal because times are tough, you need to stay engaged, and earning some compensation is better than none.

• Assess what you really want to do and where you have a reasonably good chance of success

• Focus is the key to success in everything and with search. Focus on exactly what you want and develop every channel to making it happen.

• Network to find people that can open doors

• Be able to pitch your qualification cold. Do not leave room for error by being unprepared.