When he arrived in Buffalo, Michael A. Young, FACHE, faced an uphill climb.
His 550-bed teaching hospital and a 586 bed nursing home — Erie County Medical Center and Erie County Home (ECMC) – were recently separated from Erie County, the result of a sale to a newly created public benefit corporation. ECMC had no bank account and little cash. The heavily unionized workforce was not tuned in to accountability or the importance of productivity. Excessive benefits drove wage/salary and benefit costs to 74 percent of net revenue, a sure sign of a hospital not long for this world. Employees took no ownership for the problems that seemed insurmountable. The prevailing culture in early 2004 was linked to the belief that ECMC had no worries; Erie County would bail them out as always had been the case. But in 2004, a new county executive, having cut property taxes by more than 20 percent without corresponding reductions in operating expenses, was staring at a $100 million budget shortfall. Anxious to plug the hole without rolling back the cuts, the county executive made a deal to sell the hospital and other building on the 67 acre campus for $100 million, the size of his deficit. There would be no bailing out ECMC this time, except for a $20 million operational subsidy and a debt guarantee that was necessary to get the bonds sold in the first place.
For the most part, ECMC was on its own. In the ECMC boardroom, survival was the focus.
Mike Young is a tough CEO. That was his reputation at Lancaster General Hospital. With a sharp mind, a deep understanding of hospital operations, and driving energy, Mike drove the growth of that hospital into a market leader and a respected regional powerhouse. Now, faced with a range of immediate pressing priorities, Mike focused on rounding out his top leadership team. We quickly helped him recruit a CFO and a Senior Vice President of Operations. This talent,along with executives brought over from the county ownership, began focusing on the basics – top-line revenue growth while drilling down on quality and satisfaction, and reducing costs.
By collaborating with his three unions – Civil Service Employees of America, New York State Nurses Association and the American Federal of State County and Municipal Employees — cutting overtime and flexing the staff,the team reduced wage/salaries and benefit costs from 74 to 52 percent of net.
As the census climbed and costs declined, something very unusual for ECMC occurred: profits. Then an even more startling revelation, the ECMC board had to engage an investment advisory firm to oversee its growing pile of cash.
Was the turnaround picture perfect? By no means. It was a brutally tough four years for the team. But as Mike Young begins the turnaround as CEO of Atlanta’s perennially screwed up Grady Hospital, ECMC finds itself with increasing profits and with more than $180 million in the bank.
Our Firm is leading the nationwide search for ECMC’s next President.
The prevailing New York wisdom concerning healthcare leadership is that “we are unique, it is hard for hospitals to make profits in New York.” At ECMC, against some staggering odds, including a rotten payer mix, Mike Young, with support of his team, the employees and labor unions, made money. ECMC accrued cash.
When asked how the organization performed during a recent quarter, Mike Young said simply: “We chose NOT to lose money.”
His underlying point: leaders make choices. Bad leaders make execuses. There will always be a host of reasons why executives did not succeed, why they did not produce a positive operating margin.
Now here is a hint for the employees at Grady in Atlanta. Mike Young does not accept excuses or failure. He does not suffer gladly indifference or lame excuses. Or lack of attention to detail. Get up early, stay up late and let nothing fall through the cracks.
He can be tough to work for and he is not opposed to dramatically getting his team’s attention to ensure that everyone understands:
He chooses NOT to lose money.