Gary Kaplan, MD, Chief Executive Officer and Chairman of Virginia Mason Health System, recalls two pivotal moments in his organization’s transformation. In the early days of his tenure he confronted fallout from a change in the CEO selection process and found it necessary to generate urgency for deep and significant change — eliminating elections — to ensure the medical center’s continued success. This story was recorded live during the 2016 IHI National Forum.
Mary Jane Kornacki: Start by telling me about a challenge that you encountered as a leader. What was hard about it, what you did about it, and what you learned?
Gary Kaplan: Well, it’s interesting. Being in leadership as long as I’ve been — I’ve been with Virginia Mason 38 years now, and in leadership for 30-plus years — so I’ve seen a lot of challenges, and have successfully, with a team of people, been able to overcome some. Others we’ve worked our way around in order to help the organization continue to move forward.
I guess when I reflect on my career, the most substantive challenge was really early in my tenure as CEO. I was privileged to be elected the seventh CEO in now 96 years of Virginia Mason and I’ve been in the role for almost 17 years, and I had been part of the leadership team. I’ve been in leadership 30 years in this one organization that I came to love, had progressive leadership roles, and was vice-chairman of the medical center for 5 years prior to becoming CEO. And so, for me, the challenge began to appear early after being selected, when I realized how much change was required.
Now here I was, part of the leadership team and feeling proud, but also knowing that we were nowhere where we needed to be. We had had some economic adversity, but we weren’t going under. We were certainly ready to turn that around. The Institute of Medicine reports had just come out. The first one [was] To Err is Human, and we began to feel like, well, these things happen but maybe they don’t happen here, or maybe they do, and that was a challenge to put that in its proper perspective.
But soon after becoming CEO, I began to really do a deep dive in areas that I had not paid a lot of attention to previously in a relative sense, and realize the depth of our balance sheet, our history as a partnership of physicians that distributed earnings, as opposed to hospitals that didn’t have their roots in the group practice world but were really hospitals that retained earnings and reserves. So, as a new CEO and thinking about where we needed to be in the future — a future that was uncertain but certain things were understood, and that we knew needed to happen — I knew a lot of change was necessary. And so I began to think about, how do I make sure that I honor the past and recognize, acknowledge, and build on the strong foundation that we had built, we and our founders and those that followed them, but lead large-scale change, and ensure that we had the urgency that would allow us to get there?
In the summer of the year 2000 (I became CEO in February), the board asked me, “How can we be most helpful and do what we need to do to help ensure your success as our leader?” To me I translate that as the success of the organization, because at that point my individual success and the organizational success were one and the same and totally intertwined. And we said at that time, the best thing we can do is to eliminate elections, to actually ensure the leadership has the chance to work in an environment that is not encumbered by constant political repercussions. I remember I was an elected department chair for 20 years, and I was very good at staying elected every 3 years you get elected, but I knew that the magnitude of change and the direction we needed to go was not something that would be easy, and that living in that political climate was untenable.
The board interestingly said, “We wanted to change this 20 years ago, but your predecessor didn’t want to do it.” It was actually in 1986, when we restructured from a partnership into a not-for-profit entity, that the board became the fiduciary responsible party that allowed the doctors to continue to elect the CEO of this billion-dollar company. So the board said, “We’re going to change it.” And change it they did.
So, we knew we needed to have large-scale change, and so the board said, “We’re changing this,” and I said, “Give me 30 days to talk to the doctors.” Those were the worst 30 days, because people said, “Why didn’t you run on a platform of, ‘vote for me and I’ll take away your vote.’” So it was quite challenging.
But we knew where we needed to go, and what was interesting is that all the elected department chairs stood with me. They said, “We believe that is absolutely true and we’re going to stand up in front of this organization and say why.” And so, it was quite a 30 days. I had doctors in my office who said, “If you go forward with this, we’re going to get a doctors’ union in here,” and I remember that moment when I said, “If that’s what you came to talk about, we have nothing more to talk about.” We’re talking about how do we move this organization forward so it can be a great place for doctors and all of us, and most importantly our patients? So that happened, and our governance changed, and the next part of the process really was increasing clarity around the need to go forward in ways that would dramatically change the organization.
I’ll never forget the night in October of 2000. I stood up in our professional staff meeting for about 400 physicians and I said, “We change, or we die.” Now, we weren’t going to die or go out of business tomorrow or even the next year or two or five. But unless we changed, we would not be on a trajectory that would allow us to continue to build what we aspired to build as an organization.
And that was quite a moment, because as leaders we want our team members to feel good. But what I’ve learned since, and I guess I knew intuitively then, is that without urgency, there will be no change. That change is like the status quo. It’s like gravity. It anchors you to the status quo, and I think that’s true in health care, and so I think we need to create urgency. And at that moment, about a third of the people said, “Oh my God, the sky is falling,” and the vast majority said, “You know, maybe we’re finally hearing the truth and maybe we ought to open our eyes wider and move in a different direction.” And so we did.
And that was an early pivotal moment in my leadership career, and I think helped give me and our team — you know I’m a marker for a much bigger team, I’m just the face of that team that has been doing this for . . . many of us have been together for a long time — and so that that was one of those moments. A few people had to leave the organization, and that moment and other things we would do soon thereafter and coming on the heels of eliminating elections, that was tough because they were part and parcel of probably the most important transformation we were making as an organization, and that was going from a physician-centered, physician-driven organization — I used to be so proud of that — to truly a patient-driven or patient-centered organization. And in so doing, working to build a great place for doctors and for nurses and pharmacists and social workers and every member of the team, and most importantly for patients.
This story was recorded live at the Institute for Healthcare Improvement’s 28th Annual National Forum in Orlando, Florida, on December 4–7, 2016 by Mary Jane Kornacki on behalf of NEJM Catalyst and originally appeared on the NEJM Catalyst website on February 2, 2017. We wish to thank IHI for support of this project, especially Madge Kaplan for her technical advice and guidance. Click here for more Lessons in Leadership stories.