Good afternoon and it's really a pleasure
to be here at the University of Georgia.

I mean George Packer we were
just talking about that it's.

It really is a pleasure.

The best man at my wedding.

Got his Ph D. here in nuclear physics and
I'd never been to Georgia Tech before but.

My boss in that Pennsylvania
before Buffalo was.

The region for the American College
of healthcare executives and

said congratulations I signed
up to become a fellow and

I said good what I have to do and
he said well there's a test on Saturday.

Here's an airline ticket and

I'm sure you'll pass because
if you don't you're fired.

So I remember coming down and
you guys are all enough and

he and I were big best ball players in
those days so we went over the field house

we're playing basketball with with
Mark price which was pretty cool and

I took the exam and
I guess I passed because here I am so

I have a warm spot for Georgia Tech and

this is my second year in doing this and
it's really my pleasure.

I think giving back is very
very very important and

so I'd ask if you know twenty five
years from now when you're successful.

I want you to remember that
people came and talked to you and

answered your questions and
listened to your ideas and

I would ask you to pass that on because
it really makes a difference and

I think some of the reasons for
from my management growth

was in graduate school I got assigned
to this hospital called Shay's

hospital and they had these lightweights
like the chairman of Mellon Bank and

the chairman of U.S. Steel on the board
of directors and I started out as in my

first job as the system to the president
working with these guys and

it really made a significant difference so
I ask you to pass it on.

I'm going to give you a presentation that
I gave them as it's which is actually.

A real live company here and they're
the largest hospital group purchasing

organization they brought broadly in
one of their competitors last week for

one point four billion dollars.

And they asked me to talk a little bit
about what it's like to be Grady C.E.O.

and I'll tell you a little bit
about my management philosophy.

And I hate to tell you this now but
you spent all this money for education.

And managements really pretty easy and

we'll talk about that I have
an executive M.B.A. from Harvard.

And I have an undergraduate
in biochemistry and an M.B.A.

from the University of Pittsburgh but
when I went to Harvard about fifteen

years after I got my M.B.A. Pitt all the
finance department from Pitt had gone to

the Harvard Business School so
I don't know what that tells you to

other than they taught us the same stuff
as they did fifteen years earlier.

The most significant aspect of
management is your expectations and

this sounds so easy because you're going
to ask me what did you do at Grady.

That's different than the other six
C.E.O.'s who were there before you and

I did exactly the same thing at
Erie County Medical Center and this is so

simple that you're not going
to be able to believe it.

OK How many of you want
to fly on this class.

None of you.

OK you have expectations.

I was at a seminar yesterday
morning with with.

Harvard Business School investment manager
who is a billionaire and he said you know

all these young kids and you're young kids
to us old people like my son my son's.

You know five Beta Kappa
graduated number one

in this class never failed anything went.

Air Force was a captain
started that drone program and

he's gone the UVA law school and he'll
graduate in the top ten in this class and

he's going to go work for a firm where
everyone graduate in the top ten in their

class at Harvard Yale UVA wherever and
they've never been in the bottom

Corps tile before most of you have
never been in the bottom court before.

So you don't know what it's like to
deal with bottom quartile people.

And a core of America that
seventy five million people

are in the bottom Corps tile.

So you better figure out how to work with
them because they're going to be working.

Unless you work at Microsoft or G.E..

OK Most You aren't going to start there.

So at places that are not
successful the employees

have no expectations to
them it is a mere paycheck.

What I've been stunned by both of my
you know I work at two stellar places.

Shadyside hospitals produced the chairman
of University of Pittsburgh Medical Center

the CIA the scieno for
presidents of their hospitals it really

was the place it was the cash cow
Lancaster General you can look at up U.S.

News and World Report Hicksville USA
you know where the Amish are.

We took that hospital from a nice
community hospital with cement walls to

it looks like the Ritz Carlton the lowest
cost in the country most profit hospital.

Those people had organizational commitment
and Erie County Medical Center and Grady.

There was very little organizational
commitment they did not identify

with the organization and that's why
I started with that little joke.

You guys identify with Georgia Tech and
that means something to you.

Places that are not successful.

They don't have those expectations.

They don't ask questions they'll
do exactly what you want.

If you're in reimbursement and
every month you see a check for

a million dollars coming in from the state
that you do something with it and

you've been doing that every year for
five years for a million dollars and

it suddenly jumped up to
four million dollars.

You do something you tell somebody right.

Not at Grady two years ago.

They just kept passing it through.

And it had a very negative implication for
us because no one asked any questions.

Gee this is really unusual.

This normal check is
four times as high and

I could see the first month well maybe
it's a mistake but the second month and

the third month and
then the cost this five million bucks.

There's no performance because
they're not measuring anything and

they do that purposefully and they
become expert at dodging responsibility

dodging questions dodging commitments
the dog ate my homework you know

the bus was late and
we put in a fingerprint time card system.

OK And when I got to Grady you
could be late sixteen times and

nothing would happen to you and
I caught it and

now you can be late seven times and you
would think I've killed everybody's child.

Mr you and
I say I've been coming to work for

thirty years I haven't been late one time
in thirty years and I live in Atlanta too.

And while you don't
punch in I say yes I do.

OK so there's no performance.

Moreover the company has no incentives
there's no pay for performance.

There's no promotion of those
people who do well you get promoted

because you know somebody or
you worse yet you've been there longer.

OK And smart people figure that out.

And if they know they're doing a good
job and they know they're not.

To get promoted they're going to
go work at another company and

over twenty years your
company is in Loserville.

And they have no product
that they believe in

less than one percent of our employees
were getting their health care Grady.

Less than one percent.

Did you need to know
anything else about that.

OK so last year we switched to health

plan the employee if you come
to Grady your X. rays are free.

If you go to somewhere else.

Your X. rays cost you fifty
percent out of your own pocket and

they scream Grady sucks.

It really doesn't but that's what
they thought their big waits and

I said But
wait a minute that's your fault.

That's your problem.

You work there.

You fix the product and
now it's a year later and

they're actually very happy very satisfied
customers were paying ourself left

pocket right pocket instead of sending
money to our competitor hospitals and

my health care costs actually
went down ten percent last year.

Georgia Tech's are gone up next year
ten percent mines gone up zero and

now they believe in the product OK So

these are our what happens in less
than successful organizations.

A winning organization
has high expectations.

How many of you would go
into a loser company and

take forty percent of your pay at risk.

Anybody.

I did.

And I knew I'd get crucified in
newspaper My God he got a bonus and

my boss said Gee I hope we have the same
problem next year and the reporter

said well what problem is that a sixty
five million dollar even improvement.

I'm glad to pay three
hundred fifty grand for

a sixty five million
dollar even improvement.

We now have performant measure.

At every level.

Last year you know we did
the old Grady way we just gave

everybody a cost of living increase
this most recent year in April.

There are certain things that you have to
do so to be a nurse certain mandatory.

Educations.

If you didn't do that you
got a pay increase of zero.

What do you think happened to
the mandatory classes after that happened.

They had me to Liefeld up all
the mandatory stuff is now filled up

in Lancaster we actually
start our own college.

Because we had ten thousand
employees we had a nursing school so

it was very easy and
we put together a curriculum and

in order to move up through
the management ranks.

You had to take the twenty six classes and
passed and and

no one when so we finally said I'm sorry.

I'd like to promote you but
you didn't take the classes.

So your analogy go and so you take
the classes the classes fill it up.

We taught our middle managers
exactly what we wanted them to do.

And they worked well and
I turned over eighty percent of

the management team a grading I told a new
guy who's running my nursing home I said

if I had to do it over again I wouldn't
give them a year's worth of evaluation.

I would have given them a quarter.

So you benefit or quarter.

I want to know who you're keeping on
Friday and who you're getting rid of and

I don't say that in any
negative way because at the end

of the day without Grady the whole
health care system in Georgia becomes

a mess without this nursing home there
is no free no nursing home in Georgia.

It's a mess.

So I have to look at my
obligation to two hundred

fifty residents who are sick and
need help.

Versus ten managers who who
wasted tremendous resources and

what's the responsibility there and

the answer is the responsibility
is to do the right thing.

So what is leadership
it's really very very.

Easy.

It's getting the right people.

OK So the first month I was a gray
seventy five percent of the employees

who we had interviewed and such and
selected once we did their drug test and

their background checks seventy
five percent of them flunked it.

This is the people that we picked.

So we've turned over our entire
human resources department

based upon the last slide hiring
people who know how to find

motivated people people who
will take responsibility.

People who will set expectations.

And we don't have that problem anymore
because now the word is out on the street.

Grady's looking for strong players plan.

You need to have a plan
that you can understand and

has to fit on the back of a business card.

And it has to be comprehendible
from the chief of trauma

surgery to the housekeeper.

It has to be very simple.

It has to be believable.

If your plan in two thousand and
ten or in two thousand and

nine was to grow real estate
volumes by twenty five percent.

What are your people going to do.

They're going to laugh at you.

They're going to laugh behind your back.

It's going to ruin your credibility and
they're not going to follow the plan.

So the plan has to be real.

That doesn't mean it can't be a tremendous
stretch goal when I told people

at a public unionized governmental

Hospital in New York that we were going
to be a leading hospital in three years.

They looked at me like I'm nuts and
were put in a new computer system and

one of the consultants is from Buffalo and
I said.

You're from Buffalo.

She says Yeah my parents
are still up there and

I said well do they go to the HOT.

And she said Yeah we just got out E.C.M.
see it was great.

They were in the said that five years ago.

Policies I hate them.

I've been C.E.O. since one thousand eighty
eight and I have never written a policy

when I walked into Grady we had this
many pages of policies policies

stifle people to read about the five
year old kid who was suspended

from school because the three enter one
inch pocket knife because he was gone.

The Boy Scouts because they
have the zero tolerance policy.

Policies are for people who can't make
decisions who can't be consistent in their

decisions they will kill you.

So when you go work at these big
places and they give you policies.

You can say that crazy man from Georgia
told US policies aren't necessarily good.

Maybe you better wait a couple weeks
before you say the policies are overrated.

Here's one that's very
very very important.

You have to prioritize what your three or

four priorities are and
they're not necessarily services.

They're how your company operates.

So Lancaster only two things mattered.

The highest quality care in
the country with no compromises and

my chief of cardiology with medical record
and nurse we suspended him thirty days

because we wanted the nurses to be very
and energized to really control care.

So they could tell the doctors
when they were Ron and

this guy like the old
hierarchy I'm the boss.

I'm a doctor you're a nurse.

So we suspended them and when you suspend
the doctor they have a right to appeal so

he came to the board and
he said Mr McElhaney who is the chairman.

He said I have seventeen million
dollars in your bank if you send me I

will pull all my practice money.

My retirement money out of your bank and

thank Mr McElhaney said well
you do what you have to do.

You're suspended for thirty days.

And if you're back here again
we'll throw you off the staff and

the room got deadly quiet.

He pulled the money out and
Lancaster General passed everybody because

the doctors now had to participate
evenly and fairly with everybody else.

So our priorities were
highest quality care and

making money and my hospital was the most
profitable Spittal in the northeast.

One of the most profit hospitals in the
country and when I left they had a not for

profit hospital had a billion dollars
in cash unrestricted the pension

was over funded by one hundred fifty
million and our Age of plant was six.

OK.
Every employee even

the nurses they knew they had to take care
that patient and they had to do it as

effectively as possible and then practice
you must practice what you preach if

you're a leadership position because they
will look at everything you do every

employee is skeptical just like you guys
are skeptical hoping I'll shut up soon.

But trust me if you have a special C.E.O.
parking place and

your people skills in your plan is
that we treat everybody the same.

They won't believe it because
they treat you differently and.

So you must practice it and
if you talk about fair compensation and

fair evaluations you as the leader
at any level need to practice that.

So if your sister is working on your floor
and she's a stiff you need to fire her.

OK.

Or if your friend.

OK.

You must practice exactly what you preach.

OK.

I have the same office furniture as
the woman who was C.E.O. before me.

It's beautiful it's pink It's very nice.

And the only pictures I put
up was a golf picture and

a picture from Harvard
everything else is the same I

the same furniture in Lancaster for
twenty five years.

And I vow I varied from that one time and

I bought myself a corporate S five
hundred Mercedes and I got a thousand

police asks which is a program where
employees can e-mail me and ask.

I got a thousand of them.

How can this be part of
our cost containment.

OK so I veered from my own
philosophy because I was worth it.

I was C O fourteen years
I work really hard.

I drive to Harrisburg a lot.

I need this big car.

At Grady they used to have a Lincoln
Continental for the C.E.O. and a driver.

So five years ago there would be
a Lincoln Continental sitting out there

to pick me up to take me
back to Grady I drove or

drove over on my own I
don't have a company card.

I don't have a company credit card.

So I've learned from that.

So that's really hard to do
especially the higher you go up.

So that's review employees
look at everything

you do team building is more important
than the books can describe.

The success in Lancaster was because
my number two guy was five years

older than me.

He was very good at coming up
with cutting edge program.

But he couldn't run a two
person bakery he could think of

how you could build a million dollar
bakery but he couldn't run it so

below him I had to have somebody who
was very good at running things.

OK so
you really have to evaluate your team.

What I like to do is we change
our organizational structure.

No.

Less often than every two years or
so in finance.

I had a guy who had fifteen
years to go before he retired.

So I actually was thinking
fifteen years ahead.

So I developed two people below him
to fill in that slot and one was

very good on the patient receivables in
the billing but had no Treasury expertise.

So I said.

Denise you know you probably
are going to be the C.F.O..

So you need to start coming
to the Pension Committee and

need to start coming to the Finance
Committee you need to understand how we're

investing all this money because when you
have a billion dollars one percent one

where the other is a new building every
year or not a new building every year.

When you sign just plain old teams.

You don't have to pay that much attention
you really want to get the correct.

Specialists there.

But if it's a high level team.

You really do have to think about it

if you have a team with five
equivalent senior V.P..

And you don't think about how you set
it up and structure it it will be

a failure and the rewards you
know are pay for performance for

me it's one hundred percent of my goals or
team goals at the V.P. level.

It's fifty fifty team and
individual and that's the next level.

It's twenty five individual and seventy
five team you have to have mutual war.

Or with a month ago your team will cut
each other's throat to hit their target.

I talked about this is it real.

Can it be done in thirty seconds.

If you have a planning department.

Your company will probably
not be successful.

So if you're all playing
around in the planning.

I would.
I won't hire you.

I don't have a plan or
I haven't had a planner in twenty years.

I think the C.E.O.
and the senior management and

the Senior medical staff team in
a hospital are the planning team and

it has to be a natural
function of what's going on.

If you look at Apple prior to
job's gone REBACK lots of planning

beautiful planning.

But it didn't have anything
to do with reality.

And it's got to come out
of the C.E.O.'s mouth.

I don't even go to our planning
meetings we actually have them.

OK but I sit in the next room and
I listen through the door.

Because I really do want to
hear what their ideas are but

if I sit in that planning meeting and
I talk to everyone.

Here's what I say OK so
if I'm going to have that energy spent and

that time spent I really want them
to participate and so believe it or

not that's how I've learned how to do it.

So if the C.E.O. is president you have
to be very very careful about it.

And we talked about this a little

bit policies that may
reinforce it I hate them.

It's really are you fair and
consistent and are the policies doing that

if your policy philosophy is that
you have policies for everything.

So you can hide behind them.

Your corporation is going to lose.

I give an example.

You have an employee that say she's an
executive secretary and she's spectacular.

And she's been taken all the courses
to get her bachelor's degree and

she needs one more course to go.

And she's got such good expertise you
want to make her supervisor somewhere.

But then she needs an English
class to graduate.

That's even too close to work she needs.

A humanities thing in dancing to graduate.

OK but she does that and
then the company doesn't pay for

it because it's not close
to our main purpose and so

you don't pay for you've paid for
ten grand of her other career training.

He just checked her off over eight hundred
sixty three dollars where the tuition but

you have a policy and

somebody in human resources will say all
that's our policy it's outside the norm

and I want some senior managers say yeah
but we have a lot invested in this woman.

We need her to have a bachelor's degree.

We need it now we're going to pay for.

And if they won't.

Then you as a supervisor probably ought
to write the checks and at the H.R.

and embarrass them and
make the change happen.

Practice live it live it live it.

Pay attention even the smallest things
I don't think anybody cared about

what car I drove but they did.

Give me another example.

My first.

Of the five thousand employees in Buffalo.

The only ones who were
not in the union by law.

It was me the C.F.O.
the secretary to the board my

secretary and the chief nurse officer all
the other V.I.P.'s were in the union.

And the nursing contract was two
hundred eighty five pages by itself it

was unbelievable.

So I would come and

go through the men's locker room and
there were any you guys ever give blood.

You know those nice reclining chairs and
they had them in the men's locker room and

why were they there.

So your winners you can't even believe it.

So they could sleep on
I said doing their job.

So I called up the guy who runs
housekeeping I said throw them all

away and he tested me.

He not only threw them away but
he threw them away on the first Friday and

change of shift.

He put the big dumpster in the parking
lot just as everybody was coming in and

everybody was leaving and
he set them on fire.

And it turned out to be a good

thing because the union was in my office
at four o'clock vulnerable mobile and

forced I had read the contract before
I got there in the contract I.

I said the contract doesn't say
anything about sleeping on the job and

it said it and I said I'm not here to
hurt you but I'm paying the and I expect

you to work OK This hospital is going to
close New York is broke and guess what.

New York's broke.

I said so
in order to have all these jobs and

all these people that I'm responsible for
here's what we need to do.

There was a night shift supervisor
began a guy who ran the whole hospital.

I came in that Friday night
I couldn't find them.

I went everywhere.

Probably a security guard said
he's our nanny Veron sleep and

he has a day job he sleeps here at night
so I go out and I bang on the wind and so

we fire him on the spot Union came and
said you can't do that.

He's sick and I said Now I got thirty
days to him sleep in here that's look at

these videotapes and my county which
are in the hospital just went bankrupt and

I said so we'll be glad to turn these
over T.V. they said no you can fire him.

So you really have to pay
attention to this stuff.

OK when when the C.E.O. of Microsoft
the somewhere giving a speech like this.

Somebody is right down and
it's going to have an effect.

So you really have to think
about what you're doing and

mentoring if you take one thing away.

If you mentor your people.

Over a twenty five year career.

You will never have a hard time getting

the best talent and
I mean really mentoring them.

You have a written plan I've a written
plan for my top eighteen people.

I have it includes how they
interact is the team and

it's really honest and
it's painful to do every year.

And she you are a great leader.

Except you won't take accountability you
Doc better than anyone I've ever seen.

Put your name on it be proud
of it take some risk take some

responsibility and the.

And you demand that those eighteen people
do the same thing for their people and

they will they wish they were not there
but that is your key responsibility in

developing your people whether you
like Jack Welch or not what he did it.

G.E. is right here.

OK And he developed talent early on and

they went around everybody else to
the top if they were the best and

that tells everybody what's important in
your organization not time and grade.

I think time and grade is what's killed
America's productivity over the last

twenty five years but
performance I was C.E.O.

when I was thirty two and
I can tell you now.

I wasn't ready.

I didn't know what I was doing.

But I made up for
it by working twice as hard and

getting people who were twice as
knowledgeable as me so mentoring is

probably the most important thing when you
get your first job coming out of here.

If company three pays you five thousand
dollars less but that person commits

to mentoring you you go to company three
because you'll make that in a heartbeat.

When your salaries get into the reals.

And I asked that question will you
mentor mean will you develop May and

they'll find that very impressive in your.

Negotiating skills risk taking.

It's really a hard thing.

Most Americans have lost that
capacity to take risk and

I went from a hospital making one hundred
twenty five million bucks a year brand.

You know looks like the Four Seasons and
it was boring.

My wife said What was your big
decision today did you buy granted or

did you buy marble what color wood
paneling did you put in the lobby.

OK hospital C.

Those are I think grossly responsible for

the health care cost increase
because were afraid to take risk for

many C.E.O.'s getting the job
is winning the lottery.

You need three or
four years of ten million bucks a year and

a forty million dollars
severance package and that's it.

So they're afraid to take risks.

I came to Grady it was a big risk.

Somebody had to do it.

OK And
I put forty percent of my payout risk.

Jim for your four weeks ago his
alarm clock didn't go off and

he missed the first golf tournament and
I know Jim for

your art because I played golf with
his father every Sunday morning for

five years and I know Jim He's from
Lancaster and what did he say.

Anybody but did he say.

It's my fault I take responsibility.

We're not going to talk about it anymore.

What with all the other athletes in
America say it's not it's not fair.

Right.

Isn't that what the average American
businessman would say it's not fair.

The market changed my stock stand.

He's a man he manned up and
he said it's my own fault.

And then he went out and

he wanted Eastlake and he won ten
million bucks and he doesn't need it.

I know his investment adviser but
it wasn't about the money

to him he was going to show those
people what he was made of and

what do you do what do you do to
show people what you're made of

what risk do you take what risk
does American business take

you know the American car manufacturers
put a little curve on it every year.

In the sixty's in the seventy's and Toyota
was coming out with four wheeled this

brakes and F.M.
radio guys can remember that far back.

Yes Cars used to not have F.M. radio was.

Next important thing with sides
mentoring is what I call backstopping

if you google my career.

You will probably find that I
never did anything in my career.

OK.

Like I didn't build the first amatory
surgery center in Pennsylvania

in one thousand nine hundred two actually
did but I didn't take credit for that.

I built the first comprehensive
amatory care center in Lancaster in

one nine hundred ninety and

we went from twenty eight percent market
share to ninety percent market share.

But I didn't do that in
the year two thousand.

If you look at the ten year anniversary.

It was Tom Paisley my number two guy and
Jan Bergen who's now the interim C.E.O.

there who came up from Philadelphia
to work they got the credit for

that when something gets screwed up
the C.E.O. takes responsibility for that.

OK And

pretty soon your people will take risks
because they want the kudos they know.

Kudo's goes with doing the right stuff.

But they're all scared to death.

Particularly in this economy.

They're scared to death
to make a decision.

If you let your people know you're going
to backstop them and you take the risk.

They'll do things so
meant to your people and

then take no credit
innovation it's really hard.

I don't know how you teach it.

I can tell you I'm the least
innovative person you'll ever meet.

I can draw at the fifth grade
level little stick people.

OK And
if you give me a blank piece of paper.

I'm going to hand it back in and
give you an have.

But if you show me something I can.

Find the five hundred ways to improve it.

OK So my model for innovation is I'm
the biggest plagiarizer in history and

so were the Japanese in the eighty's and
ninety's and they kicked everybody's But

so I'm telling these you have to find out
what your strengths are in innovation.

Some people are inherently
what I call base level

creative they're artistic they can
saying you know I can't carry a tune.

So the surgeon Center's actually a place.

Phoenix Arizona.

I went out in one nine hundred eighty and
I said wow this is really cool.

I have one thousand oral surgeons and
back in those days.

Anybody have their wisdom teeth out right.

You all did OK I had mine out in one

thousand nine hundred seventy
eight I was in the hospital.

It was supposed to be for
three days but it was two.

And so I checked into the hospital.

I signed out A.M.A.

and went down the stream the young it
was Stanley there with my now wife.

And you know we had our thing I

got up you know got back got up had
it out and I was in the hospital for

another day and I have you all have
them in your oral surgeons office right.

But in one nine hundred eighty one.

They were all being done in the hospital.

So I built the service center.

And a learning moment.

Pittsburgh was unionized.

Everybody was in the United Steel Workers
and their contract didn't

even discuss outpatient care because
there was no outpatient care.

So I was too innovative I was
three years ahead of the market.

So this was a problem because I
already built it before I found out I

wouldn't get paid for it.

So I went down to Blue Cross and
I said all this is really good.

This will save you a lot of money.

People don't want to be in the hospital
for their teeth and their shoulders and

stuff and they said Well how
about if we just pay you the.

The impatient rate which is ten
times the outpatient rate for

the next two years to
we figure this I went.

Yes and my hospital went from making
no money to make an twenty five million

dollars in one decision.

It was innovative because I
plagiarized somebody else and

it was innovative because I
figured out how to get it paid and

then I became C.E.O.
not too long after that.

So I'm asked as a hospital Ministre
what keeps me up at night.

Nice to see a couple senior
folks in the office.

The medic the health care reform is
built off the back of the hospitals and

I'm not whining because we don't have
much Medicare but Piedmont took a fifteen

million dollar Medicare cut in two
thousand and starting October first.

They're going to take an eighteen
million dollars next year and

probably a twenty of the third year.

OK And that's their entire bottom line.

So two thousand and fifteen and
sixteen and seventeen is capital plans or

are going to be zero because
hospitals are broke.

So that's a problem if
you're a private hospital.

What you're seeing is
private hospitals as well.

Is if you're working in a company and
you need your knee operated on.

But your company's
struggling a little bit.

You're afraid to take three days off
because your boss will say didn't somebody

used to said it's empty.

We don't need that you're gone.

And you see voluntary or elective
surgeries drop and that's a big problem.

So we do have a lot of those and
I worry about that.

The thing that really scares me
is this because I was sitting

in a boardroom with ten
Fortune twenty C E O's.

The head of government affairs repeatedly
seen me and I don't know why I was

there but you would know these companies
they fly around and they deliver thing.

And they check your finance you
know your credit report here.

And.

Those kind of guys and they said we're all
waiting to terminate our private insurance

because it's cost them between nine and
eleven thousand dollars per

employee per year but if they pay
the penalty it's only four thousand out.

I have a Harvard M.B.A.

You guys are at Georgia Tech
which is better not too smart.

Nine thousand or four thousand.

So you can say five thousand
dollars per person for us.

That's twenty five million a year.

So you're see you're going
to get a Big Ten million

dollar bonus if you hit
the bottom line bogey.

You can save twenty five
million dollars a year.

What's the only thing that's keeping
them from doing that right now.

There's Pingo What

do they want to be sacking that's exactly
what the chairman of the biggest company

in Georgia said you should give
this guy a for class today.

Because it took him five seconds to figure
out what every executive in America is

think when you do that.

These people won't have insurance anymore.

And they'll have to pay out
of their own pocket and

actually the insurance
exchange will pay them some.

But I went without a Blue Cross contract
for ten years and Lancaster Pennsylvania

and you'd have your surgery and
we bill the patient they would send

it to Blue Cross the bilby twenty thousand
Blue Cross would send them ten thousand

about half of them would send this ten
thousand say we don't know any more.

And the other half would take that
ten thousand and buy an R.V..

I'm not kidding.

So so so
health care reform when everybody's

insurance is canceled because the whole
marketplace is written off or

built off of that private
pay patient your private pay

patient somebody Ritu as good
insurance versus Medicaid.

The other thing.

It keeps me up at night.

This is more detail than
you guys want to know.

Doctors are very independent beings and
and it's sort of like the lawyers

working in the courthouse the hospital
supplying the courthouse for them.

But in the New World.

You really need to work as a team.

So if you look at
the places they're winning.

It's the guys in your health system
you've heard about guys in there and

Danville Pennsylvania has
eleven thousand people.

It's an hour and a half north of
Harrisburg there is nothing there but

they have an eight hundred bed
hospital with a thousand doctors.

It's the most unbelievable thing because
they bring ever everybody in from

literally a three hundred mile radius.

And they're all working together and
they're kickin But most

hospitals here are trying to get that
interaction like paid months employed.

A thousand.

Sorry one hundred cardiologist.

So they're trying to do it
through the employment model.

We'll have to get closer to them at
night on the public hospital side we

live off the dish.

That's buzzwords for
federal payments to poor hospitals.

That's being reduced fifteen percent
a year starting in twenty fourteen.

So I need to get my patients flip
the paying patients because fifty because

that's ten million a year for me so I need
to get ten million of paying patients to

make up for the ten million I'm not
going to get private hospitals want

to have nothing to do with my
patients today because they're poor.

They're stinky.

But in two thousand and fourteen.

They'll have an insurance card.

OK So they're very interested and still
am in one nine hundred ninety Medicaid

in Georgia didn't pay for O.B.
babies so great it ten thousand

of them and that they pay for them and
Grady does three thousand of them.

So we lost seven thousand deliveries
a year at two thousand and delivery that's

fourteen a year but Medicaid doesn't pay
for prenatal care so we're still doing.

Dado care for these poor women and
then they go into labor and

they drive to Northside work for
long because it's pretty.

But these hospitals these rich hospitals
won't even do the prenatal care

because it would cost them money.

Medicare cuts I talked about and
the teaching faculty the teaching hospital

is is well behind the normal private
hospital and how we get our teachers to

think more like innovators instead of just
teaching is going to be a challenge and

those are my prepared remarks
management makes a difference.

It makes all the difference in
the world there is no right solution.

OK.

You have to understand quickly
organization you have to

quickly understand your market and

you have to make it work in a turnaround
situation you can be a crazy guy

in Lancaster after eighteen years
one hundred million dollars profits.

It was very prim and proper and

I had to be very prim and
proper and we had lots of.

Planning meetings and
build team meetings and

all that kind of stuff because
it was a different focus.

But management makes all the difference
look at Lee Iacocca Chrysler

the good job is that Microsoft.

Look at the entrepreneurs who turn over
their their their e-commerce company after

three or four years because
they just can't manage it.

And questions.

Michael has a question since they
made you stand up here and go first.

I'll let you go first.

OK.

Your question was how do we do
the turnaround of the C.M.C..

Anybody here from the business school so
I know it's really easy.

We grew our revenue fourteen percent
cause only grew six percent.

So you can do the math and
we did that four years in a row.

So that eight percent spread
compounded over four years.

So we really did it on collections
operations on bringing

in new patients by changing the image and
changing our service call chair.

So it was a very good question.

Who has the next line that.

You OK.

You were just talking about about the
uninsured then going to private hospitals.

First of all going to be heard.

OK First of all what exactly is
the danger of losing those patients

what's the real result of that both to you
as a company if they're uninsured What

are the actual losses that the private
hospital suffering from and

then also one is one of the losses
that society at large suffers

from these newly insured poor people
going to private hospitals and

if you could then further expand on your
views on the new health care bill in

general at the very
interested to hear that.

That's you know.

To give him a start.

Is that really good question to we're
actually having that discussion just

grating need to exist.

We're actually having that discussion
with our board of directors.

Can you imagine that maybe
a guy that is brought

in to save Grady says maybe
in two thousand and sixteen.

We don't need Grady because everybody
theoretically will be insured.

Except for the illegal immigrants.

That's not a group of people.

I'm not making comment but
in two thousand and fourteen.

They'll all have an insurance card.

They'll say the President Obama
insurance plan.

You know have his picture on the back.

And I'm just kidding but but they could
have fixed the health plan by merely

paying the public hospitals
because guess what.

There are no uninsured in Alaska.

There is no one that has
no access to care plan or

because where they have access Grady and
they've had it for.

Thirty years and
the care is actually good at Grady but

the politicians had to give them something
that they could carry in their wallet and

every time they pulled it out.

They would say who the Democrats gave
this to me I'm going to vote for

them next time around.

And if you think of it's more than that
and you think it's about caring for

people.

Let me just tell you I've been in
the government health care business for

six years and

the politicians could care less that
Grady was falling down that the beds were

fifty years old that it didn't meet fire
code that the fire alarm didn't even work.

So these are the same people who are
telling you they're really caring about

those people and
they could have fixed in a heartbeat.

So than our uninsured today.

But on January first two thousand and
four.

They'll have insurance.

And just like those those O.B. patients
now say I want to go to Crawford law or

Piedmont or or north side and from a solid
perspective that isn't bad per se.

OK And Grady can probably close up and
go away then and so

long as those people stay in the system so
long as the system continues to exist.

And so then we would do.

What's the best economic savings wind
out of Grady The problem is there's

still going to be twenty five million
people who won't have insurance because

they're immigrants illegal immigrants
legal immigrants can get a green card or

go they'll be covered.

And in Georgia that six
hundred thousand people.

So they'll have a hard
time going somewhere so.

So my thought on the health plan is.

I actually think universal
coverage was the answer.

You know from a Harvard business guy
that sounds a little strange but

the Canadian system really is
the best system in the country

except they don't have
enough CAT scanners I.

I actually have as many CAT scanners
at Grady as the city of Toronto does.

And so America has plenty of CAT scanners
and now Mars and the problem in Canada was

there weren't enough doctors because they
set the R.V. you work low level too low.

And they would hit that after six or
seven months.

And then they didn't get paid
anymore to do the next surgery.

So do you think they got up at five in
the morning to go do surgery they weren't

paid for.

So what they do.

They went to California and Florida and
they work locums tennis rental doctors for

those winter mines got a nice vacation
got paid for it but now in Canada.

They've raised the R.V.

you can out in the Pay a little bit and
they've kept the doctors and so.

I think the flaw with the new
health system is the average

hospital is not going to be prepared to
deal with these really sick poor people

seventy five percent of my
patients have diabetes and

they're used to patients
taking their pills.

I actually have to send nurses out
to these high risk TB patients and

force them to take the pills and
if I don't think they're going to take

the pills I have to lock them in my
hospital and make them take the pills so

so I don't think the average proprietary
place can do it and at the end of the day.

Government there is the country
cannot afford the absolute

free healthcare system that we
have today where everybody.

How many you guys
are driving Lamborghinis.

Porsches Lexus IS a couple couple Lexus's.

But why not.

It's too expensive.

OK but what we're giving every
patient I'm giving a guy from should.

Aagot.

Thirty eight thousand dollars for
the chemo drugs

because his daughter lives in Cobb County
just happen to be down visiting.

When he came out of remission.

And didn't go to well start
because they would throw him out.

They would they would treat
him as an emergency and so

we're going to give him his chemo drugs.

So when it's all free like that
everybody will demand a Lamborghini and

that's where we are all you have to do is
walk in any I.C.U. in America and seventy

five percent of the patients in there
aren't going to be here in three months.

But yet we're spending fifteen thousand
dollars a day to do everything on them.

I don't want to make that call as
to who gets it and who doesn't.

But I don't think we can afford that.

And in fact I know we can't afford
it because we're in a mess already.

So it's a very good question.

Other questions.

Yes ma'am.

I am Sabrina my mother in
law is tissue many here and

we hospital and she hurts my husband.

It's great.

So I think greedy for
him to safety good and my question is.

In what area is Grady doing better

than Emory in one area is
Emory doing better and.

I know there are kind of two different
animals because it's great for profit and.

Emery's non profit but

I was wondering what your answer will
be the big difference between Emory and

us is really in the services that
we do we do a lot of primary

care services because it's been set up
that way over the last thirty years.

Is there more money being a family
doctor or a nurse surgeon.

There a surgeon.

So they have thirty and we have to.

So over thirty years.

The primary care stuff internal men.

And having babies and the money is
the non the non cardiology the non

nurse the non-complex things were done and
created where the reimbursements were low.

I'm not saying this was planned but
it's mysterious to me so

Emery's really a subspecialty
quarter narry hospital.

They're doing very very high end stuff.

They're not doing gallbladders they are
they do have an orthopedic hospital but

that's unusual for a teaching hospital and
Grady's during this primary care stuff.

What we do better than them
is is is is primary care.

Most notably teaching like
we have we teach diabetics

what it means to be a diabetic here's
why you do your insulin levels.

You know beyond a yada yada.

So we're much better on that we just got
a gift from Bernie Marcus the guy started.

To build a stroke center.

It's we actually plagiarized Emory strokes
and said What would you change differently

and we did all those changes and so
it's now probably and we recruited that.

The young star from Harvard and

the young star from Vanderbilt
they've been here about six weeks.

So we actually pride to stroke better
than anybody in the southeast right now.

And of course we do travel a lot better
because we do ten of them every day so

we are good at after three years but
Emery's a great institution.

You said that because we plan to be Can
science in the back of business card.

I was curious about what the plan for
pretty was and

what it says about your business card.

Actually I haven't quite
been able to implement it.

Are great because I haven't
spent a lot of time marketing

to employees although I do have
sessions like this every month.

So we've really made it simple.

Our plan is three fold.

Step number one was to to
get Grady out of the paper.

OK And we titled that stop
the craziness and can you imagine me.

Handling handing to the chairman of
Georgia Pacific who's my board chair

a plan that says Step one and
stop the craziness.

He said What's this mean.

I said Just come over my house and
we'll watch the news and

you'll know he said That's right.

OK so we've achieved that right.

You haven't heard as you know we don't
steal rings from dead people anymore and

right.

Which was gone on before I got here.

Right.

We worked really hard.

OK Goal number two is become a real
hospital and once a real hospital.

That means we can turn the lab tests
around in a real period of time we can

get you through the E.R. in four
hours we can turn around a chest X.

ray in four hours up on the floor and
we have explicit measures on that and

then the third step is to grow program and

number four is to breakeven and
the way we got to break even.

I talk to.

Groups like this and say you know and they
had had a pay increase for three years so

they all say well Mr Young when am I going
to get my pay increase and I say never.

I said I'm never going to give you
a pay increase again and they all at.

I said when we break even and make money.

I will pay you pay for performance.

But until then there's no money.

I can't throw money out of trees.

So all those patients you don't
bill all that you could bill

that would have been your paying Crees so

mysteriously last year we collected
seventy million more in cash.

Then we did before and when the office
manager would let his brother come in for

free care the nurse would squeal and
we bill that guy.

OK So we have it.

It's really that simple.

It's four things.

You talk a lot about metrics like
the bottom line or numbers going in and

out are there any like metrics for
patient.

Air quality of care like patient happiness
at the end the day there really are.

There's about thirty of them and
most of them are.

Specific to their own areas so

you know hospital wide ones are length
of stay patient satisfaction and

cost per case but
then you look at them in stroke.

You know it's time to the end use we and
cardiology it's time to the cath

lab cost per case in the operating
room it's anesthesia time.

How long does it take the doctor to do the
case number of operative procedures that

return to the because we didn't fix all
the bleeders while you were there one

time readmissions to the hospital
with him fifteen days.

So yeah each area has
their own specific line.

They were not measured at Grady and
the good news is in Pennsylvania.

It's starting in one nine hundred eighty
eight the state collected your data and

began to publish it.

So I could say they're going
to print this in the paper and

the first two years it's going
to be the hospital's name and

the third year it's going
to have your name on it.

Doctor and
you're going to lose all your business.

And by the way the data that
they prints three years old.

So you better get working on it now.

So the doctors have really
been working on it.

So we've cut our length of stay from
eight to five point seven five.

We've cut our operating room turn around
from an hour in ten minutes to twenty

minutes we've cut our of our E.R.

throughput from twelve
hours to four hours so.

So we measure this and we pay people
based upon the metrics that they hit.

Each health information exchanges and
what P.T. plane.

Yeah.

It's interesting actually in Buffalo.

We have one of the world's best.

It's been up and running in five years and
my C.I.A.O. came down from Buffalo.

So so I know all hospitals want to
steal our patients because there's.

Sitting around the table talking about
H I.E. which is health information

exchange for poor people's care they
don't want working just yet but

they do want Ray to go for
twenty fourteen.

So they can get all those patients and
I'm not that paranoid but do you think my

C.I.A.O. who has done this before and has
the best one in the country in Buffalo.

Do you think she got that assignment

did who got that which
hospital got that assignment.

Piedmont Amazing.

He's not even from a health care.

He's never done this
before moon very strange.

And then it's being run by
Emory this little task force.

And the other leadership positions
are well star they could have all those

patients today if they want them.

So makes me a little skeptical.

I think it's I think there's

a fifteen to twenty percent savings in
Medicaid which is state insurance by

having a health information exchange
because we have a baby one now and

these patients shot be ours nonstop
they go to two or three or four.

So they're getting all these X.
rays and all this test.

Number one and number two they
sixty percent of my patients

who are hospitalized don't
have a doctor to follow up on.

OK So
anybody ever been in the hospital and.

So you had your gallbladder out or
whatever and

then you followed up the next week in the
surgeon's office and then two weeks later

you went to your internist your family
doctor your pediatrician right.

Sixty percent of my patients
don't have a family doctor.

So now every time someone is
discharged we Google where they live.

And we say ACNC is the closest clinic for
you will get your appointment tomorrow so

I think health insurance exchanges
are critical this task force.

Is working on one of the states
required to have one they don't know

what they tomorrow is so hopefully
the hospital guys can do that since they

didn't include R C I O and we're turning
our information system on in two weeks.

We're going to let them choke you know.

And then they'll say hey
you did this in Buffalo.

Can you tell us what to do and
then we'll be glad to help them out but

since they were a little rude.

We're going to let them
sweat a little bit.

Of.

You know yet
that a little fine in your judgment.