Beth Israel Deaconess Medical Center

In 1990 the Beth Israel Deaconess Medical Center (BIDMC) , one of the top three hospitals in Boston, and a Harvard Medical School teaching facility, was losing millions annually and under Massachusetts State law was in jeopardy of closure.

When the Trustees approved the appointment of Paul Levy as President and CEO, known in the state for his leadership skills in cleaning up Boston Harbor, he immediately initiated a project to significantly cut costs and return the hospital to profitability.

The challenge would be to work with physicians, nurses and administrators and challenge the old ways in which patient services were delivered without appropriate consideration of the tradeoffs between patient care services, ethical responsibilities, and costs.

Levy began by calling a series of meetings in which he was very blunt about the hospital’s financial plight; unless costs could be contained, while at the same time maintaining a reputation for patient care, the hospital would be closed and its patient services absorbed by other hospitals in the city.  At first, the nursing staff and especially the physicians were reluctant to cooperate, but Levy made it clear to the physicians, most of whom held faculty positions at Harvard medical School, that if they didn’t succeed in addressing these financial issues, the hospital would certainly cease to exist and that they would lose their affiliation with Harvard.   With that threat, he caught the attention of the medical staff.  Losing their affiliation was an outcome no one wanted. It brought the crisis home in a language everyone could understand and from that point on cooperation improved.

Within one year the hospital was able to stem its losses and by 2006 it was reporting a $28 million surplus.  Building on the successful outcome of the turnaround project, Levy then set his sights on a long range project to invest $500 million and engage in a massive reorganization that could be expected to serve a surge in new patients.

The success of the turnaround project and his plans for the reorganization can be attributed to Levy’s management style. He collects data from his staff, listens carefully to their advice, decides and then executes.  But above all, he listens. Perhaps the best example of this occurred during the height of the financial crisis in 2009 when it became clear that hospital revenues, suffering during the recession, could no longer support existing staff levels, which accounts for about 70 percent of expenses.

Once again, Levy called a series of meetings. Over 600 attended in three quickly assembled sessions. The topic was how BIDMC might absorb revenue shortfalls.  Layoffs were clearly one possibility. Others included pay cuts, vacations without pay, and shorter work weeks. He presided over a difficult discussion and at the end of these meetings he invited suggestions by email.  But one point was clear. The crisis demanded action and the status quo was unacceptable.

Writing in his blog (www.runningahospital.blogspot.com/) he said that the response to these meetings was “spectacular.” He commented that “people have a terrific sense of community and are quite willing to make sacrifices for the good of their fellow workers.” Continuing he wrote that “Beyond the general feeling, I was very pleased when I asked people if they agreed with my predisposition to protect our lower wage earners from measures we take, even if it means that other people have to give up more of their salary and benefits. The response was overwhelmingly positive”

Here is what one of the employees wrote to Mr. Levy. “I attended today’s 4PM town meeting and about halfway through the meeting, I found myself on the verge of tears. Not just because of how worried I am, and not because of how sad the situation makes me, but because of how overwhelmingly proud I feel to be part of the BIDMC community.

The turnaround, reorganization and then the need to reduce expenses, all three critically important projects, share in common the open management style that invites suggestions, comments and criticism.  Yet within this open culture, difficult steps still need to be taken. What this suggests is that a project leadership style that involves others in an open and honest way, and one that struggles even in the face of adversity to protect those most vulnerable, is a leadership style built on humility and professional will.  It suggests that real leadership involves a willingness to be open to suggestions and a willingness to discuss very difficult and emotional issues in a tough environment.