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Profile in Leadership: She knows how to connect

CEO Nancy Schlichting, MBA '79, led Detroit's Henry Ford Health System out of deficit to what it is today: a $3 billion not-for-profit that is noted for excellence.

By Merrill Douglas

Nancy Schlichting
Nancy Schlichting grows faint at the sight of blood. That tendency foiled her early plans to become a doctor, but it didn't stop her from developing into a powerful force in health care. As CEO of Detroit's Henry Ford Health System, Schlichting leads the fastest-growing health care enterprise in Michigan, a $3 billion not-for-profit that has won national recognition for excellent treatment and community service. Since assuming the top spot in 2003, she has led Henry Ford out of deficit to realize a net income of more than $100 million in 2005, and has greatly improved patient and employee satisfaction.

One key to Schlichting's success is her ability to connect with individuals and stay in touch with their needs. "My orientation is to try to create a great environment for people to work, and for people to receive care, within our organization," she says.

For one thing, that means making herself available. "She has an e-mail called 'Ask Nancy,' and she will respond directly to employees who want to speak with her," says Rose Glenn, Henry Ford's senior vice president of marketing and public relations, noting that Schlichting also makes regular rounds of the system's business units to listen to employees' ideas and concerns.

That high-touch strategy goes back at least as far as Schlichting's days as chief operating officer at Akron City Hospital in Ohio, and later as executive vice president and chief operating officer of Akron's Summa Health System, of which the hospital is part. "Two, three times a year, she would meet with all the employees in the organization around the clock and talk to them about the organization's plans, its initiatives, why we made the decisions that we made and the impact on employees," says Albert Gilbert, Summa's former president and CEO.

When Schlichting had to eliminate 250 full-time equivalent employees at Akron City Hospital, she went into full-force communications mode. "I think we had 14 different meetings around the clock to explain to employees what we had to do and ask for their help," she recalls. The effort paid off: union members endorsed her plan to save positions by reassigning workers to different jobs. "People felt I was being very direct, very honest. That allowed them to feel a bit more in control of what probably felt like an out-of-control experience for them," she says.

Great leaders are skilled in business, finance, strategic planning, and culture-shaping, but few blend those skills as deftly as Schlichting or know so well how to hold people accountable while also inspiring them, says Bob Riney, senior vice president and chief operating officer at Henry Ford. Riney compares her to the best kind of athletic team coach. "She has a way of identifying talent, figuring out whether the talent's in the right position, and then providing the environment to make sure that talent is producing all the results that it possibly can."

Her choices aren't always orthodox, Riney says. "She takes a lot of risk and has the courage to put people in roles that might be nontraditional if she believes they have the relationship skills to create teams."

Schlichting's own career got an early boost from a boss who took that kind of risk. She was 28, with just a year of experience in operations management, when Gilbert promoted her to chief operating officer of the 650-bed Akron City Hospital. Since then, she says, she's been placing the same kinds of bets on others.

"I'm not intentional about being out-of-the-box, but I look for the people," Schlichting says. "And I've always allowed people to design their own jobs, tell me what they can do best, and sometimes restructure jobs to allow them to optimize their skills."

As leader of the Henry Ford Health System's 17,000 employees, Schlichting knows not only when to stand back and let employees flourish, but also when to jump in and roll up her sleeves.

"It's amazing how she's able to pinpoint places in an organization where her personal attention will make a difference," says Darlene Burgess, Henry Ford's vice president of corporate government affairs. For instance, Schlichting is working with an internal group convened to improve the Henry Ford Hospital discharge process. "Because she has come up through the ranks in hospitals and health care, she knows that fixing the discharge part of hospital care will roll out to improve many other areas of patient care and service in our hospitals. Even though it may seem a mundane management problem, she understands it is a good use of her time, and I think that is very impressive."

Schlichting started her ascent through the ranks at the bottom as a $3.25-an-hour nurse's aid and unit secretary. Fresh out of an undergraduate program in public policy studies, and before starting on her MBA in hospital administration and accounting at Cornell, she decided that an entry-level position offered the best possible vantage point from which to see how a hospital works.

"I think the big flaw in a lot of hospital administrative careers is not understanding the business well enough at the front level," Schlichting says. "I am grateful for that experience every day. It allows me to connect more directly with all levels of the organization."

"She's very down-to-earth. She's very at home with people from any walk of life," says Penny Bailer, executive director of City Year Detroit, a volunteer program for young adults that is part of AmeriCorps, and on whose board Schlichting serves.

In leading a major health care organization, Schlichting must keep up with everything from local community needs to the latest developments in medical technology. One issue that gets her particular attention is how to foster innovation in an organization. At Henry Ford, she chairs a care innovation steering committee studying models for redesigning physician practices and improving chronic disease management. "We're also looking at ways to translate some of the research we have at Henry Ford into commercial applications," she says. That could possibly involve collaboration with Detroit's auto industry.

"We're always trying to do things differently," Schlichting says. "For me, that's just fascinating – how you create the organizational structures to foster that level of innovation."

A Fabulous Environment For Innovation

The spirit of innovation and initiative that drives successful small ventures also creates tremendous power in a large enterprise, Nancy Schlichting, MBA '79, Sloan Health Administration Program, told a luncheon audience at Cornell on April 20. Schlichting, who is president and CEO of Henry Ford Health System in Detroit, spoke as part of Entrepreneurship@Cornell Celebration 2007, April 19-20, a cross-campus event that featured a selection of symposia and guest speakers and involved several colleges and programs at Cornell, including the Johnson School.

Nancy Schlichting, MBA '79
Nancy Schlichting, MBA '79

"At Henry Ford, I believe my fundamental job as the CEO is to create a fabulous environment for people to do their best work," Schlichting said. That means providing leadership and passion, creating a feeling of ownership, removing bureaucracy, and rewarding people who produce great results.

For example, when the chair of the urology department proposed a novel procedure for prostate cancer surgery employing a robotic device, Henry Ford supported the initiative. "Today, we have the largest example in the country of prostate cancer robotic surgery, and have now created the standard of what is being done throughout the world," Schlichting said.

Henry Ford has also broken new ground with standalone centers of excellence for specific health services, such as dialysis and eye care, and defused tensions between physicians and its health maintenance organization by integrating the health plan more deeply into the health care operation "I think a lot of people understood that there were tremendous opportunities in that relationship that really speak to the notion of entrepreneurship," Schlichting said.

Another of her bold moves was hiring Gerard van Grinsven, a former executive with the Ritz-Carlton hotel company, to run the new West Bloomfield Hospital, due to open in 2008. "I hired him because I thought he was a terrific leader of people," Schlichting said. "And he 'gets it' in terms of the connection of delivering high-quality service and connecting with the people who deliver that service."

Cross-functional teams have led to other innovative programs, such as an initiative to become more "retail focused," Schlichting said. Thanks to that effort, patients can call Henry Ford's new pricing office to learn the costs of common health care procedures, or visit a Web site for information on quality and pricing.

Finally, Henry Ford has explored new ways to reward desired outcomes. Under the Group Performance Award program, every employee now receives an annual check based on system-wide achievements in patient satisfaction and financial performance. The results have been amazing, Schlichting said. "We've had continuously improved financial performance, and our patient satisfaction scores are hitting the 75th percentile across our entire organization for the first time in our history."