Tuesday 07 February 2012 | RSS Feed
Header Date Feed
When Dawn Byrum opened her paycheck from Northwood Health Systems in January of 1997 there was a note attached reading, “Please wait as long as possible to cash this check.” The non-profit behavioral health care provider was on the verge of bankruptcy. Services to clients in the Northern Panhandle were in jeopardy and 570 employees in the Ohio Valley were in fear of losing their jobs.
Conditions at Northwood were deplorable. Carpeting at some facilities was held together by duct tape, heating and air conditioning were unreliable and the internal and external appearance of many group homes and clinical sites was unacceptable. Morale was horrific and patients were not receiving the quality care they needed.
That was 1997.
Today, Northwood is a world-class behavioral health care provider. How it made this transformation had a lot to do with the dedication of employees, the implementation of innovation and technology, high quality patient care and commitment to charity care. But mostly the successful turnaround of this West Virginia non-profit is because the organization hired a man named Pete Radakovich.
From 1993 to 1996, Northwood had more than $3 million in operating losses and debt totaling more than $5 million. The company was in such a dire financial condition it couldn’t make payroll. Management literally had to ask employees to hold off cashing their paychecks until the last possible moment, cut back on services to clients and lay off employees.
In September of 1996, the chief financial officer of Northwood resigned, followed three months later by the resignation of the chief executive officer. Six months later the board of directors permanently laid off 19 employees, including senior level managers due to financial crisis. In essence, there was no one steering the ship at this failing non-profit. The entire management team was gone.
During emergency meetings, members of the board of directors discussed filing for bankruptcy and/or ceasing operations. “I remember talking about closing the doors at Northwood,” said Patrick Casey, chairman of the Northwood Health Systems board of directors. “The company was broke, there was no management and we didn’t have many options.”
Financial concerns were not the only problems facing Northwood. The behavioral health care provider was experiencing significant operating difficulties, including substandard care for patients and serious regulatory compliance issues.
In April of 1997, the board made an unusual choice and hired someone outside of the clinical/behavioral health care industry to spearhead the financial turnaround desperately needed at Northwood. Pete Radakovich, a turnaround specialist with more than 27 years of diversified executive management experience was chosen for the enormous charge of transforming the organization. While Radakovich had the know-how of working for large, sophisticated organizations, including Price Waterhouse & Co. and a Fortune 1000 company, the challenge of making a near bankrupt behavioral health care provider successful was a monumental task.
Radakovich recalls, “This was a very challenging turnaround situation because there was absolutely no management or any concept of management, no systems, no clear direction/mission, no planning, a clearly substandard work force with a poor work ethic and an unbelievably poor culture.”
Since 1997, there have been dramatic improvements in all areas of Northwood Health Systems. This non-profit has experienced a monthly operating profit for 90 consecutive months in a very adverse behavioral health environment in West Virginia, and has reduced its debt to less than $1 million. The main reasons for this success included the management skills, turnaround experience, the persistence and work ethic of Northwood’s new CEO and the multifaceted plan that he implemented. The multifaceted approach that has been successfully implemented and executed over the past eight years included:
By teaching and transferring his extensive management experience and knowledge, Radakovich upgraded the quality of the work force with special attention to developing management and clinical skills. External training and many in-house, after hours training sessions on the subject of management were conducted for years. Skill levels of clinical personnel improved as a result of extensive training, the recruitment of an experienced clinical director, Perry Stanley, Ed.D. and the replacement of clinicians who lacked high skill levels.
By establishing management processes and technology-based systems, Radakovich was the inventor, architect and champion of Northwood’s new management infrastructure. Referred to as the “Four Cornerstones,” it consists of a strategic planning system, a total quality management system (referred to as Continuous Improvement System or CIS), a state-of-the-art communications system and a regulatory compliance system. These systems are sophisticated, integrated technical constructs that have taken tens of thousands of hours of dedicated effort from many key employees to successfully implement. Today they represent the foundation of Northwood’s management infrastructure for the future.
Northwood’s previous culture was characterized by a social service agency mentality, a lack of understanding regarding the importance of generating a profit to support community needs and a complete lack of understanding of the importance of utilizing innovation and technology to provide cost-effective, high quality patient care. It takes years of dedication and hard work to make major changes in a company’s culture.
Northwood’s culture today nurtures a passion for excellence, encourages a “whatever it takes” attitude and emphasizes a continuous improvement mindset. Employees that demonstrate initiative, a strong work ethic and a positive attitude are most successful in Northwood’s new corporate culture.
Every employee serves as a member of the management team through active participation in Northwood’s CIS. The management team empowers each employee, through the CIS process, to help Northwood achieve its mission of being a world-class organization providing cost-effective, quality care.
Each week employees are required to submit ideas to eliminate non-value added activities, improve quality, re-engineer processes and reduce costs. Through the power of ideas from 500 employees, CIS has contributed significantly to the improvement in Northwood’s bottom line results. A portion of the improved bottom line has been reinvested to improve the quality of patient care. This empowerment system has dramatically improved employee morale in the organization.
“This program makes us feel part of the process,” said Nancy Pogacich. “We can affect the way things are done in our work area. We are on the front lines every day. We see what can be improved, where we can cut back or where we need to enhance our efforts.”
The regulatory environment has also dramatically improved since 1997. Now, regulatory compliance at Northwood is managed through a disciplined, formal structure which begins with a comprehensive Corporate Compliance Plan. Each employee receives training on the importance and content of the program, and a Regulatory Compliance Committee conducts audits, provides training and regularly monitors the organization’s adherence to the plan.
These efforts have continued to evolve into regular weekly meetings of the Regulatory Compliance Committee, annual employee training and testing and institution of a requirement that new employees formally acknowledge that they have read, understand and are responsible for adherence to the Corporate Compliance Plan.
An example of the state-of-the-art communication systems utilized at Northwood is its nationally recognized, award-winning electronic medical records system. In the late 1990’s, the organization took its time to thoroughly understand the capabilities of the new technology it was investing in, and then began to aggressively implement the new system at all 18 locations in three counties in the Northern Panhandle.
“The implementation of this new technology represented a major change in what people were used to at Northwood, and therefore, was initially met with substantial resistance, especially from the clinical work force,” said Mary Ann Kinder. “However, today our clinicians embrace and value the importance of our electronic medical records system in improving the quality of our patient care and in helping us to accomplish our financial objectives which help provide security for all of us.”
Northwood Health Systems surpassed original project goals by eliminating manual paper charts and converting existing paper-based records to digitized documents. Following successful implementation, the electronic medical records system was expanded to serve financial, human resource and regulatory compliance needs.
The return on investment was extraordinary, with an average annual savings of $300,000. Clearly cost-effective, the electronic medical records system made it possible for Northwood’s 120 clinicians to provide more efficient, improved quality care to more than 3,000 clients at six clinical sites and 12 group homes.
During the past three years, Northwood invested more than $500,000 in executive management and staff time to design, develop and implement a state-of-the-art clinical scheduling software system. This feature rich, computer based clinical scheduling system has been instrumental in improving the productivity of outpatient clinicians, including psychiatrists, psychologists, physician’s assistants, nurses and therapists.
The custom-designed scheduling software uses a variety of features to match clinical resources with client needs, thereby maximizing productivity and patient satisfaction. A Web-based design permits an Internet-like, point-and-click user interface.
Without Northwood’s financial stability, neighboring health care organizations in West Virginia would have suffered. They could not have handled the more than 3,000 patients Northwood services annually. This potential failure could have literally dragged other health care organizations into crisis mode.
Because of tight financial management throughout the organization, the state did not have to spend millions of dollars to reestablish care to the population served by Northwood. There is no other health care provider in the Ohio Valley that can do what Northwood Health Systems does for the Northern Panhandle community.
In its progressive management style, during the past three years, Northwood has implemented a formal, progressive and proactive peer review process in order to better manage inherent risks associated with its patients and to further improve the quality of patient care.
The board of directors and executive management believe pro bono services to the financially disadvantaged are both a responsibility and one of their greatest accomplishments. Since 1998, Northwood Health Systems has provided more than $13.4 million of free care. More than 10 percent of client service revenue has been provided to those who are less fortunate. Northwood believes providing charity care is an important and Godly thing to do.
After Northwood’s turnaround was under way, its new CEO began to make financial contributions to other non-profit organizations that directly help the Ohio Valley community. Those contributions have been made to the Salvation Army, Easter Seals, American Red Cross, Wheeling Health Right, Hopeful City, Toys for Tots, Muscular Dystrophy Foundation, Bishop Donahue High School, Behavioral Health Foundation, Catholic Charities, Fraternal Order of Police, East Wheeling Girls Club, Mel Blount Youth Home, Habitat for Humanity, Wheeling Shop With A Cop, Florence Crittenton, YMCA and The Gabriel Project of West Virginia.
When the Ohio Valley was devastated by floods in September 2004, Northwood was there once again to help the community. It spent approximately $50,000 to help clients, employees and others in the community who had been devastated by the flooding. Many of these people had no one to turn to for help.
“As the winter months approached, and the weather turned cold we had as many as 30 people sleeping without heat at our facility. We asked for help from the community. Northwood Health Systems was very generous in providing financial support to assist us in the future purchase of a new furnace,” said Major Tom Friddle.
Things look a lot different at Northwood today. Patients are better served than ever before. Its continued improvement is now a focus of the organization —with highly trained professionals supported by sophisticated management infrastructure, including technology-based systems. Employees are, for the first time, taking an active role in improving their daily working environment. Work stations fully equipped with state-of-the-art software systems are up and running. Clinicians and administrative personnel work together as one team to achieve a well defined mission.
It has been eight years since Dawn Byrum got that notice in her paycheck. Today, she is still working as a manager with Northwood Health Systems. Because of the financial turnaround, Dawn continues to contribute to an organization that takes care of thousands of less fortunate people in her hometown.
“We are here to help people,” said Byrum. “We can now deliver high quality patient care, charity care to the poor and truly serve the community we love.”
Copyright 2004-2009 Executive Ink
The Face of Business in West VirginiaSuccessful meetings take time and effort to plan. So many considerations and options present themselves in organizing such events. With that demand in mind, we have created a one-stop resource for all your planning needs – Executive Meeting Planner.
© Copyright 2004-2009 Executive Ink
User Agreement | Privacy Policy | Contact Us | Login
