Under the leadership of Toby Cosgrove, the 43,000-employee Cleveland Clinic has achieved an impressive balance, maintaining quality (the clinic has been ranked #1 in cardiac care 20 years in a row by U.S. News) while at the same time cutting nearly $1 billion in the cost of care delivery over the past three years, representing about 15% of revenue. Those financial pressures have made finding sustainable growth even more urgent, says Cosgrove. We spoke with him about how to balance all of these objectives.
How big is the transformation we are facing in health care?
Toby Cosgrove: This is the biggest change in 100 years. And we are changing two things at the same time. First, we are changing the delivery of health care, and that is being driven by the high cost. If we don’t reduce the cost, then we risk not being able to afford other things that are important to us as a society, like education. Second, the practice of medicine is changing enormously because of the explosion in knowledge. The total amount of knowledge in health care doubles every two years. And so we now have to figure out how to manage the change, how we deliver that care, and we are looking for all kinds of new technologies to help us do that.
How do you manage the change, at a human level, from the dominant fee-for-service model to one that is about value and outcomes? What does this mean for people working in health care?
TC: One of the things that we have done at Cleveland Clinic is to ask: Why are we here and what’s our business? The only reason that we have a job, the only reason that we have a hospital, the only reason we have a clinic is to serve the patients. So if we focus on what the right thing is for the patient, it takes us to the right model. But sometimes we have the financial incentives that drive us in a different direction. The whole idea of change is hard. There’s a lot of people saying: ‘Who moved my cheese?’
Because I have credibility within our organization, that has helped with some of the leadership challenges. I am the one who looks for the champions in the organization who can help to lead us in the direction that we need to go. And the communication aspect is so important. You need to communicate the change over and over and over again. It requires a tremendous amount of education at every level of the organization in order to get it to move.
How do you meet the talent challenge?
TC: One of the things from the CEO summit that really resonated with me was Xerox CEO Ursula Burns talking about the common challenge of hiring people, that even when you realize that they are not a fit, we can be very slow in making personnel changes.
At Cleveland Clinic, we celebrate the top 10% and we manage the bottom 10% and we are very transparent about it. And that keeps invigorating the organization and raising the bar.
What about the need for speed? How important is it to execute the change quickly?
TC: Everybody in the industry is eventually going to get to the Emerald City; it’s just a question of when. Speed, at the end of the day, is the ultimate competitive advantage and always will be.