Frank L. Lordeman, Senior Partner, CEO Advisory Network
When Illinois’ Centegra Health System and Northwestern Memorial HealthCare announced a merger in 2016, it was strategically important to both parties. However, by early 2017, Centegra encountered several financial issues that would
adversely impact the organization. These included opening a new hospital in a suburban area, closing the acute care role in another hospital within the system and accruing more due to an increase in uncompensated care and self-pay patients. The latter being a trend that has increased only over the past few years.
The impact of these financial issues was significant. Needing to identify critical strategies for turning the organization around, Centegra’s CEO reached out to our partner organization, Warbird Consulting, for financial expertise. He also wanted to take a comprehensive look at performance improvements including revenue enhancements, labor productivity and other significant factors throughout the entire health system. Most importantly, he wanted his operations executives and directors to lead the process improvement. In need of operations and performance improvement expertise, I was recruited to add a full complement of services.
The CEO Advisory Network (CEO Advisory) and Warbird team created six performance improvement teams that were led by executives including vice presidents and directors throughout the health system. CEO Advisory and Warbird Senior Consultants facilitated team goals including establishing financial objectives to make Centegra profitable within two years. The teams were accountable for financial and operational decisions and outcomes. Meeting weekly, the teams made decisions regarding staff reductions, revenue cycle outsourcing and investments in technology. This collaborative approach revealed issues that had been known, but not yet resolved.
Performance started turning around within four months of CEO Advisory and Wardbird’s arrival. Centegra successfully implemented more than $30 million in economic benefits as a result of the six performance improvement teams. The “run rate” for sustainable performance improvements is at $4million per month going into the next fiscal year. Even though Centegra forecasted a loss for 2018, they are on track to improve that prediction by more than $10 million. Centegra is predicted to be profitable in 2019. Northwestern Medicine and Centegra have a definitive agreement to merge by September 1, 2018.
Frank Lordeman can be contacted via email at Frank.Lordeman@CEOAdvisoryNetwork.com.
August 28, 2018