Paul Levy Multi Media

Paul Levy: Taking Charge of the Beth Israel Deaconess Medical Center

How would you describe the situation Levy inherited?

The Beth Israel Hospital and Deaconess Hospital were consolidated and became Beth Israel Deaconess (BID) in 1996. BID operated under the Care Group Systems (CGS), which was an affiliation of some Boston-area hospitals. The BID hospital system was in anarchy. There were significant operating losses, amounting to millions of dollars each year. BID management seemed incapable of implementing turnaround plans. The hospital experienced tremendous employee turnover and suffered from poor patient care.

The old hierarchical structure continued in the new BID. There were layers of management with bureaucratic processes. Each department seemed to run independently of one another. Managers and chiefs were in psychic prisons as they seemed unable to move forward. Things remained as they always had, with no room for change. The board made decisions on a group-think basis, using past practices because of an inability to accept the changes that had been recommended. The organization could be called egocentric with its fixed idea of who it is and the unspoken need to remain the same old BI hospital.

Recommendations for a turnaround plan were never implemented successfully. Management would agree to implement change, but plans for change were often postponed or disregarded. The bureaucracy led to long and delayed processes that didn’t seem to lead anywhere. Though the reasons were not known, plans just weren’t implemented.

The company could be analyzed as a machine in that each department seemed to go about their own business, each independent from one another. There were no over-all goals from management, though management was running the company.

Even with the Board of Directors (BOD), decisions were made from group think. The BID resulted as a defense mechanism to the new Partners Healthcare System. The BID leaders tried to control things as they always had. They ran the new group without regards to the merged partnered hospitals. They were in a psychic prison where they had to be better than their rival Partners System. As part of the merger, they decided clinical integration would be best, with all partners and staff fitting into the BID model. They were oblivious to the problems it created. They were caught up in the group-think trap, making decisions on what that small group believed to be true.

The BID can also be analyzed through the flux metaphor and egocentrism. The BID BOD saw BID as one hospital striving to survive against the Partners System and the outside world. They see themselves as the best hospital, well known for extremely high patient care. They are lost in their own reality and can no longer see who they have become. They still live in their perfect world of a perfect hospital. This kind of behavior is also seen within the chiefs and the COO. The chiefs were always the lead managers within their own specialty, as was the COO. They didn’t really answer to anyone, they knew all of the right answers, and everyone was to accept that as reality.

Paul Levy faced many challenges when he agreed to accept the position of President and CEO of Beth Israel Deaconess Medical Center (BIDMC). As President and CEO, he was expected to create a rapid turnaround of the deteriorating financial condition of the hospital. He was also expected to stop the several-year trend of flawed implementation of turnaround recommendations. Further, he was working under intense scrutiny and pressure from many officials, including the Attorney General’s Office of the Commonwealth of Massachusetts (AG), the BID Board of Directors, and the Board of Directors of the BID parent company, Care Group (CG).

How did Levy get started in his new job? What were his goals and what did he accomplish? First day on the job? First week?

Before Levy accepted the position, he made conditions for his employment. These conditions included that he be hired before the Hunter Group Report was released, that the BOD be considerably reduced in size, and that the BOD stay out of the day-to-day operations of the hospital. Even as he talked to the search team, he knew the responsibilities and his own abilities.

His first condition was that he would start his job the first week of January 2002, before the Hunter report was presented. Hunter was the outside consultant hired to review the organization and suggest changes to turn the organization around. Levy wanted to be hired prior to the Hunter report so that he could use the report in ways that he thought would be best.

The second condition was to shrink the Board of Directors from a 44-member group to a more-manageable group of 18 members, which was accomplished just a few months after Levy’s appointment as CEO.

The third condition of employment, that the Board remain out of the day-to-day operations, showed that he believed in a chain of command. Levy made it clear that any meeting between a board member and a staff person must be brought to Levy’s attention prior to the meeting. Perhaps Levy’s intent was to avoid another situation where chiefs convinced the BOD to fire the leader.

After searching and various discussions, the Boards of The Care Group and BID made the decision to appoint Paul Levy. They also secured an agreement from the AG to foreclose the idea of selling the BID to a for-profit hospital. Levy’s first day as CEO of BID was January 7, 2002.

Levy likely had many goals including: turn BID into a profitable organization; create a common culture for the BID, which was the result of a recent merger of two hospitals; coordinate team-work between doctors, administrators, and others in the hospital; recruit good talent; repair the damaged reputation of the hospital from the perspective of the community (patients, employees, and medical partners); establish high morale among the doctors, nurses, and other staff; establish BID as a worthy donation recipient; continue to perform quality medical research; and, retain the hospital’s status as a non-profit teaching hospital.

Levy began his career with a very bold and unusual strategy. On his first day, he sent every employee of the hospital a memo that included:

• A promise of an open administration.

• A warning that the hospital had been given this one last chance for a turnaround.

• A promise to post the findings and recommendations