The following is an article on all DaVita does to micro manage itself. Yet, with all of this, the DaVita units I was in were dirty, violated infection control and had many other violations. What does this say?
In the Lead: Execs who build truth-telling cultures learn fast
Tuesday, June 13, 2006
By Carol Hymowitz, The Wall Street Journal
The higher executives climb, the easier it is for them to distance themselves from problems. Top company officials are often surrounded by yes people who filter out bad news. They then convince themselves their strategies are working, even when they aren’t.
But Kent Thiry, chief executive of DaVita of El Segundo, Calif., the No. 2 dialysis-treatment operator, starts worrying he is out of touch when all he hears is good news. In April, thousands of employees at an annual staff gathering said yes when he asked if integrating recently acquired Gambro Healthcare was “a fun process.” His response? “Either you’re all on drugs or better than me because integrations are a god-awful nightmare.”
He also told employees how much he depended on their frank feedback to avoid “messing up” the Gambro integration. He said he was paying attention to complaints from former Gambro managers who were being asked to adjust to dozens of new systems and employee practices. Among the issues: an order to assign one employee at each center to greet patients or sit with them in the waiting room. “Gambro people told us to grow a brain” about greeters, he said, and that prompted him to rescind the directive.
Mr. Thiry’s effort to build a truth-telling culture offers lessons for executives who sense they don’t actually know what is and isn’t working at their companies. DaVita was a mess when Mr. Thiry took the helm nearly six years ago, in default on its bank loans and barely able to make payroll. Turnover was a steep 45 percent a year, and it included employees with the most knowledge about which problems were most acute and what needed to be fixed first.
Mr. Thiry’s encouragement of frank feedback has helped the company cut employee turnover by 50 percent and grow revenues to more than $5 billion and achieve the industry’s best clinical outcomes. At the outset, he sold off assets and overhauling payment systems. Rather than issuing orders, he made front-line employees an integral part of turnaround decision making, seeking their views on equipment maintenance, inventory management and cutting costs by reusing supplies.
In a program dubbed Reality 101, Mr. Thiry also had every manager spend a week working in a dialysis center, seeing firsthand, he says, “how relentless and hands on and challenging this work is.” Dialysis, which replicates the kidney’s function of removing toxic wastes from the body, takes about four hours, and many patients must do it three times a week. What is more, about one in five dialysis patients, many of whom have chronic illnesses, die each year.
Nonetheless, pay scales are low, with technicians earning about $14 an hour and nurses, who are in short supply, about $26. DaVita, which has 27,000 employees and operates about 1,200 dialysis centers, can’t raise wages much and still stay competitive, Mr. Thiry tells employees who ask why pay isn’t higher.
The company faces legal difficulties as well. Medicare and Medicaid pays for dialysis for more than 85 percent of its patients, and DaVita is the target of several government investigations, including two involving compensation for medical directors. (Other dialysis providers are also being investigated for allegedly fraudulent billing.) Mr. Thiry says DaVita has “systematically and conscientiously” tried to assure compliance with laws and regulations since he took charge.
How do top executives like Mr. Thiry know they are getting accurate feedback? Some comes from worker surveys, but most is culled at town hall meetings. Mr. Thiry holds about 20 a year and tells each of his vice presidents to convene one whenever they are with at least seven “teammates,” or employees. “You can ask for a show of hands and find out immediately if your new scheduling software is terrible,” says Mr. Thiry, who tells workers to think of DaVita as a “village where there’s shared responsibility and a shared vision of reality.”
Managers collect reams of data to further pinpoint problems. Every month, treatment center managers get reports on operations and quality of care, including treatments per day, labor hours per treatment, and the retention of employees and of higher-profit, private-pay patients.
Top executives routinely revise practices that employees say aren’t working. Recent “course corrections” have included simplifying the approval process for expensive pharmaceutical supplies and providing more training.
The 49-year-old Mr. Thiry believes that just having executives stay informed can reduce employee angst. “When our procurement process or scheduling software or other things were screwed up, employees knew we knew about that, which eliminated half their concerns,” he says.
Most important, says Mr. Thiry, is for executives who seek frank feedback to be candid about their own shortcomings. In the performance review he recently received from his 13 senior executives, he got a “bad grade for giving too much negative feedback,” he acknowledges. “They say I’m not harder on them than I am on myself, but my negativity isn’t constructive,” he says. It’s the third year in a row he has received the same poor grade, he adds, so he plans to start giving himself a “daily score about feedback, to remind myself – and change.”