St.Vincent Health has gained a reputation as a leader in cardiac
care both in the state of Indiana and across the nation. But in
December 2000, CEO Vincent Caponi faced a scenario that would
have placed that standing in jeopardy.
A group of about 100 cardiologists who had worked exclusively
with St.Vincent for the past 25 years informed Caponi that it was
going to end the partnership, join with the for-profit company
MedCath, and build a brand- new heart hospital.
The defection would have decimated St.Vincent Health.
“We’d be a much smaller organization,” Caponi says, speculating
as to the effect the loss of the cardiologists would have had on the
organization. “We would have struggled financially, and I don’t
know if I would be here. I think it would have been a major problem.”
Caponi says he and his team began questioning what they had
done to prompt the cardiologists, who operated as The Care
Group LLC, to consider leaving St.Vincent.
“The second thing was what is it that we could do to listen to
them better to make sure we did not lose the relationship that had
been established,” Caponi says.
“Sometimes, you get in the position where you’re saying, ‘I’m
going to fight you out in the streets.’ I just didn’t think that was an
option for us. I thought collaboration and cooperation was going
to be a much better tactic and strategy to follow rather than getting into a major conflict.”
Caponi was given time to respond to The Care Group’s proposal, so he and his team set out to develop a counterproposal that
would simultaneously save the partnership and help take
St.Vincent to a new level of health care service.
He also came to the conclusion that the best place for him was
not at the head of the boardroom table where negotiations
between the two groups would take place.
“Jeff Immelt from (General Electric) told me when the CEO
enters the room, all creative thought ceases,” Caponi says. “If the
CEO is in the room and he says, ‘This is the way I’d like it to be,’
then the willingness of the other people that are representing you
in negotiations, they usually don’t feel as free to use some of their
creative thought processes.”
Such detachment requires a lot of faith, and even with that, still
presents a certain level of anxiety for the CEO.
“For those of us that were not in the room, I think we had a lot
of anxiety,” Caponi says. “We knew that we wanted to have a relationship at the end, but we didn’t want to sell our souls in the
process. I think there was a lot of integrity in the process, and we
tried to communicate throughout the process at the appropriate
intervals and keep people informed. I think that allayed a lot of
fears.”
In any deal where delegation of authority is involved, there must
be faith between the CEO and those who represent him or her in
the negotiations.
“I had faith in the executives that were working on this that they
were doing what we were asking them to do,” Caponi says. “They
kept me well informed. If there were issues that they were really
struggling with, they would have a break in the negotiations and
they would huddle within their group or call me, and we’d have a
discussion. If I had something where I said, ‘Hey, we’re not going
to go there,’ they appreciated that, and it really helped us.
“At that granular level where things really had to be talked about
and you had to throw a lot of things on the table, we tried to get
the most senior leader out of the room so things could evolve over
time.”
While the CEOs were not in the room, their input was felt in a list
of bedrock principles approved by both parties that was kept on
the table during any talks that took place. The principles served as
a guideline for the discussion.
“We said whatever we come up with, and we didn’t know what that
was going to be, these are the principles it is going to adhere to,”
Caponi says. “Those were principles that you could develop and then
you could take back internally within the organization and socialize
them. … If you’ve really listened to one another, what’s really important to each of the sides are in those principles.”
In this case, Caponi says the principles were rooted in the mission, vision and values of both organizations and were developed
under the premise of mutuality, economics and sustainability.
If significant changes in a business partnership are being considered, a list of principles becomes a critical foundation on which
to base the talks.
“I don’t see how you do it without it,” Caponi says. “You’re just
going to fly around and you’re never going to have anything to
agree to. … What are the non-negotiables? What are the deal-breakers? You just try to get those upfront and put in there. If you
can’t get an agreement on that, your chances of getting to the
other end with something probably are not likely. What you find
out is you’re probably more alike than different.”
Building trust
One of the most important negotiation skills is decisiveness.
That means knowing when to say ‘no’ and not being afraid to do
it, especially if saying ‘yes’ would go against the principles that
were agreed to at the start of the process.
“You need to take a stand,” Caponi says. “If the answer is no,
then go ahead and tell them it’s no. It’s not the end of the world. If
you can’t do it, make sure that they understand why you’re not
going to do it or what things have to happen in order for you to do
it. You just have to be very straightforward. What I see a lot of senior executives do is they waffle. They flip from whatever they
think is going to be the most politically advantageous for them. I
think that breeds mistrust.”
In business relationships, Caponi says there is a difference
between mistrust and distrust.
“Distrust is, ‘I know you and I don’t believe you,’” Caponi says.
“Mistrust is just, ‘I don’t know you.’ If you are going to have these
relationships, you’re going to have these partnerships, you’re
going to have these working relationships, you really have to allow
people to know you and know who you are at the core.”
Caponi says he picked up a saying not too long ago that says that
while people like to think of themselves relative to their intentions, others judge you based on your actions.
“There is a big difference between the two,” Caponi says. “You
really have to know the people that you work with. You’ve got to
know what’s keeping them up at night. And whatever you do,
you’ve got to make sure you take that into account and you have
a much broader look at things rather than just from your own position.”
Caponi credits the spirit of partnership and open communication that St.Vincent had built with The Care Group for their ability to reach an amicable solution.
“We spent a lot of time on our side trying to understand why the
doctors wanted to do this,” Caponi says. “That also afforded them
the opportunity to further examine why we might want to do it.
It’s only through that understanding of each other’s reasons and
purposes that we could come to an agreement.”
The solution was a new hospital, but one that’s part of the
St.Vincent system, not a competitor.
The St.Vincent Heart Center of Indiana opened more than four
years ago and now handles more than 5,500 admissions each year.
It is the first freestanding medical campus in Indiana devoted
entirely to the diagnosis, treatment and prevention of cardiovascular disease.
“It’s been very successful,” Caponi says. “The unique part of it is
that not only did we have the Heart Center, but we also kept our
heart program at our 86th Street facility. On the one hand, we
were partners, and then on the other hand, we were competitors.
Keeping that balance has worked out well.”
“We’ve continued the relationship and we’re doing things now
that we probably wouldn’t have done if we didn’t have this partnership.”
“Too often, as CEOs, we think we know all the answers, and
quite frankly, that is arrogant on our part. I think that what I’ve
learned in this is that there are a lot of great ideas and there are a
lot of different ways to get it done. What you have to find out is
not only what is right for you but what is right for your partners,
as well. If you’re open to that possibility, you’ll probably end up
with much better results.”
Building talent
St.Vincent has $1.6 billion in annual revenue and is Indiana’s
largest health care employer, with 12,000 employees and 17 hospitals serving 45 counties in the central part of the state.
The successful negotiations with The Care Group solidified the
organization’s leadership position in health care. But none of it
would have been possible without the core culture that produced
people capable of comfortably handling high-level negotiations
with everything on the line.
It requires the setting of clear and identifiable benchmarks for
those who wish to move up in the company and become executives.
St.Vincent came up with a list of 10 leadership competencies,
including things such as demonstrating integrity, the ability to
clearly communicate expectations, a passion to succeed, accountability and self-awareness.
In addition to the competencies, executives must integrate a
defined set of virtues into their leadership style and prove that
they can lead holistically, promoting and enhancing the continued
development of associates.
Success in meeting these standards is tracked and a report is
shared with the individual being judged.
“Each executive receives a report that outlines the strength of
their values and spiritual balance for each of the success factors,”
Caponi says. “The report describes values and judgment strength
as either optimal, proficient, vulnerable or cautionary.”
Executives are also rated and get direct narrative feedback from
their colleagues, peers, subordinates and business partners on the
consistency of their leadership behaviors against the success factors.
Presentations at St.Vincent are made by the person who came
up with the idea, even if that person is not the head of the department.
“If there is a specific project that people are working on that
needs to come to the most senior level of the organization, we
usually encourage that the people that are working on the project
and know it the best be the ones that come and present, rather
than their senior executive,” Caponi says.
“What we like to do is give people the framework of what we
need to get done, but don’t be so prescriptive that there is only one
way to do it. People get energized by that.”
He also makes the time to get around to different parts of the
organization to get a first-hand view of what he calls his company’s “up-and-comers.”
Communication with those who have worked with the individual being evaluated, whether it was in a supervisory, subordinate
or equal role, is essential to gauging how closely this person fits in
with the values and philosophy of the organization.
“The people reporting to our leadership, they are probably our
best barometer to determine how well or not well they are doing
on things we feel are important. If they are struggling with some
of that, it gives us a great opportunity to work with them to
improve in those specific areas.”
HOW TO REACH: St.Vincent Health, www.stvincent.org