Children’s Healthcare of Atlanta president and CEO James Tally keeps a mother’s tear-stained letter as a reminder of why he goes to work every day.
“In this case, her child died,” Tally says. “But she was thanking me for the compassion, love and caring her family experienced while her child battled to the end.”
For Tally, the organization provides a very special environment.
“It’s for children, for the families that take care of these children,” he says. “It’s the most gratifying work I could ever imagine doing. Most people here don’t look at it as work; they look at it as a life’s calling.”
With the goal of better serving Atlanta’s children, Tally spearheaded the 1998 merger of two of the area’s health care facilities, Egleston Children’s Health Care System and Scottish Rite Children’s Medical Center, into a single enterprise — Children’s Healthcare of Atlanta.
“What the merger allowed us to do was rationalize the entire system, develop one system and get a lot more return on each dollar invested,” Tally says. “We saved, in the first two years of the merger, over $40 million by cutting unnecessary duplication, wasteful spending, excessive advertising and those kinds of things.”
The merger brought additional benefits, as well. The editors of Child magazine ranked the facility No. 6 among America’s Top 10 pediatric hospitals. And several of the hospital’s specialty areas were ranked in the top five in national prominence.
It’s an accomplishment Tally says would not have been possible without the merger. He credits the board for recognizing the need to merge but it was Tally and his team that made it all possible.
“The board members, especially that have been involved in (the merger), are just unbelievably gratified,” he says. “They gave the leadership team an ovation at the last board meeting when they were informed that we had achieved this recognition.”
Saving money and becoming one of the most respected children’s health care facilities in the country were goals established at the time of the merger, he says.
“We thought it would take much longer to get this sort of recognition,” Tally says. “But we’re exceedingly gratified by it.”
The merger, Tally says, was borne of necessity. The leaders of the individual facilities recognized that the financial pressures — the cost of managed care, Medicaid, uncompensated care (the hospital provided $60 million in unerimbursed care in 2003), competition and duplication of services — were putting their continued survival in serious doubt.
“It was clear that in that environment, these hospitals, if they didn’t go out of business, were certainly going to be much diminished in their presence,” Tally says. “So with the financial challenges and with encouragement from the philanthropic community and the medical community and the business community who felt we were wasting the money that could be better invested in taking care of the kids, with that backdrop, we merged.”
Building the team
The merger may have been necessary, but it still took the willingness of Tally and his team to ensure the new venture was successful. Tally was president and CEO of Scottish Rite just before being named CEO of the new operation in 1997.
His first action was to interview leaders from Egleston and Scottish Rite to form a unified team. Three months later, the merger was complete.
“The next day, there were people without jobs that, previous to that, had had jobs,” he says. “A new leadership team came together that first month, and I took them on an off-site planning retreat to start forming a new team to represent this new business, Children’s, which owned both these hospitals.
“I was gratified from the outset at how quickly the top leadership team came together and how successful they were at creating their organizational structures within the hospital to achieve pretty rapid turnaround in terms of functioning as an organization, as a system. Those are things that we still work on and will forever be working on.”
Tally allowed the two medical facilities to manage their own roles in the merger. With a bit of anagram humor, the physicians formed the Taskforce to Unify Medical Staffs.
“What TUMS did was organize in such a way to bring medical leaders from both campuses together to create a single medical governance structure,” he says. “They alternated, every six months, president of the staff.”
The new entity runs more efficiently but the pressure hasn’t lessened. The Greater Atlanta area is expected to see an increase of 140,000 children by 2007, following the 120,000 children who’ve arrived in the past five years.
The hospital is overrun. It is judged full at 70 percent utilization, and it regularly runs at 80 percent to 85 percent. To meet its needs, the organization is beginning a $350 million construction project.
“We’re adding facilities to add beds,” Tally says. “And it’s entirely possible, with the growth we’re (experiencing), that by the time we open these beds, if all that growth continues, that we could be looking at another expansion about the time we open these beds in ’08. It’s huge. We’re trying to be thoughtful and responsible.”
“Thoughtful and responsible” is the polite way of saying the organization is being asked to do more with less money.
“I think there was a day where not-for-profits could plan on somebody writing them a check irrespective of how they were running the place,” he says. “Those years are long gone. We’re really strained to do all of the things in our society we really want to do. … Each year we must be smarter and smarter about how we manage our business so as to be sure we’re constantly increasing our quality, constantly enhancing our ability to care for more and more children with more and more positive outcomes for those children.”
In other words, the $40 million saved is only the beginning. Tally must ensure that, as the hospital moves forward, it practices sound money management.
“We have to be much, much more businesslike in our operations, much more thoughtful about all of our expenses and management of our money (and in) the investment of our money in programs, facilities, resources, people and benefits,” he says. “We’re a not-for-profit business. But if we don’t make a profit, to have money to reinvest in what we do, we could go into a downward spiral and ultimately go out of business. From what I’m reading, a lot of industries in this country are dealing with the same kinds of dynamics. We have to be unbelievable stewards of our resources to continue achieving our mission.”
Continuous improvement
With the merger complete, construction plans under way and the business on a constant improvement path, Tally has directed his leadership team to improving the way it runs the operation. The first person he is working on is himself.
Tally asked the board to critique his management style.
“They were very candid,” he says. “Obviously, I have some things I can improve upon. What I’m trying to do there is to illustrate to them we’re all fallible. We all need to understand what are we doing right, and we need to know where our opportunities for getting better are. And they do the same kinds of thing with their team.”
So what is Tally’s first flaw?
“We call ourselves a learning organization,” he says. “You have to constantly be learning to get better. My team has shared with me that I espouse the philosophy very effectively — we will use mistakes to learn — until there’s a big mistake and I start taking names and want to know who’s in trouble. They say that’s inconsistent; I agree with them. It’s an insight they helped me understand about myself.
“If I’m going to preach, ‘We’ve got to get better, and to get better you have to know what your flaws are,’ I have to be prepared to say openly, ‘I know I have flaws. Help me understand them and help me fix them.’ But you better understand, I’m going to be right back at you on what yours are and what you’re going to do to fix yours.”
That willingness to recognize and deal wit
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his own flaws gives Tally the credibility to work with his staff on their issues. But more than make them better employees, Tally also wants to understand the people who work for him.
“I schedule time on my calendar where I get out and move around the organization and go sit down with employees in the cafeteria, in the nursing stations or the janitorial staging area, and ask people, ‘What do you think about this place? What’s important to you personally?’ I enjoy remembering names and children and who’s getting married. I go to funerals.
“My entire team does this sort of thing. It’s trying to connect at very personal levels with the people so that they understand. There’s an old adage, ‘People don’t care how much you know until they know how much you care.’ I think there is great power in those words.”
Tally’s focus on people has begun to pay off; the hospital was named a top five employer of choice in Atlanta by a local business publication and the top overall health care company. Tally hopes that carries through the employees to the patients and their families.
Not long ago, he found out that it does.
“I was stopped by a mother in the hallway at one of the hospitals here,” he says. “Her child is a cancer patient, and the family was planning a vacation to the beach. This child was 3 or 4 years old and had been battling cancer for two years, in and out of the hospital for that entire time. The morning they got up, were packed up and ready to go, it was clear this child was going to the hospital, not to the beach. The mom said she thought she would take a chance. She said, ‘Honey, would you rather go to the beach and play with your brothers and sisters or would you rather go play with your nurse and doctor friends over at the Children’s Hospital?’
“And (the mother) started crying when she said, ‘Do you know what it means to a family like mine to have a hospital for kids that your child would rather be there than on the beach with her family?’
“Now, you talk about motivating. It just gets into your blood if you love children.”
And for that, Tally doesn’t need a transfusion.
HOW TO REACH: Children’s Healthcare of Atlanta (404) 250-kids or www.choa.org
