Caring for Cleveland

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In 1986, Farah Walters walked through the doors of University Hospitals of Cleveland to interview for the position of director of nutrition services. She was intimately familiar with the Cleveland-based hospital system after delivering her daughter at UH’s MacDonald Women’s Hospital and receiving follow-up care at Rainbow Babies and Children’s Hospital.

Because of those experiences, Walters had come to the sobering conclusion that health care had become an impenetrable maze of paperwork and referrals. And, with her typical candor, she told the interviewing panel, “This is what I feel is wrong.”

She briefly outlined what she thought would make patients’ experiences easier during the most difficult times of their lives. The outspokenness didn’t hurt her chances; Walters was awarded the job.

The mid-’80s was a time of change for health care in Northeast Ohio and nationwide. Employers looked for financial relief and began passing insurance premium costs on to employees. Managed care organizations were in a growth phase and building critical mass by negotiating lower rates with providers. But that relief was never fully realized as the national economy slid into recession.

It was during this time, in 1992, as the escalating tension leveled, that Walters stepped into the lead role at University Hospitals of Cleveland and University Hospitals Health System as CEO and president. She was the first woman to lead the 135-year-old institution and the first woman in the United States to head an independent academic medical center.

The task was daunting. Teaching hospitals nationwide were being cut to the core because of a disproportionate number of uninsured patients, high costs associated with academic research and nonrevenue generating physician training. Many were forced to look for merger opportunities, cut expenditures with layoffs or balance the books by slashing less lucrative programs.

UHHS, however, weathered the storm. Under Walters’ leadership, the hospital system grew from a traditional, single-site academic medical center into a formidable contender of the world-renowned Cleveland Clinic. UHHS established recognized centers of excellence in its Rainbow Babies and Children’s Hospital, the Ireland Cancer Center and MacDonald Women’s Hospital, the only women’s hospital in Ohio. And over the past decade, nearly $500 million has been invested into new programs, staff, buildings and enterprising initiatives.

Today, the UHHS family includes a dozen acquired and partner hospitals, 150 locations and insurance and managed care companies with revenue exceeding $2 billion.

But the changes at UHHS have also generated controversy as Cleveland moves ever closer toward an oligopoly, with two major health care systems muscling out smaller players at the starting gate.

Walters disagrees with the proverbial two-horse race theory described by some health care experts.

“If you’re two businesses operating in the same city, fighting for the same market share, yes, there is going to be some competition,” she says.

Whichever side of the equation you’re on, one thing is certain. It is because of Walters and her vision for how health care should be delivered to patients that UHHS has achieved its current level of success. She maintains strong beliefs about the impetus behind the health care revolution and refuses to rest upon her laurels.

She says her focus is on determining what new reforms the hospital can incorporate. Simply put, she is on a mission to develop creative solutions to combat the igniting health care costs that threaten Greater Cleveland.

Tehran-born Farah Moavenzadeh arrived in the United States in 1964 speaking little English and for one purpose — her parents wanted her to receive a top-notch education. She, however, saw things differently and had her own goal — to go back home.

Struggling with a new culture and language, Moavenzadeh was the only female physics major at The Ohio State University. The pressure almost took its toll on the teen-ager. She turned to her brother, a college professor who was also Stateside, for support.

Physics soon changed to preventive medicine as the hospital atmosphere appealed to Walters even then. Although more clearly focused as she walked the rounds with medical students, Walters still longed to return to Tehran. Then she met Steve Walters, a law student from Elyria, who in 1970 became her husband.

That same year, she became a U.S. citizen and moved to Cleveland to assume the post of education director at what is now MetroHealth Community Hospital. She later obtained a master’s degree in nutrition and an MBA from Case Western Reserve University’s Weatherhead School of Management, studying health care at the macro level.

In 1987, she moved into the position of senior vice president at UHHS under her predecessor, James Block. By the time she stepped into the president’s role in 1992, Walters had gained experience in research, patient care and administration.

“By shear chance, not by design, I put together this background that has served me very well,” she says.

Walters’ office on the first floor of the Lakeside Building is a professional yet feminine reflection of her style. She chooses to remain at the heart of the daily bustle, just a few yards from the main entrance and within easy reach of patients, physicians and employees.

Being accessible is part of her vision, which has thus far yielded success for UHHS and recognition for its leader. Among her honors, in 1998 Walters was the first woman to receive the Harvard Business School Club of Northeast Ohio’s Business Statesmanship Award, and in 1999, she received the Sales & Marketing Executives of Cleveland’s Business Executive of the Year Award. This year, she received the Ellis Island Medal of Honor by NECO, the largest U.S. organization promoting ethnic and religious equality.

Walters believes the heart of the hospital’s success lies in its teamwork approach, but the bottom line is that no organization can be successful without a strong leader. It is directly because of her rise through the ranks that Walters fosters a unique sensitivity to employees and patients alike, bringing a patient-centric philosophy to the business of care.

“If I had to do this 10 more times, I would not change a thing in my background,” Walters maintains. “It has given me such an insight, not only into what goes on at the clinical bedside level, but what goes on in the business side.”

Walters’ vision led to a 1993 appointment to then-first lady Hillary Rodham Clinton’s National Health Care Reform Task Force. That bird’s-eye view of the nation’s health care woes ignited programs at UHHS that made it a role model for university hospitals nationwide.

In 1994, Walters was again called upon for her expertise. Ohio Gov. George Voinovich asked her to participate in a 15-member commission to study the Ohio economy and tax structure. As her education in health care continued, Walters carved out a niche in business as well as the business of caring.

There is little question that health care is indeed a business, and with $1 trillion in revenue, it is among the largest industry sectors nationwide. But what makes it unique also makes it vulnerable — health care touches everyone involved on a very personal level. Explains Walters, “You have to do it right the first time; there is not opportunity for recall.”

UHHS generates approximately $1.7 billion a year. That’s a far cry from when Walters arrived at what was then a single-site academic medical center. Under her leadership, UHHS has become a vast network of alliances, partnerships and strategic acquisitions.

Robert Baker, president and CEO of the University Health System Consortium, says the hospital system’s outreach through community hospitals and physician offices is significant in that it promotes economic buying practices, volume buying and a sharing of management expertise. In other words, it fosters an environment that is conducive to cutting expenses.

“Overall, your health care delivery system is going to be more effective,” says Baker, “both in terms of patient care services and costs because of all the economies of scale.”

Reform began in 1993 with Walters’ strategic plan to take health care into the communities where people live and work. She says the plan is a continuation of her predecessor’s, although until she added her touch, the plan emphasized single-site acute care. She also drove complexity from the system. Redundancies in care and reams of paperwork added to the hard costs of delivering health care.

Armed with bedside experiences and a working knowledge of the gears within the health system, her plan would prove pivotal in her career. Her goal was to predict how people would want to access health care at the turn of the century and build it into UHHS.

“The way we developed not only our strategic plan but strategic alliances was really driven by focusing on what our patients and their families want,” Walters says. “We looked at health care and said, ‘Let’s design it not the way it was done in the past, which was completely illogical and a response to reimbursement policies. Let’s look at it in terms of how the consumers of health care want to use health care.'”

In UHHS’ 1999 Report to the Community, Walters wrote: “In redefining ourselves, we established a clear understanding that we are in the health care business — not exclusively the hospital business.” It is a statement she has manifested in her decisions since.

During the five years following her appointment, the number of UHHS’ primary care and ambulatory care locations grew from 16 to 100. The health care system’s presence expanded from 11 communities to 45 across 14 counties. The number of outpatient visits increased from 1.4 million to 3.1 million. The hospitals’ reach now extends from the Pennsylvania border to Sandusky, and as far south as Medina, Summit and Stark counties.

The burning question today is how this massive expansion has impacted the cost of health care.

A recent employer health insurance survey by the Robert Wood Johnson Foundation analyzed the cost of employer-sponsored health coverage in Greater Cleveland. It found an average 1.1 percent increase in 1997 compared to the double-digit increases in the late 1980s and early ’90s. From that perspective, cost containment efforts by Walters and UHHS, as well as other private and public forces, appear successful.

But as any employer today knows, premium rate hikes in the double digits are more the norm than the exception.

Sitting on the receiving side of medical bills is Medical Mutual vice president of underwriting George Statlander, who disagrees that costs have been reined in. He says UHHS’ expansion into a broad-based health care system contributes to today’s rising rates.

“All we need to do is drive along the interstates of any major city and you’ll see new ambulatory, surgery, outpatient clinics and medical office building complexes going up,” says Statlander. “This program of capital expansion needs to be paid for by the consumers, whether they be in the private or public sector.”

Scott Lyon, executive director of Group Benefits Inc. at COSE, agrees.

“There’s a lot of different things that go into it … general inflation, aging population, prescription drug prices … the absolute demand for the latest, greatest things,” says Lyon. “And consolidation of the health care market is a contributing factor.”

Lyon questions whether it would be better to chip away at the millions of uninsured rather than provide the “Mercedes Benz of health care to everybody that has it at the expense of everybody that doesn’t.”

But Walters shrugs aside such views and remains steadfast in her belief that the strategic plan is healthy and serves patient needs at an affordable rate. With an ear to the consumer, she says the most recurring complaint heard before the plan was put into effect was that patients felt they were being bounced from one provider to another. Cost, she says, was not their primary concern.

“Sometimes it was done in continuity of care,” Walters explains. “Sometimes there was information that was falling through the cracks, and sometimes there were redundancies and delays in the system.”

More important, Walters recognized a different role for hospitals in the future. She envisioned the need for outpatient services and doctor visits. Her solution was to forge alliances and partnerships and establish a wide network of caregivers.

Statlander argues the process hurt rather than helped local health care.

“There has been erosion in our ability to leverage competition between these systems (The Clinic and UH) to result in lower prices,” he says. “We don’t have the ability to negotiate that we had a while ago.”

That’s not a surprising opinion, considering the mission of insurers is to keep costs down across the board. But Joseph LaGuardia, regional vice president of Anthem Blue Cross and Blue Shield of Cleveland, is not nearly as critical of UHHS’ method of growth.

“I think it fuels other businesses because of what goes on in the two major systems,” says LaGuardia. “In a way, it is highly competitive between these two major systems. That is a good thing because it promotes excellence and innovation.”

Innovation, says Walters, is crucial to the long-range success of UHHS. Her commitment goes back to when she was senior vice president and created the managed care company QualChoice in the late ’80s.

The impetus, she says, was that UHHS employees were not exempt from the cost increases associated with health care. Walters received a good dose of reality in 1987 when she inherited responsibility for the hospital’s self-funded employee health insurance and increases were averaging 27 percent annually.

“That was really an eye-opener and what we were facing and was being faced by all other businesses,” she says.

Baker says it was Walters who recognized the problem and approached it with a creative solution.

“Costs were escalating at a dramatic level,” he says. “The business community was clamoring for a new alternative that would help control costs. Basically, Farah and her staff said they understood what the business community was asking for.”

Another innovation was the enhancement of UHHS’ alignment with one of the most prestigious academic medical schools in the United States, Case Western Reserve University. The relationship provides UHHS access to cutting edge technology at a research level.

Research has been a part of UHHS for decades. This spring, the hospital broke ground for what may be its biggest investment yet, a $10 million, 320,000-square-foot building dedicated to clinical research. The building is due for completion in 2003.

But, as any business leader knows, high tech does not necessarily yield high success. That, Walters says, comes from developing a plan and following through.

“We developed a strategic plan in 1993 that committed to understanding that not only the market of health care was changing, but more important, the needs and the wants of the consumers of health care was changing,” she says.

And, at a time when other teaching hospitals were bleeding money, scaling back services and choking on the 1997 Balanced Budget Act, UHHS expanded. Today, the organization — which includes its partner hospitals — is the largest private-sector employer in Northeast Ohio, moving up from fifth place in 1996, with a physician-employee work force of 25,000.

Baker attributes the growth directly to Walters.

“She has, first of all, a way about her that looks at care from a patient’s point of view,” he says. “It’s one thing to be able to have a vision of what needs to happen in an organization. It’s another thing to be able to execute on that vision within an extremely complex organization.”

Part of her success can be attributed to Walters’ 1993 experience in the Washington, D.C., circle. She says it afforded her an in-depth review of health care changes at the national level, and the strategic plan developed for UHHS was a key result of that knowledge.

By sharing that knowledge with UHHS’ board of directors, Walters says, “They were very quick to understand that even though the strategic plan had an element of risk in it, the bigger risk was associated with not doing anything. What made it doable was that people understood why we had to do this.”

Since becoming president and CEO in 1992, Walters has fostered an atmosphere for the development and recognition of team-driven successes. She always comes back to “we.”

“We means the senior management team, we means the clinical leadership, and we means thousands of employees that come here every day,” she says. “We could have the best strategy, the best execution of that strategy, but it requires employees.”

Staff appreciation is really a two-way street to success, she says.

“We cannot expect our employees to provide the best care to our patients and be caring, compassionate, responsive, sensitive if we treat them with lack of respect, lack of interest and so forth,” she says.

An example is when Walters addressed the nursing shortage that threatened the quality of care by developing a short-term and long-term plan. For the short-term, the hospital actively recruits retired nurses, offering a cost-free refresher program developed in conjunction with Cleveland State University. Nonprofessional employees interested in entering the health field are also offered tuition reimbursement.

The long-term strategy includes developing interest in health professions such as nursing by creating programs with local school districts for middle school through high school. Walters is also attempting to reach the root of the problem by investing time and money to understand what leads the organization’s nurses to dissatisfaction on the job.

“What we’re trying to do is to really let them know they are critical to the work we do, they are valued, their contributions are respected, they’re central to our patients’ satisfaction and to good patient outcome,” she says.

To understand the factors interfering with the staff’s ability to produce the best outcome for patients, UHHS is formulating a questionnaire for employees, physicians and residents.

“Throwing money at the problem is not the answer,” Walters says. “They (the health care staff) need to feel fulfilled. They need to feel what they do is important, is recognized and is respected.”

And, as health care pundits predict a shift toward prevention rather than cures for a patient base that demands adaptability, Walters is listening and reacting. She is developing a program called “E-Health,” which stands for electronic health communications, which will allow appointments to be scheduled online, lab reports to be transmitted over the Internet and patients to submit questions to UHHS physicians via a Web site.

For providers, the initiative will allow for a faster review of medical records and dramatically increase the efficiency of patient management. Today, paperwork accounts for almost 20 percent of health care costs, and Walters says E-Health is expected to drive that figure down.

As she goes down her path of continuous improvement, she says technology will play a major role.

“We’re focusing very heavily in the area of supply chain management and how we can improve our position,” she says. “But ultimately, our business is about people.”

How to reach: University Hospital Health System, (216) 844-1000

University Hospitals Health System website