Nancy Schlichting, CEO of Henry Ford Health System (HFHS), has been bucking conventional wisdom ever since she came to Detroit in 1998 from a smaller hospital in Ohio.
Detroit was hemorrhaging population then and HFHS was bleeding cash, with operating losses approaching $100 million. “A lot of people had sort of given up on this town,” Schlichting told me last week, “including some of our corporate leaders at Henry Ford. Our key strategist said that everything needed to move to the suburbs. And I said, ‘Are you kidding me?’ “
Since then, she has led a major expansion of the Henry Ford Hospital campus in Detroit’s urban core; invested heavily in Dr. Mani Menon’s pioneering robotic surgery, which made Henry Ford a global destination for prostate surgery, and celebrated the prestigious Malcolm Baldrige National Quality Award to HFHS in 2011.
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Now Schlichting, 60, who plans to retire as CEO at the end of 2016, has written a book that — predictably — defies easy labeling.
The title is a mouthful — “Unconventional Leadership: What Henry Ford and Detroit Taught Me About Reinvention and Diversity” — but the book itself is a lean, 139 double-spaced pages. It will be widely available for sale Tuesday.
It’s a story of Detroit’s resurgence and Henry Ford Health’s role in it. A story of out-of-the-box decisions like hiring a Ritz-Carlton hotel manager to run a brand-new West Bloomfield hospital. And it’s also the personal story of a gay woman navigating the career challenges that went with top leadership roles decades before same-sex marriage was widely discussed or accepted.
In a recent interview, Schlichting discussed the book and several pivotal points on her journey:
Being anonymously outed and passed over for promotion at a Columbus, Ohio, hospital because of her sexual orientation.
Why doubling down on Detroit as the home base of HFHS — a system with five hospitals, 23,000 employees and the HAP health insurance network — was critical for its future.
What happened with the aborted merger talks in 2013 between HFHS and Beaumont Health System?
Choosing a CEO successor, Wright Lassiter III, from outside with a two-year transition period as president and understudy to Schlichting before taking the CEO reins.
Six months after HFHS hired Lassiter, Schlichting was named in June by President Barack Obama to chair a new Commission on Care, created by the U.S. Congress to examine how to improve health care delivery to military veterans.
“I didn’t plan on that,” Schlichting said, “and that’s allowed Wright to even ramp up more quickly because I’m gone more. I’m still CEO but I think we’re making this transition happen in a very smooth way. In every aspect.”
Schlichting is spending about six days each month in Washington, D.C., where the Commission on Care is tasked with making recommendations by February on how to improve care for vets over the next 20 years.
With everything on her plate, I asked Schlichting, why write this book now?
“I’ve always done things a little differently,” she said. And noting that most people who write leadership books are academics or consultants, she added, “being a sitting CEO perhaps has a little more credibility.”
Another reason she thinks the timing is good is recent public attention to same-sex marriage. “I’m a gay woman,” she said, in an industry where top management has been very male and traditional. “So I felt that it may be useful for people who may not think they can ever rise to these kinds of positions, that they feel like a sense of hopefulness.”
In the book, Schlichting wrote that she realized she was gay when she was 19 as a student at Duke University, and she kept that largely hidden for decades. In 1993, when she was chief operating officer of Riverside Methodist Hospital in Columbus, an anonymous letter was sent to her CEO and all the trustees of the hospital, saying in essence, “Congratulations on hiring a lesbian to run your hospital.”
She survived that outing, but a few years later was blocked from becoming CEO by a board chairman and major donor who threatened to quit giving money to the health system if Schlichting was promoted.
“I felt humiliated and shell-shocked by how it all went down,” she wrote in the book, but she chose to resign rather than fight it publicly. In the book, she never names the man who blocked her promotion. “He’s dead. It’s not worth it. He’s gone,” Schlichting told me, “and his family didn’t do it , so you don’t want to hurt anybody that shouldn’t be hurt. He probably has grandkids, so I didn’t want to do that.”
She took some time off as her mother was dying, regrouped and resolved to stop hiding her sexuality. A few years and a couple of brief career stops later, she was recruited by Gail Warden, then CEO of HFHS, to come to Detroit.
Like the nearby Detroit Medical Center at the time, Henry Ford was in dire financial straits, serving a large indigent population in a struggling city, at a time when the Detroit Three auto companies — also under severe pressure financially — were fighting to reduce their health care expenses.
While HFHS did open a new, highly acclaimed West Bloomfield hospital in the suburbs in 2009, Schlichting has steadily focused on stabilizing, modernizing and expanding its presence in the core city areas of New Center and Midtown.
“You cannot recreate the academic and clinical center that the original Henry Ford Hospital is, in a suburban environment,” she said, “because the diversity of the population that we serve, the amazing talent that we attract is because they want to be part of an urban environment that is challenged. That’s why we keep people here, frankly, because they want to be doing this work.”
A huge boost came from funding Dr. Mani Menon’s pioneering robotic surgery work through the Vattikuti Urology Institute established in 2001 at HFH. “It was big money and a tough sell,” she wrote. “In the end we funded a large part of the project ourselves and Dr. Menon secured a large outside donation.”
“He changed the game for us,” Schlichting told me, “because the only way you can make a hospital like that successful, when you see a 30% population decline in your city, is you’ve got to draw from a bigger geography. You’ve got to be a destination center — and what Dr. Menon did for us was make us a destination center, which we had never been. We had never attracted patients from all over the world.”
Three years ago, Schlichting made perhaps her biggest, boldest move of all at HFHS, proposing to join with Beaumont Health System in a mega-merger to create a giant $6.4-billion nonprofit entity with 10 hospitals and 41,000 employees.
But that deal unraveled in May 2013, and Beaumont moved on to merge with Oakwood Healthcare and Botsford Hospital the following year.
In her book, Schlichting gives a mostly dispassionate account of how she, her HFHS board and Beaumont’s leaders came to conclude that their proposed merger would be “a cultural misfit,” despite clear strategic advantages of scale and penetration across the entire metro Detroit region. Beaumont officials seemed a tad concerned about Henry Ford’s commitment to Detroit and diversity, she wrote, but she left the implied criticism there.
In our interview, she was blunter when I asked what made her decide the merger wouldn’t work.
“I think it was because of how I was treated, and how I think our people were treated,” she said. “It’s kind of how you speak with one another, how you relate — and we felt like we were on trial the entire time.
“And they came to us, that was the irony of it, when you’re trying to do something that has great strategic value. It was very clear that this would be an amazing combination for a lot of reasons, but at the end of the day, it’s about dignity and respect for the people who are engaged in the process. At the end of it, I think it became very clear — not just to me, but to our board and our physicians.”
Schlichting told her HFHS board leaders — chair Sandy Pierce and board member Bill Ford, great-grandson of hospital founder Henry Ford and executive chairman of Ford Motor — that she would step aside and retire as CEO if they chose to proceed with the Beaumont merger. They joined her in deciding to abort the deal, but she decided it was time for her to put a CEO succession plan in place.
Today, Schlichting is as busy as ever, heading toward her final year as Henry Ford Health CEO, working for the president on veterans issues — and now she’s a book author.
And not just any book author, but one with a book-jacket blurb from Mike (Coach K) Krzyzewski, the famed basketball coach of her alma mater, Duke University.
Date: October 26, 2015