Management Lessons From One Hospital's Dramatic Turnaround

Putting people at the core is the key to major improvements in financial, performance, regulatory, and quality indicators.

- Eric J. McNulty, Nathaniel Foote, and Douglas Wilson

Assuming the leadership of a 165-year-old institution that appears to be in long-term decline can be a daunting task — especially if it faces deep-rooted financial challenges, eroding market position, drops in quality, a fading reputation, an aging physical infrastructure, and an influential cadre of veterans satisfied with “good enough.”

This was the challenge Bob Grossman faced when he became the dean and CEO of NYU Langone Medical Center in July 2007. In the 10 years since, however, rather than preside over further decline, Grossman has led the institution, which comprises both NYU School of Medicine and NYU Hospitals, to an impressive comeback.

The dramatic turnaround engineered by Grossman offers lessons for any manager seeking to overcome chronic under performance. Confronting an entrenched, entitled workforce — the tenured faculty in an academic medical center — he and his team succeeded in raising performance standards throughout the enterprise, while simultaneously increasing staff commitment levels. The result has been significant improvements across key financial, performance, regulatory, and quality indicators:

• From an operating loss in 2007 of US$120 million, NYU Langone now earns an operating margin of 10 percent and is investing heavily in infrastructure, equipment, and people. A new building that includes a children’s hospital is under construction. The institution continues to expand its ambulatory care for patients in the greater New York City area. Since 2007, the faculty group practice has grown from 600 to 2,700 physicians at more than 150 locations, and overall revenues have more than tripled.

• NYU Langone now consistently receives five stars for overall performance and is ranked by U.S. News & World Report as one of the 10 best hospitals in America.