Saint Peter's Healthcare System in New Brunswick, N.J., was six years ahead of the C-suite streamlining curve.
The health system slimmed down its leadership structure in 2017, President and CEO Les Hirsch told Becker's. A top-heavy executive team grew unsustainable as the system struggled financially, operating at a loss. Saint Peter's board decided to combine the president and CEO positions — which were previously split in two. Then, as president and CEO, Mr. Hirsch cut five vice presidents’ positions, including the consolidation of the chief information officer and chief medical information officer roles. More than 20 middle-manager positions were also cut or consolidated.
The streamlining of senior leadership positions alone at the time eliminated over $4 million in salaries and benefits, according to Mr. Hirsch. With the old leadership structure, Saint Peter's spent about 2.4% of its revenue on senior leaders' compensation. Last year, that percentage sank to 1.34%.
But finances shouldn't be the only consideration for a health system planning to whittle down its structure.
"The good news is, we're lean," Mr. Hirsch said. "The bad news is, we're lean."
Since consolidating the president and CEO roles — and not having a chief operating officer — succession planning is more complicated, per Mr. Hirsch.
"There's no designated No. 2," he said. "Our senior leadership team structure is very flat."
A condensed C-suite also means more work for some members of the leadership team — which is taken in stride, Mr. Hirsch said. There's no specific "planning" department, so executives put their heads together on strategy, growth and development initiatives. There is no government relations officer, but Mr. Hirsch, as CEO, takes primary responsibility for this function and is very active in advocacy.
Anyone who works on a lean team like this also "has to be a generalist," Mr. Hirsch said. He stays up to date on the literature and sends relevant articles to other executives.
"Considering our size as one of the few remaining single-hospital health systems in New Jersey, we don't have the luxury of having somebody specifically responsible for artificial intelligence or other niche responsibilities as these are functions that are absorbed within people's roles," Mr. Hirsch said. "And we all develop the knowledge needed so that we can understand how new ideas or resources may apply to us. When you're smaller and don't have the scale of these mega-organizations, you have to do more yourself. You roll up your sleeves."
Despite these challenges, a little can go a long way; three departmental administrators now split the job once shared by seven people at Saint Peter's. There's been no hit to efficiency; "they're more effective in their roles as departmental administrators than anybody that I've ever seen," Mr. Hirsch said.
The changes to streamline management were also well-received by the workforce. Often layoffs affect front-line workers more than management or senior leadership — which may have contributed to the lack of outcry, per Mr. Hirsch. But he primarily attributes the positive reception to intentional transparency.
"Most importantly, I'm a very active communicator. So, I communicated about it. It wasn't that there was some intrigue and mystery in the organization that people were hearing by rumor," Mr. Hirsch said.
"Rumors — like fear — are two things that equate to being like a cancer in an organization," he continued. "I always want to do everything I possibly can to set the facts straight and communicate with people. If it's not confidential and I can communicate it, I will. In fact, I'll err more on the side of communicating than keeping information close to the vest."
Regardless of who is affected by layoffs, executives should always handle them with sensitivity, Mr. Hirsch emphasized; the right choice for an organization is not always the easy choice for its people.
"It's always painful when you're making these kinds of changes because they affect people, and you always have to go about those changes in a very thoughtful, considerate, and compassionate way," Mr. Hirsch said. "You're eliminating roles and impacting people's lives, their careers and their family. So, I always keep that top of mind."