Richard Allen joined Warren (Pa.) General Hospital as CEO in 2014. Under his leadership, the once cash-strapped, 85-bed rural community hospital has made significant improvements in quality, safety and fiscal stability.
In 2018, following five years of operating losses ranging from $3 million to $7 million, the hospital saw its financial picture improve to nearly breakeven. In 2019, hospital leaders expect to post a profit for the first time in seven years, due in large part to Mr. Allen's drive and vision.
Part of Mr. Allen's strategy to ensure the 118-year-old Warren General Hospital remained a sustainable home for high-quality care was the establishment of a unique partnership with Pittsburgh-based based Allegheny Health Network, Highmark Health and Lake Erie (Pa.) College of Osteopathic Medicine. The three organizations in 2018 acquired a minority membership interest in Warren General Hospital, which means the hospital remains independent and its board remains intact.
Here, Mr. Allen describes the major components of the hospital's financial turnaround plan, offers his top advice to hospitals struggling financially and discusses the two people that inspire him the most.
Editor's Note: Responses have been lightly edited for length and clarity
Question: What were some of the major components of Warren General Hospital's financial turnaround plan?
Richard Allen: It starts with a clear and compelling vision and creating a culture where the staff believes the organization can achieve great things. Of course, understanding the reality of the fiscal, strategic and market position is critical. Finally, executing well-crafted strategy to reduce expenses and grow the top line is imperative. I characterize the above in the acronym D.R.I.V.E.S. To achieve a strategic and financial turnaround, a leader "DRIVES" the organization, which means Defines Reality, Instills Vision, Executes Strategy.
I work very hard to fully understand the reality of our situation in terms of finances, strategy, market and staffing. I seek to truly understand why the organization is where it is, which can be a difficult endeavor and requires open and honest assessment. This assessment provides the keys to unlock positive change.
Next comes crafting and passionately communicating the vision. Absent a clear direction, many organizations fail. I believe in the adage, "If you don't know where you are heading, any road will get you there." Finally, execute well developed strategy and tactics. Of course, strategic plans are only good if they get implemented.
Q: What are some of the unique challenges rural and community hospitals face?
RA: "Resources" comes to mind first. Many rural and community hospitals face extreme difficulty recruiting skilled staff. It's commonplace that nurses are hard to find. I agree, but add that in a rural location it's also hard to find good finance, clinical and other medical administrative support. "Bench strength" in small hospitals is very limited.
Another obvious challenge for rural and community hospitals is recruiting physicians. We have had tremendous success, but it takes a lot of time and effort to find great doctors to work and fit in small communities.
Many rural and community hospitals also face downward trending economic conditions, such as a declining population base, limited business and industry, inability to effectively negotiate with payers due to independence and size, limited ability to grow due to geographic restrictions and competition from local healthcare service providers in areas such as home care and rehabilitation.
Q: What advice do you have for CEOs of distressed hospitals and health systems?
RA: Work to understand your hospital's reality. Why are your finances not meeting industry metrics? Why is your strategy not delivering more growth and top line revenue? Why is your staff not motivated? Why can't you recruit more high-quality doctors? Work hard to determine the critical things that are failing and then develop a strategy and deploy tactics to change. Of course, focus on strategy and tactical execution when the time comes.
Additionally, I would say a clear and compelling vision is absolutely critical. What is your "Super Bowl" or "FedExCup?" Be passionate in getting all staff and the community on board with where you are taking the hospital.
Finally, don't be afraid to ask for help. If your organization needs a partner — for capital or strategic positioning — seek one out. If your vision is to remain independent, I offer that you can still find a partner. It takes some imagination and hard work, but options are available.
Q: What particular skills are required to succeed as a leader at a rural, community hospital?
RA: In addition to solid organizational, fiscal and strategic skills, the rural and community hospital leader must be able to engage the community, ensure the board is "in the know" and understand and balance the relationship between the employed and independent physicians. Working with physicians is a make-or-break skill set, as each doctor plays a critical role in the success of rural and community hospitals. The rural and community hospital leader must be a "jack of all trades" with limited resources and expert staff.
Q: Who inspires you?
RA: My wife Janis and my mother Liz are a constant source of inspiration to me. Their passion for treating everyone with respect and kindness, dedication to serving those in need and action-oriented drive to get things done encourage me every day. They both display the rare trait of "unconditional love" for family and friends — something we all need to do more of. My wife is by my side every day and although my mother is long passed, I often feel her presence.
Q: Are you optimistic about the future of rural, community healthcare?
RA: I am! It is vital that high-quality and service-oriented healthcare is delivered in small and rural communities. Care must be available where people live and work. I firmly believe that community and rural hospitals can survive and, in fact, thrive. Of course, it takes very hard work, a clear and compelling vision, and perhaps choosing an appropriate partner, but it can be done.