Two patients arrived at the same time, barely breathing and near heart failure. They came in different ambulances from unrelated calls at 3 a.m. on an already busy night.
Calm became chaos in an instant as emergency workers scrambled to save their lives. Leading their treatment was Dr. Larry McEvoy, an emergency physician, whose on-the-spot decisions helped stabilize the two patients after a frenzied few minutes.
It was there, at the Billings Clinic in Montana, that McEvoy developed his philosophy on leadership and brought it to Memorial Health System in Colorado Springs, where he took over as chief executive officer in January 2008.
True to the lessons he learned in that hospital more than a decade ago, he’s stepped up to make some tough, quick decisions as he leads an aggressive charge to put the 4,300-employee public hospital system on sound financial footing and help it weather political storms locally and nationally.
Some critics accuse him of ousting good employees and pushing change too far and too fast, but he’s widely credited by Memorial’s board, many employees and others for turning red ink to black and implementing what they say was a much-needed cultural makeover.
McEvoy, 44, says he’s moved quickly to make changes because there’s no time to wait. Major changes are afoot in medicine, he says, and Memorial needs to be ready for them. Moving fast sometimes means making mistakes, he concedes, but there’s just as much risk spending too much time waiting for everything to fall into place, as he discovered in the ER.
“Sometimes you don’t get all the pieces of the puzzle,” McEvoy said. “You get what you get, and the patients still look at you saying, ‘I need you to make a decision that counts.’”
So in his first stab at a CEO’s job, that’s what he did. In less than two years he streamlined operations, especially between the north and downtown hospitals, and instituted a new mission statement, a new executive team, budget cuts, and new policies and procedures.
In the past eight months, the hospital’s net income has gone from $32 million in the red to $14 million in the black. The mission statement has been simplified to seven words: “To provide the highest quality health care.” Employees, board members and others talk of new ways to work together as McEvoy has made it a point to break down fiefdoms, whether it’s doctors versus nurses or the north hospital versus the downtown one.
“It’s a different mindset. There’s a team approach to everything,” said Laura Lucero, the night-shift clinical coordinator in the neonatal intensive care unit.
The hospital has also seen its share of setbacks. In May, McEvoy called for Patricia Peterson to step down as president of the Memorial Health System Foundation, the hospital’s philanthropic arm. Neither has said what led to the falling out, but her departure resulted in the loss of hundreds of thousands in donations, foundation board members said at the time. And this summer, the hospital hit an impasse with its neurosurgeons, who abruptly ended their contract to provide on-call services. That forced Memorial to temporarily turn away any adult with a serious head injury. A new neurosurgeon was hired, and Memorial resumed taking such patients in September.
A few current and former employees have said privately that they resent McEvoy for cutting more than a dozen mid- and upper-level managers, many of them long-time employees with favorable evaluations. In some cases, positions were eliminated, but in others employees were asked to reapply for their jobs and did not receive them.
McEvoy and others chalk such incidents up to the pain of change.
“The whole culture of the hospital is changing,” said Mary Ellen McNally, a board member on the hospital’s foundation. “The discontent would probably be from physicians and hospital employees who don’t like the changes that are being made.”
Arrived in chaotic time
When McEvoy left Montana for Memorial in October 2007, he arrived at a time of “chaos,” he says.
The hospital was under scrutiny for its spending and financial management. It had come under fire for spending $250,000 to help sponsor the U.S. Senior Open at The Broadmoor. Discussions emerged in City Council about whether the hospital should be sold off. The system had recently opened a hospital in northern Colorado Springs and a seven-story tower downtown — projects that racked up a debt of about $200 million.
Even so, it was not his intention at the time to be the one to try to fix it.
McEvoy was hired as a chief medical officer, responsible for working with physicians and setting the course for medical care.
Then began an executive exodus. Chief Operating Officer Gus Lee left in December 2007. CEO Dick Eitel retired the following month, and Chief Financial Officer Gary Flansburg left in May 2008.
McEvoy, the only one left on the executive team, was named interim CEO in mid-January 2008. After a national job search that drew about 100 applicants, the search committee and hospital board unanimously selected him to take the job permanently, on July 1, 2008.
At the same time, the hospital was feeling the first pains of the recession. By the end of 2008, it was $32 million in the hole, down from $18.5 million in the red at the end of 2007.
Curtis Brown, who led the search committee at the time, said McEvoy’s inexperience as a CEO was a concern, but he’d proven himself as an interim leader and demonstrated he knew what to do.
“He definitely showed an understanding for what it was going to take to run the health system,” Brown said.
Given the state of affairs, he plunged into the role as if Memorial were a car crash victim. He immediately set out to hire an executive team and start work on shoring up the hospital’s operations. With the new team’s help, work on the bottom line began. Some staff members were sent home when beds weren’t filled. The hospital went from 4,800 to 4,300 positions, all through attrition. Operations at the two hospitals were combined. Bill collection stepped up. Multiple contracts were reviewed and renegotiated at better rates.
In the past eight months, the hospital has increased its net income by $46 million amid a recession in which people have cut back on elective procedures and added to the amount of bad debt.
McEvoy believes Memorial today is a fixed-up patient going home.
Reactions fairly common
Not everyone thinks so, however. Some people blame McEvoy for ousting well-respected managers and fueling low morale and fear. Speculation has emerged about his intentions, such as whether he is positioning the hospital to be sold, although McEvoy has not publicly taken a stand on the ownership.
Such reactions to a new CEO aren’t unusual, said John G. Self, a Dallas-based executive recruiter specializing in health care organizations, who was not involved in the Memorial search. Self said changes in management are typical when a new CEO takes charge, and so are sore feelings from those changes.
But overall, McEvoy seems to have made more friends than foes.
“I think Larry has done a very, very solid job,” said Mike Edmonds, chairman of Memorial’s governing board. “We wanted somebody who at their core believed in community health care, and we certainly found that in Dr. McEvoy.”
Brown, of the search committee, also said McEvoy is turning out to be a good pick.
“It’s hard to tell whether the right decision has been made or not for at least a three- to five-year period of time,” he said. “You can say (Memorial) is moving in the right direction. If you look at the financial success the hospital’s had, you would have to say that’s a high point.”
George Powell is a former business processes engineer at Memorial who resigned in February, one of at least 14 managers to leave since July 2008. He said he chose to retire to enjoy the summer and do some traveling. But perhaps unlike some other ex-employees, he lauds McEvoy.
“He’s doing everything within one man’s power to correct many of the things that were troubling or annoying (about Memorial),” he said.