Management Lessons from Mayo Clinic

1. Management Lessons from Mayo Clinic Practicing destination medicine Dörthe Prestel BUS 550 Minder Chen May 24, 2011

2. Historical Background • Dr. William W. Mayo, settled in Rochester, MN, in 1863 • sons, Drs. William J. Mayo and Charles Mayo, joined 1883 /1888 • 1893 patients came from 11 different states to receive medical care • 1914 Mayo Clinic world's first integrated private group practice was found • 3 campuses: Minnesota; Arizona; Florida • 1983-2003: number of physicians & scientists increased from 838 to 2,700 • Number of employees increased from 6,000 to 42,000 • Patient care revenue increased from $345 mill to $4 bill • 2003: 500,000 patients served at 3 campuses

3. How it works Mayo clinic is not a single-specialty boutique but rather a department store of medical care capable of addressing virtually all medical needs from cancer care to cosmetic surgery to joint replacement or organ transplantation

4. Mission To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.

5. 3 Key Principles • Continuing pursuit of ideal service, not profit • Continuing sincere concern for the care and welfare of individual patient • Continuing interest by every member of staff in professional progress

6. Human Resources • Top of talent pool: team players, commitment to high quality care and service, positive attitude, strong work ethic, understanding of cultural diversity • Hiring for life: behavioral interviewing techniques > extensive, expensive process • Employees are salaried, no incentive payments > unbinding self interest

7. Technology / Infrastructure 1 • 1907 implementation of medical records and MR numbers • 1914 Conveyance systems to move medical records • 1928 lifts and chutes system • Strategic investment of millions of dollars each year in industrial engineering

8. Technology / Infrastructure 2 • Starting in the 1990s, in 2005 EMR replaced paper charts • In- and outpatient records are instantly available to Mayo caregivers via 16,000 computer terminals on site • 7.5 million transactions processed between 8-9 am • Around noon up to 15 million transactions

9. Scheduling 1 • Rapid growth in 1950s urged development of central appointment desk (CAD) • Initial system adopted from railway company Pullman • 1950s: card system • 1960s: telephony system replaced card system

10. Scheduling 2 • 1970s: computer technology with software ideas from Boeing and NASA to accommodate complex rules of Mayo schedulers • establish time intervals between appointments and determine length of appointment types < using stop watches • 2005: genetic algorithm system

11. Strategy • Branding a labor intensive services company • Health management is the key business strategy - identifying population health concerns, targeting those issues proactively, and gathering the information needed to measure progress over time • Marketing strategy: customer and employee satisfaction, Facebook, and Podcasts

12. Collaboration • EMR, internal paging, telephone and video conferencing, physical spaces that encourage communication • Using cross-functional teams > using Six Sigma and Lean • net operating income increased by 40% in 3 years • 85% of patients complete clinical itineraries in 5 business days • Radiology department reduced time per appointment by average of 6 minutes

13. Team Leadership Model • Physician-led institution: clinical practice, education, research • Physicians experience learning-by-doing leadership training at the clinic while practicing medicine • Physician leader + administrator = marriage • Administrative partner = management coach, confidant, reality checker, implementer • Balancing business-vs.-caregiving tensions • Teaching for tomorrow’s patients – its okay for highly trained providers to ask for help > strong collegial attitude

14. Destination Medicine • Each year 140,000 patients travel more than 120 mi to receive medical care at Mayo Clinic • Patients receive efficient, time-compressed care that can usually provide definite diagnosis and sometimes initial treatment – including major surgery – within 3 – 5 days • Scheduling system is backbone of destination medicine

15. Learning from Mayo 1 • Customer demand is unevenly spread • Customer needs are diverse • Speed and accuracy are essential to performance • Multiple service providers contribute to customer’s service experience • Service chain is complex • Combining talent where its needed, encourage and enable internal communication, foster organizational competence

16. Learning from Mayo 2 • Molding firm’s resources and talents to each individual customer • Practice “patience” hiring • Invest in systems that help employees practice well and encourage to teach coworkers • Continuously stress organizations core values • Candidates for organization designs like Mayo: high reliability organizations – atomic energy plants, aircraft carriers, petrochemical plants

17. Conclusion • Cutting edge advantage of Mayo – TIME! • Mayo clinic is constantly working on solving the customer’s whole problem, using technology to support values and strategy, and innovating with systems engineering • However, Mayo Clinic does not work flawless – 85% success in their goals • How will they be affected by healthcare reform?

18. Quiz Which of the following is NOT a success driving factor for Mayo Clinic? • Strong organizational culture • constant innovation • Time efficiency • Location of their campuses Thank you for listening.

19. Works Cited • http://www.mayoclinic.org/rochester/?wt.srch=1&wt.mc_id=google&keyword=minnesota_Mayo_Clinic_Mayo_Clinic&campaign[...} • http://bush.tamu.edu/nonprofitspring09/PresentionBerry.pdf • http://ftmba.tamu.edu/research/publication/951/