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MGMA: Culture of buy-in can improve healthcare's performance

Companies with high engagement had a 14.3 percent higher operating margin than others, experts say.

Jeff Lagasse, Associate Editor

An organization's culture and philosophy is one of the primary predictors of its financial success and ability to retain employees. That was the message from organizational culture experts and authors Chester Elton and Adrian Gostick at the Medical Group Management Association's conference Monday in Anaheim, California.

Elton and Gostick used numerous examples from other industries to make the case that healthcare organizations would benefit from a culture of positive engagement, both internally with their employees and externally as they reach out to service their customer base.

[Also: Clinician satisfaction tied to healthy workplace, report says]

Being engaged, energized and enabled were the three main tentpoles of their approach, and they pointed to statistics that highlighted the efficacy of that type of culture. According to their research, companies with high engagement had a 14.3 percent higher operating margin, while companies that focused on those three E's showed an average 27.4 percent higher margin.

In particular, Elton pointed to Canadian airline WestJet, which ran a promotion one holiday season in which customers received free Christmas presents, simply for flying on the airline.

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"Their profitability is through the roof," said Elton. "They're the most popular airline in Canada, bar none. It's harder to get a job as a baggage handler at WestJet than it is to get into the Harvard School of Business." And he wasn't joking.

Gostick said that healthcare leaders looking to implement the three-E approach would be wise to consider a cautionary tale offered by General Motors. A few years ago, in an effort to make cars more in line with the quality that was coming out of Japan, GM embarked on a joint venture with Toyota, learning the latter company's production method. But GM didn't become more efficient. The production method, they decided, was too much work, they were too busy to focus on quality, and employees and middle managers all resisted, thinking the whole exercise was an excuse to start shedding employees. GM declared bankruptcy soon afterward.

"Great organizations are more agile," said Gostick. "People in these organizations feel psychologically safe to speak up. They can challenge the status quo, the conventional way of doing things."

The key to making that work in the medical world, he said, is to create a safe atmosphere in which everyone can ask questions and challenge each other without being negative. Anyone in the organization, from top to bottom, should be able to suggest innovative ideas without being considered disruptive. The most successful businesses, he said, are prone to experimentation and unique ideas.

Aside from having the potential to increase margins, such cultures typically fare better when it comes to turnover, particularly among Millennials, said Gostick. Microsoft had cut its MIllennial turnover in half by having aspirational meetings, asking employees how they want to grow, and encouraging them to give and receive feedback.

It's a challenge businesses will continue to face, as Millennials tend to job-hop much more frequently than past generations -- staying 1.5 to 2 years in an organization, on average. Knowing they're making an impact, having a good work/life balance and being able to learn in their jobs were ranked highly among Millennials, while things like autonomy and money rank near the bottom, according to Gostick. Healthcare organizations should heed these trends if they want their younger employees to stick around.

Twitter: @JELagasse
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