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Baldrige

Putting a little Ritz in health care

Recently, I had an enlightening encounter with Horst Schulze, who led Ritz-Carlton Hotels to national awards and has since opened his own hotel chain, Capella. Hortz gave an informal presentation to members of a program that I’m taking part in, the Baldrige Executive Fellowship, and we continued to talk afterwards. Capella has five ultraluxury hotels from New York to Singapore, and all have been recognized as tops in their region. Horst spoke to us of a culture of excellence. He knows—he has built such a culture time and time again. Excellence does not occur by chance. It requires clear goals and a system.

Horst explained that to be great, everyone in the organization needs to know the goals, in order of importance. For Capella, the goals are 1) keep existing customers, 2) add new customers, and 3) optimize the spend of each customer. Every employee not only needs to know the goals, but they need to know the behaviors to achieve them. The Capella employees ensure a warm welcome, compliance with and anticipation of guests’ needs, and a fond farewell.

All employees are required to know service standards. Twenty-five of them. One of them states that you are responsible to identify and immediately correct defects before they affect a guest—for example, getting customers food when the restaurant is closed. Defect prevention is key to service excellence, just as it is to delivering safe health care. Another service standard states that when a guest encounters any difficulty, you are responsible to own it and resolve the problem to the guest’s complete satisfaction.

Capella has standard processes for everything—how to submit defects, how to resolve them. And they trained staff in the goals, the behaviors and the processes. Each hotel, every morning is required to have a huddle at which all staff attend. They review the goals for the company and read one of the behaviors, called service standards. Every day they read a different one. They cycle repeats every 25 days.

If a manager did not do this, Horst said, they would be fired.

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What health care can learn from corn milling

Some of the best ideas for improving health care come from outside our field. For example, we’ve adapted cockpit-style checklists from aviation to improve teamwork and communication on our clinical teams. We’ve turned to performance improvement methods from manufacturing to reduce waste and defects in care delivery.

A recent experience reminded of the value of seeking ideas and inspiration from elsewhere. As I wrote in an earlier post, I was among 15 executives from various fields who toured Cargill through a fellowship run by the Malcolm Baldrige National Quality Award Program. On a visit to Cargill Corn Milling, among the largest of the gigantic company’s 75 business units, I heard a story with unexpected parallels to health care. Cargill officials told us that their nine plants used to compete against each other. Often, two or more of their plants would submit bids to the same customer, usually with different prices. This self-competition was inefficient, didn’t meet customer needs, and cost them market share and revenue. Something needed to be done.

The Cargill leaders recognized that they needed to organize themselves around what they provide to customers (i.e. their product lines) rather than their geographically based plants. And that’s what they did. The three main product lines were human food products (largely sugar), animal feed, and fermentation such as ethanol. Rather than having each plant compete against each other, they worked together to meet customer needs.

To support this new structure, they set cascading goals in which everyone—from the employee to the plant to the product line—knew what they had to accomplish to meet corporate goals. They changed the incentive structure so that plant managers had greater motivation to ensure the company’s success, customer satisfaction, product line success and their plant’s efficiency. With this reorganization, they weren’t pitted against others at their own company.

As I listened to the presentation, my pulse quickened. I leaned forward anxiously feeling as if I took a double espresso to pull an all-night study session. The parallels between corn milling and health care were haunting.

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