June 2004

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On May 10-11, 2004, I attended a meeting of over 4,000 presidents, chairmen, CEOs, owners, partners and other executives, known as the “World Business Forum,” at Radio City Music Hall in New York City. The symposium featured ten eminent leaders and thinkers, listed in order of appearance, speaking on a broad range of subjects that encompassed the political, the academic and the practical:

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> Letter from John A. Deane, President, Southwind Health Partners

> Peter Kindrachuk Joins Southwind as EVP/COO

> Southwind Participates in NYC World Business Forum: Leadership Speaks

> Margaret Hoban Appointed Senior Vice President Southwind RevenueCycle Solutions

> Eric Passon Joins Southwind as Consultant

Dear Colleague:

This issue of Southwind News highlights several key milestones in the growth and development of Southwind.

Peter Kindrachuk has joined us as EVP & COO - Peter’s role will allow Southwind to take a significant step forward in developing service to our clients. He is smart, capable and, above all, has values and integrity that are so important to success in our business;

Margaret Hoban has recently been promoted to SVP leading Southwind RevenueCycle Solutions – Margaret is the strongest professional fee revenue cycle executive in the country. We are honored to have her lead this critical component of the physician enterprise.

Eric Passon and Stacy Sarsfield, two younger but still experienced and capable professionals, have joined us as consultants to more effectively leverage the skills and talents of our senior consulting executives.

On the client front, we are witnessing a sea change. New clients are calling to request management assistance in the development and/or expansion of physician practice management capability. While turnarounds are still a significant part of what we do, we see progressive institutions more and more leveraging the talents of Southwind to build effective practice management infrastructure right, the first time.

I hope you enjoy reading about the World Business Forum I attended in New York City recently. There were many good nuggets of advice from the world class speakers there that we wanted to pass along.

Thank you for your continued support.

With warm regards,

John A. Deane
President & CEO

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Effective March 1, 2004, Peter Kindrachuk joined Southwind Health Partners as Executive Vice President and Chief Operating Officer. ?Peter fills a critical role in developing and implementing Southwind’s long-term strategy, in addition to providing leadership and direction to project managers for all client engagements,? said John Deane, Southwind President.

For the past two years, Peter led a physician practice management consulting firm providing pragmatic solutions to physician issues, including managed care risk contracting. ?The combination of Southwind and Peter's firm affords our clients a broader, deeper management expertise, skill set and capability to address needs in physician practice management,? said Deane. Prior to joining Southwind, Peter served as Senior Vice President and General Manager for North American Medical Management (NAMM), a division of Aveta Health (formerly PhyCor).

“After watching Southwind develop over the past six years, I have been impressed with the quality of its management consulting team and the success of the Company,” said Peter. “I look forward to contributing to the growth and development of Southwind in the years ahead.”

During eight years with PhyCor, a pioneer in the physician practice management arena, Peter oversaw a wide variety of multi-specialty physician group practices ranging in size from 25 to 200 physicians as well as independent practice associations (IPAs), most of which were extensively engaged in managed care risk contracting. As Vice President Operations at PhyCor, and later Group Vice President, Peter was responsible for recruiting, hiring and directing local management teams executing in the field.

Prior to joining PhyCor, Peter served as Administrator of the Ochsner Clinic’s largest satellite operation in Baton Rouge, Louisiana where he successfully grew the group from 40 to 80 physicians.

Peter’s early career experience includes serving as administrator of an independent physician group in Green Bay, Wisconsin and other positions at the Ochsner Clinic in New Orleans, Louisiana. Peter holds an MHA from Duke University and a BA in political science and economics from Northwestern University.

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On May 10-11, 2004, I attended a meeting of over 4,000 presidents, chairmen, CEOs, owners, partners and other executives, known as the ?World Business Forum,? at Radio City Music Hall in New York City. The symposium featured ten eminent leaders and thinkers, listed in order of appearance, speaking on a broad range of subjects that encompassed the political, the academic and the practical:

• Rudy Giuliani, former Mayor of New York City;
• Jack Welch, former Chairman & CEO of GE;
• Jim Collins, author of GOOD TO GREAT: Why Some Companies Make the Leap;
• Philip Kotler, S.C. Johnson & Son Distinguished Professor of Marketing at the J.L. Kellog Graduate School of Management of Northwestern University;
• Jeremy Siegel, Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania and author of Stocks for the Long Run;
• Lou Gerstner, Jr., former Chairman & CEO of IBM;
• Michael Porter, Professor and Director of the Institute of Strategy and Competitiveness at Harvard University;
• William Jefferson Clinton, former U.S. President;
• Anne M. Mulcahy, Chairman and CEO of Xerox Corporation; and
• Ben Zander, Conductor of the Boston Philharmonic Orchestra.

These speakers gave critical insights into the U.S.’s position in the world, global financial markets, strategy, management and the role of leadership. While the focus was broader than health care, the wealth of material covered is important for any leader in the health care industry. What follows is a summary of major points made by a few of these outstanding speakers.

Giuliani on Leadership

Rudy Giuliani, former Mayor of New York City, became an American icon in the aftermath of September 11, 2001. Widely hailed for his calm and effective leadership in the crisis, he was named Time Magazine’s Person of the Year for 2001 and was made an honorary Knight of the British Empire by Elizabeth II in 2002.

Giuliani spoke of six key characteristics of leadership:

• Knowing What You Believe – It is important to know yourself and what is important to you. What are you passionate about? ?It’s not about what people want to hear, it’s about your passion.?
• Be An Optimist – Having dreams, hopes and aspirations are critical to your success as a leader. Vince Lombardi embodied the optimist when he said, ?I never lost a game? I just ran out of time.?
• Courage – Courage is not the absence of fear, but the overcoming (or management) of fear to do what is important to you. Prove yourself to yourself.
• Relentless Preparation – Prepare for the worst. For every hour of a meeting, prepare four. The unexpected is only a variation of the expected. Giuliani said that New York’s preparation for Y2K (and $350m associated investment) made a significant difference in facilitating the response to 9/11. Abraham Lincoln said, ?If I had eight hours to chop down a tree, I would use seven to sharpen my ax.?
• Team Work – Figure out what you don’t do well and build a team to make your weaknesses irrelevant. This means knowing and being honest with yourself and hiring people who are more different than like you.
• Communication – Leadership depends upon communication at all levels – employees, colleagues, voters (in public life), shareholders (in private life) and other stakeholders.

For a leader to be an effective communicator, Giuliani believes that the leader must (1) know what he/she believes; (2) be an optimist; (3) have courage; (4) prepare relentlessly; (5) have people around who can help you; and (6) communicate at all levels.

Welch on Managing for the Bottom Line

Jack Welch is one of the most admired CEOs in the world. During his 20 years as Chairman and CEO of General Electric, he transformed the company from a bureaucratic behemoth to a dynamic and revered powerhouse. During his tenure, GE market value grew from $13 billion to $500 billion.

Welch spoke of several key ingredients for effective leadership to manage optimum bottom line performance:

• Plan for Succession – Succession is key. In Welch’s view, a company without a succession plan is evidence of a failed CEO.
• People – People are the whole game. Effective leaders are focused on recruiting, training, nurturing, and developing good people. GE’s ?vitality curve? stratifies people into three categories:
  • Top 20% – Never lose them.
  • Middle 70% – Encourage them to become ?top 20?
  • Bottom 10% – Encourage them to leave.

The biggest “kick” Welch got out of his job was seeing people succeed. Often, weeding out poor performers can be a gift as they find new opportunities in which to be successful.

It’s important that performance appraisals be candid. An honest performance appraisal is the kindest thing you can do. Differentiation is important. The compensation plan should offer mechanisms to differentiate performance.

Finally, it’s important to measure employee satisfaction. An effective employee satisfaction tool gives people a voice and dignity by allowing them input into the process of improving the organization.

• Energy – Leaders energize others. They have ?edge? which is the ability to answer ?yes? or ?no? and not ?maybe.? Finally, they execute – get the job done. The three ?E’s? (energy, edge and execution) are critical.
• Winning – Winning is good. Winning does not have to mean somebody has to lose. Effective leaders are winners.
• Putting the Organization First – Effective leaders subordinate their individual interests to the interests of the organization. Those that care more about themselves are the arrogant, pompous – the ones with the big office.
• Feed the Opportunities – Starve the weak businesses – fix them, close them or sell them.
• Advertise Mistakes – Big organizations like GE have one great advantage – the ability to ?take swings.? Effective leaders promote a culture that allows people to take swings, make some hits (hopefully some big hits) and, from time to time, strike out.

Welch feels that it is important for leaders to visit other successful businesses to learn what they do well and to emulate it. He finds that other businesses that do something particularly well are more often than not willing to share information.

Jim Collins’ Good to Great

Jim Collins is a student of enduring great companies and how they attain superior performance. He began his career at Stanford’s Graduate School of Business and later founded his own management research laboratory in Boulder, Colorado. In his book, GOOD TO GREAT: Why Some Companies Make the Leap, Collins speaks of the levels of leadership:

• Capable individual
• Contributing team member
• Competent manager
• Effective leader
• Level 5 leader

When examining “Level 5” leaders, Collins’ research revealed that there are two key characteristics: genuine humility and willful ambition, that differentiate Level 5 leaders. These leaders are not focused on themselves as much as they are on the organization.

Examples of Level 5 leaders include:

• Katherine Graham in 1963 when her husband died unexpectedly and, in assuming leadership of The Washington Post published The Pentagon Papers.
• Lou Gerstner, Jr. who unexpectedly fell in love with IBM and became ?blue.?
• Abraham Lincoln.

Another way of looking at Level 5 leadership is to ask the question, “Does the leader look more in the mirror or more in the window?” While those who focus on the mirror are mostly concerned with how events and their behavior affects how they look, those who are looking through the window are examining the possibilities for their organization and how their vision can take the organization to the next level.

Many Level 5 executives are lawyers. Lawyers were trained to ask great questions. Level 5 leaders focus on figuring out the right questions to ask as opposed to the answers.

Jim Collins stresses discipline – “disciplined people taking disciplined actions with disciplined thought.”

Lou Gerstner Talks Turnarounds

Lou Gerstner, Jr. was Chairman and CEO of IBM from April 1993 until December 2002. During this time he led one of the most dramatic turnarounds in business history, growing IBM’s market capitalization over 800% to $8 billion.

What’s his secret? Four things were mentioned:

• Stop the bleeding;
• Find the growth engines;
• Change the culture; and
• Deliver on the ability to integrate total solutions.

Gerstner said IBM was a “train wreck” of decentralization. “It’s like setting your head on fire and putting it out with a hammer.”

Asked what he learned from the experience, Gerstner said three things:

• Focus – You must be selective and committed to focus on a few things that are important and be willing to leave the rest behind. For most of us, this means focus on the core business and the constant renewing of the core business. (Gerstner was proud of ?all the deals we didn’t do.?)
• Execution – ?It’s the consultant’s dirty little secret – to out execute day-in and day-out.? Execution is about relentlessly driving positive change. Execution separates leaders from pretenders.
• Personal Leadership – You can’t transform an organization without it. Set demanding goals. Be a change agent. Be visible to everyone. Tackle problems personally. Get dirty. Communicate honestly – be willing to deliver bad news.

Gerstner says a lot of executives confuse expectations with inspection. “People do what you inspect, not what you expect.”

On the role of corporate culture, Gerstner stated, “Culture is not part of the game, culture is the game!” Culture is what people do without being asked. Tools to influence the culture include the compensation system, performance appraisal and other reward/recognition systems. To cement the best culture, Gerstner believes in team incentives based on total organization performance as opposed to individualized incentives.

Michael Porter on Strategy

Michael Porter is considered the world’s greatest authority on competitive strategy. He is a Harvard Business School Professor and Director of the Institute for Strategy and Competitiveness.

Porter preaches that imitation is the path of least resistance. Strategy is about differentiating your organization in fundamental ways. That means defining limits, making choices and trade-offs.

• Optimizing competition – striving to ?be the best? – is destructive. It leads to a focus on price that will not sustain profitability. You can’t win. Related flawed concepts are the goal to be #1 or #2 in your business (that’s an aspiration, not a strategy), most mergers, focus on technology, vision and/or experiments. None of these concepts relate to competitive advantage.
• Strategic competition, on the other hand, is about being unique. The number one goal of an effective strategy should be to optimize return on capital. Growth is secondary to return on capital. Return on sales ignores capital. Since the average shareholder only keeps a stock about 12 months, shareholder value is not a worthy goal for long term success.
• Operational excellence – doing the same thing better than anybody else – is not strategy. While Porter stipulates, ?If you don’t operate well, strategy does not matter,? he cautions that assimilating best practices leads to ?zero sum game? competition.
• So after all, what is strategy? According to Michael Porter, strategy is:
• A unique value proposition when compared to one’s competitors;
• A different tailored value chain;
• Clear trade-offs – deciding what not to do;
• Activities that fit together and reinforce each other;
• Continuous – a good strategy needs to be in place for several years to be effective.

Bill Clinton on Global Security & Prosperity

While all of the World Business Forum speakers were excellent, no one compared to former President Bill Clinton as a public speaker. Clinton offered a framework or “prism” through which to evaluate decisions. He suggests asking these three questions:

• What are the shared benefits?
• What are the shared responsibilities?
• What is the impact on the community?

On the question of international relations, Clinton feels the US should “cooperate when we can” and “act on our own when we have to.” He reminded us what Itsak Rabin of Israel said, “You don’t make peace with your friends.”

Expanding on the theme of friendship in international affairs, Clinton said his “mama” always told him, “If you want a friend you have to be a friend.”

Clinton was generally optimistic about America in the world, paraphrasing Abraham Lincoln when he said, “We may be stumbling, but we are stumbling in the right direction.”

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Effective March 1, 2004, Margaret Hoban was appointed Senior Vice President, Southwind RevenueCycle Solutions. In this strategic role, Margaret has responsibility for leading Southwind engagements that focus on improving the financial and operating performance of the professional fee revenue cycle, including both front-end practice operations and back-end billing, collections and accounts receivable management.

Margaret joined Southwind in June 2001 as a principal consultant and interim management executive. “Since Margaret joined Southwind three years ago,” said John Deane, Southwind President, “she has consistently hit home runs for clients by improving the pro fee revenue cycle, assisting clients to select, install and consolidate information technology that supports the revenue cycle, all the while improving patient service and customer satisfaction.”

As the demand for Southwind assistance with the revenue cycle has increased, Margaret has recruited a capable team of professionals.

Jack Hickey, Director of Practice Operations

Jack Hickey joined Southwind in January 2003 as Director of Practice Operations supporting Southwind RevenueCycle Solutions. Jack has over 25 years of experience in both financial and operational management in service industries.

Jack is currently serving as the interim executive responsible for development of a new physician practice management infrastructure at a Midwestern hospital with 29 employed physicians. Together with Margaret Hoban, the team is facilitating selection and implementation of a physician practice management system platform.

Prior to joining Southwind, Jack served as Chief Operations Officer at a 100+ multi-specialty physician clinic, with responsibility for 75 departments at nine locations, handling a gross revenue budget of $111 million. He also headed the national group purchasing program for a prominent physician practice management firm.

Stacy Sarsfield, Consultant

Margaret recruited Stacy Sarsfield to join Southwind on June 1, 2004 as a consultant for Southwind RevenueCycle Solutions. Stacy comes to Southwind with four years of management experience. She will support the revenue cycle assessment engagements and provide hands-on assistance to improve professional fee billing operations.

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Effective April 19, 2004, Eric Passon joined Southwind Health Partners as a consultant. Eric is responsible for the benchmarking, financial analysis and physician compensation modeling.

Prior to joining Southwind, Eric was Vice President of Finance and Administration for an anesthesia management company that provided services to over 500 anesthesiologists and certified registered nurses. Eric’s responsibilities included developing and presenting physician practice financial models and establishing metric reporting for multiple physician groups.

Eric also served as Manager of Acquisition Analysis for a $1 billion healthcare firm, Team Health, Inc., in which he oversaw the due diligence, financial modeling, and integration of three healthcare companies including two management service organizations.

Eric’s educational background includes an MBA from the University of Tennessee Summa Cum Laude and a degree in accounting from the University of Central Florida.

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