Over the past two decades, Community Health Systems (CHS) has vaulted from a small, regional healthcare organization to one of the largest in the United States. The for-profit operator of general acute care hospitals was a $700 million entity in the mid-1990s, focused on serving smaller communities. Today, it owns or operates 198 hospitals in twenty-nine states, providing comprehensive healthcare services to both urban and smaller communities.
Senior vice president and chief information officer J. Gary Seay helmed IT through this period of explosive growth. As he prepared to retire at the end of 2015, Seay reflected on the dramatic transformation of the company and the formidable challenges he faced in supporting the ambitious growth-by-acquisition strategy of CHS leaders.
Such rapid staff growth is an enormous challenge for any manager. Seay had to scale up IT infrastructure and applications while ensuring that IT was properly serving business strategy. All of this had to be accomplished while maintaining rigorous control over costs and using objective criteria to prove that he and his team were performing their jobs well.When Seay joined CHS in February 1997, the corporate IT shop consisted of just ten people. Today, its ranks are more than 600. In the three years between 2007, when CHS acquired $5 billion Triad Hospitals, and 2010, corporate IT grew from one hundred to 350 employees. Another large acquisition in 2014, of Health Management Associates, added a few hundred more employees to Seay’s department.
Managing Exponential Growth
With a small staff, processes and practices can be kept simple and flexible to make quick decisions, but as it scales up, those qualities become difficult to maintain, according to Seay. “As you add layers of management to assist with direction, governance, execution, and business partner demand, it becomes harder to get your message out consistently,” he says. “When you grow your management team rapidly, that becomes incredibly hard to do.”
In order to staff up rapidly, managers typically hire people with deep experience at other companies. These skilled practitioners are accustomed to operating in the context of other organizations. In 2007, when CHS was a $5 billion company acquiring another $5 billion company, Seay hired a consulting firm to help build “the scaffolding” to assimilate the influx of new staff. This included training and ongoing coaching processes so that newcomers could rapidly absorb CHS’s customs and values.
The consultants set up a framework that “helped unravel misunderstandings or challenges with understanding the message and direction from leaders,” Seay says. “We created a safe harbor for new managers to engage with each other on a personal basis.”
A BRIEF HISTORY OF COMMUNITY HEALTH SYSTEMS
In about two decades, the provider of general hospital healthcare services has grown into a leading Fortune 500 company in its industry.
’85
Community Health Systems is founded in 1985 after the first hospital is purchased.
’91
Community Health Systems issues its initial public offering.
’97
Wayne T. Smith becomes president and chief executive officer, kicking off a period of exponential growth for Community Health Systems through acquisitions and improved operations.
’00
Community Health Systems is taken public for the second time on the New York Stock Exchange.
’07
Community Health Systems adds more than fifty hospitals, which nearly doubles the size of the organization.
’14
Community Health Systems successfully acquires Health Management Associates, adding another seventy hospitals.
Seay restructured all of his department’s processes and practices—the basics of many critical issues such as allocation of responsibilities, personnel performance evaluation, intradepartmental communication methods, and how to engage with business partners.
“When you’ve been small, many of the practices you’ve had don’t scale up well,” Seay explains. “You have to create new operating practices and evolve them rapidly. You have to communicate organizational changes effectively, and get people to adopt them and adhere to them before they are well proven to the organization.”
To help manage the rapid growth, Seay hired a “wingman” and had his top lieutenants do the same. Adding the additional layer of management helped Seay and his circle of top managers implement new procedures and drive change in the IT group.
Adding more dimensions to the organizational chart should be done sparingly, though, as Seay believes in a “careful, conservative approach to staffing.” For temporary spikes in departmental workload, he typically turned to contractors rather than permanent hires. “I never wanted to have a layoff, and in my nineteen years I never had one,” Seay says.
Aligning with Business FunctionS
As CHS grew, it resisted the notion that there is a technological answer to every challenge. Many organizations look to new systems and applications to solve business problems, Seay says, adding that it’s an unrealistic mind-set. “No operating problem will ever be solved by an IT investment,” he says.
The solution can be enabled by IT, Seay explains, but the operational plan underlying the tool must be well conceived beforehand. “An IT tool creates form, structure, and discipline, and maybe enhances activity through automation,” Seay says. “But most importantly, it provides an avenue to create metrics that expose operating execution, adoption, and performance to senior leadership.”
Historically, CHS has moved quickly to adopt new systems and applications—after the company sees proof that they work as intended. “I like to think that we are the world’s best second adopter,” Seay says. Major capital spending on IT goes through a rigorous examination process by the company’s IT Operations Innovation Investment Council.
Gaining approval for a proposal by this board takes persistence and strong proof of concept. “A lot of proposals die a natural death as it becomes clear over time to the executive sponsor that the initiative will not meet the executive criteria for funding,” Seay says. “If it would not deliver a hard-dollar return, or boost quality, or help to meet a regulatory requirement, it won’t get funded.”
Lean Tendencies
Indeed, spending discipline was at the heart of Seay’s guiding principles even during periods of rapid growth. “We’ve always focused on being lean from a staffing and cost perspective,” Seay says. “There’s often a tendency for companies to think about IT as something you spend lavishly on in anticipation that you will get economic and competitive benefit in the operating departments, in the workflows, practices, and services that IT enables. I’ve never believed that.”
A lean approach permeates all operating departments at CHS, according to Seay, who believes that it has been a key to the company’s success. “Our management believes that you can accomplish very effective, high-quality outcomes in a way that is operationally efficient from a direct-cost perspective,” he says.
Seay credits the organization’s success to a “culture of accountability” that demands individuals take responsibility for problems and correct them rather than trying to pin blame on others. Furthermore, he says, CHS leaders constantly monitor an extensive array of metrics to gauge the effectiveness of operations, with IT in particular, always under the microscope.
“We rely heavily on metrics for recognizing opportunities, recognition of problems, for sustaining continuous improvement, and for driving objective credibility with IT’s operating partners,” Seay says. By contrast, Seay adds that IT in many organizations is “a space that’s often completely subjective in how it’s being evaluated.”
When things went awry, Seay always aimed for swift resolution and sustained prevention of their reoccurrence. “Perfection in IT is a practical impossibility,” he says. “The IT infrastructure is so inherently complex and fragile for any corporation. That is the way I’ve been able to build personal and IT credibility with my operating colleagues.”
That’s just one aspect of his legacy that Seay points to with pride as he prepares for his post-CHS life. Relishing new challenges, he is not ready to spend most of his time at the golf course or sit idly by a tropical beach. Instead, he will set up a consulting practice and may serve on a corporate board or two. No doubt, others will reap the benefits of his decades of valuable experience.
