Durable Optimism and the Importance of Healthcare Boards Taking Informed Risks

Change is hard and, these days, it’s compounding. Big disruptions layered with small pivots have led to a tough environment where “one more thing” is a burden, not an exciting opportunity.

In this environment, healthcare executives and hospital board members are challenged with walking a fine line – guiding their organizations through disruption while acknowledging the uncertainty, making decisions when the path forward is foggy, and processing their own exhaustion, too.

Jarrard Inc. CEO David Jarrard and McDermott Will & Emery partner Michael Peregrine – both of whom have a deep interest in helping healthcare executives and boards navigate change – sat down to talk about the situation. They first acknowledge the challenge, then provide some historical context, then offer a few ideas for getting through it all.

Here’s an overview of the conversation. Listen to the whole thing or read the transcript below.

The Challenges:

It’s natural to wonder about the point of making long-term plans when we’re experiencing constant upheaval and uncertainty, when change has worn us down, when so much is out of our control.

In healthcare this is borne out as we see increasing responsibility – and opportunity – arrive at the door of provider organizations. And, some of the forces that have been serving as accelerants of change over the past few years have grown to be more disruptive. These factors are like the lighter fluid that started a campfire in a dry forest.

The Risk:

The tendency is to focus on and do what is doable. We tend to act on what’s right in front of us. And, while that is right and necessary in a crisis, it is not sustainable long-term. Spending too much time in the short-term leads to susceptibility to competition and disruption.

The Solutions:

  • Call out the problem. It’s not wrong to flag things that aren’t going well. But…
  • It’s what comes next that defines your trajectory. Follow up on calling out the challenges with action and clarity, even if that’s clarity about what you do and don’t know.
  • Present a message of collaboration, even self-sacrifice. Not one of blame, criticism or deflection.
  • Provide a fulcrum by rooting your message in what isn’t changing. Not as a way to deflect from the challenges or divert attention, but as an anchor and reference point to help provide context and, hopefully, lead to solutions.
  • Bring everything to a head with, “So, therefore…” and, “Here’s what it means for us.” Point to a next step. You may not be able to resolve the problem, and the point is not to act just to look busy. Rather, it’s to act to control what you can and support those to whom it all matters.

Read the transcript

David Shifrin: Michael and David. So, a lot of change disruption happening these days, and it’s happening in ways that put pressure on us and on health care leaders, both personally, as well as professionally.

I guess just a few things to note, to run down the list; although this definitely isn’t comprehensive, we’ve got the Dobbs decision, which is just one of a number of significant Supreme Court decisions this term. We’ve got the great resignation and kind of the workforce reshuffling, we’re facing down the prospects of massive inflation, which continues, as well as a potential recession. We’ve got the ongoing epidemic of gun violence. We at Jarrard just put out some resources to help healthcare providers be involved in that conversation. There’s the political divide; there’s lack of trust that we’re seeing. And then, Michael, you even mentioned the shakeup in college sports recently, with schools moving between conferences as something to flag. So, there’s so much, it’s exhausting.

And so, I’ll just kick us off here and then let you both converse with each other and bounce ideas back and forth but to start with, just talk about where that overwhelming collection of change is leading us and how people are processing it, or maybe failing to process it.

[00:01:54] Michael Peregrine: I think that’s right. You mentioned the change in college football. I think that put the capstone on it for me in terms of, it’s not that people and leaders are afraid of change, per se. I think they’re, to use your word, exhausted by this pace and the profound nature of the change. Too much, too fast change to traditions on which people counted on as normality in their lives, as predictable in their lives.

And one by two by three they’re being taken away from folks. So, I think, and David, I’m interested in your view. I think it’s a question of losing faith in the ability to control events. I know that I was particularly shaken in this environment of violence. The Abe assassination was one that I put down on my list because, again, I always thought we could count on living in a global society where we were civilized nations. These things don’t happen. And that’s really,

I guess the question, David Jarrard, I have is, I’m wondering if our leaders are saying that “when will this stop?” These things that we, these guard rails of society, these guard rails of organizations, seem to be eroding. And if we can’t count on them, and David Shifrin, going to your point, what’s the use of trying? What’s the use of planning? What’s the use of looking forward? You know, we talk about the three-year strategic plan being superseded by the five-year strategic plan, being superseded by the never-ending or ongoing strategic plan. Why even engage in strategic planning, if we’re just getting pummeled on a daily basis with things that we’ve counted on being obliterated? David, what’s your take?

[00:03:43] David Jarrard: Yeah. And in that environment, it’s the latest change that gets the greatest attention because it’s the latest change. It’s right in front of you. And everyday can begin to feel like a fire drill because you’re, as a leadership group, as a board, and even as a staff member.

I’m thinking of, of course, our hospital health system client, you run from event to event. It’s like having moved from a surgery suite, where everything is well planned and coordinated. And a good surgery, runs like a ballet. You know exactly what you’re doing, how you’re doing it to the ER, where you don’t know what’s going to come in the door next and you are running and gunning. You’re looking for supplies and trying to take care of people and keep folks alive and make it through the shift. It’s a whole different environment and way of thinking, and ER nurses and ER physicians, they have a different mindset than that orthopedic surgeon who’s been around for 30 years and knows exactly what they’re doing and how to do it.

It’s, and to your point, it’s not just the change. It’s the culmination of a whole series of changes. And it’s that sense of a lack of control where you can, you can begin to think, “what’s next? Why even act?” And I’ll add one more that we’re really paying attention to. It’s the decline of trust in organizations, in institutions. And healthcare systems continue to be very trusted organizations. And so, as other organizations become less trusted, more responsibility seems to land at the doorstep of our hospitals and health systems.

[00:05:09] Michael Peregrine: Yeah, from a leadership perspective, what troubles me is the concern that leaders for both executives and directors to pull back from engaging more fully in issues.

This is something that you, as you and I have talked, that Mitt Romney recently wrote about in the Atlantic. A concern that it’s easier to take the easiest, most simple solution to complex problems even though you have a fair likelihood of believing that it’s the wrong solution. But it’s easy, it’s quick and it’s available. Whether it’s denying that a problem exists or taking a shortcut. It’s this loss of a willingness to engage. Because again, we can’t count on traditional traditions. We can’t count on traditional guard rails to hold up. So, we’re playing short term ball. We’re making short-term decisions. We’re allocating capital on a short-term basis. We’re not planning for the future. So, when we come out of the current combination of crises that our clients are going through, will we be prepared for the next phase? Will we have prepared strategically? Will we be more susceptible to disruption and competition and regulation?

You just worry about this wearing down on our executives and our board members and it being just, when have we really hit the last straw? You’ve talked about it.

[00:06:32] David Jarrard: I agree. We, particularly, our leadership teams in healthcare systems are used to a strong sense of agency. Like driving forward and shaping the delivery of care and having some control over what happens next. And so, we are all built, particularly in healthcare, but other industries too, to do what’s doable. What can I do today that’s actually going to make a change and make a difference?

And Michael, I think you’re exactly right. Things have become so chaotic beyond our vision. That we act on those things that are right in front of us. So, we become tree people instead of forest people when we act. Which can be helpful short term; it can maybe be great in a pandemic, great in a global crisis, but not in a long-term event. It’s not a long-term solution to the crisis. That doesn’t seem to end.

[00:07:18] Michael Peregrine: And also, David, I’m concerned that if this is affecting our colleagues in the boardroom and in the C-suite, it’s got to be affecting the workforce as well. What do you say?

[00:07:28] David Jarrard: Oh, for sure. You know, our hospitals and health systems, they are not immune. they’re not an island. I mean, all the things that we experience in our communities are happening in the halls of our facilities as well. And we see it play out like position by position, job by job, in our hospitals.

And you see that in nurse staffing issues. You see it in labor activity. You see it in consumers being more and more reluctant to go spend that money, to receive the care that they should receive that would be helpful to them that will forgo longer-term health care costs. But, because they can’t see the future, they don’t know if they’re going to continue to have a job. They don’t know if they can live with continual 9% inflation that erodes their wages. They’re not seeking the care or may not seek that care in the future. Which has this cyclical effect, it reduces the revenue hospitals receive, which reduces their ability to pay nurses at a wage that is in competition with Chick-fil-A, for goodness sake. And so, it begins to build on itself into a significant issue.

[00:08:27] Michael Peregrine: And I guess the one thing that I worry about, particularly with respect to the board, is it’s trying to be a true partner in management and help lead the organization through all these very difficult times. Including the extraordinary economic issues that they’re having right now. Will board members be up to making the commitment to invest? And looking towards the future, in being an effective partner again if they are concerned that those things they knew and counted on are no longer reliable? And will there be another shoe to drop in terms of one of these change curveballs?

I particularly am concerned that what we see in the polls is about a lack of trust in democratic principles. At some point, is there a line that we’re crossing where our leaders will look to themselves saying, “after this, I know there’s really only one thing I can trust and it’s my judgment. It might not be the judgment of my collective group. My fellow executives, my colleagues on the board. I’m going to go with my gut because I know that’s not changing even though everything else around me is changing.” And that’s just antithetical to effective governance. And it is not what our industry needs at this time. And again, I’m sure you’re seeing this as well with the people you deal with in crisis management and communications.

[00:09:44] David Jarrard: That’s such a good point. Because we as a board, although the last, 20 or 24 months through the pandemic have been a very challenging time, we’ve been able to talk about the pandemic as an accelerant of change. What the pandemic has really done has made things that were already changing, just move faster.

So, telehealth, telemedicine, all the elements that are part of that new evolution of healthcare, are just occurring faster. And in some cases, that was a good thing. This strange environment gave us permission to move in the direction we wanted to go anyway. In the last year though, it’s felt like the changes have not been accelerants of change. They’ve been almost purely disruptive. And it’s impossible to anticipate. And so, the result is the bets are bigger. The risks feel higher. Because, as you say, no one has a model to predict this one outlier after another. There’s not necessarily math you can run. There’s not an analysis you can do that will give you a margin of error. So, you have to lean more on, and I love the way you say, you have to lean on your gut. What you believe to be true. And that seems to make ultimately the real job, the ultimate job of a board.

[00:10:51] Michael Peregrine: What worries me too, and has to be corrected, is the concern that the foundational principles, the core understandings of the industry, that our volunteer directors, or even our compensated directors came on board. And there were those principles or those operating guidelines, those basic understandings about the healthcare industry that they were weaned on, that they came to understand. The foundational principles and the understandings and the stipulations that underscore the strategic plan. Again, if we lose confidence in these types of factors because of the Powerful rapidity of change, we’re again, operating on an “I’m taking it one day at a time” basis. And that can be catastrophic for an organization’s future. And we, and that to me, that shift from a focus on the long-term vision to the “I just have to get through tomorrow” vision, that’s what we have to protect against.

[00:11:49] David Jarrard: And I know you work with so many boards, and I know how seriously they take the idea that they are trustees. That they are entrusted with this extraordinary organization, you know, often times hundreds of millions of dollars or multi-billion dollars of revenues and thousands of jobs. I know that weighs heavily. And so, they take seriously the ability to plan for the future and invest in the future two years, five years, 10 years out. I’m curious, as they are thinking today, how are they beyond their gut thinking about the future, sort of, envisioning about what the future is going to bring so they can plan for it?

[00:12:24] Michael Peregrine: It’s got to be a frustration again, because they contribute to a strategic vision in a variety of perspectives. They’re making bets on certain developments. And again, if they find out that they’re really unable, that change is coming too fast and too strong, their willingness to take informed risks, David, I think we’ll be limited. And that is, I keep coming back, that will be the greatest harm of this. And this is why, this kind of a miasma has to be stopped before it gets much traction.

And I was thinking about something. I saw a blip in the paper the other day. We just passed the 43rd anniversary, and I’m sure you have this on your calendar, of Jimmy Carter’s malaise speech. There’s been a lot of anniversaries this summer, with Sarbanes, with Watergate. But I thought to myself, wait a minute, as someone who waited in line for hours at the gas station during that period of time, and remembering a speech, I thought, there’s a little bit of similarity there. You had back then, as I recall, this overarching sense of an inability as a country to control our own destiny. We were no longer in charge of events, and to a certain extent, I’d be interested in your view, that seems to be where we’re headed right now with this change fatigue. We can’t stop these things from occurring. Things that we relied on are no longer reliable. We cannot control events. Do you see that as relevant at all?

[00:13:56] David Jarrard: I do say it’s very relevant. And I do remember that speech and I do remember the heckling he got afterwards. I have two thoughts about that. And the kind of communications that leaders are and could be delivering today. When I think about Carter’s comments, he wasn’t wrong to call out that this was an issue; that there’s a concern. And recognizing how the voters at the time, at least how he felt the voters at the time were feeling and thinking. I think it’s right for a leader to see the folks that they are asking to follow them. Is that recognition? I think that’s really important, and I think that’s what he was attempting to do.

But the other element of that message was there’s a problem, and I don’t know what to do about it. I’m not sure, I feel helpless, just like you. And that was, that’s the disconnect right there, that that can’t be the message leadership delivers. So, it’s great to recognize it. It’s great to call it out. It’s great to show appreciation for it and sort of shared empathy. But then, as a leader, therefore here’s what we’re going to do. Here’s how we’re going to tackle this problem. Not that I have the answers, but I know how we’re going to get into it together. I think that’s an important element for leaders today.

[00:15:07] Michael Peregrine: I agree with you. And as I thought about it, and again, I know that half of our clients have no idea what we’re talking about. But I think part of the problem, again, Carter did have his finger on the pulse. There was a crisis of American competence, and communication was what failed him. The communication of his vision failed him and ultimately failed his presidency.

And as I recall, David, this is germane to the subject of, how do we address this in the context of our clients? Somehow, he allowed the conversation on his message to shift from “we need to work together for the common good and make some self-sacrifice” to “Mr. President, you’re criticizing our way of life. You’re making moral judgments on our consumerism. You’re suggesting that we’re overly reliant on materialism and you’re blaming us for the problem.” And that, I think, as inaccurate as it was, took over the dialogue. I come back to your expertise in response to change fatigue as it may be creeping in with an organization just seems to me, not just what the message is, but how it’s delivered.

[00:16:19] David Jarrard: Yes, very much. And some of that message has to be action. So, it’s the recognition that there’s this issue. It’s acknowledging that there’s a challenge with creating a vision in such a cloudy environment. How do we see past the fog into the future? So therefore, and here’s the key, it’s always the, so therefore what? So therefore, we’re not going to cross arms and go into our boardroom and worry about the future. So therefore, we’re going to create teams. We’re going to involve you. We’re going to create a dialogue. We’re going to construct this and reconstruct it together. So even if the answer is, we’re not sure about the future, it’ll be an answer we all came to together.

So just the action of pulling people together in concert can be hugely energizing. Because then you’ve set the organization up for whatever direction you need to change. And because we will need to change, but you’ve set them up to acknowledge their own consensus building in that work. And that’s the right place for leadership right now.

[00:17:15] Michael Peregrine: Not to be Pollyannish, but I think that there’s an element where leadership here, it has as an opportunity to, through a durable optimism approach, say, “let’s take a look at what we’re dealing with right now. Maybe we can’t be, here’s where we stand in the industry. Here’s our financial position. Here are the things that are positive about this organization. Here are the tools we have to work with and here’s our position within the industry, and here’s what we do know.” And create a vision in saying that “we here at this health system are actually in a relatively stable position. These are things that you, the workforce, you, the board, us, the management team, we can count on this universe of knowns. And therefore, we are to a certain extent, maybe better than others in a position to control our destiny, even if that destiny is in the near term.”

So, I come back to your point about energy. When I’m tired, when I’m down, when I’m lazy, when I just don’t feel up to it, something energetic snaps me out of it. And I think that the energy, David, of the communication, as much as the context of the communication, is what may be necessary, in part, to counter this fatigue. The sense of loss of faith that nothing matters anymore because the future is changing every day.

[00:18:34] David Jarrard: I love the phrase durable optimism. I wrote it down as you said it. I think that’s so important to this. And to your other point, which I fully agree, and as part of our change management work is, before you can really talk about change, you have to talk about those things that aren’t changing. That will never change. This is what we know to be true.

And if you worry about all the changes that are happening, you can begin to worry that everything is going to change. That these shifts are going to change, this floor is going to change, and our mission’s going to change. And we know as an organization that short of something truly extraordinary, these things aren’t changing. This is who we are and who we’ve been for a hundred years or whatever the message is.

So, that ability to ground those things and put off the table those things that can bring some foundation and some solid ground, I think is a really important part of the message.

[00:19:30] Michael Peregrine: Don’t you think that’s a message that has to be delivered not just by the CEO, but by the linked arms of senior management and the board?

[00:19:37] David Jarrard: Yes. And the important role of the board here can be overstated to deliver that message to senior leadership. It’s the board’s commitment to this direction or these fundamentals that is key to unleashed leadership to get into this work.

[00:19:54] David Shifrin: All right. For the last couple of minutes here, let’s get very tactical. How do healthcare boards and executive teams deliver those messages? What are the tactics that are needed right now to make that connection with employees while also providing an opportunity for feedback and acknowledging the personal stress that leadership is undergoing themselves? How do you roll that in what’s the day-to-day for delivering these? Michael, I’ll start with you here.

[00:20:19] Michael Peregrine: Well, David, from my perspective, it has to start with leadership in the boardroom. And basically, the board chair and other leaders saying, “this is not a soft issue. This is a big deal. In all of our lives. We need to realize that we need to confront it, and we need to understand that for the potential risk, it is to our organization and our culture.”

So, David, I would start off by saying board leadership has to own the issue and convince the board that this is something that they must attack as a strategic concern for the organization. It’s got to start so that it’s buying in with the tone at the top. That’s job number one for me.

[00:20:57] David Jarrard: Very much so, and to affect that, is to recognize the needs of the senior leadership. And it’s, we talk about the mental health of our staff and colleagues and physicians and nurses and burnout and stress. It happens at the top, too. And as we move through dramatic things like this, recognizing that’s a need. And this group needs to be together and solid and comfortable addressing those things before they can be who they need to be within their organization.

[00:21:25] Michael Peregrine: That’s why I think that the board has to shift into high gear if it’s not already in high gear already. And begin to take a series of steps that represent a visible demonstration of their leadership and their buy-in on this issue and send that message of durable optimism. Meeting more as a board as opposed to meeting less. Having more sessions with the executive leadership team. Being visible in the institutional community. Having more town hall meetings between management and employees. A visible demonstration of board’s commitment and belief. And belief in the future and stability of the organization, not just the economic and quality and delivery of care stability, but the mission stability. As you said, David, we continue to stand for what we’ve always stood for, and you can count on that. That isn’t changing.

[00:22:21] David Jarrard: I remember years ago, during another sort of economic downturn working with a number of Catholic hospitals who were run by a group of sisters. And even though things were hard and there were questions about the future, they would tell stories about selling the chandeliers and selling this piece of land, that piece of property, or doing away with this practice because we will always support this. We will never not be that. And it was such a grounding story that they told that reminded people that we’re committed to this, no matter what we have to do to get there. I think that the level of commitment and that storytelling and remembering who we are, remembering why we are is really important.

And I really want to highlight a message you just delivered about visibility and that visibility through personal engagement. One of our core beliefs is that communications happen in a lot of ways. And part of it is the words that you use and the emails that you send out. But the messages that are delivered through the theater of physical interaction, walking the halls, body language in a presentation, being so optimistic that you’re willing to be present with people and shake their hands and hear their concerns, and cry with them, or pray with them, or be with them is hugely impactful. And it creates a kind of trust that is gold in times of change like this. Really want to highlight that point. I think it’s fundamentally important here.

[00:23:50] David Shifrin: Well, Michael and David, thanks so much for your time. It’s always fun. Always fascinating. And look forward to our next conversation. This has been great.

[00:23:57] Michael Peregrine: Thank you both.

[00:23:58] David Jarrard: Thanks, David. Thanks, Michael.

David Jarrard
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