By Adam Beyer
How do you save a hospital system? That’s the question Nancy Schlichting PPS ’76, had to answer when she took over as CEO of the Henry Ford Hospital and subsequently became system CEO.
The Detroit-based Henry Ford Health System was losing millions, the city of Detroit was in decline, and employee morale was low. Schlichting and her team managed to turn the system around, bringing it to profitability by 2003. It was not an easy process and had required the shuttering of three hospitals. By the time she retired in 2016, the system had done more than recover, it had almost tripled in size.
“I’m very business focused, but my belief is that if you focus on people, high quality and great service, then the finances will follow,” Schlichting said.
The Health System now has more than $5.5 billion in revenue, employs 27,000 people, and treats more than a million people across 100 sites in the Detroit metropolitan area. In addition, the Henry Ford Health System has its own insurance program that enrolls 650,000 people.
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Recognized for Quality
Nancy Schlichting PPS '76, accepts the Malcolm Baldrige Quality Award in 2011 on behalf of the Henry Ford Health System, which she led from 2003 to 2016.
Schlichting details the leadership philosophy that helped her guide the turnaround in her recent book, Unconventional Leadership. The book brings together her professional advice for leaders of large organizations and her personal story as a gay woman in the male-dominated top levels of health care administration. She took inspiration from the leadership philosophy of Henry Ford, the namesake of the hospital system she led for 13 years.
“My belief is that if you are not active and engaged in creating in the future, then you are sitting on the sidelines,” she said. “Without risk, there is no reward.”
She honed her philosophy over more than 30 years. Stepping into her first major position at age 28 as Chief Operating Officer of a large teaching hospital in Akron, Ohio, Schlichting said she had a lot to learn. Luckily, she had influential mentors to help.
With her MBA from Cornell, a residency at the Memorial Sloan Kettering Cancer Center, and leadership experience at several other major health organizations, Akron may not have been the flashiest location for Schlichting to land, but it was important for her development.
“It’s not always the location that matters most, but working for the right person and with a quality organization,” she said.
The Akron job required making tough decisions about how to get the hospital back into the black, and it was a springboard for the rest of her career.
“I learned every single day of my career,” she said. “Health care is a constantly changing and very dynamic field filled with smart people. I love the fact that you are always challenged.”
She has spent much of her professional life in hospitals in the Midwest, often in areas that are suffering through sluggish or declining economies. Health institutions have to be part of the solution, she maintains.
The Henry Ford Health System pioneered setting up health kiosks in churches and putting clinics downtown to help reach busy young professionals. In order to keep the Health System profitable in the midst of the Great Recession, and with an opportunity to build a new suburban hospital, Schlichting knew they had to design a fundamentally different kind of community resource.
The health system hired a Ritz-Carlton executive to oversee the design of the new hospital in West Bloomfield that featured many unconventional services such as a spa and a demonstration kitchen. The proposal faced opposition from other hospitals in the region who sought a court order to halt its construction, but it has been a successful pioneer, attracting new patients to seek treatment and doctors to work at the facility. It also was named the second most beautiful hospital in the world in 2012.
After 13 years as CEO, Schlichting retired in late 2016 after spending two years mentoring her successor, Wright Lassiter III. Her approach to retirement fit naturally within her leadership philosophy.
“There’s an appropriate time for leaders to move on,” she explained. “I knew I was ready to retire and helped with the transition.”
Shortly before she retired, President Barack Obama tapped her to lead the Veterans Administration’s Commission on Care, a group of health care leaders tasked with making recommendations for improving the medical care veterans receive.
After considering 4,000 pages of consultant reports, the commission developed 18 major recommendations. Most notably, it suggested creating an integrated model of care between the VA, military and private sector services.
(Photo: Schlichting meets with high school student members of Generation with Promise, which promotes healthy living.)
Although the commission’s main work is over, Schlichting wants to make sure the new administration follows through to implement changes. In early January, she traveled to Trump Tower to discuss the report with members of the president’s transition team. She also maintains contact with the new Secretary of Veterans Affairs David Shulkin.
Schlichting was among the second class of public policy majors to graduate from Duke. She had spent her first two years as a chemistry major, but after realizing she did not want to be a doctor, she switched into policy.
“For the first time in my life, I couldn’t wait to do the assignments and readings,” Schlichting said.
She recalled sitting next to Terry Sanford while she was in the Duke Chapel Choir as a student. The two would talk and Schlichting said she was very impressed by him.
Now, besides serving on numerous boards, Schlichting teaches at the University of Michigan.
She also is bringing her expertise back to Duke, serving on the board of the Duke University Health System. Schlichting has also served for many years on the Sanford School’s Board of Visitors. It brings her full circle in her relationship with Duke—from student, to hospital worker, to board member.
“I never thought I would achieve what I have,” Schlichting said. “I continue to marvel at the fact that I became CEO, marvel at the fact that I could contribute on the national level.”