It’s tough enough cutting any corporate budget in lean times. But when you’re a CEO of a safety net hospital like John Haupert, of Grady Health System, the choices become even more distasteful if low-income and uninsured patients with limited options find it harder to get the medical care they need.
Haupert, a veteran hospital administrator, is committed to running Grady as a business. That may mean cutting $45 million in services starting in 2014 if the state sticks with its decision to opt out of federal money for Medicaid expansion. Gov. Nathan Deal has said it will cost the state too much over the long haul.
Grady has had a turbulent financial history, often taking one step forward followed by one backward. Last year, for example, Grady posted a $27 million net profit under Haupert’s leadership.
Haupert, 52, has been involved with hospitals for most of his life. He talks about his background, the value of mentors, clueless CEOs and how he’s approaching Grady’s financial issues.
Q: How did you become interested in health care?
A: I grew up in a family that was very heavy on physicians and on involvement with a local hospital in Fort Smith, Ark. My parents both served on the board of St. Edward Mercy Medical Center, and my grandfather, who was a physician, was chief of staff there.
I grew up with grandparents and parents who focused all of their kids on giving back. It’s not about me, me, me, but what you can do to serve others. My mother was a school teacher and my father was an entrepreneur in the oil business, but a philanthropic man. He was very involved in Habitat for Humanity and different agencies that helped the underserved.
I volunteered at the hospital as a teenager and got to know the CEO, who was a nun. I was just fascinated by what she did. By the time I was 15 or 16, I got hooked on the health care environment.
Q: Did you want to become a doctor?
A: I went into college as a premed student at Trinity University in San Antonio. To be honest, that’s how I was programmed. But I took a few business classes along the way and found myself more attracted to that. I ended up focusing on finance.
After graduating, I did not know what type of master’s program I wanted to go into. So in talking it over with my parents I got some great advice — it’s better to take the time on this end of your life if you’re not sure. Find something to develop your business skills and then when it’s time to go to grad school you’ll know.
I got a management training job at Dillard’s in San Antonio. They were great at giving you a lot of opportunity quickly. I ended up in nine positions in seven years.
You often hear people say that when you get to the end of your life, you are truly lucky if you can count five mentors. There was a man there, who was director of stores, who was an incredible mentor to me. He taught me that a leader should not expect his people to meet him where he is. It’s up to the leader to meet his managers where they are. If you have 10 direct reports, in order to maximize their contribution you need to meet them on their playing field.
He also instilled in me the importance of driving accountability with individuals without steamrolling or micro-managing them. You have to be very clear about expected results and then help them get there if they’re having trouble.
Q: Why did you leave Dillard’s?
A: It wasn’t really fulfilling the giving back side of what I needed. I wanted to contribute more broadly in society. It became clear to me that I wanted to go back to the passion I had around health care. I went to get my master’s degree in health care administration at Trinity.
I never looked back. I then ended up at Methodist Health System in Dallas, where I met my second mentor, the president and CEO. I really bonded with him and became his executive assistant. I rose up the ranks and spent 15 years there. I got a lot of opportunities there because of him.
It’s important to find that mentor you can connect with. What I see a lot of young folks doing when they try to network is blitzing and trying to talk to as many people as they can. But they make no investment in establishing a relationship or connection. To me, that’s wasted energy. You have to be mature enough to identify mentors and develop a relationship over time.
It helps to have mentors who give you honest feedback — good and bad so you can improve.
Q: Your career continued to improve. You became chief operating officer at Parkland, a big public hospital in Dallas. How did that prepare you for Grady?
A: They are almost identical situations. Both are public safety net hospitals. Parkland is about twice as big as Grady and much better funded from its local community. At that time, Dallas County contributed about $400 million per year to Parkland, whereas Fulton and DeKalb contribute about $60 million to Grady. Any support is great.
I learned a lot about political and legislative advocacy. I’m not sure how you teach people this, but you need to be attuned to interpersonal situations. Developing relationship skills is so critical in being successful in any business environment. You often read crash-and-burn stories about CEOs who have the technical and book knowledge, but they totally lose it on the interpersonal side and end up disintegrating.
Any CEO who thinks the organization got to where it is because of their sole contribution is totally delusional. Grady is an organization of 5,500 people. There has to be a little ego that drives you. But when ego overshadows the people doing the work, I think you then enter the crash-and-burn mode.
Also, one of the greatest lessons I ever learned is to never disregard the history of an organization you’re coming into. I think so many leaders think a new “state of wonderful” will occur because they’ve arrived on the scene. That’s BS.
If you don’t understand where an organization has come from — particularly one like Grady that has come through a great deal of strife in its history with lots of ups and downs — you’re not doing well by the organization.
Q: Grady will be experiencing more strife. How are you planning to deal with the upcoming financial challenges? Do they keep you up at night?
A: It definitely keeps me up at night and preoccupies most of my time. My No. 1 responsibility is to sustain the financial health of this organization, so we can go about providing quality health care to the people who come to us.
For 2012, we’ll end up with net income of about $27 million on net revenue of about $650 million. But we’ve got a lot of headwinds. Thirty percent of our patients are uninsured. There’s a pot of federal money for Medicaid expansion, but the state has decided not to expand.
Grady stands to lose $45 million a year starting in 2014 if we don’t get something changed. Either we need to get federal funding, or we have to have Medicaid expansion in the state, or the thing that keeps me up at night is that neither happens. Then we lose $45 million in funding and have to decide what clinical services we no longer are going to provide.
We’re going to run Grady as a business. We’re not going to let Grady fail and continue to be all things to all people, but not be able to afford to do that. So far, I have not been beating the governor over the head about expanding Medicaid. I think he will reconsider.
Each week, Sunday Business Editor Henry Unger has a candid conversation, called “5 Questions for the Boss,” with a top executive in Georgia. Some remarks are edited for length and style.