What a hospital CEO learned from Nordstrom

I have spent 32 years working in hospitals and the last 16 running them. Hospitals are created for the benefit of the community, a place where people go when they are acutely Ill, injured or have a complex condition that eludes quick diagnosis and treatment. Hospitals historically provided primarily inpatient care and comprehensive diagnostic and treatment facilities for patients.

It took a major snowstorm — one of many we endured this snowiest winter on record — to turn what I thought I knew on its head.

We in the “industry” know that hospitals have been on a “change pathway” for over 15 years as more care is delivered outside the hospital. For example, we rarely admit people to inpatient psychiatric units anymore. Instead we offer intensive outpatient therapy programs. Pediatric patients are only admitted to the hospital if they are extremely sick. We focus instead on managing their asthma or diabetes symptoms in after-hours clinics not only to keep them out of the hospital but keep them out of our emergency rooms. Cancer care is largely treated on an outpatient basis. Even minimally invasive surgery, plastic reconstructive technology, radiation and chemotherapy regimens are delivered as outpatient therapies.

This change has occurred for a number of reasons: Because of tremendous advances in medical science, because we recognize that patients do better at home than in a hospital bed, and because new insurance plans often won’t reimburse for an inpatient stay. And patients don’t want to pay out of their own pockets, which is understandable: Hospital beds are not that comfortable, hospital food is not that palatable, and hospital floors are loud and busy with activity 24-7.

But this is not the change that I found surprising. Most teaching hospitals have a mix of inpatient and outpatient services. Generally 60-70 percent of their revenue comes from inpatient care and approximately 30-40 percent from outpatient services. But at Lahey Hospital & Medical Center over 70 percent of our revenue comes from outpatient services; physician visits and outpatient testing, surgery and procedures.

So, when we were hit with two feet of snow and were forced to close our outpatient clinic for the first time ever in January because of a travel ban, it hit me like a hard snowball — we are subject to the vagaries of any other retail business.

Although we aggressively worked the cancellations: W could only rebook 85 percent of the original visits. Why? Patients’ symptoms got better or disappeared; they decided to wait for their next scheduled visits or decided to delay testing (maybe because they really did not want that colonoscopy anyway!) There were other snowy days in February 2015 where we stayed open, fully staffed while only 50 percent of the patients made it to our doors. In reality we should have been flexing our staffing to patient demand. In fact we should be doing that rain or shine.

So, I called Nordstrom, assuming that they did not have 100 sales associates on the floors during inclement winter weather. I learned some interesting lessons:

1. If their employees can’t get there, Nordstrom expects its customers won’t be able to get there either — so there is a natural reduction in workforce.

2. Every department staffs to a metric of sales per associate per hour on the floor. Department managers are expected to know and grow their business. They take last year’s sales volumes and predict what the sales will be and then staff appropriately. This takes into account weather and school vacations. Managers are expected to anticipate volume surges in response to predictable trends.

3. When Nordstrom loses business during inclement weather they work their social media and customer email lists to entice people to make time to visit the store — rather than running sales or additional advertisements.

What are the lessons for hospitals? We should be using predictive analytics to staff according to patient demand. We need to appeal to different patient groups who all have preferred appointment times. Working patients want to be seen before or after work, seniors typically don’t like to drive during rush hour or after dark. Young millennials would rather be seen via video chat. Saturdays work for busy parents. Easy in easy out, free parking and conveniences that are not currently available in the healthcare environment should all be considered.

I believe it will take a new skill set and a new mindset to survive in our new retail-driven market. And I, for one, am glad spring is finally upon us.