Fairview's new CEO sees perfection as the goal

A quick read through the background of any new CEO an organization recruits from the outside provides a pretty good indication of the direction the board thinks it needs to go.

At the big health care company Fairview Health Services, the board of directors late last year selected James Hereford as CEO. He's a health system executive who once taught statistical process control at Boeing and who now is eager to show his Fairview colleagues a big automotive air bag factory in northern Utah so good at quality management that it's approaching perfection.

As he described it, that trip to an auto parts factory with an amazing quality record would obviously be well worth the time. And the message is also clear. The best opportunities at Fairview don't lie outside of its hospitals and clinics, with more strategic acquisitions or blunting the moves of competitors. What they need to work on is on the inside.

Hereford moved to Fairview in December from the post of chief operations officer at Stanford Health Care in Northern California, the academic health system that is affiliated with Stanford University. In a conversation last week in his office, he came across as anything but a process improvement nerd, happily addressing subjects as diverse as health care policy in Minnesota and the pleasures of working alongside academic physicians and researchers at a major medical school.

It was also an open-ended interview, to discuss impressions from his first 100 days since reporting for work at Fairview's Minneapolis headquarters. And he did bring up process improvement, really warming to the topic when talking about the Autoliv air bag assembly plant in Ogden, Utah.

It's a loud, bustling factory that produces hundreds of thousands of air bags per week, he said, nothing like a surgical suite. But he first saw it as a health care executive, and he's planning to take Fairview staff there when he can, he said, "to show them an example of great."

What Autoliv, a Swedish company, turns out to be great at is extremely productive and high-quality work. It first adopted the principles of lean manufacturing more than 20 years ago. Since then, it has blown past the defect standard implied by what's known as six sigma, commonly stated as 3.4 defects for every million opportunities to mess up.

Autoliv's stated corporate goal now is simply perfection — zero defects. And the company recently reported that more than 10 percent of the production lines now run with no defects for at least 15 consecutive days.

It's not just a story of statistics and manufacturing processes, either. Ask any of the employees on a production line in Utah what their job is, Hereford said, "and to a person they say 'We save lives.' "

Hereford didn't even have to point out the lesson here, that if factory workers in Utah want to achieve perfection making air bags because they save lives, imagine what physicians, nurses, physical therapists and others could do if given the chance.

Hereford is far from the only health care executive who has looked at the quality systems that have come out of manufacturing and seen plenty of application in how health care gets delivered. The way he has been introducing the idea at Fairview is not as some sort of new ­corporate goal, though, but as a tool kit or way to help Fairview achieve its goals.

Hearing about lean management from the new boss maybe is off-putting to some Fairview staff, but one of the first things anyone learns starting training for lean is that there's usually nothing wrong with the people working in an organization. What is broken is the system of directing the work they do. The other thing that should come up right away is basically no more complicated than finding things that waste time and money and getting rid of them.

"You know there's a lot of waste in health care," ­Hereford said. "Maybe the biggest waste is the waste of the human potential of the people who work in it."

To get to know people who work at Fairview, ­Hereford has conducted, at last count, more than three-dozen big meetings with Fairview staff. That's a normal thing when coming into the top job from the outside, yet of course he hasn't been part of anything close to a normal leadership transition. He's Fairview's fifth CEO in five years.

During that period of instability, the company remained financially solid, though, and about $4 billion in annual revenue with clinics and hospitals that include the University of Minnesota's Medical Center, Fairview rivals Allina Health as the largest health care ­provider in the Twin Cities.

Recently, Fairview announced its intention to merge with HealthEast Care System, with the first steps toward a deal having been taken before Hereford even arrived.

This deal doesn't really change the task that Hereford sees ahead. The simplest way to describe it, he said, is turning Fairview from a holding company for hospitals, clinics and other units into a ­single, tightly integrated system.

Fairview was on no one's list, including his, of organizations that had done much to achieve that, "so I didn't know exactly what to expect," he said. "Then you read through everything, but … then seeing it is completely different. So every day I'm surprised by the depth of our capabilities, what we do and do so well. I mean, we have one of the best specialty pharmacies in the world."

To him that means Fairview generally already has what it needs to deliver all of what its patients need. He has come to find out, in his meetings with employees, that this conclusion is broadly shared within Fairview, too. The word he used to describe this is "potential."

"It's like being told you have a Ferrari," he said. "So you go out to the garage and you open the garage door and yes, there is a Ferrari. It's just in parts strewn about on the floor. But if you can figure out how to put that Ferrari together, you're going to have a heck of a car."