Lessons from the C-suite: Carl Armato, Novant Health

How one CEO is focused on 'delighting' patients

This interview with Carl Armato, the president and CEO of Novant Health, was conducted by Tom Cassels and Eric Larsen, Managing Partner, and condensed by Dan Diamond.

Q: For this series, we’ve mostly interviewed folks who began their careers in health care. But you’re a certified accountant…

Carl Armato: That's right. I started at Ernst & Whinney. [Editor's note: Which became Ernst & Young in 1989.]I know; I’m dating myself a little bit.

But coming out of college, I thought the certified public accounting route and being a partner with one of the major accounting firms—at the time, the Big Eight—was going to be my path.

Q: What appealed to you about that line of work?

Armato: The beauty of crunching numbers is you learn a lot. Doing audits, I touched just about every industry—banking, retail, manufacturing, oil and gas. And the tax department had collapsed in the firm location I was in, so I ended up doing audits and tax work together in the field with the client [when] most tax people were in the office.

It was a pretty unique role, and getting out in the field helped me be the most efficient tax guy. We had lots of success with it.

But eventually, the managing partner gave me a choice: what did I want to do? Audits or tax work?

I chose tax, and the more I got into it, the more I realized that the not-for-profit area was an area that I wanted to explore. So I started working with not-for-profits, including hospitals. That was my introduction to health care.

Q: So how did a CPA become a health system CEO?

Armato: The first time I walked down a hospital hallway, I saw the impact that staff were having on patients and visitors. It was amazing how patients' lives were being touched in such a special way.

It made me wonder: Can someone like me—a guy who was really into the numbers—become part of that?

"The first time I walked down a hospital hallway, I saw the impact that staff were having ... It made me wonder: Can someone like me become a part of that?"

And after four years of working in accounting, when one of our clients at Ernst & Young, Louisiana's General Health System, advertised that he needed a director for finance and tax…I applied. And the health system hired me.

From that point on, I volunteered for just about everything. Whether it was trying to help physicians be successful in health care systems, or figuring out how to put partnerships together and affiliations together. Over time, I got to touch so much of the health care system and industry … it was just unbelievable.

I spent eight years as General Health System's director of finance and tax, and then two years overseeing medical group operations, working on building partnerships with physicians. That led into an opportunity to be VP of finance and operations at Novant Health about 15 years ago; I began leading Presbyterian Healthcare in 2003; and I was named CEO of the entire Novant Health system in January 2012.

Focusing on physician strategy

Q: Your career was moving pretty quickly in Louisiana. What motivated you to pull up stakes and head to North Carolina?

Armato: After getting a call to interview, I visited Novant Health, and realized it was an opportunity to work with physicians on a much larger scale. At the time, the system had about 300 physicians, and the division was losing about $50 million.

And my wife asked me—"you just fixed the operations at General Health System, what are you doing? Relax and enjoy what you just completed.” But I told her that I saw so much opportunity at Novant Health; I really wanted to help the physicians and the health system. 

So after getting here, we worked on introducing a new approach to bringing physicians into the leadership. We transformed how we operated as a physician-integrated organization. 

Then I started to think about asking physicians that ran the outpatient ambulatory environment to truly integrate into the health care system, both at the acute care level and [through] all of our operations. That kind of physician integration could create a competitive advantage for Novant Health and could enhance the services we provide to our patients.

Q: Can you talk about that physician strategy? Specifically, what does it mean to integrate physicians into leadership roles?

Armato: Here's one key example. We have a cabinet of 10 physicians who represent every geographic market we serve. They all still practice, but they're part-time administrators too. And when we decide strategic priorities in that group, they break and go back to the market president they're teamed up with to implement those priorities.

For example, the Charlotte market physician leader connects with the Charlotte market president, the Winston-Salem physician leader connects with the Winston-Salem president. And each one of those physician leaders is connected in a market to every lead physician in [our] medical group clinics and with lead physicians in independent clinics, and so on.

"We have the same administrative-physician partnership in every market ... That truly is the secret sauce."

We have the same administrative-physician partnership in every market. It goes from market to sub-market: administrators and physician leaders rally the strategy to every location. Whether it’s physician compensation or a strategic response all physicians get the same message at the same time.

And that message quickly rolls back up to me if an issue needs further discussion or clarification.

That truly is the secret sauce behind where we stand with our administrative-physician partnerships at Novant Health.

My long-time physician partners helped me bring that vision of physician partnership to light. Dr. Steve Wallenhaupt as Chief Medical Officer and Dr. John Phipps as President of the Novant Health Medical Group—both have helped physicians see what it really means to have a voice at the leadership of Novant Health. 

Focusing on 'delighting' patients

Q: You've been CEO of Novant Health for about two years and one of your leadership priorities is focusing on the 'remarkable patient experience.' Can you define what that means, and talk about how that came to be?

Armato: When I was running the Charlotte market, I used a simple word—I said we were going to delight patients and families.  

Now I have to tell you…whenever I used that word with staff, at first they asked, “Are you serious, do we do that in health care?"

Q: Were you serious?

Armato: Yes! I met with every department and physician throughout the market to discuss how we would delight patients and family members.

I was in an auditorium once, talking to our environmental staff, and asked them "tell me what you do." And hands went up. "I mop the floor," said one staffer. “I empty the trash," said another, and so on.

I tried to tell them—at the end of the day, you do a lot more than that. You prevent infections; your job is part of delighting people by keeping them safe. That’s what you do.

Or if nurses asked about their role in creating the experience, I’d say to them: I need you to be able to grip the rail, look people in the eye, and tell them you have time to hear them out. You want patients and their families to be able to relax. And they’ll remember the nurse who "gripped the rail" to listen to their story.

Currently, we are on a journey to deliver the most remarkable patient experience to person we serve. Our patients have helped to define the remarkable patient experience, which I'll get back to in a second.

Q: Your strategy is more than just 'delighting' patients, though. Can you explain some of your key objectives around patient experience and satisfaction?

Armato: We interviewed patients all across our footprint. Talking to them so they could help us define what a remarkable patient experience could be.

And I have to tell you—patients’ expectations weren’t high!

So it's our job to constantly raise the bar on creating the remarkable patient experience, and help people see that you can achieve something pretty unique and special in health care.

"You prevent infections; your job is part of delighting people by keeping them safe."

The patient interviews helped us come up with six elements that are now part of our strategic plan: safety, quality, authentic personalized relationships, easy access, voice in choice (giving patients the ability to truly partner with us in their health care, if they so choose), and affordability. 

Then, we went through and started setting bold objectives of what we wanted. [Here's] an example, for safety, we set a goal of zero serious safety events and an 80% reduction in serious safety events throughout the Novant Health footprint over three years. Less than two years in, we’ve already hit a 70% reduction in serious safety events.

Meanwhile, we tie everything back to achieving that remarkable patient experience. Whether it's how we as employees enter a room or how we round on patients—it's all part of being authentic with patients and families. 

Setting a vision

Q: Can you provide perspective on how you're charting the course for Novant Health, especially with more health reform provisions coming online next year?

Armato: Let’s talk about affordability a little bit, because I truly believe health care costs are too high. Health care providers have to find a way to be more affordable for the people we serve. 

And let’s face it: employers across our markets have said enough’s enough on rate increases. So we've set targets on how we’re going to deliver on becoming more affordable.

But I didn’t sit in a room with my team and say, “we’re going to just tell the nursing department that they need to see more patients,” or come up with a new patient ratio for nurses that just doesn’t make sense. 

Instead, here's what we did for nursing. We brought 50 nurses in from across all of Novant Health to design a new model of care, and I gave them three objectives. 

  • First, we had to get nurses practicing at the top of license.
  • Second, we had to take a 12-hour shift, and have about 70% of the 12-hour shift be on direct patient care. 
  • Third, I wanted to see a 30% improvement in efficiency.

Q: How did those metrics—say, nursing time spent on direct patient care—compare to where Novant Health was at the time?

Armato: Our original baseline was 40% of a 12-hour shift was spent of direct patient care, so we were a little better than the industry average of 20%.

But to get where I wanted us to go—nurses had to truly do research into their jobs and eliminate stuff that they as nurses should not have been doing all along. So we put beepers on nurses, we would call them, and we started to see exactly where they were spending their time. 

After that, we diagrammed and charted those patterns. Now we’re almost devoting 60% of a 12-hour shift to direct patient care. And our nurses, CNAs, and support teams created these positive results.

Q: What about your ambitious goals for improving nursing efficiency? How are you working to achieve that?

Armato: Our nurses, CNAs, and other support staff designed a great team approach that has now been implemented in all of our med/surg units—more CNAs do work under the direction of our RNs, who now can work at the top of their license.

The model [is successful] because the people who are providing the direct patient care are the ones who designed it.

We've applied three models across Novant Health, based on each facility's size and complexity. And together, they've saved Novant Health $25 million. 

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