Melbourne Health CEO Linda Sorrell aims to fix the organisation’s fiscal woes by 2009. The prognosis? The former nurse and 2007 Telstra Victorian Business Woman of the Year is on target to do just that. By Georgina Jerums
For many, taking up the CEO role at an organisation that’s carrying a $13.3 million deficit would provoke an “er, thanks, but I’ll pass” response. Particularly when that organisation is in public health and under the intense scrutiny of government. Poisoned chalice alert, right?
Well, no, not everyone sees it like that. Certainly not Linda Sorrell. When appointed to lead public health provider Melbourne Health in April 2007, inheriting a $13.3 million debt plus some 7800 staff and a $680 million annual operating budget, she knew full well the finances needed emergency resuscitation. And, far from backing off, this nurse-turned-executive is relishing the task at hand.
Perhaps that’s because it’s familiar territory, and Sorrell, viewed in health circles as a troubleshooter, knows how to get the job done. Before accepting the tenure at Melbourne Health – which operates The Royal Melbourne, Australia’s busiest hospital, where she’s the first female CEO in 160 years – Sorrell was Chief Executive of Southern Health, one of Victoria’s 14 big public health services.
In just three years at Southern, Sorrell erased a $16.5 million deficit; a turnaround lauded as something of a health management miracle. Can a similar budget miracle occur at Melbourne Health by 2009? It looks that way, given promising year-to-date figures, but first there’s the pesky finance responsibility issue to be addressed.
“The challenge has been to build a culture of accountability,” admits Sorrell, speaking from her office at Parkville’s Royal Melbourne where Norman Lindsay sketches soften the walls, and binders fat with spreadsheets line the shelves. Nearby, trams rattle past and it’s only a short walk to the bluestone surrounds and clipped green lawns of the University of Melbourne.
She’s 15 months into the job and while the Royal Melbourne is not exactly The Ritz (compounded by a redevelopment that has the entrance scaffolded and abuzz with ear-splitting drills), there’s no question Sorrell loves it here in the hospital’s crowded, buzzy corporate wing, from where she oversees the Melbourne Health network. Created in July 2000, Melbourne Health includes aged care and takes in The Royal Melbourne, NorthWestern Mental Health, North West Dialysis Service and the Victorian Infectious Diseases Reference Laboratory.
The CEO gig – to manage the network’s 1000 beds, 55,000 emergency patients and 700,000 occasions of care annually – is not for faint hearts, particularly when long waiting lists and bed shortages hit the headlines, but constant, meticulous goal setting makes the role achievable. In fact, although she tries not to work weekends and refuses to own a BlackBerry for work/life balance reasons, it is by being intensely goal driven Sorrell gets the job done. It’s common knowledge her meetings always start and finish on time. The secret?
“I schedule meetings back-to-back. If anyone goes overtime, I can’t stay. People get used to it.” That razor focus rarely lets up: you’ll find Sorrell at her desk early, usually after striding out at the ungodly hour of 5.20am for a 60-minute walk to prep her mind for the day.
Prior to her appointment, the elephant in the room at Melbourne Health was inefficient spending. The brand needed to get more corporate. And fast.
Sorrell knew a cultural shift was crucial. “Managing a public hospital system is no different from running a corporation,” she says, holding a direct gaze. “You have revenue, you have expenditure. If you don’t deliver on that, you’re wasting public money. We all pay our taxes and we expect a certain service.
“For me, one of the things about coming to Melbourne Health was the financial state of the organisation; that’s been a challenge. We provided very high quality clinical care, but when you have press coverage about the financial state of the organisation, it does have an impact on your brand.”
To turn that around, lean thinking management (used by Qantas, National Australia Bank, Toyota, Woolworths and the UK’s National Health Service) has been rolled out at Melbourne Health.
“Based on the principles of lean thinking, we focus on the needs of patients rather than the needs of the organisation,” explains Sorrell.
The strategy encourages clinicians, bed management, surgical staff and administration to all work together to improve the flow of patients, providing safer patient care and reducing waiting time for treatment. Lean thinking also works to eliminate duplication, delays and the potential for errors, ensuring every step improves outcomes for patients and staff. It’s a focused approach to delivering whole-of-system innovation and ensures executive sponsorship is linked to frontline staff to drive change.
So adept is Sorrell at applying lean thinking and reining in hospital budget blowouts that in 2007 she won Telstra’s Victorian Business Woman of the Year and the National IBM Community and Government Award. A Melbourne Health balanced budget by mid-2009 is possible, she hedges, provided emergency admissions don’t skyrocket.
“We closed the 2006-07 financial year with a $13.3 million deficit and we’ve set ourselves three years to turn it around. We may achieve that sooner, we may not. You have no control over patients that come through the emergency department. That drives a lot of costs.”
It has to, as emergency care is a public health priority. In private health, the management mantra is “attract the specialists, and the profit and patients will follow”. Working with the public purse, however, Melbourne Health must serve the community, and that includes operating one of Victoria’s two trauma centres plus facilitating education and research such as clinical trials into a Type 1 diabetes intranasal vaccine. An ageing population means services for age-related diseases such as cancer also take priority.
Given most staff weren’t aware of just how grim the spreadsheet was at Melbourne Health before Sorrell came on board, transparency and a collective ownership is key to wrestling the budget under control.
“We all have a responsibility to turn it around,” points out Sorrell. “I, as the chief executive, can’t do it on my own. We’ve had a focus on improvement and innovation. We need to start to look at how we can do things differently and get everyone aware of the costs. The culture’s different.”
Where the buck stops
Since the buck stops with the CEO, does the immensity of that task – leading, managing and nurturing not only the health care, but also staff, finances and stakeholders – make her lose sleep occasionally? “No,” Sorrell says after a pause. “It doesn’t weigh too heavily because I know we can reduce patient costs and still deliver the same care. And we can grow our business.”
Having a tight executive team “with differing yet complementary skills and experiences”, who lead by example and give her feedback is essential. Sorrell quips that she hasn’t personally met all 7800 staff yet, but, when time allows, she schedules visits throughout the hospital network and the intensive care unit or the emergency department.
Once all the talking is done, the tightening of costs is the hard part and Sorrell has to make tough, at times unpopular, decisions, which is why accessing the latest data to support a budget argument is key. “You’ve got to be fair and equitable,” she says. “You look where demand is occurring and allocate the funding with those things in mind. You need proof that an area has substantial growth for the future.”
Sorrell says that she always wanted to manage a hospital. “When I was working in nursing, I always wanted to do more. I’ve got two sisters who are nurses. I think you have to be a certain type of person to move into the field. Caring for people, you have to have a lot of compassion. That’s what drives me. I love working at a public hospital.”